Rimon Toma v Carolyn Anne Olcorn
[2019] VSCA 116
•29 May 2019
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0090
| RIMON TOMA | Applicant |
| v | |
| CAROLYN ANNE OLCORN | Respondent |
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| JUDGES: | WHELAN and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 10 May 2019 |
| DATE OF JUDGMENT: | 29 May 2019 |
| MEDIUM NEUTRAL CITATION: | [2019] VSCA 116 |
| JUDGMENT APPEALED FROM: | [2018] VCC 224 (Judge Macnamara) |
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CONTRACT – Sale of land – Unilateral mistake – Vendor entered into contract for sale of land under mistaken belief as to adjustment at settlement for rent pre-paid – Whether purchaser was aware of mistake – Trial judge found purchaser was aware of mistake and opportunistically sought to take advantage of it – Contract rescinded – Leave to appeal granted but appeal dismissed – Taylor v Johnson (1983) 151 CLR 422, Leibler v Air New Zealand Ltd [No 2] [1999] 1 VR 1 applied.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr D J Williams QC with Mr M I Ravech | Spigler & Schwarcz Solicitors |
| For the Respondent | Mr N P Jones | De Marco Lawyers |
WHELAN JA
McLEISH JA:[1]
[1]By a determination dated 9 May 2019 under s 11(1A) of the Supreme Court Act 1986 the President determined that two Judges of Appeal constitute the Court of Appeal in this case.
On 26 June 2017 the applicant, Mr Toma, and the respondent, Ms Olcorn, entered into a contract of sale for a property in Upper Plenty. Ms Olcorn was the vendor and Mr Toma the purchaser. The purchase price was $900,000.
Ms Olcorn entered into the contract under a serious mistake about its contents. She refused to settle and Mr Toma brought proceedings in the County Court seeking specific performance. After a trial, the judge found that Mr Toma had been aware of Ms Olcorn’s mistake and had opportunistically sought to take advantage of it.[2] The judge ordered that the contract of sale be rescinded.
[2][2018] VCC 224 (‘Reasons’).
Mr Toma now seeks leave to appeal.
There were many issues raised in the proceeding and at the trial, but the only issue which remains contentious is the trial judge’s conclusion concerning Mr Toma’s state of mind. We will accordingly confine ourselves to the facts, submissions and findings which bear on that issue.
Relevant factual matters
The property in question is a rural property of approximately 50 acres (20 hectares) with a farmhouse, seven dams, an Olympic size manège, stables and other outbuildings.
In April 2012 Ms Olcorn entered into a 99 year lease with Crown Castle Australia Pty Ltd, a company associated with one of the large telecommunications providers, Vodafone. The area leased is approximately 100 square metres. A telecommunications tower was constructed on the leased area. The lease provided for a total rental of $350,000 plus goods and services tax, equating to a rate of $3,535.35 per annum, with the total amount to be paid in two instalments, one on 30 June 2012 and the second on 2 July 2012.[3]
[3]Reasons [5].
On 17 May 2017 Ms Olcorn gave a company named Real Estate City Pty Ltd an exclusive selling agency authority. She authorised the agent to offer the property for sale for a price between $870,000 and $950,000.[4]
[4]Reasons [6].
At some time prior to 14 June 2017 Mr Toma and his wife saw an advertisement on the internet offering the property for sale.[5] The advertisement they saw included a ‘price guide’ of $870,000 to $950,000.
[5]Reasons [3].
The person at Real Estate City responsible for the matter was Ms Shirley Collins. On 14 June 2017 Mr Toma’s wife exchanged text messages with Ms Collins arranging an inspection. That inspection with the real estate agent did not take place until Monday 19 June, but, in the meantime, on Friday 16 June 2017, Mr Toma and his wife went to the property and were briefly ‘shown around’ by Ms Olcorn.[6] On that occasion there was some discussion about the telecommunications tower and the lease.
[6]Reasons [3]–[4].
On Friday 16 June 2017 Mr Toma made an offer to purchase the property for $870,000. The offer was initially made orally to Ms Collins who requested that he put it in writing. Later that same day he sent the offer of $870,000 to Ms Collins in an email.[7]
[7]Reasons [6]–[7].
At the time Mr Toma made his $870,000 offer he knew there was a telecommunications lease because there had been some discussion about it during the informal inspection with Ms Olcorn, but, on his own evidence, he did not know the duration of the lease and he did not know what rent was payable, if any.
At that time no statement under s 32 of the Sale of Land Act 1962 had been prepared. Ms Collins was not prepared to put Mr Toma’s offer to Ms Olcorn until the property had been ‘viewed [a reference to the 19 June appointment] and the right documentation’ was in place.[8]
[8]Reasons [8].
On Monday 19 June 2017 Ms Collins met Mr Toma and his wife on site.[9] Amongst other things, the telecommunications tower was discussed. According to Mr Toma, Ms Collins was unable to give him any details about the lease.[10]
[9]Reasons [9].
[10]Reasons [11].
Ms Olcorn had engaged Ms Terri Sari of the conveyancing firm, Sargeants, to prepare the contract of sale and the section 32 statement.[11] Ms Olcorn had provided Ms Sari with a copy of the telecommunications lease amongst a number of other documents to enable her to prepare the section 32 statement. Ms Sari’s evidence was that she was instructed that Ms Olcorn was to retain all the money from the lease.
[11]Reasons [13].
The contract which Ms Sari drew had a special condition, special condition 32, dealing with the telecommunications lease. The special condition read as follows:
The purchaser acknowledges the Lease contained in the contract to Crown Castle Australia Pty Ltd/Vodafone Network Pty Ltd and the continuing rights of the Lessee contained therein. The purchaser further acknowledges that all payments due pursuant to the terms of the Lease have been paid to the vendor/lessor and that no further payments are required to be made by the Lessee under the terms of the Lease.
Ms Sari overlooked, however, one of the standard conditions contained in the contractual form which she used, being the form prescribed by the Estate Agents (Contracts) Regulations 2008. General condition 15 provided as follows:
All periodic outgoings payable by the vendor and any rent and other income received in respect of the property must be apportioned between the parties on the settlement date …
Ms Sari in her evidence said that she had not taken general condition 15 into consideration when she drafted special condition 32.
The draft contract drawn by Ms Sari and a section 32 statement were provided to Mr Toma on Tuesday 20 June 2017.[12]
[12]Reasons [11].
On Wednesday 21 June 2017 and Friday 23 June 2017 there were communications between Ms Collins and Mr Toma, as a consequence of which Mr Toma increased his offer to $900,000.[13] Notwithstanding the increased offer, Ms Collins determined to go ahead with a public ‘open for inspection’ which had been scheduled for the following day, Saturday 24 June 2017. The trial judge observed that Ms Collins was ‘presumably’ allowing for the possibility that a better offer might be forthcoming from a person inspecting the property on the Saturday.[14]
[13]Reasons [14]–[17].
[14]Reasons [17]–[18].
Following the open for inspection on Saturday 24 June 2017, Ms Collins put Mr Toma’s $900,000 offer to Ms Olcorn and Ms Olcorn instructed Ms Collins that she was happy to accept that offer.[15]
[15]Reasons [19].
There were then some dealings between Ms Collins and Mr Toma finalising the particulars of sale, and there was a further telephone discussion concerning the telecommunications lease.[16]
[16]Reasons [22]–[24].
Signed contracts were exchanged on Monday 26 June 2017.[17]
[17]Reasons [21]–[22].
The next day, Tuesday 27 June 2017, Mr Toma’s solicitor, Joanne Rajab at Spigler & Schwarcz Solicitors, wrote to Sargeants (Ms Sari). In view of the importance of the letter we set it out in full:
I refer to the above matter and confirm that I act on behalf of the purchaser Rimon Toma.
My client has advised that he may wish to run horses and cattle on the said property in the future and would like to obtain a report from the Department of Economic Development, Jobs, Transport and Resources. We have attached the necessary Authority to Release Information and ask that you please arrange for your client to complete and sign same and return to our office as soon as possible so we can obtain the necessary report as soon as possible.
In relation to the contract, please provide clarification as to the following:
·Is the lease to Crown Castle Australia Pty Ltd the only current lease on the property?
·Item 3 Rent — has your client received both rental payments of $175,000 plus GST?
·Confirmation that rental in the total sum of $385,000 will be an adjustable item at settlement.
We await your response.
The dispute began from that point onwards. If the rental were adjusted at settlement in the manner foreshadowed in Mr Toma’s solicitor’s letter the amount Mr Toma would be required to pay at settlement would be approximately $330,000 less than the $900,000 specified as the purchase price, being approximately 94/99ths of the total rent. Ultimately Mr Toma sought specific performance of the contract, and Ms Olcorn counterclaimed alleging an oral or an implied term that there would be no adjustments, estoppel, mutual mistake, or unilateral mistake.
Discussions about the lease before the contract was signed
Ms Olcorn, Mr Toma and Ms Collins all gave evidence that the lease was discussed before the contract was signed. In substance, they all stated, or accepted, that Mr Toma was told that nothing further was payable by the lessee. The last conversation to that effect was between Mr Toma and Ms Collins very shortly prior to the exchange of contracts. Ms Olcorn went further in her evidence and asserted that she had expressly told Mr Toma that there would be no ‘adjustment’. The trial judge did not accept that aspect of her evidence.[18]
[18]Reasons [65].
The relevant issue at trial
The judge set out the relevant facts, including those to which we have referred and some additional factual matters. He set out the plaintiff’s claim for specific performance and the allegations and claims made in the defendant’s amended defence and counterclaim.
There were a number of contentions made by the respective parties which were either rejected by the trial judge or were not determinative of any relevant issue. By final submissions, counsel for Ms Olcorn placed primary reliance upon the statement of principle of the High Court in Taylor v Johnson[19] concerning unilateral mistake, and both counsel agreed that Ms Olcorn had entered into the contract under a serious mistake as to its contents. The matter which was then of critical importance was whether Mr Toma had so conducted himself as to entitle Ms Olcorn to relief as a consequence of her serious mistake.
[19](1983) 151 CLR 422.
Principles applied by the trial judge
The trial judge applied the relevant principles set out by the High Court in Taylor v Johnson and quoted a passage from the joint judgment of Mason ACJ and Murphy and Deane JJ where they said:
a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering into the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension.[20]
[20]Ibid 432, quoted at Reasons [69].
The trial judge also cited and adopted a clarification of that passage by Kenny JA (with whom Winneke P and Phillips JA substantially agreed) in Leibler v Air New Zealand Ltd [No 2][21] where her Honour said:
In Taylor v Johnson … the majority referred to the case in which the non-mistaken party deliberately sets out to ensure that the mistaken party does not become aware of the existence of a mistake. But the majority’s reference to this circumstance was plainly not intended to be an exhaustive statement of what amounts to conduct entitling the mistaken party to rectification, even if it constitutes a particularly clear example. … In some circumstances, as in the special circumstances of this case, it may be enough that the non-mistaken party chooses to leave the mistaken party under the misapprehension in executing the agreement.[22]
[21][1999] 1 VR 1 (‘Leibler’).
[22]Ibid 26 [68], citation omitted, cited and adopted at Reasons [72].
The trial judge’s finding on the relevant issue
Having set out the principles, the trial judge expressed his critical findings as follows:
Mr Toma sought information as to the tower lease repeatedly and was concerned, it seems, to have confirmation that all of the rental had been prepaid. Ms Collins said that she felt ‘bamboozled’ by these repeated questions. His last inquiry on this subject with Ms Collins was immediately before he executed the contract of sale. It was plainly a matter weighing on his mind. First thing the following morning, his solicitors raised the issue of the adjustment with Ms Sari. I accept [counsel for Ms Olcorn’s] submission that this indicated that they and Mr Toma apprehended that there would be a dispute as to the adjustment of the prepaid rent. This action is indicative of a knowledge and belief that the adjustment of prepaid rent was not something which Ms Olcorn or her conveyancer realised would be necessary under the terms of the contract, or were agreeing to undertake. Mr Toma, through his solicitors, moved early because he knew there would be a fight on this subject. The letter might also be regarded, in colloquial terms, as a ‘gotcha’ response on behalf of Mr Toma. I am satisfied, therefore, that Mr Toma was aware that Ms Olcorn was labouring under a mistake, being unaware that the terms of the written contract would require an adjustment of prepaid tower rent. He sought opportunistically to take advantage of the mistake. Where one party knows of a serious mistake under which the other party is labouring but takes no step to disabuse that other party the mistaken party may be entitled to relief for unilateral mistake [Leibler cited]. I am satisfied of that matter in accordance with the principles discussed in Briginshaw[23] and in light of the requirements of s 140 of the Evidence Act 2008.
I note there was no suggestion from Mr Toma that his solicitors, in writing their letter on the morning of 27 June, were acting without instructions. As to this letter, Mr Toma said, ‘It is a large amount, so we want to make sure we’re on the right pages and the appropriate steps to settlement’. (T51, L12-14) Mr Toma was pressed on this point. It was put to him that his solicitors moved early because he and they knew there would be a dispute on the matter of adjustment at settlement. His response was ‘Not necessarily, no’. (T52, L30) Following that relatively weak denial, his next answer, ‘I was actually quite, ah, shocked when I found out that it was an issue and that that was the – the what was happening, you know’, (T53, L2-5) was unconvincing. [Counsel for Mr Toma], it will be recalled, submitted that the rule in Browne v Dunn[24] had not been observed with respect to these matters. The allegation of a unilateral mistake on Ms Olcorn’s part, but known to Mr Toma at material times, was clearly pleaded. In the questions which led to the answers which I have quoted above, [counsel for Ms Olcorn] did distinctly put to Mr Toma that he raised the issue of adjustment through his solicitors only after the contract had been made, despite repeated queries on the subject of prepayment before contract because he knew Ms Olcorn was not intending, or did not think she was agreeing to, an apportionment of the prepaid rent. These matters could have been put perhaps more vigorously or extensively, but, in my view, the questions which were asked were sufficient in context to meet the requirements of the rule.[25]
[23]A reference to Briginshaw v Briginshaw (1938) 60 CLR 336 (‘Briginshaw’).
[24]A reference to Browne v Dunn (1893) 6 R 67.
[25]Reasons [72]–[73] (citations added).
The relief granted
Submissions were made on the appropriate relief to be granted should it be determined that the relevant principle in Taylor v Johnson did apply. The trial judge accepted Mr Toma’s position in that respect, which was why he ordered rescission rather than rectification.
Proposed grounds of appeal
The proposed grounds of appeal are as follows:
1.The learned trial judge erred in finding that, at the time of entering into the Contract to purchase the Property from the Respondent, the Applicant knew the Respondent was labouring under a mistake to the effect that there was to be no adjustment at settlement for prepaid rent in relation to the Tower (the Mistake) in circumstances where:
(a)the Tower was leased to an arm’s length third party for 99 years;
(a)ordinarily, the benefit and burden of a lease would pass to the purchaser of the Property as and from settlement, and the Contract so provided;
(c)the Respondent’s belief that she could keep the future benefit of the lease (by retaining prepaid rent), but could pass on the burden of the lease to the purchaser, was inherently illogical and hence unlikely to have been known by the Applicant unless he was told of it;
(d)the Respondent’s sole pleaded case as to the Applicant’s knowledge of the Mistake was that his knowledge derived from:
(i)discussions between the Applicant, his wife and the Respondent personally; and
(ii)discussions between the Applicant, his wife and the Respondent’s selling agent -
during each of which, the Respondent alleged, the Applicant was told in substance that there was to be no adjustment for prepaid rent;
(e)the Respondent’s evidence, to the effect that she told the Applicant that there would be no adjustment of prepaid rent at settlement as per the allegation referred to in (d)(i) above, was expressly rejected by the trial judge;
(f)the selling agent’s evidence did not support the allegation referred to in (d)(ii) above;
(g)directly contrary to the Respondent’s pleaded case, and her own evidence, the trial judge found that prior to entering into the written Contract the Applicant had not been told that there was to be no adjustment of the prepaid rent;
(h)no facts or circumstances were pleaded or found which would have placed the Applicant on notice of the Mistake, where:
(i)the written Contract, prepared by the Respondent’s conveyancer, incorporated the standard provision for an adjustment of prepaid rent; and
(ii)the Applicant gave sworn testimony to the effect that he did not know that the Respondent believed that there would be no such adjustment;
(i)further:
(a) having found that the Applicant was not told there was to be no adjustment of the prepaid rent, his Honour should have concluded that the Applicant did not know of the Respondent’s mistaken belief, because no case was pleaded or put that the Applicant so knew in the absence of being told; and
(b) in the circumstances set out in sub-paragraph (a) above, his Honour erred in concluding that the Applicant knew of the Respondent’s mistaken belief.
2.Further or alternatively, the learned trial judge erred in inferring that the Applicant knew at the time of entering into the Contract, that the Respondent was labouring under the Mistake in circumstances where:
(a)the trial judge drew that inference against the Applicant on a logically unsound basis, namely by reasoning that a letter sent by the Applicant’s solicitors shortly after execution of the Contract raising the issue of adjustment with the Respondent’s conveyancer (the Letter), was indicative of the Applicant’s knowledge and belief that the adjustment of prepaid rent was not something that the Respondent or her conveyancer realised would be necessary under the terms of the written Contract, or that the Respondent had agreed to undertake;
(b)the sending of the Letter was not pleaded by the Respondent as a matter going to the Applicant’s alleged knowledge of the Mistake;
(c)there was no evidence that sending the Letter was not standard or normally prudent conveyancing practice;
(d)the magnitude of the adjustment for prepaid rent was such that it was an obvious and prudent step for the Applicant’s solicitors to seek agreement as to its calculation and adjustment; and
(e)in the premises, the sending of the Letter did not afford a logically sound basis from which to draw an inference that the Applicant knew of the Mistake.
3.By reason of the matters in grounds 1 and 2 above, the learned trial judge erred in failing to find that the Applicant was unaware of the Mistake.
Senior counsel for the applicant commenced his oral submissions as follows:
There are three grounds expressed but, in reality, they are all attacks on a single finding which is that the applicant, Mr Toma, was aware that the respondent, Ms Olcorn, was operating under a mistake at the time of entering into a contract for the purchase of the property which is the subject of the contract of sale in this case.
Thus, the focus of argument before us was on the trial judge’s finding that Mr Toma had been aware Ms Olcorn was operating under a mistake.
Submissions of the parties
The applicant’s written case accepted that in order to establish the error contended for under his first proposed ground of appeal it was necessary to satisfy the appellate court that the judge’s finding was ‘glaringly improbable’ and clearly ‘wrong’, using terms employed by the High Court in Robinson Helicopter Inc v McDermott.[26]
[26](2016) 331 ALR 550, 558 [43].
The applicant submitted that ‘ordinarily’ the benefit and burden of a lease would be adjusted at settlement and, where a vendor had made a mistake as to the need for such an adjustment in a particular case, a purchaser would be unlikely to have known of it unless expressly told. The applicant submitted that Ms Olcorn’s pleaded case was that Mr Toma had been expressly told there would be no ‘adjustments’ referable to the lease, but the trial judge had rejected the evidence upon which those allegations were based.
The applicant emphasised that the contract had been drawn by Ms Olcorn’s conveyancer.
The applicant submitted that no case as found by the trial judge had been pleaded by Ms Olcorn or put to Mr Toma in cross-examination.
In relation to the second proposed ground of appeal the applicant submitted that the inference drawn by the judge based upon Mr Toma’s solicitor’s letter ought not to have been drawn in the circumstances. Reference was made to s 140 of the Evidence Act 2008 and to the principles set out by Dixon J in Briginshaw.[27] It was submitted that there were two possible explanations for the letter. One was that found by the trial judge, namely, that it was indicative of knowledge that a mistake had been made by Ms Olcorn. The applicant submitted that this inference was unconvincing as the reason for sending such a letter if Mr Toma did indeed know of the mistake was ‘far from obvious’. The alternative explanation, which it was submitted was at least as likely, was that the magnitude of the adjustment required was such that raising it in the letter constituted an ‘obvious and prudent step to take in preparation for settlement’. It was submitted that as the alternative inference was at least as likely as the one accepted by the judge, Ms Olcorn had failed to prove her case.
[27](1938) 60 CLR 336, 361–2.
In relation to proposed ground 3 the written case relied on the matters set out in proposed grounds 1 and 2.
In oral submissions senior counsel for Mr Toma began by submitting (in the passage quoted earlier) that the three proposed grounds of appeal really concerned a single finding of the trial judge, being that Mr Toma was aware of Ms Olcorn’s mistake. Senior counsel submitted that the judge’s critical erroneous finding was in the passage from the judgment which we quoted in full earlier. Senior counsel submitted that the judge had correctly articulated the relevant principle, drawn from Taylor v Johnson, in the judgment and that the application of that principle required both knowledge on his client’s part of the mistake made by Ms Olcorn and a deliberate course of conduct to ensure that Ms Olcorn did not become aware of her mistake. He agreed that circumstances might be such, as they had been in Taylor v Johnson, that the commercial unreality of the documented arrangement powerfully supports a conclusion that a mistake has been made and that the unmistaken party was aware of it.
Senior counsel for the applicant focused particularly upon the trial judge’s characterisation of Mr Toma’s response to the proposition that his solicitor had moved early because he knew there would be a dispute (where Mr Toma said ‘not necessarily, no’) as a ‘relatively weak denial’. It was submitted that when the entire relevant passage was read the denial was not ‘relatively weak’ but was emphatic. Immediately after the passage quoted by the trial judge Mr Toma had said that he was ‘shocked when he found out that it was an issue’.
Senior counsel also devoted considerable attention to Mr Toma’s solicitor’s letter, contending that the trial judge had been wrong to interpret it in the way in which he did. It was submitted that the letter was unremarkable in dealing with the adjustment, and had, before even addressing that issue, dealt with an entirely separate matter concerning use of the property.
Senior counsel submitted that the trial judge’s conclusion that Mr Toma’s evidence about the letter was ‘unconvincing’ was unwarranted in the circumstances and that if the principles in Briginshaw and s 140 of the Evidence Act had been properly applied a finding that Mr Toma knew of Ms Olcorn’s mistake and opportunistically sought to take advantage of it could not have been made.
The respondent in her written case contended that the findings made by the trial judge were neither ‘glaringly improbable’ nor ‘wrong’. The respondent referred to a number of factors supporting the conclusion that the trial judge had reached as to Mr Toma’s knowledge of the mistake.
The first factor was the very considerable reduction in the purchase price, well over 30 per cent, which would occur were the adjustment to be made.
The second was the fact that Mr Toma had sought information about the tower lease on a number of occasions including immediately prior to executing the contract.
The third was Mr Toma’s solicitor’s letter the day after the contract was signed.
Finally, the respondent relied upon what was said to be Mr Toma’s weak denial of the suggestion that he knew there would be a dispute and that that was why his solicitor wrote the letter, and the judge’s conclusion that his evidence about the letter was unconvincing. The respondent submitted that the trial judge was in the best position to reach these conclusions.
The respondent submitted that a combination of all of these factors could be relied upon in reaching the relevant conclusion.
The respondent relied upon the fact that Mr Toma had offered $870,000 for the property before he had seen the contract of sale or the section 32 statement and at a time when he had no knowledge of the duration of the lease or the amount of the rent. It was submitted on behalf of the respondent that the reduction of over 30 per cent in the cash required at settlement was in itself enough to put Mr Toma on notice that Ms Olcorn was labouring under a mistake.
In relation to the trial judge’s rejection of Ms Olcorn’s evidence that express reference was made to there being no adjustment, it was submitted that it was not necessary for the trial judge to find that those statements had been made, given the other matters which revealed the fact that Ms Olcorn was labouring under a mistake, and that Mr Toma knew it.
The respondent disputed the assertion that the case was not adequately pleaded or put to Mr Toma.
In relation to proposed ground 2, it was submitted by the respondent in her written case that the inference the judge drew in relation to the solicitor’s letter was open and that the judge had applied the principles in Briginshaw. In this context the respondent again relied upon what was said to be Mr Toma’s weak and unconvincing evidence concerning the letter. It was submitted that the inference was clearly open that the letter was written because Mr Toma ‘knew there would be a fight on the subject’. It was submitted on behalf of the respondent that there was no credible reason for Mr Toma’s solicitor to send the letter because of a concern to ensure proper arrangements were made concerning timely settlement, in circumstances where the settlement was four months away.
The respondent did not address separate submissions to proposed ground 3.
Counsel for Ms Olcorn in oral submissions submitted that the trial judge’s analysis of Mr Toma’s evidence was one that was clearly open to him. It was submitted that it was open to the trial judge to conclude that Mr Toma’s denials were ‘relatively weak’. It was submitted that the expression ‘not necessarily’ is equivocal. Counsel also addressed the passage in Mr Toma’s evidence which was relied upon by counsel for the applicant in the course of which Mr Toma had said that one of the reasons the letter was written was because the adjustment was ‘a large amount’ and he was concerned they were on the ‘right pages’. It was submitted that this evidence revealed, at the least, an acknowledged awareness of the possibility of different ‘pages’, and that this supported the judge’s conclusion that Mr Toma’s assertion that he was ‘shocked’ that there was a dispute about the matter was unconvincing.
In relation to the letter written by the solicitor, it was submitted that the letter could not be seen as a normal part of steps taken in a conveyance, particularly in the context of its timing and the size of the adjustment. Counsel for Ms Olcorn submitted that no evidence was given which provided a satisfactory explanation for why the issue of this very large adjustment was raised immediately after contracts had been exchanged, rather than before.
Counsel for Ms Olcorn relied upon the offer of $870,000 which Mr Toma had made before he had any knowledge of the terms of the lease. It was submitted that that indicated his assessment of the value of the property, excluding consideration to any significant extent of the lease, and made it obvious that the vendor must have been mistaken if a reduction in the amount payable of $330,000 were to be required.
In reply senior counsel for Mr Toma submitted that the offer of $870,000 was made when he knew there was a lease and he would naturally have expected some commercial return. In relation to the queries which he raised concerning future payments under the lease it was submitted that if Mr Toma was deliberately setting out to prevent Ms Olcorn from finding out her mistake about the adjustment he would not have been raising any queries about the lease. Finally, senior counsel submitted that it could not be concluded that the solicitor’s letter was significant without evidence of what ordinary conveyancing practice was.
Analysis
In the passage upon which senior counsel for Mr Toma relied as containing the trial judge’s error (which we have quoted in full earlier), the judge explained that he had concluded that Mr Toma did know of Ms Olcorn’s mistake and that he opportunistically sought to take advantage of it for the following reasons:
·The lease was a matter ‘weighing’ on Mr Toma’s mind.
·The solicitor’s letter ‘first thing the following morning’ after contracts had been exchanged was written because Mr Toma apprehended a dispute.
·Mr Toma’s explanation for the solicitor’s letter was unconvincing.
In our view each of those matters was properly to be taken into account by the trial judge, but they also must be assessed in the factual context which the trial judge was addressing and which he had earlier set out in detail. That factual context included the following significant features:
·The adjustment is very large. It has the effect of reducing the agreed purchase price by approximately 35 per cent.
·Mr Toma offered $870,000 for the property before he knew anything about the commercial arrangements under the lease. He did not know its term, and he did not know what rent (if any) had been paid or was payable.
·The property had been advertised with a price guide of $870,000–$950,000. No reference was made in the advertisement, or in any subsequent negotiations, to an adjustment which would mean a very significant reduction in the amount payable by a purchaser.
·The lease was unusual. It concerned a very small part of the total property (approximately 100 square metres of a property of approximately 20,000 square metres). It provided for a term of 99 years with the entire rental paid in advance. In commercial terms, it was indistinguishable from a sale of the small plot of land within the much larger rural property. This is not a case where parties would have assumed that an ‘ordinary’ adjustment for rent would apply.
We have considered carefully the submissions made by senior counsel for Mr Toma concerning what the judge characterised as his ‘weak’ denial and ‘unconvincing’ evidence about the solicitor’s letter. Whilst at points Mr Toma was emphatic in his denial that his solicitor’s letter was written in anticipation of a dispute (he was ‘shocked’), we consider that counsel for Ms Olcorn is correct when he characterises other aspects of his evidence as equivocal (‘not necessarily’) and as inconsistent with his professed shock (‘the right pages’). It was open to the judge to regard his evidence on this question as unconvincing.
It is not contentious that Ms Olcorn had made a serious mistake. In our opinion, that mistake, if perhaps not quite as stark as the mistake in Taylor v Johnson, was of a similar character. In the context, a conclusion that the solicitor’s letter written so soon after contracts were exchanged revealed an awareness of that mistake, kept secret until after the exchange, and likely to result in a dispute as soon as the mistake was exposed, was certainly open to the trial judge. That was particularly so in the absence of a compelling alternative explanation, and Mr Toma’s explanation was not compelling. In our view, it was, as the trial judge found, weak and unconvincing.
In relation to the assessment of Mr Toma’s evidence the trial judge had advantages over this Court, which it is necessary for us to recognise. In any event, we do not consider his conclusions as to Mr Toma’s evidence to be wrong.
We do not accept the submission that Mr Toma was not given a proper opportunity to address the matters upon which the trial judge relied, or that the judge wrongly decided the case against Mr Toma on a basis that had not been adequately pleaded.
In relation to Mr Toma’s opportunity to respond to the matters upon which the trial judge relied, it is, in our view, clear from the passages to which we have referred that Mr Toma had ample opportunity to respond on the issues the judge determined to be significant, and he did in fact do so. In certain critical respects the judge found his response to be weak and unconvincing.
In relation to the pleading, the amended defence and counterclaim asserted a conversation at which the parties were present when Ms Collins was alleged to have said ‘that the rent payable under the lease had been prepaid and that none of the prepaid rent was to be paid to any purchaser of the Land’. It also pleaded a discussion between Mr Toma and Ms Olcorn in which Ms Olcorn was alleged to have said that ‘if they bought the property they would get the house and land only and they would receive no payments from the lease of the telecommunications tower’. It relied upon these discussions in support of claims that there was an oral term of the contract of sale, that there was an estoppel, that there had been a common mistake, and, alternatively, that there had been a unilateral mistake by Ms Olcorn of which Mr Toma was aware by reason of the discussions alleged. It is true that the pleaded claim did not specifically refer to the solicitor’s letter. However, as is clear from the course of the evidence as we have described it, the case was conducted on the basis that Mr Toma’s knowledge could be inferred from all of the relevant circumstances, including the solicitor’s letter. Mr Toma was therefore not prejudiced by the fact that the judge upheld the case on that basis.
Conclusion
We consider that the proposed grounds of appeal were arguable but, for the reasons given, the appeal will be dismissed.
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