Update Pty Ltd (ACN 106 132 245) v Commissioner of State Revenue

[2014] VSCA 218

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2014 0056

UPDATE PTY LTD (ACN 106 132 245)	Applicant
v
COMMISSIONER OF STATE REVENUE	Respondent

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JUDGES:	NEAVE and HANSEN JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	7 August 2014
DATE OF JUDGMENT:	10 September 2014
MEDIUM NEUTRAL CITATION:	[2014] VSCA 218
JUDGMENT APPEALED FROM:	Update Pty Ltd v Commissioner of State Revenue [2014] VSC 187

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CONTRACT – intention to create legal relations – examination of objective factors – Masters v Cameron applied – preferable to avoid the use of the word ‘presumption’ when determining whether parties intended to enter legal relations – knowledge of established/usual practice may raise an inference as to intention to contract – exchange of written agreements.

ADMINISTRATIVE LAW – Application for leave to appeal decision of Supreme Court affirming the decision of the Victorian Civil and Administrative Tribunal – Whether VCAT decision vitiated by error of law – application for leave refused.

TAX - Taxation Administration Act 1997 (Vic) s 110 – burden of proof on applicant/appellant in relation to facts necessary to make out the appeal.
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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr M R Pearce SC Mr A J de Wijn	Mr M Canzoner MSL Lawyers
For the Respondent	Mr C P Young	Mr R Trajceski State Revenue Office

NEAVE JA
HANSEN JA:

Introduction

1. The applicant, Update Pty Ltd (‘Update’), seeks leave to appeal[1] from orders made by Sloss J, granting Update leave to appeal, but dismissing its appeal from a decision and orders made by the Victorian Civil and Administrative Tribunal (‘VCAT’) on 17 September 2013. Under s 148 of the Victorian Civil and Administrative Tribunal Act1998 (Vic) (‘VCAT Act’) an appeal to this Court lies only on a question of law.

   [1]Leave is required under s 17A(3A)(a) of the Supreme Court Act 1986 (Vic).

1. For leave to be granted the applicant must ‘at least identify a question of law (as distinct from a question of fact) and a question of law which is important’[2] to the success or failure of the appeal, and there must be a real or significant argument that an error has occurred.  In addition, the public interest in, or importance of, the question of law to be resolved may be taken into account in deciding whether leave should be granted.[3]

   [2]Secretary to the Department of Premier and Cabinet v Hulls (1999) 3 VR 331, 335 [9].

   [3]See generally Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331, 335-337 [8]-[16]; Myers v Medical Practitioners Board (2007) 18 VR 48, 55-56 [28].

A brief procedural history

1. The issue for resolution in the VCAT decision from which the applicant seeks leave to appeal (described below as ‘the second VCAT decision’) was, in essence, whether a binding contract for the sale of land had been entered into between the vendors and Update on 1 December 2008. If the contract had been made after that date, Part 9B of the Planning and Environment Act 1987 (Vic) (‘the Act’) required Update to pay a Growth Areas Infrastructure Contribution (‘GAIC’) of more than $800,000, plus interest, to the respondent, the Commissioner for State Revenue (‘the Commissioner’). If the parties had made the contract on or before 1 December 2008 the sale was ‘an excluded event’ falling within s 201RB of the Act and no GAIC was payable.[4] 

   [4]For a more detailed explanation of the operation of these provisions see Update Pty Ltd v Commissioner of State Revenue [2014] VSC 187 (‘Reasons’), [2]–[5].

1. The circumstances in which this factual question arose are described in more detail at paragraph 10 below.  In brief, Update and the vendors had been negotiating for the purchase of the property for some months and the vendors had received a draft written contract before the events which occurred on 1 December 2008.  In support of its argument that the sale was an excluded event, Update relied on the fact that the vendors’ agent had communicated the vendors’ acceptance of the offer of $1.4 million to one of Update’s directors on 1 December 2008.  The Commissioner argued that the contract was not made until 9 December 2008, when the written contract was signed by both vendor and purchaser and the written parts of the contract were exchanged. 

1. The VCAT decision from which Update appealed to Sloss J was not the first time that VCAT had considered whether the applicant was liable to pay the GAIC. In earlier proceedings before VCAT, (described below as ‘the first VCAT decision’) Senior Member RW Davis held, among other things, that the sale was not an ‘excluded event’ under s 201RB(d)(iii) of the Act as the parties had not entered into a contract which was legally enforceable before 2 December 2008 (the date on which the GAIC provisions would have effect). The contract for sale was not legally enforceable because it was not in writing, as is required for contracts relating to the sale of land, under s 126 of the Instruments Act1958 (Vic) (‘Instruments Act’). In addition, Senior Member Davis found the parties did not intend the contract to take effect until it had been signed by both the vendors and the purchaser.

1. Update successfully appealed to Davies J from the first VCAT decision.[5] Her Honour held, among other things, that the Tribunal had erred in law by relying on the Minister’s Second Reading Speech in support of the conclusion that s 201RB(d)(iii) required the parties to have entered into a contract which was legally enforceable because it satisfied the requirements of s 126 of the Instruments Act.  This was a question which should have been determined by the construction of the provision.  Davies J made it clear that she did not consider that the provision required the contract to be legally enforceable.

   [5]Update Pty Ltd v Commissioner of State Revenue [2013] VSC 122.

1. As a consequence the Tribunal had not considered the factual question of whether the parties had intended to be bound immediately upon acceptance by the vendors or whether their intention was not to conclude their bargain unless and until they executed a formal contract.  The latter question fell to be determined by reference to the common law principles set out in Masters v Cameron.[6]  As a consequence her Honour remitted the matter to the Tribunal for determination of the questions of law on which leave to appeal had been sought.  These questions were summarised by Sloss J at paragraph [19] of her Honour’s reasons dismissing Update’s second appeal from VCAT, and from which Update seeks leave to appeal in this proceeding.  They were:

(a) whether there was a ‘contract relating to’ the transfer of land for the purposes of s 201RB(d)(iii) of the Planning and Environment Act 1987 (Vic) (‘the Act’) where the parties orally agreed on 1 December 2008 to sell and purchase land on terms set out in writing that was before both parties.

(b) whether it is necessary, where a party seeks to satisfy the requirement in s 201RB(d)(iii) of the Act that a ‘contract relating to the transaction was entered into before the relevant day’ by relying on a contract for the sale of land that the requirements of s 126 of the Instruments Act and s 53 of the Property Law Act have been satisfied before the relevant day.

Her Honour also made an order referring the matter ‘to the Registrar of the Tribunal to be allocated to a member, which may be the same member who made the original order, for determination in accordance with the law.’[7]

[6](1954) 91 CLR 353.

[7]Update v Commisioner of State Revenue [2014] VSC 187 [19] (citations omitted).

1. It appears that, in effect, Davies J had decided the second question in favour of Update.

1. Following remittal of the matter to the Tribunal, orders were made by consent that:

2.The evidence in the proceeding be the evidence received by the Tribunal in Update Pty Ltd v Commissioner of State Revenue at the Victorian Civil and Administrative Tribunal on Wednesday 25 July 2012, No T1/2012.

3.There be no further evidence adduced by either party without the leave of the Tribunal.

4.Any application for leave to adduce further evidence be made on seven days’ notice to the Tribunal and to the other party.[8]

[8]Ibid [20], reproducing the Reasons of the Senior Member.

1. The matter was remitted for rehearing to Senior Member RW Davis, who reached the same conclusion as had been reached in the first hearing.  In doing so Senior Member Davis referred to the facts set out in the first decision and ‘also reproduced from the applicant’s summary further factual matters that the applicant said were established by evidence at the first hearing’,[9] as follows:

   [9]Ibid [22].

Mr and Mrs Borthwick, the vendors, were the owners of the land at all relevant times prior to 17 August 2009.  By at least June 2008 they had decided to sell the land.

Mr Cowper was a licensed real estate agent and was the vendors’ agent for the sale of the property. In early June 2008, Mr Cowper met with Mr Mondous and Mr Canzoneri (Update’s directors), showed them the property and gave them a draft written contract. The vendors were asking for $1.4 million for the property with a settlement period of 6 months. That purchase price and settlement period were typed into the draft contract.

Around 11 June 2008 Mr Cowper and Mr Canzoneri met and Mr Canzoneri offered to purchase the property for $1.2 million with settlement in 12 months. In making that offer, Mr Canzoneri crossed out the typewritten price of $1.4 million in the draft contract and replaced it with $1.2 million in handwriting and changed the deposit and balance figures appropriately. He replaced the 6 month settlement period with 12 months in the same way and then gave the amended draft contact to Mr Cowper. That offer was rejected by the vendors.

In late November 2008 the purchasers offered the vendors (through Mr Cowper) their original asking price, $1.4 million with a 6 month settlement period. The vendors were away at the time of the second offer but they had instructed Mr Cowper to accept $1.4 million for the property if it was achieved. He had authority from the vendors to orally accept such an offer. After the offer was made Mr Cowper contacted both the vendors and their solicitor and advised them of the offer, which the vendors accepted. On 1 December 2008, Mr Cowper told Mr Mondous by telephone that the vendors accepted the offer and made arrangements for the purchasers to sign the amended written contact the following day at 9.00am. Mr Cowper then crossed out the handwritten price of $1.2 million and replaced it with $1.4 million (he also changed the deposit and balance figures appropriately and changed the settlement period back to 6 months) before the purchasers signed the written contact.

The purchasers signed the contract and gave Mr Cowper a cheque for $10,000 on 2 December 2008. The date next to the item “Date of Sale” was originally handwritten as “11/06/2008”, that being the date of the first offer. Mr Cowper changed that to “2/12/2008” and added the handwritten words next to the deposit clause on the particulars of sale page when the purchasers signed the written contract. These words acknowledged that the purchasers had paid $10,000 of the deposit.

After the purchasers had signed, Mr Cowper took the written contract and left it at the vendors’ solicitors’ office because the vendors were still away. The vendors signed the document on 9 December 2008.

Against that background, the Tribunal found that “the objective evidence does not show that the vendor and purchaser [the applicant] intended that there be a concluded agreement between them on 1 December [2008]”21 and thus held that the applicant and the vendors had not entered into a “contract relating to” the transfer of land for the purposes of s 201RB(d)(iii) before 2 December 2008. Rather, the Tribunal held that the earliest a ‘concluded agreement would have been made was 2 December 2008 but more than likely it was not made until 9 December 2008’.[10]

[10]Ibid [22]–[23], reproducing the Reasons of the Senior Member.

1. In her reasons, Sloss J said that:

the applicant has identified three ‘questions of law’ upon which the appeal is brought, as follows:

QUESTIONS OF LAW

1.Did the Tribunal apply the wrong test when considering whether the vendors and purchaser of the relevant land had an intention to create contractual relations at the time of their agreement on 1 December 2008?

2.Were the Tribunal’s following findings of fact open to it on the evidence:

(a)that ‘[before 2 December 2008] there was no discussion about the payment of the deposit and when the deposit was to be paid’…

(b)that ‘when Mr Cowper and Mr Mondous did meet on 2 December 2008, there was clearly negotiations between them as to the payment of deposit’…

3.Did the evidence before the Tribunal, together with the Tribunal’s findings of fact (excluding findings that were not open to it), rationally allow only one conclusion which the Tribunal nonetheless failed to reach, being that the vendors and purchaser intended to create contractual relations at the time of their agreement on 1 December 2008?[11]

[11]Ibid [39].

1. In dismissing the appeal on a question of law, Sloss J held that the Tribunal had applied the correct test when considering whether the parties intended to create contractual relations on 1 December 2008.  She also held that the Tribunal’s findings of fact were open to it on the evidence and that the evidence before the Tribunal (which the parties had agreed would be the same evidence which was before the Tribunal in earlier proceedings), together with the findings of fact of the Tribunal, did not rationally allow only one conclusion, a conclusion which it had failed to reach.

Proposed grounds of appeal  

1. In this appeal the applicant proposes to rely on different grounds from those considered by Sloss J.  In the applicant’s first ground of appeal the applicant alleges that Sloss J erred ’in holding that there is a presumption under Victorian law that no binding contract for the sale of land exists until the parties exchange written contracts in the standard form published by the Real Estate Institute of Victoria.’[12]  That ground was clearly, if artificially, intended to dress up the factual finding made by the Tribunal as a question of law.

   [12]Update Pty Ltd, ‘Proposed Notice of Appeal’, submission in Update Pty Ltd v Commisioner of State Revenue, S APCI 2014 0056, undated, [1] (contained in Exhibit MSC3 to the Affidavit of Michael Salvatore Canzoneri sworn 29 May 2014).

1. The other two grounds are that:

   2.The learned primary judge should have held that the only conclusion open to the Tribunal on the evidence before it was that the Appellant made a binding contract to purchase the land on 1 December 2008.

   3. Alternatively to 2, the learned judge should have remitted the matter to the Tribunal for further consideration according to law.[13]

   [13]Ibid [2]–[3].

   Counsel’s submissions

1. In support of ground 1, counsel for the applicant contend that both VCAT and the judge below, erred in law in reaching the conclusion that the parties had not entered into a binding contract.  It is argued that the conclusion was incorrectly based on a presumption of law that the parties could not have intended to be contractually bound, because they did not exchange written contracts until after 1 December 2008. 

1. The applicant argues that although there are English and New South Wales authorities which may support the existence of that presumption, it has not been accepted in Victoria and some authorities cast doubt on it.[14]  Further, the applicant contends that the New South Wales case of Smith v Lush[15] did not rely on the existence of a presumption, but rather on ‘a normal practice’ and that in McDonald v Commissioner of Taxation Gyles J expressed reservations about relying on a presumption from conveyancing practice, in deciding the factual issue of whether the parties had made a contract.[16]  Finally the applicant relies on  a statement by Gaudon, McHugh, Hayne and Callinan JJ in Ermogenous v Greek Orthodox Community,[17] doubting the utility of applying presumptions to determine whether parties intended to be contractually bound.[18]  We note that this  case did not involve a contract for the sale of land but concerned the question of whether a clergyman and an association formed to promote Hellenic culture, which had arranged for him to perform religious duties, had an intention to enter into an employment contract.  

   [14]Reliance was placed on Encino Plaza Pty Ltd v Wilson International Pty Ltd (1988) V ConvR 54‑308 where Ormiston J doubted that usual conveyancing practice required the exchange of contracts before a binding contract was made, noted the use of sale notes and was critical of the reference to the presumption in Voumard on the Sale of Land in Victoria (4^th ed) on the basis that for many years in Victoria, the sale of land was often finalised by the execution of a ‘sale note’ and later a ‘contract note’ requiring the purchaser to later execute a formal contract (see especially 17-18); Seventh Shar Nominees Pty Ltd v HorticoPty Ltd [2000] VSC 155, [29] (Mandie J): ‘Without acceding to the proposition that there is any presumption involved, I do not think that it should be too readily concluded that parties intend to be bound in relation to transactions affecting title to real estate by the exchange either of correspondence or of both written and oral communications, at least when it is clear that they are both contemplating the execution and exchange of formal contracts.’

   [15](1952) 52 SR(NSW) 207, 212.

   [16](2001)109 FCR 207, [2]. See also the remarks of Stone J at [18]–[23], Beaumont ACJ agreeing.

   [17](2002) 209 CLR 95.

   [18]Ibid [26]–[27].

1. In the alternative, the applicant contends that any such presumption should be confined to situations where it has been alleged that a contract for the sale of land has been made and there is no written instrument in existence containing the detailed terms and conditions of sale at the time it was made.  This case is said to fall outside that category because there was a written contract in existence.  The decisions of the High Court in Allen v Carbone[19] and the New South Wales Court of Appeal in Lezabar Pty Ltd v Hogan[20] are said to support that alternative formulation. 

   [19](1975) 132 CLR 528, 533.

   [20](1989) 4 BPR 9498, 9501.

1. Update submits that there is sufficient doubt about the correctness of the decision to justify the grant of leave and that there would be a substantial injustice in allowing an erroneous decision to stand, because this would require Update to pay over a million dollars in tax.[21]  Update also contends that there is a public interest in resolving authoritatively whether a presumption arises concerning the effect of the exchange of contracts for the sale of land.

   [21]Note that this submission relied on the test in Niemann v Electronic Industries Ltd [1978] VR 431, though that case concerned an application for leave to appeal from an interlocutory order

1. In its written submissions in support of this application Update conceded that ground 1 raised a new issue in that it was not the ground relied upon under question of law number one, considered by Sloss J.  However it submitted that it should not be precluded from raising the issue on appeal because the question of the presumption could be determined by reference to the evidence before the Tribunal and the respondent would not be disadvantaged if that occurred.  Update submits that the failure to raise the ground below could not have affected the way the Commissioner ran the case before VCAT, and hence there would be no injustice in now allowing Update to argue the legal question of whether the presumption exists in Victorian law.

1. At the hearing of the application, the matter was put somewhat differently.  It was argued that proposed ground 1 was implicitly included in the first question considered by Sloss J.  

1. The respondent submits that leave to appeal should be refused, because the appeal does not raise a question of law, but simply  challenges the factual findings made by the Tribunal.  The Commissioner argues that neither the Tribunal nor the trial judge reached a conclusion by applying a presumption of law that a binding contract for the sale of land does not exist until exchange of written contracts.  

1. In reaching its conclusion, that the parties did not intend to contract on 1 December 2008,the Tribunal took account of the fact that they had  negotiated by reference to a written contract of sale in the Real Estate Institute of Victoria’s standard  form  and that it was ‘normal practice’ in Victoria for a sale of land to be effectuated by a written contract.  In reaching that conclusion the Tribunal was not bound by the rules of evidence[22] and was entitled to draw on its own experience.  Moreover the finding of fact about normal practice was not challenged before the Tribunal or the trial judge.

   [22]See VCAT Act s 98(1)(b) and (c), which allows VCAT to inform itself on any matter as it sees fit.

1. Neither the Tribunal nor Sloss J treated the ‘presumption’ as conclusive or as preventing Update from showing that the parties intended to be contractually bound on 1 December 2008. Sloss J simply treated the proposition that the normal practice in Victoria is that contracts for sale of land are signed and exchanged, as a matter to be taken into account in deciding what inference should be drawn from the whole of the facts. It was for the applicant to rebut the inference arising from ‘normal practice’ in Victoria, because s 110 of the Taxation Administration Act1997 (Vic) placed the burden of proof on the applicant to show that it was not liable to pay GAIC.

1. The respondent also submits that Update should not be permitted to rely on the question of law now identified in the first ground of appeal, because before the second hearing the parties had agreed that the evidence given at a previous hearing, would provide the basis for the decision to  be made after the second hearing. 

1. The respondent contends that, if Update had given notice before the second hearing that it proposed to challenge the finding made in the first hearing that the ‘normal practice’ in Victoria was for there to be an exchange of signed written contracts, it would have been open to the Commissioner to lead evidence to that effect. 

1. Finally the respondent argues that because the Tribunal simply drew an inference from the failure of the parties to finalise a written contract on 1 December 2008, the applicant cannot succeed in an appeal on a question of law unless it shows that the Tribunal could not have reached the conclusion that it did, on all the facts before it.

Conclusion

1. It is important to bear in mind that the questions of law which are relevant to this application are those in respect of which Sloss J gave leave.  Proposed ground 1 raises an entirely different question from the first question considered by Sloss J.  The Tribunal’s reasons make it clear that the question it had to resolve  was whether, on the facts, the parties had concluded their contract on 1 December 2008.  Before the Tribunal, Update argued that the offer made by Update’s agent was made and accepted on the basis of a complete written document, which contained all the necessary terms for a binding contract, and which therefore fell within the first category of cases discussed in Masters v Cameron.[23]

   [23](1954) 91 CLR 353.

1. By contrast, the Commissioner argued that when the conduct of the parties was considered objectively they did not intend to be bound until the contract was signed by both parties.

1. Sloss J characterised the first question for resolution as follows:

   The applicant’s essential complaint is that the Tribunal took into account subjective evidence when reaching a conclusion about an objective matter, being the intention to create legal relations. In its grounds in support, the applicant contended that the Tribunal applied the wrong test by “enquiring into, and taking into account the evidence of, the uncommunicated subjective motives and intentions of the parties”…[24]

   [24]ReasonsUpdate Pty Ltd v Comissioner of State Revenue[2014] VSC 187 [43].

2. Her Honour went on to set out the five items of evidence on which the applicant relied in support of that contention.

1. Further, in our view there is no real or significant argument that VCAT approached the resolution of that factual question by erroneously applying a presumption that in Victoria contracts for the sale of land are not made until a contract is signed and its counterparts exchanged.  It is clear that the Tribunal treated the question of whether the parties had made a contract on 1 December 2008as a factual issue, to be determined by the objective circumstances of the case and any inferences which could be drawn from them.

1. In considering this question, the Senior Member said:

In this particular instance, in my view, the objective evidence does not show that the vendor and purchaser intended that there be a concluded agreement between them on 1 December.  If that was their intention, one would have thought that either Mr Cowper or Mr Mondous or both would have agreed that they had a final agreement and there would be no need to have any further discussions in relation to any further terms such as the payment of deposit.

Mr De Wijn submitted that, as a result of the conversation on 1 December 2012, and the documents and negotiations that had gone on before and commencing in June of that year, the parties intended to create legal relations.  He not only relied on the passage from the Ermogenous case previously quoted but also on the well known case of Masters v Cameron (1954) 91 CLR 353 at 360 …

43       There are a number of factual matters which suggest to me that objectively the parties did not intend to create legal relations on 1 December.  The parties were negotiating on the basis of a written document (REIV contract) that provided for the signing and counter-signing which was well established contractual practice relating to land.  Given the fact that Mr Cowper was an experienced estate agent and Mr Mondous was a sophisticated business man who had purchased land on many occasions objectively, in my view, both would have expected that for there to be legal relations, a contract needed to be signed.  That is not to say of course that had they wished they could have created legal relations orally but there is no or no sufficient objective evidence to suggest they did.  Again, I refer to Mr Cowper’s evidence where he said signatures count.  Further, it is clear that Mr Mondous wanted the contract to be enforceable.  He said his practice was to take the contracts to his solicitor and to have the contract signed.  That being the case, he did not give any reason why, in this particular instance, he would have wanted to adopt a different practice.

Mr De Wijn suggested that the parties had agreed to all legal essential terms in the REIV contract and had not intended to continue negotiating the terms.  In my view, the evidence does not support this submission.  There is no suggestion in the conversation of 1 December 2008 that there would be no more negotiation between the parties.  When Mr Cowper and Mr Mondous did meet on 2 December 2008, there was clearly negotiations between them as to the payment of deposit.  It is fanciful to suggest, as Mr De Wijn did, that those negotiations were a variation of the 1 December agreement or a new contract.  Those negotiations were part of the whole negotiation that had taken place.  It was not completed until 2 December and possibly not completed until 9 December when the matters that had been written in about the deposit were approved by the vendor signing the contract.

In my view, this is not what was referred to as ‘a fourth class of case additional to the three mentioned in Masters v Cameron’ by McLelland J in Baulkham Hills Hospital v GR Securities (1996) 40 NSWLR 622 at 628 where his Honour referred to Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317 namely:

… one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.

In this proceeding, I am of the view, objectively speaking, that neither the purchaser nor the vendor through his agent, intended to be bound until the contract was signed by at least the purchaser but in all probability by the vendor and purchaser…

The situation in this particular instance is very similar to that of McDonald’s case.  I agree with the comments made there by the Full Court of the Federal Court (per Stone J at paragraph [21] previously quoted).  That is, that because the practice of exchange of contract is so entrenched in New South Wales (also Victoria) that a party contending that an intention to proceed other than in accordance with the established procedure needs to act on clear evidence to support that contention.  In this particular instance, there is not that clear evidence.  In my view, the evidence points the other way.

As previously stated, Mr De Wijn attempted to distinguish McDonald’s case by the fact that the Tribunal did not believe the evidence of Mr McDonald.  In my view, the same can be said in relation to the evidence of Mr Mondous and Mr Cowper.  Mr Mondous’ evidence was self-serving and he struck me as a person who would be willing to say anything to try and advance his position.  I agree with the submission of Mr Young at paragraphs [13] to [22] of his submissions where he stated:

Mr Mondous lacked creditability.

13.1.1He did not give his name properly when taking the oath.

13.1.2He gave the frankly absurd answer that he treated the purchase of some blocks of land as no different to buying a jumper.

13.1.3He gave answers in cross-examination that accorded with the facts and with commercial sense, only to change those answers in re-examination to give self-serving evidence.[25]

[25]Update Pty Ltd v Commissioner of State Revenue (Review and Regulation) (Correction) [2013] VCAT 1627, [41]–[48].

1. The Senior Member accepted that Victorian  general conveyancing practice is similar to that in NSW, but also considered other matters which cast light on the intentions of the parties,  as revealed by objective circumstances.  The Tribunal drew inferences from the conduct of the parties and did not treat itself as bound to apply a rebuttable legal presumption.  Indeed the Senior Member specifically acknowledged that a contract could have been made orally.

1. Sloss J took a similar approach.  True it is that she used the word ‘presumption’, at certain points in her judgment. For example she said that:

Having identified the absence of any express statement that the events on 1 December entailed a final agreement, the Tribunal then proceeded to set out a number of factual matters that suggested that the parties did not intend to create legal relations on 1 December 2008. The first was that the parties were conducting their negotiations on the basis of a written standard form contract prepared by the Real Estate Institute of Victoria (‘REIV’) that provided for the signing and counter-signing, which was well-established contractual practice relating to land.

This ‘well-established contractual practice’ is a reference to a ‘presumption’ or ‘inference’ that the Courts have often referred to as arising in cases involving the sale of land, particularly in New South Wales and Victoria, where land is ordinarily sold by signing and exchanging contracts in the form approved by the relevant Real Estate Institute and Law Society. The presumption is to the effect that, even though the parties may have agreed in writing that the subject real estate is sold for a specified price, no binding contract exists until ‘contracts’ are exchanged. A leading example of a case involving the presumption is the decision of the High Court in Allen v Carbone, where the Court found that the parties contemplated that they would not be bound until a formal contract was signed by them and exchanged by their solicitors.[26]

[26]ReasonsUpdate Pty Ltd v Comissioner of State Revenue[2014] VSC 187 [50]–[51] (citations omitted).

1. However when Sloss J’s reasons for judgment are considered as a whole it is clear that her reference to a presumption is simply another way of describing a ‘normal’ or usual conveyancing practice of which the parties were aware.  Their knowledge of that practice, was correctly said to raise an inference that they intended to contract only when they had exchanged signed counterparts of the contract.[27] 

   [27]Ibid [60]–[65].

1. It may be preferable to avoid use of the word ‘presumption’ when determining whether parties intended to enter legal relations.  The language of presumption has the potential to distract a court from paying sufficient attention to other objective factors which must be taken into account in deciding whether parties have intended to make a binding contract for the sale and purchase of land.  But in this case there is no doubt that her Honour considered all the objective factors which led her to conclude that no contract was made on 1 December 2008.  She did not apply a legally binding presumption, but spoke of ‘normal practice’ as some indicator of when the parties intended to be contractually bound. 

1. Further, the onus lay on Update to demonstrate that the contract was made on 1 December 2008.  In such circumstances, there was no error in the judge’s reference to the need for Update to lead evidence showing they had an intention to be bound by that date.

1. Further, the case was conducted on the basis of the evidence at the first hearing when the present point was not identified as one for determination.  In other words, issues of fact, such as evidence on conveyancing practice, were not pursued.  It is not appropriate for it to now be raised at a very late stage, namely on appeal from a decision in the Trial Division following the second hearing before VCAT.

1. Furthermore the case is not an appropriate vehicle for consideration of the general question of whether in Victoria there is a ‘presumption’ that the vendor and purchaser of land only intend to create a contract when written contracts are signed and exchanged.  As we have already remarked, the question before the Tribunal and Sloss J related to the inference to be raised by the parties’ knowledge of conveyancing practice, as opposed to the broader question which the applicant now seeks to raise.

1. In effect the second proposed ground of appeal argues that her Honour should have found that it was not open to the Tribunal to reach the conclusion it did.  The evidence relating to the parties’ objective intentions is discussed at length in her Honour’s judgment and there is no point in recapitulating it.  This ground of appeal is hopeless.  The third ground adds nothing to it.

1. Leave to appeal should be refused.

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