Update Pty Ltd v Commissioner of State Revenue

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

TAXATION LIST

No. 2013 of 5339

UPDATE PTY LTD (ACN 106 132 245)	Plaintiff
v
COMMISSIONER OF STATE REVENUE	Defendant

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATES OF HEARING:	11 and 12 February 2014
DATE OF JUDGMENT:	5 May 2014
CASE MAY BE CITED AS:	Update Pty Ltd v Commissioner of State Revenue
MEDIUM NEUTRAL CITATION:	[2014] VSC 187

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TAXATION - Growth Areas Infrastructure Contribution (“GAIC”) imposed under Part 9B of the Planning & Environment Act 1987 – GAIC is imposed in respect of the first “GAIC event” to occur in relation to the land – “GAIC event” included a dutiable transaction relating to land in the GAIC area - Land was transferred to the purchaser under a dutiable transaction – Whether the transfer of the land gave rise to a GAIC event or was an “excluded event” – Whether the parties intended to create legal relations before the relevant day – Whether communication of the vendors’ acceptance of the applicant’s offer constituted “a contract relating to that dutiable transaction” entered into before the relevant day.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A J de Wijn	MSL Lawyers
For the Defendant	Mr C P Young	Solicitor for the Commissioner of State Revenue

HER HONOUR:

Introduction

This is an application brought by Update Pty Ltd (“the applicant”) for leave to appeal, and if leave be granted, to appeal, from a decision of the Victorian Civil & Administrative Tribunal (“the Tribunal”) made on 17 September 2013. The application is made under s 148 of the Victorian Civil & Administrative Tribunal Act 1998 (Vic) (“VCAT Act”).

Liability to pay a “Growth Areas Infrastructure Contribution”

The present case concerns the applicant’s liability to pay a Growth Areas Infrastructure Contribution (“GAIC”) that is triggered under the Planning & Environment Act 1987 (Vic) (“the P&E Act”) when a “GAIC event” occurs.[1] The GAIC is a flat rate contribution made towards the provision of State infrastructure in the growth areas and is levied on the occurrence of certain specified transactions in relation to land, such as transfers.
[1]See P & E Act ss 201SC and 201S(1).

Pursuant to a dutiable transaction undertaken in 2009, a parcel of 12.11 hectares of land situated at 971-1003 Plumpton Road, Plumpton was transferred to the applicant. The land is located within the ”urban growth boundary” and an “urban growth zone” for the purposes of the P&E Act. Subsequently, on 30 August 2010, some 8.53997 hectares, or 70.52%, of the land was brought within the Melton-Caroline Springs growth area (“the GAIC land”).[2]
[2]On 26 August 2010, the Minister for Planning made an order under the Act, gazetted on 30 August 2010, declaring certain land within the urban growth boundary within the municipal district of the Melton Shire Council to be added to the Melton-Caroline Springs Growth Area that had earlier been declared by an order gazetted in 2007.

The GAIC land is relevantly classified as “type B-1 land”[3] as it is in “investigation area 3”[4] and was brought within a growth area, an urban growth boundary and an urban growth zone on 30 August 2010.
[3]Under s 201RC of the P&E Act, “type B-1 land” is any land in investigation areas 1 to 6 that is brought within a growth area, an urban growth boundary and an urban growth zone on or after the first announcement day, being 2 December 2008.
[4]Defined in Part 2 of Schedule 1 of the P&E Act as the area of land in the municipal district of Melton Shire Council shown as the investigation area on the plan lodged in the Central Plan Office and numbered LEGL./09-313.

The transfer of the GAIC land on 16 June 2009 from the vendors, Mr and Mrs Borthwick (the “vendors”), to the applicant for a consideration of $1,400,000 was a “dutiable transaction relating to land”[5] and prima facie a GAIC event. The question arose, however, whether the GAIC event was relevantly an “excluded event” such that the transfer of the land was not subject to liability for GAIC. The answer to that question depended on whether “a contract relating to” that transfer of land was entered into before the relevant day, being 2 December 2008.
[5]See definition in s 201R of the P&E Act.

Procedural history
The Commissioner assessed the applicant for GAIC

On 1 December 2010, the defendant (“the Commissioner”) assessed the applicant for GAIC liability of $811,297.15 in respect of a GAIC event, being the dutiable transaction relating to the land.

By letter dated 27 January 2011, the applicant lodged a notice of objection disputing its liability for the whole of the GAIC assessed. The Commissioner considered the applicant’s objection and on 5 August 2011 determined that it should be disallowed in full.

The Tribunal’s first decision

At the applicant’s request, the Commissioner referred its determination to the Tribunal pursuant to s 106 of the Taxation Administration Act 1997 (Vic). The matter was heard by the Tribunal on 25 July 2012 before Senior Member RW Davis. The issue before the Tribunal was whether there was “an excluded event” within the meaning of s 201RB(d)(iii) of the P&E Act.

Before the Tribunal, the Commissioner contended that s 201RB(d)(iii) of the P&E Act applied only where there was a formal written contract for the sale of land entered into prior to 2 December 2008, whereas the applicant argued that the word “contract” should be given its ordinary meaning of “an agreement between two (or more) parties”.

At the hearing, oral evidence was given by Mr Souhail Mondous, a director of the applicant, and Mr Andrew Cowper, the selling agent engaged by the vendors. A witness statement of Mr Sebastian Canzoneri, also a director of the applicant, was tendered but he was not required to attend for cross-examination.

In essence, the applicant’s case was that a contract relating to the land was made on 1 December 2008, when Mr Cowper communicated to Mr Mondous the vendors’ acceptance of the applicant’s offer. The Commissioner’s case was that there was no contract until 9 December 2008, because, in accordance with the established practice in real estate dealings in Victoria, the parties did not intend to create legal relations until the written contract was signed by both the vendors and the purchaser and exchanged. The Tribunal preferred the Commissioner’s construction.

On 3 August 2012, the Tribunal affirmed the Commissioner’s assessment and the disallowance of the applicant’s objection (“the Tribunal’s first decision”).[6]
[6]Update Pty Ltd v Commissioner of State Revenue [2012] VCAT 1166 (3 August 2012).

On appeal, the Court set aside the Tribunal’s first decision

The applicant sought to appeal the Tribunal’s first decision to the Supreme Court of Victoria. The application for leave, and the appeal, were heard together by the Honourable Davies J on 25 February 2013. On 21 March 2013, her Honour granted the applicant leave to appeal and allowed the appeal.

On the appeal, Davies J found that there was “legal error” in the Tribunal’s reasoning, both in the approach to the construction of s 201RB(d)(iii) of the P&E Act and in the construction of that provision. Her Honour found that the Tribunal, by relying upon the extrinsic materials to conclude that s 201RB(d)(iii) refers to a “binding” contract in the sense of a formal written contract, had failed to engage in the process of construction.[7]
[7][2013] VSC 122, [18].

When dealing with the proper construction of s 201RB(d)(iii), her Honour observed that “it is undoubted that parties can make an oral contract for the sale of land that is binding on them in the sense that they have a concluded agreement, albeit that the contract is not enforceable because of non-compliance with s 126 of the Instruments Act 1958 (Vic) and s 53 of the Property Law Act 1958 (Vic)”.[8] She added that although such a contract “may be unenforceable for want of writing, there is still a contract and the contract is not void.”[9] In these circumstances, her Honour found that the Tribunal’s reasoning “wrongly elided the existence of a concluded contract with the enforceability of that contract”.[10]
[8]Ibid [20].
[9]Ibid.
[10]Ibid (emphasis added).

Further, her Honour noted that there is no textual basis in s 201RB(d)(iii) for imposing the requirement that the contract must be enforceable at the time it is entered into. Thus she said “[t]he application of the section is not made to depend on enforceability of the contract, but upon when the contract was made.”[11] Her Honour focussed attention on the question of when the contract was made because she found that “the discernible legislative intention [of Part 9B of the P&E Act] is that actions prior to the announcement of the levy on 2 December 2008 giving rise to a GAIC event in respect of land should not trigger a liability to the GAIC.”[12] And in the present case, she identified the relevant enquiry as being “when the contract was made”, which her Honour said “falls to be determined by common law principles.”[13]
[11]Ibid [21].
[12]Ibid.
[13]Ibid.

In relation to the question of contractual intention, her Honour observed that the question of the parties’ intention was a question of fact for the Tribunal’s determination.[14] She said that the issue for the Tribunal “was whether the written contract constituted the contract between the parties or whether the oral communications of offer and acceptance constituted the contract.”[15] Her Honour found that the Tribunal reached its conclusion that there was no binding contract until the formal contract was signed “without considering whether the parties intended to be bound by those terms immediately upon reaching agreement on 1 December”. Her Honour found that, in so doing, “[t]he Tribunal misapprehended the scope of the inquiry that it should have made and because it did so, it failed to have regard to the whole of the evidence that would materially bear upon the determination of the matter.”[16]
[14]Ibid [24].
[15]Ibid [25].
[16]Ibid.

Remittal to the Tribunal

Having found that the two questions of law raised by the applicant were pure questions of law that are meritorious, her Honour granted the applicant leave to appeal.

In remitting the matter to the Tribunal for determination, Davies J formulated the leave to appeal in terms of the following questions:

(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.[17]

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.”[18]

[17]See Orders made by Davies J on 21 March 2013 (S CI 2012 06542).

[18]Ibid.

On the remittal to the Tribunal, the Registrar allocated the matter to Senior Member RW Davis. On 19 June 2013 orders were made by consent, including orders 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.

Neither party sought leave to adduce any further evidence.

The Tribunal’s second decision

The Tribunal re-heard the matter on 9 September 2013. Before the Tribunal, the parties were agreed on the relevant issue for determination, namely whether a contract relating to the transfer of the land was entered into before 2 December 2008. If it was, then the transfer was not a GAIC event and GAIC was not payable.[19]
[19]Update Pty Ltd v Commissioner of State Revenue (Review and Regulation) (Correction) [2013] VCAT 1627 (17 September 2013), [7].

On the re-hearing, the Tribunal again made a decision confirming the Commissioner’s decision (“the Tribunal’s second decision”). In its reasons, the Tribunal referred to and incorporated the factual background set out in its first decision and also reproduced from the applicant’s summary further factual matters that the applicant said were established by the evidence adduced at the first hearing, as follows:

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.[20]

[20][2013] VCAT 1627, [5].

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”.[22]
[21]Ibid [41].
[22]Ibid [54].

Application for leave to appeal to the Court

The applicant seeks leave to appeal from the Tribunal’s order made on 17 September 2013, pursuant to r 4.06(2) of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 and s 148(1) of the VCAT Act. The parties were in agreement that both the question of leave and the hearing of the full appeal, if leave be granted, would require detailed examination of the evidence below. Accordingly, on 8 November 2013, Lansdowne AsJ made orders for the determination of the leave application and, if leave was granted, for the substantive appeal to be heard together by a judge.

In this application, the applicant submits that the Tribunal made a number of errors of law in reaching its conclusion about when a “contract relating to” the transfer of land was made and that it should have reached the opposite conclusion, namely that a contract relating to the transfer of the land was formed on 1 December 2008 because that was the only conclusion rationally open on the evidence.

Before turning to consider the Tribunal’s second decision in detail, and the errors of law contended for, I will outline the relevant legislative framework in a little more detail.

The GAIC legislation

GAIC is administered under Part 9B of the P&E Act and the Taxation Administration Act 1997 (Vic). Liability to pay GAIC arises on certain “trigger events” concerning land in a contribution area, one of which is the transfer of land pursuant to a dutiable transaction under the Duties Act 2000 (Vic) (“Duties Act”). In such cases, the provisions of Part 9B of the P&E Act are intended to work harmoniously with the provisions of the Duties Act.

GAIC is imposed in respect of the first “GAIC event” to occur in relation to the land.[23] In the case of a transfer of land made pursuant to a dutiable transaction under the Duties Act , s 201SE(c) of the P&E Act provides that the GAIC event occurs at the time at which the transaction would be taken to have occurred under Chapter 2 of the Duties Act.
[23]See P&E Act s 201S(1).

Section 201SD sets out the circumstances in which liability for GAIC may arise after a GAIC event has occurred. Relevantly, s 201SD(3) provides that in the case of ”type B-1 land”, liability to pay GAIC arises –

(a)If the GAIC event occurred on or after the first announcement day [2 December 2008] … and before the commencement day [1 July 2010] –
(i)on the commencement day [1 July 2010] if the land was brought within a growth area … before that day; or
(ii)on any later day within the 12 month period after the commencement day when the last of the following things has occurred –
(A)the land is brought within a growth area;
(B)the land is brought within an urban growth boundary;
(C)the land is brought within an Urban Growth Zone.

Accordingly, in the present case, any liability for the GAIC would have arisen on 30 August 2010, when the subject land was brought within the Melton-Caroline Springs Growth Area.

The applicant, as purchaser of the land and the ”transferee” in respect of that transaction under the Duties Act, is liable to pay any GAIC imposed in respect of that dutiable transaction: s 201SF(1).

The liability to pay GAIC depends on three factors:

(1) whether a ”GAIC event” occurred – this will involve consideration of whether the relevant event is an ”excluded event” as defined in s 201RB of the P&E Act;

(2) whether the land is in the contribution area at the time the GAIC event occurred; and

(3) the type of land for the purposes of Part 9B of the P&E Act.

In the present case, the only relevant dispute between the parties is whether a ”GAIC event” occurred. Sections 201RA and 201RB are relevant to the determination of that issue:

201RA

GAIC events

For the purposes of this Part, a GAIC event means any of the following –

…

(c)

the occurrence of a dutiable transaction relating to land in the contribution area -

but does not include an excluded event.

201RB

Excluded events

For the purposes of section 201RA, an excluded event means –

…

(d)

in the case of any land in the contribution area –

(iii)

a dutiable transaction relating to the land (other than a significant acquisition), if a contract relating to that transaction was entered into before the relevant day.

The expression “relevant day” is defined in s 201R as meaning, in the case of type B-1 land, the first announcement day, being 2 December 2008.[24]

[24]The statutory note to the definition of “first announcement day” in s 201R of the P&E Act states that “2 December 2008 was the day on which the Minister gave public notice of the proposal to implement a scheme for the imposition of contributions towards the provision of State infrastructure in respect of certain growth area land.”

The parties are agreed that as the land is type B-1 land, the transfer would be an ”excluded event”, and a GAIC liability would not arise, if a contract between the applicant and the vendors was entered into prior to 2 December 2008.

Onus of proof under the Taxation Administration Act

The GAIC is a taxation law for the purposes of the Taxation Administration Act 1997 (Vic). Accordingly, on a review or appeal, the taxpayer has the onus of proving the taxpayer’s case: s 110.

The VCAT Act

Section 148 of the VCAT Act provides as follows:

Appeals from the Tribunal

(1)

A party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceeding -

…

(b)

to the Trial Division of the Supreme Court in any other case -

if the Court of Appeal or the Trial Division, as the case requires, gives leave to appeal.

Leave to appeal is required under the VCAT Act

The leave requirement under s 148(1) of the VCAT Act, and the question of when leave to appeal may be granted, have been the subject of consideration by the Court of Appeal in leading cases such as Secretary to the Department of Premier and Cabinet v Hulls,[25] Myers v Medical Practitioners Board of Victoria[26] and ISPT Pty Ltd v Melbourne City Council.[27] The relevant principles were set out in detail in the Commissioner’s Outline of Submissions and the applicant did not take issue with them.[28]
[25][1999] 3 VR 331.
[26](2007) 18 VR 48.
[27](2008) 20 VR 447, [1].
[28]Transcript of Proceedings, 11/02/2014, 100.

It is clear that the granting of leave to appeal is a discretionary matter that will depend upon the justice of the case. For leave to be granted, the applicant must:

(a) identify a question (or questions) of law that is relevant to the granting of the relief sought on appeal; and

(b) demonstrate that there is a real and significant argument to be put that error exists on that question (or questions) of law. That is, the applicant must show that the Tribunal’s decision is attended by sufficient doubt to justify the granting of leave.

The public or general importance of the question of law may also be a relevant consideration.

Subject to leave being granted, s 148(1) permits a party to a proceeding to appeal on a question of law from an order of the Tribunal. The existence of a question of law is not merely a qualifying condition to the right of appeal, but also the subject matter of the appeal itself.[29] An appeal under s 148 involves an exercise of original jurisdiction, in the nature of judicial review, to determine whether the Tribunal made errors of law that vitiated its order.[30] Importantly, s 148 does not provide an opportunity for a re-hearing on the merits;[31] nor is there an appeal on questions of fact to this Court.[32]
[29]See Pizer, Pizer’s Annotated VCAT Act (JNL Nominees, 4^th ed, 2012) at [VCAT.148.220] citing Ingelese v Estate Agents Board (Unreported, Supreme Court of Victoria, Murphy J, 15 and 31 August 1989). See also Osland v Secretary to the Department of Justice (No. 2) (2010) 241 CLR 320, [21].
[30]Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (2001) 207 CLR 72, [15]; Osland v Secretary to the Department of Justice (No. 2) (2010) 241 CLR 320, [18], [71].
[31]Spilkin v Rosenberg [2011] VSCA 128, [42].
[32]Kacinskas v McMahon [2011] VSC 458, [11].

Questions of law raised in proposed notice of appeal

In its proposed notice of appeal,[33] the applicant has identified three “questions of law” upon which the appeal is brought, as follows:
[33]The applicant’s proposed notice of appeal is set out as Exhibit “SC2” to the affidavit of Sebastian Canzoneri sworn 14 October 2013.

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’ (at [40]);
(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’ (at [44]).

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?

The Commissioner opposed the grant of leave. There was no dispute that the questions posed in the applicant’s proposed notice of appeal were pure questions of law. Rather, the Commissioner’s starting point was that the case before the Tribunal was an entirely factual one, and the applicant is now dissatisfied as to the outcome of the Tribunal hearing because it failed on a finding of fact, or of mixed fact and law, on which it bore the onus of proof, namely to prove the parties’ intention to create legal relations. In those circumstances, there being no ability to appeal on other than a pure question of law, the Commissioner asserted that the applicant has had to “construct questions of law about the fact finding process”[34] as a means of effectively re-agitating those findings of fact.
[34]Transcript of Proceedings, 11/02/2014, 106.

As will be seen from the analysis of the applicant’s arguments set out below, there is something to be said for the Commissioner’s view that the applicant’s real complaint lies with the findings of fact, or mixed fact and law, that the Tribunal made, in circumstances where the applicant failed to adduce evidence on relevant matters of which it was on notice were in issue. Nevertheless, I am satisfied that each of the three questions, as framed above, raises a question of law that is attended by sufficient doubt to justify the granting of leave within s 148 of the VCAT Act. Accordingly, leave is granted.

First question of law: did the Tribunal apply the wrong test for ascertaining contractual intention

The first question of law posed raises the question of whether the Tribunal applied 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”.

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” and, in particular, by relying on:

(a)Mr Cowper’s evidence “where he said signatures count” (at [43] of the Tribunal’s second decision);
(b)Mr Mondous’s evidence that he “wanted the contract to be enforceable” (at [43] of the Tribunal’s second decision);
(c)Mr Mondous’s evidence that his “practice was to take the contracts to his solicitor and to have the contract signed” and his failure to “give any reason why, in this particular instance, he would have wanted to adopt a different practice” (at [43] of the Tribunal’s second decision);
(d)the purchaser’s solicitor’s letter written on 25 February 2009 which, in the Tribunal’s words, “indicates that there was no contract until 9 December” (at [52] of the Tribunal’s second decision); and
(e)other correspondence between the vendors’ solicitor and the purchaser’s solicitor which, in the Tribunal’s words, “tended to also show that the applicant [i.e. the purchaser] believed there was certainly no contract or agreement on 1 December 2008” (at [52] of the Tribunal’s second decision).

The applicant says that the Tribunal should have instead applied the test set out by the majority of the High Court in Ermogenous v Greek Orthodox Community[35] and considered ”what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened”.[36]
[35](2002) 209 CLR 95 (“Ermogenous”).
[36]Ibid [25].

In Ermogenous, the High Court was considering the question of intention to create legal relations in a context quite different from the present one. In that case, the Court was dealing with what was essentially an employment dispute between a clergyman, engaged to perform spiritual duties as Archbishop, and an incorporated association formed for the promotion of Hellenic culture. In a joint judgment, Gaudron, McHugh, Hayne and Callinan JJ made the following observations about ascertaining the requisite intention to create legal relations:

“It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.” To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet “[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts.”
Because the enquiry about this last aspect may take account of the subject matter of their agreement, the status of the parties to it, their relationship to one another, and surrounding circumstances, not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account are so varied as to preclude the formation of any prescriptive rules. Although the word “intention” is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.[37]

[37]Ibid 105-106 [24]-[25] (per Gaudron, McHugh, Hayne and Callinan JJ (citations omitted).

That statement of principle, which was accepted by both parties in the present case, has been reaffirmed by the High Court in later cases such as Pacific Carriers Ltd v BNP Paribas[38] and Toll (FCGT) Pty Ltd v AlphaPharm Pty Ltd[39] where the Court reiterated that “what matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe”.[40]
[38](2004) 218 CLR 451, 461-462 [22].
[39](2004) 219 CLR 165.
[40]Ibid 179 [40] citing Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461-462 [22].

The Commissioner emphasised that in ascertaining the relevant intention it was necessary for the Tribunal, as fact finder, to look at the course of the dealings that took place between the parties as a whole, noting that communications or events that happen after the date of the alleged contract may bear upon whether or not there was as an “alleged contract”. In this regard, the Commissioner relied on the observations of Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd[41] to the effect that in a case where the objective determination of the intention of the parties is to be discerned from the consideration of a series of communications exchanged by them in the context of their dealings over a period of time “it is both appropriate and necessary to have regard to the commercial circumstances surrounding the exchange of communications and, in particular to the subject matter of those communications”.[42] Furthermore, Gleeson CJ said that in such cases:

it is proper to have regard to communications between the parties subsequent to the date of the alleged contract to the extent to which those communications throw light upon the meaning of the language which is being considered for the purpose of determining whether it expresses an intention one way or the other upon the critical matter. At the least, such subsequent communications will often form part of the context in which the particular exchanges in question are to be evaluated.[43]

[41](1988) 18 NSWLR 540.

[42]Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (“XIVth Commonwealth Games case”), 550A-B, citing Allen v Carbone (1975) 132 CLR 528, 531-532.

[43]XIVth Commonwealth Games case, 550B-C.

In the present case, the applicant argued before the Tribunal that the correct conclusion to be drawn from the facts was that the parties entered into a contract on 1 December 2008 when Mr Cowper, the vendors’ selling agent, told Mr Mondous that the vendors had accepted the applicant’s offer to purchase the land. The applicant contended that the offer that was made and accepted contained all of the terms necessary to form a binding contract, and in those circumstances it was said the parties effectively evinced an intent to create legal relations. The applicant submitted that the contract so formed fell within the second category identified in Masters v Cameron,[44] and was similar to that under consideration by the High Court in both Niesmann v Collingridge[45] and Godecke v Kirwan,[46] namely that it was a contract under which the parties agreed to buy and sell land; all of the essential terms of that agreement were agreed between them, and they agreed to later execute a formal written contract. The applicant contended that the later execution of the formal written contract did not alter the conclusion that they nevertheless entered into a contract on 1 December 2008.
[44](1954) 91 CLR 353, 360. In Masters v Cameron, the Court (Dixon CJ, McTiernan and Kitto JJ) identified (at 360) the second category as being “a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of their terms conditional upon the execution of a formal document.” Their Honours said that in such a case, there is “a contract binding the parties to join in bringing the formal contract into existence and then carry it into execution.”
[45](1921) 29 CLR 177.
[46](1973) 129 CLR 629.

The Tribunal rejected the applicant’s contention. The Tribunal acknowledged at the outset that it was open to the parties to have come to a concluded agreement prior to 2 December 2008 and prior to the signing of the contract of sale, but it nevertheless found that the objective evidence “does not show that the vendor and purchaser intended that there be a concluded agreement between them on 1 December”.[47] The Tribunal observed that:

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 the deposit.[48]

(The reference to Mr Cowper and Mr Mondous, and not to the vendors, was because the vendors were overseas when the negotiations were being conducted.)

[47][2013] VCAT 1627, [41].

[48]Ibid.

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.[49]
[49]Ibid [43].

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.[50] A leading example of a case involving the presumption is the decision of the High Court in Allen v Carbone,[51] 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.
[50]Smith v Lush (1952) 52 SR (NSW) 207, 212; Allen v Carbone (1975) 132 CLR 528, 533, cited with approval in GR Securities v Baulkham Hills Private Hospital (1986) 40 NSWLR 631, 634D per McHugh JA. See also Lezabar Pty Ltd v Hogan (1989) 4 BPR 9498, 9501 per Gleeson CJ.
[51](1975) 132 CLR 528.

In Allen v Carbone, Mr Cummings, a real estate agent, was seeking to purchase a property on behalf of his sister, Mrs Allen. He identified a commercial property near Sydney that was for sale. He approached the vendor and ascertained that the vendor would be willing to sell the property for $24,000, which was less than the advertised price and was the sum his sister was prepared to pay, but only if Mr Cummings would accept a reduced commission of $500 on the sale. Mr Cummings then made an offer on behalf of his sister to purchase the property for the stated price. He prepared an authority to sell which stated the price, the reduced commission, and authorised him to accept a deposit of 10 per cent of the purchase price. It also provided that the vendor “will enter into a Contract of Sale in the form approved by the Real Estate Institute of New South Wales.”[52] The document was signed by the vendor and witnessed. Mr Cummings then spoke with Mrs Allen and arranged for her to engage a solicitor and pay the deposit. He wrote to both the vendor’s solicitor, informing him that the property had been sold and requesting that he forward a contract of sale to the purchaser’s solicitors, and to the vendor, notifying him that the property had been sold and that details of the sale had been forwarded to his solicitors. However, parts of a formal contract were never exchanged between solicitors, and Mrs Allen instituted proceedings for specific performance.
[52]Ibid 531.

Before the High Court, it was common ground that the informal agreement amounted to a limited consensus, but it was disputed that what then took place amounted to a concluded contract. In a joint judgment, the Court (Stephen, Mason and Murphy JJ) observed that in resolving the dispute “it is legitimate to ascertain the terms of the agreement then made by the parties, that is to say, what the parties relevantly intended, by drawing inferences from their words and their conduct in making that agreement” and that to ascertain their relevant intention “it is often necessary to resort to inference”.[53] Their Honours said that once it is accepted that “it was appropriate for the primary judge to draw inferences from the words and conduct of the parties” there was:

ample material from which his Honour could legitimately infer, as he did, that the parties mutually contemplated that a contract should come into existence in the normal course, that is, by means of the signing and the exchange of a contract in the form adopted by the Real Estate Institute of New South Wales, without relying on evidence that this was the unilateral intention or understanding of Mr Cummings, a finding which the appellant submitted was irrelevant.[54]

Against that background, their Honours proceeded to identify as “the first consideration” the fact that the usual method of selling real estate in New South Wales is by means of the industry standard form contract, observing that it was “a practice which was confirmed by Mr Cummings’ evidence of his understanding.[55]

[53]Ibid 532.

[54]Ibid 532-533.

[55]Ibid 533.

It will be noted that, in the present case, the Tribunal adopted a similar approach. Both parties acknowledged that in Victoria there was such a presumption, that it was rebuttable and not conclusive, and that contracts for the sale of land may be made according to a different method. There was , however, no direct evidence that the parties had expressly agreed to proceed otherwise than by the usual practice nor was there any other express provision to the effect that acceptance of the offer would constitute a legally binding acceptance, as in GR Securities v Baulkham Hills Private Hospital.[56]
[56](1986) 40 NSWLR 631. In that case, the relevant offer contained a stipulation that acceptance of the offer ‘would constitute a legally binding acceptance’ so the Court held (at 635D) that, on acceptance, a contract was formed.

The Commissioner relied upon the presumption or inference, pointing in particular to the certainty that it provides to both parties. It was said that where parties negotiate by reference to a REIV standard form contract, the parties do not intend to be bound until the terms are agreed, each of the parties sign up to them and the contracts are exchanged. In these circumstances, the Commissioner contended the inference that the parties intended to make a contract only upon the exchange of signed written contracts, together with the onus of proof under s 110 of the Taxation Administration Act, made it relevant for the Tribunal to look for “clear evidence” that the parties intended to depart from that method.[57]
[57]Allen v Carbone (1975) 132 CLR 528, 533.

The approach contended for by the Commissioner was consistent with that adopted by the Full Court of the Federal Court in McDonald v Commissioner of Taxation,[58] a case similar to the present, where the taxpayers maintained that the relevant contract was made by the acceptance of an oral contract before the date the capital gains tax provisions of the Income Tax Assessment Act 1936 (Cth) became effective.
[58](2001) 109 FCR 207 (“McDonald”).

In McDonald, it was common ground that the property, which was land in New South Wales, was acquired in 1985 but the parties were in dispute as to the precise date on which it was acquired. The oral offer was accepted on 13 September 1985 but a letter from the vendor’s solicitor written the same day, enclosing the contract for sale, stated “[k]indly note that no legal liability shall attach to either party until such time as an exchange has been effected.” A few days later, the taxpayers’ solicitor replied enquiring if the vendor would be prepared to accept a deposit of 5% instead of the normal 10%. Later correspondence between the solicitors for the parties included a request in terms to the effect that, as the negotiations had been proceeding for a considerable time, the purchaser has “dated the enclosed copy of the contract the 13^th of September 1985 and you are to date the original contract the same date of the 13^th September 1985.” The vendor’s solicitor responded, enclosing the original contract signed by the vendor to complete the exchange – it was dated 13 September 1985 but was not signed.

At first instance, the Administrative Appeals Tribunal (“AAT”) held that the relevant contract was made after 20 September 1985, and thus was subject to capital gains tax.[59] On appeal, Finn J held that this conclusion was unexceptionable and the AAT’s reasons were without error.[60] His Honour also pointed out that the taxpayers’ case had failed not because of an error of law but rather because the AAT did not believe Mr McDonald, and that once his evidence was disregarded, that which remained “pointed inexorably to the conclusion at which the Tribunal arrived”.[61]
[59]The capital gains tax provisions did not apply to the disposition of property acquired before 20 September 1985.
[60]McDonald v Commissioner of Taxation (2000) 44 ATR 226.
[61](2000) 44 ATR 226, 231 [15].

The Full Federal Court dismissed the taxpayers’ appeal from the decision of Finn J. In the leading judgment, Stone J, with whom Beaumont ACJ and Gyles J agreed, found that the parties had adopted the usual method of sale in New South Wales and did not intend to be bound by the oral agreement. Her Honour referred with approval to the comments of Gleeson CJ in Lezabar Pty Ltd v Hogan[62] that one reason why the presumption that no binding contract exists until “contracts” are exchanged is important is that “the form of contract ordinarily used contains important provisions for the protection of both parties, and a court would not lightly attribute to knowledgeable parties an intention to forego such protection.”[63] Her Honour reiterated that it is possible for a contract for the sale of land in New South Wales to be effected other than by exchange of contracts and said:

Ultimately, the intention of the parties as to whether they enter into binding obligations is decisive: Masters v Cameron (1954) 91 CLR 353 at 360-362. In reaching the point from which they intend to be bound, they may agree that one of the terms of the contract is that certain obligations under it are to be retrospective to a specified date. However, the date of formation of the contract is a matter of law and the parties cannot, by backdating the written document, rewrite history with the effect that a binding contract existed from the specified date.
No special form of words is necessary to ensure that an agreement is binding or not binding. However, the practice in New South Wales of proceeding by exchange of contracts is so entrenched that a party contending for an intention to proceed other than in accordance with the established procedure will need clear evidence to support the contention.[64]

[62](1989) 4 BPR 9498, 9501.

[63]McDonald (2001) 109 FCR 207, 213.

[64]McDonald (2001) 109 FCR 207, 213 [20]-[21] (emphasis added).

The approach which the Tribunal adopted in the present case was to start with the presumption or inference that the parties intended to contract only upon the exchange of signed written counterparts embodying all of the terms agreed between them, and then look for “clear” evidence that might displace it. It was for the applicant, in accordance with its burden, to lead ”clear evidence” that the parties intended to contract by another method.

It was in respect of that issue that the Tribunal considered the evidence of Mr Cowper and Mr Mondous. It did so against the background that in cases such as Ermogenous,[65] the High Court had recognised that the status of the parties to the agreement was a relevant matter to take into account. The Tribunal noted that Mr Mondous was an experienced property developer with substantial experience in buying and selling land, and Mr Cowper, the vendors’ selling agent, had been a real estate agent for more than 20 years. In those circumstances, the Tribunal was satisfied that each of them would have been familiar with the normal or usual practice associated with the use of REIV contracts. The Tribunal then observed, once again, that whilst Mr Mondous and Mr Cowper could nevertheless have agreed to create legal relations orally, there was no or no sufficient, objective evidence to suggest they did.[66] That is, there was no evidence before the Tribunal of any discussion between them to the effect that they wished to proceed by an oral contract, or that they intended to create legal relations or regarded themselves as bound from the moment that Mr Cowper communicated the vendors’ acceptance. On the contrary, the evidence before the Tribunal was that when Mr Cowper phoned Mr Mondous on 1 December 2008 to let him know that the vendors accepted the offer, Mr Cowper said to Mr Mondous that he “wanted to see him that day so he could sign and pay the deposit.”[67] But Mr Mondous was not available that day and he told Mr Cowper to come the next day at 9.00 am.[68]
[65](2002) 209 CLR 95, 105 [25]. See also Allen v Carbone (1975) 132 CLR 528, 532 where the High Court referred to Mr Cummings’ knowledge of conveyancing practice as confirming his understanding that the usual method of sale would apply.
[66][2013] VCAT 1627, [43].
[67]Witness Statement of Andrew Cowper, [6], reproduced at [80] below.
[68]Ibid.

Mr Cowper’s apparent keenness to have Mr Mondous sign the contract on behalf of the purchaser is consistent with a recognition that the REIV contract they had chosen for use, and the usual practice associated with it, requires the parties to sign and exchange the contract once the terms have been agreed. In the context in which Mr Cowper communicated that request to Mr Mondous, contemporaneously with notification of the vendors’ acceptance of the offer, his request conveyed to Mr Mondous the sense that he, and implicitly the vendors, regarded it as important for those steps to be completed forthwith. Similarly, when requested to sign and pay the deposit, Mr Mondous responded in a manner which suggested that he too regarded those steps as important to be undertaken in a timely way.

When the Tribunal referred to the evidence of Mr Cowper that “signatures count” and Mr Mondous’ evidence that “he wanted the contract to be enforceable” and to his usual practice in real estate dealings of taking the contract to his solicitor to have the contract signed, the Tribunal was effectively confirming that the parties were aware of the presumption and what it entailed, and that their respective understanding of what was required to be done accorded with it. In this regard, the oral evidence of Mr Cowper affirmed that not only Mr Cowper, but also the vendors, were intending to proceed according to the usual practice.

The Commissioner contended that the approach taken by the Tribunal insofar as it referred to “subjective” evidence of the parties was consistent with that taken by Gleeson CJ in Lezabar Pty Ltd v Hogan[69] where his Honour confirmed the applicability of the presumption by reference to the subjective evidence of the parties. His Honour referred to the “usual method of selling real estate” and said that it was common ground “that the parties to the [dinner party] conversation in question were aware of this “usual method of selling real estate” and that they contemplated that, in due course, and after they had taken legal advice, contracts of the usual kind would have been signed and exchanged.”[70] In summarising the reasons for his conclusion that there was no binding contract entered into between the parties in September 1986, Gleeson CJ referred to a range of matters including the fact that the parties were aware of the ordinary course of practice whereby “a standard form of contract, with appropriate variations for the particular case, is prepared by solicitors and exchanged between the parties”. [71] Gleeson CJ also referred to the fact that both parties were represented by solicitors and “contemplated that they would instruct solicitors to protect their interests and attend to the conveyancing transaction in the ordinary way.”[72]
[69](1989) 4 BPR 9498.
[70](1989) 4 BPR 9498, 9501.
[71]Ibid 9504.
[72]Ibid.

In my view, the approach taken by the Tribunal in the present case accords with that adopted by Gleeson CJ as a basis for affirming the presumption.

The applicant was also critical of the Tribunal’s reliance on the letter of 25 February 2009 and other correspondence between the applicant’s solicitor and the vendors’ solicitor as indicating “that there was no contract until 9 December” and as tending to also show that “the applicant believed there was certainly no contract or agreement on 1 December 2008”. The applicant contended that this was further evidence that the Tribunal had applied the wrong test.

In its reasons, the Tribunal referred to the letter of 25 February 2009 written by the applicant’s solicitors as making “clear” that they were of the view that the day of sale was 9 December 2008, which was the day when the vendors signed the contract. The letter from the applicant’s solicitors was written to the vendors’ solicitors and enclosed for their information a copy of a letter from Mr Cowper to “Oakbee P/L”[73] dated 15 January 2009 regarding the sale of the land at Plumpton Road. In that letter, Mr Cowper as selling agent stated as follows:

The purpose of this letter is to confirm that the contract of sale for the property known as 971 Plumpton Rd, Plumpton was dated the 2^nd December 2008.
The vendors were unavailable.
The contracts of sale were signed and executed by the vendors on the 9^th December.
The exchanged contracts of sale were collected from the vendors solicitors offices [of DKL law in Essendon] on the 9^th December…
The contracts of sale were signed by the purchaser on the 8^th December 2008 and a 5% deposit was paid into the Trust Accounts of Cowper & Associates.[74] The balance of the 10% deposit was received and banked on the 9^th December.[75]

[73]Apparently an entity related to Mr Mondous.

[74]This statement appears to contradict other evidence of Mr Cowper that Mr Mondous signed the contract on 2 December 2008 and paid a “nominal deposit of $10,000”.

[75]Letter from Cowper & Associates Pty Ltd to Oakbee P/L dated 15 January 2009.

The letter sent by the applicant’s solicitor to the vendors’ solicitors enclosed a copy of the letter received from Mr Cowper and stated:

Accordingly the date of the contract should be the date of acceptance by the Vendor and we propose to amend the day of sale to the 9th December 2008 and request that you amend your copy accordingly.[76]

[76]Letter from Comito, Iacovino & Co to DKL Lawyers dated 25 February 2009.

In the context of considering these later communicated statements, the Tribunal referred to the decision of the Court of Appeal of New South Wales in the XIVth Commonwealth Games case as confirming the appropriateness of making reference to subsequent correspondence between the parties when seeking to ascertain their objective intention.[77] Therein, Gleeson CJ stated:

There is ample authority for the proposition that reference may be made to the correspondence between the parties subsequent to 13 June 1986 for the purpose of showing that ‘it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to the transaction of such nature’: [citations omitted]. In the present case that correspondence has a particular bearing on the interpretation and understanding of the earlier communications in that it constitutes an importance source of information as to what are matters incidental, or for that matter essential, to a transaction of the nature in question. In a case where a court is required to make a judgment concerning the intention of the parties, in relation to what might broadly be described as a Masters v Cameron dispute, it will normally be of importance that the court have an understanding of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract.[78]

[77][2013] VCAT 1627, [51].

[78](1988) 18 NSWLR 540, 547G-548D.

When viewed in the context in which reference was made to the subsequent correspondence, it seems clear that what the Tribunal was doing was comprehensively dealing with all of the evidence before it from which an intent to create legal relations could be discerned. The subsequent correspondence tended to confirm the presumption that the parties did not intend to create legal relations until they had agreed the terms, and signed and exchanged contracts. The correspondence was relevant because it was consistent with the parties treating the signed, exchanged contract as the contract.

The date of sale stated in the Particulars of Sale was an important reference point because obligations flowed from that date - it effectively fixed, by reference, the date for payment of the balance of the purchase price. In the Particulars of Sale, the “date of sale” was stated to be “the earlier of the date of this contract or the acceptance date of any prior contract note”. When Mr Cowper and Mr Mondous met on 2 December, Mr Cowper wrote the date of “2/12/2008” in the date of sale section in the Particulars of Sale.[79] Mr Mondous initialled that change.[80] The Tribunal did not expressly refer to this in its reasons, but in my view, the initial denotation of 2 December 2008 as the date of sale, rather than 1 December 2008, is telling – it would likely convey to a reasonable person, with knowledge of the surrounding circumstances and the purpose and object of the transaction, the notion that on 2 December 2008 neither Mr Mondous nor Mr Cowper regarded earlier events as having created legal relations between the parties.
[79]Witness Statement of Andrew Cowper, [7], reproduced at [80] below. See also Witness statement of Mr Mondous at [8], reproduced at [80] below.
[80]See the Particulars of Sale.

Against that background, in circumstances where the vendors did not actually sign the contract until 9 December 2008, but the Particulars of Sale in the contract denoted the date of sale as 2 December 2008, the later correspondence demonstrates that the parties obviously regarded it as important to correct that date to 9 December 2008, lest adverse consequences flow therefrom.

Here again, the approach the Tribunal took is consistent with that taken by Gleeson CJ in Lezabar Pty Ltd v Hogan[81] where his Honour referred to the subsequent conduct of the parties and found that it was inconsistent with their having intended to be contractually committed as a result of the ”agreement” made at the September 1986 dinner party. His Honour noted that their dinner party “agreement” was in the broadest of terms and related only to the identity of the property and the purchase price and “did not even go into the question of whether there was to be a deposit.”[82] Accordingly, in my view, the Tribunal’s approach does not involve an impermissible departure from the “objective assessment of the state of affairs between the parties” test set out in Ermogenous.[83]
[81](1989) 4 BPR 9498.
[82]Ibid 9504.
[83](2002) 209 CLR 95, 105-106 [25].

In summary, in my view, each of the evidentiary matters complained of by the applicant was relevant to the Tribunal’s consideration of the veracity and relevance of any evidence before the Tribunal that tended to show that the parties intended to contract otherwise than by the exchange of signed written contracts. I agree with the Commissioner’s contention that, taken together with the evidence that there was no discussion between Mr Mondous and the vendors or Mr Cowper about proceeding by way of an oral contract, the first three pieces of evidence cited by the applicant were relevant for the Tribunal to consider, because in light of that knowledge and those practices and the status of those involved, one would expect clear, express statements of an intention to proceed otherwise than by way of exchange of signed written contracts. The later correspondence between the solicitors for the vendors and purchasers is important because it is consistent with the parties treating the signed, exchanged contract as the contract.

It follows that on the first question, I am not satisfied that the Tribunal applied the wrong test.

Second question of law: whether the findings of fact concerning the deposit were open

The second question of law posed raises the question of whether two of the Tribunal‘s findings of fact concerning the deposit were open to it on the evidence, namely the findings that:

(a)‘[before 2 December 2008] there was no discussion about the payment of the deposit and when the deposit was to be paid’ (at [40] of the Tribunal’s second decision); and
(b)‘when Mr Cowper and Mr Mondous did meet on 2 December 2008, there was clearly negotiations between them as to the payment of the deposit’ (at [44] of the Tribunal’s second decision).

In its grounds in support, the applicant contended that in each case there was no probative evidence to support the Tribunal’s finding of fact.

The Commissioner argued that the applicant’s proposed second question of law effectively contends that the two findings “were not supported by any probative evidence.” In his written submissions, Counsel for the Commissioner pointed out that a “no evidence” challenge will fail where there is even a slight evidentiary basis to support the Tribunal’s findings[84] and a finding cannot be impugned simply because the Court on appeal considered the finding to be erroneous or against the weight of the evidence.[85] He said it is for these reasons that the jurisdiction to review for “no evidence” has been described as “narrowly available”[86] and it has been noted that such challenges are “strictly confined” and “rarely succeed”, particularly in the Tribunal, which is not bound by the rules of evidence.[87]
[84]SZNKV v Minister for Immigration and Citizenship (2010) 118 ALD 232, [37].
[85]Director of Liquor Licensing v Kordister Pty Ltd [2011] VSC 207, [248]. (An appeal was allowed, in part, but not on this point: Kordister Pty Ltd v Director of Liquor Licensing [2012] VSCA 325).
[86]Myers v Medical Practitioners Board (2007) 18 VR 48, [37].
[87]VCAT Act, s 98(1)(b).

The applicant bore the onus of demonstrating that there was complete agreement as to the terms of the contract on 1 December 2008. Further, the orders made by Davies J on 21 March 2013 made plain that the issue about the deposit was something that the Tribunal had to address, and the orders made by the Tribunal on 19 June 2013 gave the parties the ability to seek leave to adduce further evidence should they wish to do so. No application for leave to adduce further evidence was made.

Against that background, the Tribunal probed and tested the applicant’s contention that there was agreement on all essential terms, including the deposit, as at 1 December 2008. Relevantly, the applicant had called two witnesses: Mr Mondous and Mr Cowper. In their statements they addressed the agreement on price and settlement period but neither of them mentioned any agreement on deposit.

On the issue of the deposit, the evidence before the Tribunal was as follows:

(a)In his witness statement, Mr Mondous stated:
[6]I phoned Cowper on either the same day he had called me (late November) or the next day. I said that Sebastian and myself would accept the price of $1,400,000 that the vendor wanted. I also said that we would agree to a settlement period of six months, not twelve months. Cowper said that was good, he would contact the vendor’s solicitor to verify that our offer would be accepted.
[7]Cowper phoned me on 1 December 2008. He said that the vendor and his solicitor accepted the amount of $1,400,000 and the contract. He said that he was coming to see me with the amended contract for me to sign. I said I couldn’t see him that day but asked him to come the next day. …
[8]Cowper came to my office in Leemak Crescent the next day, being 2 December 2008, at 9 am. He bought [sic.] the contract which had already been amended to show a price of $1,400,000, a deposit of $140,000 and a balance of $1,260,000 to be paid at settlement. The contract also had a settlement period of six months (not twelve). The contract otherwise remained the same. I signed the contract and gave Cowper a cheque for $10,000 as the initial deposit. Cowper added the handwritten words that appear in the deposit clause of the Particulars of Sale of the contract. Cowper also wrote “2/12/2008” in the date of sale clause of the Particulars of Sale.

(b)In his witness statement, Mr Cowper stated:
[5]…In late November 2008, Mondous made a verbal offer of $1,400,000 for the property. I understood Mondous made this offer on behalf of himself and Canzoneri. I amended the Particulars of Sale to the contract to show a price of $1,400,000, a deposit of $140,000 and a balance of $1,260,000. I also amended the settlement period back to 6 months, which is what the vendors wanted…
[6]The vendors were away at the time Mondous offered $1,400,000. However they had instructed me to accept $1,400,000 for the property if it was achieved. When Mondous’ offer was submitted, I contacted the vendors and vendors’ solicitor and advised them of the offer, which was accepted… On 1 December 2008 I told Mondous by telephone that the vendors accepted the offer and I wanted to see him that day so he could sign and pay the deposit. Mondous was not available that day and told me to come the next day at 9-00 am.
[7]I saw Mondous early on 2 December 2008 at his office in Berwick. He signed the contract and paid a nominal deposit of $10,000. I wrote the date of “2/12/2008” in the date of sale section of the Particulars of Sale. I then took the signed contract, on 2 December 2008, to the vendors’ solicitor where I left it for countersignature. The vendors were still away. So far as I recall, they signed the contract a few days later at the least.
[8]As I recall, the remainder of the deposit was paid and the property settled in June 2009.

(c)Mr Canzoneri did not address the payment of the deposit in his witness statement.

Mr Mondous gave no direct evidence about the circumstances leading up to his payment of the cheque for $10,000 for (what he described as) the “initial deposit”. The Particulars of Sale, in the form in which they existed on 1 December 2008, provided that the deposit was payable “on the signing hereof”. On 2 December 2008, Mr Cowper amended the Particulars of sale to show the deposit as being $140,000. Mr Mondous did not offer any explanation for his payment of the sum of $10,000 on 2 December 2008, in advance of the vendors countersigning the contract, or why he described it as an “initial deposit”. Nor did he comment on the handwritten amendment Mr Cowper made to the deposit clause, when he added the words “of which $10,000 has been paid and the balance of the deposit is payable upon vendor signing of contract of sale” to the deposit clause. (Some other handwritten words located above the deposit clause (apparently dealing with the deposit paid in respect of an earlier offer made on 11 June 2008) were also struck-out but no evidence was given about their deletion either.)

Under cross-examination, Counsel for the Commissioner put to Mr Mondous that the cheque for $10,000 was paid “just to show that you were serious about the offer that you were making”. He replied that you “could say that”.[88]
[88]Transcript of Proceedings, 25/7/12, 18 (cross examination of Mr Mondous).

In his evidence in chief, Mr Cowper also said nothing about the circumstances surrounding the payment of (what he described as) the “nominal deposit of $10,000” by Mr Mondous, nor did he address the handwritten addition he made to the deposit clause, the reasons for making it, or at whose suggestion it was made. It will be recalled that it was Mr Cowper who had phoned Mr Mondous on 1 December 2008 and requested to see him that day “so he could sign and pay the deposit”.[89] It is not clear why payment of the deposit was being sought in advance of the vendors countersigning the contract, and no explanation was proffered by Mr Cowper. Furthermore, no evidence was given about whether, and if so, when, the vendors agreed to the handwritten amendments concerning the deposit.
[89]Witness statement of Mr Cowper, [6] (emphasis added), reproduced at [80] above.

The Tribunal found that payment of the deposit was an important matter, and one that was likely to have been the subject of discussion and agreement. The Tribunal referred to what transpired between Mr Cowper and Mr Mondous when they met on 2 December 2008 as evidencing “negotiations between them as to the payment of the deposit” and said that “[t]hose negotiations were part of the whole negotiation that had taken place” rather than a variation of the 1 December 2008 agreement or a new contract as contended for by the applicant.[90] That is, the Tribunal did not accept that the evidence supported the applicant’s submission that all the essential legal terms had been agreed on 1 December 2008.[91]
[90][2013] VCAT 1627, [44].
[91]Ibid.

Counsel for the applicant accepted in the course of argument before the Court that if it were the case that on 1 December 2008 the parties had not agreed either how much the deposit would be or when it would be paid, that would not be determinative but would be a significant factor against it, indicating that there was not a contract on 1 December 2008.[92] Counsel for the applicant contended there was no evidence before the Tribunal to the effect that no-one had discussed or spoken about the deposit on or before 1 December 2008. Further, he said the deposit figure was there from the beginning, even though it was changed twice, and the handwritten amendment made no substantive change to the obligation to pay the deposit either as to amount or as to timing.[93] Counsel acknowledged that it was open to the Tribunal to infer from the handwritten amendment that there must have been “some talk about the deposit” but said that “was very different to saying that there were negotiations about the deposit.”[94]
[92]Transcript of Proceedings, 11/02/14, 64.
[93]Ibid 68.
[94]Ibid 66.

Counsel for the applicant submitted that the highest the Commissioner could put his case was to say that there was simply no evidence either way as to what took place concerning the deposit, and in those circumstances, the Tribunal should not have made any finding. Counsel argued that in the absence of evidence of what took place, the correct principle to be applied is that stated by the High Court in Kuligowski v Metrobus,[95] namely that “[a] failure to find a matter does not establish the truth of the contrary of that which is alleged”.[96] Counsel for the applicant said this approach was relied upon in Krsteski v Jovanoski,[97] where Macaulay J found there was valid cause for the Tribunal not to feel compelled to accept one party’s version but to be left unpersuaded on the balance of probabilities as to where the truth lay.[98] In Krsteski, his Honour found that there were “some internal inconsistencies, some implausibilities, some equally plausible alternative explanations (i.e., equivocality) and some contradictory or opposing evidence in relation to the various asserted supporting facts” such that it could not be said that the evidence before the Tribunal in relation to each fact left open only a single outcome as a matter of rational conclusion.[99]
[95](2004) 220 CLR 363.
[96]Ibid 385 [60]
[97][2011] VSC 166 (“Krsteski”), [32]-[35].
[98]Ibid [67].
[99]Ibid [84].

In dealing with the absence of evidence ground, Counsel for the Commissioner commenced by observing that the Tribunal is not bound by the rules of evidence. Counsel went on to point out that the kind of inference the Tribunal drew was the sort of inference that a court could permissibly draw in circumstances where persons who were called could have given evidence about a matter but did not. Reference was made to cases such as White Industries (Qld) Pty Ltd v Flower & Hart,[100] Jones v Dunkel[101] and Commercial Union Assurance Co of Australia v Ferrocom Pty Ltd[102] in support of the Commissioner’s contention that adverse inferences can be drawn not only where a party fails to call a witness at large but also when they do call a witness, but that witness fails to address, in evidence in chief, important matters of which they have notice will be issues in the case.
[100](1998) 156 ALR 169, 221-229.
[101](1959) 101 CLR 298, 320-321.
[102](1991) 22 NSWLR 389, 418-419. (The decision of the Court of Appeal was upheld by the High Court: Ferrocom Pty Ltd v Commercial Union Assurance Co of Australia Pty Ltd (1993) 176 CLR 332.)

In my view, it was open to the Tribunal to infer from the absence of any evidence about an earlier discussion concerning the deposit that Mr Mondous had not made his position on the deposit apparent until he met with Mr Cowper on 2 December 2008. It was also open to the Tribunal to infer that there had not previously been any agreement about the manner in which the deposit would be paid. All that was proffered by Mr Cowper and Mr Mondous in their evidence in chief was that Mr Cowper advanced a position on 1 December 2008 (“pay the deposit”), and there was a change of position on 2 December 2008 (payment by Mr Mondous of $10,000 as an initial or nominal deposit, accompanied by an alteration to the contract). No evidence was adduced by the applicant to explain that change of position.

It is clear that something took place between Mr Cowper and Mr Mondous on 2 December 2008 that necessitated a change to the Particulars of Sale concerning the deposit. Whatever that something was could only have been explained by Mr Cowper and Mr Mondous, but they chose not to do so. The Tribunal characterised whatever it was that took place between them on 2 December 2008 as “negotiations”. The Tribunal did so in circumstances where it had rejected the applicant’s submission that on 1 December 2008 “the parties had agreed to all legal essential terms in the REIV contract and had not intended to continue negotiating the terms”,[103] having formed the view that the evidence did not support it.
[103][2013] VCAT 1627, [44].

Furthermore, when regard is had to the way in which the handwritten amendment was framed on 2 December 2008, it also seems clear that Mr Cowper and Mr Mondous contemplated that there was a need for the vendors expressly to assent to that method of payment, by signature. That of itself suggests that consensus had not earlier been reached.

The Tribunal also had to deal with the applicant’s argument that the alteration to the deposit clause made on 2 December 2008 may have created a new contract or a variation of the contract. The Tribunal held that to be “very unlikely” primarily because it regarded the payment of the deposit as a very important matter and found that Mr Mondous would have known that.[104] Being an important matter, the Tribunal did not accept that Mr Mondous “would conclude any contract without having made arrangements as to when and the method of which the payment of the deposit would be made” and it noted that “he did not sign the contract until such an arrangement was made.”[105]
[104]Ibid [39].
[105]Ibid.

In my view, it was open to the Tribunal not to draw any positive or favourable inferences in favour of the applicant in circumstances where the applicant had the opportunity to lead relevant evidence about the deposit, but chose not to do so. As the applicant bore the onus and was on notice of the need to demonstrate that there was complete agreement as to the terms of the contract on 1 December 2008, its failure to take up that opportunity left it open to the Tribunal to draw the inference that the witnesses’ evidence on that issue would not have assisted its case.

It follows that I am satisfied the findings of fact the Tribunal made were open to it.

Third question of law: whether only one conclusion as to intention was open

The third question of law posed by the applicant raises the question of whether the evidence before the Tribunal, together with the Tribunal’s findings of fact (excluding findings that were not open to it), rationally left open only one conclusion which the Tribunal nonetheless failed to reach, namely that the vendors and the applicant as purchaser intended to create contractual relations at the time of their agreement on 1 December 2008.

The applicant contends, in effect, that if the Tribunal had applied the test set out in Ermogenous, there would have been only one conclusion open to it, but that the Tribunal failed to reach that conclusion. In amplification of this ground, the applicant further contends that it was irrational for the Tribunal:

(a)to attribute to Mr Cowper and Mr Mondous an expectation “that for there to be legal relations, a contract needed to be signed” (at [43] of the Tribunal’s second decision); and
(b)to rely on the difference between the usual practice at an auction of land and the usual practice in a private sale of land as support for its inference that the parties did not have an intention to create contractual relations (at [50] of the Tribunal’s second decision).

In essence, the applicant’s argument on this question is that “the parties have agreed sufficient terms of the agreement so that it can be concluded that they intended to be immediately bound”[106] on 1 December 2008. This argument was further clarified as being that “the parties had agreed not only the necessary or usual terms but all terms of their agreement on 1 December 2008 and had written them down in exactly the form they signed in the following days (subject to the insubstantial change to the deposit clause).”[107] The applicant said that because the parties had agreed all of the terms usually included in a contract for the sale of land on 1 December 2008 then “the only conclusion” that can be drawn is that the parties intended to be bound immediately.[108]
[106]Applicant’s Outline of Submissions dated 9 December 2013, [51].
[107]Ibid [54].
[108]Ibid.

The applicant also contended that the present case is within the second category identified in Masters v Cameron,[109] as were Niesmann v Collingridge[110] and Godecke v Kirwan,[111] where a contract has been formed but performance of one or more terms is conditional on execution of a formal document. In this regard, it also contended that the case was very similar in principle to what occurs at an auction.
[109](1954) 91 CLR 353.
[110](1921) 29 CLR 177.
[111](1973) 129 CLR 629.

The Tribunal rejected the proposition that the parties intended to be bound immediately on 1 December 2008 as a matter of fact, based primarily on the changes that were made to the deposit clause, and also the absence of any direct evidence that the parties so intended to be bound. The Tribunal found that “the objective evidence does not show that the vendor and the purchaser intended that there be a concluded agreement between them on 1 December”[112] and it recited in paragraphs 43 to 53 of its reasons the evidence upon which it relied in forming that view:
[112][2013] VCAT 1627, [41].

(a)The parties negotiated using a standard form REIV contract that provided for signing and counter-signing by vendor and purchaser, which was well established contractual practice relating to land. It was open to the parties to create legal relations orally had they wished to do so but there was no or no sufficient objective evidence to suggest they did. Having chosen to use the REIV contract it is likely that the vendors and purchaser intended that there be signatures for the making of the contract (at [40] and [43] of the Tribunal’s second decision).
(b)Mr Mondous was a sophisticated purchaser and an experienced property developer (at [38] of the Tribunal’s second decision). He wanted the contract to be enforceable (at [39] of the Tribunal’s second decision).
(c)Mr Mondous was aware that the normal practice in Victoria was for a written contract to be entered into by the parties prior to there being an agreement to purchase (at [38] of the Tribunal’s second decision).
(d)Mr Cowper said that the vendor’s countersigning of the contract and exchanging of contracts “finalises things” (at [38] of the Tribunal’s second decision).
(e)In circumstances where they were negotiating on the basis of a REIV contract, both Mr Mondous and Mr Cowper would have expected that for there to be legal relations between the vendors and the purchaser a contract needed to be signed (at [43] of the Tribunal’s second decision). If the parties had intended to create legal relations orally there would have been discussions to that effect (at [43] of the Tribunal’s second decision).
(f)Mr Mondous never discussed with the vendors or Mr Cowper whether or not an oral contract would be sufficient (at [39] of the Tribunal’s second decision).
(g)When Mr Mondous signed the contract on 2 December 2008, he was agreeing to a term that the deposit was payable on the vendor signing the contract of sale (at [39] of the Tribunal’s second decision).
(h)Mr Mondous would not have concluded any contract without having made arrangements as to when and the method of which the payment of the deposit would be made. He did not sign the contract until such an arrangement was made (at [39] of the Tribunal’s second decision).
(i)The subsequent correspondence from the applicant’s solicitors to the plaintiff’s solicitors dated 25 February 2009 referred to 9 December 2008 as the date of sale.

Against that background, in my view, the applicant’s submission must fail. The Tribunal identified a body of evidence in support of its finding that the vendors and the purchaser did not intend to create legal relations between them by way of a concluded agreement on 1 December 2008, and when regard is had to that evidence it cannot be said that the only finding open to the Tribunal was to the contrary.

In its written outline of contentions, the applicant asserted that it was “irrational for the Tribunal to attribute to both men [Mr Cowper and Mr Mondous] an expectation that the parties needed to sign a written contract before a contract could be formed.”[113] That contention mischaracterises the Tribunal’s approach and the findings it made. Relevantly, the Tribunal found that “both would have expected that for there to be legal relations, a contract needed to be signed.”[114] That finding was made in the context of the objective evidence relied on by the Tribunal as outlined above. Furthermore, the Tribunal expressly recognised that they could have created legal relations orally had they wished to do so, but it found there was “no or no sufficient objective evidence to suggest they did.”[115] It is clear that the Tribunal did not proceed from an erroneous view of the law, nor did it attribute an erroneous view of the law to Mr Mondous and Mr Cowper.
[113]Applicant’s Outline of Submissions dated 9 December 2013, [43].
[114][2013] VCAT 1627, [43].
[115]Ibid.

The Commissioner also took issue with the applicant’s statement in its written outline of contentions that the Commissioner “has never disputed that the other elements of a contract (offer, acceptance, consideration, certainty of terms, etc.) existed on [1 December 2008].”[116] Before the Tribunal, the Commissioner patently contended that the changes made by hand on 2 December 2008 to the deposit clause in the Particulars of Sale meant that there was not agreement on all terms on 1 December 2008. It maintained that argument before this Court. Similarly, the Commissioner said it had never conceded that on 1 December 2008 there was consideration moving from the purchasers. Rather, it contended that none of the money consideration moved from the purchasers on 1 December 2008 and there was no exchange of promises until the signing and exchange of the written contracts.
[116]Applicant’s Outline of Submissions dated 9 December 2013, [8].

I turn now to consider the applicant’s argument based on the auction cases, and what it contended were the “obvious and inescapable”[117] similarities between an auction and what transpired between the vendor’s agent, Mr Cowper, and Mr Mondous and Mr Canzonieri as purchasers. In essence, the applicant took issue with the Tribunal’s distinction of the auction scenario and its treatment of the decision in Futuretronics International Pty Ltd v Gadzhis.[118] The applicant contended that while the present case clearly does not concern an auction scenario, decisions such as the Futuretronics case provide helpful guidance about the requisite contractual intention, and it is well-recognised that when the auctioneer knocks the property down to the successful bidder, a contract for the sale and purchase of the land is formed immediately and before either party has signed the written contract.
[117]Ibid [44].
[118][1992] 2 VR 217 (“Futuretronics case”).

In its reasons, the Tribunal stated:

As will be remembered, Mr De Wijn referred to the Futuretronics case. However, that decision depended on there being a binding auction contract. In this particular situation, there is no auction contract and it is not an auction situation. A situation of a private sale is very different to that of an auction. I can take notice of the fact that at an auction usually the vendor and the purchaser sign the contract immediately after the property is knocked down. The practice is very different on a private sale where the usual practice is for the purchaser to sign the contract, pay the deposit and then the contract is signed at a later time and a different place by the vendor. In my view, the Futuretronics case does not assist me in finding the objective intentions of the vendor and purchaser in this particular instance.[119]

[119][2013] VCAT 1627, [50].

In the Futuretronics case, the defendant made only one bid at the auction – it was the final bid, and upon the property being knocked down to him, he informed the auctioneer that he had no intention of signing the contract of sale. The negotiations broke down and the sale was never concluded. The vendor sued to enforce the sale of the property to the defendant, submitting that the defendant’s bid, which had not been withdrawn, gave rise to a preliminary or collateral contract containing a term that the defendant would sign the contract of sale, and the collateral contract, not itself being for the sale or disposition of an interest in land, was enforceable even in the absence of compliance with the Instruments Act 1958 (Vic).

The trial judge, Ormiston J, rejected the defendant’s factual defence. His Honour found that the defendant “intended to enter into legal relations with the vendor when he made his bid and [the auctioneer] had no different understanding as to his intentions.”[120] It was against that background that his Honour turned to consider the plaintiff’s contractual claim. He noted that the plaintiff “carefully eschewed in its pleadings any allegation that the defendant was directly bound by any enforceable contract of sale to purchase the property.”[121] Rather, it contended that the acceptance of the defendant’s bid bound him to sign a contract of sale, and it was that obligation that the plaintiff sought to have specifically performed. As the contract of sale was no more than an oral agreement, the plaintiff sought to avoid it being rendered unenforceable by reason of the provisions of the Instruments Act 1958 (Vic) by asserting that the defendant was under a number of different, though related, legal obligations.
[120]Futuretronics case [1992] 2 VR 217, 229.
[121]Ibid.

In essence, the plaintiff contended that two separate contracts were brought into existence, the one the oral contract of sale and the other the agreement to sign and pay the deposit. His Honour rejected that submission, finding that there was no reason to treat the defendant as bound by any such terms before his bid was accepted. His Honour said:

Once accepted by the fall of the hammer his offer was converted into a single oral agreement containing all relevant terms in the auction contract, including not only the agreed terms of purchase but also the terms requiring signature and payment of the deposit. There is nothing unusual about the inclusion of an enforceable term to the effect that a formal contractual document be executed: cf. Niesmann v Collingridge (1921) 29 CLR 177 and Godecke v Kirwan (1973) 129 CLR 629. The only unusual aspect of the present auction condition is that it may be unenforceable for want of any written memorandum. One might argue that the draftsman should not be presumed to have devised a futile clause, but, apart from the unlikelihood in the normal circumstances of a purchaser declining to sign, specific provision is made in this contract for that event in that the vendor is given a right of re-sale after 20 minutes. This latter provision makes it abundantly clear how limited were the rights of the vendor which the parties contemplated might arise if there was a refusal to sign.
Consequently I consider that there was a single offer made by the defendant as bidder which was accepted on the fall of the hammer and which created an oral contract including a term requiring signature.[122]

[122]Ibid 232.

It is clear that the express provision in the auction contract was operative, and central, to Ormiston J’s finding. Furthermore, that finding was made in a context where his Honour had expressly found that the parties did intend to enter into legal relations when the defendant made his bid.

In the present case, the applicant contended that what had taken place between the parties was very similar in principle to what occurs at an auction. The applicant said that, in effect, the parties agreed on 1 December 2008 that they would at some point in the future sign and exchange an REIV contract for the sale and purchase of the land, the form of which was before the parties and agreed between them. As Counsel for the Commissioner pointed out, that submission depended upon the implication of a term, akin to that found in the auction case scenario, and before such a term could be implied, evidence needed to adduced about what was said and done between the moving parties to establish a proper basis for it to be implied. However, no such evidence was given by Mr Mondous or Mr Cowper.

In my view, in the circumstances of a private sale where the presumption applied, the decision in the Futuretronics case does not assist to ascertain the requisite contractual intention. The decisions in cases such as Allen v Carbone,[123] McDonald[124] and Lezabar Pty Ltd v Hogan[125] do, however, provide helpful guidance about the presumption, what evidence is required to displace its application or the role of subjective evidence in affirming its application. In the present case, the Tribunal applied those guiding principles and could not be satisfied that there was “clear evidence” that on 1 December 2008 the parties intended to proceed otherwise than by the signing and exchange of written contracts.
[123](1975) 132 CLR 528.
[124](2001) 109 FCR 207.
[125](1989) 4 BPR 9498.

It follows that I am not satisfied that the evidence before the Tribunal rationally allowed only one conclusion and effectively required the Tribunal to find that the vendors and the purchaser intended to create legal relations on 1 December 2008.

Conclusion

I grant the applicant leave to appeal on the three questions of law posed. The proposed notice of appeal shall stand as the notice of appeal. For the reasons I have given, the answer to each of the questions of law in the notice of appeal is 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?
ANSWER: No
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’ (at [40]);
(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’ (at [44]).

ANSWER: Yes
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?
ANSWER: No

Accordingly, I dismiss the applicant’s appeal on each of those questions. I will hear the parties on appropriate final orders.

201RA	GAIC events
For the purposes of this Part, a GAIC event means any of the following – …
(c)	the occurrence of a dutiable transaction relating to land in the contribution area -
but does not include an excluded event.
201RB	Excluded events
For the purposes of section 201RA, an *excluded event* means – …
(d)	in the case of any land in the contribution area –
(iii)	a dutiable transaction relating to the land (other than a significant acquisition), if a contract relating to that transaction was entered into before the relevant day.

Appeals from the Tribunal
(1)	A party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceeding -
…
(b)	to the Trial Division of the Supreme Court in any other case -
if the Court of Appeal or the Trial Division, as the case requires, gives leave to appeal.

[2014] VSC 187

5 May 2014