Winter v Official Trustee in Bankruptcy - [2006] FMCA 1059

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WINTER & ANOR v OFFICIAL TRUSTEE

[2006] FMCA 1059

BANKRUPTCY – Whether concluded contract between Trustee and discharged bankrupts for purchase of property – s.160 Evidence Act (Cth).

Evidence Act 1995 (Cth), s.160

Pacific Carriers Limited v BNP Paribas (2003 – 2004) 218 CLR 451
Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Others (2004) 219 CLR 165
Darter Pty Ltd v Malloy (1993) 2 Qd.R. 615
African Minerals Limited v Pan Palladium [2003] NSWSC 268
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 76 ALJR 246
Australian Energy Limited v Leonard Oil N.L (1986) 2 QR 216
Neill and Another v Hewins and Another (1953) 89 CLR 1
Meehan v Jones and Others (1982) 149 CLR 571
RA Brierley Investments Limited v Landmark Corporation Limited (1966) 120 CLR 224
Rossitter v Miller (1878) 3 APP CAS
Masters and Another v Cameron (1954) 91 CLR 353
Pioneer Plastic Containers Ltd v Commissioners of Customs and Excise (1967) (Ch) 597
Suttor v Gundowda Propriety Limited (1950) 81 CLR 418

Applicants:

ROSS CHARLES WINTER &
LEANNE MARGARET WINTER

Respondent:

OFFICIAL TRUSTEE IN BANKRUPTCY

File Number:

BRG732 of 2005

Judgment of:

Burchardt FM

Hearing date:

20 July 2006

Delivered at

Melbourne via video-link to Brisbane

Delivered on:

1 September 2006

REPRESENTATION

Counsel for the Applicants:

Mr. R. W. Morgan

Solicitors for the Applicant:

Mark O’Dea

Counsel for the Respondent:

Mr. C. A. Wilkins

Solicitors for the Respondent:

Tucker & Cowen

ORDERS

THE COURT DECLARES AND ORDERS THAT:

Declares that the Applicants and the Respondent concluded a contract between them in April 2003 for the sale to the Applicants’ of the Respondent’s interest in land at 8 Sharon Drive, Eagleby in the State of Queensland being the property described as Lot 4 on R.P. 188588 County of Ward, Parish of Boyd, and Certificate of Title reference 16472057.

ORDERS:

That there be specific performance of the said contract.
That subject to (4) below, the Respondent pay the Applicants’ costs on a party party basis, to be taxed in default of agreement under Order 62 of the Federal Court Rules.
The Applicants pay the Respondent’s costs in respect to the matters contained in paragraph 10 – 23 of the Applicants’ statement of claim, on a party party basis, to be taxed in default of agreement under Order 62 of the Federal Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG732 of 2005

ROSS CHARLES WINTER & LEANNE MARGARET WINTER

Applicants

And

OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

REASONS FOR JUDGMENT

“As corrected”

By application filed on 5 October 2005, together with Statement of Claim of the same date, the Applicants Mr. and Mrs. Winter sought declaratory relief against the Respondent to the effect that the Respondent holds title to land at 8 Sharon Drive, Eagleby in the State of Queensland (“the property”) on a constructive trust for the Applicants together with ancillary orders to give effect to that trust or alternatively specific performance of a contract entered into in or about April 2003 or damages in lieu of specific performance.
The Respondent has filed an amended defence and cross claim on 13 July 2006, which relevantly seeks by cross claim an order for possession of the property because the Applicants are in possession thereof and it belongs to the Respondent. I shall return to the terms of the amended defence later in these reasons.
The Applicants have filed an amended reply and defence to the cross claim dated 18 July 2006, to which it is not necessary to turn in any detail.
I was informed during the running of the proceedings by counsel for the Respondent that the Applicant abandoned all its claims save the contractual claim at the commencement of the trial. Counsel for the Applicants did not gainsay that proposition.
In the ultimate therefore, the issue as it emerged in the running of the trial can be put quite simply. Did the Applicants enter into a concluded contract with the Respondent to purchase the property in 2003 or, as was contended for by the Respondent, was no such contract ever concluded?
It should be noted that the Applicants became bankrupt on their own petitions on 26 June 1998 and were discharged from that bankruptcy on 27 June 2001. Neither the Applicants nor the Respondent have at any stage raised any question as to whether the Court has jurisdiction to entertain the claims presently before it. I infer that that is because they adopted the view that the controversy before the Court was sufficiently interrelated with the bankruptcy of the Applicants so as to be properly before the Court.
Mr. and Mrs. Winter, the Applicants, have lived in the property which is their home since 1992. They continued to do so throughout and after their bankruptcy.
It appears that the property has been at all material times the subject of a mortgage, the mortgagee being the Queensland Housing Commission. At the date of the Statement of Affairs signed by Mrs Winter on 26 June 1998, the sum of $70,952.27 was owed in respect of the mortgage (“Exhibit A3”). By 2003, that amount had reduced to approximately $66,428.00 (“Exhibit A36”).
On 8 July 1998 the Respondent, which for convenience I shall refer to as “ITSA”, wrote to the Applicants (“Exhibit R1”). In that letter, ITSA set out what might be expected to be the usual observations about the bankrupts’ estates, and relevantly noted that the value of the property was estimated by the Applicants at $69,000.00, the mortgage owed to the Department of Housing was then in the sum of $70,952.27, that discharge from bankruptcy was likely to occur in three years, and noted in the attached notice to creditors that, "The bankrupt has been informed that they can no longer deal with the house property in sale, or sign any contracts in relation to that property."
After receipt of that letter, which Mrs. Winter described in evidence-in-chief as mid 1998, a description I accept as being reasonably accurate, nothing further passed between the parties until 2002 when Mrs. Winter contacted ITSA. During this period, the Applicants continued to make payments satisfying the Department of Housing mortgage and paid rates and insurance on the property.
Mrs. Winter contacted ITSA in 2002 to ask if she and her husband had been discharged from bankruptcy. She was told by the officer to whom she spoke that they had been discharged in June 2001. There was no indication at that time given to her that any claim might be made by the Trustee against the property.
In October 2002 the Applicants obtained a market appraisal from PRD Realty, which valued the property at $90,000.00 (“Exhibit A4”).
The Applicants obtained a valuation from Eccleston and Fraser which valued the property at $93,500.00 dated 20 February 2003 (“Exhibit A7”).
On 6 March 2003, ITSA wrote to the Applicants (“Exhibit A6”), advising inter alia that in the event sufficient equity in the property became available, the Official Trustee might choose to exercise the right to sell the property for the benefit of the creditors. The letter went on:
“If you do not wish this to occur, please submit an offer in writing to purchase the Official Trustee's interest in your property at your earliest convenience.”
By letter dated 31 March 2003 (“Exhibit A7”), the Applicants wrote to Benjamin Kelly, who was the relevant case officer for the file at the time at ITSA, submitting an offer of $15,000.00 to purchase the property which was expressed as “subject to us obtaining finance for this amount”. That letter enclosed a number of other documents which relevantly showed that $66,428.00 was still owing on the property by way of mortgage, and enclosed the two valuations of $93,500.00 and $90,000.00 respectively.
ITSA replied by letter dated 1 April 2003 to the Applicants (“Exhibit A8”). The author, Mr. Kelly said:
“I have reviewed your offer with the Official Trustee, and regretfully inform you that your offer has been declined, for reasons being that the equity in the property is substantially higher than your offer, as result the Official Trustee has deemed that your offer will not provide creditors the best possible return.
I request that you please review, resubmit a new offer to purchase the Official Trustee's interest.
Please note that pursuant to section 58 of the Bankruptcy Act, "all property vests in the Official Trustee"; the above property will remain the property of the Official Trustee even after you have been discharged from bankruptcy.”
It should be noted that no evidence was put before me as to whether or not Mr. Kelly had in fact referred the matter to the Official Trustee, or whether he acted in this instance on his own authority.
Mrs. Winter gave evidence that following receipt of that letter she had conversations with Benjamin Kelly about the amount of the equity in the property, and as to whether or not the payment of rates would be relevant. She said she also had a conversation with Mr. Sara of ITSA about this issue.
Following those conversations Mrs. Winter emailed Benjamin Kelly on 10 April 2003 (“Exhibit A9”). In the light of the way the parties have argued their case before me, it is appropriate to set out the relevant text of that email in full:
“Dear Benjamin
Further to your discussion with Ross on April 3^rd, we have spoken to Mr Sara in your office who originally handled our file. He confirmed that any outstanding council rates are fully secured over the property and therefore need to be taken into consideration when establishing the amount of equity available in the property. Mr Sara indicated that he would discuss this with you.
It is our belief that the equity in the property is approximately $22,840.00 ($93,500.00 – $66,428.00 mortgage – $4,232.00 rates).
We would like to make a further offer to purchase the Official Trustee's interest in the property of $17,500 (subject to us obtaining finance).
Thank you for taking the time to consider this offer, we look forward to hearing your response.
Yours faithfully
Ross and Leanne Winter”
Mrs. Winter gave evidence that at that time, the Applicants did not have finance available and had not engaged a financier to get it.
On 24 April 2003 (“Exhibit A10”), Benjamin Kelly wrote again to the Applicants. Once more, it is appropriate to set out the relevant text of the letter:
“I refer to your email offer to purchase the Official Trustee's interest in the above property dated 10 April 2003.
I request that you please review, complete and return the attached Formal Offer to Purchase contract to this office by 8 May 2003; otherwise you will have to resubmit a new offer to purchase the Official Trustee's interest in the above property, as the contract will have lapsed.
In the event of the attached contract lapsing; additional charges may be used in re-calculating a new acceptable purchase price, due to costs incurred by the Official Trustee.”
Attached to that letter was a “CONTRACT TO PURCHASE REAL ESTATE” (“the CONTRACT TO PURCHASE REAL ESTATE”), which I do not reproduce in full because of its length. It will be necessary to turn in more detail to the terms of that document in due course. It is sufficient for the moment to note that the document stated inter alia that the Applicants, "hereby offer the sum of $17,500.00 as consideration, inclusive of the professional expenses and outlays associated with the transmission of title to the Official Trustee in Bankruptcy, and those associated with the execution of necessary documentation for registration of transfer of title from the vendor to the purchaser, in full and final settlement, to purchase the Official Trustee's interest in the property ... ."
Mrs. Winter gave evidence that on receipt of that letter, she and her husband decided to go ahead with the deal, signed the document and sent it back to Mr. Kelly. She said that this was signed and sent back on or about 5 May by ordinary post. She said that that took place after she had spoken to Mr. Kelly to clarify some issues. It should be noted, however, that as she expressly conceded by her Counsel, she did not come up to proof on an allegation of a conversation with Mr. Kelly, alleged to have taken place at about this time and, evidencing or proving a contract with ITSA, as detailed in paragraph 29(b) of the Statement of Claim.
On 13 May 2003, Mr. Kelly replied (“Exhibit A12”). His letter relevantly said:
“Thank you for returning the offer to purchase contract.
Please provide me with an update regarding your efforts to obtain the necessary funds to purchase the Official Trustee's interest.”
Thereafter, the Winters contracted a mortgage broker who put them in contact with Pepper Home Loans. Mrs. Winter telephoned Mr. Kelly at about that time to say that funds were being obtained.
Although the Applicants did not know it, ITSA took action of its own. Exhibit A36 is a document entitled, "Decision to Transmit Title of Real Estate". It is apparent from that document that Mr. Kelly prepared, by 22 May 2003, particulars for the standard form document that it was showing the Applicants, the property value of approximately $69,000.00 as per the statement of affairs, the recent valuation by Eccleston and Fraser at $93,500.00, and potential equity of $22,839.22. Under the heading, "Comments", Mr. Kelly wrote:
“Given the costs associated with the sale of the property by the OT, it would be more cost effective to accept the former bankrupts' offer to purchase. I recommend that we accept an offer of $17,500.00 to purchase the former bankrupts' share of the property.”
Mr, Mumford, Mr. Kelly's superior, approved this action on 2 June 2003 and next to the heading, "Documents Executed" which had a "Yes" or "No" sign, the word "No" was crossed out. Mr. Ross, who was the officer having power to sign off on contracts, signed Exhibit A36 on 4 July 2003.
Instructions had been given to Ms Nicola Blade, a lawyer at the Australian Government Solicitor, by Mr. Kelly by no later than 3 June 2003. On that date, Ms Blade wrote to Mr. Kelly (“Exhibit A37”) saying that in accordance with Mr. Kelly’s instructions, the relevant documentation to enable the transmission of the bankrupts' property had been prepared and was enclosed for execution by the Official Receiver and return to her. That letter followed a letter ostensibly dated 6 June 2003 (part of “Exhibit A1”) from Mr. Kelly to Ms Blade. In my opinion, that date is in error, because the letter from Ms Blade to Mr. Kelly dated 3 June 2003 to which I have referred (“Exhibit A37”), has a date stamp showing that it was received by ITSA on 5 June 2003. Quite when the ostensibly 6 June 2003 letter was sent to Ms Blade it is not ascertainable, but I have no doubt that it was the preceding letter referred to when Ms Blade talks of, "In accordance with your instructions."
The so-called 6 June 2003 letter relevantly stated:
“Your assistance would be appreciated in assisting the Official Trustee in arranging for the transmission of Mr and Mrs Winter’s interest to the Official Trustee by preparing the necessary Form 14 and Form 20.”
Mrs. Winter telephoned Mr. Kelly because the finance company wanted a confirmation from ITSA that the offer made by the Applicants had been accepted. The date of that telephone call was not given by Mrs. Winter in evidence, but, judging by the pace of the other correspondence between the Applicants and Mr. Kelly, it was probably in early June 2003.
In response to Mrs. Winter's request to him, Mr. Kelly wrote an email to her dated 12 June 2003 (“Exhibit A13”), which I accept was procured by her for transmission to her proposed financiers and was understood by Mr. Kelly to achieve that end. The email relevantly stated:
“I am happy to advise that your offer of $17,500.00 to purchase the Official Trustee's interest in the property located at 8 Sharon Drive, EAGLEBY has been accepted in principle. However, I require that you remit to this office the amount of $17,500.00, in order for me to review and execute the required documents.”
Mrs. Winter gave evidence that there was no suggestion by Mr. Kelly that any further terms were required to be agreed. She said there was no suggestion that the contract was conditional, nor that any other terms were suggested in any way by Mr. Kelly either, as is self-evident, in the email, or orally. No alternative contract documentation was sent to her by ITSA. She then passed the email of 12 June 2003 from Mr. Kelly to the finance company.
In the interim, however, ITSA had itself obtained a valuation of the property. That took place because when Mr. Mumford signed Exhibit A36 on 2 June 2003, he made an annotation to Mr. Kelly which read:
“Benjamin – obtain RE appraisal please. (RE clearly meant real estate).”
Unbeknownst to the Applicants, L J Hooker Beenleigh provided a valuation to Mr. Kelly dated 20 June 2003 that valued the property between $140,000.00 and $145,000.00 (“Exhibit A35”).
On 24 June 2003, Pepper Home Loans approved the Applicants application for finance (“Exhibit A15) and on 27 June 2003, Hunt and Hunt solicitors for Pepper Homes, wrote to the Winters enclosing relevant loan documentation (“Exhibit A16”).
Mrs. Winter gave evidence that she then phoned Mr. Kelly (possibly on 1 July 2003 (see “Exhibit A17 - letter from Mrs. Winter to ITSA dated 5 August 2003) and told him that the Applicants had received finance, to which he replied, "That's great". He asked who Pepper Homes' solicitors were and was told Hunt and Hunt and said that he knew them. Mrs. Winter asked if Hunt and Hunt should contact Mr. Kelly directly and he said, "Yes". Mrs. Winter said in evidence that there were no other discussions, including that there were no discussions about rates or stamp duty.
Nothing thereafter happened from Mrs. Winter's point of view, and she contacted Hunt and Hunt who said that Mr. Kelly had not been in contact with them. Mrs. Kelly then rang ITSA, and discovered that

Mr. Kelly had gone. Mr. Kelly had, according to Mr Mumford, who gave evidence, been on a short four month contract which concluded, it would appear, at about the end of June.
On or about 21 July 2003, Mrs. Winter spoke to Mr. Terrence Liebler, who she said in evidence told her that the documentation was with the Official Trustee for signing. There was no intimation given to Mrs. Winter that there were any difficulties with the matter or any advice as to why the matter had not progressed.
Once again events had been transpiring of which Mr. and Mrs. Winter were unaware. On 7 July 2003, Terrence Lee, who had taken over from Mr. Kelly, wrote to Ms Blade (“Exhibit A38”), and referred to:
“Our previous telephone discussion and your email message on

4 July 2003 in relation to the above matter.”
He then went on to require Ms Blade to proceed with "the transmission as originally intended" and enclosed relevant documentation.
It emerged in the running, following an examination of the AGS file (“Exhibit A1”) by Mr. Lee during cross-examination that Ms Blade, who was not called as a witness because she was apparently uncontactable by the Respondent and her whereabouts are not known, spoke with Mr. Lee on 4 July 2003. From the email sent by her to Mr. Lee also on 4 July 2003, it seems plain that Ms Blade was considering the Official Trustee's position in the context that the Official Trustee might agree to relinquish its interest in the property. Ms Blade asserted relevantly that:
“I have considered the Official Trustee's position and in the event that the Official Trustee agrees to relinquish its interest in the property in exchange for repayment of the debt owed (approximately $17,500.00) the Official Trustee would be best protected (in the interim) by lodging a caveat over the property. An executed release of caveat can be given in exchange for a bank cheque at settlement.”

She then went on to deal with ancillary cost issues.
File notes made by Mr. Lee, the original of which were tendered as Exhibit A54, reveal that Ms Blade spoke with Mr. Lee on 4 July 2003 and that relevantly there was a discussion to this effect as follows:
“Ben gave her the go ahead & prepare transmission docs & a certificate of title issued to …”
That sentence is not completed but I am satisfied that the phrase “Certificate of Title issued to” reflected instructions given by

Mr. Kelly to Ms Blade to the effect that she was to take steps to prepare the necessary documentation to sell the property to the Applicants for $17,500.00.
Were this not the position, there would have been no need for

Ms Blade to express the opinion to Mr. Lee on 4 July 2003 (recorded in Exhibit A54) that “there is no need to continue with the transmission … a caveat can be lodge [sic] or alternatively, an undertaking from Hunt and Hunt acknowledging that the Official Trustee has an interest in the property”.
It was that conversation to which Ms Blade plainly referred when she sent her email to Mr. Lee on 4 July 2003.
Ms Blade had also spoken on 4 July 2003 to Tanya Quoyle of Hunt & Hunt, lawyers for Pepper Homes, the Applicants’ financiers.

Tanya Quoyle was called by the Applicants. She said that her diary notes of 4 July 2003 were accurate. Those diary notes (“Exhibit A50”) are contemporaneously handwritten notes made by Ms Quoyle. They show that on 4 July 2003, Ms Quoyle spoke to the representatives of the Department of Housing. One extract, referring to a conversation with Gary from the Department of Housing says:
“settlement at their office, 133 Mary Street L6”
A further entry referring to Ms Blade says:
“Nicola – Australian Government Solicitor phd – they are the sols for the Dept of HSG – (Public trustee)
She was concerned that ITSA would not receive their funds of $17,500.00 and suggested putting a caveat on the property.
Advised her that it is a condition of their loan that the debt will be paid no matter what.
She suggested that maybe we could put something in writing to that affect [sic] instead of caveat.”
From the file notes kept by Ms Blade, being part of Exhibit A1, the AGS file, it is clear that someone in the AGS, (possibly Lisa - see last entry Exhibit A50”) spoke to Ms Quoyle on 15 July 2003. That person, whose handwriting is clearly different from that of Ms Blade, had already spoken with somebody about the Ross Winter file and made annotations which can clearly only have followed a discussion with somebody at the Public Trustees Office:
“mtg @ public trustee – wants to organise settlement”
Under those annotations there is a further note, the first part of which is illegible but the second is:
“– transmission lodged 10.7.03”
Under which there is a further note of a conversation, clearly with Ms Quoyle in these terms:
“Tania
I said transmission lodged 10/7.
We have to wait until it registers before can settle. She will ring Nicola.”
From the notes kept by Ms Quoyle, it is clear that that conversation did not take place with Ms Blade as Ms Blade was not then present. It is not clear with whom Ms Quoyle spoke on 15 July 2003, as no evidence was led about the entries on that date. In these circumstances, I cannot be certain quite what the extent of their understanding of the events were.
Ms Quoyle said in evidence that Ms Blade was the solicitor for ITSA, and was concerned that ITSA might not get their money. It was in this context that the discussion as to the possibility of a caveat was raised and this was made a condition of the loan that $17,500.00 be paid to ITSA.
On 21 July 2003 Mrs. Winter rang Terrence Lee. Mr. Lee's file note (“Exhibit A39”) discloses:
“Re: Follow-up on delay of settlement of contract in relation to their purchase of OT's interest in their residential property for $17,500.00
Leanne called re: above matter. I advised her that the matter is with the OT for signing. I will follow up on the OT and get back to them.”
According to file notes kept by Mr. Lee (“Exhibit A40”), he spoke again with Mrs. Winter on 24 July 2003. It would appear that having assured Mrs. Winter that he would find out what was going on.

Mr. Lee spoke to Mr. Mumford reminding him to discuss the matter with Glen Cooper, Mr Mumford's superior.
Mr. Lee was called as a witness. He is now an APS level 5 case manager but was an APS 3 manager when he started on 1 July 2003. He had experience in insolvency before that but is not legally qualified. I formed the very clear impression that he had little active recollection of any of the events. This is not a matter of criticism. He must have handled dozens of files since his commencement of work for the Respondent on 1 July 2003. He was asked in re-examination whether the phraseology of the note set out in paragraph 52 reflected as to the first paragraph the words used by Mrs. Winter and as to the second paragraph words that he himself had used. He gave affirmative answers to those questions, but his hesitation in doing so leads me to accept the criticism advanced by counsel for the Applicants that I should not give much weight to that evidence.
Mr. Lee did concede, however, in cross-examination that the reference in Exhibit A39 to settlement would ordinarily mean that there had been a contract prior to the use of that phrase. He said that the phrase “delaying settlement of the contract” meant that ITSA was considering the offer. He said that “contract” meant the Applicants' document but did not understand that there had been a concluded settlement. He went on, however, to say that the notes were all that he could recall.
From Mr. Lee's diary notes, it is plain that Mrs. Winter rang again in late July 2003 asking what was going on. Following that Mr. Lee again reminded Mr. Mumford to discuss the matter with Mr. Cooper, "On whether to accept the offer from the Winters." The diary note by Mr. Lee to this effect appears to be dated 9 July 2003 (which I suspect is an error and may be 29 July 2003), but it would appear that it took until 6 August 2003 before discussion between Mr. Cooper and

Mr. Mumford occurred (“Exhibit A41”). They decided not to accept the offer of $93,500.00 because they already had the L J Hooker appraisal dated 20 June 2003 in excess of $140,000.00. They decided to obtain an AVO valuation.
On 5 August 2003 the Winters wrote to ITSA (“Exhibit A17”), stating that they had been advised on 12 June 2003 that their offer of $17,500.00 had been accepted in principle and that ITSA was awaiting the receipt of funds. They had told Mr. Kelly on 1 July 2003 that they had been successful in obtaining such funds. The letter went on:
“We, along with the financier, are now eagerly awaiting advice from ITSA as to how to proceed from here. Our concern is that if too much time elapses the financier will withdraw their offer of finance. Leanne has made six phone calls over the past month to Terry Lee, who's now handling our file. At this point Terry has not been able to advise us what the current position on our file is or what is causing the delay.”
The Winters went on to ask, in effect, what was going on.
It was put to Mrs. Winter in cross-examination that the terms of this letter reflected a state of mind and that it was not a concluded deal. She was seeking to get one, because she had earlier given instructions to ensure that the increased value of the home, known to her, was not revealed to ITSA. Mrs. Winter said that she always thought that there was a deal but that she was concerned by this stage that because of the increase in the value of the property, ITSA would renege upon it.
I found Mrs. Winter's answers on this issue, and indeed her evidence generally, to be given in a straightforward and convincing way.

I remain of this impression notwithstanding the concession made in submissions that Mrs. Winter had failed to come up to proof in respect of an important conversation alleged in paragraph 29(b) of the Statement of Claim, which was one of the alternative bases upon which a contract was contended for in the pleadings. Notwithstanding that the failure to remember an important conversation might be said on one view to detract from her credit, nonetheless, I have formed the clear view from the manner in which Mrs. Winter gave her evidence, and the direct way in which she responded to cross-examination that her answers were truthful. I accept her answers on this issue.
There is nothing inherently contradictory in believing that you have a deal, finding that the deal is going to be more advantageous to you than perhaps you had at first thought, and having an anxiety lest that fact alert the other side to the position and cause the deal to be lost.
On 8 August 2003, ITSA instructed Eccleston and Fraser to conduct the relevant valuation of the property (“Exhibit A42”). By this stage, Mr. Ponting had been engaged by the Winters to represent their interests. Although Mrs. Winter said this was because they had had no response to their letter of 5 August 2003, the fact that Mr. Ponting had been engaged by 8 August 2003 suggests to me that those instructions were given because of a general frustration by the Applicants as to the progress of the matter.
The valuation was provided to ITSA by Eccleston and Fraser dated

12 August 2003. It valued the property at $145,000.00.
Further conversation took place between Darrel Kake of the firm of Bernard Ponting and Company and Mr. Lee on 22 August 2003, as shown by Mr. Lee's file notes of that date (“Exhibit A43”). It would appear that Mr. Lee told Mr. Kake that legal advice was being obtained, "in relation to present contract of sale." Mr. Lee said he would get back to Mr. Kake as soon as he heard from Tucker and Cohen, ITSA's solicitors.
Thereafter, Mr. Lee gave temporising replies to Mr. Kake's further contacts in August 2003.
Messrs Tucker and Cohen wrote to Mr. Kake on 17 September 2003 (“Exhibit A18), essentially denying that a contract had been concluded. In the meantime on 25 August 2003, Ms Blade wrote to Mr. Lee confirming that the Official Trustee had been registered on title as the owner of the property (“Exhibit A44”).
On 22 September 2003, ITSA wrote to the Applicants enclosing a list of creditors and requiring further details of the same (“Exhibit A19”). That letter showed that the Winters were indebted, including the debt pursuant to the mortgage, in their joint estate in sums of approximately $143,000.00 in respect of Mrs. Winter and $39,000.00 in respect of Mr. Winter.
Although subsequent correspondence between Bernard Ponting and Company and Tucker and Cohen has been received into evidence, it is sufficient for these purposes to say that that correspondence did no more than articulate the respective competing positions for which the parties contended.
The last correspondence relevant for these purposes would appear to be the letter from Bernard Ponting and Company to Tucker and Cohen dated 24 November 2003 (“Exhibit A23”), which sought that the Respondent obtain instructions. It does not appear that that letter was the subject of any reply by ITSA or its solicitors. After receipt of that reply, it would appear that Mrs. Winter was advised by her solicitors that they were unable to get any response. She gave evidence that she contacted Terrence Lee and asked if she could know who the creditors were. He said he would put that together and get a list for her. Mrs. Winter said this was an alternative to legal process but Mr. Lee did not call back. She tried to contact him but he was always unavailable.
Mrs. Winter gave evidence that she was not aware that ITSA was the official registered owner of her property, but retracted that answer when shown documentation that showed her rates bills were forwarded by ITSA to the Applicants which they paid. The Applicants continued to service the mortgage loan, continued insurance on the property. No demand was made by ITSA that the Applicants vacate, nor were they given any notification of sale.
The next thing that occurred appears to be a letter from ITSA to the Applicants dated 2 February 2005 (“Exhibit A25”), which gave the Applicants the options of paying out the debts and costs of their bankruptcies in full, or making an offer to purchase the Trustee's nett equity in the house property.
Thereafter, the Applicants gave instructions to their solicitor to the effect that there was a binding agreement, and Mr. O'Dea, now engaged on their behalf, wrote to ITSA on 18 March 2003 (“Exhibit A25”) articulating their position that there was a binding contract.
Once again, although correspondence thereafter passed between

Mr. O'Dea and ITSA, that correspondence has been exhibited. It shows that the parties maintained their positions, including that of the Applicants, that they remained willing and able to complete the contract for $17,500.00. The correspondence does not significantly assist because the parties merely repeated their positions.
At this stage, it is appropriate to deal with the other witnesses called by the Respondent.
The Respondent called a Mr. Kallos, a registered property valuer who has given valuations for the property at various times. In cross-examination Mr. Kallos conceded that he had not inspected the interior of any of the properties to which he made reference in his report, including that of the Applicants.
It is not necessary for me to deal in detail with Mr. Kallos’ evidence save to say that his methodology was seriously flawed. I found particularly unconvincing his assertion that the Applicants' property was worth only $2,000.00 more than a property in worse condition and having a quarter of the land. Even accepting, if one did, the reservations about the capacity of subdivision of the property, it seems to me that to allot only $2,000.00 more for an extra three-quarters of the property as land is wildly unrealistic.
Mr. Mumford was the next witness called by the Respondent. He had been an employee of ITSA for about 16 years and the Deputy Official Receiver for about six years. He was familiar with the Applicants' estates and managed the team that managed them.
He gave evidence that Mr. Kelly had been a contract employee of ITSA for about three to four months in 2003, between about March/April and about July. He gave evidence that Mr. Kelly was a lower level APS 3 with a relatively limited authority to deal with assets. APS 3 was the lowest level of officer entitled to handle bankruptcy and was mainly limited to selling chattels. He had no delegation to deal with real property.
Mr. Mumford said that Mr. Kelly underwent induction procedure at which such matters would, in the ordinary course, have been made plain to him but Mr. Mumford was not himself involved in

Mr. Kelly’s induction. Nor was Mr. Kelly called.
Mr. Mumford gave evidence about Exhibit 49, which was only made available to the Applicants’ lawyers on the morning of the trial. He said Exhibit 49 was a decision to sell and transfer real estate. It was a standard internal document and it came from the Applicants' file. This document was submitted to him from Mr. Kelly. In fact the transmission document should have come first. This meant transmission by bankruptcy. He never signed Exhibit 49, because “we’d looked at the values and the offer was too low”.
Exhibit A36 was the decision to transmit, which he signed, and Exhibit A49 was the same day. The recommendation made on Exhibit A36 would normally have been on Exhibit A49. According to Mr. Mumford, Mr. Lee got the documents the wrong way round, (“he got his order wrong” (Transcript 80 at line 43).
Exhibit A41 was the file note of his discussion with his manager on 6 August 2003. This was undertaken because Mr. Mumford only had delegated authority up to properties of $150,000.00. The L J Hooker appraisal said the value was close to that amount.
Mr. Mumford said he took Exhibit A11 (“the CONTRACT TO PURCHASE REAL ESTATE”) to be an offer, but only Mr. Ross had authority from the Official Trustee, as Official Receiver, to sign off such contracts.
Mr. Mumford was unable to say when ITSA received Exhibit A11. He never signed it.
He deposed that following the correspondence of 17 September 2003 by which Messrs Tucker and Cohen rejected any suggestion that the Applicants owned their property, the property was not sold because of the possibility of litigation throughout 2003 to 2004.
In cross-examination, Mr. Mumford was unable to explain why Exhibit A49 was not included in the Affidavit of Documents sworn pursuant to the orders of Greenwood J. He said the document must have been overlooked at the time by the case manager who prepared documentation for him to swear his affidavit. He had not been through the file himself.
Mr. Mumford deposed that he circled "Yes" on document A36 in relation to transmission only and not in relation to sale.
I found Mr. Mumford's answers in cross-examination, and his demeanour, to be overly defensive, being unwilling to concede even matters that were obvious.
The fact that Mr. Mumford requested an independent valuation in June 2003 does not persuade me that he was, as he said in evidence he was, only viewing Exhibit A36 as an approval of transmission and not as an approval of a decision to sell. I think that this was a version of events based on reconstruction. Plainly, Mr. Mumford was seeking to do a belt and braces operation in respect of the possible price of the property. However, he seems to me to have been somewhat confused by the fact that Mr. Kelly had erred in the documentation. As he put it, “he got his order wrong” (T80). In any event, I am not satisfied that Mr. Mumford did more than ask Mr. Kelly to seek a valuation by making the annotation on Exhibit A36. He certainly proffered no such oral evidence before the Court. In these circumstances, I am satisfied that my analysis of the position adopted by Mr. Kelly is correct. If Mr. Kelly had been told not to proceed until after the valuation with any prospect of selling the property, then he would never have given the instructions that he must have given to Ms Blade that gave rise to the discussion of sale between her, the Department of Housing and Ms Quoyle.
Mr. Mumford was unable to explain why the Australian Government Solicitor had contacted Pepper Home Loans. He was also unable to explain why there had been discussion of a caveat, given that on his evidence there was no concluded agreement to sell. He did, however, confirm that ITSA always transmits title even if the bankrupts are on title. He said that ITSA can ask for a pre-contract tender because of concerns as to whether the bankrupts may indeed be able to gain funds. He said that sometimes costs of transmission were required.

It emerged, however, that the costs of transmission were really only of the order of $500.00 to $600.00. The figure of $3,000.00 to $4,000.00 to which he also referred is the figure that would include all the costs of sale and the costs of ITSA generally in completing the transmission of title to enable the sale to take place and the sale itself.
Mr. Mumford said that although he was aware of the L J Hooker appraisal of 20 June 2003 in the sum of $140,000.00 to $145,000.00, it took until August to make a decision. Transmission had taken place before 20 June. He said that the delay might have been caused by annual leave or other workaday factors. In re-examination, Mr. Mumford confirmed that equity was one reason for the transmission, because once there was equity in the property there was a purpose in putting the Trustee on the title. He confirmed that $3,000.00 to $4,000.00 was the standard fee charged by ITSA for sale to a bankrupt if there was no equity in the property. He said that transfer to bankrupts had occurred 30 to 40 times in his experience, and that ITSA always wants to recover at least $3,000.00 to $4,000.00.

Submissions as to the Law

Both parties provided written submissions and spoke to their submissions. The Applicants' submissions were marked by me as “MF2” and further supplementary submissions as “MF4”. Submissions by the Respondent were marked “MF3”.
I have been referred to numerous authorities on various aspects of the matters in dispute in the proceeding, and have carefully studied all of those authorities.
Nonetheless in the ultimate, it seems quite clear to me that the critical issue is whether or not there was a concluded agreement between the parties. Neither counsel disagreed with that proposition when I put it in the running.
Both parties accepted that pre-contractual conduct is admissible as evidence of the existence of a contract if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective, aim or the meaning of any descriptive term (see Codelfa Construction Propriety Limited v State Rail Authority of New South Wales (1982) 149 CLR 337). Counsel for the Respondent took the matter further. He submitted that in light of the decisions of the High Court in Pacific Carriers Limited v BNP Paribas (2003 - 2004) 218 CLR 451 at 22 and Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 40, the surrounding circumstances are relevant even where there is no ambiguity in the contract document.
Counsel for the Applicants further asserted that post contractual conduct can be admissible on the question as to whether a contract was formed (a point also expressly made in footnote 47 of the Respondent’s submissions, referring to Darter Pty Ltd v Malloy (1993) 2 Qd.R. 615), and referred me to the judgment of Einstein J in African Minerals Limited v Pan Palladium (2003) NSW SC 268 (“African Minerals”) in which Einstein J quoted at [28] from the judgment of the New South Wales Court of Appeal in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 in the following terms:
“The first relevant principle of law is that pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective aim or the meaning of any descriptive term. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347 – 352.
The second relevant principle is that post contractual conduct is admissible on the question of whether the contract was formed (authorities not reproduced).
The third relevant principle is that post contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed (further discussion omitted).
The fourth relevant principle is that the construction of a contract is an objective question for the court, and the subjective beliefs of the parties are generally irrelevant in the absence of any argument that a degree of rectification should be ordered or an estop led by convention found.”
In that decision, Epstein J went on further to discuss at 29 to 40 the principles relevant to the Court’s task in circumstances such as these. I have had regard to that helpful (if I may respectfully say so) discussion of the law in approaching the task that is now before the Court.
In my opinion, what I have to do in the light of all the authorities to which I have been taken is to review the conduct of the parties and decide “whether the conduct of the parties viewed in the light of the surrounding circumstances shows or is indicative of an agreement having come into existence” (African Minerals at [31]) and ascertaining “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in this situation at which they were at the time of contracting” (African Minerals at [44)] quoting the judgment of Gleeson CJ, Gummow and Hayne JJ in Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 76 ALJR 246 at 248.
In approaching this task, however, I bear in mind the caution uttered by Thomas J in the decision of the Full Court of the Supreme Court of Queensland in Australian Energy Limited v Leonard Oil N.L (1986) 2 QR 216 at 237, that inferences will only be drawn in cases where the evidence is clear.
I also bear in mind the line of authorities referred to by the Respondent commencing with Neill and Another v Hewins and Another (1953) 89 CLR 1 (“Neill”), showing the caution that must be brought to bear when one is considering documents which, as counsel for the Respondent rightly pointed out, appear ex facie to require execution by both parties.
What then is the true analysis of the events? In my opinion, this is a case which can be approached on the standard principles of offer and acceptance.
The letter from ITSA to the Applicants dated 6 March 2003 (“Exhibit A6”) was plainly an invitation to treat. It requested the Applicant to submit “an offer in writing to purchase the Official Trustee’s interest in your property”.
In my opinion, the response to that letter from the Applicants dated 31 March 2003 (“Exhibit A7”) was indeed an offer. It was expressly suggested that it was an offer. It stated “we would like to submit an offer of $15,000.00 (subject to us obtaining finance for this amount)”. That in my opinion was an offer susceptible of being accepted or not accepted by the Respondent. The reservation concerning finance did not render the offer illusory (see Meehan v Jones (1982) 149 CLR 571).
The Trustee did not of course accept the 31 March 2003 offer.

Mr. Kelly wrote back on 1 April 2003 rejecting that offer and in effect inviting the Applicants to submit a new offer. Mr. Kelly’s letter (“Exhibit A8”) stated, “I request that you please review, resubmit a new offer to purchase the Official Trustee’s interest”.
In my opinion, the form of words, “please review” add nothing to the sentence in which they are contained. They are clearly a form of words used by Mr. Kelly, (who used them again later) and amount to no more than inviting the Applicants as it were to think again.
The Applicants then forwarded the email of 10 April 2003 to

Mr. Kelly (“Exhibit A9”). That letter followed other discussions between Mr. Winter and Mr. Sara as to the appropriate amount that should be fixed for the fair price for the sale of the property to the Applicants. The letter said, “we would like to make a further offer to purchase the Official Trustee’s interest in the property of $17,500.00 (subject to us obtaining finance)”.
That letter then led to Exhibit A10 being Mr. Kelly’s reply dated 24 April 2003. That once again used the phrase, “please review” but in a slightly different context. It appears that what Mr. Kelly was inviting the Applicants to do was to look at the contractual documentation that he had enclosed, “complete and return the attached formal Offer To Purchase contract to this office by 8 May 2003; otherwise you will have to resubmit a new offer to purchase the official trustee’s interest in the above property, as the contract will have lapsed”. Leaving aside for the moment the question as to whether Mr. Kelly had appropriate authority to enter into contractual arrangements on the part of the Respondent, the question is whether the letter and attached document from Mr. Kelly constituted either:
a)an acceptance of the offer put to him by the Applicants by their email dated 10 April 2003; or
b)an offer to the Applicants to purchase the property by executing the document that Mr. Kelly had enclosed with the letter; or
c)a further invitation to treat.
It is common cause that the Applicants did indeed sign the CONTRACT TO PURCHASE REAL ESTATE and that Mr. Kelly replied on 13 May 2003, thanking them for that documentation and asking for an update regarding the applicant’s efforts to obtain necessary funds. In my opinion, while it is of course clear that the CONTRACT TO PURCHASE REAL ESTATE on the face of it required signature by both parties, when looked at in the context of the dealings with the parties as showed objectively by the correspondence passing between them, I think that a valid agreement was entered into as a result of the documents to which I have referred. At all times, the Respondent expressed itself in correspondence to the Applicants in terms inviting the Applicants to make “an offer to purchase the Official Trustee’s interest”.
The Applicants did exactly that by their email of 10 April 2003.

It should be noted that while plainly the Applicants’ offer was as it were in shorthand form, this was a case where the parties were under no illusions as to what the subject of negotiation was. The Applicants had been living in the property for a very long time, they were aware, or thought they were aware, of all relevant matters about the property as it then was, and they had come to a precise figure as to an amount they were prepared to pay to buy it.
The CONTRACT TO PURCHASE REAL ESTATE contained more detail in the email sent by the Applicants. It contained the salient features of a binding contract. The land was fully identified to the extent that was necessary in the circumstances as were the price and other relevant ancillary matters.
The letter dated 24 April 2003 from Mr. Kelly did not make anything of the qualification as to finance contained in the Applicants’ email dated 10 April 2003. All that was required was that the Applicants “review, complete and return the attached Formal Offer to Purchase contract to this office by 8 May 2003”. Most tellingly, the letter went on to say “otherwise you will have to resubmit a new offer to purchase the Official Trustee’s interest in the above property, as the contract will have lapsed” (emphasis added).
Mr. Kelly’s letter went on to say what the consequences of the contract lapsing would have been, namely, additional charges in recalculating a new acceptable purchase price. The obvious inference is that the purchase price offered by the Applicants had indeed been accepted.
Viewed objectively, the only qualifications to a concluded contract (i.e. option (b) in paragraph 107 above), in my view, might be said to have been extant as at the signing of the CONTRACT TO PURCHASE REAL ESTATE were first, that it be returned on or before 8 May 2003 and second, that in due course the Applicants be in a position to be obtaining of funds to complete the purchase.
I accept the submission made by counsel for the Respondent that the effect of s.160 of the Evidence Act 1995 (Cth) is one that must presume the letter posted by the Applicants on or about 5 or 6 May 2003 must have been received after 8 May 2003. Nonetheless, it is apparent from Mr. Kelly’s letter of 13 May 2003 (“Exhibit A12”), that the reference to 8 May 2003 was not a material one. Nothing in that letter raised the question of the time limit previously expressed of 8 May 2003. Rather, it is plain that Mr. Kelly regarded the contract (if that is what it was which I find it was) was on foot. Mr. Kelly did not, as he would have done had the matter been material, raise the time limit. Rather he had merely enquired what was happening about the finance.
While the above findings are sufficient to establish the existence of a concluded contract between the parties, I am fortified in the proposition that the events that I have described gave rise to a binding contract by the conduct of Mr. Kelly thereafter. Mr. Kelly was, it should be noted, only an employee of the Respondent for some four months. While Mr. Mumford said that Mr. Kelly did not have authority to authorise sale of properties at all (being restricted as an APS 3 merely to the disposition of chattels), Mr. Mumford did not personally conduct the induction process that Mr. Kelly was said to have been likely to have undergone, and there is no probative evidence before me that Mr. Kelly had any particular understanding of his authority. He plainly did not regard himself as having a capacity to personally approve the sale of the property as shown by Exhibit A36.
What is worthy of note, however, is that in Exhibit A36 by no later than 22 May 2003, Mr. Kelly was writing that:
“I recommend that we accept an offer of $17,500.00 to purchase the former bankrupt’s share of the property.”
On that document, as I have said earlier, next to the heading “action approved” the word “yes” is circled by Mr. Mumford with a date of

2 June 2003. By the next day, Mr. Kelly had given instructions to Ms Blade (see Exhibit A37) to enter transmission of the bankrupt’s property.
As I have discussed earlier, it is quite plain that Ms Blade was at least initially under the impression that she was to sell the property to the Applicants for the sum of $17,500.00. That was a sum well in excess of the amounts that would have been required to effect transmission which appeared to be limited to either $500.00 or $600.00 (apparently this sort of fee is chargeable on such transmission) or $4,000.00 (if one takes a global view of the Respondent’s costs of transmission and sale).
It seems to me more probable than otherwise, that ITSA would not have been concerned to secure the $17,500.00, as Ms Blade plainly was on her instructions seeking to do, if there had not been an agreement to sell for that amount. A mere transmission would only have cost $4,000.00.
It is not possible to see how Ms Blade could have been under the misapprehension that she was supposed to be selling the property if someone had not given her instructions to that effect. It seems more probable than otherwise to me that that impression was gained by her from the instructions given to her by Mr. Kelly who was the person having charge of the file in June 2003. Ms Blade was not called and nor was Mr. Kelly. This does not necessarily give rise to an inference, in my view, that their evidence would have been actively unhelpful to the Respondent. In Ms Blade’s case it was conceded that she could not be found, and although Mr. Kelly’s non-appearance was not explained, no evidentiary basis was established by the Applicants for a Jones & Dunkell point on this issue. Mr. Kelly having been an employee for a short period of time in 2003, his non-attendance at Court does not to my mind necessarily impute any actively negative quality to his possible evidence.
Nonetheless, as I have said, it seems far more probable to me than otherwise that Mr. Kelly acted in a fashion consistent with a contract having been entered into. While Mr. Kelly’s actions are not admissible evidence on the question of what the contract means, they are admissible as to whether or not it was formed[1].
[1] See African Minerals at paragraph 40.
The evidence does not show for certain whether or not Mr. Kelly ever saw Exhibit A36 after Mr. Mumford signed it on 2 June 2003. Nonetheless, there is an annotation on Exhibit A36, as I have already said, requiring Mr. Kelly to obtain a real estate appraisal. Mr. Kelly acted on this appraisal and it is therefore more probable than not that Mr. Kelly had the document A36 returned to him at some stage, either in copy or original form. Noting that the phrase “action approved” was circled “yes”, and noting that it was Mr. Mumford’s position that Mr. Kelly may have misunderstood the process, I am of the view that, Mr. Kelly acted thereafter as though a contract had been entered into by giving Ms Blade the instructions to sell before he left ITSA at the end of June 2003 or very early July. That evidence, in my opinion, is supportive of the proposition that a concluded agreement was reached when the Applicants returned the Contract to Purchase Real Estate to him.
There are, however, a number of other matters that still require consideration. Counsel for the Respondents made a number of submissions with which it is appropriate to deal in more detail, although I have traversed some of them in a more general way.

Non mutuality of the alleged offer and acceptance (paragraph 7 submissions for the Respondent)

Plainly, a contract can only be concluded if the party that accepts the offer assents unreservedly to the contract proposed by the offer

(see RA Brierley Investments Limited v Landmark Corporation Limited (1966) 120 CLR 224 at 233 per Barwick CJ, Kitto and Windeyer JJ and 236 per Menzies J). The difficulty here for the Respondent, however, is that on the analysis that I have found to be correct, the Applicants did unreservedly accept the offer made to them. What had happened was that the Applicants' email of 10 April 2003 provoked the offer as I find it to be from Mr. Kelly to them constituted by the CONTRACT TO PURCHASE REAL ESTATE. By signing it, the Applicants unreservedly accepted that offer.
Those observations are sufficient to dispose of the matters set out in paragraph 7 of the Respondent’s submissions. Further, the CONTRACT TO PURCHASE REAL ESTATE document was clearly, on the face of it, regarded by ITSA as a document sufficient to ground a contract inasmuch as it provided for signing by both the Applicants and the Official Trustee in Bankruptcy.

The CONTRACT TO PURCHASE REAL ESTATE on its face was required to be executed by the Respondent under seal

I accept of course the force of the authorities referred to by the Respondent in this regard. I have already referred to Neill above.
For the reasons I have set out, however, (and responding to the matters set out in paragraph 9 of the Respondent’s submissions) I think that the surrounding circumstances which I have described above show that the CONTRACT TO PURCHASE REAL ESTATE was indeed prepared by the party sought to be charged, sent by that party to the other party for that party to sign and that it is shown from the form of the document, and more particularly the surrounding circumstances, that it was intended that a contract be entered into by the execution thereof by the Applicants.
The surrounding circumstances to which I refer in the preceding paragraph are of course the dealings between the parties up until the letter from Mr. Kelly dated 24 April 2003, together with the terms of that letter. If one applies the statement of Lord Blackburn from Rossitter v Miller (1878) 3 APP CAS at 1124 and 1152, quoted by Dixon CJ and McTiernan and Kitto JJ with approval in Masters and Another v Cameron (1954) 91 CLR 353, this is not a case where “each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he finds that though it may represent what he said, it does not represent what he meant to say”.
To the contrary, the CONTRACT TO PURCHASE REAL ESTATE set out in clear unambiguous terms what ITSA was offering to the Applicants. There was no suggestion whatsoever that the valuation process that ITSA had embarked upon was a condition precedent to the execution of the contract.
While it may seem counter-intuitive to see a document which plainly provides for execution by two parties as binding even though it has only been signed by one party, the fact is that on the construction of the events that I have found, the signature by the Applicants did indeed form a binding contract when they signed the CONTRACT TO PURCHASE REAL ESTATE.

Section 160 of the Evidence Act 1995 (Cth)

While I have accepted the submission of counsel for the Respondent as to the effect of this legislation, for the reasons given above, I believe it is in no way fatal to the Applicants’ claim. While Mr. Kelly did indeed on the face of the document request that the formal “Offer To Purchase contract” be returned to him by 8 May, and expressly said that the contract would lapse if that did not occur, it is quite apparent from the course of dealings between the parties thereafter that, to the extent that this might have been said to be a material condition, it was waived by the Respondent. The letter from Mr. Kelly to the Applicants dated 13 May 2003 (“Exhibit A12”) thanked the Applicants for returning the “Offer to Purchase contract” and did not in any way suggest that the contract had lapsed. If the time limit of 8 May 2003 had been in any way material, the point would plainly have been taken by Mr. Kelly at that time. What in fact happened was that Mr. Kelly proceeded to instruct the AGS (at a date that I think was at the end of June, or very early July 2003, this being the time at which Mr. Mumford said that Mr. Kelly ceased work and the date at which Mr. Lee said he commenced), and gave instructions to the AGS to transmit the bankrupts’ property, and as I have earlier found, did so in such a fashion as to create in Ms Blade’s mind, at least initially, an understanding that the property would be sold.

Other subsequent conduct

Both parties have sought to seize upon the phraseology of communications between the parties after 24 April 2003 in support of their respective positions. Save to the extent that I have already identified in the earlier discussion of the facts in these reasons, in my opinion, both parties used phraseology arguably inconsistent with the positions for which they now contend at one time or another. None of this, in my opinion, save to the extent that I have set it out above, in any way detracts from the fact that a contract was, in my view, entered into when the Applicants returned the CONTRACT TO PURCHASE REAL ESTATE and the same was accepted by Mr. Kelly.

The authority of Mr Kelly to sell

It seems clear on the evidence that Mr. Kelly did not have the authority to sell the property to the Applicants in the sense that he was too junior an officer to have received the relevant delegation of authority to do so. Nonetheless, I think there is very considerable force in the submissions made about this matter by counsel for the Applicants. In paragraph 29 of their Statement of Claim which was settled by senior counsel, the Applicants pleaded the circumstances alleged to give rise to a concluded contract between the parties, such matters being essentially to do with what Mr. Kelly had allegedly said or done. By its defence filed on 16 November 2005, the Respondent relevantly pleaded that it denied that Mr. Kelly was an “agent for the Respondent on the grounds that he was an employee assisting the Respondent in the conduct of this matter and not an agent for the Respondent”. While that denial was to sub-paragraph 29(a) of the Statement of Claim which referred to a conversation between Mr. Kelly and Mrs. Winter, the pleading that Mr. Kelly was the agent of the Respondent was denied in general terms by the defence. In other words, the suggestion in the Statement of Claim that Mr. Kelly was an agent of the Respondent was not restricted to the conversations alleged in sub-paragraphs 29(a) and (b) but traversed the whole of that paragraph and was denied in the same way.
By an amended defence and cross claim filed on 13 July 2006, a short period before the trial commenced, and the denial that Mr. Kelly was an agent was expressly withdrawn and sub-paragraph 29(a) was admitted. That admission included the proposition that Mr. Kelly was an “agent of the defendant [sic]”.
While evidence of the true state of Mr. Kelly’s authority was admitted without objection, nonetheless in my opinion, “an admission of a fact alleged in the pleading of the opposite party operates to remove the fact from the area of controversy” (see Pioneer Plastic Containers Ltd v Commissioners of Customs and Excise (1967) (Ch) 597. I think that counsel for the Applicants is right and that given that the formal admission made by the Respondent, this point cannot be upheld in favour of the Respondent.

The Statute of Frauds (Section 59 of the Property Law Act 1974 (Qld))

The amended defence and cross claim, which if I may say so, was thoroughly and professionally drawn, does not plead the Statute of Frauds.
The learned authors of Cheshire and Fifoot’s Law of Contract, eighth Australian Edition, Butterworth’s 2002 assert at paragraph 16.7:
“Statute must be expressly pleaded. Before proceeding to a detailed examination of these provisions, it is important to note that a defence of the statute must be expressly pleaded …”
and thereafter cite authority including Suttor v Gundowda Proprietary Limited (1950) 81 CLR 418 at 440 which is to the effect asserted.

I think that counsel for the Applicant is right in his submission, that the failure to plead this defence unfairly prejudices the Applicants who might reasonably have been expected to put evidence as to part performance if the matter had been squarely raised. I note further, that there was no application even at that late stage in submissions by counsel for the Respondent to further amend the pleading to plead the Statute. Accordingly, in my opinion, this defence must fail.

Laches

The Respondent submits that if a contract is held to have been formed then specific performance should not be decreed. The Respondent submits that the Applicants should be confined to damages.
It is submitted that the delay by the Applicants from the time of receipt of the Respondent’s solicitor’s letter of 17 September 2003 (“Exhibit A18”) until the issue of proceedings in March 2005 was excessive. It was pointed out that even after that the proceeding was not instituted seeking specific performance until 5 October 2005.
In the ultimate, I am not persuaded that the Respondent has been prejudiced by the delay in these proceedings. Given that there was, as I have found, a concluded contract in 2003 at that time the Respondent ceased to have any beneficial ownership in the property. All that has happened in the meantime is that the issue as to whether or not the contract had indeed been formed has been put off for judicial determination.
While it is true that the Respondent did not know whether it would be held to the contract for which the Applicants have contended, the fact is, it was just as open to the Respondent to have instituted proceedings seeking declaratory relief, as it was to the Applicants to institute the proceedings that they have indeed brought.
It has not been contended in submissions from the Respondent that the delay has of itself prevented the calling of Ms Blade or of

Mr. Kelly. Furthermore, most of the evidence in this case is documentary evidence capable of being analysed now, at a time in the ultimate, just over three years since the breach of contract took place, a period only half the standard limitation period.
Nothing was put to Mrs. Winter in cross examination to suggest that the Applicants wilfully delayed bringing their claim in order to maximise their potential gain if the contract was to be upheld. Indeed, the impression I had from the tenor of Mrs. Winter’s evidence, together with the long residence of the Applicants in the property, would suggest to me that while they would of course be delighted by the increase in price of the property, they have no immediate plans to realise a profit by selling it.
In all the circumstances, it is easy to see why the Applicants may have taken some considerable time to institute proceedings. It would be doubtless not to have been easy for them to obtain the necessary funding to embark on legal proceedings. I do not find that the Applicants unduly or unfairly delayed bringing the proceeding, nor that the Respondent has been unfairly prejudiced by any such delay.

I repeat that it was always open from the 17 September 2003 onwards or at least from October 2003 when solicitors for the Applicants articulated the Applicants’ position (“Exhibit A20”), for ITSA to have commenced proceedings. I further note, that as late as 5 April 2005 ITSA (“Exhibit A29”) was writing to the solicitors for the Applicants, stating inter alia “I acknowledge that the issue of the Trustee’s interest in the property needs to be resolved and I apologise for the length of time it has taken”. Later in the same letter, Mr. Warten, the ITSA correspondent, wrote “the Trustee would like to work towards a resolution with a minimum of expense for your clients and does not believe it is necessary for your clients to take legal action. However, the Trustee will defend its position if any action is taken”.
In all these circumstances, I do not believe that such delay as there has been by the Applicants should disentitle them to an order for specific performance.

Conclusion

Accordingly, in my opinion, the Applicants are entitled to succeed. There should be an order for specific performance of the contract that I have found to exist. The formal orders of the Court will include a declaration that the Applicants and the Respondent concluded a contract between them in April 2003 for the sale to the Applicants of the Respondent’s interest in land at 8 Sharon Drive, Eagleby in the State of Queensland being the property described as Lot 4 on R.P. 188588 County of Ward, Parish of Boyd, Certificate of Title reference 16472051. The Court will further order that there will be specific performance of the said contract.
I will hear the parties on the question of costs.

I certify that the preceding one hundred and forty-seven (147) paragraphs are a true copy of the reasons for judgment of Burchardt FM

Associate: Brooke Evans

Date: 1 September 2006