Zabart P/L v McKay
[2002] QDC 5
•23 January 2002
DISTRICT COURT OF QUEENSLAND
CITATION:
Zabart P/L v McKay & Anor [2002] QDC 005
PARTIES:
ZABART PTY LTD
ABN 947 337 265 81 (as Trustees for the KEALALEY FAMILY TRUST) and EWAN ALISDAIR STODDART (as Trustee for the MONTEGO BAY DISCRETIONARY TRUST)and
DAVID McKAY and JENNIFER LYN McKAY
FILE NO/S:
928/2000
DIVISION:
Civil jurisdiction
PROCEEDING:
Action for return of deposit
ORIGINATING COURT:
Magistrates Court, Southport
DELIVERED ON:
23 January 2002
DELIVERED AT:
Brisbane
HEARING DATE:
21 December 2001
JUDGE:
Judge Boulton
ORDER:
Application dismissed
CATCHWORDS:
CONTRACT FOR SALE OF LAND – commercial leases – inconsistency between standard condition in contract and special condition along with specific references in lease schedule
COUNSEL:
Mr GJ Radcliff for the plaintiffs
The defendants appeared on their own behalfSOLICITORS:
Johnsons Solicitors for the plaintiffs
REASONS FOR JUDGMENT
The principal action is for return of a deposit paid by the plaintiff purchaser pursuant to a contract for sale of a property at Southport. The defendants were the vendors.
The plaintiffs’ claim is based upon a standard condition Clause 33.3 of the contract which is set out in detail in paragraph 3 of the Statement of Claim filed 2nd November 2000. Standard Condition 33.3 is as follows:
“33.3 Acceptance of Lease and Service Contract Terms
(1)Within seven days of the date of this contract the vendor will deliver to the purchaser or the purchaser’s solicitor true copies of all leases and service contracts together with a written statement that they constitute the whole of every agreement or arrangement with each of the tenants stated in those leases or with each of the service contractors in those service contracts.
(2)If
(a)the vendor does not deliver to the purchaser or the purchasers’ solicitors true copies of all leases and service contracts pursuant to clause 33.3(1); or
(b) true copies of all leases and service contracts
have been delivered pursuant to clause 33(1)
and the purchaser is not satisfied with any of
the terms and conditions of any lease or
service contract:
(c) then in the case of clause 33.3(2)(a) the
purchaser shall be entitled to terminate this contract by notice in writing to the vendor or in the case of clause 33.3(2)(b) the purchaser shall be entitled to terminate this contract by written notice to the vendor within seven days from the date upon which all leases and service contracts have been delivered.”
The plaintiff alleges non-compliance with this provision on the part of the defendants and that, as a consequence, their termination of the contract on 11th October 2000 was legitimate and that they were entitled then to a return of their deposit of $10,000.
The defendants (who were self represented at trial) filed a defence on 6th January 2001 claiming reliance on a special condition, Special Condition 5. Special Conditions 4 and 5 are contained in Annexure “B” to the contract and are as follows:
“Special Conditions
4.This contract is subject to and conditional upon Lease 2 in the Lease Schedule and Lease 3 in Annexure being duly executed on or before the date for completion. ...
5.This contract is subject to and conditional upon Lease 1 in the Lease Schedule being renewed for a further two year period (being from October 1, 2000 to September 30, 2002 prior to settlement). Rental for the 12 months commencing October 1, 2000 shall be $880 (GST inclusive) per calendar month. Rental for the 12 month period commencing October 1, 2001 shall be reviewed by CPI over the proceeding year.”
It is worth noting that Clause 2 of the contract made the following provision for resolution of discrepancies or inconsistencies:
“2.Where there is any discrepancy or inconsistency between a part of this contract and any other part, the following descending order of precendence (sic) of the parts shall apply to resolve the discrepancy or inconsistency:
(a)any special conditions;
(b)items schedule;
(c)lease schedule;
(d)service contract schedule;
(e)standard commercial conditions.”
The defendants allege that Standard Condition 33 did not apply to certain leases which were not due to come into effect until the date of completion of the contract. They also claim that Special Condition 5 overrides Standard Condition 33.3(1) in that Lease No. 1 was to be renewed from 1st October 2000.
In this respect they assert that regardless of the original tenor of Standard Condition 33.3 the plaintiff, by insertion of the special condition and the lease schedule at its own request, had acceded to a mode of performance which was quite inconsistent with the provisions of Clause 33. As a result of this they contend that the plaintiff was not entitled to terminate the contract.
On 23rd May 2001 the defendants filed a counter claim claiming a deficiency of $25,000 on a later sale of the property and the costs thrown away by the failed contract with the plaintiff.
Mr Radcliff who appeared for the plaintiff, objected to paragraph 4 of the defence which was in the following terms:
“4.The plaintiffs have failed in their obligations under the agreement.”
Mr Radcliff objected to the lack of particularity of the paragraph and asked that it be struck out.
It became clear, however, that what the defendants were saying was no more than that the plaintiff was not entitled to refuse to complete the contract. In this sense it is in accordance with the reference in paragraph 2 of the counter claim to “the plaintiff’s wrongfully terminated contract” and cannot be regarded as objectionable.
Mr Radcliff also objected to paragraph 3 of the counter claim on grounds of lack of particularity. That paragraph was as follows:
“3.The defendants claim all costs accrued by the defendants relating to failed contract.”
Prior to the commencement of the plaintiffs’ case I informed the defendants of the need for such particulars and the need for evidence to be brought to prove the losses referred to in the counter claim. Those particulars were not provided and the defendants were patently unable to prove their loss. With some reluctance I dismissed the counter claim with costs.
It should be pointed out in respect of the counter claim that no evidence was called by either the plaintiff or the defendants on the issue. I note that the plaintiff filed an answer to the counter claim on 2nd August 2001. The plaintiffs’ costs should be limited to the preparation and filing of that answer.
As to the principal action there is little disagreement with the course of events as set out in the exhibits to the joint affidavit of Ben Roy Kealley and Ewan Alisdair Stoddart which is Exhibit 2.
The contract, Exhibit BRK/EAS1 to the abovementioned affidavit, in its Lease Schedule makes reference to three leases. Insofar as is relevant to these proceedings the schedule provides:
“Lease 1
Name of Tenant: Curtis McCormack trading as “Fineline Furniture” ...
Current Rental per Annum: $9,000 (annual review to CPI)
Current Lease Commencement Date: October 1, 1999
Current Lease Term: One year
Remaining Option/s: Option 1 Term two years
Lease 2
Name of Tenant: Brad Purdon trading as “Signmark Signage Solutions” ...
Current Rental per Annum: $8,840 plus GST
Current Lease Commencement Date: From the date of settlement
Current Lease Term: Three years
Remaining Option/s: Option 1 Term 3 years
Lease 3
Name of Tenant: David Mackay ...
Current Rental per Annum: $5,720
Current Lease Commencement Date: Date of Settlement
Current Lease Term: One year
Remaining Option/s: Option 1 Term One (1) years”.
Further to the above it is quite apparent from the correspondence exhibited to the joint affidavit that the plaintiff was acceding to a mode of performance which was quite inconsistent with Standard Condition 33.3.
On 21st July 2000 (prior to contract) the plaintiff’s solicitors wrote to the vendor’s agent as follows in Exhibit BRK/EAS 10.
“Secondly, I note your reference to the need for some new leases to be prepared and that you will attend to that and liaise with the parties. In those circumstances, I suggest that a clause should be included in the contract making settlement conditional upon those leases or agreements to lease being duly executed on or prior to the settlement date of the contract.”
This advice was repeated in a letter dated 27th July 2000, Exhibit BRK/EAS 11.
It should further be noted in respect to Lease 1 that the lessee had until 1st October 2000 to exercise the option to renew the lease. The letter confirming the exercise of the option dated 10th October 2000 is Exhibit BRK/EAS 4 to the joint affidavit. The renewal itself was to take place from 1st October. These aspects were set out clearly in the Special Conditions and in the Schedule of Leases contained in the contract document. It seems ludicrous to suggest that Standard Condition 33.3 – with its draconian consequences for non compliance – could have required the delivery of the lease documents within seven days of 14th August 2000.
During all of this time the plaintiff’s solicitors were proceeding on the basis that Lease 1 would be renewed from 1st October and that Leases 2 and 3 would be executed at or before settlement. There was no mention of Standard Condition 33.3. It was only on 13th September 2000 in Exhibit BRK/EAS 12 that reference was made to some problems giving concern about Leases 2 and 3. On 4th October 2000 in a “Without Prejudice” letter, the plaintiff’s solicitors suggested a mutual rescission. On 10th October 2000 the problem with Leases 2 and 3 appears to have been overcome. It was only then that the plaintiffs somewhat belatedly began making noises about Standard Condition 33.3. With settlement due on 13th October 2000 the plaintiff purported to terminate the contract on the ground of non compliance with Clause 33.3. Furthermore it was said:
“Further, and in the alternative, our clients are not satisfied with the terms and conditions of the leases, in particular those relating to the tenant, Brad Purden and the tenant, David Mackay.
With respect to the former, the rental review provision in Special Condition Clause 2 is not acceptable and with respect to the latter, a fortnightly tenancy is not acceptable and not in accordance with the contract.”
The letter Exhibit BRK/EAS 21 to the joint affidavit makes it clear that these latter grounds are of no substance whatsoever. They do not receive a mention in the Statement of Claim.
Mr Radcliff referred to some cases going to the issue of election between the exercise of alternative and inconsistent rights – among them Tropical Traders Ltd v Goonan [1963-1964] 111 CLR 41 and Sargent v A.S.L. Developments [1974] 131 CLR 634. He submitted that the plaintiff was not debarred from later reliance upon Standard Condition 33.3.
The former case involved an agreement where time was of the essence and there had been instances of acceptance of late payments. In the leading judgment of the Court Kitto J. at p. 52 observed:
“It may be that repeated acquiescence by one party to a contract in non-observances by the other of stipulations as to time may amount, when considered in the light of particular circumstances, to an assent to time being treated for the future as not of the essence, notwithstanding a provision in the contract that it is of the essence; and in such a case it may not matter whether the result is described as a promissory estoppel or a waiver or a variation of the contract by mutual, though tacit, consent. But it is not a valid general proposition that wherever some instalments are accepted late without demur the party accepting them is precluded in respect of later instalments from insisting upon the agreement that time shall be of the essence: see Bird v. Hildage [1948] 1 KI.B. 91, at pp. 94-96.”
Something similar was said by Mason J. in Sargent at p. 656:
“A person confronted with a choice between the exercise of alternative and inconsistent rights is not bound to elect at once. He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side. An election takes place when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other (Tropical Traders Ltd v. Goonan (93)). So, words or conduct which do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract may not amount to an election to affirm the contract”.
The present case is very different. Here the plaintiff, prior to entering the contract, caused to be incorporated special provisions governing the execution of the leases. It could not fairly be said that it left the question of Clause 33 open or that prejudice was not caused to the other side by such behaviour over a period of some months.
I therefore find that Standard Condition 33.3 of the contract was overridden by the Special Condition and the Schedule of Leases. It had no application. Furthermore, although the words “waiver” and/or “estoppel” do not appear in the defence of the self represented defendants, it is inherent in the letter of their then solicitors Exhibit BRK/EAS 21 that the plaintiff was acting unreasonably in attempting to invoke Condition 33.3 after having proceeded for a period of several months on a different basis of performance. That was the gist of their letter. Whether it is called “waiver” or “estoppel” does not much matter.
I find that the plaintiff was not entitled to repudiate the contract and did so wrongfully. In the circumstances the defendants were entitled to forfeit the deposit.
I order that the plaintiffs’ claim be dismissed. As the defendants were self represented I make no order as to their costs with the exception of filing fees.
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