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Trupkovic v Furrer

 

[2007] QSC 27

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Trupkovic v Furrer [2007] QSC 027

PARTIES:

DENNIS TRUPKOVIC
(first plaintiff)
LESLEY CLOUGH
(second plaintiff)
v
EDMUND MARTIN FURRER
(first defendant)
LOTTI FURRER
(second defendant)

FILE NO/S:

BS884/07

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane

DELIVERED ON:

16 February 2007

DELIVERED AT:

Brisbane

HEARING DATE:

9 February 2007

JUDGE:

Mackenzie J

ORDER:

  1. It is declared that on the true construction of cl 10 of the special conditions of the contract for sale of land dated 25 August 2006 between the plaintiffs and the defendants whereby the defendants agreed to sell the property situate at and known as 32 Netherby Rise, Sunrise Beach in the State of Queensland and described as Lot 264 on SP 184089, the clause was solely for the benefit of the plaintiff purchasers;
  2. It is declared that on the true construction of the contract and in the events which have happened, the plaintiffs were entitled to waive the benefit of special condition 10 insofar as it related to the sale of their unit at 8/56 Duke Street, Sunshine Beach within five months of the date of the contract;
  3. It is declared that on the true construction of the contract and in the events which have happened, the defendants were not entitled to terminate the contract under special condition 10 insofar as it related to the sale of the plaintiffs’ unit at 8/56 Duke Street, Sunshine Beach within five months of the date of the contract;
  4. The counter-application by the respondents is dismissed.
  5. Unless submissions are delivered to my Associate within seven days of this order seeking a different costs order, it is ordered that the defendants pay the plaintiffs’ costs of and incidental to the application.

CATCHWORDS:

CONVEYANCING – RELATIONSHIP OF VENDOR AND PURCHASER – MATTERS ARISING BETWEEN CONTRACT AND CONVEYANCE – CONDITIONS OF SALE – GENERALLY – Where contract of sale conditional upon sale of the applicant’s unit within five months of the date of the contract – where contract did not provide for date of completion –  where purchaser waived benefit of the special condition – whether the special condition was solely for the benefit of the purchaser – whether request to vary contract amounted to election – whether notice to complete was adequate

Balog v Crestani (1975) 132 CLR 289, cited

Donaldson v Bexton [2006] QCA 559, distinguished

Gange v Sullivan (1966) 116 CLR 418, cited

Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26, cited

Koikas v Green Park Constructions Pty Ltd [1970] VR 142, cited

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, considered

Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, cited

Sargent v ASL Developments Ltd (1974) 131 CLR 634, cited

Suttor v Gundowda Pty Ltd (1950) 81 CLR 41, cited

COUNSEL:

L A Stephens for the applicant

D A Skennar for the respondent

SOLICITORS:

Paul Clough, Solicitor for the applicant

Chris Reeve & Co Solicitors for the respondent

  1. MACKENZIE J:  This is an application by the plaintiffs for the following declarations:
  1. That a clause in a contract of sale of residential real property making the sale and settlement of a unit owned by the first applicant within five months of the date of contract a condition was solely for the benefit of the applicant purchasers;
  1. That they were entitled to waive its benefit within five months of the date of the contract; and
  1. In the event that had happened, the respondents were not entitled to terminate the contract within five months of the date of the contract.
  1. The respondents filed a counter-application by leave seeking:
  1. A declaration that the contract was validly terminated on 25 January 2007; and
  1. An order that the respondents’ caveat be removed.
  1. The facts, if not the legal consequences of them, are relatively uncontroversial, since they are essentially contained in correspondence. The parties entered into the contract on 25 August 2006. Relevantly, the contract contained the following clause, clause 10:

“This contract is subject to and conditional upon the sale and settlement of the unit of Dennis Trupkovic (the buyer) situated at 8/56 Duke Street, Sunshine Beach within five (5) months of this contract or 3 months after the date of registration of title of the within property whichever is the earlier…”.

The period calculated by reference to the date of registration of title is rendered irrelevant by the way events occurred.

  1. The provision in the contract relating to “settlement date” was completed only with the words “see special condition (10) and (11)”. Clause 10 is relevantly reproduced above. Clause 11 provided only for the investment of the deposit and the entitlements of the parties to interest and a return of the deposit and half the interest if the contract did not settle with no fault of the buyer.
  1. The standard terms of contract, by cl 6.1, provide that time is of the essence of the contract, except regarding any agreement between the parties on a time of day for settlement. Whatever application that may have, there was nothing in the contract prescribing a date for settlement upon which it might operate. If it could operate in relation to cl 10, that would be subject to the condition remaining operative at the end of the five months period. Special condition 5.1 provided that settlement must occur between 9am and 5pm on the settlement date.
  1. It is apparent that towards the end of November 2006 the first applicant became aware that the real estate agent involved in the transaction was apparently still marketing the land the subject of the contract. While there are differences between the solicitors as to the detail of what transpired subsequently, it seems apparent that the respondents’ position is that a backup contract was entered into because the agent was concerned that the first applicant “was not selling his property”. The backup contract was entered into on 30 November 2006 for the same price as the applicants’ contract. The evidence of the applicants’ solicitor is that he did not become aware of the contract until 30 January 2007. All of that is merely referred to as part of the background. It is not directly relevant to issues for determination.
  1. The relevant chain of events commenced with a letter from the applicants’ solicitor on 29 December 2006, which, in summary, sought a variation of the contract on the basis that no contract had been entered into for the first applicants’ unit and that it was unlikely that there could be a sale of it and settlement by 25 January 2007. A variation of the contract was sought. The letter concluded:

“If the above varied conditions cannot be agreed to, I advise that my clients cannot comply with the conditions of clause 10 of the contract through no fault of their own and the contract will be at an end as at 25 January 2007.  In that event, my clients request the return of their deposit together with half the accrued interest by 28 January 2007.”

  1. On 8 January 2007 the respondents’ solicitor advised that they would not agree to the proposed amendments. The letter also advised that if the applicants wished to terminate the contract immediately in view of the unlikelihood of them settling the sale by 25 January 2007, the applicants would immediately authorise release of the deposit and half the interest. That letter was followed up by a letter of 12 January 2007 seeking advice whether the applicants agreed to mutual termination of the contract immediately rather than waiting until 25 January 2007.
  1. On 19 January 2007 the solicitor for the applicants forwarded the transfer documents for execution. The solicitor for the respondents also received on that day a copy of a letter from a credit union approving finance for the applicants, subject to documentation being completed. On 20 January 2007 the applicants’ solicitor advised as follows:

“Please be advised that my clients are in a position to settle the above conveyance.  You are formally notified that my clients are ready, willing and able to complete the contract of sale entered into by our mutual clients on 25 August (sic) 2006.

I notice that no specific date for settlement has been mentioned in the contract at clause 10, originally, there was provision for settlement to be extended for a further 3 months after 25 January 2007.  The sentence containing this provision was deleted and no other date was entered for settlement date.

On that basis, I propose to settle this contract on 8 February at Noosa Heads as mentioned in the contract.”

  1. On 24 January 2007, the applicants’ solicitor telephoned the respondents’ solicitor. There is a substantial degree of common ground about the subject matter of the conversation. Receipt of the transfer and associated documents by the respondents’ solicitor was confirmed. There was a discussion about, at least, the local authority charges component of the settlement sum. The respondents’ solicitor raised the issue of settlement on 25 January 2007; he characterised the letter of 8 January 2007 as a notice to complete. He said that he was seeking instructions but his clients expected the respondents to settle on 25 January 2007. The applicants’ solicitor said they could not do so. It may also be noted that in his affidavit the applicants’ solicitor points out, and it appears not to be disputed, that no time of day or more specific place at which the settlement was to occur was nominated by the respondents’ solicitor at any time.
  1. On 25 January 2007, in light of the telephone conversation the previous day, the applicants’ solicitor wrote to the respondents’ solicitor referring to the letter of 20 January 2007 which, it was said, contained a notice by the applicants to complete the conveyance on 8 February 2007 and requesting a settlement statement. It was asserted that in the previous day’s conversation, the defendants’ solicitor had intimated that the respondents were of the opinion that the conveyance was to settle on 25 January 2007 “based upon the letter of 8 January 2007 from your office ‘calling’ for settlement on today, 25 January”. He advised of the applicants’ intention to lodge a caveat that day. He added: “For completeness, I am instructed today to waive the benefit of the contract clause 10 condition relating to the sale and settlement” of the first applicants’ unit. He went on to nominate a time and place for settlement on 8 February 2007.
  1. A letter received by the applicants’ solicitors about 5pm on 25 January 2007 advised that, as special condition 10 had not been satisfied, the respondents terminated the contract and authorised a refund of the deposit. By letter of 30 January 2007 the respondents’ solicitor contended that cl 10 was not inserted solely for the applicants’ benefit. In consequence of those events the present application was filed on 1 February 2007 with a return date of 9 February 2007.
  1. The issues that emerged in argument were:
  1. whether cl 10 was solely for the benefit of the purchasers and could be waived by them;
  1. whether effective notice to complete had been given by the letter of 8 January 2007;
  1. whether the purchasers had elected not to waive cl 10 by the letter of 29 December 2006;
  1. whether the doctrine of approbation and reprobation applied; and
  1. whether the purchasers were estopped from any right of election.

Was clause 10 solely for the benefit of the purchaser?

  1. The respondent defendants submit that it was not. It was submitted that the clause was one where the vendors had an equal interest in it. Reliance was placed on the Court of the Appeal decision of Donaldson v Bexton [2006] QCA 559 where there was extensive discussion of authority by Keane JA, who formed the majority with Jerrard JA, and PD McMurdo J in dissent. 
  1. The case was factually different from the present case in at least two respects. One was that in Donaldson v Bexton the issue was of the right of a party to waive a special condition beyond the period of its fulfilment.  In the present case, the purported waiver occurred before the expiry of the time for its fulfilment, albeit on the last day.  The second was that in Donaldson v Bexton the relevant clause provided that, if the special condition was not satisfied within the specified time, the “contract (would be) at an end”, which in this context means voidable (Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; Gange v Sullivan (1966) 116 CLR 418).  In the present case the clause stated no more than that the contract was subject to and conditional on sale and settlement of the first applicant’s unit within a specified time. 
  1. Counsel for the applicants accepted that the question for the Court to answer in cases of this kind is the contractual intent of the parties. He submitted that where there is a clause in the form of the clause under consideration, the trend of authority supports the conclusion that ordinarily it will be construed as being for the benefit of the purchasers and therefore capable of waiver by them (Gange v Sullivan; Koikas v Green Park Constructions Pty Ltd [1970] VR 142; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537).  In my view, this is the way in which the clause should be construed in this case with the consequence that it was open to the purchaser to waive the benefit of it before the time for its fulfilment had elapsed.

Was effective notice to complete given on 8 January 2007?

  1. The letter of 8 January 2007 is in the following form:

“Further to your letter to us dated 29th December 2006, our clients will not agree to the requested amendments to the contract.

If your client wish [sic] to terminate the contract now in view of the unlikelihood of their settling a sale by the 25th January 2007, our clients will immediately authorise a release of the deposit and half of the interest to your clients.  Please advise us of your clients’ instructions as soon as possible.

In the interim we enclose a photocopy of the Registration Confirmation Statement of Lot 264 and call for settlement on 25th January 2007.”

  1. Given the absence of a contractual provision as to a settlement date, the basic premise that unilaterally fixing a settlement date coinciding with the date of expiry of the special condition 10 is effective may be questionable. This issue received only passing reference in the applicants’ oral submissions, and none at all in the respondents’. The thrust of the argument was whether what is relied on as the notice to complete falls short of what is required of such a notice in the context of this case. The applicants’ counsel relied on Gibbs J’s dicta in Balog v Crestani (1975) 132 CLR 289 but those dicta must be read in conjunction with later authorities such as Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623.  As Deane and Dawson JJ said at page 654:

It is important that courts tread warily in disturbing current perceptions about the effect of conveyancing precedent or practice. Notwithstanding that need for caution, the weight of past authority is debatable and clearly inadequate to justify this court in insisting upon a requirement that a notice to complete must unequivocally state that, in the event of non-compliance, the party giving the notice will treat the contract as at an end. That is not, of course, to suggest that a notice will be effective to make time of the essence of a contract with the consequence that the party giving the notice will be entitled to rescind in the event of non-compliance if it is inadequate to convey to a reasonable person in the position of the recipient that that is its purport and effect. The whole point of equity's intervention in relation to stipulations as to time was that, in the absence of express or implied contractual provision to the contrary, it regarded it as inequitable or unconscionable for a party to a contract to rescind for breach of a time stipulation without having given reasonable warning to the party in default. It seems to us, however, that, in modern circumstances, a notice will be adequate to convey such a warning if, but only if, it conveys either that the time fixed for performance is made of the essence of the contract or that the party giving the notice will, in the event of non-compliance, be entitled (or regard himself as entitled) to rescind. A notice, particularly one between solicitors, can convey those matters by implication.”

  1. Properly construed, the letter of 8 January 2007 does not sufficiently comply with the relevant criteria. It was written in the context of a request by the applicants for variation of the contract, which was refused. It proposed early termination if the applicants wished to do so. Pending consideration of that there was a call for settlement on 25 January 2007. The call for settlement was prefaced by the words “in the interim” which introduces an element of contingency which, of itself robs the letter of the necessary character. Further, the events recounted in paragraphs [8] to [10] above did nothing to dispel that characteristic of the letter. Even when the transfer documents were sent and an alternative settlement date was proposed, there was no immediate disabusal about the intent of the letter. I therefore conclude that the letter was ineffective as notice to complete.

Election

  1. The respondent submitted that the passage in the letter of 29 December 2006 quoted in paragraph [7] above constituted an election to terminate the contract on 25 January 2007. In the context of the request for a variation of the contract the applicants had the option of saying nothing about the consequences of refusal to make the variation but chose to say that if it was not granted, they could not comply with cl 10 and the contract would be at an end as at 25 January 2007. “In that event”, they wanted the deposit and interest returned. It was submitted that the purchasers were confronted with two mutually inconsistent courses of action, one to waive the benefit of cl 10 and the other to concede that the contract would end on 25 January 2007. They chose the former and once an election was made, it could not be reversed (Sargent v ASL Developments Ltd (1974) 131 CLR 634; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26).
  1. The respondent submitted that the contents of the letter were not an election. The letter had been written as request to vary the contract. Subsequent correspondence showed that the respondents’ solicitor did not treat it as an election because he treated the contract as still being on foot in subsequent correspondence. The respondents’ counsel replied that the solicitor’s view was immaterial to the issue whether the election was effective. A decision had been made by the applicants that the contract would end on 25 January if the variation was refused.
  1. In my view what occurred falls short of an election on the part of the applicants. The letter proposed a variation to the contract. The paragraph relied on as an election recites what the consequences will be in the event that the variations are not agreed to. The letter also asserts that the circumstances are ones entitling the applicants to have their deposit and accrued interest returned in the event that the contract comes to an end. In a letter written as part of an attempt to negotiate a variation, it would not be surprising if the party seeking the variation resorted to a “worst case scenario”, without irrevocably committing to that outcome. I am not persuaded that what was said should be regarded as meeting the criteria of an election.

Approbation and reprobation

  1. The respondents submit that the applicants exercised a right to decide not to proceed with the contract in the letter of 29 December 2006 but had subsequently, once finance to complete the contract had become available, claimed the right to have the contract proceed. This, it was submitted, was impermissible under the doctrine of approbation and reprobation. Assuming it applies to this kind of situation, the factors discussed in connection with election are similarly applicable and I am not persuaded that the respondents are entitled to succeed under it.

Estoppel

  1. The parties accept that if there are circumstances in which a case of estoppel may succeed, whether estoppel is made out is then a question of fact which would have to be tried. The material before me on the issue is scant.
  1. There is an affidavit from the respondents’ solicitor that refers to the letter of 29 December 2006 and continues:

“My clients have relied upon that letter as a clear intimation that the Plaintiffs would not be proceeding with their contract of purchase, and have made arrangements to proceed with a “back-up contract”, and have relied upon the Plaintiffs’ clear and unequivocal statement to their detriment”.

  1. The back-up contract was, on its face, entered into on 30 November 2006, a month before the letter in question. Later in the affidavit, there is a reference to special conditions 10 and 12 of the back-up contract. Clause 10 makes the contract subject to and conditional upon the contract with the applicants being terminated on or before 25 January 2007. If this condition is not fulfilled then the contract will be at an end. Clause 12 fixes settlement at 21 days after fulfilment of special condition 10.
  1. The affidavit says that there is detriment due to reliance on the representation that the contract would end on 25 January 2007. The respondents’ solicitor’s affidavit deposes that because the plaintiffs had failed to terminate their contract, the defendants are suffering loss and damage in the form of interest on the net proceeds of sale of the back-up contract which otherwise could have settled sooner. There is reference to ten working days being required for the finance for the back-up contract to be organised and that the financier will not prepare mortgage documentation while the caveat is registered on the title. It is said that the caveat is further delaying settlement causing further loss and damage to the defendants.
  1. In the respondents’ submissions, the argument is put that the respondents say that they relied upon the representation contained in the letter of 29 December 2006 that the purchasers would not be able to complete the contract on 25 January 2007 to their detriment by terminating the contract with the plaintiffs and thereby satisfying the condition precedent to performance in the “back-up” contract. That being so the applicants were estopped from relying on cl 10 of their contract.
  1. So far as the letter of termination of the contract dated 25 January 2007 is concerned, there would appear to be some difficulty in linking that causally to the letter of 29 December 2006 having regard to the events that had occurred throughout January. Apart from that, the character of the letter previously discussed also persuades me that there is no basis upon which the claim of estoppel can succeed.

Orders

  1. The orders are the following:
  1. It is declared that on the true construction of cl 10 of the special conditions of the contract for sale of land dated 25 August 2006 between the plaintiffs and the defendants whereby the defendants agreed to sell the property situate at and known as 32 Netherby Rise, Sunrise Beach in the State of Queensland and described as Lot 264 on SP 184089, the clause was solely for the benefit of the plaintiff purchasers;
  1. It is declared that on the true construction of the contract and in the events which have happened, the plaintiffs were entitled to waive the benefit of special condition 10 insofar as it related to the sale of their unit at 8/56 Duke Street, Sunshine Beach within five months of the date of the contract;
  1. It is declared that on the true construction of the contract and in the events which have happened, the defendants were not entitled to terminate the contract under special condition 10 insofar as it related to the sale of the plaintiffs’ unit at 8/56 Duke Street, Sunshine Beach within five months of the date of the contract;
  1. The counter-application by the respondents is dismissed.
  1. Unless submissions are delivered to my Associate within seven days of this order seeking a different costs order, it is ordered that the defendants pay the plaintiffs’ costs of and incidental to the application.
Close

Editorial Notes

  • Published Case Name:

    Trupkovic v Furrer

  • Shortened Case Name:

    Trupkovic v Furrer

  • MNC:

    [2007] QSC 27

  • Court:

    QSC

  • Judge(s):

    Mackenzie J

  • Date:

    16 Feb 2007

  • White Star Case:

    Yes

Litigation History

No Litigation History

Appeal Status

No Status