Burnitt v Pacific Paradise Resort Pty Ltd
[2006] QCA 309
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- Notable Unreported Decision
- Burnitt v Pacific Paradise Resort Pty Ltd[2006] QCA 309
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Burnitt v Pacific Paradise Resort Pty Ltd[2006] QCA 309
Burnitt v Pacific Paradise Resort Pty Ltd[2006] QCA 309
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 25 August 2006 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19 July 2006 |
JUDGES: | de Jersey CJ, McMurdo P and Jerrard JA Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: | 1.Appeal dismissed 2.The appellant is to pay the respondents’ costs of the appeal, to be assessed |
CATCHWORDS: | CONTRACTS – SALE OF LAND – EXECUTED WRITTEN CONTRACT – SPECIFIC PERFORMANCE – validity of termination of instalment contract for purchase of land – whether deferment of need to complete had to be evidenced in writing – sustainability of factual findings Property Law Act 1974 (Qld), s 59, s 72 Alford & Ors v Ebbage & Ors [2004] QCA 283; Appeal No 8863 of 2003, 6 August 2004, cited Dowling v Rae (1927) 39 CLR 363, applied Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd (2004) 218 CLR 471, cited Morris v Baron & Company [1918] AC 1, cited Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221, applied Vezey v Rashleigh [1904] 1 Ch 634, cited |
COUNSEL: | M M Stewart SC for the appellant A J H Morris QC, with B A Laurie, for the respondents |
SOLICITORS: | Dibbs Abbott Stillman for the appellant Simmonds Crowley & Galvin for the respondents |
[1] de JERSEY CJ: This is an appeal against a judgment given in the District Court, in favour of the respondents, for specific performance of a contract for the purchase by the respondents from the appellant of a townhouse.
[2] The learned trial judge found that the respondents entered into a contract in writing, in the REIQ form, to purchase lot 78. The parties executed that contract on 20 February 2003 (although it was dated 7 February 2003). It provided for a price of $225,000 and payment of the unusually large sum of $65,000 by way of “deposit”. It also provided for completion on the date on which it was executed, 20 February 2003, which his Honour considered was a mistake, but there was no claim for rectification, so that he consequently held that to be the contractually operative date for completion.
[3] Completion did not then occur. The judge appears to have accepted that prior to the execution of the contract, on or about 7 February 2003, the male respondent (Mr Burnitt) orally arranged with Mr Volpe, a director of the appellant, that settlement of the purchase could be delayed until certain building costs owed to Mr Burnitt and his company, in respect of the overall development, had been paid. (Mr Burnitt depended on the receipt of those funds for completion of this contract.)
[4] The appellant contended that amounted to a term of the contract between the parties which, for the enforceability of the contract, should have been evidenced in writing (s 59 Property Law Act 1974 (Qld)). On the other hand, the respondents characterised it as a “collateral arrangement between the parties that a particular contractual term would not be strictly enforced”.
[5] But as I have said, the judge found that the contract provided for completion on 20 February 2003, in effect that the written contract in that respect superseded the earlier oral agreement or arrangement.
[6] Because the amount of what the judge held to be the deposit payable under the contract ($65,000) exceeded 10 per cent of the purchase price, the contract was an “instalment contract” for the sale of land, and therefore governed by Division 4 of Part 6 of the Property Law Act. Because of s 72(1), the appellant therefore could not rescind on the basis of any default in payment of any part of the purchase price, including in this case the deposit, until the appellant had first served a notice in the approved form and had waited for 30 days. That course was not followed.
[7] On 14 April 2004 the appellant purported to terminate the contract on the basis of non-payment of the deposit. The judge held that ineffectual and, the contract remaining on foot, gave judgment for specific performance.
[8] The respondents’ case at trial was that the contract provided for the payment of a deposit of only $10,900. The respondents had paid that amount to the appellant’s solicitors (Praeger Batt) under an earlier contract, in respect of another lot (lot 83), which was abandoned short of completion.
[9] The judge observed that the parties seemed to have proceeded on the basis that sum would be “treated as the deposit under the replacement contract”. He found however that the deposit payable under that replacement contract was in fact the amount it specified, $65,000. That finding was critical, because it led to the characterisation of the contract as an instalment contract, excluding termination except in accordance with the procedure prescribed by the Property Law Act.
[10] The oral agreement as to a deposit of $10,900 was alleged in para 7(c) of the respondents’ reply. His Honour pointed out there was no direct evidence supporting that allegation. Pages 64-66 of the transcript record questions and answers which assume the existence of the alleged agreement, but the answers do not specifically verify it. They were directed, rather, to the time the agreement was made.
[11] At p 66, Mr Burnitt is recorded as saying: “… we were agreed on a deposit of $10,900 which is five per cent of $225,000”. The judge noted that $10,900 is actually five per cent of $218,000, which was the purchase price under the earlier, abandoned contract. He considered that answer therefore looked “very much like reconstruction”.
[12] His Honour reached the conclusion from the evidence that the agreement alleged in para 7(c) of the reply had not been established. Hence his finding that the deposit was in fact that provided for by the written agreement, $65,000, although he conceded this result was “very odd”. He reached that conclusion after a painstaking analysis of the evidence. His acknowledgment of the oddity of that factual conclusion, which the judge nevertheless reached after a very careful review of the evidence, leaves the factual finding particularly difficult to challenge.
[13] At the time of the execution of the written contract, the parties also executed what was termed at trial a “side agreement”. That side agreement provided that the purchase price was to be $160,000, but that $225,000 would be shown as the purchase price on the contract “for valuation purposes”. The side agreement contemplated that stamp duty would be paid on the sum of $225,000, with the excess over the stamp duty calculated on $160,000 to be refunded to the respondents on completion.
[14] The judge accepted Mr Burnitt’s explanation for this side agreement, which was that the respondents were purchasing lot 78 at a discounted price, and that Mr Burnitt and his co-developers were keen to ensure that the purchase price notified to the Valuer-General did not deflate the prospective values of other lots yet to be sold.
[15] His Honour rejected a related defence of “unclean hands”. He held that the public were not shown to have been misled, because there was no evidence $225,000 was not the true market value of lot 78 at the time. The appellant did not pursue grounds of appeal which may be read as challenging this finding.
[16] Mr Stewart SC, counsel for the appellant, submitted that his Honour erred in not making a finding in accordance with the respondents’ pleaded case of an oral agreement that the deposit be $10,900, and not $65,000 as per the contract in writing. Mr Stewart relied on Mr Burnitt’s evidence at pp 64-66 of the transcript, and the mention of a deposit agreed at $10,900 in two documents (exhibits 6 and 19(q)) to which I will come.
[17] His Honour generally accepted the evidence of Mr Burnitt, while observing it was “at times difficult to follow, and not always consistent”. He obviously was not obliged to accept all of it, notwithstanding there was no contrary evidence from the appellant. He carefully analysed Mr Burnitt’s oral evidence on this point. He correctly observed that there was no direct, express evidence supporting the existence and content of the agreement alleged in para 7(c) of the reply, and that the evidence on which Mr Stewart relied assumed rather than established that allegation – being directed to the question of date rather than the content of the agreement. Furthermore, it was open to the judge to regard Mr Burnitt’s evidence on the point as involving reconstruction. He assigned a legitimate reason for taking that approach, and his conclusion was no doubt fed also by his impression of the reliability of Mr Burnitt’s oral evidence.
[18] The assertions in the documentation did not oblige the judge to take a different approach.
[19] Exhibit 6 was a fax dated 21 April 2004 from the solicitor Mr Batt to the then solicitors for the appellant. In it Mr Batt said:
“We confirm that we hold $10,900 in our trust account representing the purchaser’s deposit. The deposit was receipted on 2 September 2002 in respect of a Contract dated 22 August 2002.”
I would not regard that as clear evidence of an agreement that the deposit payable under the replacement contract was to be $10,900.
[20] Exhibit 19(q) is a letter dated 30 April 2004 from the solicitors for the respondents to the solicitors for the appellant. It includes this sentence:
“The deposit of $10,900.00 was agreed at the time of execution of the enclosed agreement orally in the presence of an independent witness and confirmed by your client’s former solicitor Mr J Batt.”
Mr Stewart characterized that as an admission by the respondents. The judge was not however bound therefore to find this alleged agreement established. Having heard oral evidence from Mr Burnitt, the judge is to be taken to have rejected the foundation for that assertion in the letter, a course reasonably open to him.
[21] Mr Morris QC, who appeared for the respondents, referred us to a document closer in time to the relevant events. It is a fax dated 7 April 2003 in which Mr Batt said:
“We also note the contract of sale to Burnitt Group Superannuation Fund for Lot 83 has been terminated and the deposit held on account of that sale ($10,900) is to be applied to the sale of Lot 78.”
That is consistent with an understanding that the sum of $10,900 was to be applied in part satisfaction of the price payable under the replacement contract, but not necessarily as deposit moneys.
[22] Mr Stewart submitted the respondents should not be permitted to urge, on appeal, a position different from that advanced at trial; that is, that the respondents should now be confined to their pleaded contention, that the deposit was $10,900, as orally agreed. But the trial judge having rejected that case, the respondents were perfectly entitled now to seek to sustain the findings the judge made. Compare Alford & Ors v Ebbage & Ors [2004] QCA 283.
[23] He also appeared to submit that the judge should not have made this finding, because of the way the respondents pleaded their case and the way the trial proceeded. Although the respondents pleaded this alleged oral agreement as to a deposit of $10,900 in para 7(c) of the reply, in its amended rejoinder, the appellant alleged that any contract between the parties comprised solely the REIQ contract and the side agreement, and denied there were any orally agreed terms in addition. In the circumstances, in finding that the deposit payable was $65,000, the judge in that respect found consistently with the appellant’s own pleading.
[24] Mr Stewart was critical of the judge’s approach, suggesting that had it been flagged in advance, the appellant may have chosen to give evidence. Whether or not it gave evidence was a matter for the appellant. The judge’s finding was open on the pleadings. There is no basis for even suspecting the judge’s approach in some way misled the appellant into making a forensic decision it would not otherwise have made.
[25] Mr Stewart then submitted that the judge should have found that the parties orally agreed that the time for completion could be deferred until building costs owed to Mr Burnitt and his company had been paid. His Honour rejected the view that amounted to an orally agreed term of the contract, characterizing it as an “understanding” which came to be “commonly accepted” between Mr Burnitt and Mr Volpe. Mr Stewart submitted, in effect, that was a distinction without a difference.
[26] I consider his Honour was justified in his approach to this issue. What he has in effect found is the substance of the contention presently raised for the respondents: there was an understanding that, if necessary, the provision as to the date for completion in the written contract would not be strictly enforced. The specific date, 20 February 2003, nevertheless remained the contractually stipulated date. What the appellant effectively accepted was that it would not insist on completion at that time, which is a not unusual occurrence, and one which does not involve a variation of the contract or a separate agreement which must be in writing to be enforceable.
[27] The judge’s disinclination to find a formal contractual provision in this respect is hardly surprising when one looks at the relevant evidence. Mr Burnitt gave this evidence on the point:
“… I did tell John (Volpe) that I’d settle the unit as soon as I’d paid for my building works and I couldn’t settle it before that … . He (Mr Volpe) was quite okay with it. He wasn’t, sort of, forcing me or saying that the contract was null and void or anything like that … . He was quite okay.”
Mr Burnitt was then asked: “… did he agree, disagree, or was (he) neutral?” Mr Burnitt answered: “He was neutral. He didn’t, sort of, disagree or agree.”
[28] In any event, any arrangement reached here fell within the principle confirmed in Dowling v Rae (1927) 39 CLR 363, 370-1, that an arrangement between parties to a contract such as this, bearing on the mode of performance of the contract but not effecting a variation of the contract, need not be in writing. It is akin to a representation founding an argument of waiver or estoppel, such as a statement or conduct waiving the essentiality of time.
[29] In these circumstances it has not been necessary for me to examine the respondents’ alternative reliance on the doctrine of part performance (para 4 notice of appeal).
[30] Finally, Mr Stewart submitted that his Honour should have found that the presumption arising from the parties’ execution of the formal written contract, that it contained the whole of their agreement, had been rebutted. The rebuttal arose, he submitted, from the aggregation of these circumstances: the very existence of the side agreement (which the judge regarded, however, as a variation of the REIQ contract); Mr Burnitt’s evidence concerning the reason for specifying $225,000 as the price in the written contract; the evidence as to the date for completion; and the evidence concerning the deposit.
[31] Because I consider his Honour’s approach to each of those aspects was reasonably open, his consequent conclusion – that the parties should be held to the agreement in writing, varied only by the side agreement – was open and justified.
[32] In this judgment I have addressed the issues pursued in Mr Stewart’s written outlines and orally before the Court. That sufficiently covers grounds 3 – 3d of the notice of appeal. The other grounds included (1), as to the standing of the REIQ contract, (2), as to the instructions preceding the letter of 7 April 2003, and (5), as to the discretion to refuse specific performance. They were not pursued before us, and were plainly unsustainable.
[33] I would order:
1.That the appeal be dismissed;
2.That the appellant pay the respondents’ costs of the appeal, to be assessed.
[34] McMURDO P: The appeal should be dismissed with costs to be assessed for the reasons given by the Chief Justice.
[35] JERRARD JA: In this appeal I have had the benefit of reading the reasons for judgment of the Chief Justice in draft form, and the orders proposed by His Honour, and I respectfully agree with those reasons and that this appeal should be dismissed. I add the following reasons, adopting the succinct statement of the relevant facts by the Chief Justice.
[36] The result under appeal can be justified on the alternative ground that the respondent plaintiffs enforced in their claim a written contract composed of two documents, of which contract there had been (as the appellants argued) parol agreement to vary the terms as to the deposit and the settlement date. Those variations not being in writing, and there being no note or memorandum of them, the position described by Williams J in Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 applies. His Honour wrote:
“If an arrangement amounts to a parol variation of the original contract it is ineffective either to enable the contract to be enforced as so varied or to prevent the original contract being enforced in its unaltered form.”[1]
[37] The learned judge added that in that case the plaintiff had sought to enforce the original contract, but that plaintiff’s own evidence showed that he had not performed it, but had performed a new and unenforceable agreement.[2] The principle Williams J described may seem curious, in that it allows the enforcement of an agreement different from that ultimately agreed by the parties. But I respectfully observe that the statement by Williams J accords with the observations of Isaacs J (with whom Knox CJ agreed) in Dowling v Rae (1927) 39 CLR 363[3] and of Powers J in that same case.[4] Those judges in turn cited as authority the judgments in Morris v Baron & Company [1918] AC 1. In that decision Viscount Haldane, for example, wrote that:
“...a further construction is now firmly settled which bases both the 4th and 17th sections of the Statute of Frauds upon a special rule of evidence. That rule is that where an agreement is validly entered into which has had to comply with the Statute of Frauds, and variations are afterwards sought to be introduced by parol or by a document which does not comply with the statute, these variations cannot be set up even by a defendant as an answer in proceedings to enforce the original agreement.”[5]
[38] His Lordship referred, inter alia, to Vezey v Rashleigh [1904] 1 Ch 634 as an example of the application of that principle; in that case Byrne J cited from Robinson v Page (1826) 3 Russ. 114, where the Master of the Rolls, Sir J.S. Copley, had written:
“...where parties have entered into a binding agreement in writing and variations are afterwards introduced by parol, or by an instrument not signed according to the statute of frauds, these variations are not sufficient to prevent the execution of the agreement, and are no answer to a bill for specific performance.”[6]
What the judgments in Morris v Baron & Company emphasized was the difference, said to be critical for the enforceability of a written agreement, between a parol agreement purporting to vary, and a parol agreement rescinding, an enforceable written contract. I see no rational difference in these circumstances, where no estoppel or misrepresentation is pleaded, between prior and subsequent parol agreement to not be bound by particular terms of an otherwise binding written agreement.
[39] It so happens that in this matter the plaintiffs were in a better position to enforce the instalment contract contained in the two documents than they were to enforce the (non instalment) contract as varied by other oral agreement. The plaintiffs’ original pleading was that the contract was constituted by the two documents. Those describe a deposit of $65,000, payable upon the plaintiff signing the contract. The defence included the pleading that the plaintiff was obliged to pay that deposit at that time, and that the defendant had terminated the contract on 14 April 2004 by reason of the plaintiff having failed to pay that deposit. Those pleadings by the parties reflected the terms of the written contracts put in evidence, and the irony for the appellant defendant is that the learned judge upheld that part of the originally pleaded case of each party. That was done despite the lack of any oral evidence from the plaintiff supporting either that pleading or the agreement contained in the written contract. The defendant called no evidence.
[40] The learned judge was satisfied that the written agreement had very likely included in error the term that settlement was to be on 20 February 2003, the date the judge concluded the documents were executed; but held, and was entitled to hold, that in the absence of any application for rectification, the parties were bound by the terms of their written agreement contained in those two documents. The remarks in the joint judgment of the High Court in Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd (2004) 218 CLR 471[7] support that conclusion and are apposite. Their Honours stated:
“The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents’ case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified.”[8]