Campbell v Theo[1996] QDC 184

CIVIL JURISDICTION

JUDGE ROBERTSON

and

and

BRISBANE

DATE 15/08/1996

JUDGMENT

HIS HONOUR: Gentlemen, I have found in favour of the plaintiff and I will make the formal orders.

I give judgment for the plaintiff against the first defendant for damages for breach of: contract and for moneys had and received in the sum of $7,957.57.

I give judgment for the plaintiff against the second defendant for damages for conversion in the sum of $1,441.34.

I publish my reasons.

...

HIS HONOUR: In light of the amounts awarded, the defendants submit that I should order the costs to be paid on the Magistrates Court scale in the light of the provisions contained in rule 363A. The plaintiff's claim originally was for specific performance which could not have been commenced in the Magistrates Court. However, this became a claim for damages relatively early in the piece. There was some complexity in the matter. However, that is not the determinative issue. The defendant's counterclaims, however, as particularised exceeded the jurisdiction of the Magistrates Court and in those circumstances it seems to me in the exercise of my discretion that the plaintiff should have her costs on the District Court scale.

I order the defendants to pay the plaintiff's costs of and incidental to the action to be taxed or as agreed, and if to be taxed to be taxed on the scale appropriate to awards less than $50,000.

BETWEEN:

AND:

AND:

REASONS FOR JUDGMENT - ROBERTSON D.C.J.

Delivered the 15 day of august 1996

The plaintiff's claim as litigated is for damages for breach of contract and damages for conversion. The defendants counterclaim for similar relief and make a claim for damages for loss of bargain. The defendants also claimed for other relief e.g. damages for deceit and defamation, but these other claims were abandoned at trial.

Facts:

There are a number of facts which are not in dispute:

The contract is Document 1 in Exhibit I and is the standard form. The important clauses for the purposes of this dispute are 4.1(a), (b), (c), (d) which reads as follows:—

Clause 10.1:

Clause 10.2:

Clause 11.1 provides:—

Clause 11.2 provides:—

Clause 26 provides:—

As I have noted, the second defendant acted as agent for the first defendant in relation to the transaction.

The plaintiff's solicitors by letter dated 17th November 1994 had forwarded to the second defendant a memorandum of transfer, a Form F100 in triplicate, a vendor's direction and vendor's undertaking (see document 14 in Exhibit 1). The plaintiff's solicitors had in the usual way proposed to hold the transfer for stamping purposes pending settlement upon the usual undertaking. The second defendant was not prepared to accept this, and on the 24th November 1994, by prior arrangement the second defendant met with a Ms. Heide Kautz, the Town Clerk employed by the plaintiff's solicitors at the Office of State Revenue for the purposes of stamping the transfer which was required as the plaintiff's purchase was being partially financed by the Commonwealth Bank of Australia.

There is a dispute as to what took place on this occasion. The second defendant had demanded a production fee pursuant to clause 10.2 which had been refused by the solicitors on behalf of the plaintiff. Clearly the production fee referred to in clause 10.2 is a professional charge only payable when a solicitor is engaged to produce the required document, and not payable in the case of an unrepresented vendor. No production fee had been paid prior to the appointment at the Office of State Revenue, but the dispute does assume some importance when the events of the following day are considered.

The correspondence between Mr. Hilton Misso, the senior partner of the plaintiff's solicitors and the second defendant on the day of settlement prior to 2.30 p.m. is contained in documents 17, 18, 19, 20 and 21 in Exhibit 1. The second defendant was continuing to claim an amount of $100 as “inconvenience money” for producing the transfer for stamping. Although the solicitors maintained that such a fee was not payable, they obtained instructions and proposed to compromise by payment of $50. The second defendant rejected this compromise. I find that Mr. Misso previously agreed with the plaintiff to limit his costs of the conveyance to $400, however he decided to reduce this fee to $350 on the basis that his firm was prepared to cover the inconvenience fee of $50, in order to effect settlement. This finding is relevant to the assessment of damages under the head of legal costs.

It is clear from the tone and content of the second defendant's correspondence to the solicitors on the day of settlement, and I so find, that he had adopted a high-handed, uncompromising attitude to the solicitors, and he was angry and upset at what he perceived to be attacks upon his integrity. The content of these letters is instructive in my view, to an assessment generally of the attitude of the second defendant to the first defendant's obligations under the terms of the contract.

Ms Kautz swears that at the Office of State Revenue on 29.11.94 the second defendant handed her one copy only of the Form F100 and the executed transfer and she then proceeded to have the contract and transfer stamped. After stamping she handed the stamped transfer to the second defendant and the Form F100 was retained in the records of the Office of State Revenue. At that time the Registrar of Land Titles required production of a second completed Form 100 at the time of lodgment of the transfer and other documents to enable registration to take place. The second defendant swears that he handed to Ms Kautz or to another young lady with her the three Forms 100 and one was returned to him. There was a trainee Town Clerk with Miss Kautz on that day however I accept her evidence that this girl had no dealings with the second defendant and took no part in the transaction.

I have already referred to the attitude of the second defendant as reflected in his correspondence on the next day. In his conduct of these proceedings on behalf of himself and the first defendant, the second defendant impressed ms as an intelligent articulate man of considerable business acumen. However he also showed himself to be a man who was quick to take offence and who was unreasonably stubborn and uncompromising. It was apparent to me that as soon as cross-examination by Counsel for the plaintiff commenced he became defensive and at times unreasonably emotional.

In evidence he frankly admitted that at all material times he did not trust solicitors. In particular he referred to a dispute wife the plaintiff's solicitors relating to an earlier transaction in which he was acting for himself or a family member in the purchase of a property and the solicitors had acted for the vendor. It. appears that on this occasion the solicitors demanded a production fee which was payable pursuant to clause 10.2.

In my view, in light of the attitude expressed by the second defendant in the witness box, it is simply unbelievable to suggest (as he does) that he gave Ms. Kautz any documents not strictly required to be handed to her under the terms of the contract. I reject his evidence that he handed Ms. Kautz or the other girl the three copies of the Form 100 and that one was returned to him.

I am confirmed in this view by other evidence. Exhibt 3 is a memorandum to Ms. Kautz which contains her instructions and refers only to a single Form 100. She gave evidence, which I accept, that she was an experienced Town Clerk and would never receive more than one Form 100 as extra copies were not needed for stamping purposes. The second defendant acknowledged that he was responsible for the preparation, signing and filing of all the various defences and counterclaims on behalf of both defendants, with the exception of the one pleading filed by Beston & Co.

In all but the last pleading filed on 18th July 1996 there is this statement:

In the last pleading “three” is substituted for “two”. Not surprisingly, the second defendant was cross-examined on this point. He agreed that his recollection was that it had always been the case that three Forms 100 were produced and one was returned. His explanation that the statements in the earlier pleadings simply represented the find result on that day was unconvincing and I reject it.

The second defendant in his evidence said that he believed his only obligation at the time of settlement was to receive the first defendant's money in exchange for the stamped transfer, a view which clearly misconceives the first defendant's obligations under the contract and in particular clauses 4.1 and 10.1.

This attitude expressed by the second defendant explains in part why he behaved as he did at the settlement on the following day.

There is a dispute as to what occurred on that day.

The solicitor who attended the settlement on behalf of the plaintiff, Mr. Davis, gave evidence. He said that initially documents were exchanged for the purposes of inspection. In accordance with the settlement instructions (exhibit 4) he handed to the second defendant a bank cheque in the sum of $20,503.10 and a bank cheque in the sum of $32,313.74 to Metway, the vendor's mortgagee. He says the second defendant then handed to him the stamped transfer which he proceeded to sign correct for the purposes of registration. The second defendant also handed him a building compliance certificate and a vendor's undertaking. The Commonwealth Bank representative was also present as the plaintiff's financier and it soon became apparent during the inspection that a further completed Form 100 had not been delivered. I accept Mr. Davis when he says that he told the second defendant he could not leave the settlement because the matter had not been finalised and he needed to get instructions from his office and that further while his back was turned, the second defendant left the office with the cheque. I reject the evidence of the second defendant that he was not told to stay. He was simply evasive when cross-examined about the concern expressed at the settlement as a consequence of the missing Form 100. He finally conceded that he “sensed” there was concern. However he did not regard this as his responsibility and he frankly admits taking the money and leaving the bank.

There is another dispute relating to the second defendant's actions at the settlement. The plaintiff submits that I will find the second defendant also took with him from the settlement the stamped transfer. Mr. Davis does not recall what occurred with the stamped transfer after the issue arose concerning the Form 100. The second defendant swears that he obtained the stamped transfer later that afternoon from Karen Ellis the representative from the Metway Bank. I do not accept the second defendant's evidence in this regard. There is no reason at all why the Metway Bank would have any interest in the stamped transfer at settlement. As the first defendant's mortgagee, Metway's interest was in being paid out and ensuring the delivery of the released mortgage and certificate of title to the purchasers and/or the purchasers' financiers. Karen Ellis was not called to give evidence on behalf of the defendants. Having regard to the general attitude of the second defendant to which I have referred and in particular his attitude to the plaintiff's solicitors, I find that it is more probable than not that he did remove the stamped transfer when Mr. Davis and the representative from the Commonwealth Bank were distracted over the Form 100 issue. I also accept Mr. Tracy's evidence concerning the inspection of documents on 3rd March 1995 which was that the second defendant was most reluctant to produce the actual original stamped transfer which he had discovered.

In any event, even if I accepted the second defendant's evidence that he did not take the stamped transfer with him, on his own account, he had possession of the stamped transfer by the end of that day. He never definitely acknowledged this until the 3rd March 1995. It is significant in my view that in directly handing the plaintiff the completed Form 100 on 2nd December 1994 the second defendant made no effort to also hand her the stamped transfer.

Before returning to my factual findings there are a number of preliminary matters that should be mentioned. The defendants do not submit that the Form 100 was not a document required to enable registration to take place. (See Clause 4.1(d)). In T.L.I. Management Ptv. Ltd. v. Nufate 1988 1 Qd.R. 717, the Full Court held in part that the vendor was not obliged to execute a form f in due form for presentation on settlement. The form f was a stamp duty declaration and a forerunner to the F100. The standard form REIQ contract at that time did not contain a clause similar to 4.1(d) and it may well be that the standard form was amended with this case in mind.

Clause 10.1 to which I have referred above is a contractual re-statement of the ‘best endeavours’ principle:

“It is a general rule applicable to every contract that each party agrees by implication to do all such things as are necessary on his part to enable the other party to have the benefit of the contract” (see per Griffith C.J. in Butt v. McDonald 1896 7 Q.L.J. 68 at pp. 70-71 and Secured Income Real Estate (Australia) Limited v. St. Martin's Investments Ptv. Ltd. 1979 144 C.L.R. 596 at 607 per Mason J).

It is clear in this case that the first defendant, through the conduct and actions of the second defendant on his behalf, lost sight of his overall obligations to make and convey a good title and to do all things and execute all such documents as required for that purpose. His obligation was not merely to do the bare minimum. His obligation was to do more than to take the money and run when it was placed before him. The second defendant's misunderstanding of these fundamental obligations in my view explains much of his behaviour in this particular matter.

Upon the plaintiff commencing an action for specific performance on or about the first day of December 1994 she affirmed the contract and waived her right to rescind for the first defendant's breach by the actions of his agent on 25 November 1994. As no decree for specific performance had actually been obtained it was open to the parties to set a farther date for completion which is what occurred here. It was also open to the plaintiff to rescind for breach of contract in relation to the second completion date i.e. 26 April 1995 whilst the claim for specific performance remained on foot (see Ogle v. Combouro Investments Pty. Ltd. (1976) 136 C.L.R. 441 at p. 446).

By the commencement of the proceedings for specific performance time ceased to be of the essence. Thereafter neither party could charge the other with a breach of the essentiality of the time clause unless time was remade of the essence by the giving of a proper notice to complete. This is what occurred on 23 March 1995 and there is no argument that the notice was not given in the proper form (see Balogue v. Crestarnev (1975) 132 C.L.R. 289).

When the second defendant on behalf of the first defendant, the vendor, came to settle on 26 April 1995 he refused to settle because the purchaser refused to pay the interest demanded. The defendants demanded interest under cl. 11.1 and it is clear from the documentary exhibits that they demanded this as part of the purchase price. This was clearly an incorrect view. The interest was never part of the purchase price. The contract provides that the interest “shall be paid contemporaneously with the balance of the purchase price”. However the distinction is not important in light of my findings.

The plaintiff asserts that the first defendant through the action of his agent wrongfully insisted upon payment of a sum by way of interest and thereby breached his obligation to complete in accordance with cl. 26.

The plaintiff further contends that as a consequence she validly rescinded and is entitled to damages. This point turns upon whether the first defendant was correct in his demand for interest. The question is whether the relevant money (balance purchase price) was not paid “when payable”. (see Clause 11.1). The words “when payable” do not have any absolute meaning. For example, the words “date for completion” could have been used. These words do have a defined meaning: see Item Q in the contract. The contract is not reluctant to use the phrase “date for completion” when it wishes to: see cl. 4.1, cl. 14.1, cl 21.1 and cl. 25.2. The use of the words “when payable” in Cl 11.1, probably means that a different notion was intended. The plaintiff's contention is the words “when payable” can only mean “when legally payable”. That is to say when all the necessary conditions are met and the purchaser is legally obliged to pay the purchase price.

Neither party is liable to tender performance in accordance with the contract unless the other party also tenders performance in accordance with the contract: see per Byrne J. in Segacious Ptv. Ltd. v. Fabrellas (1991) 1 Qd.R. 471 at 478. In short, unless the vendor had fully complied with the contract the purchaser was not legally obliged to pay the purchase price. In the light of the factual findings I have made the purchase price did not become legally payable or payable at all on 25 November 1994 because

In any event, the defendants could not charge the purchaser with a breach because the first defendant was not willing to comply with his fundamental obligations under the contract. His agent ought to have remained at the settlement, enquired as to what the problem was and volunteered to get the extra Form 100 which he said was at his house. The first defendant did not perform his fundamental obligations and therefore he cannot charge the plaintiff with breach and cannot claim that the plaintiff failed to pay the purchase price when payable.

Such a construction is consistent with the well defined body of authority which providest that contracts will not be construed in such a way as to permit one party to profit from his or her own wrong. Some of the authorities even go so far as to say that there is a presumption to that effect. See New Zealand Shipping Company v. Societes Ateliers (1919) Appeal Cases 1, Alghussein Establishment v. Eaton College (1988) 1 W.L.R. 587 and Suttor v. Gundowda pty. Ltd. (1950) 81 C.L.R. 418. This view is also supported by the views of the learned authors of Queensland Conveyancing Law and Practice C.C.H. para. 6-030.

The second defendant on behalf of the first defendant breached his obligations under the contract by failing to tender the additional Form 100 which he was obliged to do on the first date of settlement. As a consequence, the plaintiff was never legally obligated to pay the purchase money on that day. The further consequence was that the purchase money only become legally payable once time was remade of the essence on 26 April 1995 with a further consequence that no interest was payable. By the defendant's failure to complete without the payment of interest the first defendant repudiated the contract on 26 April 1996 and the purchaser has validly rescinded.

As I have noted, even if the second defendant's version of the facts is correct and the plaintiff's solicitors did have an appropriate Form 100 and mislaid it, it was still his obligation to remain at settlement for the purpose of effecting settlement if possible. By departing the scene before settlement was complete he was in breach of the first defendant's fundamental obligation. In any event, I have found that when the second defendant left the settlement he took with him the transfer and thus further prevented settlement. On any view the first defendant was in breach of his obligations under the contract.

Damages

The plaintiff's claim is primarily for

The claim under paragraph (c) for interest is based upon the principle in Hungerfords v. Walker (1989) 1 C1 C.L.R. 125. I assess damages as follows:

The final issue relates to legal costs. The relevant evidence comes from Mr. Tracy and Mr. Davies and I accept their evidence that the charges are proper and in accordance with the appropriate scales. Exhibit 5 contains the calculations made by Mr. Davies (which are in handwriting) and Mr. Tracy which is in the form of itemised bill. I find the total costs so proved to be $4,907.41.

In making this finding I have taken into account a claim for the stamp duty paid by the plaintiff on the 24 November 1994 in the sum of $1,951.25. I accept Mr. Tracy's evidence that he used his best endeavours to recover this sum. The Commissioner took the view set out in ex. 6 which is a letter to the plaintiff's solicitors from the Office of State Revenue dated 17 May 1995. As Mr. Tracy said in evidence his client could not furnish a statutory declaration in the terms required. The Commissioner in forwarding that letter has relied on what appears to me to be a proper construction of s. 54 of the Stamp Act 1894 and in particular sub-paras. 7, 7A and 8. It does appear to be a rather unusual consequence that a purchaser who has validly rescinded a contract cannot recover his or her stamp duty because he or she is unable to furnish a statutory declaration in the terms required by the Stamp Act due to an on-going dispute between the parties regarding their performance under the terms of the contract. In any event, I accept the evidence of Mr. Tracy and I am satisfied that the Commissioner for Stamp Duties' interpretation of the relevant sections is correct and that stamp duty is properly recoverable as a component of the damages relating to legal costs.

CONCLUSIONS

It follows that the Plaintiff must succeed in her claim. The claim for relief in the Amended Plaint is for damages for breach of contract, and for recovery of deposit and, as against the First and Second Defendants for damages for conversion. It is therefore necessary to calculate the percentage of the sums referred to in (a) & (b) above attributable to the different claims so as to ascertain the appropriate orders to be made against each of the defendants. I have calculated the amounts attributable to the claim for damages for conversion as $101.50 under (a), and $1339.84 under (b).

I give judgment for the Plaintiff against the first defendant for damages for breach of contract in the sum of $5257.57 being made up of $172.80 under (a) above; $177.36 under (b) above; and $4907.41 for legal fees. I give judgment for the Plaintiff against the First Defendant for $2700 being recovery of deposit.

I give judgment for the Plaintiff against the second defendant for damages for conversion in the sum of $1441.34. I dismiss the counterclaims of the defendants.

In the light of the amounts recovered I will hear submissions in relation to costs.