MFT Holdings Pty Ltd v Booth[2003] QDC 344

DISTRICT COURT OF QUEENSLAND

1. [1]
   The applicant in this matter seeks declarations that (a) the respondent has breached a contract in writing dated 3^rd April 2003 made between the applicant and the respondent; (b) the applicant was entitled to terminate the contract in accordance with clause 9 of the Standard Conditions contained therein; (c) the respondent forfeits his deposit pursuant to clause 9.3(2) of the Standard Conditions; (d) the applicant is entitled to the said deposit. The hearing of this application was, in fact, the hearing of the matter which brought into play Chapter 2 Part 1 of the Uniform Civil Procedure Rules which provide, so far as is relevant:

“9. A proceeding must be started by claim unless these rules require or permit the proceeding to be started by application.

10. A proceeding must be started by application if an Act or these rules require or permit a person to apply to a court for an order, or another kind of relief and (a) the Act or rules do not state the type of originating process to be used; or (b) the type of originating process (other than a claim or application) is required or permitted under a law.

11. A proceeding may be started by application if – (a) the only or main issue in the proceedings is an issue of law and a substantial dispute of fact is unlikely; or (b) there is no opposing party to the proceeding or it is not intended to serve any person with the originating process; or (c) there is insufficient time to prepare a claim because of the urgent nature of the relief sought.”

2. [2]
   At the outset counsel for the respondent objected to much of the evidence material. Ms Magee argued that paragraph 5 of the affidavit of William Richard Murray is hearsay information and inadmissible by virtue of r 430 of the UCPR. Its hearsay nature is apparent from the second sentence of that paragraph. Ms Magee argues further that the allegations in paragraph 7 rely also on information from the selling agent and is also hearsay. Paragraphs 8 and 9 are clearly hearsay as was conceded by Mr Radcliff for the applicant.

3. [3]
   Objection is taken to the second sentence of paragraph 10 which provides: “Settlement was not effected by the respondent”. That assertion is dependant on information supplied by the solicitor for the applicant and is hearsay, and paragraph 12 similarly is clearly hearsay. I accept all of Ms Magee’s submissions in respect of Murray’s affidavit.

4. [4]
   Objection is taken also to the portions of the affidavit of Mark Lowing, namely in paragraph 7, the last sentence; in paragraph 9, the second sentence and the final sentence. All those sentences objected to are clearly hearsay and are inadmissible.

5. [5]
   Ms Magee also argues against the admission of the document annexed to Lowing’s affidavit and marked “B” purporting to be a copy of a tax invoice addressed to Bill Murray & Associates. There is no evidence as to the source of that document or as to how it came to be in the possession of Mr Lowing rather than Murray. I also rule that inadmissible.

6. [6]
   Objection is also made to the contents of the affidavit of Brenda Elizabeth Fleming, namely the last sentence of paragraph 3 and the last sentence of paragraph 4, and paragraph 5. Those are all hearsay statements, as indeed would be the first paragraph of Exhibit 3. I rule that the contents of paragraphs 3, 4 and 5 are inadmissible.

7. [7]
   Because Ms Magee gave Mr Radcliff notice of her proposed submissions, leave to file and read an affidavit of Andrew Mark Raeburn was sought and, in the absence of objection, was granted. That affidavit contained the following:

“2. I refer to the affidavit of William Richard Murray sworn 30^th July 2003 (‘the affidavit’).

3. With respect to the exhibits referred to in paragraphs 8 and 9 of the affidavit, I swear that the documents referred to were prepared by this firm and sent/received on the dates which they bear.”

8. [8]
   Paragraph 8 of Mr Murray’s affidavit exhibited a copy of the letter from his solicitor to the respondent’s solicitor enclosing the transfer documents. Paragraph 9 of that affidavit exhibited a bundle of correspondence relating to the conveyancing transaction which followed. That bundle of correspondence of course contains letters which could correctly be described as having been “prepared by this firm and sent” as Mr Raeburn alleged. A number of the documents, however, were not prepared by Mr Raeburn’s firm but appear on their face to have originated from the respondent’s solicitors and were addressed to the solicitors for the applicant.

9. [9]
   Ms Magee argued that those latter documents clearly were not prepared by Mr Raeburn’s firm and therefore there was no admissible evidence of correspondence emanating from the respondent’s solicitors. In my view that objection is excessively technical and the only reasonable way in which to read and interpret paragraph 3 of Mr Raeburn’s affidavit is to do so as if he swore that the documents referred to “were prepared by this firm and sent or were received on the dates which they bear”. In my view that is what Mr Raeburn clearly intended to mean by the choice of words in his affidavit. Consequently, I rule that the entire correspondence between the solicitors for the parties is admissible on the hearing of this application.

10. [10]
    Next, a jurisdictional issue was raised by Ms Magee, based on the well-known case, Startune Proprietary Limited v Ultratune Systems (Aust) Pty Ltd  (1991) 1 Qd R 192.  She argued that presuming that the application is made under subparagraph (xiii) of s 68(1) of the District Courts Act, namely, for the determination on any question of construction, the value of the property in respect of which the declaration is sought exceeded the monetary limit of $250,000. The contract price for the property, the subject of the application, was $252,000. That price was clearly not the unimproved value of the land upon which the property was constructed but in any event Mr Radcliff contended, correctly, the only sum in issue in these proceedings is the sum of $5,000, the deposit which the respondent is alleged to have forfeited. He argued further that I was able to make findings in respect of paragraphs (a) and (b) without making declarations and could then make declarations in accordance with subparagraphs (c) and (d). The situation is that a court of limited jurisdiction is empowered to consider claims in excess of the monetary limit of jurisdiction even though it is not able to give judgment in excess of that sum. However, Mr Radcliff’s argument overlooks the wording of s 68 of the District Courts Act. Subparagraph (xiii) gives the court jurisdiction in:

“Actions and matters –

(xiii)for the determination of any question of construction arising under a deed, will or other written instrument, and for a declaration of the rights of the persons interested where the sum or the property in respect of which the declaration is sought does not exceed in amount or value the monetary limit;”.

11. [11]
    The “monetary limit” of course is $250,000 and the Act is silent as to the manner in which that monetary limit is to be determined for the purposes of subparagraph (1)(b)(xiii). Subsection 3(b) of s 68 provides:

“In the case of proceedings falling within subsection (1)(b)(iii)(xi) or (xii) – the value of land shall be the most recent valuation current at the time of instituting the proceedings, made by the chief executive (of the department within which the Valuation of Land Act 1944 is administered) under the Valuation of Land Act 1944 or, if there is no such valuation in respect of the land, the current market value at the time of the land exclusive of improvements thereto;”.

12. [12]
    Clearly the property in respect of which the declarations are sought in this application does appear to exceed the monetary limit in value. However, the declarations sought are ancillary to the principal relief, namely the claim for the forfeiture of the deposit. Therefore “the sum…in respect of which the declaration is sought” is $5,000 which clearly falls within the jurisdictional limit. Accordingly I rule that I have jurisdiction to entertain the application.

13. [13]
    Finally we come to the rules contained in Chapter 2, Part 1 of the UCPR which are set out at the start of these Reasons. Ms Magee contended that the proceedings ought to have been started by claim rather than by application but without going into the arguments put, I am satisfied that Mr Radcliff’s contention is correct and that the result of this application depends entirely upon the construction of a contract for the sale of land which is a matter of law and a substantial dispute of fact is unlikely. Indeed, the respondent has not filed any affidavit material at all to contest the truth of any of the evidence relied upon by the applicant. The matter is one clearly suitable to be dealt with by way of application.

14. [14]
    The contract the subject of this application is tendered as Exhibit A to the affidavit of Mark Lowing. A critical omission is made at the foot of page 1. The area headed “Matters Affecting Property” is left vacant. No mention is made of any tenancy to which the contract was subject. A marginal note provides “If the property is sold free from title encumbrances insert ‘Nil’. If the property is sold subject to title encumbrances they must be described”. Neither of those drafting suggestions was followed. Clause 7 of the Standard Conditions annexed to the contract dealt with matters affecting the property and Clause 7.2 provided:  “Encumbrances - The property is sold free of all encumbrances other than the title encumbrances, tenancies, and interests registered on the plan.”  The contract also contains special conditions, Clause 4 of which provides: “The vendor and purchaser agree that no GST is payable on this sale. The property is sold as a going concern and under the provisions of the Tax Act is free of GST.”  By agreement settlement was intended to occur on the 23^rd May 2003. On that date the solicitors for the purchaser wrote to Mr Raeburn in these words:

“Further to the correspondence which has been exchanged yesterday and today regarding settlement we draw your attention to the item ‘Matters Affecting Property’, contained in the Contract of Sale. Are you in a position to confirm by return mail that the vendor will give vacant possession at settlement today?  Notwithstanding your demands for settlement at 3.30pm please be advised that there is sufficient precedent to permit settlement to take place prior to the conclusion of normal business hours which is 5pm.

Your client’s failure to comply with the terms of the contract will be regarded as a repudiation of the contract by your client.”

Mr Raeburn replied on the same date:

“We acknowledge receipt of your fax received at 4.01pm today. We comment as follows:

1. Our client will not be giving vacant possession at settlement. This fact is well known to your client. Special Condition 4 refers to ‘The property being sold as a going concern’. Your client is well aware that Bill Murray & Associates are the tenant. Further the Commercial Tenancy Agreement was attached to the contract;”.

The letter advised that a representative from Raeburn’s office had been at the mortgagee’s office since 3pm and would wait until 5pm, and deals with a misconceived allegation that the contract was null and void pursuant to the Public Agents and Motor Dealers Act (2000).

15. [15]
    On the 26^th of May 2003 Mr Raeburn wrote again to Mal Chalmers & Co advising:

“We are instructed that the Commercial Tenancy Agreement was entered into at the request and instigation of your client. Your client was apparently seeking to acquire the property as a ‘going concern’ and it is for that reason that Special Condition 4 was inserted. Your client therefore was well aware of the terms of the Tenancy Agreement. Further Bill Murray, the Principal of Bill Murray & Associates is a director of our client company. He was well aware of the obligation to comply with the Commercial Tenancy Agreement.

The contract is at an end.

If your client does not authorise the release of the deposit by 12 noon tomorrow we have instructions to take appropriate proceedings confirming our client’s position. We will look to your client for the payment of all costs associated with that process.”

16. [16]
    The solicitors for the purchaser replied on the same date:

“We acknowledge receipt of your letter dated 26 May 2003 and the contents therein.

Our client does not accept your client’s purported termination of the contract and further their right to forfeit the deposit. The tenancy agreement referred to by you is null and void as the tenant is a registered business name meaning that our client is entitled to vacant possession. We note further that if the tenancy agreement was to apply to the contract, your client has not property (sic) complied with clause 5.3(4) of the contract (which relates to delivery of the seller’s copy of any tenancy documents or service agreement documents, a notice to each tenant advising of the sale and assignment of rights under the contract and any notice required by law to transfer to the buyer the seller’s interest in a bond).”

17. [17]
    That latter allegation and the previous suggestion that the contract was null and void under the Property Agents and Motor Dealers Act 2000 indicate a desperate search for reasons justifying the purchaser’s failure to settle and neither of those matters was raised in argument by Ms Magee, possibly because no valid argument could be raised in support of either of them.

18. [18]
    However, the contents of the letter from Mal Chalmers & Company dated 26^th May impliedly admits the tenancy or at least the tenancy agreement. Moreover there had been references in the correspondence or at least in the letters forwarded by Mr Raeburn referring to the tenancy, see, for example, letters dated 9^th May 2003, 19^th May 2003 and 23^rd May 2003. Indeed, the correspondence as a whole indicates that the solicitors for the purchaser ought to have been aware, at all material times, that there was a tenancy affecting the property the subject of the contract.

19. [19]
    Moreover and in any event, it is not necessary to have recourse to the correspondence between the solicitors for the parties except to demonstrate that no question or objection was raised by or on behalf of the purchaser relating to clause 4 of the Special Conditions. It seems to me to be beyond question that that clause is meaningless and redundant if there was ever an intention on the part of the vendor to transfer vacant possession to the purchaser. The subject property could not be sold as a ‘going concern’ as that term is defined in A New Tax System (Goods & Services Tax) Act 1999. Mr Radcliff referred in detail to the relevant provisions of the Income Tax Assessment Acts and in particular to the amendment establishing the Goods & Services Tax. He also referred to the New Zealand Goods & Services Act 1925 and a decision thereunder in Belton v Commissioner of Inland Revenue (1997) 18NZTC 13, 403.

20. [20]
    In my view it is unnecessary to attempt to unravel the intricacies of either Goods & Services Tax legislation. The relevant question is what was in the minds of the parties to the contract which led to the addition of clause 4 of the Special Conditions. That term, in my opinion, has sensible effect only if the parties were aware that there was a lease affecting the subject land. The use of the term ‘a going concern’ has no relevance or sensible meaning unless it refers to a business carried on in or about the subject premises, an industrial unit. Whether the ‘going concern’ described the business conducted by Bill Murray & Associates or the investment business involved in the leasing of that unit to Bill Murray & Associates or indeed to anyone else, it certainly cannot refer to a vacant unit not subject to a lease. It is in fact inconsistent with the intention to grant or acquire vacant possession of that unit. Accordingly I find that the plaintiff did not intend to and was not obliged to, transfer vacant possession pursuant to the contract and the defendant was aware of the existence of the lease to which the land was subject. His demand for vacant possession as a condition of his completion of the agreement was invalid and he was in breach of his contractual obligation. Therefore I find for the plaintiff and I make declarations in accordance with subparagraphs (a), (b), (c) and (d) of the application.

21. [21]
    I further order that the respondent pay the applicant’s costs of and incidental to this application to be assessed.