Notley v Hunter[2004] QDC 108

DISTRICT COURT OF QUEENSLAND

1. [1]
   The plaintiff, Mr Notley, seeks specific performance of an option agreement dated 12 December 1997: his success would lead to his and the defendant, Mr Hunter’s becoming bound as buyer and seller respectively by a “contract” (of sale), identified as “in the form of the attached draft contract”.  The Option to Purchase Agreement, Exhibit 2, has no attachment. However, the trial was conducted on the assumption that the REIQ – Queensland Law Society Contract For Houses and Land, Second Edition (copyright 1997) would apply, with settlement required within 30 days and the standard Finance Clause (Clause 3) deleted; the Deposit is defined as “the Option sum or part thereof not to exceed 10% of the purchase price ($173,000.00)”, and by Special Condition 2:

“2. If the Contract shall be terminated due to default of the Purchaser the Vendor shall be entitled to retain that part of the Option sum paid under the Option Agreement which exceeds the amount of the deposit specified herein on account of damages recoverable by the Vendor from the Purchaser under Term 9.”

2. [2]
   Exhibit 2 was not the only agreement executed by the parties dated 12 December 1997. Exhibit 1 is a Residential Tenancy Agreement in respect of the same property in the standard REIQ form, whereby Mr Hunter rented it to Mr Notley for $953.33 per month, for a term beginning on 26 December 1997 and ending on 25 December 2000.

3. [3]
   The law firm Appleyard Crawford, named as Mr Notley’s solicitors in the pro forma contract of sale, occupied a somewhat ambiguous position. They had a long connection with Mr Hunter, who described himself as operating a real estate business from premises at 3/3186 Gold Coast Highway, Surfers Paradise during and after 1997, no connection with Mr Notley or his wife. In 2000, Mr Appleyard was apparently asked about the matter by Mr Hunter “as a friend” and advanced the opinion that the Notleys could “kiss their option fee goodbye” in the circumstances discussed (T p132, p136). He had written to Mr Notley on           15 December 1997:

“Dear Ken

Re : J Hunter – Tenancy 28 Capricorn Drive, Pacific Pines, Gaven

We advise that John Hunter has now signed the Residential Tenancy Agreement and Option.

A brief overview of both documents is as follows:-

Tenancy Agreement

1. (1)
   The term will be three (3) years plus a further option of two (2) years.

2. (2)
   The initial rent is $953.33 payable monthly in advance.

3. (3)
   To insert the commencement and expiry date of the tenancy we need your advice as to the date when you will be moving into the premises.

4. (4)
   The rent is tied to any rise in the Three Monthly Variable Rate of Citibank Savings Limited.

5. (5)
   To exercise the Option, you must give notice in writing to Mr Hunter not less than six (6) or more than one (1) month prior to the expiration of the tenancy. As the date for exercise of the Option is most important, due to the fact if you do not exercise the Option, then the Option will lapse and cannot be exercised unless the Lessor grants an extension then you must diarise the period during which you can exercise the Option.

Option

1. (1)
   You have been granted an Option to Purchase the property for $173,000.00. The Option sum for the three (3) year period is $10,800.00 payable calendar monthly in arrears and the amount required to be paid each month is $300.00. If you exercise the Option to renew the tenancy, then the Option sum in order to cover the additional two (2) years increases to $18,000.00

2. (2)
   If you exercise the Option, then the Option sum is credited towards the purchase price of the property. If you do not exercise the Option or you default under the Option Agreement and/or Tenancy Agreement, then the Option sum is forfeited to Mr Hunter.

We now enclose our Memorandum of professional outlays and ask that when you pay the first month’s rent to Mr Hunter, also attend to payment of our Memorandum so that we in turn can stamp the Option Agreement. As advised, any stamp duty charged on the Option Sum will be given as a credit on stamp duty payable on the Contract if the Option is exercised.

We hold in our office the Option Agreement and Tenancy Agreement which you asked us to keep on your behalf but if you ever need same, or a copy, please let us know.”

4. [4]
   The letter set out above helpfully outlines Mr Notley’s situation, with the arguable exception that it is silent as to time frames for exercising the Option to Purchase, any need to “diarise” them, and the need to exercise that option in writing. The Option Agreement (which Mr Notley did not have) contains the following:

“3. Grant of Option

In consideration of the Option Sum to be paid by the Purchaser to the Vendor in equal consecutive monthly instalments payable in arrears and the first instalment shall be payable one month from the date of commencement of the tenancy.

4. Exercise of Option

4.1 The Option may be exercised by the Purchaser giving written notice to the Vendor of the exercise of the Option.

4.2 And Providing:

1. (i)
   the tenancy or any extended tenancy has not been terminated;
2. (ii)
   the Purchaser is not at the time of exercise of the Option to Purchase in breach of the terms conditions covenants and stipulations and has observed each of the terms, conditions, covenants and stipulations contained in this Agreement, the tenancy and any extended tenancy;

4.3 The Option may be exercised at any time after the second (2^nd) anniversary plus eight (8) months but no later than the second (2^nd) anniversary plus eleven (11) months from the date hereof.

4.4 If the Option to purchase is not exercised then the Option Sum shall be forfeited to the Vendor.

4.5 If the Option to purchase is exercised then the Option Sum shall be credited towards part payment of the purchase price payable under the contract.

5. CONTRACT

Upon the exercise of the Option the Purchaser shall within seven (7) days execute a contract containing identical terms and conditions as the contract with the exception that the particulars not completed in the contract shall be inserted and shall deliver the contract in duplicate to the Vendor who shall sign and return the Purchaser’s counterpart within seven (7) days of receipt thereof.

5A. POSSESSION BY PURCHASER

Upon the exercise of the Option to Purchase by the Purchaser the Purchaser shall remain in possession of the property as a tenant until completion or termination of the contract of sale. The rent to be paid by the Purchaser shall be the same rent being paid immediately prior to the expiration of the term of the tenancy or renewed tenancy and if requested in writing by the Vendor the rent shall be adjusted in accordance with the Review of Rental Provisions contained in the tenancy.

…

9.1 Notice

Without limitation to any other mode or service permitted by law, all notices to be served by virtue of the provisions of this Agreement may be sent by pre-paid post addressed to the person to be served at his address, as stated in this Agreement or at any other address subsequently notified in writing by one party to the other and shall be deemed to be served three (3) working days after being sent by pre-paid post as stated.

…

9.8 Time of the Essence

Unless otherwise expressly stated to the contrary, time periods in this Agreement will be of the essence.

…

15. VENDOR’S MORTGAGE
    1. (a)
       The Purchaser acknowledges that the property is subject to First Mortgage No. 700305052 to Citibank Savings Limited A.C.N. 006 465 505 (‘the Vendor’s Mortgagee’) to secure the principal sum of ONE HUNDRED AND FORTY-FIVE THOUSAND EIGHT HUNDRED DOLLARS ($145,800.00) (or thereabouts);
    2. (b)
       The Vendor shall not:-

1. (i)
   increase the principal sum payable under the Vendor’s Mortgage; or
2. (ii)
   further mortgage or encumber the property; or
3. (iii)
   draw down any further monies under the Vendor’s Mortgage.

16. TENANCY EXTENSION

If the Purchaser validly exercises his Option to renew the tenancy then this Option to purchase shall be varied by:-

1. (a)
   the Option Sum being increased to EIGHTEEN THOUSAND DOLLARS ($18,000.00);

2. (b)
   the words ‘fourth anniversary’ shall be substituted for the words ‘second anniversary’ in Clause 4.3;

3. (c)
   the deletion of the Option to Renew.

17. METHOD OF PAYMENT

The Purchaser shall pay the instalments in two (2) parts:-

1. (a)
   To the Vendor’s Mortgagee in payment of monthly payments due under the Vendor’s Mortgage; and

2. (b)
   Any balance to the account of the Vendor at the Nominated Bank of the Vendor;

3. (c)
   The Vendor shall provide:-

9. (i)
   A pay-in book for payments due under the Vendor’s Mortgage; and

9. (ii)
   A pay-in book for payments due to the Vendor.”

The “Option Sum” was $10,800.00, apart from the effect of Clause 16(a).

5. [5]
   The parties came into contact following Mr Hunter’s advertising a house he had vacant (the subject property) in the Gold Coast Bulletin “to either rent or buy” (T105). Before they signed the documents of 12 December 1997, the parties had signed Exhibit 21, on 6 November 1997, in the familiar REIQ-Law Society Form. Mr Appleyard was nominated solicitor for the buyer. The property and purchase price were the same. By Special Condition 1:

“1. Purchase Price and Interest Repayment

The purchase price and interest shall be repaid by TWO HUNDRED AND SIXTY-FOUR (264) consecutive calendar monthly instalments of such amounts each that are stipulated by the Vendor. The first of such instalments shall commence on the 21^st day of the month next following the date of possession. The initial monthly repayment will be ONE THOUSAND TWO HUNDRED AND FIFTY-THREE DOLLARS ($1,253.00) calculated n accordance with the Lower Rate (as set out hereunder) and the Purchaser acknowledges that the current rate of interest being charged by the Bank is 6.69% per centum per annum. The Purchaser further acknowledges that the monthly repayment shall vary in line with fluctuations in the Lower Rate of interest.”

The instalments were variable, depending on the interest rate charged by Mr Hunter’s mortgagee, whose withholding of consent (required by Special Condition 5 within 30 days) meant the agreement, which would have allowed Mr Notley 22 years to pay the purchase price, never became unconditional.

The Notleys

6. [6]
   Mr Notley manages a business called Gold Coast Sandblasting, in which he said he has a small interest. Mrs Notley does (or in the past did) office work there. The family have suffered unspecified business or employment-related financial reverses. There have been health problems too. Mr Notley’s age (58 at trial) is one of the main factors producing inability to date (at least until the last part of 2002) to obtain a suitable loan to assist in purchasing a residence. Mr Notley explained the difficulty in terms of insufficient deposit or “equity”. Whether, if the action succeeds, and Mr Notley becomes entitled to a contract along the lines of Exhibits 7A or 22, he will be able to complete, is a matter for the future. The assumed appreciation in market value over $173,000 would doubtless be a favourable factor.

7. [7]
   Both Notleys presented as surprisingly unsophisticated. I think they are without guile. It seems extraordinary that they showed no interest in having copies of Exhibits 1 and 2. I do not think they would have understood them. I do not think they would even have understood Mr Appleyard’s letter, Exhibit 3, which ignores, among other things, that the periods for exercise of the two options do not coincide. In my assessment, they gave their evidence honestly. By and large I accept it. There are difficulties when they offer dates, Mr Notley in particular being willing to acknowledge the possibility of error (that Exhibit 19, which he dated 26.10.02 may have been written by him on 26.11.02, for example). As it happens, the contentious dates do not matter, as the Notleys appear to have got the order of events right. They (and to a lesser extent Mr Hunter) have retained enough documents (phone records, message books kept in the office, a newspaper of a certain date with a phone number noted on it, demands by Mr Hunter for payment of excess water rates, receipts for payment of rent and option fees and the like) to enable enough of the history to be worked out.

8. [8]
   No attempt was made by Mr Notley to exercise any option in writing, until (going by the contractual documents) it was too late. Thus Mr Notley is driven to contend that the defendant has become estopped from raising that point.

9. [9]
   The Court simply has to accept that the plaintiff and his wife had a curious approach of letting things ride, of failing to contact Mr Hunter, or take any action to get the parties’ situations clarified. There seems to have been a psychological reluctance even to raise issues. Thus, the crucial conversation the defendant      Mr Hunter had, in August 2000, was not with Mr Notley, but with Mrs Notley:

“I didn’t take a lot of notice of the contract, because I had nothing to do with it, but Ken asked me to ring him up and tell him we couldn’t get a loan at that time.”

Mr Hunter

10. [10]
    Mr Hunter was apparently as loath to contact the Notleys as they were to contact him. While Mr Hunter presented as a confident witness, upon reflection and careful perusal of the transcript, I find him quite unreliable, indeed, a witness who was prepared to say anything to advance his cause. Examples of statements of his which I am inclined to think deliberately untrue are that he had forgotten Exhibit 21 (p 126 l 5), that he did not know the three-year option period could be extended for another two years (p 117, p 124 l 55), that he believed that if the option to extend the lease for two years were exercised, that would be subject to discussion (i.e. negotiation) of rent for the extended term (p 125 l 5), that the Notleys “didn’t want to renew a lease” (p 123 ll 14-15); his solicitor’s letter, Exhibit 24, asserts he made “best efforts to obtain (the Notleys’) commitment to an extended lease term” – something I would consider a complete fabrication.

The Events of Mid-2000

11. [11]
    By the second half of 2000, perhaps because of some kind of awareness that the three-month window for exercise of the option to purchase was about to begin (under Clause 4.3), the parties embarked on some discussion of ways in which   Mr Notley might become purchaser. I would infer that it was common ground all along that the Notleys’ financial circumstances were such that they would have difficulty obtaining a housing loan – something that made the 22-year arrangement in Exhibit 21 desirable. It was common ground between the parties that the notion of Gold Coast Sandblasting doing work on a boat of Mr Hunter’s as a way of establishing a set-off against the purchase price was explored.         Mr Notley’s evidence is persuasive that this happened in the last week of July 2000. I accept that he told Mr Hunter then that he and his wife “were still having trouble getting finance” and that Mr Hunter said he may be able to help in that regard. In due course, he put the Notleys in touch with a lady he knew who was a finance broker (Mr Notley at least saw her, Mrs Notley said she did not), but whatever efforts she made after seeing Mr Notley or both of them proved unavailing. Although Mr Hunter described his own efforts towards organising finance as “great” (p 130), they seem to have been desultory, and limited to introducing the lady. The “contra” arrangement for work on the boat came to nought, apparently because nowhere suitable could be found to accommodate the boat while work took place.

12. [12]
    Mrs Notley was deputed by her husband to deliver the bad news to Mr Hunter, possibly on 8 August 2000. Phone records support the date. There is nothing to support Mr Hunter’s belief that it happened in September.

The Crucial Conversation

13. [13]
    According to Mrs Notley (T p 84):

“I told him that we couldn’t get a loan; did he want us to move out and he said, no, he didn’t want us to move out, that the house was ours to do what we wanted with it.

And was there anything else said in that conversation at all?--  Not a lot, no. I don’t think there was anything else. That was it. A short conversation.”

Cross-examining, Ms Magee asked, at 96 ff:

“Well, is it possible that you mentioned to Mr Hunter that you’d had these problems in the past and were still‑‑‑‑‑?‑‑ That wouldn't have‑‑‑‑‑

‑‑‑‑‑struggling?‑‑ ‑‑‑‑‑been my conversation with him.

All right. Now, I suggest that you telephoned Mr Hunter and said, ‘Look, we can't get a loan, we're having trouble.’  Yes, you agree that you‑‑‑‑‑?‑‑ Yeah.

And you said, ‘Do you want us to move out?’?‑‑ Yes.

And what Mr Hunter said back was, ‘No, I don't want you to move out.’?‑‑ That's correct.

He said, ‘I've got to have a tenant for the house.’?‑‑ No, he didn't say that at all.

And he said, ‘Look, as long as you're happy to keep paying the same amount you've been paying, you can stay in the house.’?‑‑ No, he didn't mention money at all. He just said the house was mine to do what I wanted with it.

All right. And what did you understand him to mean by that?‑‑ I understood him to mean that we could stay there as long as we paid the rent and the 300.

And that he could never, ever kick you out?  Is that what you understood him to mean?‑‑ Until we got a loan.

And what if you didn't get a loan for 10 - 15 years?‑‑ Oh, well, I didn't - I thought we could get a loan before then.

Yes. But, you see, what I'm - what I’m getting at is that it really was unreasonable - if Mr Hunter said the words, ‘The house is yours’, it was really unreasonable to think that you could - that it was yours forever and a day and you could take as long as you like to pay the money?‑‑ No, I didn't think that at all. I knew that we'd have to find a loan.

Right. And you knew that there were contracts in place and time limits in which you had to find these loans?‑‑ Ken had been looking for loans, yes.

All right. And there was no suggestion by Mr Hunter that when he said - there was no suggestion by Mr Hunter that you didn't - that Ken didn't have to abide by the terms of the contracts he'd entered into?‑‑ I don't know what he would've said to Ken.

I see. Now, in this discussion that you had with Mr Hunter where you said, ‘Do you want us to move out?’, the word - I suggest that he said to you, ‘Look, if you pay the same amount you've been paying you can stay on as tenant from month to month while you decide what you want to do.’?‑‑ He never mentioned money to me at all.

He certainly never mentioned the word ‘option’, did he?  I'm sorry, was that a ‘No’?  He didn't‑‑‑‑‑?‑‑ He never mentioned money to me at all.

No, did he mention the word ‘option’?‑‑ No.

You also asked him in this conversation whether he wanted to sell the property and give you your option fee back; correct?‑‑ No, I didn't mention anything at all.

You didn't mention anything at all?‑‑ I didn't mention that at all, no. I just‑‑‑‑‑

Oh‑‑‑‑‑?‑‑ ‑‑‑‑‑asked him did he want us to move out.

And he said "No", and that was it?  That was all that was said?‑‑ Yeah, that's all that was said. It was a very short conversation.

All right. Well, do you want to have a look at the telephone records again and see how long the telephone conversation took. According to your telephone records if this was the conversation. See, according to the telephone records the telephone call you made to Mr - that was made to Mr Hunter from your house on the 8th of August 2000‑‑‑‑‑?‑‑ Yeah.

‑‑‑‑‑went for eight minutes and 40 seconds?‑‑ Yeah.

Is that what you call a very short telephone conversation?‑‑ For me it is, yes.

I see. Well, what else did you talk about, then?  With Mr Hunter in this telephone conversation?‑‑ That's all we talked about. We never - he never mentioned money or anything.

All right. So, you said you're having trouble - according to you, you said, ‘We're having trouble getting a loan, do you want us to move out?’, he said, ‘No, the house is yours’, that's all that was said, but that took eight minutes and 40 seconds?‑‑ He said the house was mine to - to do what I wanted with it.

Yes. And that took him eight‑‑‑‑‑?‑‑ And later on‑‑‑‑‑

Yes?‑‑ ‑‑‑‑‑he would help us get a loan.

Right. And when he said ‘later on’, he could've meant in a month's time or two months' time or‑‑‑‑‑?‑‑ I don't know what he meant.

‑‑‑‑‑three months' time?  He could've meant between then and when you had to exercise the option?‑‑ Don’t know.

See, I suggest that Mr Hunter never said the house was yours, he only ever said that you could stay in the house?  What do you say to that?‑‑ He said the house was mine to do what I wanted with it.

And you say that's the only telephone conversation you ever had with                       Mr Hunter?‑‑ Yes, other than business. With the boat I took the phone call, one phone call at work when he rang up wanting his boat looked at.”

She returned to the topic at p 103:

“Now, in that conversation I suggest to you that Mr Hunter said, ‘You don’t have to move out, but you’ll have to keep paying the same amount of money because I need to cover my mortgage and it’s $1100 a month’?--  There was no mention of money.

And I suggest that Mr Hunter said to you that, ‘Since that’s what you’ve been paying, you’re obviously able to pay it.’  Do you recollect him saying that?--  No, he did not say that.

And he said that, ‘The rent of $220 a week is the same rent I was getting when I first bought the property in 1994/1995.’?--  He’s never mentioned that.

And he explained that that’s why he wanted you to pay the increased money?--  Never mentioned it.

Now, in this conversation there was no suggestion on the part of Mr Hunter that either his rights and obligations or your husband’s rights and obligations under the option agreement or the tenancy agreement were in any way affected by this conversation?--  Not to my knowledge.

Now, some time after – this conversation took place, you say, in about August 2000?--  Yes.

All right. Now, did you have any further telephone conversations with Mr Hunter at any time?--  Not me, no.”

14. [14]
    In evidence-in-chief at p 107, Mr Hunter rather improved upon what his Counsel had been suggesting:

“Mrs Notley said, ‘Do you want us to move out?’  She said, ‘Ken likes the house, but I think it’s too large. I want something smaller.", and I said, ‘Well, I need a tenant because I have rental - mortgage commitments.’  She was also going on about their difficulties of finance and I said, ‘Well, you've been able to pay this rent/option fee up to this point. If you want to stay on until you make up your mind you continue paying that as rent until you've made up your mind as to what you're going to do.’

All right, and when you said ‘when you've made up your mind what you want to do’ what were you referring to?--  Well, moving into another property, renew the lease, continue from – on a proper basis or either move out and find something of their own or renew the lease.

All right, and when do you think this conversation took place?--  Well, I think this conversation was around the August/September - sorry, September of 2000.

All right, and why is it that you've got that date fixed in your mind?--  Because it was after we had - she had contacted to say that they were having trouble with the finance and we'd gone through the process of them visiting my office a couple of weeks later, visiting with Mrs Gilsenan and then there was no chance of them getting finance so I said to them - she then phoned me and said, ‘What do you want us to do?  We can't get the finance.’

Now, when you had this telephone discussion where you said, ‘Look, you can stay on as long as you keep paying the same amount of money.’, what was Mrs Notley's response to that?--  Well, she seemed grateful, happy. She said thank you.

All right, and did, in fact, Mr and Mrs Notley stay on in occupation of property?--  Yes, they did.

And what happened in terms of what they were paying you on a monthly basis after this conversation?--  Excuse me, I'm not quite-----

All right. Well, after this conversation did the amount of money being paid by Mr and Mrs Notley to you change or did it stay the same?--  No, it remained the same as arranged.

Now, in your conversation with Mrs Notley was there any reference made by you or Mrs Notley to the residential tenancy agreement?--  No.

Was there any reference made by you or Mrs Notley to the option to purchase  agreement?--  No.”

Thus, it was suggested to Mrs Notley that she, not he, had used the word “option”. He moves from volunteering that he used it to the assertion last quoted. In cross-examination (p 124) he put it this way:

“At the time I said to Mrs Notley, ‘If you will pay the same amount as you've been paying as rent you can decide what you want to do. You can stay on in the property. You don't need to move.’  I didn't specifically say, ‘I need X amount of rent.’, you know, I calculated everything out that I have to show it. I just said that, ‘That was what you'd been paying. That's what I need. It balances out nicely on the account. Continue paying that until you know what you want to do, until you decide what you want to do.’.”

I do not accept Mr Hunter’s claim to have characterised payments “as rent”. That gloss was neither put directly to Mrs Notley, nor persisted in in cross-examination. Apparently anxious to slip it in, Mr Hunter said in his next answer:

“No, I said to, ‘Continue paying that rent because that’s what I need until such time as you know what you want to do’.”

At p 132, Mr Eastwood proceeded:

“So this increase in rent, this $300 that you said was agreed to by Mrs Hunter, do you agree with me that that's around about a 30 per cent increase on what was – the previous year was?--  Percentage I've never calculated, but it would be, I think, yes.

And you thought that was fair, did you, just to increase the rent by 30 per cent?--  In the circumstances, yes.

You see, because I put to you that, in fact, there was no such conversation at all between you and Mrs Notley?--  There most definitely was.

And that at no time was there ever any suggestion that there was going to be a continued occupation of the premises by them as a tenant without an option?--  There definitely was an agreement by - I agreed to let them stay on on a month-to-month basis until they decided what they wanted to do because they were uncertain as to what they wanted to do.

HIS HONOUR:  But was the option to purchase mentioned at all?--  Never, sir.

All right?--  Excuse me, your Honour-----

So you didn't say to them, ‘Well, this is the end of your option to purchase so’ - or, ‘If you're going to purchase you've got to do it by November 26th.’, or whatever the date

was?--  No, your Honour. In retrospect, of course, I should have said, but I didn't. I should have made it clear, but as they hadn't renewed anything or done anything in writing it had just lapsed and I did ask a solicitor friend what the situation would be in the circumstances and they said - well, exact words were kiss their option fee goodbye.

MR EASTWOOD:  Yes. Well, now, see, that was another thing that you didn't mention in the conversation with Mrs Notley, wasn't it, the fact that the $10,800 or whatever the option sum had been paid by them was also to be forfeited to you? Didn't mention that, did you?--  No, I didn't mention that.

Mmm?--  Mrs Notley actually said to me, ‘Would you consider selling the house?  We'll stay - we'll help you to sell it, allowing people to look through. Would you consider selling the house and giving us our option fee back?’, and I said, ‘I don't want to sell the house. It is not for sale.’

HIS HONOUR:  You say that happened in the same phone call?--  That happened in the same phone call.”

And at p 133:

“Mr Hunter, the effect of this agreement was that there was to be no continuation of any option to purchase; that's right, isn't it?--  That was never discussed.

But in your mind there was no option to purchase that could be continued?  Look, we discussed it in a way. Didn't you just say that there was talk about the $10,800 being refunded?--  That was a suggestion of Mrs Notley.

 In a way that's a discussion of the option because the way the documentation is set up that was - the 300 a month was described as an option fee, something different from the rent?--  Well, she said that they looked after the house – it was quite a long conversation, your Honour - that she looked after the house and they wanted to move and all of this went on - a number of things happened in that conversation and that was one of the suggestions which I brushed over because I didn't want to say, ‘Well, you've kissed that money goodbye’."

He was finally offered an opportunity to and did deny (at p 141 l 15) saying to    Mrs Notley, “Look, don’t worry about it. The place is yours, do with it what you want.”  Mr Eastwood put Mrs Notley’s version more directly at p 151, when it was denied.

15. [15]
    Whenever the crucial conversation took place, however long it lasted, I think   Mrs Notley was generally correct as to the gist, if not all of the actual words she attributed to Mr Hunter. I find Mr Hunter did say to Mrs Notley, in the face of her advice to the effect that the Notleys’ circumstances were such that they could not find a loan to cover the balance purchase price in the foreseeable future, “The house is yours.”  A meaning has to be attributed to the statement. It is absurd to attribute the meaning (as per para 7A(d) of the Amended Statement of Claim) that Mr Notley was the equitable owner. He agreed his wife had never said anything suggesting that he owned it (p 55) - nor had Mrs Notley thought along those lines herself (p 97) – whether that thought was generated by Mr Hunter or by herself. In my opinion, it is common experience that a statement that a job, a lot offered at auction (or any real or personal property which the hearer is interested to acquire, and which the speaker has some control over) “is yours” means it can become yours if you want it, and do what is called for to bring about appropriate contractual arrangements.

16. [16]
    I accept Ms Magee’s point that Mr Hunter can be affected only by what he actually said, a point illustrated by a somewhat similar case her researches unearthed. In Powell v Bochas Pty Ltd (Supreme Court of Queensland, 148 of 1995, Williams J, 1 June 1995), an option to renew a lease had to be exercised in writing; the plaintiff sought to rely on a statement of intention to exercise the option made in a phone call three days before the option expired; the defendant’s director was held to have done or said nothing to justify a belief that he had accepted the option was exercised. His Honour preferred the director’s evidence. Here, Mrs Notley’s evidence is accepted. Mr Hunter’s is rejected, as to the crucial utterance “The house is yours”, in the context where, as I find, it was made clear that all that was required by Mr Hunter was that the Notleys continue in possession as before, meaning that they continue making the accustomed payments. I find that nothing was said by Mr Hunter to suggest that $300 or any other amount of the accustomed monthly payments was to change its character from option fee to rent, or as to anyone becoming a tenant from month-to-month. I reject any claim that Mr Hunter pressed in vain for the exercise of the option to renew the lease (something difficult to reconcile with his evidence that he did not know that there was such an option). Notwithstanding Mr Hunter’s suggestion of one slightly late payment in 2001 (not borne out by Exhibit 14A, which consists of deposit slip butts stamped by the bank – if payments were due by the 26^th day of the month as per Exhibit 1), the Notleys were always able to meet the payments and continued so able. It defies belief that the option to extend the residential tenancy for two years (and with it the option to purchase) would not be exercised, if this were going to cost Mr Notley nothing – but that, instead, Mrs Notley agreed that rent should increase by the amount of the option fee, the option to purchase be abandoned and the option fees paid for nearly three years be forfeited, at a time when Mr Notley still had two or three months in which to decide what do, in consultation with his wife.

17. [17]
    Mr Hunter conceded he remained silent about certain things. I think it clear that where estoppel is asserted, as it is here, silence cannot be elevated into a representation, at least in the absence of special circumstances, which are not presently encountered. Compare Mason CJ’s comments about the implications of a failure to plead the statue of limitations, standing alone, in Commonwealth v Verwayen (1990) 170 CLR 394, 408. Mr Hunter must not be embarrassed by what he did not say. What he did say necessarily imports that he would indulge Mr Notley so far as meeting any particular timetable in relation to the purchase was concerned, provided (as happened, until Mr Hunter made it clear the purchase price had gone up) the accustomed payments continued to be made. Of course, the parties were aware that once the option to purchase was exercised, and a contract of sale came about, Mr Notley had to complete within 30 days. Whether or not Mr Hunter expected the indulgence to last only months, he said nothing to that effect to Mrs Notley, so that time constraints became irrelevant, at least until Mr Hunter gave reasonable notice he was going to insist upon them. Compare Hughes v Metropolitan Railway Co (1877) 2 App Cas 439; see Meagher Gummow and Lehane’s Equity (4^th) 17-055. It would be unrealistic to suggest that Mr Hunter committed himself to an option to purchase in perpetuity.

18. [18]
    Ms Magee was properly concerned that the plaintiff’s case not be improved by any misunderstanding, any misrepresentation or extension of Mr Hunter’s statements by Mrs Notley, or, in turn, of hers by Mr Notley, when he received her account of the crucial phone call. While it may seem odd that Mrs Notley’s role was as agent for her husband, he was the contracting party, she was not. Any operative estoppel depends on Mr Notley’s understandings and actions (or actions not taken), not on his wife’s; his understanding, relevantly, came from information she imparted. But he can gain nothing from any understanding not capable of being generated by what Mr Hunter actually said.

19. [19]
    In the end, this potentially difficult issue turns out not to be troublesome. The memorable statement “The house is yours” was not reported to Mr Notley; if it was, he fails to recall it. Mrs Notley described to her husband in her own words what had happened in the phone call, reporting her understanding of it. “The house is yours” was not literally true, it had to be interpreted. Mrs Notley’s interpretation was a correct one. Mr Notley’s interpretation of what she told him was equally correct, not only in respect of Mrs Notley’s words, but also of         Mr Hunter’s. In evidence-in-chief, Mr Notley said at p 30:

“She told me that she'd asked Mr Hunter what - what he wanted us to do, whether he wanted - whether we - he wanted us to move out or whether we stay in the property, because at that time we didn't have a lot of prospect of coming up with the money to purchase the property, and she told me that basically he said that - just carry on and hope things get better.

Was there anything else that she said to you about the conversation regarding‑‑‑‑‑?‑‑ Well, he - he was happy for us to just continue on and keep paying.

And keep paying what?‑‑ Well, paying rent and - and - and the option, I - I'm - is my belief.

And what was said about the - to you, if anything, about the option to purchase?‑‑ That at a later date when - if things got better for us we would then be able to purchase the property.

Was anything discussed with you in relation to what you could do with the property?‑‑ I - I don't - I don't really understand what - you know, it wasn't our property. What‑‑‑‑‑

Perhaps I can rephrase it this way: upon what basis were you remaining in the premises was - sorry, I've phrased it badly. What, if anything, did your wife tell you upon - as to the basis upon which you were staying in the premises, from your knowledge?‑‑ I was led to believe by my wife that we were to - we could stay on and pay the rent and pay the option fee and at a later date we would be able to pay        Mr Hunter out.”

The flavour of Mr Notley’s evidence further appears from this part of his cross-examination at p 72-3:

“Well, really it was in - because she said to me we just carry on and - and pay for the house when we can.

All right. So, your wife said to you after she had a conversation with Mr Hunter, ‘We'll just carry on and pay for the house when we can’, and that led you to believe that you could - what did that lead you to believe?‑‑ That we - exactly what you've just said that we could pay the - pay the rent and pay the option fee. Once I had the option fee paid which was about $17,000 and we had also money of our own which we'd saved we were in a - we would've been in a - we were in a position that we could've borrowed from several lending institutions and we would've been able to complete the sale or the purchase of the property.

All right. But there was nothing - all right. But, it was never suggested to you that    Mr Hunter had ever said that, ‘As long as you keep paying these payments you can buy the property whenever you like.’?‑‑ Well, I - I really thought that that was meant.

What was - you thought that was meant by what?‑‑ That we could purchase the property‑‑‑‑‑

All right?‑‑ ‑‑‑‑‑at a later date.

What I'm trying to get at is what led you to have that belief?‑‑ Because we'd contemplated moving out - we'd - we'd contemplated moving out because we'd not had such a good time. My wife had been sick; I'd been sick myself; we'd had employment problems; I'd had all sorts of problems. I - you know, I - if you want me to go into detail I can, but the crux of it is we weren't in a very good position.

Mmm-hmm?‑‑ And we were considering moving to cheaper premises and walking away from the amount of money that we'd paid in. This just‑‑‑‑‑

I understand that. But, your belief that you could - as long as you paid the rent contained in the initial tenancy agreement plus $300 a month that you could buy this property at any time?‑‑ Yes.

That was your understanding of the documents that you signed, was it?‑‑ Yes.

All right. Now, you said that your copy - the copy that you had of these documents, the tenancy agreement and the option to purchase, I think you said that they weren't legible. Did you take any steps to get a better copy, so you'd fully appreciate your position under those documents?‑‑ The - yeah, when - when I went to Appleyard Crawford that was the‑‑‑‑‑

All right. So, that was‑‑‑‑‑?‑‑ That was the only steps I took.

And that was November 2002?‑‑ Whenever I - yeah, whenever that‑‑‑‑‑

Well, I suggest that in fact you saw Mr Appleyard on the 21st of November 2002?‑‑ That - that sounds about right, yes.

All right. And it's really the case, isn't it, Mr Notley, that you were just careless about looking after your own interests?‑‑ In hindsight I was careless because we'd had a lot of health problems. My wife had been in hospital and - and had - and I'd also been in hospital and financially we were in a very - very poor position. Our - our whole - our whole life was in - in utter turmoil at that - at the time, yes.

And because you were pre-occupied with a lot of other problems that you had you didn't take particular notice of the written terms of your agreement, and you didn't take steps to ensure that you crossed your I's and dotted your T's?‑‑ No, I did not. I - I relied on - on my memory and a bit of goodwill.”

20. [20]
    Mr Hunter’s motivation appears in his cross-examination at p 119, when, speaking of 1997 he said:

“At that time I wanted rid of the property.

You wanted rid of the property?--  Yes.

At any price, is that right?--  At the price at the time of entering into the agreement  with the Notleys I wanted to sell the property, I had other things of interest and I wanted to sell the property.

All right. Now, this property at $173,000, that was market value, you say, at that time?--  At that time, yes.

Why didn't you sell it to someone else?--  I didn't want to sell it to someone else at that time.

Just out of the goodness of your heart again with the Notleys, is it?--  No, when I - the history was that I had bought this on a rent and buy scheme with some other people who had absconded and that is where this rent and buy was in my mind and I said ‘rent’ or ’rent and buy’ in my advertisement and they expressed interest to purchase the property, which is why we entered into this.

But, Mr Hunter, it is irrelevant, isn't it, what happened to someone before who reneged on their agreement?  You could either sell the property at market value or you couldn't, which was it?--  Well, the market wasn't very bright at that time and interest rates were presumably high, I don't know, it was not very bright and I decided to rent it and only when speaking with them did I decide, ‘Okay, well, we'll do another rent and buy agreement’.”

Immediately before, he had agreed that he had tied himself for five years “if things were done correctly, to the same price ($173,000.00)” as he had paid for the property. Immediately afterwards (p 120) he agreed with a suggestion that he had signed the contract “because you thought that it was going to make you money”.

21. [21]
    The conclusion seems inescapable that Mr Hunter regarded himself as locked into the mortgage which Citibank Savings Limited held over the property, not only from the contractual documents in evidence, but also from his assertions of having emphasised to Mrs Notley in August 2000 (p 107 l 49) and/or some time in mid-2001 (p 109 l 5) his need to meet his mortgage commitments; his preference appeared to be for the later date, at p 107 l 32.

22. [22]
    It makes good sense that Mr Hunter’s primary concern when Mrs Notley rang him was to prolong his satisfactory experience of them (after he had been let down by someone else before) as reliable payers of the requisite monthly amount. For them to quit would be the last thing he wanted. (It does not follow that he pressed for them to extend the lease term.)

23. [23]
    I do not accept Mr Hunter’s claim (if he intended to make it) that $1,253.33 per month was the market rental for the property about August 2000. His reasoning at that time was that he depended on the property bringing in that sum. If it matters, I am not satisfied that the market justified a $300 per month increase in rent. Exhibit 26 is a fax of 30 January 2004 (the last business day before the trial commenced) purporting to be a copy of a 12-month tenancy agreement made eight days earlier in respect of the property for a rent of $300 per week, marginally in excess of $1,253.33 per month. Assuming this shows market rent in 2004, it does not do so for 2000. One curious feature of the document is that the lessor is not Mr Hunter, but “Hollywood Homes”. Mr Eastwood might have pursued whether from late 2000 Mr Hunter changed the way in which he reported his receipts to the taxation authorities (presumably an option fee is an affair of capital), but refrained, not wanting to ask a question he did not know the answer to.

24. [24]
    Phone records are consistent with the conversation happening on 8 August 2000, and lasting something over eight minutes, a lengthy time. While there were minutes enough for Mr Hunter to raise the matters he claims he did, I accept     Mrs Notley as to what was not discussed. I think the time could have been taken up by her recounting of the family’s woes, the failure of steps taken to produce a loan, the steps taken to find somewhere else to live, and her essential enquiry whether Mr Hunter wanted them to move out, given their current circumstances. She was not in the least nonplussed to be told the recorded duration of what she had insisted was a “short” phone call, saying eight minutes was short, for her.

Troubles Arise

25. [25]
    In 2002, Mr Hunter showed signs of concern that matters were drifting along. He sent the following letter in February:

“Dear Ken and Barbara,

How are you both?  We must get together for a chat to see what direction we are going in.

Meanwhile, I from the council a water usage bill showing an amount of $70.20 is due. I have paid this but please let me have your payment for this amount.

Please give me a call when you have time. …”

And one evincing an escalating level of concern in September:

“Dear Ken and Barbara,

Doesn’t time fly?  It is water rates again. Enclosed is the demand that I have paid so please pay the amount into my account.

We must get together and decide what you want to do about the house. Prices are roaring ahead e.g. my family have just bought 2 blocks in Pacific Pines at $97,000 and $120,000. These prices are staggering but show no sign of being too high as the land is sold before it hits the market. I really believe that you should do something sooner rather than later.

I hope that you are both well and look forward to hearing from you. …”

I reject Mr Hunter’s suggestion that this was to convey that the price to Mr Notley of the subject property was going or might go up. It does indicate some concern that Mr Hunter is bound to Mr Notley and in the latter’s hands from the point of view of being able to go into the market seeking a better price.

26. [26]
    It was not long before Mr Notley was faced with a clear assertion that the price to him had gone up. Whether or not the letter of 3 September 2000 played a part (by suggesting that his “equity” in the property had increased), or some awareness that “the end of the five-year period was approaching” (see T p 33 l 43), Mr Notley, in light of improved financial circumstances, at or not long after this time reached the view that it was feasible for him to purchase, with the assistance of borrowed funds he anticipated being able to arrange. He contacted Mr Hunter by telephone with the news. Mr Notley said at p 33:

“I just said things had got a little better for us and we would be in a position probably to buy - buy the property and Mr Hunter sort of replied that basically that the price had gone up and we'd have to re-look at the whole thing and I - I said, ‘Oh, I thought we had a deal.’

And what did he say?‑‑ Oh, just - just - he just said, ‘Oh, well, the price has gone’ - he just said that the price had gone up, we'll have to re-look at it, and‑‑‑‑‑

So, was anything else said in that conversation?‑‑ Well, it was a pretty short conversation.

And what was your reaction to that conversation?‑‑ Well, I was - oh, I - I was taken aback a bit. I didn't really - that - that was the first time that I had any idea that things were not right. It was a bit of a shock to me actually.”

Mr Hunter gave this evidence at p 109:

“At any subsequent time did you have a conversation with Mr Notley?--  He phoned me after the 20th of November of 2002 and he phoned on my mobile and said, ‘I want to buy the house.’

All right. Now, firstly, you've said that this conversation took place after the 20th of November 2002. How is it that you're so certain about that?--  Because I have a habit of writing phone numbers and things on newspaper next to the telephone.

Yes?--  And I wrote his - phoned on mobile and I said, ‘Look, this is very expensive. Give me your number and I'll call you back.’, and I wrote his number down on the newspaper, which was the 20th of November.

All right.

Might the witness be shown this newspaper?

WITNESS:  This is the paper. There's the number I wrote down.

MS MAGEE:  All right, and what number is that?--  This is 5573 5582.

All right, and why did you write that number on that newspaper?--  Because that was the number that Mr Notley gave me on a mobile phone for him to phone back - the phone number from which he was speaking.

And when did you write that number on that newspaper?--  Well, I wrote it so that I was able to remember to phone him back on the land line.

So you write it down as you were speaking to him?--  At the time of the phone call, yes.

So when you phoned him back what did you say or who said what?--  Well, verbatim I can't give you. The gist of it was he said, ‘I want to buy the house.’  I said, ‘Well, prices have moved an awful lot since then and I have to consider this. Please go and see your lawyer.’, because I didn't really want to start a whole discussion about it with him on the phone.

All right. Did you say anything else to him about him having said that he wanted to purchase the house?--  Well, only really, ‘Go and see your lawyer.’

All right, and what was his response to that?--  Well, he said he would do.

All right, and did you have any further telephone conversations with Mr Notley subsequent to that time?--  No.

All right. I tender that newspaper.”

Oddly, Ms Magee had put to Mr Notley (at p 63) there was general discussion about how the two were going, Mrs Notley’s health, the progress of Mr Notley’s business. Only the last attracted any admission. It seems implausible that           Mr Hunter would have resorted to small talk when intent on communicating to   Mr Hunter that the option to purchase no longer existed. He may have mixed up recollections of some other conversation. It is also unconvincing that Mr Hunter would be as concerned as he claims to save Mr Notley the cost of a phone call to a mobile.

27. [27]
    Following the conversation, Mr Notley said he posted a letter, Exhibit 19 to       Mr Hunter at his address shown in the contract documents in these terms:

“John,

A short note to let you know that things have gone a little better for us over the last couple of years.

It seems at last we will be able to pay you the money owing before the end of the year. Could you let me know what you require from us. …”

It was not delivered, as Mr Hunter had closed his business down. In the circumstances, it is not necessary to decide whether the notice provisions in the option agreement covered the way in which this letter was sent, or whether its terms were effective as an exercise of the option. Pressed (at p 63) as to whether it was intended as such, Mr Notley said, “It’s just what it is. I’m asking the man, ‘What is required?’.”  While Mrs Notley insisted the date was correct, Mr Notley (who really had no idea) effectively bowed to Ms Magee’s suggestion the letter and phone call which inspired it (Mrs Notley said the letter came first) happened about 25 or 26 November 2002.

28. [28]
    While denying Mr Hunter had advised him to see a lawyer, that is what Mr Notley (who was unaccustomed to using lawyers) did, explaining his approach to          Mr Appleyard as a quest for legible copies of the contract documents. Regarding the option to purchase, Mr Appleyard told him, “I think you’re too late.”            Mr Notley had thought he had until December, indeed until January 2003, which was the time for the last option fee payment, those being due in arrears.

29. [29]
    Mr Notley went to new solicitors, who sent to the defunct business address and to Mr Hunter’s home address a letter dated 28 November 2002 on the first page, 29 November 2002 on the second (it was posted on the later day):

“We advise that we act on behalf of the abovenamed Ken Notley in relation to the above matter.

We are instructed that pursuant to a Tenanacy Agreement dated 12 December 1997, an Option to Purchase the above property was granted to our client, with an agreement granting such option to purchase being entered into on the same date as the Tenancy Agreement.

Pursuant to the Tenancy Agreement our client agreed to pay, has paid and continues to pay the agreed rental at $953.33 per month.

Pursuant to the Option to Purchase, our client agreed to pay the Option Sum of $10,800 by monthly instalments of $300 per month in arrears monthly and has completed these payments.

The said Tenancy Agreement was for a term of three years commencing 26 December 1997 to 25 December 2000, and contained an option to renew the term of the lease for a further two years.

We are instructed that our client exercised his option to renew the term of the lease on or about October 2000, by a letter addressed and sent to you at your address stated above – that being the address for service of notices stated in the Tenancy Agreement.

Pursuant to the terms of renewal of the Tenancy Agreement, our client continued to pay rental as agreed, and has continued in occupation of the premises.

Pursuant to the terms of the renewal of the Option to Purchase, in the event the option to renew the term of the Tenancy was exercised by our client, the Option Sum would be increased by a further $7,200 to $18,000 from the initial Option Sum of $10,800, payable in monthly instalments of $300 per month. Our client has continued to make the payments of $300 per month in addition to rental due each month.

We are instructed that our client informed you approximate two months ago that he wished to exercise his option to purchase the property, and you had confirmed your agreement to this and that he continue to pay the instalments towards the Option Sum.

In the expectation of purchasing the property, our client has continued to be in possession of the premises, has duly paid all sums due to you and has continued to pay same including all the requisite instalments towards the Option Sum.

We now write by way of notice, to confirm our client’s intention to exercise his option to purchase the property, and enclose for your execution a duly completed Contract for Sale of the property being the same Contract which was appended to the Option to Purchase.

Please execute the Contract for Sale and return the original to us as we will require this for stamping purposes before settlement.

Yours faithfully”.

There is a certain amount of nonsense in that letter, probably attributable to the new solicitor’s difficulty in getting clear instructions from Mr Notley in haste. It has not been contended there was any written exercise of the option to renew the lease in October 2000 or at any other time; nor has there been any attempt to show advice being given “two months” ago of a wish to exercise the option to purchase. In the circumstances, this must be taken as an erroneous reference to “two years ago” – i.e. to Mrs Notley’s phone call, unless it refers to Exhibit 19 and the phone call Mr Notley made to similar effect. The purported notice of exercise of option is, in my opinion, effective as such, despite the date, given that there was no current deadline, but irregular from another point of view: as to the contract document presented, Clause 8 of the Option Agreement (Exhibit 2) required the document sent to Mr Hunter to be executed by the purchaser, which had not happened, still has not. No point has ever been taken about this. In any event, I think that Mr Hunter’s clear repudiation of the option to purchase in the phone call when Mr Notley called to foreshadow exercise of that option excused compliance in this regard (neither the law nor equity requires a person to do a useless act). By Clause 8, the plaintiff had seven days from giving notice of exercise within which to execute the contract document; such execution need not accompany the notice. Similar reasoning excuses the plaintiff’s non-payment of the last three instalments of the $18,000 option fee (according to the Court’s findings, these were not rent). Why should Mr Notley pay, for an option repudiated by Mr Hunter, $900, for the purpose of having Mr Hunter forfeit the sum?  (In recent times tender was made of the $900, and rejected.)

30. [30]
    Mr Hunter’s solicitors responded to the notice of exercise of option on 9 December 2002:

“We act for Albert Hunter and we have been provided with a copy of your letter dated 28 November 2002.

In response to your letter we are instructed as follows:

1. Despite our clients best efforts to obtain your clients commitment to an extended lease term your client did not exercise his option to renew the initial term for a further two years and only continued to occupy the premises on a monthly tenancy.

2. In any event if your client had exercised his option to renew, which is denied, the extended term would expire on the 26^th of December 2002. This would require your client to exercise in writing the option to purchase by no later than 26 November 2002. This did not occur.

In the above circumstances our client fails to understand on which basis your client now purports to exercise an option to purchase the above property. Accordingly, our client does not intend to execute the contract of sale enclosed with your letter.

Enclosed for your information is a copy of the Form 12 Notice to Leave delivered by our client to your client today.

Yours faithfully”

Paragraph 2 appears to misconceive the expiry date, which, on the basis indicated, would appear to be 12 November 2002.

For a time, the Notleys ignored the Notice to Leave, presumably paying $953.33 per month as rent. At a date which the evidence did not agree about, they vacated, but (by agreement acknowledged in solicitors’ correspondence) this was without prejudice to Mr Notley’s claim for specific performance.

Theories Advanced to Support the Plaintiff’s Claim

31. [31]
    The first theory presented by lawyers representing the plaintiff as to why he should obtain specific performance appears in his then solicitor’s letter of 28/29 November 2002, relying on exercise of both options. This approach was unsustainable. Not only was the option to extend the tenancy agreement not formally exercised, the purported exercise of the option to purchase would still (without more) have been too late.

32. [32]
    The next theory, in the statement of claim filed 16 January 2003, advanced the idea that the conversation of 8 August 2000 had affected the parties’ rights:

“6. The Plaintiff paid all rentals, and all option payments making his total option payments made $18,000.00.

7. The RTA was renewed by agreement between the parties when the plaintiff’s wife and agent (Barbara Notley), telephoned the defendant on 8 August 2000 to enquire whether the plaintiff could extend the RTA and the option to purchase agreement and the defendant agreed to renew and extend both agreements stating inter alia to Barbara, “the house is yours”.

8. Thereafter the conversation referred to in paragraph 7 above the defendant continued to accept rental payments and the additional $300.00 monthly.

9. The plaintiff exercised the option to purchase.

Particulars

1. (a)
   The fourth anniversary plus 11 months from the date of the contracts (12 December 1997) was 12 November 2002.

2. (b)
   On or shortly before 25 October 2002 the plaintiff spoke to the defendant per phone and the plaintiff told the defendant that he definitely wanted to exercise the option to purchase the property.

3. (c)
   On 26 October 2002 the plaintiff posted by ordinary mail to the defendant notice in writing confirming his intention to exercise the option to purchase the property.

4. (d)
   Alternatively, if it is not accepted that the plaintiff’s notice in writing dated and sent 26 October 2002 was sufficient to exercise the option to purchase the property the plaintiff states that:-

4. (i)
   he verbally agreed with the defendant to permit the plaintiff to exercise the option to purchase agreement in consideration of the plaintiff’s payments of the option fee, and his continued rental of the property until settlement;

4. (ii)
   he continued to pay the rental and option fee.

10. In light of the matters pleaded above, the Defendant is estopped from denying the exercise of the option to purchase the property by the Plaintiff.

11. On 27 November 2002 the plaintiff’s solicitors sent the draft contract for purchase of the property pursuant to the option to purchase agreement, but the defendant has refused to honour the option to purchase agreement.

The Plaintiff claims the following relief:

And the plaintiff claims:-

2. (i)
   An injunction preventing his removal from the property;

2. (ii)
   An injunction preventing the defendant dealing with the said property pending judgment in this action.

3. (iii)
   An order for specific performance of the option agreement that the defendant’s contract with the plaintiff to sell the property to the plaintiff for $173,000.00;

4. (iv)
   In the alternative, damages;

5. (v)
   Costs.”

33. [33]
    At an interlocutory hearing on 28 January 2004, two days before the trial began, the plaintiff obtained leave to amend the statement of claim. The new pleading refers to the Valuer-General’s valuation of the property, to establish the Court’s jurisdiction. A new paragraph 6A pleaded at some length a conversation “between on or about 24 July 2000 and on or about 26 July 2000” in which the parties discussed work being done on the boat “off the contract price for the property” which “might help you get your loan to buy the house” (Mr Notley did not come up to proof here). Paragraphs 7 and 8 were substantially recast, and a new paragraph 7A inserted:

“7. The plaintiff’s wife and agent (Barbara Notley), telephoned the defendant on 8 August 2000 when a conversation to the following effect occurred:

Barbara Notley:  ‘John, we can’t get a loan. We don’t have enough equity in the house, do you want us to move out?’

John Hunter:   ‘No, I don’t want you to move out, its your house. Do what you want with it. Later on there will be enough equity in the house to get you a loan to buy the property. I will help you get a loan.’

Barbara Notley: ‘Okay. Thanks John.’

7A. By virtue of the facts alleged in paragraphs 6A and 7 hereof the Defendant represented collectively and/or alternatively that

2. (a)
   the Plaintiff could continue in occupation of the property after termination of RTA by effluxion of time

2. (b)
   the Plaintiff need not exercise the Option to Renew according to its terms or at all

2. (c)
   the Plaintiff need not exercise the Option to Purchase according to its terms or at all

2. (d)
   the Plaintiff was the equitable owner of the property

2. (e)
   Upon the payment of the Option Sum and continued compliance with the terms of the RTA the Defendant would comply with his obligation under the Option to Purchase to execute a contract in terms of the Option Contract Form.

8. After the conversation referred to in paragraphs 6A and 7 above

2. (a)
   and in reliance thereon and induced thereby the plaintiff, to his detriment made both the rental payments and the monthly option sum of $300 and continued to reside in the Property

2. (b)
   the defendant continued to accept rental payments and the additional $300.00 monthly.”

While I would not have cast paragraph 7A as Mr Eastwood did, I have concluded that, with the exception of (d), for purposes of the decision the Court has to make, in its essentials, the paragraph is made out, any contribution of the paragraph 6A matters being simply by way of useful background.

Detriment

34. [34]
    Estoppel depends on establishing the plaintiff suffered a relevant detriment from relying on the state of affairs Mr Hunter led him to believe pertained. It is not a fair criticism of the plaintiff’s case here that it has fluctuated in what is asserted by way of detriment – or as to the meaning of what Mrs Notley was told. In the circumstances, a range of meanings may be appropriate, also there are various ways in which to characterise what the Notleys did or refrained from doing. It is difficult for parties to predict the approach that will appeal to a court. I am not prepared to say the plaintiff must get these things exactly right, or fail. So long as the case the defendant has to meet is substantially the same, there is no affront to justice should the Court’s analysis vary in some details from the plaintiff’s. Possessed of all the evidence the parties want to adduce, the Court, in my view, may act on the basis of detriments which seem obvious, regardless of the emphasis the plaintiff or his legal representatives placed on them. Although there may be room here for the Court to proceed in such an inventive fashion, it seems unnecessary to do so in the end.

35. [35]
    Mr Eastwood resiled from arguing detriment in terms of the Notleys foregoing the opportunity of moving to cheaper (inferior) rented accommodation, or doing      Mr Hunter a favour by remaining his tenant and continuing to pay him. The true detriment, as it seems to me, lay in Mr Notley’s refraining from taking steps he might have taken, in particular, in the first instance, by correctly exercising the option to extend the tenancy, which would have cost little more than the price of a stamp on a letter, and committed him to nothing new.

36. [36]
    (An interesting feature is that the plaintiff, in reliance on Exhibit 21, insured the property from November 1997 (see Exhibit 23) and kept it insured thereafter (see Exhibit 16). I accept this was something Mr Appleyard told Mr Notley he had to do. The basis of such insurance was Mr Notley’s being a buyer let into possession before completion. While it is a reasonable inference Mr Hunter was fully aware of the original taking out of the insurance, it is obscure whether he knew or should have known that it was kept up.)

37. [37]
    Whether Mr Notley would, in the event, have bestirred himself into action and exercised the option to renew in writing is beside the point. I am not persuaded it would have been useful to raise this with him in the witness box. As the situation was presented to him, to preserve his ability to become purchaser, nothing had to be done: Mr Hunter was prepared to wait, and, for all that appeared, indefinitely, although no-one contemplated it would be a matter of years and years. In the circumstances, Mr Notley had no need to take any step to get the option to purchase extended. Nor did the need arise to exercise that option by any deadline expiring in November 2002. It became unconscientious or unconscionable for   Mr Hunter to insist upon any deadline in the absence of action by him to re-instate one.

38. [38]
    Verwayen indicates the Court’s role to be limited to interfering to the minimum extent necessary to avoid the relevant detriment. Here, there could hardly be any argument but that the plaintiff should be permitted to exercise the option.

Terms

39. [39]
    A final issue upon which submissions were invited was the Court’s ability to attach to any specific performance decree conditions calculated to compensate   Mr Hunter for the delay in the balance purchase price being paid to him. There was no evidence of rising values, apart from Mr Hunter’s last demand for money for excess water (which probably suffices). If necessary, I would take judicial notice of apparently inexorably rising property values on the Gold Coast over the last few years. While Mr Hunter must be taken to have quite deliberately (despite his denials) agreed to be held to the 1997 market price for five years, he is at risk of being held to it for even longer. In a rising market, Mr Notley has had the advantage of keeping his funds, or not having to borrow. The REIQ – Law Society Contract provides for interest to be paid on overdue purchase price, reference being made to a rate set by the Society if none is specified in the contract. There appeared to me to be a certain justice in requiring the plaintiff, as a condition of a decree, to pay interest at some such appropriate rate for the delay that has happened after 2002. Neither Counsel showed much enthusiasm for this approach. It would cost Mr Eastwood’s client money; in the end I understood him to say his client would submit to conditions set by the Court. Ms Magee opposed any decree “conditional” in the sense of the Court putting the plaintiff on terms. She rightly apprehended that it would weaken an argument for “hardship” upon her client. (The purported recent lease was not said to generate hardship.)  Both Counsel submitted the Court could not rewrite the parties’ agreement.

40. [40]
    I am of the view that a condition of the kind proposed might be proper, either on the basis of the maxim that “He who comes to equity must do equity”, or the basis of ameliorating perceived hardship, to the point that it ceases to be a defence to a specific performance decree. Assistance may be gained from Harvela Investments Pty Ltd v Royal Trust Co of Canada (Cl) Ltd (1986) AC 207; (1985) 2 All ER 966, and the cases cited in Stonham, Vendor and Purchaser, para 1520: Burrel v Harrison (1691) 2 Vern 231, 23 ER 749; Moxhay v Inderwick (1847) 1 De G & Sm 908; 63 ER 1261 and Lukey v Higgs (1855) 3 Eq Rep 510. In the first of these, the brief report is:

“Bill for a specific performance of articles for a lease of lands in Norfolk, where by custom the landlords repair; but the rent reserved on this lease appearing to be under the value, decreed the tenant should covenant to repair.

Bill to have an execution of articles for a lease of lands in Norfolk, at the rent of thirty pounds per ann.. and the custom throughout Norfolk being, that the landlord should do and be at the charge of all repairs during the term. The question was, who in this case should be obliged to repair.

Per Cur. The tenant being plaintiff to have the lease made, and it being in proof that thirty pounds per ann. is not the full value, decreed a lease to be made; but that the plaintiff tenant should covenant to repair, and the rent of thirty pounds per ann. To be subject to no deductions, save only parliamentary taxes,  (Reg. Lib. 1691, A. fol. 338, 368. 15^th Dec.)”

41. [41]
    The recent House of Lords case is particularly helpful, in that the unsuccessful defendant vendor’s persistence in a mistaken view that it was entitled to sell shares to a co-defendant, rather than to the successful plaintiff was the cause of delay; nevertheless, it was held appropriate that it be paid interest. Lord Templeman (All ER at 977 ff) said:

“The sale was not completed because the vendors declined, mistakenly as it now appears, to recognise and fulfil their duties under the invitation to sell to Harvela. On behalf of the vendors counsel submits that interest is payable unless the vendors were to blame for the delay. The delay was due to Sir Leonard, who submitted the referential bid and maintained that he was entitled to the shares. The vendors were powerless to complete until the inevitable litigation was resolved. In my opinion, in the events which have happened, the vendors are not entitled to interest at the contractual penal rate imposed by the invitation. Harvela made the highest bid and were ready, willing and able to complete on the completion date. The conduct of the vendors was not blameworthy but they declined to complete. As between Harvela and the vendors, the failure to complete was due to delay on the part of the vendors. It would have been possible for the vendors to seek an interlocutory order barring Sir Leonard from the equitable remedy of specific performance and confining him to damages at the option of the vendors even if he succeeded in establishing his claim to be the purchaser pursuant to the invitation unless Sir Leonard undertook that he would pay to the vendors interest at the contractual rate from the completion date if, in the event, Harvela established its claim to be the purchaser. Corresponding relief could have been granted to the vendors against Harvela.

On behalf of the vendors counsel submitted in the alternative that, if the vendors are not entitled to interest at the contractual rate pursuant to the express provisions of the invitation, nevertheless the court should, in the exercise of its discretion in awarding the equitable remedy of specific performance, decline to make any such order at the behest of Harvela save on terms that Harvela pay a reasonable rate of interest from the completion date to the date of actual completion. On behalf of Harvela counsel submits that, if the vendors fail to establish their contractual claim to interest at law, they are not entitled to be allowed any interest in equity.

Although the sale was not completed on 15 October 1981 because of delay on the part of the vendors, the conduct of the vendors was not unreasonable. Harvela could have sought and obtained an interlocutory injunction restraining the vendors from completing with Sir Leonard; Sir Leonard could have sought and obtained a similar injunction restraining the vendors from completing with Harvela until the litigation had finally established the rights of the parties. There is a well-recognised principle that, subject to any contractual provision to the contrary, the vendor ought to be entitled from the completion date to interest on the purchase money, which in equity belongs to the vendor, and the purchaser ought to be entitled from the completion date to the fruits of the property, which in equity belongs to the purchaser. A corresponding principle is that if the vendor is not to blame for the delay in completion then again, subject to any contractual provision to the contrary, the purchaser should not be allowed to claim the fruits of the property and to retain the benefit of interest which was or could have been earned by the purchaser on the purchase price which in equity belongs to the vendor. Every case must be judged on its merits. In the present case the vendors are not blameworthy, Harvela had the use of the purchase price of $2,175,000 for nearly four years, Harvela could have paid the purchase price into court and Harvela will benefit from the profits made by the company since 16 September 1981. Those profits have not been distributed save to honour preferential dividends. In these circumstances it will be unconscionable for Harvela to enjoy the purchase price and the benefit of profits attributable to the shares and available to Harvela once completion takes place and Harvela assume control of the company. Counsel for Harvela submitted that there was no sufficient evidence that the company made profits during the past four years. The company has provided accounts which disclose the profits of the company but do not disclose the profits owned by the subsidiaries of the company. The accounts show that the company has made profits in the region of hundreds of thousands of dollars and that, consistently with the year preceding the accounts, it is likely that the subsidiaries have made profits of millions of dollars which could be, but have not yet been, distributed to the company. At any rate, Harvela having offered $2,175,000 for 12% of the share capital of the company, and having sought specific performance, show no signs of repenting its bargain and I conclude that Harvela is not entitled to the benefit of interest attributable to the purchase money as well as the profits attributable to the contractual property. Harvela could have paid the purchase price of £2,175,000 into court on the completion date to earn interest at the short-term investment rate. In my opinion, as a condition of specific performance, Harvela should pay to the vendors interest at that rate from 15 October 1981 until actual payment of the purchase price. Harvela will be entitled to the preference dividends received by the vendors in respect of the shares since 15 October 1981.”

42. [42]
    The Court here decides that equity would not permit the defendant, Mr Hunter to resile from what he told Mrs Notley. There is no evidence to support any strong defence of hardship, in that Mr Hunter was prepared to accept the purchase price of $173,000.00 until about the end of 2002. While reliable in paying the rent and option fee, Mr Notley must have been frustrating to deal with. I do not think     Mr Hunter expected he would be still waiting for his price indefinitely (notwithstanding that in November 1997 he had been prepared to wait for 22 years for payment in full); he is now embarrassed because he did not choose his words to Mrs Notley more carefully, rather offered an open-ended indulgence. Although he brought the delay in 2003-2004 upon himself by contesting these proceedings, his approach was not indefensible: most equitable estoppel cases could go either way, and this one had an unusual genesis. In my opinion, Mr Hunter has not disqualified himself from being allowed some compensation for delay. Further, it strikes me as arguably unconscionable for the plaintiff to be made better off by the Court’s decree coming now than he would have been had matters proceeded in late 2002.

43. [43]
    I will hear submissions about orders to be made. But it seems the plaintiff should have a degree of specific performance requiring Mr Hunter to execute a form of contract in accordance with Exhibit 7A, with appropriate changes, such as possible insertion of different solicitors’ names, provided Mr Notley has previously executed it, I would be inclined to attach a condition that upon completion of such a contract, Mr Notley pays interest at the Law Society Contract Rate (which may be taken as one the parties thought just in 1997)  or some other appropriate rate such as the fixed for default judgments from 1 January 2003 until the date when the document executed by Mr Notley is delivered to    Mr Hunter’s solicitors. I propose to refrain from making another order until the parties have had an opportunity to consider things and made submissions. The reason why the special condition is contemplated is the Court’s concern that the delay has occasioned financial “hardship” to the defendant. Whether this is so is not established by clear evidence of Mr Hunter’s situation. He set things up so that the property was self-funding in the sense that mortgage payments and other outlays were covered. The extent to which this has been so in recent times is unknown. The point is that Mr Hunter has the Court’s invitation to show the extent of “hardship”, so that any condition appropriate to alleviate it to the extent the Court thinks fit can be devised. Mr Hunter is entitled to be paid the balance of the first $18,000.00 “option fee” still outstanding.

44. [44]
    Tribute should be paid to Ms Magee for the impressive written submission she provided during her final address on 28 February 2004. I note in particular the careful analysis of weaknesses in Mrs Notley’s evidence:

“It is submitted that the evidence of Mrs Notley is inherently unreliable for the following reasons:

1. (a)
   She exhibited a tendency to state positively facts of which she was later determined to be in ignorance.

For example, she repeatedly stated that she had a telephone conversation with the Defendant on 8 August 2002: Transcript, page 84, lines 10-20 and page 86, lines 1-5.

However, when she looked at Exhibit “15” she realised that the relevant year was 2000 and she substantial conceded that she had no independent recollection of the date without her keeping a record: Transcript page 92, lines 8-10.

Notwithstanding this she was adamant that the letter written by her husband and bearing the date the 26^th October 2002 (Exhibit “19”) was sent on 27 October 2002: Transcript page 92, lines 8-58; page 93, lines 1-10.

2. (b)
   In relation to the same piece of correspondence, she said that she believed the letter was written before her husband had a telephone conversation with the Defendant: Transcript page 93, lines 12-20. In contrast, the Plaintiff was quite definite that the letter was written substantial to a telephone conversation with the Defendant: Transcript page 33, lines 34 to page 34 line 12; Transcript page 60, lines 1-10.

3. (c)
   Mrs Notley’s account of the relevant telephone conversation is that it was very short: Transcript page 84, lines 28-37; Transcript page 98, lines 10-16. When it was pointed out to her that the telephone conversation took 8 minutes and 40 seconds she said that that was a short telephone conversation for her. Her version of what was said in the conversation is inconsistent with its length. Rather, the length of the conversation is more consistent with the Defendant’s version of the conversation.

4. (d)
   Mrs Notley denies having attended at Mr Hutner’s office with her husband to discuss his assisting them in obtaining a loan to purchase the property and that she accompanied her husband to meet the finance broker suggested to them by Mr Hunter. This conflicts with her husband’s evidence (Transcript page 50, lines 20-48) and the evidence of the Defendant: Transcript page 105, lines 50-60, page 106, lines 1-22.

5. (e)
   Mrs Notley was adamant that she and her husband vacated the property the subject of the proceedings in July 2003: Transcript page 83, lines 35-46; page 100, lines 5-15. However, it is evident that in fact the property was vacated in September 2003: Transcript page 69, lines 10-20; Exhibits “9” and “10”.

6. (f)
   The conflicting versions given by Mrs Notley of her conversation with the Defendant and what the Plaintiff said he was told by Mrs Notley about that conversation:

6. (i)
   Mrs Notley is adamant that no mention of money was made in the conversation with the Defendant which is alleged to found the estoppel by representation: Transcript page 97, line 19; line 53-54, last line; page 98, line 31; page 103, lines 17-18 & lines 25-30.

6. (ii)
   In contrast the Plaintiff says that what he was told about the conversation by Mrs Notley was that as long as they kept paying the same amount that they had been paying, they could stay in the property: Transcript page 30, lines 30 to the end of the page; page 54, lines 35-45; page 55, lines 18-28.

6. (iii)
   Mrs Notley said that she was told by the Defendant that ‘the house was ours to do what we wanted with it’, Transcript page 84, lines 30-31.

7. (g)
   In contrast, Mr Notley denies there was every any suggestion of his owning the property: Transcript page 55, lines 103.

By reason of all these factors the Court ought to find that the evidence of Mrs Notley is inherently unreliable and would accept the evidence of Mr Hunter in relation to to the contents of the telephone conversation.”

Those considerations do not dissuade me from accepting Mrs Notley in respect of the crucial conversation. Her locating it in 2002 initially was an obvious slip probably attributable to nerves. I think the defendant made a “clear” representation to satisfy Legione v Hateley (1983) 152 CLR 406, 435. It may be treated as an “implied representation” (cf Deane J in Verwayen at 444). These were the principal passages from authority relied on by Ms Magee.