Burnitt v Pacific Paradise Resort Pty Ltd
[2005] QDC 429
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- Unreported Judgment
- Burnitt v Pacific Paradise Resort Pty Ltd[2005] QDC 429
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Burnitt v Pacific Paradise Resort Pty Ltd[2005] QDC 429
Burnitt v Pacific Paradise Resort Pty Ltd[2005] QDC 429
DISTRICT COURT OF QUEENSLAND
CITATION: | Burnitt & Anor v Pacific Paradise Resort Pty Ltd [2005] QDC 429 |
PARTIES: | PETER RAYMOND BURNITT First Plaintiff AND TRACEY MAREE BURNITT Second Plaintiff v PACIFIC PARADISE RESORT PTY LTD Defendant |
FILE NO/S: | BD1721/04 |
DIVISION: | |
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 21 December 2005 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 3 November 2005 |
JUDGE: | McGill DCJ |
ORDER: | Judgment for specific performance in terms to be settled. |
CATCHWORDS: | CONTRACT – Sale of Land – written contract – effect of oral evidence as to different terms – whether sham – whether contract terminated – specific performance. EQUITY – Specific Performance – whether absence of “clean hands” – whether damages adequate remedy. Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 – cited. Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 472 – followed. Jamieson v R (1993) 177 CCR 574 – applied. Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 – applied. Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 – applied. Marek v Australasian Conference Association Pty Ltd [1994] 2 Qd R 521 – applied. Pianta v National Finance and Trustees Ltd (1964) 38 ALJR 232 – applied. Pukallus v Cameron (1982) 180 CLR 447 – cited. Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 – cited. S.J. Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87 – applied. Turner v Bladin (1951) 82 CLR 463 – cited. |
COUNSEL: | B.A. Laurie for the plaintiff M.M. Stewart SC, with him R.M. Treston for the defendant |
SOLICITORS: | Simmonds Crowley & Galvin for the plaintiff Dibbs Abbott Stillman for the defendant |
- [1]This is an action for specific performance of a contract for the sale of land. The plaintiffs allege that they entered into a contract in writing with the defendant to purchase a town house, lot 78 on survey plan 109960, County of Canning, Parish of Maroochy, which the defendant has refused to complete. In response the defendant pleaded a large number of defences, and at the beginning of the trial a further defence was added by amendment, to plead the statute of frauds[1]. Ultimately, not all of the defences were pursued[2], and the defendant called no evidence at the trial[3].
Background
- [2]The male plaintiff[4] is an electrician by trade (page 43), though he has a builder’s licence: page 44. In 1999 he purchased a property at Mudjimba from a mortgagee in possession, a partially completed development which he was going to complete and sell off: page 43. He was then telephoned by a man who had previously owned the land, Mr Volpe, who told him he wanted to become involved in a joint venture, also involving another man, Mr Marcochie, who was a financial backer. They decided to work together, with the plaintiff acting as the builder, Mr Volpe managing the sales, and Mr Marcochie organising the finance: page 45. The development was proceeding in stages; stage 1 had already been finished and soon after this arrangement stage 2 was finished, and the plaintiff proceeded to finish stage 3: page 44. The defendant company was established to own the land, but the plaintiff was never made a director of it.
- [3]The plaintiff said that on a couple of occasions there was some conversation between him and Mr Volpe in which it was suggested that he buy one of the units being constructed: page 45. His response was that he did not have the money to pay for one because his money was tied up in financing the construction work. Ultimately, however, he did agree to purchase one of the units and a contract dated 22 August 2002 was signed by Mr Volpe on behalf of the defendant and a Ms Morgan on behalf of the plaintiff, for the “Burnitt Family Superannuation” to purchase lot 83 on the proposed plan for a price of $218,000: Exhibit 1[5]. The contract provided for a deposit of $10,900 to be payable, and that amount was paid: Exhibit 19, document n.
The Contract
- [4]However, that was not the contract the enforcement of which was sought. The plaintiff said that subsequently Mr Volpe wanted him to take a different unit instead of lot 83, and he was agreeable, so a subsequent contract was prepared in relation to lot 78, which was to be in substitution for the earlier contract: page 47. The document which was tendered as the later contract is dated 7 February 2003: Exhibit 2. It consists of 14 pages, and is the fourth edition REIQ contract for lots in a community titles scheme. The first two pages are the contract warning under the Body Corporate and Community Management Act 1997; there are then seven pages of the terms of contract, which are in the standard form. There are then four pages of reference schedule, and finally a page listing the seller’s disclosure required to be made under the Act.
- [5]The reference schedule provided that the defendant was the seller, the buyer “Burnitt Group Superannuation Fund”[6]. The price was given as $225,000, and the deposit $65,000. There were no special conditions, but the date for settlement was 20 February 2003. No place for settlement was specified. The document was signed on behalf of the defendant by Mr Volpe, and on behalf of the plaintiffs by Mr Burnitt: page 47. They were in the management office for the development at the time when they signed.
- [6]At the same time as this document was signed, both Mr Volpe and Mr Burnitt also signed another document[7] relating to the contract, a copy of which appears in Exhibit 3[8]. That agreement provided that the purchase price of the unit was $160,000, and that $225,000 would be shown as the purchase price on the contract “for valuation purposes”. The side agreement contemplated that stamp duty would be paid on the face value amount, and the difference between that and stamp duty on a $160,000 purchase was to be refunded to the plaintiffs’ company on the settlement of the contract.
- [7]The plaintiff’s explanation for this was that the sale was not an arm’s length transaction, the price to him of $160,000 was at a discount, but they were concerned that if a sale at this price came to be advised to the Valuer General it could affect the valuation of all of the units in the development: page 61. As developers, of course, they had an interest in maximising the value of the units.
- [8]The plaintiff said that this side agreement was signed as a precaution by him, although at the time he still considered that there was a good relationship between him and Mr Volpe: page 59. It was in retrospect a wise precaution, but it did not go far enough: it made no reference to the correct amount of the deposit. The parties seem to have proceeded on the basis that the deposit which had been paid under the earlier contract, $10,900[9], was to be treated as the deposit under the replacement contract.
When was the contract signed?
- [9]This raises an issue as to the timing of the execution of Exhibit 2. Although that document was dated 7 February 2003, the plaintiffs’ evidence was that it was not signed on that date, but rather was signed on a later date: page 65[10]. At one point he said that Exhibit 2 was signed on 20 February 2003: page 57. That date appears on Exhibit 2, indeed on the page where both parties signed, and immediately above their signatures, but as the settlement date rather than the date of execution. It is, however, in the same colour pen as the pen with which the plaintiff signed on that page, and he said that the correction in blue on page 10 of 14, and the purchase price and the default interest rate entries on page 11 of 14, also in blue, were also made or written by him: page 59-61. He was not asked about the amount written in as the deposit, but it too is in blue and I strongly suspect it was also written in by him. He said that the parts filled in in black ink were completed (presumably earlier) by Mr Sockhill, the solicitor used at the time by Mr Volpe: page 59[11].
- [10]Although it was not submitted that the plaintiff’s evidence was dishonest or unreliable[12], his evidence was certainly at times difficult to follow[13], and not always consistent. I am concerned about the statement that the contract was signed on 20 February 2003; he may have said this only because the date appeared on the document which was then in front of him in the witness box. On the other hand, it may be that when he signed the contract he wrote that date in intending to record the date of his signing the contract, and without realising that he was actually recording a settlement date. The latter explanation is consistent with his evidence that there had been an earlier oral agreement to the effect that he did not have to settle the contract in a hurry, whereas at best the contract provided for settlement after only 13 days, and to the extent that it was actually executed after 7 February it was even tighter. If 20 February was the settlement date, it was an unusually early one for a contract of this nature. In all the circumstances, I think that the correct approach is to treat the evidence of the plaintiff at page 57 line 28 as correct on its face, that is that 20 February 2003 was actually the date on which Exhibit 2 was executed by the parties. It follows that the side agreement (which is undated) was executed on that date as well. In these circumstances, the appropriate conclusion is that the date of 20 February 2003 was inserted as the settlement date by mistake, the intention being to record it as the date of execution.
What else was agreed?
- [11]That would also be consistent with the evidence of the plaintiff that the parties did not intend an early settlement. The plaintiff said that he agreed with Mr Volpe that settlement of the purchase could be delayed until the building costs owing in respect of the development had been paid, and this was agreed on or about 7 February 2003: page 64. He said that what had happened was that there was an agreement on 7 February which led to the contract being drawn up, but it was actually signed on a later date: page 65. The absence of urgency at that stage would also be consistent with the contract apparently not having been provided to Mr Batt, the solicitor, until early April 2003; I strongly suspect the facsimile, Exhibit 3, was sent soon after he first received the contract and instructions to act[14].
- [12]The only indication that there was at some stage some intention that there be a speedy settlement appears in Exhibit 4, the third paragraph of which suggests that when Mr Batt first received instructions from the plaintiff they were to the effect that the purchase was to be settled speedily, rather than that settlement was to be delayed. The plaintiff unfortunately was not cross‑examined about this, and obviously the contract was not speedily settled; perhaps at that stage the plaintiff expected that he would be speedily receiving a large payment under the building contract, from which he could complete the purchase. He said that it was only in about April 2003 that his relationship with the others began to deteriorate, as a result of payments not being forthcoming: page 54.
- [13]Under cross-examination the plaintiff was referred to the allegation in paragraph 7(c) of the then existing reply and answer that the contract included an oral term that the sum of $10,900 would be paid as a deposit. That allegation was put in issue by the defendant’s rejoinder: paragraph 2. There was no mention of any such agreement in the plaintiff’s evidence-in-chief, and strictly speaking, there was no oral evidence to support that allegation during cross‑examination either, although there were questions asked about the timing of the agreement alleged there, which assumed, and which produced answers which assumed, that there had been such an agreement: pages 65-6. However, the answer at page 66 was suspicious, because of the reference to the deposit being agreed at $10,900 which was 5 per cent of $225,000. It is actually 5 per cent of $218,000, which was the purchase price in the earlier contract, pursuant to which that amount had been paid: Exhibit 1, Exhibit 7. The answer at page 66 looks to me very much like reconstruction.
- [14]On the evidence overall I am not persuaded that there was an agreement in the terms alleged in paragraph 7(c) of the reply; I think it more likely the parties simply assumed that the deposit which had been paid under the earlier contract would stand as the deposit paid under the new contract. Which would have been fine, had not somebody, presumably the plaintiff, for reasons unexplained, inserted $65,000 as the deposit payable when Exhibit 2 was completed. It occurs to me that this represents the difference between the nominal purchase price stated in that contract, and the true purchase price stated in the side agreement, though it is not obvious why that should lead to that amount being identified as the deposit. The whole thing is very odd, and difficult to reconcile with the proposition that there was a specific oral agreement about a deposit of $10,900 between 7 February and the execution of Exhibit 2.
The solicitor for both parties
- [15]Both the parties retained a solicitor, Mr Batt, principle of Praeger Batt, who on 7 April 2003 sent a facsimile to Mr Marcochie on behalf of the defendant: Exhibit 3. That facsimile confirmed that he had received instructions to act on the sale[15], and enclosed a copy of the contract, or at least the operative parts of it[16], and the side agreement. It continued:
“We also note the contract of sale to Burnitt Group Superannuation Fund for lot 83 has been terminated and the deposit held on account of that sale ($10,900) is to be applied to the sale of lot 78. Kindly confirm we are to proceed with this transaction.”
- [16]Mr Batt said that he had no definite recollection of who gave him instructions as to the matters set out in that letter, and in particular whether it was someone on behalf of the defendant rather than on behalf of the plaintiffs[17], but his evidence was to the effect that in the light of his ordinary practice and the terms of the letter, it was more probably someone on behalf of the defendant: pages 33-4. The letter was in the terms that he would use to confirm to his client the instructions he had received: page 26. Bearing in mind the considerations mentioned below, I accept this evidence and on the basis of it am prepared to draw the inference on the balance of probabilities that someone on behalf of the defendant did give to Mr Batt the instructions which are reflected in that facsimile letter.
- [17]The following day Mr Batt wrote to Mr Burnitt: Exhibit 4. That letter begins:
“Thank you for your instructions. We advise we have also been instructed to act on behalf of Pacific Paradise Resort. In order to comply with our ethical obligations we request that you acknowledge your full and informed consent to our firm acting in both capacities by executing the enclosed copy letter.”
- [18]The letter went on to give appropriate advice as to what should follow if any difficulties or conflict arose. On the same day Mr Batt sent a facsimile to Mr Volpe on behalf of the defendant advising that he had also been instructed to act on behalf of the plaintiff: Exhibit 5. Mr Batt sought confirmation from the defendant that it consented to his acting for both parties, and sought instructions in relation to an early settlement of the contract.
- [19]In my opinion the terms of these letters provide confirmation not only that both parties had retained Mr Batt but also that the defendant retained him first. If he had been retained first by the plaintiffs, I would expect Mr Batt to be concerned to obtain the informed consent of the defendant to his acting for both parties before he had any other communication with it. If he had had instructions from the plaintiffs first, his first letter to the defendant would have been more in the terms of Exhibit 5 than of Exhibit 3[18]. That in my opinion provides confirmation that Mr Batt had instructions from the defendant on or before 7 April 2003; indeed, it indicates he had no instructions from the plaintiffs at the time he wrote Exhibit 3. The letter (Exhibit 4) goes on to deal with various mechanical things associated with the preparation for settlement, no doubt consistently with the usual conveyancing practice.
- [20]There is no evidence that either party actually signed and returned the copy letters, but also there is no evidence that either party took exception to Mr Batt’s continuing to act. I do not doubt that if any oral exception had been taken he would have ceased to act. The position appears to be that there was no particular response from either party, since on 30 May 2003 he sent a further facsimile to each of Mr Burnitt (Exhibit 8) and Mr Volpe (Exhibit 9) referring to the letters of 8 April and seeking confirmation of instructions to proceed.
- [21]At some point Mr Batt received a facsimile from the plaintiff dated 2 June; this is not in evidence, but was referred to in a facsimile he sent the plaintiff the following day: Exhibit 12. That referred to proposed searches, and in due course a set of searches were undertaken: Exhibit 13[19]. On 13 June, Mr Batt sent a further facsimile to the plaintiff seeking some further instructions (Exhibit 14), and on 18 September again sought from the plaintiff instructions as to whether this matter was to proceed: Exhibit 10. The latter elicited a response, with the facsimile being facsimiled back with the plaintiff’s cryptic addition: “Yes, it is. You will be notified so as” (sic): Exhibit 11.
Other solicitors become involved
- [22]Evidently Mr Batt sent a facsimile in similar terms to Mr Volpe on 18 September, because on 29 September another firm of solicitors, Rae and Sockhill, advised him that they were instructed to advise that, “The proposed sale to Burnitt Superannuation Fund is not proceeding,” and to ask that the file be transferred to them: Exhibit 18. There was then on 30 September 2003 a letter (Exhibit 17) from a different firm of solicitors, Porter Davies, to Mr Batt advising that it acted for Mr Volpe and a different company (not the defendant) in respect of other litigation in the Supreme Court to which the plaintiff and his company were parties, and passing on Mr Volpe’s advice that, “Under no circumstances should the above purchase proceed.” On 9 October 2003 Mr Batt sent this letter to the plaintiff by facsimile with a covering message that, the sale having become subject to a dispute, it was necessary for him to obtain independent legal advice: Exhibit 16[20].
- [23]The explanation for this is that the relationship between the plaintiff and the other members of the joint venture had deteriorated after April, and in August 2003 proceedings were commenced in the Supreme Court dealing with, among other things, the plaintiff’s claim for payment in respect of the building work: page 51. Those proceedings were ultimately resolved, in about March 2004, but the contract the subject of the present action was not part of that settlement.
- [24]The plaintiffs instructed other solicitors, who on 29 March 2004 wrote to Rae and Sockhill for the defendant[21] calling for settlement on 30 April 2004: Exhibit 19(a). On 2 April 2004 that firm responded, referring to this facsimile and adding: “We await receipt of transfer documentation referred to in your facsimile under reference.” The transfer was apparently enclosed with the original of the letter sent by facsimile on 29 March when it followed by post. By the time of the next response, 13 April 2004, the defendant’s solicitors had become more wary, and enquired about payment of the deposit and any agreement to extend the settlement date: Exhibit 19(e). By the following day, however, their position had changed again, and they sent a short facsimile (Exhibit 19(f)) in the following terms:
“We refer to the above matter. It is our understanding your client has not paid the deposit referred to in the contract and accordingly this contract is now terminated.”
- [25]On 15 April the plaintiffs’ solicitors disputed the right to terminate (Exhibit 19(g)), and in response the defendant’s solicitors again sought evidence of payment of the deposit: Exhibit 19(i). The defendant’s solicitors, however, had also been communicating with Mr Batt, who on 21 April sent them a facsimile (Exhibit 6) saying among other things:
“We confirm that we hold $10,900 in our trust account representing the purchaser’s deposit. The deposit was receipted on 2 September 2002 in respect of a contract dated 22 August 2002. We are not aware of any contract dated 7 February 2004 nor of any extension request.”
- [26]It went on to refer to issues about payment of fees, which are a little puzzling. On 28 April 2004 the plaintiffs’ solicitors sent a calculation of settlement figures to the defendant’s solicitors, which assumed a deposit of $10,900: Exhibit 13(j). The solicitors queried the documentation of a deposit other than $65,000, but in reply the plaintiff’s solicitors sent only a copy of the receipt for $10,900: Exhibit 19(m). The request was repeated, and the reply on 30 April 2004 (Exhibit 19(q)) enclosed a copy of the side agreement and continued:
“The deposit of $10,900 was agreed at the time of execution of the enclosed agreement orally in the presence of an independent witness and confirmed by your client’s former solicitor, Mr J. Batt.”
The defendant continued to decline to settle, and the action was commenced.
The effect of Exhibit 2
- [27]It was submitted for the defendant that the contract was made orally between Mr Volpe and the plaintiff, in terms that the defendant would sell lot 78 to the plaintiff for a price of $160,000, in substitution for the earlier agreement to sell lot 83, which would be discharged, that the $10,900 held by the solicitors pursuant to the earlier contract would be treated as the deposit for the purposes of the sale, for valuation purposes the parties would execute the agreement specifying a price of $225,000, with the defendant to refund to the plaintiffs the difference between the stamp duty payable on that contract and the amount payable if the price were $160,000, and that settlement was to take place when monies owing under the building agreement between related parties were paid[22]. However, I do not accept this analysis, for a number of reasons.
- [28]This was a contract for the sale of land, and there is a strong presumption that when parties sign a formal written contract for the sale of a parcel of land, that that document is the operative contract between them[23]. The contract, Exhibit 2, expressly provided: “The seller and the buyer agree to sell and buy the property under this contract.” The evidence of oral negotiations between the parties, although referring to agreement on particular points, does not support the view that there was some particular occasion when the parties actually orally agreed all these (or for that matter any other) terms. Rather, the evidence indicated to me that there were a series of conversations over a period of time in the course of which an understanding on a number of points in relation to this proposed sale came to be commonly accepted between the plaintiff and Mr Volpe, as a result of which the contract and the side agreement were drawn up and signed. It must be remembered that at this time the parties were not at arm’s length; they were engaged in this development as joint venturers, and the purpose of the contact was to enable the plaintiffs to obtain a benefit which was to some extent to balance a benefit obtained by a relative of Mr Volpe: pages 45, 61. Although relations subsequently deteriorated between the parties, at this stage they were still on friendly terms (page 53), and that encourages a relaxed and informal attitude to contractual negotiations.
- [29]Apart from all of this, as a general proposition where parties after negotiations sign a formal written contract, that contract will become the operative contract between them[24], at least in the absence of a clear indication that the whole contract is not contained in the document, and any incongruity between what had been earlier agreed orally and the written terms is resolved on the basis that the written document supersedes any earlier inconsistent oral agreement[25]. This is subject to the equitable remedy of rectification, but that depends on the state of the written document being the product of a mistake[26], and there is no evidence of a mistake in the present case as to the amount of the deposit, nor is rectification claimed by either party. Indeed, where there is a written contract of this nature, ordinarily evidence of an earlier contrary oral agreement would be excluded under the parol evidence rule if its only purpose was to seek to modify the interpretation of the agreement[27].
- [30]Parties do sometimes enter into a formal written contract designed to look as if it was intended to govern the legal rights between the parties, in circumstances where their private intentions for at least some of the matters are different. No doubt when this happens the parties generally give effect to their private intentions, and both are satisfied by the outcome, and lawyers never get to hear about it. But when from time to time disputes arise, the legal response is that the parties are bound by the legal positions reflected in the formal contract between them. This is I suppose a consequence of the objective theory of contract[28]. There are some exceptions to this, one of which is estoppel, which does not arise in the circumstances of this case. But subject to that, the parties here have deliberately entered into a formal written contract, and accordingly the starting point of the analysis of the contractual relationship between them must be that contract. If there was some oral agreement before that contract, it has been superseded[29]. It was not disputed that the side agreement was effective to modify the purchase price under the contract, and indeed to introduce the additional term in relation to the stamp duty rebate. But the contract provided for a deposit of $65,000, and that in my opinion was the deposit payable under the contract.
- [31]Another exception is where the written contract is a sham[30]. The defendant submitted that Exhibit 2 was a sham, and that it therefore did not supersede the earlier oral agreements[31]. There is no basis for a conclusion that the agreement, Exhibit 2, as a whole was a sham. A sham is something in the form of a legally effective transaction which the parties intended should not have the apparent, or any, legal consequences[32]. There was no evidence to support that conclusion, except in relation to the purchase price stated in Exhibit 2, which was the subject of an express written variation.
- [32]The fact that the parties entered into this express written variation of Exhibit 2 suggests to me rather that the intention was that Exhibit 2 would have legal consequences subject to the specific modification of the side agreement. In my opinion it is really inconsistent with the notion that Exhibit 2 as a whole was a sham. If Exhibit 2 were a sham, it was unnecessary expressly to vary it, particularly with the formality of writing.
- [33]Apart from as to price, there was no evidence that the parties intended that Exhibit 2 should not have legal consequences. The plaintiff certainly said nothing of the sort, indeed, I do not think that the proposition that Exhibit 2 as a whole was a sham was directly put in cross-examination. There was certainly no evidence that anyone on behalf of the defendant intended that Exhibit 2, as amended by the side agreement, would not have its ordinary legal consequences. In those circumstances, there is no basis for a conclusion that Exhibit 2 was a sham.
- [34]The presence of the provision for this deposit in the contract was certainly curious. It is an unusually large amount for a deposit; indeed, because it was more than 10 per cent of the purchase price, it made the contract an instalment contract for the sale of land for the purposes of division 4 of part 6 of the Property Law Act 1974[33]. As a consequence pursuant to section 72(1) the defendant was not entitled to rescind as a result of any default in payment of part of the purchase price, including in this case the deposit (or the balance of the deposit over $10,900) until it had first served a notice in the approved form and waited for the expiration of a period of 30 days. That step was never taken. It follows that the contract has never been validly rescinded by the defendant, and remains on foot.
- [35]The position is similar with the date of settlement. The contract provided the date of 20 February 2003. Again there is no explanation why this date was chosen as a date for settlement, and why a specific early date was inserted in circumstances where the only evidence indicates that there was no intention that there be an early settlement of the contract. Nevertheless, the parties signed a written contract with that date for completion in it, and that became the operative date for completion.
- [36]What is different about the position of the date for completion is that there is reason to think that the date was inserted by mistake. Accordingly, on the face of it rectification would be available, though in the present action it was not sought by either party. The logic of the remedy of rectification depends on the proposition that the contract, including the mistaken term, would be effective in law in the absence of rectification even though it has been included by mistake. Accordingly, in the absence of rectification, the position remains that the contract provided a date for completion of 20 February 2003.
The defences argued
- [37]The first matter raised by the defendant was the defence under the statute of frauds, in that the contract provided for a deposit of $10,900, and a deferred date for settlement, and neither of these terms was evidenced in writing. It is true that neither of these terms was evidenced in writing, but neither was a term of the contract; the contract as I find it provided for a deposit of $65,000 and a date for settlement of 20 February 2003, and both of those terms were evidenced in writing. The defence under the statute of frauds therefore fails. In these circumstances it is unnecessary to consider whether the plaintiffs have made out a case of part performance.
“Unclean hands”
- [38]The next matter raised was that as a matter of discretion the relief sought should not be given because of the plaintiff’s “unclean hands”. This is not a case where the defence is being raised as a rhetorical flourish on a defence of fraud or misrepresentation or illegality or breach of contract. According to Spry[34], the cases fall into two main categories. The first is concerned with the situation where there has been inappropriate behaviour on the part of the plaintiff in the course of the action, such as misleading the court or abusing its process, or attempting to do so. Nothing of that nature is alleged or occurred here. The second is concerned with unconscionable conduct on the part of the plaintiff by enforcing a right improperly obtained or by otherwise furthering unconscionable purposes. It is concerned with a situation where a plaintiff is seeking to derive an advantage from dishonest conduct.
- [39]There was here no question of dishonesty between the parties. The defendant had as much of an interest as the plaintiff, indeed more of an interest, in raising the value of these lots, and there is no reason to doubt that the defendant was entirely content with this arrangement. The only question is whether the arrangement was misleading the public dishonestly by encouraging an unrealistic view as to the true value of the lot as suggested by the sale. As to this, there was simply no evidence of value or true value. For all I know, $160,000 may have been a substantial discount[35], and the figure of $225,000 may have been the price that a third party at arm’s length might have had to pay in order to purchase this lot from the defendant.
- [40]There is no evidence that $225,000 was not the true market value of this property at the time. There was some evidence from the plaintiff that he had been told something by a valuer, but that was not led as evidence of value: page 45. It is fundamental to this aspect of the defence that $225,000 was more than the true market value of this lot at the time, and there was no evidence of that. Further, there was no evidence that the plaintiff was being dishonest in attributing a value of $225,000 to the lot; he claimed that this was consistent with what he had been told by the valuer, and what the lots were offered to the public at: page 61. This defence therefore fails[36].
Specific performance as a remedy
- [41]Finally, it was submitted that it was not an appropriate case to grant specific performance, and an award of damages should be made in lieu. It was submitted that specific performance is traditionally regarded as an exceptional remedy not granted unless common law remedies were inadequate. That is true as a general proposition, in relation to contracts in the broad sense, but one example of a case where it has been regarded as appropriate is a contract for the sale and purchase of land, because each piece of land is unique, and no amount of damages could put the unsuccessful plaintiff in precisely the same position as if the contract had been performed[37]. The absence of any sentimental or other special attraction for the plaintiff is irrelevant[38]. Even if the purchase was simply as an investment, specific performance remains the relief routinely given for contracts of the sale of land[39]. This applies even in the case of vendor actions for specific performance[40], the logical justification for which has always struck me as decidedly tenuous. I would be acting inconsistently with the modern law and the current practice of the court in refusing specific performance in a case like this on discretionary grounds. Accordingly, there will be judgment that the contract ought to be specifically performed and carried into execution. The counterclaim, which just sought various declarations none of which I am prepared to make, is dismissed.
Precautionary findings
- [42]In case a different view of the matter should be taken elsewhere, I will make a number of precautionary findings. The defendant submitted that seven findings were justified on the evidence and ought to be made. The first was that Exhibit 2 was a sham executed with the dishonest purpose of misleading others that the plaintiff agreed to pay $225,000 for the property, and that as a consequence that represents the market value. I am not prepared to make that finding. It is true as shown by the side agreement that the purchase price as stated in Exhibit 2 is not intended to reflect the actual price to be paid by the plaintiff for the land. At most though that makes Exhibit 2 a sham in respect of the purchase price stated in it. The purpose of this arrangement was to prevent the value of the lots from being adversely affected by a sale at what was a concessional price. The fact that the sale was not at arm’s length ought to have meant that the sale was not a good indicator of market value anyway, but it is understandable that the parties, particularly perhaps the defendant, would be concerned that a transaction showing a low purchase price would have an adverse effect on value. If $160,000 was an undervalue, stating a higher consideration in the contract would have reduced the risk of a fraud on the revenue in terms of stamp duty. There was no evidence that $225,000 did not reflect the true market value of this home unit at the time, but there was evidence that the plaintiff believes that that was its true value. In the circumstances I am not prepared to make this finding.
- [43]The second finding sought was that the real agreement was an earlier oral agreement between Mr Volpe and the plaintiff; for reasons already given, I am not prepared to find that that was the operative contract between the parties.
- [44]The third finding sought was that it was the plaintiff who gave Mr Batt the instructions concerning the deposit which Mr Batt recorded in the facsimile Exhibit 3. For reasons already given, I am satisfied that Mr Batt’s initial instructions came from the defendant rather than the plaintiffs, but in the circumstances it is possible that the instructions initially came to Mr Batt from the plaintiff on behalf of the defendant. However, I think that was unlikely; it was Mr Volpe who was concerned with the sales side, so he would have been the natural person to be giving instructions to Mr Batt; Mr Batt said he spoke frequently with him during this period: pages 41-2. Both were present at the time the contract was signed, and so it would have been natural for Mr Volpe to take the contract and pass it on to Mr Batt.
- [45]For reasons I have already given, Mr Batt did not initially have instructions also to act for the plaintiffs, which suggests that he spoke to someone other than the plaintiff first. He received instructions from the plaintiff after he sent Exhibit 3 and before he sent Exhibit 5. It is possible the plaintiff spoke to him twice, but I think quite unlikely. Finally, there is the consideration that Mr Volpe did not give evidence, nor was his absence explained or justified, so I am prepared to draw the inference that his evidence would not have assisted the defendant[41]. In all the circumstances I am not prepared to find that it was the plaintiff who gave Mr Batt the instructions recorded in Exhibit 3; indeed, I am prepared to find that it was someone other than the plaintiff who gave those instructions.
- [46]I was next asked to find that at no stage after 7 February 2003 did the defendant claim any entitlement to the deposit; I take this to be a reference to the $10,900 held by Mr Batt, and I am prepared to make that finding. I was then asked to find that at no stage after 7 February 2003 did the defendant engage in any conduct which might be taken as having affirmed the contract. I am not prepared to make that finding; there was one step which at the least “might be taken as having affirmed the contract”, namely the letter of 2 April 2004 from the solicitors for the defendant referred to earlier. The only reason the transfer documents would be forwarded to that firm would be with a view to completion of the contract, and accordingly on that occasion by impliedly inviting the forwarding of transfer documents, those solicitors were behaving in a way which was consistent with the contract being still on foot and at least arguably inconsistently with the continuation of a right to rescind for failure to perform in a timely way, so as to waive the essentiality of time[42]. I am therefore not prepared to make the fifth finding sought on behalf of the defendant.
- [47]The next finding sought was that the defendant as early as April 2003 evinced the intention to refuse to convey the property to the plaintiffs. There was simply no evidence to support such a finding. The defendant referred to paragraph 4.3 of the further and better particulars of the plaintiffs’ reply and answer. It is not entirely clear what the terms of the request were in response to which these particulars were provided, but the particulars do allege telephone conversations between the plaintiff, Mr Volpe and Mr Marcochie in April and May 2003. There was, however, no evidence of these matters, and a statement in a pleading (and hence a statement in a particular) does not amount to a representation[43]and in my opinion does not amount to evidence. Accordingly I am not prepared to make this finding either.
- [48]Finally, it was submitted that I should find the value of the property as at 30 April 2004 was $275,000. This was on the basis of a valuation prepared under joint instructions of the solicitors for both parties, which was tendered by consent: Exhibit 30. It gave a valuation of $275,000 as at 30 April 2004, and on that basis I make that finding.
- [49]I should also for the sake of completeness make some precautionary findings in relation to some other matters which are in issue on the pleadings. It follows from what I have already said that I find that paragraph 3 of the amended statement of claim has been proved. I also accept the plaintiffs have proved the contents of paragraphs 1 and 4-8 of the amended statement of claim. There is no evidence in support of paragraph 9 of the amended statement of claim, although I do not think it matters for a cause of action. If it is necessary to assess the plaintiffs’ loss as at 30 April 2004, that is the difference between the value proved by Exhibit 20 of $275,000 and the contract price of $160,000, namely $115,000. In the circumstances, it is unnecessary for me to determine whether that is the appropriate date for assessment of damages.
- [50]It is unnecessary to consider whether the contract was void for uncertainty, that not having been pressed on behalf of the defendant, nor the defence of laches, for the same reason. The same applies to the defendant’s defence of estoppel.
- [51]Part performance was raised in the reply and answer of the plaintiffs. On the view that I take of the facts, it is unnecessary to deal with that issue. I think it is sufficient to say that I find that each of the matters listed as particulars of part performance in paragraph 3A(c) of the reply and answer to the further amended defence and counterclaim[44] occurred as alleged; indeed, it seems that in general paragraph 7C of the amended rejoinder did not deny that they occurred.
- [52]With regard to other allegations in the reply, I am not prepared to find that the contract included the oral term alleged in paragraph 5(c), which is still denied in paragraph 2 of the amended rejoinder. As to paragraph 6(b), I am not persuaded there was any such oral term and, on the view that I take of the facts, an oral agreement on 7 February 2003 would have preceded rather than followed the execution of Exhibit 2, and therefore be ineffective as a variation of it. I do not think that there are other precautionary findings which need to be made arising out of the reply and answer of the plaintiff to the further amended defence and counterclaim, or the subsequent amended rejoinder.
Conclusion
- [53]There will be judgment for specific performance of the contract in terms to be settled. Unless another order is appropriate, the defendant should pay the costs of the action including the counterclaim.
Footnotes
[1] More precisely, that there had been a failure to comply with section 59 of the Property Law Act 1974.
[2] In written submissions the defendant did not press any of the defences except for four, considered below.
[3] The plaintiffs’ two witnesses were completed on the first day after the amendment was made. On the second day the plaintiffs tendered some documents and then closed their case, but were not yet in a position properly to plead in response to the amended defence. The defendant foreshadowed that it would probably not call evidence, so the trial was adjourned. The amended reply was filed on the following Tuesday, and the following day the defendant by letter elected not to call evidence. Submissions in writing were subsequently received on behalf of each party.
[4] I shall refer to him as “the plaintiff”.
[5] See p 46. This contract did not specify a date for completion.
[6] The plaintiffs sue as trustees of that fund.
[7] This was referred to at the trial as the “side agreement” and I will use that term.
[8] See pages 47, 56, 57-8.
[9] 5 per cent of the purchase price under that contract.
[10] On the other hand, originally when asked when it was signed, he said 7 February: p 56. His position seemed to change during cross-examination.
[11] On Volpe’s instructions: p 60.
[12] Generally, I accept it, except when otherwise stated.
[13] See, for example, page 53 lines 19-27; contrast this with page 48 line 55, and page 54 lines 1-4.
[14] He first received instructions to act after 20 February 2003: Exhibit 14.
[15] In context, that must have been a reference to acting for the defendant.
[16] Batt p 39.
[17] He had no file note of any instructions: page 30.
[18] There is no mention in Exhibit 3 of the suggested early settlement proposed by the plaintiff, so he must have had that suggestion made to him by the plaintiff between when he wrote Exhibit 3 and when he wrote Exhibit 5.
[19] As far as I am aware nothing turns on the contents of these.
[20] The facsimile refers to a confirmation of “our advices on 1 September 2003 that we are not able to act on your behalf…”. In the circumstances I believe that this was an error of dating, and the advice would have been given on 1 October 2003, presumably by telephone.
[21] The firm that had sent the Exhibit 18; the firm that sent Exhibit 17 appears to have dropped out of the picture again.
[22] This is a paraphrase of paragraph 13 of the defendant’s written submissions.
[23]S.J. Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87 at 92; Marek v Australasian Conference Association Pty Ltd [1994] 2 Qd R 521 at 527 (and note p 528 re involvement of the solicitor Mr Sockhill who prepared the contract); Teviot Downs Estate Pty Ltd v MTAA Superannuation Fund Property Pty Ltd [2004] QCA 57 at [15]. The parties had used a written contract for the earlier sale of lot 83, and this contract was to be in substitution for that earlier formal contract.
[24]Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 351; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 472 at [33].
[25]Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352; Equuscorp (supra) at [36].
[26]Pukallus v Cameron (1982) 180 CLR 447 at 452; 456.
[27]Codelfa (supra).
[28]Equuscorp (supra) at [34].
[29]Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 at 47.
[30] Because this is an exception to the prima facie position, a party alleging this has to plead it, and carries the onus of proving it. The defendant has not discharged that onus.
[31] Supplementary submissions in writing received 14 December 2005.
[32]Equuscorp Pty Ltd (supra) at [46]
[33]Emlen Pty Ltd v Cabbala Pty Ltd [1989] 1 Qd R 620 at 623. This was conceded (if Exhibit 2 was effective) in supplementary submissions on behalf of the defendant received 14 December 2005.
[34] Spry “Equitable Remedies” (6th edition 2001) page 245-6.
[35] As the plaintiff claimed: page 61.
[36] Apart from anything else, it is at most a discretionary ground for refusal of equitable relief. In all the circumstances of this case, I would not as a matter of discretion refuse the plaintiff equitable relief on this ground.
[37]Spry (supra) page 61; Duncan and Weld “The standard Land Contract in Queensland” (3rd Ed 1990) at page 307. This fine language appears to have been dropped in later editions of this work.
[38] The property was purchased as an investment: pages 66-7.
[39]Pianta v National Finance and Trustees Ltd (1964) 38 ALJR 232 at 233.
[40]Turner v Bladin (1951) 82 CLR 463 at 473.
[41]Jones v Dunkel (1959) 101 CLR 298.
[42]Barooga Projects (Investments) Pty Ltd v Duncan [2004] QCA 149; Mehmet v Benson (1965) 113 CLR 295 at 303; Stephens v Coorey (1996) Q Conv. R 54-469
[43]Jamieson v R (1993) 177 CCR 574 at 579; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85-6, 98.
[44] Filed and served on 8 November 2005; the amended rejoinder was even later.