DISTRICT COURT OF QUEENSLAND

1. [1]
   The plaintiffs (as purchasers) entered into a written contract^[1] dated 8 January 2005 with the defendants (as vendors) in respect of the sale and purchase of a property at 32 Colorado Circuit, Parkwood, Queensland. The plaintiffs paid a deposit of $10,000, but the contract did not proceed to completion and both the plaintiffs and the defendants seek a declaration from this court in respect of the status of the contract and the disposition of the $10,000 deposit paid by the plaintiffs pursuant to the contract.

2. [2]
   The plaintiffs commenced their action by way of a Claim^[2] with a Notice of Intention to Defend, and Defence of the defendants^[3] being filed on 4 July 2006 and the Reply of the plaintiffs^[4] being filed on 18 August 2006. The defendants brought an application seeking that the proceedings be set aside, or in the alternative that the proceedings continue as if started by application, and this proceeded before Judge Robin in the Southport District Court on 21 August 2006. Judge Robin ordered that the proceeding go ahead as an application^[5] and further ordered that the hearing take place on 28 September 2006. The hearing proceeded on the papers without oral evidence.

Chronology

3. [3]
   I acknowledge the assistance of Mr Frigo who appeared on behalf of the defendants. This chronology draws from his written submissions in these proceedings.

1. The parties entered into a contract for the sale and purchase of a property at 32 Colorado Circuit, Parkwood, Queensland on 8 January 2005.^[6]  The contract utilised the standard Real Estate Institute of Queensland Contract for Houses and Land (5^th edition).

The contract included a relevant special condition:-

2. “2.  This contract is subject to and conditional upon the full and final settlement of the buyers’ property situated at 72 River Crescent,

Broadbeach Waters. This property presently has an unconditional Contract of Sale on it on or before the 14^th February 2005.”

3. The settlement date in the contract was specified as “14^th February 2005 or sooner” and clause 6 of the contract specified that time was of the essence. The plaintiffs paid a $10,000 deposit to the stakeholder, Arundel Parkwood Real Estate.

4. On 14 February 2005 the plaintiffs’ solicitors wrote to the defendants’ solicitors in these terms:-

“Settlement of this matter is scheduled to occur on 14 February 2005 at 16:00 at Heritage Southport.

We are pleased to advise that we agree with your settlement calculations.

Please forward final cheque details.”

5. At 3.48pm on 14 February 2005 the defendants’ solicitors wrote to the plaintiffs’ solicitors as follows:-

“We refer to your facsimile of even date and note the contents therein.

Would you please advise if your clients intend to settle in accordance with the terms and conditions of the contract.”

6. The unconditional contract over the plaintiffs’ property at 72 River Crescent, Broadbeach Waters did not settle on or before 14 February 2005.

7. The plaintiffs and their solicitors did not attend the scheduled settlement and tender the balance purchase price in accordance with the contract. On the other hand the defendants were in a position to convey the property the subject of the contract upon receipt of the balance purchase price.

8. On 15 February 2005 the defendants’ solicitors wrote to the plaintiff’s solicitors as follows:-

“We refer to the above matter.

As you are aware settlement was due to occur at the offices of Heritage Building Society, Southport at 4.00pm on Monday, 14^th February, 2005.

Your client was required at settlement to tender the balance purchase price in accordance with the terms of the contract. Accordingly we are instructed to hereby terminate the above contract.

Please advise whether or not special condition 2 has been satisfied.”

9. On 16 March 2005 the plaintiffs’ solicitors wrote to the defendants’ solicitors (relevantly) as follows:-

“ . . .

It was a condition of the purchase contract that the sale of our client’s property be effected on or before 14^th February 2005 and this did not occur and accordingly our client elected to terminate the purchase contract and claim a refund of the deposit.”

10. On 16 March 2005 the defendants’ solicitors wrote to the plaintiffs’ solicitors in these terms:-

“We refer to your facsimile of even date.

Unfortunately your client did not terminate the contract. Our client terminated the contract on 15 February 2005 as a result of your clients failure to tender the balance purchase price at settlement in accordance with the terms of the contract.

At law, your clients were bound to complete the contract as they did not avail themselves of the right to terminate in Special Condition 2 of the contract prior to the date of settlement.

. . .

In accordance with standard condition 2.4 of the contract our client is entitled to receive the deposit as the contract was terminated owing to your clients default.

. . .”

11. No notice in writing was communicated to the defendants’ solicitors or his employees prior to settlement that Special Condition 2 had not been fulfilled and that the plaintiffs had elected to terminate the contract.

12. The deposit ($10,000) was held by the stakeholder in the Brian B Russell Trust Account, but pursuant to the Property Agents & Motor Dealers Act 2000 the stakeholder was notified that the deposit was in dispute and the legal proceeding had been started in the District Court to determine which party was entitled to the deposit, and that deposit was paid into this court on 17 October 2006.

Plaintiff’s Submissions

4. [4]
   The plaintiff submits that the relevant clause (Special Condition 2) is not void for uncertainty and that it should be construed as delimiting the time for full and final settlement to “on or before 14 February 2005”. I am unable to accept this submission. Although the clause specifies that the contract “is subject to and conditional upon the full and final settlement of the buyer’s property at 72 River Crescent, Broadbeach Waters”, the second sentence of the clause is no more than an observation, namely “this property presently has an unconditional contract of sale on it on or before 14 February 2005.” In my view that clause cannot be properly construed as containing a time frame for fulfilment.

5. [5]
   In my view the contract was as of 5.00pm 14 February 2005, voidable but not void^[7]and either party, if not in default, could elect to treat the contract at an end if the condition had not been fulfilled or waived.

6. [6]
   The defendants were clearly not in default when they elected to terminate the contract in writing (as required by clause 10.4 of the contract) on 15 February 2005.

7. [7]
   The plaintiffs did not purport to terminate the contract (in writing as required by clause 10.4) until 16 March 2005. In any event the purported termination in writing by the plaintiffs misconstrues the effect of Special Condition 2 and asserts that it was the non-occurrence of the sale of the plaintiff’s property on or before 14 February 2005 which entitled their client to elect to terminate the purchase contract and claim a refund of the deposit. Even if this assertion by the plaintiffs was correct, Special Condition 2 was a clause for the benefit of the plaintiffs, and they failed to advise, in writing (as per clause 10.4 of the contract) at or prior to 5.00pm 14 February 2005 that the condition had not been fulfilled.

Conclusion

8. [8]
   In my view therefore the defendants, being entitled to terminate the contract, did so on 15 February 2005 and were then entitled to receive the $10,000 deposit paid pursuant to clause 2.4(1)(c) of the contract. That sum has subsequently been paid into court at the request of the parties.

9. [9]
   I declare that:-

1. (a)
   the defendants were entitled on 15 February 2005 to terminate the written contract of sale between the plaintiffs and the defendants dated 8 January 2005.

2. (b)
   the defendants are entitled to receive the deposit of $10,000 (plus interest accrued) paid by the plaintiffs.

10. [10]
    I order:-

1. (a)
   That the sum of $10,000 (plus interest) paid into court from the Bryan B. Russell Trust Account be paid out to the defendants, or at their direction.