Rice v Ray[2009] QDC 275

DISTRICT COURT OF QUEENSLAND

HIS HONOUR: This is an application by the defendant for summary judgment under rules 292 and 293 of the Uniform Civil Procedure Rules.

The defendant seeks judgment against the plaintiff on the whole of the plaintiff's claim on the basis that the plaintiff has no real prospect of succeeding on all of the plaintiff's claim, and that there is no need for a trial of the claim.

The defendant also seeks judgment against the plaintiff on those parts of her counterclaim referred to in the defendant's application filed on the 11th of June 2009 on the basis that the plaintiff has no real prospect of successfully defending those parts of the defendant's counterclaim, and that there is no need for a trial of those parts of the counterclaim.

The relevant facts are not disputed to any real extent and I will later refer to those about which there is said to be some dispute.

The application involves the application of certain provisions of the Property Agents and Motor Dealers Act (PAMDA) to the facts.

The plaintiff has sued the defendant for $250,000 being the deposit paid by the defendant by cheque pursuant to a contract dated 19th of February 2009 whereby the plaintiff agreed to sell, and the defendant agreed to purchase, the plaintiff's property situated at 31 Hedges Avenue, Mermaid Beach (the property).

The cheque was dishonoured on presentation on the 23rd February 2009 which was well before settlement was due and, as a result, the plaintiff on the 24th of February 2009 terminated the contract and sued for the deposit. The defendant contends that she, in fact, terminated the contract on the 23rd of February 2009 and seeks declarations that she was entitled to do so (the counterclaim) and summary judgment on the plaintiff's claim as well as parts of the counterclaim.

The matter involves two offers by the defendant to purchase the property, the first being rejected and the second being accepted. In each case the offer was contained in a REIQ contract prepared by the plaintiff's agent, Michael Kollosche (the agent).

The first offer was signed by the defendant at 11.45 a.m. on the 18th of February 2009. This was to purchase the property for $8.5 million, payable by $3 million cash, and a contemporaneous purchase by the plaintiff from the defendant of two Kingscliff properties for $2 million and $3.5 million respectively.

The offer consisted of the following documents:-

3. (1)
   A two-page PAMDA form 30c Warning Statement. This was signed by the defendant at 11.45 a.m. on page 1 and initialled by her at the foot of page 2.

3. (2)
   A REIQ contract of nine pages as follows:-

2. (a)
   Pages 1 and 2, Reference Schedule. This was initialled by the defendant at the foot of each page at 11.45 a.m.

2. (b)
   Page 3, Special Conditions - see page A1. This was signed and initialled by the defendant at 11.45 a.m.

2. (c)
   Pages 4-8, Terms of Contract. Each page was initialled by the defendant at 11.45 a.m.

4. (d)
   Annexure page A1, Special Conditions. This page was initialled by the defendant at 11.45 a.m.

3. (3)
   A three page PAMDA form 27c, Selling Agent's Disclosure to Buyer. This was signed by the agent and the defendant at 11.45 a.m.

3. (4)
   A one-page Buyer's Acknowledgement of receiving the forms 30c and 27c, the proposed contract and the Buyer's Acknowledgement. This was signed by the defendant at 11.45 a.m.

See Exhibit DEH1 to the affidavit of Damien Hodgson filed on the 11th of June 2009.

This offer was rejected by the plaintiff.

A second offer was made by the defendant at 5 p.m. on the 18th of February 2009 when she met the agent at her house. Exactly the same signed and initialled documents (which were produced by the agent) were used as for the first offer except that:

3. (1)
   A new page 2 of the Reference Schedule replaced the original and referred to a new purchase price of $7.5 million, and this page was initialled by the defendant at 5 p.m.; and

3. (2)
   A new Special Conditions page replaced the original and referred to the purchase price of the second Kingscliff property being $2.5 million not $3.5 million, and this page was initialled by the defendant at 5 p.m.

The documents otherwise contained the signatures and initials placed on them by the defendant at 11.45 a.m.; they were the same documents.

These facts are admitted by the plaintiff and he also admits that the defendant did not otherwise sign the second proposed relevant contract (Amended Answer, paragraph 4D).

See Exhibit DEH1 again.

This offer was accepted by the plaintiff and the proposed relevant contract, the second offer, became the relevant contract.

The defendant contends, firstly, that she was entitled to terminate the contract under section 367 of PAMDA because:

1. (a)
   The agent did not direct the defendant's attention to the warning statement when handing her the contract documents; and

2. (b)
   The defendant did not sign the warning statement before she signed the contract.

Section 366B(2) requires the seller's agent to "ensure that the proposed relevant contract has attached a warning statement". The warning statement must include the information set out in section 366D(1). If "the seller's agent hands the proposed relevant contract to the proposed buyer the agent must direct the proposed buyer's attention to the warning statement" (section 366B(4)) and "if the seller's agent hands a proposed relevant contract to the buyer for signing, a warning statement is of no effect unless the buyer signs the warning statement before signing the proposed relevant contract" (section 366D(4)).

In the case of the second proposed relevant contract, that is, the second offer, the warning statement attached to it was the first offer (the first proposed relevant contract) warning statement.

The agent deposes as follows in relation to the second proposed relevant contract:

“14. The documents comprising the subsequent amended offer to purchase was signed at Ray's home on the late afternoon of 18 February 2009".

In relation to the first proposed relevant contract, he deposed as follows:-

“6. On or about 11.45 am on 18 February 2009 at Café Republic in Mermaid Beach in the state of Queensland I met with Ray and her husband Mark Javed.

7. At the said meeting with Ray and prior to signing the contract documents, I drew Ray's attention to Property Agents and Motor Deals Act 2000 PAMDA - Form 30c Warning Statement ('Form 30c') which was on the top of the contract documents.

8. I drew Ray's attention to the Form 30c by directing her to the Form 30c which was on the top of the contract documents and by saying words to the effect of, 'I have to advise you to obtain independent legal advice and to get an independent valuation.'  I am conscious of making every buyer aware of the Warning Statement as the Property Agents and Motor Dealers Act is relied upon by a lot of buyers to try to get out of contracts".

9. After Ray's attention was drawn to the said Form 30c she signed same in my presence.

10. After signing the Form 30c, I had Ray sign the other pages of the contract documents."

He does not say he did the same for the second proposed relevant contract.

The plaintiff alleges that his agent was not required to comply with section 366B(4) "as he had already done so" at the time of the first proposed relevant contract (Amended Answer paragraph 4C).

The plaintiff also contends that only "one proposed relevant contract existed by virtue of the fact that the documents were signed only by the buyer and, that there was no counter offer by the seller and, that a brief period between the two meetings elapsed" (Outline paragraph 21(a)).

In my view there were clearly two separate, albeit related, contractual situations involving the first offer, and later, the second offer. There was not the one evolving offer which morphed into the relevant contract. There were two offers and in the case of each, the seller and his agent were required to comply with their various statutory obligations.

The plaintiff admits that the defendant did not sign the (attached) warning statement before signing the second proposed relevant contract in the manner I have already referred to (Amended Answer, paragraph 1, admitting paragraph 23 of the Counterclaim). In fact she didn't sign it at all other than in relation to and at the time of the first proposed relevant contract.

The plaintiff contends that the warning statement to which the agent drew the defendant's attention to at the time of the first proposed relevant contract, and which the defendant signed before she signed the first proposed relevant contract, is sufficient for the purposes of the second proposed relevant contract. The defendant submits that it isn't. I agree with the defendant.

In my view the warning statement referred to in section 366B(4) and 366D(4) is one referrable to the proposed relevant contract then to be signed and not an earlier one. The defendant is here said to have signed the proposed relevant contract at 5 p.m. in the manner already referred to. Before she did this she did not sign a warning statement referrable to that contract. The warning statement attached to the second proposed relevant contract was not a warning statement referrable to that proposed contract, but one referrable to the first proposed relevant contract. It was signed before the defendant signed that contract not before she signed the second proposed relevant contract. Further, when the agent handed the second proposed relevant contract to the defendant (which was different to the first) he did not, as he was required by section 366B(4) to do, direct the defendant's attention to the warning statement.

In my view the warning statement referred to in section 366D(3) and (4) is a warning statement relating to the proposed relevant contract then handed/given to the buyer, not one relating to an earlier or another proposed relevant contract. The signature required is a signature by the buyer on a warning statement referrable to the proposed relevant contract submitted to the buyer for signature.

In this respect I agree with what Fryberg J said in Hedley Commercial Property Services Proprietary Limited v. BRCP Oasis Land Proprietary Limited [2008] QSC 261 at paragraphs 63 and 64.

The scheme of Chapter 11, Parts 1 and 2, of PAMDA requires the warning statement to be attached to the first or top page of the proposed relevant contract handed to the proposed buyer and that it be then unsigned. The buyer's attention is then directed to it and the buyer is to sign it before signing the proposed relevant contract. This did not happen here. The defendant's attention was not directed to any warning statement and none was signed by her before she signed the second proposed relevant contract. A warning statement is not a floating document signed generally by a buyer for the purposes of any number of proposed relevant contracts for a particular property. On the contrary, it is intended to be a warning applicable to the proposed relevant contract then under consideration.

It follows then that by reason of section 365(1)(a), (2)(c) and (3), the defendant was not bound by the relevant contract formed when the second proposed relevant contract was signed by the plaintiff and was entitled to withdraw her offer by giving written notice of withdrawal to the plaintiff or his agent.

Alternatively it also follows that the defendant was entitled to terminate the relevant contract under section 367.

By notice dated 23 February 2009 the defendant, under section 365(3), withdrew her offer and alternatively terminated the contract under section 367.

In case she was not entitled to do either, the defendant also on 23 February 2009 gave notice under section 368(1) terminating the contract during the cooling off period (which, on this scenario, started on Thursday 19 February 2009 when the contract was signed by the plaintiff and ended at 5 p.m. on Wednesday 25 February 2009, see section 364).

The plaintiff contends that the defendant waived the cooling off period under section 369. He points to Special Condition 3 of the relevant contract which provides, "The buyer agrees to have executed a form 32a that waives the cooling off period prior to signing this contract", and to the form 32a signed by the defendant's lawyer on 20 February 2009.

There is no substance in this argument. The form 32a was not executed prior to the defendant signing the contract. Further, on the plaintiff's case the defendant was bound by the contract when it was signed by the plaintiff on 19 February 2009 and section 369(2) requires the form 32a to be given to the seller before then for the waiver to be effectual.

I agree also with the remarks of Douglas J in Blackman v. Milne [2007] 1 Qd R 198 at paragraph [17] that:

"(the) right to waive the cooling off period provided in section 369 arises before the buyer is bound by the relevant contract and requires an approved certificate from a lawyer independent of the seller".

See also the similar remarks of Fryberg J in Hedley Commercial Property Services Proprietary Limited v. BRCP Oasis Land Proprietary Limited (supra) at paragraph [56], footnote 34.

The plaintiff also submits that there are unresolved factual issues which warrant a trial. The first is that the defendant denies (affidavit, paragraph 27(a)) that the agent drew her attention to the warning statement and the proposed relevant contract. The second is that the defendant (affidavit, paragraph 27(b)) says that at the second meeting on 18 February 2009 the agent said words to the effect, "We have already been through this process". The allegation to this effect in paragraph 20(b) of the Counterclaim is denied in the Amended Answer (paragraph 4C) in the following terms:-

"4C. The plaintiff denies the allegations in paragraph 20 of the Counterclaim as Kollosche was not required to comply with s.366B(4) as he had already done so as pleaded in paragraph 2 of this Amended Answer."

In any event what the defendant says is not really so different to what the agent says in paragraph 14 of his affidavit (which I have already set out) that it amounts to a factual dispute sufficient to warrant a trial.

The plaintiff submits that what occurred at the time the defendant initialled some of the pages of the second offer "can only be determined at trial" and that "all the facts of the day have not been presented by both parties. There are glaring anomalies about what Kollosche did and what Ray did and what others who acted for them did" (Outline paragraphs 13 and 17).

The agent does not say he drew the defendant's attention to the warning statement before she made the second offer and I have already concluded that the statement, in any event, related to the first offer and not the second, and that there was no warning statement relating to the second proposed relevant contract so this alleged factual dispute is not important for present purposes.

The plaintiff submits that the words which the defendant says the agent used (which the plaintiff denies the agent used) "may well be construed as a further direction to the documents in question" (Outline paragraph 15) but no evidence to this effect is advanced by the agent. Likewise, for the purported reliance again by the plaintiff (Outline paragraph 21(b)) on the words the defendant says the agent used on the second occasion. The plaintiff denies the agent used these words on the one hand and, on the other, seeks to rely on them as amounting to a factual dispute warranting a trial.

The plaintiff also submits (Outline paragraph 22) that "Until the precise words, events and conduct of each party are sworn to, and tested in a trial environment, and the totality of the conversations are known, this is a matter for consideration at trial". Again, the agent provides no supporting evidence.

In any event even accepting that the agent said these words they would not be sufficient, in my view, to support a finding that a warning statement signed at 11.45 a.m. in relation to a proposed contract to purchase the property for $8.5 million, and involving the plaintiff purchasing a property from the defendant for $3.5 million, could be used as a warning statement for a proposed contract signed by the defendant at 5 p.m. for the purchase of the same property for $7.5 million, and involving the plaintiff purchasing the same other property from the defendant for $2.5 million. There were two separate offers or proposed relevant contracts and the PAMDA requirements had to be complied with in respect of each.

In my view the defendant is entitled to summary judgment as sought in her application. In my view the plaintiff has no real prospects of succeeding on his claim or successfully defending those parts of the defendant's counterclaim referred to, and there is no need for a trial of either. I do not agree with the plaintiff that "these are extremely contentious legal points which must be given the right of trial. It cannot be said, because of the state of flux of the law, that the Plaintiff has no prospect of success" (Outline paragraph 17).

The issues are clear cut and on them the plaintiff would not succeed.

In the circumstances the defendant is entitled to judgment and to the particular declaration favoured by her.

The orders I make are these:-

3. (1)
   I give judgment for the defendant on the plaintiff's claim.

3. (2)
   On the defendant's counterclaim I declare that by notice dated 23 February 2009 the defendant duly terminated the contract pursuant to section 367 of the Property Agents and Motor Dealers Act 2000.

The defendant is entitled to her costs of the proceeding including the application for summary judgment. The defendant foreshadowed an argument to the effect that those costs should be on the indemnity basis.

...

HIS HONOUR: I order that within 14 days of today the defendant file and serve written submissions on costs and that the plaintiff file and serve written submissions on costs within 28 days of today and that any written submissions in reply by the defendant be filed and served within 35 days of today.