Hookham Constructions P/L v Lindemann
[2012] QDC 296
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- Unreported Judgment
- Appeal Determined (QCA)
- Hookham Constructions P/L v Lindemann[2012] QDC 296
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Hookham Constructions P/L v Lindemann[2012] QDC 296
Hookham Constructions P/L v Lindemann[2012] QDC 296
DISTRICT COURT OF QUEENSLAND
CITATION: | Hookham Constructions P/L v Lindemann [2012] QDC 296 |
PARTIES: | HOOKHAM CONSTRUCTIONS PTY LTD ACN 108 463 501 as Trustee for the HOOKHAM FAMILY TRUST (Applicant) V RODNEY CHARLES LINDEMANN (Respondent) |
FILE NO/S: | BD 558/12 |
DIVISION: | Civil |
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court of Queensland |
DELIVERED ON: | 24 Sept 2012 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 2 August 2012 |
JUDGE: | Andrews SC DCJ |
ORDER: | Application dismissed |
CATCHWORDS: | CONTRACTS – whether a conversation was an agreement to be immediately bound CONTRACTS – NON EST FACTUM – INTENTION TO CREATE LEGAL RELATIONS – LEGAL CAPACITY TO CONTRACT – where the vendor had an impaired capacity to make legal decisions – whether oral agreement was made without legal capacity to contract – whether the vendor intended to create legal relations – where vendor’s receipt relied upon by buyer to satisfy the Property Law Act 1974 s 59 – whether the buyer failed to understand the nature of the receipt Masters v Cameron (1954) 91 CLR 353 Petelin v Cullen (1975) 132 CLR 355 Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 South Australia v Commonwealth (1962) 108 CLR 130 S J Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87 Marek v Australasian Conference Association P/L (1994) 2 Qd R 521 Moffatt Property Development Group P/L v Hebron Park P/L [2008] QSC 177 Moffatt Property Development Group P/L v Hebron Park P/L [2009] QCA 60 Land Contracts in Queensland the Federation Press, (3rd ed.), Christensen, Dixon, Duncan and Jones at 4.2.3.1, p 188 |
COUNSEL: | C Wilson for the applicant P Barlow for the litigation guardian for the respondent |
SOLICITORS: | Bone Lawyers for the applicant BC&A Solicitors for the litigation guardian for the respondent |
- [1]The applicant, Hookham Constructions Pty Ltd, as trustee for the Hookham Family Trust (“the buyer”)[1]alleges it entered into an oral agreement to buy a house at 10 Lawrence StreetMoranbah and applies for specific performance of that agreement.
- [2]The buyer seeks specific performance of an agreement dated 30 July 2011 between the buyer and the respondent Mr Lindemann (“Mr Lindemann”) for the sale of land described as Lot 15 on CP M9737, County Grosvenor, Parish Moranbah, Title Reference 50119700, situated at 10 Lawrence Street Moranbah in Queensland (“the subject property”). If successful, the buyer will provide minutes of the orders he would seek.
- [3]The primary issue is whether, in a conversation about terms for a sale of a house and land, the parties reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms. That paraphrases the first of three categories described in Masters v Cameron(1954) 91 CLR 353 at 360 to 361.[2]
- [4]Mr Lindemann had an interest in three properties at the time. He is the registered owner of the subject property at 10 Lawrence StreetMoranbah. Mr Lindemann was thinking of selling the subject property as he had bought a house in Mackay to be closer to his children. He had borrowed $115,000 from his sister to buy the house in Mackay and he wanted to repay her as soon as possible. The subject property adjoins 2 Turner Court(“the adjoining property”). Mr Lindemann had an interest in the adjoining property but he could not conveniently sell the adjoining property at that time as it had a caveat registered on the title and his estranged wife had some interest in it. Mr Lindemann offered the adjoining property for rent in July 2011.
- [5]In the week commencing 21 July 2011 Mr Lindemann was approached by Helen Hughes who wanted to rent the adjoining property. Mr Lindemann mentioned to Mrs Hughes that he might be interested in selling the subject property and the adjoining property. Mrs Hughes spoke of knowing Burt Hookham and of Burt Hookham buying properties on the spur of the moment. Mrs Hughes’ husband Garry was working for Hookham Concrete Pty Ltd at the time. The applicant company, Hookham Constructions Pty Ltd is related in some way to Hookham Concrete Pty Ltd. Mr Hookham goes by the name “Burt”. That was the first name Mrs Hughes used when speaking of Mr Hookham to Mr Lindemann. Mr Lindemann said to Mrs Hughes “send Burt around”. Mr Lindemann had not met Mr Hookham at the time of his conversation with Mrs Hughes.
- [6]Mrs Hughes and her husband Garry rented the adjoining property from Mr Lindemann that week. Mr Lindemann did not take a formal lease from the tenants. In evidence he said that he regretted not doing so because it would have given him some protection. He explained that eventually Mrs Hughes sub-let the house on the adjoining property and that he disapproved.
- [7]As a result of a conversation between Garry Hughes and Mr Hookham, Mr Hookham believed that Mr Lindemann wanted to sell the subject property and the adjoining property.
- [8]Mr Hookham made no appointment to visit Mr Lindemann. On Saturday, 30 July 2011, he called at the home Mrs Hughes was renting on the adjoining property. Mrs Hughes took Mr Hookham next door to the subject property. Mr Lindemann was in the yard raking. Mr Hookham was introduced to Mr Lindemann by Mrs Hughes.
- [9]Mr Hookham is a builder. He is the sole director of the applicant company which runs a construction business as trustee for the Hookham Family Trust. The conversation between Mr Hookham and Mr Lindemann took place for some time in the yard and then continued in Mr Lindemann’s kitchen at the subject property. There was a discussion about Mr Lindemann’s desire to sell both properties. Mr Lindemann indicated that he wanted $430,000.00 for the adjoining property.
- [10]The total of the prices Mr Lindemann was discussing for both properties was $900,000.00 and Mr Hookham indicated that the total price was acceptable.
- [11]Mr Lindemann explained that he could not sell the adjoining property at that time because of an interest held by his former wife in that property and because of a caveat on its title lodged by his former wife’s solicitor because she owed her solicitor legal costs. Mr Lindemann said that once he had resolved the claims of his former wife and her solicitor he would give Mr Hookham a first option to purchase the adjoining property for $430,000.00.
- [12]The buyer’s case: The buyer alleges a sale agreement was made by conversation. There were no pleadings, but it was the buyer’s case, explained during the trial, that the contract was formed orally[3]on Saturday 30 July 2011 and that shortly after the agreement a note was signed which satisfied the requirements of the Property Law Act1974 s 59. As the trial progressed it became clear to both counsel, for the first time, that a subsequent document, the original receipt for a deposit signed by Mr Lindemann on Sunday 31 July 2011, was a much more comprehensive record than the photocopy receipts briefed to counsel to prepare for trial. From that stage of the trial it was a reasonable inference that the buyer’s case relied also on the original receipt to satisfy the requirements of the Property Law Act1974 s 59. After the evidence was complete, the buyer’s written submission included:
25. In the present case it is submitted that the only objective assessment of the conversation on 30 July, the handshake, the signing of the documents and acceptance of the deposit, is that the parties agreed to the sale and purchase of the property.
I interpret the buyer’s submission consistently with the buyer’s explanation given during the trial that the buyer relies upon an oral agreement made on 30 July 2011. I infer that the buyer does not allege that the agreement was made by a combination of the conversation, the note, the handshake, the acceptance of deposit and the receipt. I infer that the handshake, Mr Lindemann’s signing of documents on 30 and 31 July and his acceptance of a deposit on 31 July are submitted to be circumstantial evidence that the oral agreement of 30 July was a sale agreement and intended to be immediately binding. Consistent with that interpretation of the buyer’s case is the further written submission for the buyer:
There is no requirement that the agreement for sale itself be in writing – an oral agreement is sufficient: see Land Contracts in Queensland (3rd ed) page 188; Cheshire and Fifoot para [16.35].
- [13]Mr Lindemann contends that the alleged oral agreement was no more than talk about the price and terms he wanted, that there was no oral sale.
- [14]Because the buyer’s case is that the agreement was oral, the evidence of what was said that is centrally important. As was observed in Masters v Cameron[4]
The question depends upon the intention disclosed by the language the parties have employed…
- [15]Direct evidence of the parties’ language was scant. It emerged from affidavits prepared for an application for summary judgment and from oral evidence at trial. The broader conversation is relevant context, but evidence of the part of the conversation that dealt with agreement to sell the subject property is crucial for determining whether there was an agreement to be bound. Three versions emerged in the evidence. They are at [16], [19], [27] of these reasons.
- [16]Mr Lindemann deposed that his conversation with Mr Hookham consisted of words to the following effect:
Hookham: ‘I hear you want to sell your house.’
Me: ‘Yeah’.
Hookham: ‘What have you got on it, what do you want for it?’
Me: ‘$470,000.00.’
Hookham: ‘What else do you want?’
Me: ‘Well I want to sell the house as is and I want 3
months to vacate the property.’
Hookham: ‘Ok, do you want to put that info down on a bit of
paper or something?’
Me: ‘Yeah, Ok, no worries.’
Hookham: ‘Well just jot down what you want.’
- [17]In cross-examination at trial Mr Hookham accepted that the gist of the conversation was in those words.[5]
- [18]The version above is a conversation about what Mr Lindemann wanted. Conspicuously absent are words of acceptance spoken by Mr Hookham or Mr Lindemann.
- [19]Mr Hookham also said in cross-examination:
I asked him how much he wanted for this one and he said it would be 470, and I said I'm happy to pay that as long as I have got first option on the second block, and we both agreed on that.
- [20]The conversation between the two men was estimated to have taken some time. The estimates were from 10 to 45 minutes. There was also some direct evidence of the words spoken in an affidavit deposed by Mr Hookham and set out at [27] of these reasons.
- [21]Mr Hookham’s oral evidence at [19] above is about a first option to purchase the adjoining property. The evidence is consistent with the option being a part of the bargain. That is, Mr Hookham’s oral evidence was effectively that he agreed to pay $470,000 for the subject property on condition that he received a first option to buy the adjoining property. That version of events was not included in the note written on 30 July 2011 and signed by the two men shortly after the conversation. It was not included in the formal contract prepared months later. It is inconsistent with the two men reaching a sale agreement and inconsistent with Mr Hookham’s affidavit evidence that:
8. Mr Lindemann said he would give me a first option on purchasing the property at No. 2 Turner Court aforesaid at a price of $430,000 ... once he had resolved the claims of his former wife and her solicitor, and we agreed to leave that transaction for a later time when he had a clear title to that property.
- [22]These matters suggest that Mr Hookham’s oral evidence about the first option that “we both agreed on that” should not be taken as evidencethat they had reached a binding agreement about a first option. These matters also suggest that when Mr Hookham uses an expression such as “we agreed on that” he uses it loosely.
- [23]Mr Hookham’s oral evidence that “we both agreed on that” is unhelpful for determining whether the two men agreed on something and unhelpful for determining what was agreed. The evidence does not describe what the two men did or said to cause Mr Hookham to assert “we both agreed on that”.
- [24]Like Mr Hookham’s imprecise oral evidence that they “agreed” a first option to buy the adjoining property, a notable feature of Mr Hookham’s affidavit evidence is a similar imprecision. He has not deposed to the precise words used by Mr Lindemann. Mr Hookham deposed that they “agreed to write down our agreement” and that Mr Lindemann “wrote the agreed terms” and that a cheque was drawn the next day “being the agreed deposit in the sum of $6,000.00”. His use of the word “agreed” in the affidavit was unhelpful. It is not direct evidence of what was said. On the premise that Mr Hookham was deposing truthfully, his evidence of occasions when things were “agreed” might be construed as his evidence of the effect of the conversation. But it is as readily to be construed as his opinion of the result of the conversation. On either of those bases, if the evidence was admissible for that purpose, it was not persuasive. Mr Hookham misused the word “agreed” with respect to the option to buy the adjoining property. Also, he misused it with respect to the deposit, as will emerge.
- [25]Before Mr Hookham was called to give evidence, concerns about Mr Hookham’s affidavit evidence about agreement were aired in the following edited exchange about admissibility:
HIS HONOUR: … I did notice, in reading Mr Hookham's affidavit, that occasionally - while he didn't use … direct speech?
MR WILSON: Yes.
HIS HONOUR: Mr Hookham used a sort of hybrid so that I knew
what he was saying he recalled Mr Lindemann to have said, but occasionally Mr Hookham also used words such "as it was agreed".
MR WILSON: Yes.
HIS HONOUR: Which I thought gets a bit close to swearing the
issue-----
MR WILSON: It does, your Honour.
HIS HONOUR: -----but I didn't know whether you were relying
on it.
MR WILSON: Your Honour, if my learned friend had taken that
objection to it, I would have conceded the objection to - the
example that your Honour has given, that he swore that there
was an agreement. I wouldn't be able to sustain that, but I
am in a little bit of difficulty when my learned friend says
he'll take the objections afterwards.
- [26]In response, Mr Lindemann’s counsel advised that he had objections to parts of the affidavit evidence on various bases but was content to leave the affidavits before the court and that he would take particular objection in submissions. In the final result, no objection was specifically taken to the various occasions in Mr Hookham’s affidavit where he swore to matters agreed. His version was plainly in contest. I infer that the evidence of agreement is not objected to but is in contest. Apart from the vice of swearing the issue, it has the inherent defect of concealing evidence of the direct speech of the parties to the conversation. I regard Mr Hookham’s assertions in his affidavit of things “agreed” as less useful than it might have been if he had expressed his basis for the assertions or given evidence of the words of the conversation.
- [27]I will highlight Mr Hookham’s assertions about agreement in bold to identify them in Mr Hookham’s affidavit evidence:
“6. Mr Lindemann told me that he wanted to sell both properties for a price of $900,000. I told him that I was prepared to purchase the two properties for that price.
7. Later in that conversation, Mr Lindemann told me that he could not then sell the second house ... at that time, because he had not yet settled the interest of his ex-wife in that property, and that his ex-wife’s solicitor held a caveat over that property as his ex-wife owed legal costs to her solicitor.
8. Mr Lindemann said he would give me a first option on purchasing the property at No. 2 Turner Court ... at a price of $430,000 ... once he had resolved the claims of his former wife and her solicitor and we agreed to leave that transaction for a later time when he had clear title to that property.
9. Mr Lindemann said that he wanted the sum of $470,000 for No. 10 Lawrence Street, and I told Mr Lindemann that I would pay that price.
- Once the price was agreed for No. 10 Lawrence Street at $470,000, then Mr Lindemann requested that the time for settlement of the purchase be three months, and he told me that he had lived in the property for nearly 20 years and he had belongings which he intended to remove to Mackay and he would need that time to remove all his belongings.
11. Mr Lindemann and I then agreed to write down our agreement ... At the conclusion of the meeting ... I told Mr Lindemann that I would be in contact with my solicitor to arrange the completion of the transaction.”
- [28]Towards the end of the conversation Mr Lindemann and Mr Hookham signed their names to a note reading
Rod Lindemann
49 415685
0409756765
10 Lawrence St
$470,000 3 months
Home as is
30/7/2011
B Hookham
R Lindemann
This note is the first of two documents relied on by the buyer as satisfying the requirements of the Property Law Act 1974 (Qld) s 59.
- [29]There was psychiatric evidence that Mr Lindemann has developed increasingly paranoid ideation about being at risk from various people with regard to the property. That opinion is consistent with a theory Mr Lindemann proposed about the genesis of the note above. I find that the handwritten note[6]is the note signed by both men on that date and reject Mr Lindemann’s evidence that the genuine note to similar effect was written on another piece of paper. The psychiatric evidence did not impugn Mr Lindemann’s memory generally.
- [30]Mr Hookham recalled that they then shook hands. In oral evidence Mr Hookham added that when they then shook hands, it was for a third time. The evidence that it was a third handshake was not a detail in Mr Hookham’s affidavit evidence. It did appear that Mr Hookham was seeking to strengthen his credibility with detail. It adds to my concern about the reliability of Mr Hookham’s evidence where he deposes about things “agreed”. The number of handshakes otherwise makes no difference. The buyer’s counsel submits that, among other things, the handshake after the note was signed leads to the conclusion that there was a sale agreement. I reject that inference. In this case, the evidence of a handshake is as consistent with an agreement in the first class in Masters v Cameronas it is with the third class, that is, where the negotiated terms are not intended to have any binding effect on their own.
- [31]Mr Hookham deposed that he told Mr Lindemann that he would:
“be in contact with my solicitor to arrange the completion of the transaction.”
- [32]A lawyer would understand “completion of the transaction” to possibly refer to something different from preparation of a contract in the REIQ form. “Completion of the transaction” suggests the completion of the sale agreement, for example by the seller’s exchange of the instrument of title and keys to the dwelling for the purchase price. If there was no conversation about preparation of a formal contract, then stating that the solicitor would arrange completion, if it was understood to refer to the completion of the agreement, would be significant. It would be consistent with an intention to omit the step of creating a contract in the REIQ form and would be more consistent with the parties having reached a final agreement than not having done so. Mr Lindemann deposed that he believed Mr Hookham would include the terms in a formal contract.[7]His belief that there was to be a formal contract was consistent with subsequent events.
- [33]Neither man gave direct oral evidence that there was a conversation that a formal contract would be prepared. Mr Lindemann told his psychiatrist that Mr Hookham said he would get a formal contract drawn. Mr Lindemann deposed that his instructions to his psychiatrist were correct. He was not cross-examined as to the correctness of his report that Mr Hookham said that he would get a formal contract drawn up. Eventually, a formal contract was prepared on Mr Hookham’s instructions to his solicitor, signed by the buyer and delivered to Mr Lindemann for signature.
- [34]I find that on 30 July 2011 Mr Hookham said that he would get a formal contract drawn up. Nothing enables me to determine whether it was said before or after the note was made and signed that day.
- [35]Mr Lindemann contends the note signed on 30 July2011 was a written description of what he wanted but contends that he did not intend the note to be a contract. It is not part of the buyer’s case that the note was the contract. On the contrary, the buyer contends that the oral agreement was the contract. As agreement is to be assessed objectively, Mr Lindemann’s belief about the effect of the note or the conversation is irrelevant to the question of whether, objectively assessed, a sale was orally agreed.
- [36]There is no direct evidence of words spoken by either man about whether the parties agreed to be bound before signing a formal agreement. The belief of each man that a contract was to be prepared does not assist with an objective assessment of whether the parties intended to be bound by their oral agreement or bound only upon signing a formal contract. The fact that Mr Hookham said on 30 July 2011 that he would get a formal contract drawn up is not decisive on the issue of whether the parties agreed a sale by something said on 30 July 2011.[8]
- [37]Mr Hookham’s affidavit did not depose to the words of any conversation about agreeing a deposit. He deposed that the next day (Sunday 31 July 2011) he asked his wife to draw a cheque on the applicant’s bank account payable to Mr Lindemann “being the agreed deposit in the sum of $6,000.00”. Mr Lindemann deposed “there was no discussion between Burt Hookham and me about a deposit, or how much that would be, or when it would be paid…”
- [38]There is a conflict about whether a deposit was mentioned on 30 July in the conversation between Mr Hookham and Mr Lindemann. If it was mentioned, the best evidence of what was said was the oral evidence of Mr Hookham at trial. He said:
At the end of the signing of the paper, I said to him that I
would drop some - a cheque around to him for a deposit which
would be a sum between five or $6,000, and that's when we
shook hands for the third time. We shook hands three times.
One when we met him; two, when we were outside and we agreed
on the sum, the 470,000 for the house; and the third time was
when we signed the paperwork.
- [39]I note two things about this. Firstly, it can be contrasted with Mr Hookham’s affidavit evidence deposing to “the agreed deposit in the sum of $6000.00”. If the oral evidence is correct: there was no express agreement that there should be a deposit; there was no express agreement as to the precise amount; the deposit was not a term of the sale agreement allegedly made earlier in the day’s conversation. The oral evidence suggests that after the oral agreement for sale was concluded and after the note was signed, there was a range for a deposit of between five or six thousand dollars which was promised by Mr Hookham as an afterthought. If Mr Lindemann said nothing in response to Mr Hookham’s promise of a deposit in that range, he arguably agreed to accept anything between five and six thousand dollars as a deposit. Those complexities arising from Mr Hookham’s oral evidence were not evident from what Mr Hookham deposed in his affidavit by the words “the agreed deposit in the sum of $6000.00”. It is consistent with Mr Hookham using the word “agreed” loosely. The idea that Mr Hookham was indecisive about the amount of the deposit he was offering is implausible. His evidence is unpersuasive on the issues of whether a deposit was agreed or even mentioned on 30 July 2011. I prefer the evidence of Mr Lindemann that a deposit was not discussed on 30 July 2011.
- [40]On Sunday 31 July 2011 Mrs Hookham attended at Mr Lindemann’s home at the subject property and met him. She presented Mr Lindemann with a cheque drawn by her on the buyer’s bank account in the amount of $6,000.00 and made payable to Mr Lindemann. On the face of the cheque the printed name of the payer was “Hookham Constructions Pty Ltd ABN 31005494809 as trustee for Hookham Family Trust”.
- [41]Mr Lindemann was not expecting a visitor that Sunday morning. There was no evidence of any advice to Mr Lindemann that Mrs Hookham would attend that Sunday with a cheque. Mr Lindemann was not expecting a deposit cheque. Asked by counsel what he thought when offered the cheque, Mr Lindemann replied:
Well, I went - you know, it's firstly asking you to make up your mind there and then…[9]She said, "Here's Burt's cheque", handed it to me and I went, "Okay", and then she said, "Here is the receipt. Could you sign it, please?" I - you know, you've sort of got to make a snap decision.[10]
- [42]Mr Lindemann accepted the cheque from Mrs Hookham that Sunday morning.
- [43]Mrs Hookham had brought with her a document she had created with a photocopier and the cheque and the note that had been signed the day before. At the top of the photocopy was a copy of the note that Mr Lindemann and her husband had signed the day before and at the bottom was a copy of the cheque she was delivering to Mr Lindemann. Mrs Hookham intended to leave the document with Mr Lindemann, but when the two discussed a receipt for the deposit, the photocopy document was at hand so Mrs Hookham decided to use it to create a receipt. In the space between the photocopies of documents at top and bottom, Mrs Hookham’s original handwriting appears as follows:
Received from Hookham Constructions the sum of $6,000 as deposit on sale of 10 Lawrence St , Moranbah 4744. (Six thousand dollars) ………………… 31.07.11
Mr Lindemann claims that Mrs Hookham’s handwriting filled the space when Mrs Hookham produced the document. I accept the evidence of Mrs Hookham that she filled the space with her handwriting while she was there. The words and figures were obvious. Mr Lindemann saw them and understood them and understood that the deposit was from the buyer and not from Mr Hookham. He signed on the line Mrs Hookham created for his signature, immediately in front of the date.
- [44]On 26 April 2012 Mr Lindemann was interviewed by a psychiatrist, Dr Lockwood. He told Dr Lockwood his recollection of relevant events. He subsequently deposed, having read Dr Lockwood’s reports, that his instructions were true and correct to the best of his knowledge, and that she accurately sets out the factual details he provided. However, one exception was identified in oral evidence by Mr Lindemann. If the report of Dr Lockwood suggests that Garry Hughes told Mr Lindemann of Mr Hookham buying properties it was an error. Mrs Hughes was the person who advised Mr Lindemann that Mr Hookham buys properties. I accept that the matters set out in Dr Lockwood’s report accurately set out the instructions given to her by Mr Lindemann. Mr Lindemann instructed to the effect that in the ten days before 31 July 2011 when talking with Garry Hughes, he said he had been thinking of selling a house in Moranbah as he had bought one in Mackay at the end of 2010 and asked Garry to “send Burt around”. Mr Lindemann referred to Mr Hookham as “Burt”. That is the name by which Mr Hookham was known. Mr Lindemann instructed Dr Lockwood that when Mr Hookham came to his home at the end of July he said to Mr Lindemann “I hear you want to sell this house” to which Mr Lindemann replied “I was thinking about it”. He instructed that Mr Hookham asked how much he wanted for it, that he did not really know and had not had his property valued but was aware that a house down the road had recently sold for $480,000.00 so he said “$470,000.00”. He instructed that Mr Hookham wanted something in writing so the two went inside the house and he wrote down his name, phone number, mobile number, the address, “$470,000.00” and “3 months”. He instructed that he then dated and initialled it and both men signed this piece of paper. He instructed that Mr Hookham said he would get a formal contract drawn up.
- [45]Mr Lindemann told Dr Lockwood that on 31 July 2011 he was not expecting a cheque. I accept that this was his honest recollection.
- [46]Mr Lindemann banked the cheque. Mr Lindemann subsequently tried to repay the $6,000 and also offered to repay $6,500 to more than adequately compensate for interest.
- [47]Mr Lindemann reported to Dr Lockwood that he thought that the piece of paper he wrote on on 30 July was a written description of his conversation with Mr Hookham and not a contract; that he had never sold a house before, and that he thought there would be a formal contract drawn up and that the note was a reminder. He told her that he recalled Mr Hookham saying that he would get a formal contract drawn up.
- [48]Mr Lindemann deposed by affidavit that Mr Hookham suggested to him at the meeting on 30 July that Mr Lindemann “jot down what I wanted” and that when he signed the piece of paper with the details written on it he did not believe that he was signing a contract. He deposed that he was simply setting out contract details and the points discussed concerning the property “so that Burt Hookham could consider those points”. He deposed that he believed “that when people agree to sell, and buy a property, it is necessary to complete a thick REIQ contract before the sale can proceed. As such, when I put my signature on the short note that I made for Burt Hookham, I did not believe I was entering into a contract to sell the property because I was not signing a full REIQ document”.
- [49]I accept that Mr Lindemann believed on Saturday 30 July 2011 that he had not agreed a sale with Mr Hookham. Mr Lindemann’s belief on 30 July 2011 at the time of his alleged oral agreement to sell is not a matter the court may consider for the objective assessment of whether the conversation was a binding sale agreement.
- [50]Mr Lindemann had some experience with buying real property in that he had three properties. This was his first experience with a sale. It is plausible that he believed that an agreement for the sale of real estate would not bind until an REIQ contract was signed. That is how residential land contracts in Queenslandare commonly made.
- [51]With respect to the receipt that Mr Lindemann signed on 31 July he deposed by affidavit that:
“When the document was presented to me, it had been filled out before I saw it, and I placed my signature where indicated, because I had been given a cheque. I specifically believed I was simply signing a receipt for the cheque, and nothing more”.
- [52]I am not persuaded that Mr Lindemann believed that his acceptance of the cheque for a deposit was insignificant. He gave evidence of what he thought:
“it's firstly asking you to make up your mind there and then.”
His answer was consistent with believing that he had not previously agreed to sell, but that by accepting the deposit he would be indicating an intention to complete a sale. Whatever it signified to him when he accepted the cheque, I am not satisfied that the two acts of accepting the cheque and giving a receipt for a “deposit on sale”, reveal enough about the previous day’s conversation between the two men to allow for a finding about what probably was said the day before. More importantly, the acts of giving the receipt and accepting a deposit do not cause me to find that the effect of a conversation the day before was probably that the two men reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms.
- [53]Mr Lindemann accepted that he signed a receipt. He disputed that the receipt tendered was genuine. I accept that it is genuine.
- [54]On about 4 October 2011 Mr Hookham delivered an REIQ contract to Mr Lindemann. Mr Lindemann deposed that he was surprised when he looked at the contract that it did not have any of the special conditions he had requested. Specifically it did not provide him with three months to leave the property and did not specifically say that the house was to be “as is”. It did provide for settlement on 31 October 2011. That was a Monday and was the first business day three months after the date of the alleged oral agreement of Saturday 30 July 2011.
- [55]On about 27 October 2011 Mr Lindemann contacted Mr Hookham by telephone. There is a dispute about what was said. One thing common to both parties to the conversation is their recollection that Mr Lindemann wanted more money on the basis that he asserted the property was worth considerably more.
- [56]If there was an agreement for sale, Mr Lindemann contends:
- Having regard to psychiatric issues he did not have the capacity to contract on 30 July 2011;
- The conversation on 30 July 2011 did not include an agreement to sell;
- Mr Lindemann did not believe that his note of 30 July 2011 or his receipt signed 31 July 2011 were a contract and invokes the principle of non est factum;
- He did not intend to create a legally binding relationship with the buyer’s agent for the sale of the property;
- The note signed 30 July 2011 is not a sufficient memorandum for the purposes of the Property Law Act1974 s 59;
- If a contract was formed on 30 July 2011 it does not comply with s 368A of the Property Agents and Motor Dealers Act2000;
- The contract is void for uncertainty;
- The written agreement presented months later does not reflect the terms of the note signed on 30 July 2011.
Did Mr Lindemann have the legal capacity to sell in July 2011?
- [57]In her second report Dr Lockwood, in response to a question posed to her, wrote the following. For convenience the question is also set out:
4. Did our client have capacity to make legally binding decisions as at July 2011? More specifically, did our client’s mental status impairment of disturbance impact on his capacity to deal with his assets, in a legal sense, as at July 2011?
It is my opinion that his capacity to make legal decisions regarding his assets was impaired as at July 2011. I think the impairment arose as a result of ongoing psychiatric symptoms described above, in particular his deep preoccupation and fear of financial difficulties associated with his legal case and his preoccupation with managing future financial problems. Additional factors which I think contributed to problems with capacity involve his history of being somewhat poorly educated and naive about the process of selling properties to the point where he was unsure of what process would be followed, and the situation which he found himself making decisions about assets sales; namely being asked to sell his house to a stranger at a time that was not anticipated or appointed, which meant that he was effectively unprepared to make a decision.
- [58]An impaired capacity to make wise decisions affecting legal rights and incapacity to make an agreement to sell are different. Mr Lindemann in July 2011: understood the impediments to the sale of the adjoining property; told Mrs Hughes of his interest in the sale of both properties; asked her to send over the man interested in buying properties; rented out the adjoining property; formed an opinion about appropriate sale prices; discussed a first option to buy the adjoining property; wrote, signed and supplied a note to Mr Hookham with two conditions of sale he required; appreciated next day when a cheque for $6,000 was presented that it was for a deposit for sale of the subject property and that concluded that he was being asked to make up his mind in a snap decision. After the REIQ contract was delivered to Mr Lindemann in October 2011 he read it “expecting to see the clauses dealing with the items I had written onto the Note included in it, but could not see any such clauses. Specifically I expected to see a clause saying that the house would be “as is” and that I would be able to take three months to leave the property…”. Mr Lindemann had a clear recollection of these aspects of the discussions with Mr Hookham and the contractual nature of those discussions. He “expected” a contract and to see clauses corresponding with the discussion and the note signed 30 July 2011.
- [59]I am satisfied that on 30 July 2011 Mr Lindemann had the capacity to adequately understand the nature of an agreement to sell the subject property, that he had the capacity to determine to sell it and to determine what terms were acceptable to him as conditions of sale.
Non est Factum
- [60]The argument for Mr Lindemann is that he did not appreciate that the note he signed on 30 July was a contract. I infer that a similar submission is intended to apply to the receipt signed on 31 July. It is not the case for the buyer that the documents Mr Lindemann signed were the contract, or that either one was the contract. The buyer’s case is that Mr Lindemann agreed in conversation. The buyer accords the receipt a special significance arguing it satisfies the requirements of the Property Law Act1974 s 59, but the buyer does not treat the receipt as a contract.
- [61]Counsel for the buyer submits, and I accept:
…the requirement is that the document signed must be “radically or fundamentally different from what it was thought to be” – see Cheshire and Fifoot paras [12.64] – [12.71], Petelin v Cullen (1975) 132 CLR 355, 359-360. A mistake about the legal effect of a document is insufficient to attract the doctrine – see eg Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42, at 62. The respondent understood that he was signing a record of his conversation and a receipt respectively.
- [62]Mr Lindemann correctly understood the note to be a note and the receipt to be a receipt. The fact that he would not have understood that the receipt was subsequently to be relied upon as writing for satisfying the Property Law Act1974 s 59 does not mean he thought the document was fundamentally different from the receipt he thought it to be. That would be no more than a mistake about a legal effect of the receipt. Non est factum is not an applicable defence in this proceeding.
Was there an agreement to sell?
- [63]The primary issue is whether the two men made an oral agreement to sell on 30 July, before they put pen to paper. The buyer bears the onus of proof that the conversation was an agreement to sell. Before one considers the issue of the sufficiency of the memoranda in writing, the buyer must first establish an agreement to sell. The memoranda of 30 and 31 July 2011 are each circumstantial evidence of what was previously said. The buyer submits: “When the terms of the Receipt are considered in conjunction with the evidence as to the oral agreement, it is submitted that the objective conclusion is that an agreement to sell the property was made.” While the note and other subsequent conduct and conversations can be considered as circumstantial evidence of what was said on 30 July 2011, direct evidence of the words of the alleged oral agreement is the first evidence to examine.
- [64]As the case for the buyer is that the agreement to sell was made before the first memorandum was signed on 30 July 2011, it is instructive to set out the sequence of relevant events that day. The first event on the buyer’s case was the oral agreement, by which the parties had reached finality in arranging all the terms of their bargain and intended to be immediately bound. The second was the note which, on the buyer’s case, is evidence of the prior binding oral agreement. The third was the alleged conversation about a deposit. I am not satisfied that a deposit was discussed or offered on 30 July 2011.
- [65]It is not critical for determining whether the parties agreed to a sale to resolve the conflict about whether a deposit was mentioned on 30 July. Parties can make an agreement for sale of land without a condition that the purchaser pay a deposit. But the fact that it was not discussed is a circumstance relevant to a consideration of whether, objectively assessed, the conversation revealed an intent to be immediately bound.
- [66]On this issue, the buyer’s counsel relied on Mr Hookham’s affidavit evidence of the agreement. Counsel submitted:
5. On 30 July 2011 the applicant’s director had a conversation with the respondent, during which the respondent agreed to sell the subject property for $470,000.00, settlement to be three months hence. Mr Hookham deposes (paras 9-11) that he and the respondent specifically agreed to a price of $470,000, together with a settlement period and an “as is” provision. Mr Hookham deposes that the parties signed a note recording the agreement, and shook hands.
- [67]Mr Hookham’s affidavit evidence at paragraphs 9 to 11 is set out at [27] above. It was a mixture of evidence of what was said by Mr Lindemann on 30 July 2011 with Mr Hookham’s assertions about what was agreed. I do not accept Mr Hookham’s evidence where he deposed at paragraphs 10 and 11 that matters were agreed. I do not accept Mr Hookham’s evidence at paragraph 11 of “our agreement”. If I put those assertions about agreed matters aside to focus on Mr Hookham’s affidavit evidence of actual words spoken, his evidence from paragraphs 6 to 11 of his affidavit says little.
- [68]I put aside for the moment circumstantial evidence of things written and done after the conversation. The evidence in paragraphs 9 to 11 of Mr Hookham’s affidavit, if those paragraphs are accepted as accurate, was the evidence at its highest for an oral agreement to sell.
- [69]If it were accepted that the men spoke as Mr Hookham deposed, the conversation would have been, effectively:
Lindemann: I want $470,000 for No 10
Hookham: I would pay that price
Lindemann: Can settlement be three months…I would need that time to remove all my belongings
- [70]That evidence would not satisfy me that the two men had made an agreement to sell. The affidavit evidence at paragraphs 6 to 11, if accepted, would not satisfy me that the two men made an agreement to sell, bearing in mind that I do not accept Mr Hookham’s assertions in those paragraphs of agreement. I do not accept the affidavit evidence of Mr Hookham where it is inconsistent with the evidence of Mr Lindemann set out at [16] of these reasons. I am not satisfied that there was more to the gist of the conversation than is set out at [16] of these reasons. The direct evidence of the conversation set out at [16] of these reasons does not persuade me that there was an oral agreement to sell on 30 July 2011.
- [71]The subsequent conduct of Mr Lindemann including his writing the note on 30 July, shaking hands, accepting a deposit proffered on 31 July, giving a receipt for the deposit and banking it, does not satisfy me that the parties in their earlier conversation objectively reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms.
Did the parties intend to create legal relations?
- [72]An intention to enter into a legally binding agreement is a necessary element of formation of a contract.[11]It is a jural act, separate and distinct from the terms of the bargain.[12]It is to be proved objectively.[13]As well as looking at what the parties wrote, the court can have regard to what the parties said and did,[14]the extent to which the agreement is expressed to be finally definitive of their concurrence,[15]the status of the parties and their relationship to one another,[16]the nature and subject matter of the agreement,[17]the way the agreement came about[18]and other extrinsic evidence occurring before and after the execution of the alleged contract is admissible to ascertain the intention of the parties.[19]
- [73]As Mr Lindemann had suggested that his tenant make contact with the man interested in buying properties and as he discussed the price of the subject and adjoining properties with Mr Hookham and made and signed a note containing two terms, and accepted that there would follow the preparation by Mr Hookham’s solicitor of a formal contract, many indicia of an intent to create legal relations are present. But one of the important indicia is what the parties said. If the parties had agreed orally to a sale, I would have found an intention on Mr Lindemann’s part to enter into a legally binding agreement.
Presumption as to execution of a formal contract
- [74]It was submitted for Mr Lindemann:
The sale of land in Queensland is subject to a presumption that even when parties agree in writing that land is to be sold at a specified price there is no binding contract until written contracts are exchanged.
- [75]I reject that submission. In Queensland, written contracts are not traditionally exchanged.
- [76]A related submission was:
…as a matter of law…there is a presumption that there is no binding contract until as is usual for the sale and purchase of real estate in Queensland, an REIQ contract is signed.
- [77]No cases were cited which refer to such a presumption in Queensland. The cases refer in the Queenslandcontext to a traditional or usual expectation in Queensland.
- [78]
whom Macrossan CJ and Shepherdson J agreed) said that there is a strong
traditional expectation that in the negotiation of sales of land the parties do not
intend to be bound until a formal contract is executed. In Marek v Australasian Conference Association P/L (1994) 2 Qd R 521 at 527 Cooper and Byrne JJ[21] wrote:
“The usual expectation of parties in negotiation for the sale of land is that they will not be taken to have made a concluded bargain unless and until a formal contract is executed. In this State real estate is ordinarily agreed to be sold by the execution by vendor and purchaser of a form of contract adopted by the Real Estate Institute of Queensland and approved by the Queensland Law Society: see W.D. Duncan and H.A. Weld, The Standard Land Contract in Queensland, (3rd ed., 1990), pp. 53-55. This notorious fact largely explains why these days in land sales the ‘expectation is strong that the parties do not intend to be bound until a formal contract is executed’: S J Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87, 92-93 per McPherson J with whom Macrossan J and Shepherdson J agreed … exceptionally, the conduct of the parties may reveal an intention to make a binding agreement concerning land before a formal contract is signed …”
When considering that passage, I note the caution of Chesterman J at first instance in Moffatt Property Development Group P/L v Hebron Park P/L [2008] QSC 177 at [18] that the proposition “is one of fact and not of law. Where the parties intend to be bound by a particular … form of agreement, is a question of fact in the particular case. It is not a rule of law that parties negotiating the sale of land are not bound to buy or sell, as the case may be, until a formal contract in an approved form is executed.” I note that is consistent with what was said in Marek where the Full Court went on to refer to the fact that there are many cases in the books where parties entered into a firm agreement though they contemplated a formal document to embody the terms of their agreement. However the Full Court continued that “such cases are rare”.[22]
- [79]Keane JA[23]as his Honour then was, in Moffatt Property Development Group P/L v Hebron Park P/L[2009] QCA 60 at [25] referred to “a ‘traditional’ pre-disposition of the kind referred to in Marek.” I accept that in Queensland, with respect to the sale of land parties have been traditionally predisposed to making their agreements to sell by signing a standard form REIQ contract. I accept that in 2011 it was still the traditional predisposition in Queensland of parties in negotiation for the sale of land that they would not be taken to have made a concluded bargain unless and until a formal contract was executed.
- [80]In Land Contracts in Queenslandthe Federation Press, (3rd ed.), Christensen, Dixon, Duncanand Jones at 4.2.3.1, p 188 the authors observe:
“In New South Wales, the authorities accept there is a presumption that mere agreement on a price for the property does not give rise to a binding contract where exchange of contracts is contemplated. In Queensland, there are no similar presumptions and the question of whether there is a binding agreement between the parties before execution of a formal contract will depend on the intention of the parties objectively ascertained from the documents in light of the surrounding circumstances.”
- [81]I have not relied upon a presumption in considering whether there was an oral sale agreement. I have not resorted to the traditional expectation to assist me to determine that there was no sale agreement in this case. I have not relied upon Mr Lindemann’s subjective expectation that an REIQ contract was required. I have relied upon the direct and circumstantial evidence of the oral agreement to determine whether, the parties in thatconversation objectively reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms.
- [82]The evidence does not establish such an agreement.
- [83]It becomes unnecessary to resolve the legal arguments about the adequacy of the receipt as a note for satisfying the Property Law Act1974 s 59.
Footnotes
[1] I was informed from the bar table that the buyer is trustee for the Hookham Family Trust and is not trustee for the Hookham Family Trust Pty Ltd. I proceed on that basis and have amended the name in the heading of these reasons to reflect that advice.
- [2][2]The buyer actually submits that that the agreement sued upon fell into one of the first two categories in Masters v Cameron.
- [2]
[3] T 1-48 ll 3-13
[4] Op. cit p362
[5] T 1-17 l 43
[6] exhibit 1
[7] Doc 8 par 14
[8] Cf Masters v Cameron (1954) 91 CLR 353 at 360
[9] T1-64 l 3
[10] T1-64 l 48
[11] TLA [7.1.210]; Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424
[12] Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, per McHugh JA at 337 D-E.
[13] Air Great Lakes P/L op. cit. per McHugh JA at 337 D-E.
[14] Air Great Lakes P/L op. cit. per McHugh JA at 337 D-E.
[15] South Australia v Commonwealth (1962) 108 CLR 130 at 154 per Windeyer J
[16] South Australia op. cit. at 154 per Windeyer J
[17] Placer Development Ltd v Commonwealth (169) 121 CLR 353 at 367 per Windeyer J
[18] South Australia op. cit. at 154 per Windeyer J
[19] TLA [7.1.230] citing Air Great Lakes Pty Ltd op. cit. per Mahoney JA at 332–334 and McHugh JA at 337–338
[20] (1989) 2Qd R 87 at 92 l 47
[21] With whom McPherson SPJ agreed at 521
[22] Marek op. cit. 527, ll 45-528, l 2
[23] With whom McMurdo P and Atkinson J agreed