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M J Arthurs Pty Ltd v Isenbert[2017] QDC 85

M J Arthurs Pty Ltd v Isenbert[2017] QDC 85

DISTRICT COURT OF QUEENSLAND

CITATION:

M J Arthurs Pty Ltd v Isenbert [2017] QDC 85

PARTIES:

M J ARTHURS PTY LTD
(plaintiff)

v

MICHAEL DAVID ISENBERT
(first defendant)

and

KERRIE ISENBERT
(second defendant)

FILE NO/S:

BD3754/2013

DIVISION:

 

PROCEEDING:

Civil trial

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

12 April 2017

DELIVERED AT:

Brisbane

HEARING DATE:

28-30 November 2016

JUDGE:

McGill SC DCJ

ORDER:

Plaintiff’s claim dismissed.

CATCHWORDS:

CONTRACT – Offer and acceptance – need for communication of acceptance – whether made to authorised agent of offeror – when effectively made.

CONTRACT – Offer and acceptance – whether acceptance or counter-offer – whether counter-offer accepted – no contract.

CONTRACT – Termination – whether repudiation – whether election to terminate for repudiation – whether effective election to affirm - need for communication of election.

PRINCIPAL AND AGENT – Authority of agent – whether third party agent – scope of authority of agent to receive communications on behalf of principal – no implied authority.

BUILDING AND ENGINEERING CONTRACTS – Statutory regulation – obligation to provide copy – whether and when performed – right to withdraw – when arising – whether exercised.

Domestic Building Contracts Act 2000 s 36, s 72, s 75.

Ashdown v Kirk [1999] 2 Qd R 1 – cited.

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 – cited.

Barker v GE Mortgage Solutions Pty Ltd [2013] QCA 137 – applied.

Beckford Nominees Pty Ltd v Shell Co of Australia Ltd (1987) 73 ALR 373 – cited.

Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 – cited.

Brewer v Fichera (1991) 12 Qld Lawyer Reps 98 – cited.

Brien v Dwyer (1978) 141 CLR 378 – cited.

Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 – cited.

Carter v Hyde (1923) 33 CLR 115 – considered.

Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20 – applied.

Commissioners of Customs and Excise v Pools Finance (1937) Ltd [1952] 1 All ER 775 – cited.

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 – cited.

Costello v Loulakas [1938] St R Qd 267 – cited.

Cozi Pty Ltd v Bedi [1994] VSC 161 – distinguished.

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 – cited.

Davies v Smith (1938) 12 ALJ 260 – cited.

Evans Deakin Industries Ltd v Queensland Electricity Generating Board (1984) 1 BCL 334 – applied.

Fitzwood Pty Ltd v Unique Goal Pty Ltd (2001) 188 ALR 566 – cited.

Foran v Wight (1989) 168 CLR 385 – cited.

Ford v Lismore City Council (1989) 28 IR 68 – cited.

Goodman Fielder Consumer Foods Ltd v Cospack International Pty Ltd [2004] NSWSC 704 – cited.

Holland v Wiltshire (1954) 90 CLR 409 – considered.

Howes v Miller [1970] VR 522 – cited.

IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205 – cited.

Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 – applied.

Keogh v Dalgety and Co Ltd (1916) 22 CLR 402 – cited.

Kirkpatrick v Kotis (2004) 62 NSWLR 567 – cited.

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 – cited.

Legione v Hateley (1983) 152 CLR 406 – cited.

M. J. Arthurs Pty Ltd v Heaysman [2015] QCA 113 – applied.

M. J. Arthurs Pty Ltd v Heaysman [2014] QDC 160 – cited.

Midland Bank plc v Serter [1995] 1 Fam Law R 1034 – cited.

Mohr v Smith [1914] SALR 92 – cited.

Morgans v Launchbury [1973] AC 127 – cited.

Parklands Blue Metal Pty Ltd v Kowari Motors Pty Ltd [2004] 1 Qd R 140 – cited.

Permanent Trustee Co Ltd v O'Donnell [2009] NSWSC 902 – distinguished.

Petersen v Moloney (1951) 84 CLR 91 – cited.

Poort v Development Underwriting (Victoria) Pty Ltd (No 2) [1977] VR 454 – distinguished.

QBE Insurance (Australia) Ltd v Cape York Airlines Pty Ltd [2011] QCA 60 – cited.

Quadling v Robinson (1976) 137 CLR 192 – cited.

R A Brierley Investments Ltd v Landmark Corporation Ltd (1966) 120 CLR 224 – cited.

Scammel and Nephew Ltd v Ouston [1941] AC 251 – cited.

Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 – cited.

Shevill v Builders Licensing Board (1982) 149 CLR 620 – cited.

Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd (2016) 91 ALJR 233 – cited.

The Kanchenjunga [1990] 1 Lloyd’s Rep 391 – cited.

Three Pty Ltd v Savoir Faire CTS 3841 [2008] 2 Qd R 568 – cited.

Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 – cited.

Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498 – cited.

Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 – cited.

Universal Guarantee Pty Ltd v Carlile [1957] VR 68 – distinguished.

COUNSEL:

GI Thomson for the plaintiff

G Handran for the defendants

SOLICITORS:

Construct Law Group Pty Ltd for the plaintiff

Morgan Conley for the defendants

  1. [1]
    The plaintiff was in 2012-13 in an arrangement with a group of companies which for present purposes can be identified as the Optima Group (“Optima”). Optima was marketing house and land packages to people as an investment opportunity, using telemarketing to locate leads who were then visited by a salesman presenting what were said to be the advantages of obtaining an investment property in this way. The properties being promoted were in a subdivision development north of Mackay.
  1. [2]
    The defendants were two people to whom such a package was sold. This involved procuring their signatures on two contracts, one to purchase a block of land in the development[1]and one for the construction of a house on the land; the latter, though dressed up to appear as a contract with Optima, in fact specified that the plaintiff was the builder.[2]That contract was subsequently executed by Mr Arthurs on behalf of the plaintiff. By this proceeding, the plaintiff claims damages for breach of that contract. Pursuant to an order I made in the course of case managing this matter on the commercial list, the present trial is proceeding only on the issue of liability.

Background

  1. [3]
    The arrangement with Optima predated the involvement of the plaintiff as the builder under such contracts, which occurred only from August 2013; prior to that Mr Arthurs, who controls the plaintiff, and who has been a licensed builder for some time, was nominated personally as the builder: p 22. Until 19 November 2012, Mr Arthurs, and subsequently the plaintiff, were operating with a company, Portfolio Housing Pty Ltd, associated with a Mr Davison, which handled administrative arrangements while the plaintiff or Mr Arthurs concentrated on the actual building:[3]pp 21, 24, 27, 70. In November 2012 there was a falling out between Mr Arthurs and Mr Davison, which led to litigation in the Supreme Court.[4]Initially however the relationship between the plaintiff and Optima continued, though by mid-2013 that had also broken down.
  1. [4]
    Following that break down, a number of people who had signed building contracts gave notices of termination under the Domestic Building Contracts Act 2000 (“the Act”), including the defendants. The plaintiff contests their right to do so, and that is one of the issues in the present proceeding. There has been previous litigation between the plaintiff and the parties to another contract procured by Optima, which I also tried.[5]Neither party before me in this matter sought to challenge any conclusion I had arrived at in that decision, or anything said by the Court of Appeal on appeal from my decision, which was dismissed.[6]There are another 23 proceedings pending in this court between the plaintiff (or Mr Arthurs) and other purchasers under other contracts procured by Optima; these have been stayed pending the hearing and determination of this matter, which (it can only be hoped) will resolve issues which are common to at least a number of those proceedings.
  1. [5]
    In November 2012 there were meetings between Mr Arthurs and representatives of Optima to confirm that the arrangement between them was to continue despite the departure of Mr Davison and his company: p 30. The way the arrangement worked in practice was that from time to time Optima would identify a particular lot in the development and Mr Arthurs would nominate one of the plaintiff’s standard house designs which it would construct on that lot (p 31) for $X: p 72, 73. Optima would then secure execution of a building contract for such a house for a higher price, $Y.[7]Any contract would be sent to Mr Arthurs for signing, and he would return it to Optima after execution, keeping copies for his use: p 32.[8]
  1. [6]
    The plaintiff would build the house, once that could lawfully be done, with progress claims being submitted by the plaintiff to Optima, based on the price of $X: p 33.[9]Optima prepared and submitted progress claims to the customers or their financier based on the contract price of $Y.[10]When payment was received, the plaintiff was paid on its claim. At the end of the day, Optima retained the difference between $X and $Y: p 73. In the case of the contract involving the defendants, this difference amounted to $57,770.[11]Perhaps unsurprisingly in the circumstances, it was part of the arrangement that the plaintiff was to have no contact with the owners under the building contract, with everything being handled by Optima on its behalf: p 33.

The defendants

  1. [7]
    Also in November 2012, following contact from a telemarketer, there were meetings between the defendants and Mr Randall, a salesman employed (on commission) by Optima.[12]The first of these involved a presentation about the supposed long term benefits of investing in the house and land packages being marketed by Optima: p 2-100. A second meeting was then arranged, to which Mr Randall came armed with drafts of the necessary house and land contracts, and accompanied by Mr Ramsey from Optima who delivered a further such presentation: p 119, p 2-100. The defendants were given a bundle of documents, a “welcome pack” which included an unexecuted copy of part of the contract.[13]As a result the defendants were persuaded to enter into those contracts, and Mr Randall was left to get them executed.
  1. [8]
    The contracts had been prepared by Optima, and in the case of the house contract provided for the plaintiff to be the builder.[14]The details about the defendants to be completed were highlighted[15]and stickers applied indicating where the defendants were to sign: p 112, p 2-6. The defendants signed or initialled as directed.[16]Mr Randall said that after the one copy of the building contract was executed by the defendants, he took it with him, though he told them that “the office” would sign it and they would receive a copy: p 111.[17]The executed contract was sent to Optima, where a copy was taken for the file, and it was then forwarded to the plaintiff: p 2-7.
  1. [9]
    Mr Arthurs said he received the contract, signed it where appropriate on behalf of the plaintiff, took copies for his purposes, and then posted the original back to Optima: p 40. What happened to the original thereafter is a mystery – it was not produced and put in evidence at the trial. The person at Optima who would ordinarily receive such a document, Ms Whyman, said that her practice was to put it in the file of another person who worked for Optima Lending Solutions Pty Ltd (“OLS”)(p 2-7), but that person, Ms McAllister, said that she only saw scanned copies of the contract which came to her as PDF documents: p 2-23. That it was received by Optima is shown by the fact that a different Optima person emailed a copy to the plaintiff, not including the HIA General Conditions, together with some other documents, on 14 February 2013.[18]Mr Arthurs did not give a copy of the executed contract to the defendants, as required by the Act, s 36.
  1. [10]
    Neither of the Optima employees who were involved with the contracts said it was the practice to send a copy of the executed contract to the purchasers,[19]or indeed even to inform them that the contract had been executed by the builder (p 2-30, p 2-47), though Ms McAllister, a finance broker employed by OLS, said that, if she had been asked by a customer whether that was the situation, she would have said that it was, if that were true: p 2-49. Both defendants denied that they were sent a copy of the executed contract, and I accept that they were not.
  1. [11]
    In December Ms McAllister made contact with the defendants, and discussed what finance arrangements would suit them: p 2-21, 22. What they worked out was that the defendants would obtain a line of credit from a credit union with which they were associated, to cover part of the cost and some renovations on their home, and the rest was to be borrowed from a financier located by OLS: Exhibit 32, which set out the basic structure of the arrangement: p 2-25. She also sent them another copy of the Optima credit guide, on 11 December 2013: Exhibit 31.
  1. [12]
    Mr Isenbert had some recollection of having been told, about the middle of February 2013, that the contract had been executed by the builder.[20]His evidence was very vague about this, and he was not able to identify the person who told him; he nominated three people to whom they had spoken by phone: p 3-6. Two of the persons named were not called as witnesses; one, Ms McAllister, was called, but she had no recollection of telling them this: p 2-47. She did identify a “contact sheet” maintained as a record by OLS where some note could be made of various steps that had been taken including in particular contact with the defendants (Exhibit 34), on which her last entry is a note indicating that on 13 February 2013 she had contact with someone over the fact that a second financier had approved the finance necessary to enable the contracts to be completed: p 2-30, p 2-38.[21]She thought she would have advised the defendants of this, as it meant that everything was in order for the contracts now to proceed; she sent them an email that day advising of the approvals: Exhibit 36. That was the principle recollection that Mr Isenbert had.
  1. [13]
    The plaintiff was advised by Optima on 20 February 2013 that the defendants’ finance was now unconditional: Exhibit 12. The defendants were concerned about the delay, and asked someone at Optima about this from time to time, being given plausible excuses.[22]Subsequently Optima advised the plaintiff that the subdivision had become registered.[23]On 29 May 2013, someone from the developer sent Optima an authority to lodge an application for approval of the plumbing plan with the local authority and this was passed on to the plaintiff: Exhibit 13. The developer had to approve the design, landscaping and colour scheme of houses to be built on the estate and by email on 29 May on 2013 Optima gave the plaintiff advice on the requirements for such approval, which it said it would deal with: Exhibit 14. The plaintiff took steps to have construction plans drafted,[24]and retained Matrix Certification Services, a private certifier, to provide the necessary building approval.[25]
  1. [14]
    Mr Arthurs said that the plaintiff’s relationship with Optima began to deteriorate at the end of June, early July 2013: p 53. As a result of this on 15 July 2015 he had his then solicitors send a letter to Optima terminating the arrangement for Optima to collect progress payments on contracts such as those with the defendants.[26]It was only that part of the arrangement that was terminated in this way: p 78. The plaintiff paid a fee to arrange BSA insurance for the construction of the house on the defendants’ land,[27]and also paid an amount to “QLeave” by way of a compulsory levy in respect of the construction of a house on that land: p 54.[28]
  1. [15]
    It appears that Optima moved quickly in response to this termination. Mr Isenbert said that at some time, which he did not identify but which must have been mid July 2013,[29]he was told by Optima of a falling out with the plaintiff, referred to as “their builder”: p 3-8. He was then told by Peter Ramsay of Optima that they had managed to find a new builder who would build a better house for them, and he arranged a meeting to sign a new contract: p 3-9. Mr Isenbert also had some communication with the solicitors who had acted for him in the purchase of the land, and the defendant signed some documents with a view to putting an end to any contract which was in place with the plaintiff.[30]
  1. [16]
    The first contact Mr Arthurs had with the defendants directly was by an email which was sent to them on 25 July 2013 advising of the termination of the collection agency: Document 90. Then on Saturday 27 July 2013 he telephoned the defendants in the morning. According to him he spoke to Mr Isenbert, introduced himself and said he was the builder of the investment house: p 57. He said Mr Isenbert disputed this, and claimed Optima was the builder. He referred him to the first page of the HIA building contract at Item 3 of the Schedule, which Mr Isenbert looked at, and then admitted that the plaintiff’s name was on the contract. Mr Arthurs said that Mr Isenbert appeared to become agitated, and he told him to calm down and advised him to get independent legal advice. He said that he would be sending some material such as plans and insurance documents and a tax invoice for the deposit, and he said Mr Isenbert replied that he had already paid the full amount to Optima, and that the concrete slab was already down: p 57. Mr Arthurs said that he told him that nothing had been done to build the house at that stage, invited them to look at the site, repeated that he would send the various plans and other documents, and told him that nothing would happen on the site until he paid the deposit.[31]He also at some stage told Mr Isenbert that Optima was being terminated as the collection agent. That he made a call to the defendants’ number on 27 July is confirmed by his telephone bill.[32]
  1. [17]
    Mr Isenbert recalled a phone call with Mr Arthurs, but was vague about the date; he thought it was around the time of the email on 27 July: p 3-7, p 3-36. He did not give a very clear account of what was said in the phone call, but he said that Mr Arthurs said words to the effect that the defendants were in the middle of a scam, and the word “fraud” was used.[33]He said Mr Arthurs was assertive and wanted them to switch allegiance from Optima to him. He asked Mr Isenbert to look at the copy of the contract that was in his possession and he did so and saw that Mr Arthurs was on it, but said he was still under the belief that Optima were building the house: p 3-8.
  1. [18]
    After the call Mr Arthurs sent the defendants an email with an invoice for the deposit and another copy of the termination advice attached (Document 93), an email attaching copies of the BSA Insurance and the approved plans (Exhibit 17) and an email advising that he was ready to start construction when the invoice was paid: Document 95. Mr Arthurs said that after this call he spoke to the site supervisor who was effectively in charge of the plaintiff’s business in Mackay (p 23), Mr Dobson, asked him to get a copy of the defendants’ contract and highlight certain points in it, and go around to the defendants to show it to them: p 59.[34]Mr Arthurs said that he had never met the defendants in person (p 60) and did not speak to either of them on any occasion other than in that conversation on 27 July 2014: p 61. After that conversation, he told the certifier to put his inspections on hold.
  1. [19]
    Mr Dobson said that he highlighted the relevant parts of the contract that had been sent to him, and went to the defendant’s house on 27 July 2013 but was told by Mrs Isenbert that her husband was out fishing, and he said he would come back the next day: p 2-71. He returned the next day at about 3.00 pm and spoke to Mr Isenbert, showed him the passages in the contract he had highlighted, suggested he get independent legal advice, and then left: p 2-72. Mr Dobson said he went back to the defendant’s residence on 30 July, saw Mr Isenbert outside of the house, and asked him whether he had had time to seek independent advice about the contract, and Mr Isenbert told him that they were happy to stay with Optima as the builder: p 2-73. He said that he just thanked him and left, and the same day told Mr Arthurs that the defendants were going to stay with Optima: p 2-74.[35]At 1.00 pm that day, the plaintiff’s solicitors emailed the defendants advising of the termination of the Optima collection agency: Document 99.
  1. [20]
    Mr Dobson said that he had, before 30 July, set out stakes on the property to mark out where the under slab plumbing was to go, had had some bricks and some timber delivered to the property, and had had the lot scraped: p 2-55, 57, 74. He said that on 29 July he sent an email stopping reinforcing which he had ordered from being delivered to the site, and to 11 other sites in the subdivision: p 2-72; Exhibit 41. The under slab plumbing was not put in: p 2-56.[36]
  1. [21]
    At some time in July 2013, Mr Randall received advice from Optima of problems with the plaintiff, and was asked to make arrangements for new contracts to be signed with three of the customers, including the defendants: p 115. Following this, he was sent a copy of a contract with Optima Homes (Qld) Pty Ltd to be executed by the defendants. When he arrived at their home with the contract it was not necessary for him to provide any great explanation or justification for the new contract: p 117. The defendants executed the building contract, which he witnessed, and which he subsequently returned to Optima: Exhibit 26. That document is now dated 30 July 2013. Mr Randall said that the dates in Exhibit 26 were not in his handwriting, and he could not recall whether or not they were there when the defendants signed: p 117. Mr Isenbert however spoke as if he had put the dates on the contract, as the dates on which they had signed it.[37]
  1. [22]
    Mr Arthurs said that on 28 July 2014 Mr Dobson reported to him that he had seen Mr Isenbert who told him that he was staying with Optima as the builder: p 61, 62. After lunch however Mr Arthurs said that he was told this by Mr Dobson on 30 July: p 66.[38]Mr Arthurs said that his building programme involved starting work with various subcontractors on the defendants’ lot on Monday 29 July, and when he was told what Mr Isenbert had said he immediately told Mr Dobson to get everything off the site (p 62), and he cancelled arrangements he had made to obtain prefabricated trusses, the joinery for the kitchen and the windows that he had already ordered for the house.[39]
  1. [23]
    Mr Dobson said that after he was told to get everything off the site, he cancelled the subcontractors who had been booked to work on the site, and arranged for a truck to go to the site to collect the material there (p 2-75) but when he went to the site on 31 July it had been bulldozed, the stakes that he had put into the ground had been pushed over, and the bricks and timber had been disturbed: p 2-75. He nevertheless salvaged what he could from the site. Mr Dobson said that part of his job as site supervisor was to take photographs of the sites as they reached the various progress payment stages, to be sent to Optima: p 2-54. No photographs of the damage to the site which he claimed to have seen on 31 July were put in evidence.
  1. [24]
    Mr Arthurs said that he received the notice sent by the defendants’ solicitors under the Act, though he did not identify when he received it, except that it was after the discussion with Mr Dobson on 30 July 2013.[40]On 18 August, Mr Arthurs composed and sent personally an email to the defendants rejecting the purported withdrawal from the contract by the defendant solicitor’s letter: Document 105.[41]There was a reference, in a letter of 25 September 2013 from the plaintiff’s solicitors, to a notice to remedy substantial breach dated 26 August 2013, presumably given to the defendants or their solicitors: Document 117. Somewhat curiously however there was no other evidence of such a document having been given in some way to the defendants, and I am not prepared to find that it was given.
  1. [25]
    Mrs Isenbert said that a person who introduced himself as Sean Dobson came to their house at 2.00 pm on 29 August 2013 and said that he wanted to show her something in a bundle of material he had, presumably the copy of the contract, but she told him that her husband would be home next Tuesday and to come then: p 3-72, 73. She added that he told her that they should get their own lawyer because there was going to be “a big shit fight between them.” Mrs Isenbert made a note of the conversation that day: Exhibit 46. She said that Mr Dobson came to the home a second time about a week later and spoke with Mr Isenbert, but she was not involved in that: p 3-74.
  1. [26]
    Mr Isenbert said Mr Dobson came to their house on 5 September at 9.00 am: p 3-10, p 3-61. His version of the conversation then was that Mr Dobson also mentioned they were in a scam and the word “fraud” was mentioned, and that they should disassociate themselves from Optima in favour of Mr Arthurs. He said that on that occasion Mr Dobson gave him a copy of the contract, which he retained and which became Exhibit 42. Mr Isenbert said that he made a note of the visit, Exhibit 44, and that two days later he faxed the document which was given to him to his solicitors, when he had access to a fax machine at work: p 3-12, Exhibit 43. He did not have access to a fax machine at home.
  1. [27]
    Mr Dobson denied that he went to the defendants’ house on 5 September 2013, and denied leaving Exhibit 42 with them: p 2-81. He said that that day he went to Sarina with Mr Arthurs, which was confirmed by Mr Arthurs, who said that that day he and Mr Dobson were finalising four houses in Sarina, returning to the office in Mackay at about 3.00pm before he flew out of Mackay at about 5.00pm: p 66-7.
  1. [28]
    Around 20 September, Mr Arthurs prepared what he described as a list of the money outlaid on the lot the subject of the contract with the defendants, with a view to providing this to his lawyers: p 67. He emailed this to Mr Dobson on 20 September 2013, to have Mr Dobson confirm these costs, though given Mr Dobson’s role in the project I would have thought that Mr Arthurs was in a better position to identify costs of this nature than was Mr Dobson: p 68.[42]In fact, on the same day Mr Dobson went to Mr Isenbert, and gave him a copy of Exhibit 19: p 83. He said that the purpose of giving it to Mr Isenbert was “just to give him the heads-up and just to let him know that this was here, and he’d go and get independent legal advice” (p2-85). Mr Arthurs denied that he told or asked Mr Dobson to do this, as did Mr Dobson (p 2-85), who denied that he did this to intimidate the defendants: p 2-84. Mr Isenbert said that on 20 September, Mr Dobson came to their house at 1.00 pm with the attachment to the email printed out, and said that they should switch their allegiance to Mr Arthurs otherwise these two documents would be submitted to a solicitor the following Monday: p 3-13. Mr Isenbert made a note of that conversation: Exhibit 45; p 3-14.
  1. [29]
    The building certifier company engaged by the plaintiff to provide certification services in relation to the houses in Mackay, including the subject of the contract with the defendants, was operated a Mr Rix: p 90. Mr Rix identified Exhibits 20 and 21 as documents he prepared under the Building Act in relation to the construction of the building on the defendants’ lot: p 92, 93. He also signed a notice to the defendants, Document 133: p 94. Mr Rix said that he did the approval and sent notice to the owner before he heard about difficulties with Optima, which he heard of at the end of August or the beginning of September: p 95. After this he found out about the approval by another certifier of a different building on the block, and he sent Mr Isenbert a couple of emails, Exhibits 22, 23, and had a telephone conversation with Mr Isenbert in the course of which Mr Isenbert told him that he had been told (by his solicitors) that he could ignore the contract with Mr Arthurs and tear it up: p 96.   
  1. [30]
    Mr Rix was not consistent about the sequence: at p 96 he said “I sent him a couple of emails and he finally rang me,” but at p 98 he said that the phone call was “after the first one… but before that second one.”[43]Mr Rix said that he spoke to Mr Isenbert because Mr Arthurs had in conversations with him (which must have been in late September shortly before the emails were sent) indicated that he still wanted to perform the contract with the defendants: p 98. Mr Rix said that in the conversation he told Mr Isenbert that he was in the middle of a scam, and that Optima was being fraudulent: p 98. Mr Rix denied that he was interfering in the dispute between the plaintiff and defendants in the interest of Mr Arthurs (p 100), but it seems to me that there is no other construction which can sensibly be put on his intervention in this way. The emails can only be described as a forceful attempt by Mr Rix to browbeat Mr Isenbert into continuing with the plaintiff. They certainly render quite unrealistic any notion that Mr Rix was acting as an “independent” building certifier.
  1. [31]
    There is also the consideration that, at the time he was giving evidence, Mr Rix was 83. Some of his evidence, even in his examination in chief, was unresponsive, confusing and inconsistent.[44]I have already given one example of an inconsistency. On p 96 he said at line 3 that he spoke to Mr Isenbert at “about that time” (that is, August/September: p 95). But on the same page three questions later he said “I had no contact with Isenbert at that time.”  He then said that he had contact “at the beginning of September”, but the emails he sent were dated 17 and 18 September. His suggestion that he somehow had a statutory duty to investigate this matter was obviously nonsense: p 100.[45]I had the distinct impression that Mr Rix was showing not only loyalty to Mr Arthurs, but signs of senility consistent with his age. He told me there was no age limit for building certifiers. If that is so, he is a strong argument for the imposition of one, lower than 83. Nevertheless, bearing in mind that Mr Isenbert essentially corroborated his evidence as to the emails and conversation (p 3-15), I do not consider his evidence was dishonest.
  1. [32]
    On 25 September 2013 the plaintiff’s solicitors wrote to the defendants’ solicitors to say that, on account of the defendants’ failure to comply with what was said to be a notice to remedy substantial breach supposedly sent on 26 August 2013, the plaintiff had terminated the contract effective immediately: Document 117. It was at this time that the engagement of Mr Rix’s company was terminated: p 85; Document 116. The following day, a second notice of withdrawal under the Act was sent to the plaintiff: Document 122.

Credibility

  1. [33]
    There is a conflict in the evidence, particularly between the defendants and Mr Dobson, as to the extent, timing and what passed between them, which I need to resolve on the basis of the credibility of the witnesses. The defendants struck me as straightforward, unsophisticated people, as might be expected given that they had been persuaded by Optima to enter into these transactions in the first place. They frequently did not seem to have a very clear recollection of just what had happened on particular occasions, and their evidence seemed to be more that certain things had happened which stuck in their minds, rather than necessarily a comprehensive description of the event. They seemed to me to make reasonable concessions in cross-examination, and in one matter there was some inconsistency between their evidence, which tends to confirm that their evidence was honest rather than a story which they had concocted together.[46]
  1. [34]
    Generally there was nothing in particular about Mr Dobson’s evidence or the way he gave evidence which affected his credibility, though there were some aspects of his evidence which struck me as implausible. For example, his failure to take photographs of what he said was the damage done when he went to the site on 31 July seems odd to me. As well, he said that he gave a copy of Exhibit 19 to the defendants without having been asked to do so by Mr Arthurs, but really did not give a plausible explanation for why he would have done such a thing without an instruction to do so from Mr Arthurs. That he would give a copy of Exhibit 19 to Mr Isenbert, just to give him the “heads up” as he put it, without pointing out to Mr Isenbert the significance of his doing so, that is to say, what effect this was supposed to have on Mr Isenbert, also seems odd. All he would admit to was that he recommended that Mr Isenbert obtained independent legal advice (p 2-85) but he did not say what it was that he was to get independent legal advice about.
  1. [35]
    There does not seem to be any point in giving Mr Isenbert advance notice of a claim which is going to be brought against him unless it is with a view to persuading him to do something in response to that notice. Yet there was not even a demand to pay up this money otherwise legal proceedings would be taken. In short, Mr Dobson did not either give evidence of any plausible reason for providing this document spontaneously to Mr Isenbert, or of his having said when it was handed over anything which would provide a plausible reason for doing so.
  1. [36]
    There was also the consideration that, although Mr Dobson had a copy of the contract signed by Mr Arthurs (Exhibit 40) which he said he took with him when he went to see Mr Isenbert on 28 July, with a view to showing him certain things in it which he had highlighted, he denied that he provided Mr Isenbert with a copy of the contract, specifically the copy which became Exhibit 42. Yet on 7 September 2013, Mr Isenbert faxed to his solicitors that document under cover of a note that “this is the contract that was given to me by the builder on Thursday”: Exhibit 43, which includes a transmission report dated 7 September 2013. This is not just a copy of the contract signed by Mr Arthurs, which on the defendants evidence they did not have themselves until Mr Dobson gave it to them,[47]but a copy which is highlighted in very much the same way as Mr Dobson said he highlighted Exhibit 40. There is one minor difference, which could easily be explained by a lack of care when transferring the highlighting on the original to the highlighting on the copy. On Mr Dobson’s account Mr Isenbert paid no real attention to Exhibit 40 when they were together. Mr Dobson’s version does not explain how Mr Isenbert could have obtained an only slightly inaccurate understanding of what parts of Exhibit 40 had been highlighted by Mr Dobson. In short, Exhibit 43 could not exist unless it was a copy of the contract, highlighted by Mr Dobson as was Exhibit 42, and given to Mr Isenbert. If that is so, it follows that Mr Dobson’s denial of having done so is false.
  1. [37]
    There is also the consideration that it seems to me strange that Mr Isenbert would tell his solicitors that the contract was given to him by Mr Dobson on Thursday, i.e. on 5 September, if in fact it had been given to him at some time in late July. It is clear that the solicitors in late July were conscious of the significance of whether or not the defendants had been provided with a copy of the contract, and this must have been something they would have been asking the defendants about. In those circumstances, one would expect the defendants to be telling their solicitors promptly as soon as they got a copy of the contract, which is what they did by Exhibit 43 if it had been given to them on 5 September. That supports their evidence that there was a visit on 5 September, and tends to falsify the denial of such a visit by Mr Dobson, whose evidence in this respect was corroborated by Mr Arthurs. That suggests that both of those witnesses are not reliable.
  1. [38]
    There is also the consideration that Mr Isenbert made a diary note dated 5 September to the effect that Mr Dobson came to their house, which gives a time as 9:00 am, and advised them that the contract with the plaintiff was still valid and not to sign a second contract as they would be liable for payment on both: Exhibit 44. In September 2013 Mr Dobson was using a mobile phone on the plaintiff’s account. The bill issued 16 September 2013 became Exhibit 24, and shows on p 19 calls made on 5 September on that mobile number between 7:34 am and 8:26 pm. Each call records an “origin”, presumably the mobile phone tower through which the phone was operating at the time of the call. At 8:01 and 8:04 am the origin is shown as Bucasia, which is located between Mackay and Shoal Point, close to and a little to the northeast of Eimeo, where the defendants live.[48]At 8:27 am there was a call showing Mackay as the origin, and at 10:20 am there was a call with the origin Hay Point,[49]while at 11:28-11:49 am there were three calls with an origin Sarina or Sarina South. There were then a series of calls beginning at 12:56 pm with the origin Mackay, followed at 3:49 pm with one at South Mackay,[50]and from 3:56 pm five at Mackay East. There is nothing in that list of origins which would be inconsistent with Mr Dobson having been at Eimeo at around 9:00 am, but they are inconsistent with their being in Sarina by 10:00 am (p 67) and not being back at Mackay until about 3:00 pm (p 66).  
  1. [39]
    Mr Arthurs’ mobile phone records are in the same Exhibit, and on page six there were a number of calls made on 5 September, 8:35 am, 12:54 pm, 2:11 pm, and 2:33 pm, all showing an origin of Mackay.[51]The next call was at 7:09 pm at Slacks Creek. The origins listed for Mr Arthurs’ phone are not inconsistent with his having been to Hay Point and Sarina with Mr Dobson on 5 September, at the times indicated in Exhibit 24, but this exhibit appears to be inconsistent with Mr Dobson’s evidence about the extent of time that he spent in Hay Point and Sarina that day.
  1. [40]
    Mr Dobson denied the conversations recorded by the defendants in contemporaneous notes on 29 August 2013 and 5 September 2013, and that he said most of the things recorded on the contemporaneous note for the visit on 20 September 2013. Mr Dobson had no contemporaneous notes to support his accounts of when he said he visited the defendants, and what he said passed on each occasion, and I think the existence of the contemporaneous notes bolsters the credibility of the defendants. This is particularly the case where it would not have been obvious to them at the time that there would have been any particular significance to them in their fabricating notes of conversations with Mr Dobson which did not occur. Overall therefore in relation to the interactions between the defendants and Mr Dobson, I prefer the evidence of the defendants.
  1. [41]
    This has some implication for the evidence of Mr Arthurs, since there are aspects of Mr Arthurs evidence which are inconsistent with the defendants’ version of their interactions with Mr Dobson. For example, Mr Arthurs cannot have been told by Mr Dobson on 30 July that he had been told by the defendants that they were staying with Optima if, as I find, there was no contact between the defendants and Mr Dobson at that stage. The notion that thereafter Mr Arthurs treated the contract as being at an end for this reason[52]is also difficult to reconcile with other contemporaneous documents. For example, at 1.00 pm that day the plaintiff’s solicitors emailed a letter to the defendants asking them not to make payments to Optima but to pay “all future progress payments” into the plaintiff’s bank account, details of which were provided: Document 99. There is nothing in that letter to suggest that at that time the solicitors were aware of any attitude by the plaintiff that the contract was at an end. It may be that that was formed too late in the day for that letter to be intercepted. There was however also a letter sent by the plaintiff’s solicitors to the defendants’ solicitors, in relation to this and other matters, on 5 August 2013: Document 104. That letter contained nothing suggesting that the plaintiff regarded this contract as being at an end, and parts of it are clearly inconsistent with that, such as an assertion that no further payments should be made to Optima.
  1. [42]
    The email Mr Arthurs composed and sent personally, Document 105, said nothing about any supposed contact between the defendants and Mr Dobson, nor does it contain anything which is consistent with the notion that Mr Arthurs had decided that the plaintiff was not going to be proceeding with the building contract with the defendants; on the contrary in the second last paragraph he said “please note I am ready, willing and able to proceed with my obligations under the domestic building contract.” That is on its face clearly inconsistent with the notion that, so far as he was concerned, since 30 July the contract was at an end, and indeed his evidence at p 81 that as at this date he was not intending to construct the dwelling. His explanation, that he considered that the defendants were liable under the contract for breach of it, is not what he said in the letter.
  1. [43]
    The letter of 25 September 2013 from the plaintiff’s solicitors advising that their client had terminated the contract effective immediately, Document 117, is inconsistent with the notion that the plaintiff terminated the contract on 30 July. It is however consistent with Mr Arthurs having sent Exhibit 19 to Mr Dobson for him to deliver it to the defendants, to deter them from abandoning the contract. Mr Dobson was not involved in costings, and so Mr Arthurs explanation for doing this, that he wanted Mr Dobson to check the costings (p 68), is implausible, particularly in circumstances where there was no evidence from either of them that Mr Dobson did in fact do so, and drew to Mr Arthur’s attention the fact that one part of the document was wrong. It refers to what is supposed to be the cost of standing down subcontractors, but it gives the cost for 12 contracts, rather than just this one: p 83. This error greatly inflated the total “claim”. In any case, to be claiming the cost of standing down subcontractors is consistent with a claim for damages for delay, and inconsistent with an assertion that the contract was treated as terminated on 30 July.[53]
  1. [44]
    The evidence that Exhibit 19 was prepared for sending to the solicitors (p 67) is difficult to reconcile with the fact that it is completely different from the amounts claimed as damages for breach of contract in the initial statement of claim filed on 2 October 2013.[54]There is some similarity in the total claimed, but that is because the statement of claim asserted that the plaintiff had lost profit on the contract of the order of $116,000. Exhibit 19 looks like a deliberately exaggerated assessment of the plaintiff’s supposed loss, delivered with a view to persuading the defendants to have the plaintiff build the house on the land. It was at about this time that Mr Rix emailed and spoke to the defendants. Again, the content of his communications was clearly an attempt to pressure the defendants into staying with the plaintiff. It is a remarkable coincidence if this occurred at about the same time as Mr Dobson dropped off Exhibit 19, if both were not part of a last attempt by Mr Arthurs to save this contract. It is only when that attempt failed that the letter Document 117 was sent by the solicitors on 25 September, reflecting Mr Arthur’s final abandonment of the contract.
  1. [45]
    It seems to me that the contemporaneous documents are quite inconsistent with the evidence Mr Arthurs gave to me, and that is a matter which reflects adversely on his credit. The fact that he would put together and have given to the defendants the document in terms of Exhibit 19 is also something which reflects badly on his character, as it is plainly exaggerated, and indeed much the same can be said for the initial claim in the statement of claim. The assertion that the plaintiff lost profit of over $116,000 on a contract where the plaintiff was only ever going to get $240,000 is obviously fanciful.
  1. [46]
    There is also the inconsistency between his evidence that it was “exactly right” that when he sent the invoice for the deposit he did not intend to commence construction unless the deposit was paid (p 78) and his evidence that various subcontractors were programmed to start work on 29 July (p 62), as arranged earlier in 2013 by Mr Dobson: p 2-55, 56. But he said it was only after he was told by Mr Dobson on 30 July that the defendants were staying with Optima that he called off the work: p 66. That implies that, but for what he was told by Mr Dobson, work would have gone ahead on the site, which contradicts his evidence at p 78. Conversely, the failure to start work on 29 July, and subsequently, and cancelling material, can be explained by the non-payment of the deposit, without any such conversation on 30 July.
  1. [47]
    There is also the consideration that the effect of the arrangement between the plaintiff and Optima was essentially to bring into existence a series of contracts between the plaintiff and those who were sufficiently gullible to be taken in by Optima’s sales technique, under which the amount to be paid to the plaintiff to build the house that was to be built on their land, and hence presumably the value of that house, had been substantially, and perhaps fraudulently, inflated. The customers were thereby cheated out of the difference, since they were never told the amount that was being paid as a kickback to Optima.[55]Mr Arthurs conceded that there were in the order of 60 to 70 of these contracts involved (p 70), and if the kickback of over $57,000 paid in this case was typical, the customers overall were cheated out of about $4 million. Someone who would be willing to participate in this sort of industrial scale deception is unlikely to be above a little perjury.
  1. [48]
    By the time of the trial, Mr Arthurs had a motive to invent the conversations on and before 30 July with the defendants, because the first notice of withdrawal under the Act was given on 1 August. The main argument presented by the plaintiff at the trial was that the contract was validly terminated by the plaintiff for the defendants’ breach before the first notice under the Act was given, preserving its right to damages. That argument was based entirely on the supposed conversations between Mr Dobson and the defendants on 27 – 30 July, and Mr Arthurs’ reaction to them, which are not supported by any contemporaneous document, and not mentioned in the original statement of claim filed 2 October 2013 or the original reply filed 22 November 2013.
  1. [49]
    Overall therefore I am not prepared to regard Mr Arthurs as a reliable, or indeed honest, witness, and in general I am not prepared to accept his evidence unless it is supported by contemporaneous documents, or other reliable evidence, or it is otherwise inherently likely. The same applies to Mr Dobson. I find that events unfolded as set out in the contemporaneous documents, and in the evidence of the defendants.

Plaintiff’s statement of claim

  1. [50]
    There is nothing that I need to resolve in relation to paragraphs 1 and 2. Paragraph 3(a) alleged that a Mr Ross and a Ramsey were involved in some business. There was evidence that there was a Mr Ross and a Mr Ramsay who had some association with Optima, and in that sense they were involved in the business of selling house and land packages to members of the public. Subparagraph (b) then referred to the business “carried on by Mr Ross and Mr Ramsay”, but there was no evidence that either of them carried on any business, as distinct from the business (or businesses) carried on by the Optima group of companies. This is a point taken in the defence, and I think that it is valid. The same difficulty arises in relation to paragraph 3(c), and it follows that the rest of paragraph 3 was not made out. There is however one allegation within paragraph 3 which requires some further attention, because it was central to one of the matters particularly in issue in the proceeding.

Agency of Optima

  1. [51]
    Paragraph 3(b)(v) alleged that the business included acting on behalf of such investors, which they referred to as clients, to complete all necessary contracts and other documentation in respect of such house and land packages. This allegation recurs. For example, in paragraph 13(f) it is alleged that:

“The defendants authorised Mr Ross and/or Mr Ramsay and/or the Optima entities and/or the Optima personnel[56] to act on their behalf as their agent:

  1. (i)
    to receive the building contract executed by the plaintiff, and to communicate to the defendants the receipt of the executed building contract;
  1. (ii)
    to communicate on behalf of the defendants with the plaintiff in relation to matters regarding the land contract, the building contract and construction work;
  1. (iii)
    to forward the executed land contract, the executed building contract and the associated documentation to the defendants’ financier;
  1. (iv)
    in respect of the matters pleaded in paragraph 3(b)(v) hereof.”[57]
  1. [52]
    These allegations are very much in issue, except that it is admitted that OLS acted as finance broker for the defendants: defence para 13(a). The very vagueness of the allegation in the plaintiff’s pleading signals what was in fact the case, that there was no evidence of any express creation of any agency, either orally or in writing, by the defendants in favour of any company in the Optima Group, or for that matter any individual associated with Optima in any way, other than in relation to finance broking. The plaintiff does not point to any document by which an agency is created, nor have I noticed any such document.
  1. [53]
    By way of contrast, Document 2 contained an express acknowledgement that Optima Homes (Australia) Pty Ltd is not the builder and acts as agent on behalf of the builder for the purposes of the domestic building contract: p 112. That was consistent with the system as explained, and particularly that the builder would have no direct contact with the customers of Optima. It was an essential element of the Optima Scheme that Optima, in arranging for the building contract to be entered into, was acting as agent for the builder, and not as agent for the customers, because if Optima were acting as agent for the customers, the receipt by it of the substantial kickbacks from the building contracts would appear to be a criminal offence under s 442B or s 442E of the Criminal Code.[58]  The relevant paragraph in the contract notes appears to have been deliberately formulated to ensure that the factual position was taken outside the operation of those sections.[59]Given that the size of the kickback was not to be disclosed to customers, it was essential for the operation of the Optima system for Optima not to be an agent for the customers in relation to the building contracts.
  1. [54]
    This would also explain why there was some effort made to keep the finance broking company, OLS, as a separate entity, even to the point of putting it in a different part of the Optima offices.[60]As finance broker that company was acting as agent for the defendants once it was engaged by them to do so. The system involved the company offering its services as finance broker to customers who had been signed up after the contract was signed, and it was then a matter for the customers to decide whether or not to take up the offer. In the present case, that company was engaged as finance brokers, and it was therefore the agent of the defendants for that purpose. I will come to that matter later.
  1. [55]
    This is of some importance, because agency is generally not something which can be unilaterally thrust upon a prospective agent. The ordinary way in which an agency is created is by agreement between the principal and the agent, which requires at least the assent of the agent.[61]In the present case, there was no evidence of any express conferring of authority by the defendants on any other company, or person, nor any evidence of any express assent by such company or person to the existence of an agency. Nor was there evidence of anything that the defendants actually did by which they objectively manifested an intention that some Optima company or person should be their agent in relation to the building contract, nor was there any purported acting as agent by any other Optima company or person. It is impossible in these circumstances for the existence of an agency relationship to be implied.
  1. [56]
    As a general proposition, if a person acts as if another person is the first person’s agent for some purpose, and the other person acts as if he is the first person’s agent for that purpose, the existence of the agency will be implied.[62]Again, there was no act of either defendant identified which involved their acting specifically as if Optima was an agent for the defendants, rather than as, with regard to the building contract, an agent for the plaintiff, or simply on its own behalf as a marketer of house and land packages to people like the defendants. There was certainly no evidence that anybody on behalf of Optima purported to act as agent for the defendants in relation to the building contract.
  1. [57]
    The plaintiff’s case placed some reliance on certain statements made by Mr Isenbert in the course of cross-examination. He said at p 3-26 that the impression he was given was that “they [Optima] would handle everything for us,” that that was their profession and that he thought it was part of their profession to take care of any requirements in relation to the building contract documentation. The difficulty with this evidence is that Mr Isenbert was at the relevant time under a fundamental misapprehension as to the nature of the contract that he had entered into: he thought that the effect of the documents he signed was that the defendants had made a contract with Optima for the house to be built. Indeed, even when his attention had been drawn on 27 July to the reference to the plaintiff’s name as the builder in the contract, he still appeared to retain the view that the contract was with Optima, even if it provided that the house would actually be built by the plaintiff. He acknowledged that, as a result of the discussion with Mr Arthurs on 27 July, he knew that Mr Arthurs must have been the builder (p 3-37), but he did not ever acknowledge that at any relevant time he believed that the building contract he had entered into was with the plaintiff rather than with Optima. In addition, he accepted what he was told by Optima, sometime before 27 July 2013, that the first contract could be disregarded and that there was a new contract to be signed. Hence by the time he spoke to Mr Arthurs, the point was academic as far as he was concerned because the original contract was no longer relevant: p 3-37.
  1. [58]
    The evidence of Mr Isenbert is to the effect that as far as he was concerned he had contracted with Optima for it to have a house constructed on the defendants’ land. That was not a correct view of the legal position, though it is an understandable mistake given the way the building contract was dressed up with Optima materials. In this context, his understanding of the situation, and his expectation of what Optima would do, being predicated on an incorrect understanding of the legal position, cannot provide a basis for a conferral of authority on some Optima entity to act as the defendants’ agent for the purposes of a contract which he did not know existed.
  1. [59]
    Mrs Isenbert’s position was essentially similar, although she was made aware of the fact that the builder was the plaintiff, and that Mr Arthur was going to sign the contract. Her understanding was that Optima was providing them with a package deal, under which they would organise everything: p 3-77. She later clarified that the package as the house and land for them to rent out. Optima were in effect providing her with a product in the form of a rental house: p 3-82. She conceded that Mr Ramsay had said to them that he had to take the contract back to the builder to sign, but he did not say that it would be returned to them: p 3-75. Her position was that her husband handled everything, though occasionally she would speak to someone from Optima, such as Sandy, when they telephoned: p 3-76. Essentially she left everything to her husband and Optima: p 3-77. In this situation, although Mrs Isenbert was expecting that Optima would organise the house for them, it does not follow that her intention at the time was that they would do so on behalf of them, rather than simply as part of their business of putting together the package that they were supplying to the defendants.
  1. [60]
    Mrs Isenbert was never asked directly whether at the time of signing the contract she understood that the other party to the building contract that she and her husband were entering into was the plaintiff rather than Optima, but if she understood that Optima was supplying them with the house and land package, that would be consistent with her understanding. Again, if that was her understanding of the position, her intention would not have been to create anything in the nature of an agency relationship between her and Optima since the positon of Optima as far as she was concerned was that of vendor or supplier.
  1. [61]
    After the contract was signed, the only thing that Mr Isenbert did was to ring up Optima from time to time to find out what was happening and why building work had not yet started on their lot: p 3-6. That is consistent with his understanding that his arrangement was with Optima. The various excuses and explanations given, convincingly, to him came either from someone working for OLS, talking about how the finance application was progressing, or from someone from some other Optima entity in fact acting as agent for the plaintiff, though Mr Isenbert did not know that. There was certainly nothing in any of those actions by which any such person purported to act as agent for the defendants, so far as the evidence goes.
  1. [62]
    The contract after being signed by the defendant was sent by Optima to the plaintiff, but that was pursuant to the arrangement between Optima and the plaintiff, not something done as agent for the defendants. The contract was then returned by the plaintiff to Optima, because it was part of the arrangement between the plaintiff and Optima that the plaintiff would do so, rather than with a view to giving it to someone acting on behalf of the defendants, but that ultimately does not matter; what matters is whether the defendants had in some way authorised Optima to receive the signed building contract on their behalf. There was certainly no evidence of any actual intention on the part of the defendants that the signed building contract would be received and held by Optima specifically on their behalf, and no manifestation of that intention.[63]They had been told by the Optima salesman that the signed contract would be sent to them, and the correct interpretation of the documentation entered into by them was that, for Optima to send them a copy of the executed contract would be the act of Optima as agent for the plaintiff. Mr Isenbert had no recollection of having any particular intention at the relevant time as to what was to happen to the executed contract: p 3-22. That does not amount to some sort of implied intention that the executed contract would be received and held on his behalf by Optima.
  1. [63]
    It must be remembered that Optima had a considerable interest in the building contract being completed, because it was getting over $57,000 from that process, and that explains why Optima was liaising with the plaintiff about things like the progress of the subdivision, and assisting the plaintiff by, for example, giving advice on how to satisfy the requirements of the developer. This may have facilitated the plaintiff’s work under the contract, and may even have satisfied in practice specific contractual obligations of the defendants, but that does not mean that Optima was doing things on behalf of the defendants, rather than in its own interest. The defendants did not ask Optima to do things on their behalf, because, once they had signed the documents which Optima presented for signing with the contract, so far as they were aware there was nothing else for them to do apart from arranging finance to enable the contracts to be completed, part of which they did themselves, and for part of which they had the assistance of OLS.
  1. [64]
    There is in the circumstances of this case no reason to characterise what actually happened as the defendants’ acting as if Optima was their agent in relation to the building contract, and Optima acting as the defendants’ agent in relation to the building contract. The defendants did not demonstrate by their actions an intention that Optima would act as their agent, nor did Optima demonstrate by any of its actions an intention to accept that authority and act on it. There is also the consideration that Optima was expressly the agent of the plaintiff in relation to the building contract. It is possible for the same person to be the agent of two different parties to a transaction, but in circumstances where there is an express conferral of authority to act for one party, and there was good reason why the agent would be keen to avoid acting as agent for the other party, there would have to be evidence of acts which clearly indicated the existence of an agency relationship between the agent and the other party before a court would be justified in making such a finding.[64]Far from there being such clear evidence in this case, there is in fact no evidence. As well, a court will not readily infer such a relationship if it put the agent in a conflict of interest.[65]
  1. [65]
    The plaintiff relied on Permanent Trustee Co Ltd v O'Donnell [2009] NSWSC 902, where it was held that a finance broker was also the agent of a lender (or a loan provider) as well as the agent of the borrower. In that case there was a contract in writing between the broker and the lender, and a further oral agreement between them as to how the broker would behave, and as to functions of the lender that the broker would perform, and Price J found that the broker was also the agent of the lender, distinguishing a number of cases like Barker v GE Mortgage Solutions Pty Ltd [2013] QCA 137. It is sufficient to say that the facts in that case were very different from those in the present case. There was no control exercised by the defendants over Optima, and no arrangement between them for Optima to perform functions for the defendants. This case really stands as a example of how difficult it is to show that the agent of X is also the agent of Y.
  1. [66]
    The position is much the same as if A contracts with B to build a house for B, and then subcontracts the carpentry work to C. So far as B is concerned, it is A’s responsibility to organise everything, including the carpentry work, in order to supply the built house, but that does not mean that A becomes B’s agent for the purpose of the subcontract to C. Not everyone performing a task which is for the benefit of another will be an agent.[66]Of course, the actual legal positon here was that there was to be a contract directly between the defendants and the plaintiff, the equivalent of a contract in my example between B and C. But if in that situation there were a contract directly between B and C, for C to do the carpentry work necessary on the house that A was building, that would not necessarily make A B’s agent for the purpose of the contract between B and C. It could be arranged in that way, for example by providing that C would do the work as and when directed by B, and that A would give such directions on B’s behalf, but it would not have to be done that way, and the fact that A was responsible for delivering the entire house would not mean that A would have to be B’s agent for the purpose of the contract with C.
  1. [67]
    There are two difficulties in the way of the plaintiff’s argument about agency. The first is that the subjective expectation of both defendants was, clearly in the case of Mr Isenbert and quite possibly in the case of Mrs Isenbert, based on the misapprehension of the true relationship between the defendants and Optima in relation to the building contract. This in my view is an insecure foundation for the existence of any implied legal relationship. Apart from that, even if the defendants had at the time the necessary expectation or intention as a mental state, what matters is the manifestation of that intention by their words or deeds at the time. Even on the Boustead theory mentioned above, that agency is based on a unilateral manifestation of will,[67]the unilateral will must be made manifest for the agency to be created, not merely exist in the recesses of the mind or minds of the putative principals. There was simply no evidence of any manifestation of that will. Mrs Isenbert may have had an expectation that Optima would get the builder to sign the contract documents on her behalf, but she had no recollection of any express discussion to that effect at the time: p 3-78.
  1. [68]
    Accordingly I am not prepared to find that any Optima entity was the agent of the defendants for the purposes of the building contract, that is for the purposes of any contract between the plaintiff and the defendants. Specifically, I find that Optima was not the agent of the defendants for the purposes of the receipt of the copy of the contract required to be provided to them by the builder under the Act. I also find that communication to Optima of the fact that the contract had been executed by the plaintiff was not communication of acceptance of the defendants’ offer by the plaintiff.[68]   That leaves the separate question of whether the receipt of the contract by OLS, which was the agent of the defendants, amounted to a relevant receipt.
  1. [69]
    That depends on the scope of authority of OLS as agent for the defendants. The fact that an agent is engaged for a particular purpose means that the agency operates only for that purpose.[69]Agency is not a characteristic that the person has always in all circumstances and for all purposes.[70]It is always necessary to identify the scope of the agent’s authority.[71]
  1. [70]
    A finance broker acts as agent for the party seeking finance,[72]but only for the purpose of locating a financier; the finance broker does not have authority itself to enter into the financial transactions on behalf of the prospective borrowers. The position is analogous to a real estate agent having authority to locate potential purchasers for a parcel of land, but not having authority to make a contract with those purchasers binding on the vendor.[73]Hence a finance broker would have authority to communicate for the purpose of giving effect to that agency, and to receive communications for that purpose. But that does not mean that any communication received by the finance broker is thereby to be effective as a communication to the defendants; that depends on whether the communication was received within the scope of the agency, that is, to give effect to the purpose of the agency in locating a financier.
  1. [71]
    The witness from OLS said that financiers did not necessarily need to be provided with a fully executed copy of the building contract before they would agree to provide finance, though they might want it before any money was actually advanced under any agreement to lend money which had come into existence.[74]That is consistent with the absence of any evidence in the present case that a fully executed copy of the contract between the plaintiff and the defendants was ever in fact provided to any finance company, and in particular to the two financiers who ultimately approved the provision of finance for these contracts.[75]That indicates that it was relevant to the agency being exercised by OLS on behalf of the defendants for that company to receive a fully executed copy of the contract at some time, but it does not follow that OLS was the agent of the defendants to receive the communication of acceptance of the defendants’ offer for the purpose making a contract, or the defendants’ agent for the purpose of receiving the fully executed copy of the contract from the plaintiff  in discharge of its obligation under the Act.
  1. [72]
    If OLS did not have authority to enter into a finance contract on behalf of the defendants, it did not have authority to enter into any other contract on their behalf, and was therefore not their agent to receive the communication of the plaintiff’s acceptance. The position with regard to s 36 is also clear: that duty can be performed by the provision of a copy to the agent of the owner, but only to an agent who has the authority of the owner to receive the copy of the contract from the builder for that purpose. The section would not be satisfied by providing a copy to just anyone who happened to be an agent of the owner for some purpose. There is no reason to treat the authority of a finance broker as extending so far. Hence providing a copy to OLS was not the performance of the plaintiff’s statutory obligation under s 36 of the Act, and the day on which it was provided was not the day on which the owner received a copy of the signed contract for the purposes of s 72(5) of the Act.[76]
  1. [73]
    No money was ever in fact advanced by either lender, at least in relation to the plaintiff’s contract, as no money was ever paid to the plaintiff, and there was no evidence that either lender had ever sought at any relevant time to be provided with a fully executed copy of the building contract. In those circumstances it was never part of the function of OLS to be in possession of a copy of the building contract for the purposes of its agency. The attempt of the plaintiff to rely on the agency of OLS to make the receipt by that company of the fully executed contract receipt by the defendants for the purposes of the Act therefore fails.
  1. [74]
    Besides, there was no clear evidence specifically that OLS ever received the fully executed contract when it was returned by the plaintiff to Optima. Exhibit 13 was not sent by OLS, and Ms McAllister’s evidence suggested rather that a PDF copy of the contract would have been available to her if she needed it: p 2-23.[77]She did not deal with the credit union, so she did not send it a copy, and the correspondence from the bank she dealt with indicates that it never received such a copy. There was no evidence as to what ultimately happened to the original document. On the evidence, I would not find that OLS ever had possession of the fully executed contract.
  1. [75]
    It was submitted for the plaintiff that it was admitted in the defence para 10.7(a) that the contract came into the possession of OLS. That is not the effect of that pleading. Paragraph 10 of the statement of claim is a general allegation as to how the Optima system operated, so that any admission in response to any of it was directed to the general operation of the Optima system. A party cannot purport to admit something which has not been alleged. The relevant allegation is in paragraph 16(d)(ii) of the statement of claim, and the relevant (very narrow) admission, that OLS received the document, is in paragraph 16.4(b)ii of the defence.
  1. [76]
    Overall therefore I accept that OLS was the agent of the defendants for the purpose of finding a lender for them, but not otherwise, but that otherwise no Optima entity or person was the agent of the defendants for any purpose. In these circumstances, further differentiation of the various Optima companies is unnecessary.[78]It occurs to me that it would probably not assist the plaintiff to show that an Optima company was the agent of the defendants, if it was the Optima company which received the kickback, because then the contract would be unenforceable by the plaintiff on the ground of illegality. It is just as much an offence to pay an agent a secret commission as it is for an agent to receive one.

Further allegations

  1. [77]
    With regard to paragraph 5 of the statement of claim, I am prepared to find that Optima carried on its business and its personnel worked from 2245 The Parkway Sanctuary Cove, an address referred to by the witnesses and appearing on a number of Optima documents, but the relevance of this fact to the plaintiff’s claim never emerged. With regard to paragraph 6, there was evidence from Mr Arthurs of meeting with Mr Ross and Mr Ramsay, which he described as representatives of Optima homes, in February and July 2012, where he said that they told him most of the things referred to in paragraph 6, except of course there was no question of Mr Arthurs on either of those occasions making any agreement on behalf of the plaintiff, which was not then licenced by the BSA: p 21, 22. In the circumstances however I am not prepared to place much reliance on Mr Arthur’s evidence.
  1. [78]
    Document 85 is a letter written in July 2013 from Optima’s solicitors to the plaintiff’s solicitors, setting out a somewhat different position under which essentially Optima was providing services, initially to the partnership which involved Mr Davison and his company, including sourcing the relevant land, preparing the contracts and associated documentation and undertaking the marketing and sale of what were described as “house and land packages”: Document 85. That letter went on to say that “our client received fees for marketing, sales, customer services and associated administrative services provided to the partnership.” Optima’s position, as set out in that letter, was therefore that as far as it was concerned it was doing everything on behalf of the plaintiff. That is more consistent with the documentation, though if Optima was responsible for the preparation of that documentation, that is unsurprising.
  1. [79]
    I am not at all confident that a solicitor’s letter written in the context of a dispute between the plaintiff and Optima is the ideal source of a reliable account of the true relationship between the parties. Some indication of the practical workings of the relationship appears in Exhibits 2 and 4,[79]likely to be reliable. For present purposes I am prepared to find that, from November 2012, the relationship between the plaintiff and Optima was as set out in paragraphs [5] and [6] above. To the extent that paragraph 6 of the statement of claim goes beyond that, it has not been proved.
  1. [80]
    I am prepared to find that on or about 19 November 2012, the relationship between Mr Arthurs and the plaintiff on the one part and Mr Davison on the other part ceased, on the basis of Document 21. With regard to paragraph 8 of the statement of claim, the position is essentially the same as with paragraph 6: I am prepared to find that the arrangement between Optima and the plaintiff was as set out in paragraphs [5] and [6] above, but insofar as the paragraph goes further than that, I am not persuaded that it has been proved. In particular, paragraph 8(b) asserts that as part of the agreement the plaintiff would follow the process in respect of house and land packages set out in considerable detail in paragraph 9 of the statement of claim.
  1. [81]
    I have in my findings covered paragraph 9(a) and (b) so far as it relates to Optima and the plaintiff. As to the rest of that paragraph, there was no evidence from Mr Arthurs in relation to most of the remaining paragraphs, and at times Mr Arthurs gave evidence of something quite different. For example, paragraph 9(j) said that the plaintiff would send executed building contracts to Judy Whyman so that she could send them to the investor’s financiers, but Mr Arthur’s evidence was that they were to be sent back to Ms Whyman so that she could forward them to whoever she was going to forward them onto within Optima, p 1-31. The one exception to this was paragraph 9(k) as Mr Arthurs said that it was stressed that he was not to have direct contact with what counsel described as the investors: p 33. None of this detail is supported by the letter from the Optima solicitors, but Exhibit 4 is a contemporaneous record of what was discussed, and it supports the allegations in paragraph 9(c) to (i), and I find the facts in paragraph 9(c) to (i) proved on this basis. There is no evidence to support paragraph 9(j), which is not proved. 
  1. [82]
    Paragraph 10 then alleged that things were done, in effect, to give effect to that arrangement. Again my decision is that, so far as matters are set out in paragraphs [5] and [6], I am prepared to find that the arrangement between the plaintiff and Optima was carried into effect. Insofar as paragraph 10 goes further there is no reliable evidence to that effect and I am not persuaded that that was the case. There are some documents in Exhibit 1 which refer to transactions other than the one with the defendants, but sweeping generalisations such as in paragraph 10(f), (g) and (h), were entirely unsupported by evidence. Paragraph 10(d) contained a generalised assertion that the Optima entities (and/or Mr Ross, and/or Mr Ramsay, and/or the Optima personnel), acted as agent of the investors in certain respects. There was not a shred of evidence about what happened in relation to any other “investors”.[80]Paragraph 10(d) was not made out. Apart from that, the relevance of the allegation in paragraph 10 to the plaintiff’s claim in this proceeding is not apparent.
  1. [83]
    Paragraph 11 then alleged that the usual suspects sourced lot 533 for a house and land package and the defendants as potential purchasers, and marketed and sold such a package to the defendants. I am prepared to find that someone within Optima identified lot 533 as a suitable lot for their scheme. The defendants have made certain admissions in relation to paragraph 11. Apart from them I am prepared to find that Optima sourced the defendants as potential purchasers of a house and land package, and marketed such a package to them in respect of lot 533. That the two contracts, Documents 1 and 2, were signed by the defendants is admitted. Optima prepared the particular building contract signed by the defendants and certain other documents signed by them, collectively forming Document 2 in Exhibit 1. A number of those documents however obviously were not part of the actual contract for the construction of the building expressed as a contract between the plaintiff and the defendants.
  1. [84]
    With regard to paragraph 13, I find that Mr Randall witnessed the defendants’ signatures on the land contract, the building contract and other documents signed by them on that day; subject to that, paragraph 13(a) is not made out. There is some issue on the pleadings as to the content of the actual building contract signed by the defendants, as distinct from other separate documents which they signed at the same time. The actual building contract comprised the HIA form QC1 2003, plain language new home construction contract comprising the general conditions of cl 1-38, schedules 1, 2, 3 and 4 which form part of the contract (see p 120), and the plans and specifications,[81]being the specifications on p 113 and the plans on pp 115 and 116. The contract information in Annexure 2 does not form part of the contract: see schedule 1, p 128. The contract did not include any special conditions, with the sheet headed “Special Conditions” crossed out: p 127. Schedules 3 and 4 were physically present and initialled by the purchasers, but had not been completed, so there were presumably no excluded items or prime cost or provisional sum items and allowances.
  1. [85]
    With the contract, and executed or initialled by the defendants at the same time, were a document headed “Contract Optima Homes” which set out the price and the names, address and contact details of the defendants, and the site address (Document 2, p 110), a variation request form which was initialled but crossed out and was otherwise blank (p 111), a “contract notes form” which said various things including acknowledging and accepting that Optima Homes Australia Propriety Limited was acting as agent on behalf of the builder, which was signed by both the defendants (p 112), a document by which the defendants acknowledged that they had reviewed and accepted the proposed termite protection systems (p 169, presumably referring to the termite protection conditions of approval on p 168) and an authorisation addressed to “MJ Arthurs” to lodge and collect plans for Council approvals and fencing authorisation, which authorised him to sign and submit for building approval the contract and documentation relating to the construction of the property, to procure any relevant information regarding dividing boundary fences and to gather names and addresses for adjoining properties. Mr Arthurs’ address was stated as “Optima Homes 2245 The Parkway, Sanctuary Cove Queensland 4212”: p 170. A form allowing the builder to choose the colour scheme for the house: p 171.
  1. [86]
    The defendants also signed a series of progress payment tax invoices, prepared as invoices from Optima Homes Australia Propriety Limited, approved by the defendants and with provision for the builder also to approve: copies of these appear as part of Exhibit 42.[82]With the contract, but not specifically executed, were a sheet headed “Optima Homes” with a couple of coloured drawings showing the proposed house and the list of its features and inclusions (p 109) and another coloured drawing showing the layout of the proposed house, with some furniture in place: p 114.[83]These documents did not form part of the contract between the parties. To the extent that paragraph 13(d) goes further than this, it has not been proved.
  1. [87]
    With regard to paragraph 13(e), Mr Randall, a representative of Optima, took the executed contract so that it could be executed by the plaintiff, but I am not persuaded that it has been shown that either defendant provided the document to him for this; Mr Isenbert apparently had no intention that these be executed by the plaintiff, and Mrs Isenbert let him have it in order to give effect to the process of Optima providing them with a house and land package. For reasons given earlier, paragraph 13(f), another allegation of agency, is not made out. Subsequently, and pursuant to a further specific retainer,[84]OLS was engaged by the defendants as finance broker to assist them in obtaining finance to complete both contracts; otherwise paragraph 13(g) is not made out.
  1. [88]
    With regard to paragraph 14, for reasons given earlier, there was no agency relationship with the defendants involved, but I am prepared to find that soon after the contract was executed by the defendants it was posted to the plaintiff for execution, and for him to return to Optima, and that the other documents signed or initialled by the defendants, and a couple of other documents which were just with the contract, were also sent to the plaintiff. This was done pursuant to the arrangement between the plaintiff and Optima. I also find that on or about 19 December 2012, the plaintiff, by Mr Arthurs, executed the contract document and forwarded it to Optima, but for the reasons set out earlier, it was not sent to Optima as agent for the defendants, nor was it received by whoever received it at Optima in that capacity.
  1. [89]
    It was then pleaded in paragraph 15(c) that the plaintiff in this way communicated acceptance of the offer made by the defendants. Leaving aside the issue about whether anyone at Optima was an agent of the defendants for the purposes of receiving such communication, which I have already resolved against the plaintiff, there is also an issue raised in paragraph 15.4 of the defence as to whether the plaintiff really had accepted the defendants’ offer, or had made a counter-offer.

Was there a contract?

  1. [90]
    Mr Arthurs said that at the time he signed the contract he wrote on the floor plan “Please note kitchen configuration change, ensuite configuration change”: p 42; document 2, p 115. Mr Arthurs explained this on the basis that what he had in mind was a change to remove the return on that side of the walk-through kitchen which included the pantry and stove, which formed a short hall leading to bedrooms 1 and 2 (p 42), which was to be removed because there had been ceiling cracking associated with this in houses built in Mackay. There were also problems with the sliding door in the ensuite, and that was to be replaced by a swing door, with a change in the layout of the ensuite to accommodate this (p 43).[85]Mr Arthurs did not communicate with the defendants about this: p 42. None of the detailed changes referred to in Mr Arthurs’ evidence were however incorporated into the diagram at the time he signed it; all that happened was that a note was placed on the diagram stating that the kitchen and ensuite configurations had changed, in some undefined way.
  1. [91]
    If after one party signs a contract in writing and sends it to the other party, the other party makes an alteration to the contract in writing and signs it, that is not an acceptance of the offer constituted by signing and sending the contract in writing; it is a counter-offer, to enter into a contract in those different terms. “In order to create a contract an acceptance must be unqualified and it must accord with the terms of the offer: cf Davies v Smith (1938) 12 ALJ 260. That and other decisions show that the requirement of correspondence between offer and acceptance is one that is insisted upon with considerable strictness.”[86]There are many cases where that principle has been applied, sometimes without being expressly stated.[87]
  1. [92]
    The principle is sometimes stated as limited to a material variation, although that limitation was doubted in Outer Suburban Property Ltd v Clarke [1933] SASR 221 at 225 by the majority of the Full Court, where it was held that there was no contract for the sale of land when certain particulars required by statute for such a contract were inserted by the vendor’s agent in the contract form after it became an offer when the purchasers signed it, and before it was signed in purported acceptance by the vendor. In Evans Deakin, McPherson J said that, for a contract for the design and construction of a structure at a power plant, the material terms[88]were the work to be done and the price. The same would apply here, and the definition of the work to be done was the very thing which the plaintiff varied.
  1. [93]
    It is not to the point that the particular changes that Mr Arthurs had in mind were relatively minor, because they were not incorporated into the contract. By making this note on the diagram before he signed the contract, what he was proposing was not to construct the house in accordance with the offer, but to construct it with a differently configured kitchen and bathroom, where the difference was undefined. In these circumstances, it cannot be said that the difference is inconsequential, and there may be an argument for the proposition that the counter-offer from the plaintiff in this way was too uncertain to found a contract.[89]
  1. [94]
    The plaintiff relied on Universal Guarantee Pty Ltd v Carlile [1957] VR 68 at 73, but that decision involved quite different facts; it was in my opinion correctly described in a text as a case where a document containing new terms was sent in error after the offer had been accepted.[90]There have been cases where courts have held that there was a contract made because an ambiguous communication did on its true construction amount to unconditional acceptance of the offer. For example, in Carter v Hyde (1923) 33 CLR 115 it was held that a reference to an inventory in the acceptance of an offer to sell a hotel did not render it conditional, because properly construed the acceptance did correspond with the offer. This was characterised as a mere misdescription of the offer, not the addition of a qualification or condition to it: see p 122, 133. Another example is Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20 where it was held that an offer was accepted when the acceptance set out the offeree’s understanding of the effect of the offer, which did reproduce the offer. But if the acceptance sets out a particular understanding of the offer, and is construed as an acceptance only on that understanding, it is only a conditional acceptance, and there is no contract.[91]
  1. [95]
    The situation in this case is quite different. The effect of what Mr Arthurs did was that his purported acceptance was agreeing to construct the house only if there were (undefined) changes to the kitchen and ensuite layouts. This was not an unconditional acceptance of the defendants’ offer. As a result of making this change, Mr Arthurs’ execution of the contract on behalf of the plaintiff did not amount to acceptance by the plaintiff of the defendants’ offer. There was therefore no acceptance to communicate to the defendants, and no contract came into existence. The defendants were never asked to approve this change, so there was no counter-offer for them to accept. They did not even find out about it until much later, when a copy of the contract, including a copy of this page with Mr Arthurs’ note, was provided to the defendants by Mr Dobson on 5 September (Exhibit 42) and faxed by Mr Isenbert to their solicitors: Exhibit 43. It was not part of the plaintiff’s case that anything happened after that date which amounted to acceptance by the defendants of the counter-offer. It follows that a contract between the plaintiff and the defendants never came into existence, and for that reason the plaintiff’s claim must fail.
  1. [96]
    The plaintiff sought to resist this argument by pointing to the contract notes page, Document 2 at p 112, which contains a clause:

“As this contract may have been prepared based on the information available and not a site specific Contour and Detail Survey or Engineer assessed soil test and wind rating or detailed location of services and extent of slope then I/we agree to accept any minor plan alternations that are required provided they do not alter the floor size of the plan by more than 5 percent”. [sic]

  1. [97]
    It was submitted that the plan ultimately approved[92]had a floor area which was not more than 5 percent less than the floor size of the plan in the contract, and that is correct: the diagram in the contract had a total floor area, including the porch and alfresco areas, of 200.8 m2, and the diagram in the approved plans had a total area of 193.8 m2, which is within the 5 percent margin.[93]There are several reasons why this clause does not assist the plaintiff. In the first place, the wording of the clause shows that it was concerned with what the owners under the contract would accept by way of performance of the contract, rather than any consideration of whether the defendant’s offer could be changed by the plaintiff prior to acceptance. Secondly, by using the words “that are required,” it was necessary for any “minor plan alterations” to be related to one of the matters referred to in the clause, and there was no evidence that either the kitchen or ensuite configuration changes, or the adjustment to the length, had anything to do with any of those listed matters. Accordingly, these changes do not come within the scope of operation of that clause or the agreement constituted by the contract notes. In any case, the contract notes are obviously an agreement which is ancillary to, and dependant on, the building contract. Finally, because it purported to permit the builder to depart from the agreed plan without following the procedure for variation under the Act, it was void under the Act s 93(2).
  1. [98]
    In these circumstances, it does not matter whether anyone at Optima thought that the contract had been accepted, and whether Ms McAllister or anyone else told the defendants that the plaintiff had signed the contract, and hence communicated the idea that the plaintiff had accepted the defendants’ offer. Given the tenuous nature of the defendants’ recollection about this, and the fact that it was not the practice of Ms McAllister, who was the person dealing with the defendants on behalf of OLS, to advise customers of this fact unless she was directly asked, I am not persuaded that it is more probable than not that this was actually said in terms, though I am prepared to accept that someone at that company did inform the defendants that everything was now in place for the building to proceed, and that general statement necessarily implies that the defendants’ offer in the signed building contract had been accepted.[94]If the plaintiff had accepted the defendants’ offer by signing the contract, that would have been sufficient to communicate acceptance to the defendants.
  1. [99]
    It was submitted for the defendants that the fact that acceptance had been communicated by Optima was admitted on the pleadings: para 9. I do not think that is correct. Paragraph 16(b) of the statement of claim alleged that Optima notified the defendants that the plaintiff had executed and returned the building contract, as agent for plaintiff or defendants or both. The defence paragraph 16.2(b) admitted “the defendants were notified that the plaintiff had signed the [contract] from 14 February 2013, as is more particularly pleaded in paragraph (c) below,” and paragraph (c) pleaded notification on four fairly specific occasions, but denied the allegations of agency. The reply paragraph 16.3(a) purported to adopt the admission in paragraph 16.2(b), but paragraph 16.4(a) did not admit the allegations in paragraph 16.2(c). But the defendants had admitted notification as particularised in (c), and if (c) is in issue, there was no relevant admission to adopt.  There was in fact no evidence of any of the specific notifications in 16.2(c), so the issue was not resolved on the pleadings.[95]
  1. [100]
    I think it probable that their impression that they were told this in February 2013 arose from the fact that they had been told that everything was in place for the building to proceed, and they had in fact drawn the inference which I would regard as a reasonable and appropriate inference from such a statement, that the contract had been signed. Overall, paragraph 15(c) is not made out. With regard to paragraph 16, I accept that Optima received the document signed by the plaintiff, but did not do so as agent for the defendants; it did so as agent for the plaintiff. With regard to paragraph 16(b), I have dealt with the question of notification of the defendants, but again, that was done as agent for the plaintiff. There was no evidence that Optima provided the defendants with a copy of the building contract signed by the plaintiff and the defendants, as agent for anyone or otherwise, and paragraph 16(c) was not made out. There was also no evidence that a copy of the building contract signed by the plaintiff had ever been provided to OLS, though a copy may have been available to that company had that company wanted it. As discussed earlier, there was a limited admission in the defence paragraph 16.4(b)(ii). Apart from that, paragraph 16(d) was also not made out.

Further allegations

  1. [101]
    Paragraph 17 of the statement of claim was admitted: defence, para 17. Paragraph 18 pleaded certain terms of the building contract but because that expression is, in effect, defined in paragraph 12 in a way which I do not accept, I find that the building contract document signed by the defendants, constituted as found above and included within Document 2, identified the defendants as owners except for the specification sheet which referred to “client signature”. The contract identified the plaintiff as the builder except on p 9 of Schedule 1, the execution page, p 128, where the builder was identified as “Michael Arthurs”. The building contract also included the specifications. It did not include the provisions in paragraph 18(d) and (e), but they were included in the contract notes page also executed by the parties. With regard to paragraph 19, the building contract as I have found it to be contained the matters in paragraph 19(a)(i)-(iii), and that the house was to be constructed on lot 533. It provided in Part B of Schedule 2 for progress payments at the stages identified in paragraph 19(b), and the part of Schedule 1 headed “signatures” (p 128) provided as alleged in paragraph 19(c), the general conditions for contract included the provisions pleaded in paragraph 19(d), except in subparagraph (xvi), since the contract information statement Annexure 2 does not form part of the contract. In addition the contract provided as alleged in paragraph 19.4 of the defence: see p 120, p 154 cl 30.
  1. [102]
    With regard to the next part of the statement of claim, I doubt the facts alleged in paragraphs 20-31 are material to any cause of action asserted. Nevertheless, I shall deal with them. With regard to paragraph 20, Exhibit 11 purports to be, and I am prepared to accept that it is, an email from Sandy Elingford who described herself as client liaison Optima Wealth Solutions to the plaintiff in relation to the defendants’ house and land package, advising that finance was approved but was not yet unconditional and that she would advise when the settlement date was known, and attaching a scanned copy of the contract document which had been signed as found earlier,[96]a letter from Connective Home Loans dated 13 February 2013 addressed to the defendants and advising them of formal approval of a construction loan, a letter from Queensland Country Credit Union addressed to Mr Isenbert advising of approval on application for a line of credit which was not a formal offer of a loan, design guidelines and a deed of covenant (unexecuted), an easement schedule not relevant to the defendant’s land, a disclosure statement and disclosure plan which seem to incorporate various development approvals, an unexecuted deed of guarantee and indemnity, a set of special conditions supposedly forming part of a contract of sale and copies of some of the other documents also executed by the defendants at the time of signing the building contract. In other respects paragraph 20(c) was not made out.[97]There was no evidence to support any of the allegations in paragraph 20(d) which are not proved; specifically the email was not sent as agent for the defendants.
  1. [103]
    As to paragraph 21, Exhibit 12 proves that on 20 February 2013 Sandy Elingford sent to the plaintiff an email in relation to the defendants’ house and land package advising that finance was now unconditional and that she would advise of the settlement date once known. She asked Mr Arthurs to let her know if there was anything else they needed. There was no evidence as to the capacity in or the purpose for which the email was sent, but I find it was not sent on behalf of and with the authority of the defendants. There was no evidence that the defendants knew anything about this.
  1. [104]
    With regard to paragraph 22, paragraph (a) was admitted as was the fact that the email was sent on behalf of Optima Homes. But there was no evidence to support the proposition, and no reason to think, that that email was sent on behalf of and with the authority of the defendants. In those circumstances, there was no basis for the allegation that it was given pursuant to cl 6.1 of the general conditions of the building contract. There is otherwise no evidence to support the allegations in paragraph 22.
  1. [105]
    Paragraph 23(a) was admitted, and it was admitted that the email was sent on behalf of Optima Homes. There was no evidence otherwise about this email, so the other matters alleged in paragraph 23 are not proved. I am not satisfied that any such email was sent on behalf of or with the authority of the defendants, or in accordance with the provisions of cl 6.1 of the general conditions of the contract. As to paragraph 24, it was admitted that Sandra Elingford sent to the plaintiff and Mr Arthurs an email advising that the registration of the plan for Royal Sands, which included lot 533, had occurred and that settlement should occur about 11 June 2013, which email was sent on behalf of Optima homes; there was no evidence otherwise of that email, and the balance of the paragraph was not proved. It was not sent on behalf of or with the authority of the defendants or in accordance with cl 6.1 general conditions of contract. Paragraph 25(a), (b) and (c)(i) were admitted. Ms McAllister was in fact working for OLS, the defendants’ finance broker, and there is no reason to doubt that the letter and email was sent to her in that capacity. It follows that they were not sent to her as agent for the builder, and hence this was not something done in accordance with cl 6.1 of the general conditions of the building contract. Paragraph 25(d) is admitted, as was the fact that the email referred to therein was sent on behalf of Optima Homes; there was otherwise no evidence of this email and it was not proved.
  1. [106]
    Paragraph 26 of the statement of claim was admitted in paragraph 26 of the defence. As to paragraph 27 of the statement of claim, on 19 June 2013 Sandy Elingford sent the plaintiff an email advising that finance had settled: Document 75, as is admitted by the defendants. There was no evidence as to whether any and what letter was in fact attached to that email, although the email does refer to a letter being attached. It follows that paragraph 27(d) was not proved, but there was evidence that on 19 June 2013 Connective Home Loans wrote to Optima Homes advising them that settlement of the construction loan had occurred on 11 June 2013 and that they could now commence construction: Document 76. It is apparent from this document that it was not just Mr Isenbert who was labouring under the impression that it was Optima Homes that was the builder, since the whole tenor of this letter is that it is one written to a builder. For example, it sought a copy of “your builder’s licence”. The letter also sought copies of council approved plans, construction insurance, BSA certificate confirmation of warranty insurance and bank details for direct crediting, but did not seek a copy of the fully executed building contract. The letter suggests that Connective Home Loans had not seen even an unexecuted copy of the building contract, otherwise it would have known that Optima Homes was not the builder. The advice, and the forwarding of this letter to the plaintiff, if it occurred, were done by Optima pursuant to its arrangement with the plaintiff, and not on behalf of the defendants.
  1. [107]
    Paragraph 28 was proved by Document 83, except that the email and letter only purported to terminate the engagement of Optima to manage on behalf of the plaintiff the collection of progress payments. It is not necessary for the purposes of this trial to resolve any question of whether there was any wider agency than that in place between the plaintiff and Optima, and if so whether it was terminated by this letter, but the letter does not purport to do anything other than terminate the agency for collection of progress payments.[98]   Insofar as paragraph 28(b) alleged a termination of a wider agency, it has not been proved. Paragraphs 29 and 30 appear to refer to the notice and covering email Document 90, and are thereby proved subject to the qualification that the content of the advice was that Optima homes had ceased acting as collecting agent for “MJ Arthurs”.[99]
  1. [108]
    The proposition that the relationship between the plaintiff and Optima homes had been terminated completely, implied by paragraph 28(b), is inconsistent with the fact that on 22 July 2013 Mr Arthurs sent an email to Mr Ross of Optima listing 12 lots, stating that house contracts for those lots now had approval and were ready to start, and seeking conformation that they were unconditional and “ready for me to start.” In the case of lot 533, this was a little premature as Mr Rix did not sign the development application decision until 24 July 2013, a copy of which was sent to the defendants and the plaintiff on 25 July 2013: Document 91, see p 338. Further, the plaintiff had already been advised that finance had been approved for construction, though it is not clear whether the plaintiff, or Optima Homes on the plaintiff’s behalf, had by this time complied with the requirements set out by the lender in Document 76. Perhaps that was the point of this enquiry. In response Mr Ross sought a meeting, Document 87, and when told by Mr Arthurs that he had to attend a funeral on 23 July, said that they needed to meet to discuss the payment issue before they could move forward: Document 88. There was no evidence that they did meet after that email.
  1. [109]
    Paragraph 29 of the statement of claim alleged that there was a further email sent on 25 July 2013, but there was no evidence of any such document being sent to the defendants and that paragraph was not proved. It was admitted that on 27 July 2013 the plaintiff sent an email to the defendants attaching amended drawings for a house to be constructed on lot 533, and documents from the Building Services Authority and QBE Insurance (Australia) Ltd concerning lot 533, but the implied reliance in that paragraph on the existence of a valid building contract was denied. The proposition that this occurred “in accordance with the process”, that is the arrangement between the plaintiff and Optima,[100]is not correct; apart from anything else, the email was plainly inconsistent with that part of “the process” alleged in paragraph 9(k) of the statement of claim.
  1. [110]
    Paragraphs 32, 33 and 34 were essentially admitted, subject to appropriate qualifications as to the legal effect or context of the various factual matters alleged in those paragraphs. Those qualifications were appropriate. That the letter from the plaintiff’s solicitors referred to in paragraph 34 of the statement of claim contained the statement referred to in paragraph 34 of the defence was put in issue in the reply, the letter is not in evidence, so this has not been proved. Paragraph 35 seems to be concerned with matters of quantum, which are not currently being tried. The evidence shows that, before and during July 2013, the plaintiff undertook preparatory work with a view to building on the defendants’ land in accordance with the contract document the plaintiff had signed, and I am prepared to find to that extent. In terms of actually doing things on the block, this depends entirely on the evidence of Mr Arthurs and Mr Dobson, which I am not prepared to accept unless corroborated, but I do not consider that for the purposes of liability it is necessary to make any detailed findings about those matters.
  1. [111]
    With regard to paragraph 36, subparagraph (a) made certain allegations in relation to what was said to be a conversation between Mr Isenbert and Mr Dobson on 28 July 2013. No such conversation took place and this paragraph was not proved. I accept that there was a telephone call on 27 July 2013 from Mr Arthurs to Mr Isenbert, but accept Mr Isenbert’s evidence about the content of this call. I accept that Mr Arthurs introduced himself, and asked Mr Isenbert to go away and have a look at his copy of the contract, and that Mr Isenbert looked and found that the only copy he had in his possession was the unexecuted partial copy left with him when he signed the contract, Exhibit 28. He looked at that and saw Mr Arthurs’ name on that document, and told Mr Arthurs of this: p 3-8. Otherwise paragraph 36(b) was not proved.
  1. [112]
    With regard to paragraph 36(d), there was no such acknowledgement and the defendants had not in fact received a copy of the contract document executed by the plaintiff. There was no evidence that the defendants were aware that the plaintiff was doing and proposed to continue to do the things pleaded in paragraph 35, and I am not prepared to find that the defendants ought to have been aware of this. In view of the email from the plaintiff, Document 95, the defendants ought to have expected that the plaintiff would not commence construction unless and until the deposit amount referred to in the contract had been paid into the plaintiff’s account. With regard to paragraph 36(f), strictly speaking, the defendants did not do or purport to do any of the things referred to in that subparagraph, but I do not accept that there was any obligation on the defendants to do any of those things, and do not accept that a failure on their part to do any of those things has been shown to have any legal consequences.
  1. [113]
    Paragraph 36A, so far as it alleged the defendants in fact received a copy of the building contract executed on behalf of the plaintiff on 28 July 2013, has not been proved. No such document was received by the defendants on that day. The allegation that they “should be taken to have received” a copy of that document is meaningless, in circumstances where no facts have been proved which would lead to that conclusion. If this was intended to be based on the proposition that some agent of the defendants received the copy on that day, there was no evidence of that.
  1. [114]
    Paragraph 37(a) alleged that the building contract was a regulated contract within the meaning of s 9(1) of the Act. If a contract had come into existence between the parties, it would have been a regulated contract for the purposes of the Act.[101]Paragraph 37(b) then alleged that a copy of the building contract was given by the plaintiff to someone at Optima as agent for the defendants. For reasons I have given, nobody at Optima was an agent of the defendants for the purpose of receiving the copy of the building contract from the plaintiff. OLS was the agent of the defendants for a different purpose, but receipt of a copy of the contract by it was not receipt on behalf of the defendants for the purposes of the Act.
  1. [115]
    Paragraph 37(c) then alleged that some Optima person or entity gave the defendants a copy of the building contract in compliance with the Act “by July 2013”. There was no evidence of that, and I am prepared to find that no such copy was ever given to the defendants by Optima. Paragraph 37(d) alleged that the defendants had received a signed copy of the building contract for the purposes of s 72 of the Act. That was also not made out. No such copy of the signed contract was received by the defendants from the plaintiff in or prior to July 2013. I am prepared to find that prior to 17 July 2013 the defendants had assumed that the building contract had been signed by the other party to the contract, but insofar as paragraph 37(e) goes further than that, it was not made out. For reasons given earlier, paragraph 37(f) was not proved.
  1. [116]
    It was alleged in paragraph 37A that if, as I have found, Mr Dobson gave the defendants Exhibit 42 on 5 September 2013, then the document was a copy of the signed contract for the purposes of s 72 of the Act, so that 5 September 2013 was the receipt day for the purpose of that section. It was further alleged that, although Exhibit 42 did not include a copy of the standard HIA general conditions, in circumstances where those conditions were referred to in the signed document which was included within Exhibit 42, they were incorporated by reference, so that the failure to include them physically within the document provided did not mean that what had been received was not a copy of the signed contract. This argument does not assist the plaintiff. I consider that what is required by the reference in s 72 to a copy of the signed contract is a reference to a copy of whatever it was that was in fact signed as the contract between the parties. If the document executed by the parties does not physically incorporate the HIA general conditions, but incorporates them only by reference, then a copy of that document would be a copy of the signed contract for the purposes of s 72.[102]But where the document that was signed does incorporate those general conditions, it is a copy of the signed contract incorporating those general conditions which is referred to in s 72, and the receipt of which would satisfy s 72(5)(a)(i).
  1. [117]
    The contract information statement is the document appearing in Annexure 2 of the standard form, from p 160 in Document 2. This was not part of the contract, as mentioned earlier, but it was part of the documents when they were signed by the defendants,[103]and was with the contract when it was signed by Mr Arthurs, as shown by the fact that it is included in Exhibit 40. It was not however provided to the defendants by Mr Dobson on 5 September. A “receipt day” is the day on which the building owner receives both the copy of the signed contract and the copy of the appropriate contract information statement for the contract, or if they are received on different days the latter of the days. Under the Act s 40, the statement can be given to the owners before the contract is entered into, so a copy of this contract information statement for the contract could have been given on 28 November 2012, when the defendants signed the contract. What they in fact received, however, in Exhibit 28 was only the even numbered pages of the statement, which was therefore incomplete, and did not satisfy s 40 or s 72(5)(a) of the Act.
  1. [118]
    The significance of this depends on whether the statement was “received” for the purposes of s 72(5)(a)(ii) when the documents were presented to the defendants for execution by them, even though they did not get to keep that contract information statement. In my opinion, such transient possession was insufficient to satisfy s 40,[104]and that section was complied with only when the documents including the contract information statement were accessed through the dropbox by the defendants’ solicitor, on (or soon after) 19 September 2013: p 2-61. That was therefore the receipt date for the purposes of s 72 of the Act.

Estoppel

  1. [119]
    Paragraph 38 then purported to plead an estoppel against the defendants, against their denying that they received a copy of the contract by July 2013, or reliance on s 72 of the Act. There are several things I would say about this. In the first place this is a statutory right which exists as a form of consumer protection for those who enter into regulated building contracts, and accordingly this is one of those cases where in my view no estoppel will run against the exercise of a statutory right by the defendants. This is consumer protection legislation, and by s 93 the parties cannot contract out of this provision, which suggests that there can be no estoppel against it.[105]
  1. [120]
    The second thing is that, as a pleading, this is not a proper pleading of an estoppel, because it does not identify the representation made by the defendants to the plaintiff which it is alleged the plaintiff relied on to its detriment.[106]This is not just a deficiency of pleading, as there was no evidence of any representation by the defendants to the plaintiff at any time that they had received a copy of the signed contract, or for that matter that they would not exercise any right under s 72 of the Act. There was also no evidence that the plaintiff relied upon anything which might have been relevant to an estoppel.[107]
  1. [121]
    What was pleaded was that the plaintiff relied on the notification that finance was approved and that title to the land had been acquired, which it had not been told by or on behalf of the defendants, and which could not amount to a representation that the defendants had received a copy of the signed contract, or would not exercise their rights under s 72, and the matters pleaded in paragraph 36, most of which have not been proved, and none of which amounted to such a representation. There was also no evidence from Mr Arthurs that he in fact relied upon anything in particular in a way which would be relevant to paragraph 38. Finally, paragraph 38(e) does not properly plead detriment, since what is relevant is any detriment the plaintiff would suffer from the failure of the defendants to act in the way alleged to be subject to the estoppel, rather than incurring expense which would not have been incurred had the true situation been known.

First Notice of Withdrawal

  1. [122]
    Paragraph 38A of the statement of claim seeks to rely on s 73(3) of the Act, which excludes the right to withdraw from a regulated contract under s 72 in certain circumstances. It was alleged that the defendants received legal advice about the contract before entering into it. If in fact a contract had been entered into by Mr Arthurs signing the original of the contract included in Document 2 and that acceptance having been communicated to the defendants, for reasons I have given such acceptance had been effectively communicated in February 2013. Section 73(3)(a) suggests that what is relevant is whether the formal legal advice about the contract was received before the building owner did what was required by way of entering into the contract, in which case what would be relevant was any formal legal advice received prior to 28 November 2012.[108]There was no suggestion that any such advice was received.
  1. [123]
    Rather, the plaintiff sought to rely on what was said to be advice received from the solicitors prior to the time when the second contract, Exhibit 26, was signed, in connection with the defendants signing some document provided by the solicitors which was said to be a document signed with a view to bringing to an end any contract with the plaintiff. Necessarily there was very limited evidence about this, because the defendants did not wave legal profession privilege, and accordingly they could not be asked about the content of any advice received from the solicitors. Assuming however that there was some legal advice given to the defendants about the contract in July 2013, that advice was not given before the defendants entered into the contract, if that in fact occurred, and accordingly s 73(3) did not apply.[109]
  1. [124]
    On 1 August 2013 the defendants by their solicitors sent a letter to the plaintiff withdrawing from the building contract under s 72 of the Act: Document 101. There was no dispute in this proceeding that that letter was in fact received by the plaintiff. On the view I take of the matter, there was no contract between the parties from which the defendants could withdraw, but if I am wrong about that, and their contract had been made as a result of the plaintiff’s having executed the contract document included in Document 2, and the communication of that acceptance to the defendants in February 2013, the defendants were entitled to withdraw from the contract under s 72(3) on 1 August 2013. At that day there was no receipt day for the contract, since the defendants had not then received a copy of the signed contract, and five business days had elapsed since the contract was entered into. Accordingly, the defendants had a right to withdraw which was exercised by that letter, so that if before that time there was a building contract between the parties it was effectively brought to an end in that way.
  1. [125]
    The plaintiff relied on a number of factors said to prevent the notice given on that occasion from being effective. It was first alleged that the defendants had in fact received a readily legible copy of the signed contract prior to 1 August 2013, on the basis pleaded in paragraphs 15, 16, 36 and 37. Those allegations have been rejected and I am satisfied that the defendants had not received a copy of the signed contract prior to 1 August 2013. No estoppel has been made out. The withdrawal letter was effective notwithstanding the absence of receipt of the copy of the signed contract, because five business days had elapsed since the contract was entered into. The letter was therefore given within the time provided in s 72.
  1. [126]
    Paragraph 40(d) repeated an argument rejected in Heaysman (supra),[110]that the notice was invalid because it was not signed by the defendants personally. For the reasons given in that matter the notice was validly given by the solicitors as agents for the defendants. It was next submitted that the notice was not served in accordance with the provisions of the contract. The notice complied with the requirements of s 35(2). By s 75(1), to exercise the right under s 72 the building owner must do one of three things, one of which is serve a withdrawal notice on the building contractor in accordance with any provision in the contract providing for service of notice on the building contractor by the building owner. Clause 31 of the contract provided that a notice was deemed to be given and received if the notice was posted by ordinary pre-paid mail to the other party’s last known address, or sent by facsimile transmission to the party’s last known facsimile number.
  1. [127]
    The notice was in fact sent by facsimile transmission to fax number 07 3291 9216. Mr Arthurs confirmed that the plaintiff had at his principal place of business a facsimile machine with the fax number 3219 9216: p 70. Accordingly the number that the fax was sent to was the plaintiff’s fax number at the time and, since the defendants’ solicitors sent the fax to that number, it was a fax number known to them at that time. The notice was therefore sent in compliance with cl 31(c) of the contract. In any case, the notice was given for the purpose of s 75(1)(a) of the Act, bearing in mind the terms of s 39 of the Acts Interpretation Act 1954, which applies where the relevant expression used in another Act is “give”: subsection (2). The facsimile was sent to the registered office and principal place of business: p 70.[111]
  1. [128]
    It was further pleaded that the notice did not correctly identify the relevant land, because it was described as “lot 533 Galleon Circuit, Blacks Beach”. Section 75 of the Act does not require identification of the land, merely that the building owner withdraws from the contract. I doubt even the contract needs to be specified unless there is more than one contract between the parties, which was not the case here. There was in the circumstances no relevant ambiguity about the notice, and it complied with s 75. The arguments relied on by the plaintiff were therefore ineffective, and the notice validly exercised any right of withdrawal available under s 72. The matters alleged in paragraph 42 are therefore irrelevant.
  1. [129]
    A further matter relied on by the plaintiff as excluding the statutory right in s 72 is that the defendants had failed to pay the deposit in accordance with the contract, and were therefore in substantial breach of the contract and had repudiated the contract. In those circumstances it was submitted that they were not then able validly to terminate the contract. It is true that the defendants did not at any time pay the deposit provided for in the contract, and were therefore in breach of cl 4.2 which required the owner to pay the deposit when the owner signed the contract. The contract was subject to finance, but ordinarily that is not a provision which cuts across an obligation to pay a deposit. It appears however that it was part of the Optima system that deposits would not be paid until the finance came through and it was time to start building work,[112]because up until the relationship between the plaintiff and Optima broke down there was no hint anywhere in the evidence that the failure of the defendants to pay the deposit was a matter of any significance or concern on the part of the plaintiff, or for that matter Optima.
  1. [130]
    Nevertheless, the plaintiff did send the defendants an invoice for the deposit on 27 July 2013: Document 93. If there were a contract between the parties, it could be said that at that point any implied suspension or waiver of the obligation of the defendants to pay the deposit had come to an end. The invoice that was sent to the defendants specified payment terms of 7 days from the date of invoice, and stated that the due date was 2 August 2013. The plaintiff thereby in effect extended the time for payment of the deposit until 2 August 2013. Accordingly as at 1 August 2013 the defendants were not in breach of the contract in relation to non-payment of the deposit because the time for payment had been extended until the following day, and the failure to pay the deposit cannot be an impediment to the exercise of the right to terminate.
  1. [131]
    Even apart from that, s 72 is a statutory right which is not expressly predicated upon the absence of any breach, or indeed substantial breach, of the contract by the building owner. On its face, it is a right which is exercisable if the conditions for its exercise exist, regardless of any breach at or before that time by the owner. Accordingly even if there was a substantial breach of the contract by the defendants prior to 1 August 2013, that would not in my opinion prevent their exercise of the right given to them by the Act to withdraw from the contract.
  1. [132]
    In these circumstances, there is no real need for me to say anything further about paragraphs 42-45A in the statement of claim, but I will say something on a precautionary basis. I note that cl 28.2(b) of the HIA general conditions made a failure to pay the deposit a substantial breach of the contract.
  1. [133]
    Because of the significance of a deposit as an earnest of performance of the contract by the party liable to pay it, the ordinary consequence of a failure to pay the deposit is that the other party has a right immediately to terminate the contract.[113]The contract in cl 28 provides a somewhat different mechanism, in that if a party is in substantial breach of the contract the other party may give a written notice to remedy the breach, and if the breach is not remedied within 10 working days of receiving the notice, the other party may end the contract by a separate notice to that effect, unless within 5 working days of receiving the notice the party in substantial breach refers the question as to whether or not the other party has the right to end contract for determination by the Commercial and Consumer Tribunal: cl 28.3 – 28.5.[114]However, cl 28.9 preserves any other right of the other party if a party breaches, or repudiates, the contract, so presumably the common law right to terminate immediately was preserved. The only exercise of that right relied on by the plaintiff in the pleading was by a letter sent by the plaintiff’s solicitors on 25 September 2013: Document 117. This is a somewhat strange letter, purporting to exercise a contractual right to terminate which has not been shown to exist, but it would still be effective as the exercise of a right of termination arising at common law.[115]
  1. [134]
    The defendants alleged that the plaintiff waived the breach of failure to pay the deposit, by affirming the contract after the time for payment had arisen, with knowledge that the payment had not been made: defence paragraph 42.4. On 18 August 2013 Mr Arthurs, on behalf of the plaintiff, sent an email directly to the defendants by which he advised that he was ready, willing and able to proceed with his obligations under the contract, and invited the defendants to advise by 5.00pm the following day if they wished to maintain the purported withdrawal: Document 105. The plaintiff also had Mr Dobson attend the defendants’ residence on 5 September 2013 and provide them with a copy of the contract, and on that occasion he spoke of the contract as something which was still in existence between the plaintiff and the defendants. The emails sent by Mr Rix were also consistent with there being a contract still in existence between the plaintiff and the defendants, since they would be consistent with his having been told by the plaintiff that that was the situation, and having been asked to encourage the defendants to recognise and adhere to that contract. Finally, Mr Dobson’s visit to the defendants on 20 September when Exhibit 19 was provided was I think obviously with a view to giving the defendants a last chance to adhere to the contract otherwise action would be taken against them for damages, since there would be no other reason to provide them with such a document.
  1. [135]
    In these circumstances, if there were a contract between the parties and if it still subsisted after the notice on 1 August 2013, the failure of the defendants to take advantage of the extension given then to 2 August 2013 gave the plaintiff a right to terminate for non-payment of deposit, but it was a matter for the plaintiff’s election whether it terminated the contract or affirmed it in response to that right, and the plaintiff elected to affirm the contract. That affirmation was not made expressly on the basis that the deposit be paid within any particular time, so although the defendants’ breach of contract was continuing, the right to terminate for it had been lost, and there was no right to terminate on this basis to be exercised by the plaintiff on 25 September 2013.

Second Notice of Withdrawal

  1. [136]
    The statement of claim then dealt with what was described as the second purported withdrawal by the defendants, the second withdrawal notice given on 26 September 2013. This occurred after the defendants’ solicitors had accessed the electronic copy of the signed contract made available to them by Optima through the use of a dropbox facility.[116]This was the first occasion when the defendants, or their agent for that purpose, had been provided with a complete copy of the signed contract, so that it was a receipt day for the purposes of s 72. Accordingly, allowing for the intervention of a weekend, notice under that section could be given up to 26 September 2013, when the notice was in fact given. One of the ways in which that notice was given was by fax to the number 07 5677 0624, the fax number set out in Schedule 1 to the contract: Document 122, which was successfully transmitted: p 476. One of the things decided in the Heaysman cases (supra) was that notice given by fax to this number in this way was effective notice for the purpose of s 72.[117]The notice was given within 5 business days after the receipt date, and accordingly was potentially an effective exercise of the power in s 72(2) to withdraw from the contract. If there had been a contract between the parties, and it had not already come to an end, by this notice it was brought to an end.
  1. [137]
    The plaintiff relied in paragraph 47 on a number of matters as showing that this notice was not valid, but apart from the last of them these were the same as the matters relied on as showing that the notice on 1 August 2013 was not valid, and for the reasons given earlier those matters do not show any invalidity in this notice. The last matter relied on was that the contract had already been validly terminated by the plaintiff the previous day. That gives rise to an interesting question as to whether an owner can exercise a statutory right to withdraw from the contract after the time when the other party to the contract has terminated it, by accepting a repudiation of the contract by the owner. There is an important difference between the right to withdraw under the Act and the right to terminate for breach: in the former case, the termination is essentially ab initio, since the builder’s rights in such a situation are as specified by the Act, and are quite limited.[118]They do not include any right to sue for a breach occurring, or to enforce any obligation arising, prior to withdrawal. Since the whole purpose of a cooling off provision of this nature is in effect to give the building owner a short period of time for any change of mind about proceeding with the building contract, this would necessarily confer a right to terminate ab initio subject only to the statutory entitlement provided to the builder.
  1. [138]
    On the other hand, termination for breach leaves intact all rights arising under the contract prior to termination, including claims for damages of any breach which has occurred prior to that time.[119]The exercise of the statutory right to withdraw would therefore intercept any such claim, and it follows that there would be some point in the existence of a statutory right to withdraw in this way even if the contract had previously been terminated for breach by the builder. Nevertheless, the wording of s 72, where it speaks of the exercise of a right to withdraw from a contract, does suggest that there must be at the time the right is exercised a contract in existence from which the owner may withdraw. I suspect the position is simply that the legislature did not have in mind the possibility that the contract, having been entered into, might be terminated by the builder for breach before the cooling off period had even expired, though obviously if the builder fails to comply with a requirement of s 36 of the Act, a situation could easily arise where the right would exist for some time.
  1. [139]
    Ultimately it seems to me that the position is simply that the actual wording of the section implies that it can only apply while there is a contract in existence, and if this leaves a gap in the consumer protection provided by the section, that is a matter for the legislature.[120]If therefore, despite all of the findings I have already made, the true situation was that the building contract had come to an end by the termination of it by the plaintiff on 25 September 2013, then that would have prevented the valid exercise of the right to withdraw under s 72, because there was no longer a contract from which to withdraw. On the findings I have made however, that situation did not in fact arise.

Repudiation by the defendants

  1. [140]
    The next part of the statement of claim alleged repudiation and termination of the contract on a different basis. It was admitted that on 30 July 2013 the defendants engaged Optima Homes (Qld) Pty Ltd as builder to construct a house for them on lot 533: defence para 48, and see Exhibit 26. Paragraph 48A alleged that that Optima company (or another one) had certain plans and drawings prepared for building on that lot, but there was no evidence of that and that was not proved. In any case, the relevance of it did not emerge. Paragraph 48B alleged that certain things were said during a telephone conversation between Mr Isenbert and Mr Rix, but there was no evidence from either of those individuals to that effect,[121]so that paragraph was not proved. Paragraph 48C alleged certain things occurred during a conversation between Mr Dobson and Mr Isenbert on 30 July 2013 at the defendants’ residence. For reasons I have already given, there was no such conversation on that day, and this allegation was not proved. Paragraph 48D contained an allegation which logically should appear later in the pleading, and I will deal with it later.
  1. [141]
    Paragraph 49 alleged that on or before 30 July, the defendants personally or by their agents took control or possession of lot 533 from the plaintiff, or used the works on the lot, prior to paying the plaintiff the contract price and without obtaining the written consent of the plaintiff, and engaged another builder to construct the defendants’ house on the lot. There was no evidence that the defendants took control or possession of the lot out of the hands of the plaintiff at that time. There was evidence from Mr Dobson that on 31 July 2013 he went to the site and found it had been bulldozed and some things which he had put on the site had been pushed aside. There was no evidence that was done by or on behalf of the defendants.[122]There is however no other material to support Mr Dobson’s assertion, and for reasons I have given I do not regard Mr Dobson as a sufficiently reliable witness to be prepared to act on his evidence of this alone.
  1. [142]
    There was no question of taking control, possession or use of the works out of the hands of the plaintiff within cl 26 of the contract, because “the works” meant “the works to be carried out, completed and handed over to the owner in accordance with this contract,” that is to say the house which under the contract the plaintiff was to build on the lot.[123]Accepting that that could apply if only part of the house was on the lot if that part was taken possession of or used by the owner, there was at that time no part of the house actually on the lot, so what Mr Dobson described did not engage cl 26. Entering into a contract with Optima Homes to build something different on the lot also did not engage cl 26, so paragraph 49(b) was not proved. It follows that the plaintiff in paragraph 50 can rely only on the defendants’ having entered into a separate contract with another builder to build something different on the lot.
  1. [143]
    The issue therefore becomes whether entering into a contract with a builder for that builder to build something different on land which is already the subject of another contract with another builder amounts to repudiation of that other contract. The two contracts were inconsistent, in that it would not be possible for both homes to be built on the same parcel of land. A contract may be repudiated by conduct, if the conduct is such as to lead a reasonable person to the conclusion that the person so acting does not intend to fulfil his part of the contract.[124]I would think, for example, that if the vendor under a contract of sale of property also contracts to sell it to someone else, that amounts to repudiation of the first contract.[125]On the whole, it does seem to me that entering into a contract to build something different on their land meant that the defendants were evincing an intention not to go on with the contract with the plaintiff.[126]If there was a contract with the plaintiff at that time, therefore, the defendants were thereby repudiating it.
  1. [144]
    Repudiation by one party however does not of itself terminate the contract, since the other party does not have to accept the repudiation, but may elect to reject it and insist on performance.[127]It was submitted that in some circumstances a repudiation may have the effect that the other party has no choice but to terminate the contract, and in those circumstances communication of an election to rescind is not necessary to put an end to the contract. I was referred to a number of decisions: Poort v Development Underwriting (Victoria) Pty Ltd (No 2) [1977] VR 454 at 459; Cozi Pty Ltd v Bedi;[128]Ford v Lismore City Council.[129]What was said in Poort was that express or formal communication of the election to rescind was not necessary, relying on the statement of Dixon CJ in Holland v Wiltshire (1954) 90 CLR 409 at 416, that a vendor’s election to rescind for breach “was sufficiently manifested by his proceeding to advertise the property for sale, and by his selling it.”[130]In Cozi Poort was followed and it was held that a vendor accepted a purchaser’s repudiation without communication by contracting to sell the land to a third party, although there was a precautionary finding that there was effective communication in a letter a few days later. In Ford Allen J said at p 25 that all that was needed for termination for repudiation is “that the party not in default by his words or conduct manifests that he accepts the situation that the contract has been brought to an end by the conduct of the other party.” 
  1. [145]
    More recently the High Court has considered the requirements for an innocent party to elect to affirm or to rescind in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26. At 39 four members of the court, in a joint judgment, said: “The consequences of election may well be serious for the party electing; in particular, election involves the abandoning of a right that is available. A party can only be held to have elected ‘if he has so communicated his election to the other party in clear and unequivocal terms’.”[131]This passage has been cited as authoritative by the Court of Appeal.[132]So far as I am aware, it has never been reconsidered by the High Court. I regard this as a clear and authoritative statement that an election to terminate a contract for repudiation must be communicated to the other party. In so far as earlier decisions were to the contrary, they no longer represent the law. I reject the plaintiff’s submission on this point.
  1. [146]
    I accept that it would be correct to say that it was not open to the plaintiff in these circumstances to obtain specific performance of the contract, and therefore it is unlikely that a court would have granted an injunction against the defendants restraining them from having Optima Homes build on their land, even if the court had concluded that there was a valid building contract with the plaintiff at that time. In such a situation there may be no practical remedy for the innocent party except to accept the repudiation and sue for damages.[133]Nevertheless, the contract will remain in existence unless and until the innocent party terminates it.[134]I am not persuaded that in these circumstances a repudiatory act by the defendants had the effect of bringing the contract to an end before the plaintiff even knew of it, let alone exercised any election in response to it.
  1. [147]
    There was no evidence of when the plaintiff found out about the other contract, but Mr Rix said he found out in late August/early September that a different building approval had been granted in respect of the same parcel of land, so presumably the plaintiff found out at the latest at that time.[135]As mentioned above there had been conduct prior to and after then, on 18 August and 5 September, by which the plaintiff affirmed the contract. One other feature of the innocent party’s election confirmed in Immer (supra) was that the election will not be conclusive if made without knowledge of all relevant facts. The effect of this is that the right to terminate for the defendants’ repudiation by the new contract was not lost until the plaintiff knew of the new contract. The evidence does not show when that occurred, so it is not possible to conclude that anything which could amount to an election to affirm occurred between then and the purported termination on 25 September 2013. 
  1. [148]
    Once the plaintiff found out about the contract with Optima Homes, it had a right to terminate the contract if it was still then in existence. That right continued until it was exercised, or until the plaintiff elected to affirm the contract. Even if this might have been characterised as an act of futility on the plaintiff’s part,[136]it is difficult to see why it could not keep the contract on foot until it exercised its election to terminate for repudiation. Authoritative statements that on repudiation an innocent party has an election whether to terminate or affirm are in my opinion conclusive on this point. The contract continued, until one party terminated it. On 25 September, however, the plaintiff did communicate an election to terminate by notice to the solicitors for the defendants: Document 117. The plaintiff purported to terminate on a ground not shown to have been available, but that does not affect the validity of the termination.[137]
  1. [149]
    It follows that the contract did not come to an end automatically as a result of the execution by the defendants of Exhibit 26, or for that matter Optima Homes’ acceptance of that offer the following day. There had been no communication of an election by the plaintiff to terminate the contract communicated to the defendants between that time and 1 August 2013, on this or for that matter any other ground.
  1. [150]
    Mr Arthurs gave evidence that on 30 July 2013, after he was told by Mr Dobson that Mr Isenbert had told him that day that he was going to stay with Optima, to get everything off the site, and claimed that thereafter his intention was not to proceed with the contract. This cannot be relied on as an election to terminate because of the execution of the sale contract, for three reasons. First, because there is no evidence that it followed the execution of the sale contract. Second, because I do not accept that a conversation such as that occurred between Mr Isenbert and Mr Dobson on that day, and therefore Mr Dobson cannot have told Mr Arthurs about it, so Mr Arthurs cannot have formed such an intention on the basis of the conversation. Third, an election to terminate is something that requires communication to be effective, and there was no suggestion that any such election on 30 July was communicated to the defendants prior to the termination on 1 August, or indeed later.
  1. [151]
    It was alleged in paragraph 48D that the plaintiff accepted the repudiation by removing materials and equipment from lot 533 in late July or early August 2013. There was some evidence from Mr Dobson that material was removed from the site on and after 31 July, but for the reasons that I have stated I am not prepared to regard this evidence as sufficiently reliable to find that such a thing did occur. That is sufficient to deal with this allegation, though the mere removal of materials would not in itself have communicated an election to accept any repudiation by the defendants, so it could not be effective for that purpose.[138]
  1. [152]
    That leaves the question of whether the fact that the defendants had repudiated the contract in this way, and were therefore not ready, willing and able to comply with it, meant that they were not entitled to withdraw under s 72. As discussed earlier, there is in my opinion no reason to read into the clear terms of s 72 a limitation of this nature. In my opinion the defendants were entitled to exercise their right to withdraw under s 72 notwithstanding their repudiation of the contract. The notice of withdrawal on 1 August 2013 was valid. If however the contract had been still on foot on 25 September, the plaintiff’s termination of it that day would have been effective unless the plaintiff had elected to affirm the contract after it knew of the contract with Optima Homes. In these circumstances, the contract would not have survived to be terminated the following day by the second notice of withdrawal under s 72.
  1. [153]
    The next part of the statement of claim, in paragraphs 51B to 51F, alleged that the correct interpretation of what happened when the defendants signed the contract and other documents in Document 2, and presumably subsequently, was that there was a contract between the defendants and Optima under which the defendants promised to confer a benefit on the plaintiff, by paying the plaintiff for the house to be built on the land, which gave rise to an enforceable duty to perform the promise under the Property Law Act 1974 s 55.  This characterisation of the transaction, which the plaintiff did not seek to support in argument, is obviously entirely misconceived. Whatever Mr Isenbert might have thought at the time, there was actually no contract between the defendants and any Optima entity, and it follows that there could not have been a contract for the benefit of the plaintiff as a third party beneficiary.[139]
  1. [154]
    Finally, it was admitted that on 27 August 2013 the plaintiff lodged a caveat claiming an interest in the defendants’ land. The plaintiff alleged that the defendants withdrew the caveat on 23 August 2014, whereas in the defence the defendants alleged that it was removed by the Registrar pursuant to an order of the court. I made such an order on 25 July 2014, which order was taken out on 11 August 2014. I find that the caveat was removed pursuant to that order.
  1. [155]
    That addresses all of the matters necessary to be addressed in the plaintiff’s pleading in order to resolve the question of liability. It is resolved against the plaintiff, and its claim is dismissed. I shall invite submissions as to costs when these reasons are delivered, but assume that they will follow the event.

Footnotes

[1]  Exhibit 1 Document 1. Exhibit 1 is the Agreed Trial Bundle, and I shall refer to documents in it just as “Document x”.

[2]  There are several versions of the contract in evidence: Document 2; Exhibits 25, 28 (incomplete), 40, 42, and 43. They are not all the same, and unfortunately the original is not in evidence.

[3]  Arthurs pp 21, 24, 27, 70, 74. Mr Davison was an “excluded individual” and hence could not hold a contractor’s license: see Queensland Building and Construction Commission Act 1991 s 31(1)(e), Part 3A.

[4]M. J. Arthurs Pty Ltd v Portfolio Housing Pty Ltd [2014] QSC 151; [2015] QCA 86. Optima was advised that this relationship had ended on 19 November 2012: Document 21.

[5]M. J. Arthurs Pty Ltd v Heaysman [2014] QDC 160.

[6]  [2015] QCA 113.

[7]  See also Document 85.

[8]  Sometimes after a little prompting from Optima: Exhibit 5.

[9]  Supported by photographs: Exhibit 6; Exhibit 7.

[10]  On the plaintiff’s letterhead, with Mr Arthurs signature applied by a computer programme, to give the appearance of an invoice from the plaintiff, i.e. a forged invoice: Document 10; Whyman p 2-12.

[11]  $X was $240,000: Arthurs p 86; $Y was $297,770: Exhibit 1, Document 2, p 110.

[12]  Randall p 104, 118 and 122, Mr Isenbert p 2-103; Mrs Isenbert p 3-67.

[13]  Randall p 120; Mr Isenbert p 2-100; Exhibit 28. It included some sales propaganda, a disclosure document and credit guide from Optima Lending Solutions Pty Ltd, a copy of the odd numbered pages of the Schedules to the HIA contract, and the even numbered pages of the General Conditions of the HIA contract, including Annexure 2.

[14]  Mr Randall said the sequence of the contract and other documents signed was as in Exhibit 25: p 108. Ms Whyman, however, who prepared the contracts for sending to the salesmen, said that the HIA forms were at the back and the Optima documents at the front, as in Exhibit 40: p 2-14. Most of the versions in evidence follow her layout, and I prefer her evidence on this point.

[15]  Randall p 114; this was done when the draft contract was prepared in the Optima office: Whyman, p 2-6.

[16]  Mr Isenbert p 2-97, 98; Mrs Isenbert p 3-68, 69; Randall p 108. They had no prior experience of such a transaction: p 2-97.

[17]  Mr Isenbert did not recall this: p 3-70. Mrs Isenbert said Mr Ramsey said he would get the builder to sign, but said nothing about returning the signed contract to them: p 3-75.

[18]  Exhibit 11. The reason for her doing this did not emerge. The other documents are identified at [99].

[19]  Whyman p 2-8.

[20]  Mr Isenbert p 3-24, 25.

[21]  See also Document 10, a letter to the defendants advising “formal” (but not binding) approval that day. Two days later the lender’s solicitors wrote to the defendants: Document 53.

[22]  Mr Isenbert p 3-5, 6. It was caused by the developer’s delay in finishing the land subdivision.

[23]  Statement of claim, para 23(a); defence para 23.1.

[24]  They were ordered on 29 May: Exhibit 18. They were sent to the plaintiff and the defendants on 25 July 2013: Document 91.

[25]  In June 2013: Arthurs p 77. See Document 133: on 18 June 2013. A copy of the approved plans is in Exhibit 17.  

[26]  Document 83, p 325. In this way the plaintiff sought to take the benefit of the “kick backs” previously pocketed by Optima from the inflated contract prices.

[27]  The policy issued on 23 July 2013: Exhibit 17.

[28]  But see Exhibit 20 – long service leave levy not paid. Rix chased up on 16 July 2013: Exhibit 15.

[29]  He thought that it was about 2 or 3 weeks before he signed Exhibit 26, on 30 July 2013.

[30]  Mr Isenbert p 3-50; Mrs Isenbert p 3-80.  

[31]  He said that that was his intention at the time (p 78) but in fact he did quite a lot with a view to starting work (p 68) and the deposit was never paid.

[32]  Exhibit 16 p 6; for the defendants’ number, see p 3-62.

[33]  The use of the words “scam” and “fraud” were denied by Mr Arthurs: p 78. See also Mrs Isenbert: p 3-72. 

[34]  To the same effect, Dobson p 2-71. A call to Dobson’s mobile was made by Arthurs’ mobile after the call to the defendants: Exhibit 16, p 6.

[35]  Visits from Mr Dobson on these days were denied by Mr Isenbert: p 3-56, 57 and Mrs Isenbert: p 3-74. Exhibit 16 shows a number of calls that day between Mr Arthurs and Mr Dobson: pp 6-20.

[36]  He had a list of things for him to do or arrange: Exhibit 37. Nothing after item 12 was done: p 2-58. See also p 2-56.

[37]  Mr Isenbert p 3-35; Mrs Isenbert also said it was signed that day: p 3-71.

[38]  Dobson, to the same effect p 2-74.

[39]  Arthurs p 66, p 88. No emails doing this were disclosed by the plaintiff: p 79. He denied he did not cancel the trusses and windows until after 20 September.

[40]  Arthurs p 66. The notice is Document 101, dated 1 August 2013.

[41]  The email identified a letter dated 5 August 2013, but Mr Arthurs conceded under cross-examination that this was a reference to the letter dated 1 August 2013: p 80.

[42]  When it was suggested that part of the document was grossly exaggerated, Mr Dobson’s response was that he did not know because he did not handle that side of it: p 2-84. See also p 2-84, L 42.

[43]  As Exhibit 23 says, that is, on 18 September 2013. Mr Arthurs said he told Mr Rix that lot 533 was not going ahead on 19 September 2013.

[44]  See for example p 91 L 34, 35, where a completely unresponsive answer was given.

[45]  In view of his emphatic endorsement of the plaintiff’s position in Exhibits 22 and 23, his attempts to get information as to what had passed between the defendants and Optima were obviously with a view to passing this on to the Plaintiff.  

[46]  Mr Isenbert said that at the time he executed the building contract he thought the builder was Optima (p 3-17), whereas Mrs Isenbert said that on that occasion she noticed that the contract identified the plaintiff as the builder, and pointed this out (p 3-68) and Mr Ramsay said he had to take the contract to the builder to sign: p 3-75. I accept this occurred but that its significance was missed by Mr Isenbert.

[47]  Isenbert p 3-31, consistent with the defendants’ whole case.

[48]  Isenbert p 2-97. The address is also on lots of documents in evidence.

[49]  Between Mackay and Sarina. But Mr Arthurs claimed they were in Sarina by 10.00am: p 89.

[50]  Where the airport is, consistent with his having dropped off Mr Arthurs for his flight to Brisbane at 5.00pm: see Arthurs p 67.

[51]  He conceded that he may not have been with Mr Dobson at 9.00am, contrast Dobson p 2-83, L 5.

[52]  For example, at p 81.

[53]  This was also in the original statement of claim, but called “cost of quitting the site”: Arthurs p 87.

[54]  Despite Mr Arthurs assertion at p 81, that the statement of claim repeated the exaggerated figure in Exhibit 19. But see p 87.

[55]  The contract notes at Document 2 p 112 acknowledged “payments to be made to Optima Homes (Australia) to act as agent for the builder and the building contract” [sic] but did not disclose the amount.

[56]  A pleading in this form does not properly identify to the defendants the case the plaintiff is seeking to make, and strongly suggests that the plaintiff doesn’t know what its case really is. The pleader might as well have added “and Uncle Tom Cobley and all.” 

[57]  Other examples are in paragraphs 14 and 15(b).

[58]  At the very least, since an agent is a fiduciary, there would have been a duty to disclose the extent of the benefit received: Dal Pont, op cit, p 207, 8; Keogh v Dalgety and Co Ltd (1916) 22 CLR 402 at 417; Fitzwood Pty Ltd v Unique Goal Pty Ltd (2001) 188 ALR 566 at [32].

[59]  See also the account of the arrangement given by Optima’s solicitors in Document 85, and on Mr Ross’ contemporaneous notes Exhibits 2 and 4.

[60]  Whyman p 2-4; p 2-13; McAllister p 2-23; p 2-36.

[61]  Dal Pont, The Law of Agency (3rd Edition 2014) p 83, citing Morgans v Launchbury [1973] AC 127 at 140; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [175]-[177]; Boustead and Reynolds on Agency (20th Edition 2014) p 63 acknowledge this as the traditional view, but quote some academic literature in support of the proposition that the true basis of agency is a unilateral manifestation of will, as found in a Power of Attorney: p 4, p 64.

[62]  Dal Pont, op cit, p 84-85, citing Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 at 150; Boustead and Reynolds, op cit, p 61.

[63]  Mr Isenbert denied such an authority: p 3-23. He was not concerned about getting the contract back (p 3-20) and did not ask for it: p 3-27.

[64]Commissioners of Customs and Excise v Pools Finance (1937) Ltd [1952] 1 All ER 775, where it was held that the documentary evidence was clear.

[65]Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 at 234.

[66]Tonto Home Loans (supra) at [177].

[67]  Boustead and Reynolds, op. sit. p 4.

[68]  I shall deal with the question of whether the building contract was ever made further below.

[69]Midland Bank plc v Serter [1995] 1 Fam Law R 1034 at 1046-7, cited in IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205 at [37].

[70]Kirkpatrick v Kotis (2004) 62 NSWLR 567 at [89], cited by Del Pont, op. sit. p 87.

[71]IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205 at [2]

[72]Barker v GE Mortgage Solutions Pty Ltd [2013] QCA 137 at [45], [46].

[73]Petersen v Moloney (1951) 84 CLR 91 at 95, where the idea that a real estate agent was an agent in the strict sense was questioned, as that agent had no power to affect the principal’s legal rights: p 94.

[74]  As happened with the ING Bank loan here: Document 54 cl 16(a)(i) required a copy only “before initial drawdown”. That, and Document 53, show that a copy of the fully executed document had not previously been sent by OLS to the bank.

[75]  Indeed, there was no evidence that any other financier was contacted, and the arrangements with the credit union were made by the defendants, not OLS: Exhibit 32.

[76]  If the copy had in fact been passed on by OLS, receipt by the defendants may have been effective.

[77]  Documents were submitted to lenders on line – p 2-28 – so what she needed was access to an electronic version when required. There was no evidence that in this case either lender was sent a copy of the document signed by Mr Arthurs.

[78]  Four are identified in Exhibit 47, apart from OLS, but there could easily be more.

[79]  Contemporary emails from Mr Ross of Optima to Mr Arthurs, 21 and 28 November 2012.

[80]  I think a more apt term is customers, or possibly victims.

[81]  See the definition of “contract documents” and cl 38, p 157 and item 12 of the schedule, p 122.

[82]  They were produced with the other things in Document 2: Whyman p 2-15. Copies of at least some of them are in Exhibits 12, 25, 42 and 43.

[83]  The only significance of this appears to be that the house was totally unsuitable for the parcel of land, since lot 533 has a road frontage of about 15 metres (Document 1, p 54) whereas the house is over 23.5 metres wide. It would certainly have been impossible to build to the configuration shown at p 109.

[84]  There was no written agreement in evidence, but I infer Mr Isenbert retained OLS in conversation with Mr McAllister.

[85]  The changes appear in the plan in Document 91 at p 348, and in Exhibit 17, which was the copy of the plan approved by Mr Rix. In addition, the plan had become a mirror image for one contract, the vehicle access to the garage was now through the end wall rather than through the wall closest to the porch, and there were other changes.

[86]Evans Deakin Industries Ltd v Queensland Electricity Generating Board (1984) 1 BCL 334 at 342 per McPherson J, with whom Campbell CJ agreed. See also Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20 at 29 per Webb J.

[87]  Examples include R A Brierley Investments Ltd v Landmark Corporation Ltd (1966) 120 CLR 224; Quadling v Robinson (1976) 137 CLR 192, esp at 201, concerning the exercise of an option; Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498; Costello v Loulakas [1938] St R Qd 267; Howes v Miller [1970] VR 522 at 527 (purported acceptance of settlement offer enclosing a release to be signed and returned a counter-offer), followed in Brewer v Fichera (1991) 12 Qld Lawyer Reps 98 per McMurdo DCJ; Goodman Fielder Consumer Foods Ltd v Cospack International Pty Ltd [2004] NSWSC 704 at [45] per Macready M.

[88]  The term he used was “essential matters”.

[89]Scammel and Nephew Ltd v Ouston [1941] AC 251 at 254, 257, 269. It may be that if it had been accepted by the defendants, but for the Act, it would have been legitimate to resolve the uncertainty by evidence of what changes Mr Arthurs had in mind. But under the Act a contract must be in writing (s 27(1)), including the plans (s 27(2)(f), any change to the plans is a variation, and any variation must be in writing (s 79(1)).  

[90]  Seddon & Ellinghaus, “Cheshire and Fifoot’s Law of Contract” (9th Aust Ed, 2008) at p 121.

[91]Quadling v Robinson (supra) at 201, cited in Evans Deakin (supra) at p 338 per Connolly J.

[92]  Document 91.

[93]  They show houses having the same overall width, but one was 0.7 m shorter, hence the loss of 7m2, a matter Mr Arthurs did not mention when explaining the changes.

[94]  As in Heaysman (supra) where acceptance was communicated by sending an invoice for the deposit.

[95]  This is an example of a situation where a fact became contentious only because of over-pleading.

[96]  But not the HIA general conditions of contract, so it was not a complete copy of the building contract.

[97]  Since the actual document is in evidence, the admission in the defence para 21.4 is not conclusive.

[98]  See also Arthurs p 78, Document 98 (29 July 2013); Document 99 (30 July 2013).

[99]  Document 90. This was a common mistake, also made by the plaintiff’s solicitor (Document 99), Mr Rix (Document 133, Exhibit 22) and Mr Randall (Document 2 p 128).

[100]  See statement of claim para 9.

[101]  I adopt without repeating it my analysis of the Act in Heaysman (supra) [9] – [15].

[102]  Whether such a contract would comply with the Act s 27 may be doubted, but that does not arise here.

[103]  It is in Document 2 and Exhibit 25.

[104]  There was no issue about this in Heaysman (supra), but see [2015] QCA 113 at [6], which is consistent with this conclusion.

[105]Beckford Nominees Pty Ltd v Shell Co of Australia Ltd (1987) 73 ALR 373 at 378.

[106]Legione v Hateley (1983) 152 CLR 406 at 435.

[107]Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [39].

[108]  Such an interpretation would be supported by the reasoning in Three Pty Ltd v Savoir Faire CTS 3841 [2008] 2 Qd R 568, concerning other consumer protection legislation, particularly that at [28]. But I need not finally decide this.

[109]  As well, there was no evidence that s 74(3)(b) was satisfied. In the circumstances, it is possible the solicitors were paid by Optima.

[110]  [2014] QDC 160 at [48].

[111]  And was actually received: Parklands Blue Metal Pty Ltd v Kowari Motors Pty Ltd [2004] 1 Qd R 140 at [8], [9].

[112]  See for example Exhibit 9: Optima cannot “claim the deposit” without builder’s insurance.

[113]Brien v Dwyer (1978) 141 CLR 378 at 385.

[114]  Presumably this would now be a reference to QCAT.

[115]Ashdown v Kirk [1999] 2 Qd R 1 at 5, assuming that (a) there was a contract between the parties and (b) the defendants had not previously withdrawn from the contract under the Act.

[116]  Robson p 61; see also Exhibit 39.

[117]  [2015] QCA 113 at [22].

[118]  See s 76 of the Act. Unlike in Heaysman, a claim under this section was advanced in this proceeding, but in the circumstances also fails: statement of claim paragraph 56A.

[119]Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd (2016) 91 ALJR 233 at [79].

[120]  In fact the Act has been repealed and replaced with other legislation, on which I need not comment.

[121]  Nor does such evidence appear in Exhibit 23.

[122]  Since Exhibit 26 was signed by the defendants on 30 July, and by Optima only on 31 July, it would surprise me if anything had happened so quickly, particularly since Optima would first have to complete the preliminaries, such as getting a building permit.

[123]  Document 2, p 159, cl 38.1.

[124]Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 at 436; Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-6; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 658.

[125]  Though there is some authority to the contrary: Mohr v Smith [1914] SALR 92.

[126]  That is consistent with the analysis in Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 at 351, where the owner let a separate contract to another to do a significant part of the work covered by a building contract.

[127]  For example, Foran v Wight (1989) 168 CLR 385 at 394, 5 per Mason CJ, 421 per Brennan J, 437 per Deane J, 441 per Dawson J, 458 per Gaudron J. See also Carr (supra) at 348.

[128]  (Supreme Court of Victoria, Batt J, W9082/1993, 13/4/94, [1994] VSC 161, BC9406215.)

[129]  (1989) 28 IR 68.

[130]  It appears that the other two members of the court decided the case on a different basis.

[131]  Citing The Kanchenjunga [1990] 1 Lloyd’s Rep 391 at 398 per Lord Goff of Chieveley.

[132]QBE Insurance (Australia) Ltd v Cape York Airlines Pty Ltd [2011] QCA 60 at [23].

[133]Ford (supra) at 19.

[134]Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 463-5, dealing with wrongful termination of a contract of employment.

[135]  Mr Arthurs said he believed there was a new contract “by 20 September” p 83.

[136]  At least in theory, the defendants could at that point have decided to stick with the plaintiff, and repudiate Exhibit 26 instead.

[137]Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 377-8.

[138]  It was also not inconsistent with a continuing willingness to carry out the contract when the deposit was paid, as stated by him earlier.

[139]  Ironically, at one point Optima’s solicitors asserted that it was a third party beneficiary of the contracts between the plaintiff and customers like the defendants: Document 100.

Close

Editorial Notes

  • Published Case Name:

    M J Arthurs Pty Ltd v Isenbert

  • Shortened Case Name:

    M J Arthurs Pty Ltd v Isenbert

  • MNC:

    [2017] QDC 85

  • Court:

    QDC

  • Judge(s):

    McGill SC DCJ

  • Date:

    12 Apr 2017

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Ashdown v Kirk [1999] 2 Qd R 1
2 citations
Jump To
Cite 1 - [1999] 2 Qd R 1
Cite 2 - [1999] 2 Qd R 1
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435
2 citations
Jump To
Cite 1 - (1946) 72 CLR 435
Cite 2 - (1946) 72 CLR 435
Barker v GE Mortgage Solutions Limited [2013] QCA 137
3 citations
Jump To
Cite 1 - [2013] QCA 137
Cite 2 - [2013] QCA 137
Cite 3 - [2013] QCA 137
Beckford Nominees Pty Ltd v Shell Co of Australia Ltd (1987) 73 ALR 373
2 citations
Jump To
Cite 1 - (1987) 73 ALR 373
Cite 2 - (1987) 73 ALR 373
Bonette v Woolioortks Ltd. (1937) 37 S.R. N.S.W. 142
2 citations
Jump To
Cite 1 - (1937) 37 S.R. N.S.W. 142
Cite 2 - (1937) 37 S.R. N.S.W. 142
Brewer v Fichera (1991) 12 Qld Lawyer Reps 98
2 citations
Jump To
Cite 1 - (1991) 12 Qld Lawyer Reps 98
Cite 2 - (1991) 12 Qld Lawyer Reps 98
Brien v Dwyer (1978) 141 CLR 378
2 citations
Jump To
Cite 1 - (1978) 141 CLR 378
Cite 2 - (1978) 141 CLR 378
Carr v J.A. Berriman Pty. Ltd. (1953) 89 C.L.R., 327
3 citations
Jump To
Cite 1 - (1953) 89 C.L.R., 327
Cite 2 - (1953) 89 C.L.R., 327
Cite 3 - (1953) 89 C.L.R., 327
Carter v Hyde (1923) 33 CLR 115
2 citations
Jump To
Cite 1 - (1923) 33 CLR 115
Cite 2 - (1923) 33 CLR 115
Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20
3 citations
Jump To
Cite 1 - (1952) 85 CLR 20
Cite 2 - (1952) 85 CLR 20
Cite 3 - (1952) 85 CLR 20
Commissioners of Customs and Excise v Pools Finance (1937) Ltd [1952] 1 All ER 775
2 citations
Jump To
Cite 1 - [1952] 1 All ER 775
Cite 2 - [1952] 1 All ER 775
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
2 citations
Jump To
Cite 1 - (1986) 160 CLR 226
Cite 2 - (1986) 160 CLR 226
Costello v Loulakas [1938] St R Qd 267
2 citations
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Cite 1 - [1938] St R Qd 267
Cite 2 - [1938] St R Qd 267
Cozi Pty Ltd v Bedi [1994] VSC 161
2 citations
Jump To
Cite 1 - [1994] VSC 161
Cite 2 - [1994] VSC 161
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26
2 citations
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Cite 1 - [2016] HCA 26
Cite 2 - [2016] HCA 26
Davies v Smith (1938) 12 ALJ 260
2 citations
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Cite 1 - (1938) 12 ALJ 260
Cite 2 - (1938) 12 ALJ 260
Evans Deakin Industries Ltd v Queensland Electricity Generating Board (1984) 1 BCL 334
2 citations
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Cite 1 - (1984) 1 BCL 334
Cite 2 - (1984) 1 BCL 334
Fitzwood Pty Ltd v Unique Goal Pty Ltd (2001) 188 ALR 566
2 citations
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Cite 1 - (2001) 188 ALR 566
Cite 2 - (2001) 188 ALR 566
Foran v Wight (1989) 168 CLR 385
2 citations
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Cite 1 - (1989) 168 CLR 385
Cite 2 - (1989) 168 CLR 385
Ford v Lismore City Council (1989) 28 IR 68
2 citations
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Cite 1 - (1989) 28 IR 68
Cite 2 - (1989) 28 IR 68
Goodman Fielder Consumer Foods Ltd v Cospack International Pty Ltd [2004] NSWSC 704
2 citations
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Cite 1 - [2004] NSWSC 704
Cite 2 - [2004] NSWSC 704
Holland v Wiltshire (1954) 90 CLR 409
2 citations
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Cite 1 - (1954) 90 CLR 409
Cite 2 - (1954) 90 CLR 409
Howes v Miller (1970) VR 522
2 citations
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Cite 1 - (1970) VR 522
Cite 2 - (1970) VR 522
IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205
3 citations
Jump To
Cite 1 - [2005] QCA 205
Cite 2 - [2005] QCA 205
Cite 3 - [2005] QCA 205
Keogh v Dalgety and Co Ltd (1916) 22 CLR 402
2 citations
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Cite 1 - (1916) 22 CLR 402
Cite 2 - (1916) 22 CLR 402
Kirkpatrick v Kotis (2004) 62 NSWLR 567
2 citations
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Cite 1 - (2004) 62 NSWLR 567
Cite 2 - (2004) 62 NSWLR 567
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 C.L R. 623
2 citations
Jump To
Cite 1 - (1989) 166 C.L R. 623
Cite 2 - (1989) 166 C.L R. 623
Legione v Hateley (1983) 152 CLR 406
2 citations
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Cite 1 - (1983) 152 CLR 406
Cite 2 - (1983) 152 CLR 406
M J Arthurs Pty Ltd v Heaysman [2015] QCA 113
4 citations
Jump To
Cite 1 - [2015] QCA 113
Cite 2 - [2015] QCA 113
Cite 3 - [2015] QCA 113
Cite 4 - [2015] QCA 113
Midland Bank plc v Serter & Anor [1995] 1 Fam Law R 1034
2 citations
Jump To
Cite 1 - [1995] 1 Fam Law R 1034
Cite 2 - [1995] 1 Fam Law R 1034
MJ Arthurs Pty Ltd v Heaysman [2014] QDC 160
3 citations
Jump To
Cite 1 - [2014] QDC 160
Cite 2 - [2014] QDC 160
Cite 3 - [2014] QDC 160
MJ Arthurs Pty Ltd v Portfolio Housing Pty Ltd [2014] QSC 151
1 citation
Jump To
Cite 1 - [2014] QSC 151
MJ Arthurs Pty Ltd v Portfolio Housing Pty Ltd [2015] QCA 86
1 citation
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Cite 1 - [2015] QCA 86
Mohr v Smith [1914] SALR 92
2 citations
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Cite 1 - [1914] SALR 92
Cite 2 - [1914] SALR 92
Morgans v Launchbury [1973] AC 127
2 citations
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Cite 1 - [1973] AC 127
Cite 2 - [1973] AC 127
Outer Suburban Property Ltd v Clarke [1933] SASR 221
1 citation
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Cite 1 - [1933] SASR 221
Parklands Blue Metal Pty Ltd v Kowari Motors Pty Ltd[2004] 1 Qd R 140; [2003] QSC 98
2 citations
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Cite 1 - [2004] 1 Qd R 140
Cite 2 - [2004] 1 Qd R 140
Permanent Trustee Company Limited v O'Donnell [2009] NSWSC 902
2 citations
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Cite 1 - [2009] NSWSC 902
Cite 2 - [2009] NSWSC 902
Petersen v Moloney (1951) 84 C.L.R 91
2 citations
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Cite 1 - (1951) 84 C.L.R 91
Cite 2 - (1951) 84 C.L.R 91
Poort v Development Underwriting ( Victoria ) Pty Ltd (No 2) [1977] VR 454
2 citations
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Cite 1 - [1977] VR 454
Cite 2 - [1977] VR 454
Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26
2 citations
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Cite 1 - (1993) 182 CLR 26
Cite 2 - (1993) 182 CLR 26
QBE Insurance (Australia) Limited v Cape York Airlines Pty Ltd[2012] 1 Qd R 158; [2011] QCA 60
2 citations
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Cite 1 - [2011] QCA 60
Cite 2 - [2011] QCA 60
Quadling v Robinson (1976) 137 CLR 192
2 citations
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Cite 1 - (1976) 137 CLR 192
Cite 2 - (1976) 137 CLR 192
R A Brierley Investments Ltd v Landmark Corporation Ltd (1966) 120 CLR 224
2 citations
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Cite 1 - (1966) 120 CLR 224
Cite 2 - (1966) 120 CLR 224
Scammell (G.) & Nephew Ltd. v Ouston (1941) AC 251
2 citations
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Cite 1 - (1941) AC 251
Cite 2 - (1941) AC 251
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359
2 citations
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Cite 1 - (1931) 45 CLR 359
Cite 2 - (1931) 45 CLR 359
Shevill v Builders' Licensing Board (1982) 149 CLR 620
2 citations
Jump To
Cite 1 - (1982) 149 CLR 620
Cite 2 - (1982) 149 CLR 620
Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd (2016) 91 ALJR 233
2 citations
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Cite 1 - (2016) 91 ALJR 233
Cite 2 - (2016) 91 ALJR 233
The Kanchenjunga [1990] 1 Lloyd’s Rep 391
2 citations
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Cite 1 - [1990] 1 Lloyd’s Rep 391
Cite 2 - [1990] 1 Lloyd’s Rep 391
Three Pty Ltd v Body Corporate for Savoir Faire[2008] 2 Qd R 568; [2008] QCA 167
2 citations
Jump To
Cite 1 - [2008] 2 Qd R 568
Cite 2 - [2008] 2 Qd R 568
Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389
2 citations
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Cite 1 - [2011] NSWCA 389
Cite 2 - [2011] NSWCA 389
Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498
2 citations
Jump To
Cite 1 - [1922] VLR 498
Cite 2 - [1922] VLR 498
Universal Cargo Carriers Corporation v Citati (1957) 2 QB 401
2 citations
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Cite 1 - (1957) 2 QB 401
Cite 2 - (1957) 2 QB 401
Universal Guarantee Pty Ltd v Carlile [1957] VR 68
2 citations
Jump To
Cite 1 - [1957] VR 68
Cite 2 - [1957] VR 68

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1

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