Freeman v James[2002] QSC 464

SUPREME COURT OF QUEENSLAND

The facts

[2] On 17 August 2002 the respondent, as registered proprietor, agreed to sell and the applicant agreed to buy Lot 5 C22514 as freehold land at 9 Baler Street, Port Douglas.  Under the contract the purchase price was $500,000 and the deposit of $16,000 was to be paid in two instalments: $1,000 when the applicant/buyer signed the contract and $15,000 on 9 September 2002.[1]

[3] The deposit was paid as had been agreed, $1,000 on 17 August, 2002 and the balance on 2 September 2002.[2]  These amounts were paid to Vista Realty the real estate agent acting for the vendor and the deposit holder nominated in the contract and the respondent’s real estate agent for the sale.

[4] Under s 3.1 of this contract for the sale and purchase of Lot 5, the contract was made conditional on the buyer obtaining approval of a loan for the finance amount.  The settlement date for this contract was 15 November 2002, that date being “90 days from [the] contract date”.

[5] The applicant’s finance was duly approved and the respondent was notified of this on 4 September 2002.[3]

[6] On 16 September 2002 the applicant contracted to on-sell Lot 5 to another buyer for $635,000.  The settlement date for this second contract was to be 60 days from the date of contract, that is, 15 November 2002, the same date as that of the first contract.  The same real estate agent had also been engaged to effect the on-sale.

[7] At the proposed settlement meeting on 15 November 2002 the respondent’s solicitor informed the applicant’s solicitor that the respondent would not be completing the transaction and had advised, through a second solicitor, now purportedly also acting on the respondent’s behalf, that the respondent had terminated the contract.[4]  The applicant refused to accept this termination.[5]

[8] As a result of this purported termination of the first contract, the settlement date for the sale and purchase of Lot 5 under the second contract was re-negotiated as 29 November 2002 after which date, the solicitor for the new buyer had advised, specific performance of that contract would be sought against the second applicant.[6]

[9] In the face of this threatened action, the applicant applied to this court for specific performance of the first contract and so advised the two solicitors now acting for the respondent of this application.

[10] In response to this advice by facsimile, the first solicitor for the respondent advised he had not been instructed by the respondent to act in any matter other than the first sale of Lot 5.  The second firm of solicitors for the respondent, O'Dwyer & Bradley, in giving notice of the purported termination made allegations of breach of contract by the applicant, and of non-compliance with various statutory provisions.  Despite the robust manner in which the allegations were made, when these proceedings provided the opportunity for the allegations to be tested O'Dwyer & Bradley stated they had no instructions to accept service.  Yet that same firm proceeded in the very same letter to seek an adjournment of the applicant’s application for two weeks and an early mediation of the matter.

[11] The applicant was then obliged, on 22 November 2002, to seek an order of this Court that the service of originating proceedings upon the second solicitor for the respondent on 19 November 2002 was service on the respondent.

[12] At no time have the solicitors for the respondent, O'Dwyer & Bradley, provided particulars of their allegations.  Nor have they appeared on either occasion to explain the basis of the purported termination notwithstanding their awareness that the application was listed for hearing.  I trust this discourtesy to the Court was unintended.  Members of this firm may have been very disquieted by the nature of the dealings in this matter but that conduct was plainly unhelpful and unacceptable. I likewise observe that the same firm failed to extend to other persons involved in this matter the professional courtesies to which they are entitled. 

[13] At all times the applicant has shown herself ready and willing to carry out her side of the bargain and now seeks an order for specific performance.

The law

[14] Exhibited to affidavit material on which the applicant has relied on the hearing of this matter is correspondence in which the respondent’s solicitors have sought to justify the purported termination of its contract to sell Lot 5.[7]  They seek to justify repudiation for the applicant/purchaser’s alleged fundamental breach of that contract, because she had used the same real estate agent as the respondent had used in the first sale to on-sell the property.

[15] The contract by clause 9.1 does give the seller the right to terminate the contract but only if “the buyer fails to comply with any provision of the contract”.  There is no provision in the contract that the sale is conditional on the purchaser’s not using the vendor’s agent in any on-sale of Lot 5.

[16] The respondent further alleges in the same correspondence that the “contract [is] void for uncertainty and tainted with illegality” because “the selling agent was in breach of s 133 of the Property Agents and Motor Dealers Act (Qld) 2000.  It is the case that s 133 provides that a real estate agent must not act for a client unless the client first appoints the agent in writing and otherwise complies with the requirements of that section.

[17] No evidence has been lead by the respondent’s solicitors to prove their allegation.  Hence at this stage it cannot be viewed otherwise than as an allegation without any foundation.

[18] The respondent/vendor further alleges in the same correspondence that it had terminated its contract with the applicant/purchaser on account of another breach, namely, failure to pay on time the deposit payable under the contract.  The evidence before me clearly shows this allegation to have been quite false.  The deposit was paid on time.

[19] In the same correspondence the respondent also alleges it was justified in terminating the contract because of the applicant/purchaser’s on-sale of the property.  However the applicant was perfectly entitled to on-sell the property because she had an equitable interest in it.

[20] Again by their letter to the applicant’s solicitors of 15 November 2002 the solicitors for the respondent attempt to validate the termination of the contract “on the basis of …[the respondent’s] … rights under the finance clause”.  The seller does have rights under clause 3.3 to terminate the contract, but only if the buyer fails to give appropriate notice under Clause 3.2.  However such notice has duly been given.

[21] The respondent’s solicitors finally attempt to invoke certain implied rights of the respondent/seller under s 365 validate the respondent’s withdrawal of his offer to sell.  However this section is not concerned with either the express or the implied rights of the seller.  It only addresses the issue of when a buyer is bound under a contract and thus any reference to that section in this context is irrelevant.

[22] It is evident, then, that the agreement has not been validly terminated.  Indeed the respondent, I understand, has effectively capitulated and is now willing to settle.

[23] However the remedy of specific performance applies to an agreement such as the first contract of sale that such an order should be made is supported further by the purchaser’s possessing an equitable interest in the land and the remedy being available to protect such an interest.  As Gibbs CJ and Murphy J observed in Legione v Hately[8] equity will not remake “the parties’ contract simply because it transpires that as things have happened one party has made a bad bargain”. 

Costs

[24] The applicant seeks costs on an indemnity basis.  Her intention to do so was communicated to the respondent’s solicitors by facsimile on 25 November 2002.  There has been no appearance by the respondent to argue to the contrary.  These proceedings were made necessary by the respondent’s conduct which remains unexplained and so far unjustified.  In all the circumstances the applicant should have her costs on an indemnity basis.

[25] It is for the above reasons that I have made on 26 November the following orders:-

1. That the contract dated 17 August 2002 for sale of the property described as Lot 5 on Crown Plan C22514 being 9 Baler Street in Port Douglas between the applicant as purchaser and the respondent as vendors be specifically performed and completed at a time to be agreed by 4.00 pm on Friday 29 November 2002 at the Commonwealth Bank at Port Douglas.

2. That the parties perform in accordance with the settlement statement in exhibit “SPW2” document 3 to the affidavit of Sean Patrick Walsh filed 19 November 2002 subject to any adjustment in the direction of the payment of cheques by the solicitors for the respondent by 4.00 pm on 28 November 2002.

3. That the respondent pay the applicant’s costs of and incidental to this application including the reserved costs of 26 November 2002 to be assessed on an indemnity basis.

4. That the balance of the originating application be adjourned to a date to be fixed.

5. That service of this order by facsimile transmission upon O'Dwyer and Bradley, Solicitors, shall be treated as service upon the respondent.

6. That each party have liberty to apply on giving at least one days notice to the other party.