Patorniti v Chin Hong Investments Corp Pty Ltd
[2007] QSC 41
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- Patorniti v Chin Hong Investments Corp Pty Ltd[2007] QSC 41
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Patorniti v Chin Hong Investments Corp Pty Ltd[2007] QSC 41
Patorniti v Chin Hong Investments Corp Pty Ltd[2007] QSC 41
SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION
WHITE J
No 938 of 2007
SALVATORE PATORNITI, GRAZIA PATORNITI AND LINA MACARONE | Applicant |
and | |
CHIN HONG INVESTMENTS CORP PTY LTD (ACN 087 841 647) | Respondent |
BRISBANE
DATE 09/02/2007
JUDGMENT
HER HONOUR: The applicants seek the removal of a caveat which has been lodged over their commercial property at Progress Road, Burpengary. The interest said to found the caveat by the respondent is as purchaser under a written contract of sale between the respondent caveator, as the buyer, and the applicants, as the seller, made on the 6th of December 2006.
What the Court must decide on an application of this kind is not of course final relief at all. It is similar to that of an interlocutory injunction, namely that there must be some serious issue to be decided about whether there is a validly subsisting contract.
The applicants own a shopping centre on Progress Road, Burpengary, according to Mr Colin Peet, a director with Savills Queensland Proprietary Limited. He attended upon the three owners of the subject property on the 6th of December 2006 and handed them a written offer. The price contained in that letter of offer to which I will refer in more detail in a moment was for $6.4 million. The figure was crossed out and a figure of $6.533 million was inserted and the three applicants signed it, dated it the 6th of December of 2006, and returned that letter otherwise unchanged to Mr Peet.
Mr Peet then communicated the counter offer to the respondent who at that stage was undisclosed as to name and was authorised to accept the counter offer. Mr Peet immediately confirmed the acceptance by telephone on the 6th of December 2006 followed by a formal letter which, although dated the 6th of November 2006, is accepted should read 7th of December 2006.
The land the subject of the alleged contract of sale contains numbers of shops; it is a shopping centre. It is a relatively short point for decision. The applicants do not wish to be bound by the document which they signed. They allege that it was a proposal that was subject to a formal contract for the sale of land. The respondent, on the other hand, contends that all that needed to be agreed between the parties was contained in the document and that it manifested an intention by the applicants to be bound immediately. It is the case that a formal contract, which was a standard REIQ commercial land and buildings contract, was forwarded in which the respondent was named as the purchaser and which the price was the same as that counter offered by the applicants as well as many more detailed special conditions than those actually set out in the letter.
I turn then to the letter of counter offer which was accepted. It is a relatively short document, being about a page and a-third. It is on behalf of a client of Savills and it reads,
"A client of ours has authorised us to submit their offer to purchase from you the above property for your consideration: 1. Purchase price…$6,533,000.
2. Deposit - deposit of $100,000 will be payable as follows…payable upon signing a binding contract of sale and…payable when the contract becomes unconditional."
There then follow special conditions which provide,
"The contract of sale will be subject to the following special conditions, including but not limited to…
There set out are five special conditions including due diligence and matters relating to the tenancies and other matters which I need not set out.
The fifth, Mr Martin for the applicants submits, makes no sense as a special condition; it provides, "A formal contract of sale being executed by the parties within seven days of acceptance hereof." He submits that that becomes part of the body of the letter rather than one of the special conditions.
Settlement is set at the 1st of February 2007, contrasted with the date that appears in the form REIQ document which is the 9th of February 2007. The document concludes:
"Our client's offer will be open for acceptance by the vendors until 4 p.m. 6 December 2006 after which it will be deemed lapsed. Once accepted it will be binding between the parties."
As Mr Martin has submitted, there are a number of matters which might be thought to be important which are omitted from the letter; the identity of the purchaser is not articulated but it is a person who can be ascertained and Savills were clearly the agent of the vendor on this transaction. I do not find that to be a compelling reason for holding that this would not be a binding contract.
There is no stakeholder identified for the deposit and that provision in the letter says, "Payable upon signing a binding contract of sale by the parties." It is open to argue that it is payable upon the acceptance of this document. It is not uncertain in that sense.
What causes the reader to pause is what is said to be a condition is that a formal contract of sale is executed within seven days. But against that is the final sentence that once acceptance the agreement is binding between the parties.
On the face of the document itself there is a degree of formality in the sense that it is set out in a formal way, but more particularly, on the second page of the letter there is a box where the vendors are enabled to sign. Their names appear typed and they have fixed their signatures above each of their names.
Mr Martin and Mr Harding have referred to numerous cases, starting with Masters v. Cameron 1954 91 CLR 353, which Mr Martin submits has facts which are remarkably similar to this. That was a case where the agreement was said to be subject to the preparation of a formal contract of sale by the solicitors.
One of the problems, of course, about citing cases is whilst they are a very useful guide, nonetheless every set of facts will be very personal to the negotiating parties and those have now become in conflict.
Mr Martin has referred to Marek -v- Australasian Conference Association Proprietory Limited (1994) 2 Queensland Reports 521 where the Court made observations that it will be an unusual case in Queensland and, one might say, true for any State in Australia, where parties negotiating for the sale of land will not be taken to have made a concluded bargain unless and until a formal contract is executed using a form of contract adopted by the Real Estate Institute of Queensland and approved by the Queensland Law Society or similar.
But what is important is that the intention of the parties be derived from what they have written and the surrounding conduct. Other cases to which I've been referred: a decision of Justice Jones in Rossi -v- Vu 2005 QSC373 merely emphasises that point. The observation of Chief Justice Gleeson in ABC v 14th Commonwealth Games Limited (1988) 18 New South Wales Law Reports 450 that:
"In the ordinary case as a matter of fact in common sense other things being equal the more numerous and significant the areas in respect of which the parties have failed to reach agreement the slower a Court will be to conclude that they have the requisite contractual intention."
There are expansions but not significant differences in the REIQ contract to which Mr Martin has taken me. Clause 2.1 of that agreement provides:
"This contract contains the entire agreement between the parties with respect to its subject matter and supercedes all prior negotiations understandings and agreements whether oral or written."
But that provision is not inconsistent with the parties having entered into a formally binding agreement at an earlier time which has fewer provisons in it than in the final agreement. But for the last sentence in the letter, I would have reached a conclusion that it was very arguable that the parties intended merely to await a formal contract and would not be bound by this letter.
But it is a very unequivable sentence and there is no reservation by the applicants. It seems the only issue between them was as to price, they have made a counter offer of a particular price which was accepted. In all other respects the flavour of that letter is that it constitutes a binding agreement between the parties but that their formal and more detailed agreement would be reflected in the standard REIQ contract.
Accordingly, I come to the conclusion that there is a sufficient interest to sustain the caveat and that it ought to remain. As to the balance of convenience, Mr Martin wishes to say nothing more about it so, I dismiss the application. Now, can I return your cases to you gentlemen?
MR HARDING: Your Honour, I would seek the costs of the application.
HER HONOUR: Anything to say about that, Mr Martin?
MR MARTIN: Well, can I say this: That as your Honour has indicated that this is really in the nature of an interlocatory application, it takes the form of an injunction. It is not the end of the matter and it is something which the parties may or may not wish to litigate to finality. On that basis I would ask, rather than that you dismiss the application but you make an order in accordance with the rules that this application be treated as a claim and direct the applicant to file the statement of claim within seven days?
Obviously claiming removal of the caveat or a declaration of whatever they signed is not a binding agreement, then one might envisage - then the rules would take over the conduct of the matter there might be a counter-claim for specific performance if the parties wanted to go that way.
HER HONOUR: The three months hasn't elapsed, has it, so you haven't had a notice to commence proceedings?
MR MARTIN: Well, it's - no - we would have to send the notice to them‑‑‑‑‑
HER HONOUR: Yes.
MR MARTIN: ‑‑‑‑‑and we haven't done that‑‑‑‑‑
HER HONOUR: No.
MR MARTIN: ‑‑‑‑‑and the three months hasn't elapsed yet, but‑‑‑‑‑
HER HONOUR: Exactly. I see that, 22nd of December.
MR MARTIN: ‑‑‑‑‑my instructions are that at present the applicants wish to pursue the matter because your Honour has in fact - has dealt with the matter on an interlocutory basis, of course.
HER HONOUR: Quite.
MR MARTIN: They might be guided by your Honour's reasons in that, but nevertheless, I'm instructed to ask for those orders. And there is some utility in that because if - I understand that if we don't settle there's been in the correspondence a threat by the other side to issue proceedings for specific performance. It might save the filing fee.
HER HONOUR: Don't tell me that. I'm supposed to protect the revenue, Mr Martin.
MR MARTIN: That's separate to the issue of costs.
HER HONOUR: Yes, it is separate to the issue of costs. There is an obligation, if you give notice, that proceedings do have to commence. You really are just doing it for, I suppose, convenience and to save the filing fee.
MR MARTIN: Yes, yes.
HER HONOUR: Well‑‑‑‑‑
MR MARTIN: And because there's already a file open and a proceeding, in my submission, it would be a convenient way to proceed.
HER HONOUR: All right. Thanks.
MR MARTIN: And the only orders your Honour would have to make would be that the application be treated as a claim with a direction that the applicants file a statement of claim within seven days and then otherwise - then the rules take over for the conduct of the proceeding.
HER HONOUR: Yes, all right. What do you say about that, Mr Harding?
MR HARDING: I have no difficulty with an order either of the nature suggested or some directions regarding the commencement of proceedings. A time period of seven days within which to commence proceedings is‑‑‑‑‑
HER HONOUR: This is the sort of thing that you would expect if it doesn't sort itself out between the parties. I have a feeling they may not be wanting to spend any more of their money on you people‑‑‑‑‑
MR HARDING: Yes, indeed.
HER HONOUR: ‑‑‑‑‑without being impolite, though no doubt commercial interests‑‑‑‑‑
MR HARDING: In short, there's no difficulty from my side in commencing proceedings within seven days. Whether you want‑‑‑‑‑
HER HONOUR: All right. That - this is a matter though apt for the commercial‑‑‑‑‑
MR HARDING: Yes.
HER HONOUR: ‑‑‑‑‑causes judges I would think because it's a short point, it's a day, no more - half a day, probably.
MR HARDING: I'm sure that's right.
HER HONOUR: All right. So, what the orders would be then: refuse the application for a removal of caveat and to order that the proceedings commence by originating application, proceed as a claim, and direct the applicants as plaintiffs file and serve their statement of claim‑‑‑‑‑
MR HARDING: So perhaps respondents as plaintiffs, your Honour? The respondents will be the plaintiffs and the‑‑‑‑‑
HER HONOUR: Yes. I'm sorry. Yes. The respondent as plaintiff, the respondent as plaintiff.
MR HARDING: Yes.
HER HONOUR: File and serve the statement of claim within seven days. Do you want some directions about the defence, Mr Martin?
MR MARTIN: No, your Honour, because the rules would otherwise take over. But I would imagine this is the sort of case where there is some urgency, of course.
HER HONOUR: Well, there is.
MR MARTIN: We'd probably apply to the commercial list judges to have the matter put on their list so I don't think we'd need any further orders about that.
MR HARDING: I'd‑‑‑‑‑
HER HONOUR: If you joined issue on a defence‑‑‑‑‑
MR HARDING: I should say, your Honour, I would like directions as to the defence.
MR MARTIN: I'm happy to then‑‑‑‑‑
HER HONOUR: I think you should get the issues‑‑‑‑‑
MR MARTIN: Yes.
HER HONOUR: ‑‑‑‑‑clearly set out on the pleadings‑‑‑‑‑
MR MARTIN: Certainly.
HER HONOUR: ‑‑‑‑‑so that then at least when it‑‑‑‑‑
MR MARTIN: I'm happy to file - for us to‑‑‑‑‑
HER HONOUR: Seven days?
MR MARTIN: Yes, another seven days for a defence.
HER HONOUR: All right then, the‑‑‑‑‑
MR MARTIN: And counter-claim, if any.
HER HONOUR: ‑‑‑‑‑the applicant as defendant, file and serve its notice of intention to defend and defence and counter-claim - because there will be a counter-claim, won't there?
MR MARTIN: Yes.
HER HONOUR: And counter-claim within seven days of receipt of statement of claim. Leave it at that, Mr Harding, I think?
MR HARDING: Yes, yes. That's, I think, sufficient, your Honour.
HER HONOUR: I don't - you make your own way before the commercial list, I don't need to do that. But, Mr Martin, you still haven't dealt with costs.
MR MARTIN: Well, we lost, your Honour, I suppose there's not much more I can say.
HER HONOUR: I think that's right, isn't it. I know as much about it as anybody's going to. The - I'll make that part of that first order not the directions so the orders now will be: refuse the application for the removal of the caveat; the proceedings commenced by originating application proceed as a claim; the applicants pay the respondents' costs of - it's really, of incidental to the hearing today, isn't it?
MR MARTIN: Yes.
HER HONOUR: Of the application and hearing today?
MR MARTIN: The hearing today, your Honour, it was.
HER HONOUR: It's not - there is material in support. It's not just the hearing today but what I'm really dealing with is the cost of the filing of the originating application which will be the costs in the proceedings. But otherwise not, can you see the point that I'm making? If you're going to have an order of having it continuing as a claim?
MR MARTIN: Yes, but I think if your Honour ordered that - that the applicants pay the costs of the hearing today, that would cover all relevant costs other than‑‑‑‑‑
HER HONOUR: Not the affidavits?
MR MARTIN: ‑‑‑‑‑the filing fee. Of incidental‑‑‑‑‑
HER HONOUR: To the hearing today? Including the cost of affidavits?
MR MARTIN: I'm happy if your Honour makes‑‑‑‑‑
HER HONOUR: What about if I make it precise? Is that all right?
MR HARDING: I think that should cover it, your Honour.
HER HONOUR: All right, thank you. And in any event, you won't be going to the taxing officer right away. The applicant to pay the respondent - of the hearing today including cost of affidavits. All right. And then the direct that the respondent as plaintiff file and serve a statement of claim within seven days to the applicant as - the applicants as defendants file and serve their notice of defence - their notice of intention to defend and defence and counter-claim within seven days of receipt of the statement of claim.
MR MARTIN: Thank you, your Honour.
MR HARDING: Thank you, your Honour.
HER HONOUR: All right. Thanks for your assistance, gentlemen.