Le v Bui[2008] QSC 149

SUPREME COURT OF QUEENSLAND

[1] The first respondent is the owner of a freehold house at 420 Freeman Road, Richlands, which I will call the house.  On 25 January 2008 he agreed to sell it to the applicant, but subsequently refused to complete.  The applicant lodged a caveat and by these proceedings seeks specific performance.

[2] The second respondent claims to have made an earlier contract with the first respondent for the sale and purchase of the house.  That contract is said to have been made on 15 January 2007 but it has not been completed.  She resists the applicant’s claim on the basis that her interest is prior in time.  The applicant concedes that if she has the contract which she claims to have, that puts paid to his right to specific performance of his contract and he would be limited to a claim for damages.

[3] These proceedings were commenced by an application.  They were set down by a judge in the applications list for a one day trial.  There are no pleadings but it was ordered that the applicant prepare a document which set out the issues, and Mr Simpson who appears for the applicant handed up that document at the commencement of the hearing.  The respondents are not legally represented.  The second respondent does not speak English, but was assisted by an interpreter.  Her evidence-in-chief was in the form of a short written statement in English.

[4] The respondents were formerly a married couple but divorced many years ago.  The second respondent has her own business which she described as a farm.  She says that in January last year the first respondent needed money so they agreed that she would buy the house from him.  She relies upon a one page document signed by each of them dated 15 January 2007.  The original is handwritten and is in the Vietnamese language.  The English version is as follows:

“AGREEMENT TO SELL HOUSE

My name is :  HAI NGOC BUI

Date of birth:  8-11-1961

Today, 15-1-2007, I agree to sell the house at 422 Freeman Road, Richlands, Queensland 4077 to the purchaser by the name Lisa Le for $230,000.  From today, Lisa Le is the owner of the above-mentioned house.  Lisa Le will look after all matters related to the house.  I will be fully responsible if I change my mind in any way.

PurchaserVendor

(signature)(signature)

LE LISAHAI NGOC BUI

The amounts borrowed are as follows:

$1,000

$4,000

$450

$1,300

$450

--------

$7,200”

[5] She says that after signing this document she began to pay the bills on the house including its mortgage and rates.  She tendered some documents evidencing her payment of rates and I accept that she made payments of that kind.

[6] There is a further document signed by the first respondent dated 25 August 2007 which records that he had borrowed $4,000 on that day from the second respondent.  On that document he wrote also:

“I wrote this piece of paper to certify that I have borrowed the abovementioned amount.  When my house is sold in the future, [the second respondent] will deduct the above-mentioned amount.”

[7] As mentioned, the applicant’s contract is dated 25 January 2008.  The applicant knew of the house because his uncle was renting it.  Late last year and at the beginning of this year he discussed a prospective purchase with the first respondent.  The applicant says, and I accept, that it was the first respondent who caused to be prepared the form of contract.  This was done by the first respondent’s then solicitors.  It is in the standard form.  The price is $270,000 with a deposit of $1,000.  I accept, as is apparently undisputed, that the applicant paid that deposit.  Completion was to occur 30 days from the date of the contract, which became 25 February 2008 because the thirtieth day was not a working day.  The contract was subject to finance within 14 days, that is to say by 8 February 2008. 

[8] The applicant was not told of any contract with the second respondent when he made his contract.  The second respondent says that upon hearing of the applicant’s contract, she went to the applicant’s house to “explain the situation”.  She says she showed a copy of her contract to the applicant’s wife.  There is some support for that in a letter from the applicant’s solicitors to the solicitors then acting for the first respondent, dated 4 February 2008, where they wrote that the second respondent:

“advised our client that the [applicant’s] contract is not proceeding as the seller does not want to proceed and also that the seller has already signed a prior agreement to sell the property to her.” 

Thus by 4 February 2008, the applicant had become aware of the second respondent’s claim that she had a prior contract.

[9] On 8 February 2008 the applicant’s solicitors wrote to advise that finance had been approved.  The first respondent seems to challenge the fact of that approval.  But in any case it was open to the applicant to waive the finance condition so nothing comes of that point.

[10] On 21 February 2008 the applicant’s solicitors asked for an extension of time to 7 March 2008.  But on the following day they withdrew that request and asked for a transfer to be signed and for settlement figures and other details to be provided urgently.  On 25 February 2008, the due date for settlement, they wrote to the first respondent’s solicitor again calling for the return of the transfer and for those figures and details, and stating that the applicant was ready, willing and able to settle.  In the afternoon of 25 February they wrote a further letter (which, like all of this correspondence, was faxed), noting that the first respondent had not signed the transfer and was said to be then “overseas and uncontactable”.  They wrote that the applicant affirmed the contract and demanded specific performance.  Later still on 25 February, a further fax to the same effect was sent to the first respondent’s solicitors, who wrote back saying that they were unable to obtain instructions and that the applicant’s solicitors should thereafter communicate with the first respondent directly.

[11] On 5 March 2008, solicitors then acting for the second respondent wrote to the applicant’s solicitors saying that she had a prior interest in the house and that specific performance would be resisted.

[12] Caveats were then lodged by the applicant and the second respondent.

[13] I accept the second respondent’s evidence that the document dated 15 January 2007 was signed on that date.  If the respondents had set about fabricating something to make it appear that there was a prior contract, it is unlikely that the result would have been this document.  For example the references to the various amounts borrowed would be unnecessary in such a fabrication as would the first respondent’s date of birth.  Details such as those give the impression of authenticity.  At least by late January 2008 the first respondent knew what a standard form of contract looked like, because he and the applicant had signed one.  The first respondent has an ability to speak and read in English (unlike the second respondent) and I think he would have resorted to a standard form or something which looked more like a contract document had the respondents been fabricating a contract document.  Further, there is the evidence of the second respondent’s payment of the rates when she did not live in this house.

[14] For the applicant it is argued that the January 2007 document, if authentic, does not evidence a concluded contract.  The argument focuses upon the words “I will be fully responsible if I change my mind in any way”.  It is argued that this makes the contract illusory because its performance is left to the discretion of the vendor, in reliance on Thorby v Goldberg;[1] and Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd.[2]  However the sentence should not be understood in that way.  By saying that he would be “fully responsible”, the first respondent was effectively acknowledging that this document had legal effect.  And this sentence, of course, must be read in the context of the document as a whole, which also provides that the second respondent was from that day to be the “owner” and to “look after all matters related to the house”.

[15] The applicant’s argument also referred to the absence of an agreed date for completion within this document.  It was not said that this made the agreement uncertain.  It was rightly conceded that ordinarily, in the absence of an agreed completion date, by implication completion would occur within reasonable time.[3] The argument is that the absence of an agreed date is another indication within the document that it was not intended to be a binding contract.  The applicant seems to rely also on the second respondent’s evidence as to when the respondents contemplated that completion would occur.  The effect of her evidence was that it would occur when she was able to borrow the purchase price or at least most of it, which could happen only when her farming enterprise began to produce substantial income.  (She says that this has now happened.)  But this does not mean that the agreement was so open ended that it lacked legal effect.  By implication she was obliged to settle within a reasonable time and what constituted that time would be a factual question which need not be answered in this case.  As I view the matter, this was not an agreement that she would be obliged to complete only if and when her farming enterprise was successful, and I do not understand the applicant’s argument to go that far.

[16] It follows that I am satisfied that the second respondent has an enforceable contract to purchase the house.  Her interest is prior in time to that claimed by the applicant and there is no argument that in the circumstances, her interest should be postponed to his.  Specific performance of the applicant’s contract must be refused.

[17] In that event the applicant sought a judgment for damages.  The applicant concedes that the assessment for damages would have to be undertaken in another hearing.  But it wishes to have its entitlement to damages upheld now.

[18] The only matter raised by the first respondent was that the applicant had not proved that he was ready, willing and able to complete on 25 February 2008, which was the agreed date for completion.  The first respondent conceded that the applicant is now ready, willing and able to complete but his point is directed to the original completion date.  The applicant argues that he does not have to prove that he was then ready, willing and able but that in any case he has proved that fact.

[19] As to the facts, the applicant had a letter dated 8 February 2008 from a finance broker advising of the availability of finance.  However there is a letter from a financier, headed “Formal Approval Letter” which is dated 26 February 2008, one day after the due date for completion.  It provides for a loan in the sum of $216,000 against the purchase price of $270,000.  Also on 26 February 2008, an amount of $56,000 was deposited to an account of the applicant.  So clearly by the day after the date for completion he had the necessary funds.  At first the applicant’s evidence seemed to be that these funds were available on the date for completion.  But after an interruption to his evidence whilst he retrieved the relevant documents, he said that the funds available to him as at the completion date were from friends or associates who were willing to lend him the money on a short term basis whilst he waited for these other funds.  The evidence as it emerged in this way was not immediately persuasive but ultimately I accept it.  Relevant to this question is the correspondence referred to earlier, in which the applicant through his solicitors was pressing the first respondent’s solicitors for details to enable the settlement to occur on the due date.  This indicates that the applicant was then ready, willing and able to settle.  

[20] In any case it is not necessary for the applicant to prove that he was ready, willing and able on 25 February 2008.  In Commonwealth Oil Refineries Ltd v Hollins,[4] it was held that a plaintiff seeking specific performance must prove that he was ready, willing and able to perform the contract at the date of the trial and that it was irrelevant if that was not the case at an earlier time, if the contract had remained on foot.  In the present case the first respondent had made it clear enough that it would be futile for the applicant to tender on 25 February.  Accordingly, there was then no breach by the applicant in not tendering performance:  Foran v Wight;[5] Darter PtyLtd v Malloy.[6] The applicant’s contract thereby remained on foot, and subject to the second respondent’s interest by her contract, the applicant was entitled to performance.  The requirement that he be ready, willing and able has its source in the equitable principle or maxim that a person who seeks equity must do equity:  Darter Pty Ltd v Malloy.[7] The relevant date for considering the applicant’s readiness to complete is the date of trial when he seeks equitable relief.  Accordingly, the one matter raised by the first respondent provides no answer to the claim that he has wrongfully failed to perform the applicant’s contract.  I will declare that the first respondent has wrongfully failed to perform the contract between him and the applicant.

[21] The first paragraph of the application seeks specific performance and this must be refused.  The second paragraph seeks the removal of the second respondent’s caveat and again that application must be refused.  But the applicant also seeks such further or other order as is appropriate.  I will hear the applicant as to the precise terms of the order which he seeks in relation to damages which are to be assessed in a further hearing.

[22] The proceedings result entirely from the actions of the first respondent.  It will be ordered that the first respondent pay to the applicant his costs of and incidental to these proceedings, to be assessed upon a standard basis.  At one stage the second respondent was legally represented.  It will be further ordered that the first respondent pay to the second respondent her costs of the proceedings to be assessed upon the same basis.

[23] The second respondent’s contract is not stamped.  It was received in evidence upon the basis that it would be given to the Commissioner pursuant to s 487(2) of the Duties Act 2001 (Qld).  I will have the document sent to the Commissioner with a copy of this judgment.