Doolan v Rothmont Projects Pty Ltd
[2010] QSC 193
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- Unreported Judgment
- Doolan v Rothmont Projects Pty Ltd[2010] QSC 193
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Doolan v Rothmont Projects Pty Ltd[2010] QSC 193
Doolan v Rothmont Projects Pty Ltd[2010] QSC 193
SUPREME COURT OF QUEENSLAND
CITATION: | Doolan v Rothmont Projects Pty Ltd [2010] QSC 193 |
PARTIES: | ROTHMONT PROJECTS PTY LTD v GARY KEITH DOOLAN AND KAREN LEIGH DOOLAN |
FILE NO/S: | BS2504 of 2009 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 4 June 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 24 February 2010 |
JUDGE: | Martin J |
ORDER: | THE APPLICANT IS TO BRING IN MINUTES OF ORDER |
CATCHWORDS: | CONVEYANCING – Statutory obligations or restrictions relating to contract for sale – Protection of purchasers – Obligations on vendor: disclosure, warnings and like matters – where a purchaser signed a contract to purchase a property – where the purchaser signed a warning statement before the offer was signed – where the vendor amended the special conditions – whether the amendment amounted to a counter-offer – whether the purchaser had to sign a new warning statement before signing the amended contract CONVEYANCING – COMPLETION OF CONTRACT – TIME FOR COMPLETION – GENERALLY – where settlement did not occur at the time stipulated in the contract – whether the purchaser could terminate the contract after that time Acts Interpretation Act 1954 (Qld) Body Corporate and Community Management Act 1997 (Qld) Property Agents and Motor Dealers Act 2000 (Qld), ss 363, 364, 365, 366B, 366D, 367 Property Agents and Motor Dealers and Other Legislation Amendment Bill 2010 (Qld) Uniform Civil Procedure Rules 1999 (Qld), r 293 Armour Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 Deputy Federal Commissioner of Taxes (SA) v Elder’s Trustee and Executive Co Ltd (1936) 57 CLR 610 Gray v Morris [2004] 2 Qd R 118 Hedley Commercial Property Services Pty Ltd v BRCP Oasis Land Pty Ltd [2008] QSC 261 Hyde v Wrench (1840) 49 ER 132 MNM Developments Pty Ltd v Gerrard [2005] 2 Qd R 515 Rice v Ray [2009] QDC 275 |
COUNSEL: | G Handran for the applicant in this proceeding J B Sweeney for the respondents in this proceeding |
SOLICITORS: | Hickey Lawyers for the applicant in this proceeding Michael Sing Lawyers for the respondent in this proceeding |
- On 9 March 2009 Gary Doolan and Leigh Doolan (“the Doolans”) filed an originating application in which they sought, among other things, declarations:
- that the written agreement of 10 October 2007 for the sale of property at Hope Island (“the property”) from them to Rothmont Projects Pty Ltd (“Rothmont”) had been validly terminated by them; and
- that they were entitled to forfeit the deposit of $330,000.
- The application before the Court, though, is by Rothmont in which it seeks, among other things, orders that the Doolans’ originating application be dismissed and that it be entitled to recover the deposit.
Background
- The facts in this dispute (apart from a question relating to one aspect of the conduct of the Doolans’ real estate agent) are non-contentious. The chronology of the relevant events is as follows:
6 October 2007Rothmont signed an offer to purchase the property in the form of an REIQ contract. It was created by the seller’s agent. It contained special conditions. It had a Property Agents and Motor Dealers Act 2000 (“PAMD Act”) warning statement attached to it as the first pages. The warning statement had been signed by Rothmont before the offer was signed.
9 October 2007The Doolans responded to the proposed contract with some amendments to the special conditions.
Rothmont agreed to some of the proposed amendments.
10 October 2007A second proposed contract, containing the amended special conditions, was given to the Doolans for signing.
Rothmont did not sign a new warning statement before it signed the contract.
The warning statement which had been attached to the 6 October documents was attached as the first pages of this set of documents.
Rothmont and the Doolans signed the second proposed contract.
The Doolan’s real estate agent left a copy of those documents for Rothmont.
Rothmont paid a deposit of $165,000.
The Settlement Date was set for 1 October 2008.
16 October 2007The Doolans’ agent sent a copy of the executed contract to Rothmont’s solicitor.
8 April 2008Rothmont paid the balance deposit of $165,000, bringing the total deposit paid to $330,000.
1 October 2008Rothmont delivered notice withdrawing the offer made by the contract under s 365(3) of the PAMD Act.
The Doolans said that the contract was ‘still on foot’.
No election was made by the Doolans to terminate the contract under cl 9.1 of the terms of the contract.
2 October 2008Rothmont gave notice under s 367 of the PAMD Act terminating the contract.
3 October 2008The Doolans elected and purported to terminate the contract.
The applicant’s case
- It was argued on behalf of the applicant that it was entitled to judgment because, on the uncontested facts:
- Rothmont did not sign the warning statement attached to the contract after being handed that document on 10 October 2007 for signing (contrary to s 366D of the PAMD Act); and
- The copy of the executed contract given to Rothmont on 10 October 2007 did not have attached to it a warning statement which complied with the PAMD Act (contrary to s 365(2) of the Act).
Summary judgment
- In order that judgment can be given under r 293 of the Uniform Civil Procedure Rules the applicant must establish that the plaintiff has no real prospects of success. While the interests of justice usually require that the real issues be investigated at trial (Gray v Morris [2004] 2 Qd R 118), that interest will be satisfied where the court is persuaded that there is no need for a trial or that the plaintiff has no real prospect of succeeding. In this case, says the applicant, where there is no dispute as to facts and the rights of the parties turn on questions of law, the court is in a position where it is able to give judgment without the need for a trial provided the appropriate test is satisfied.
Property Agents and Motor Dealers Act 2000
- The applicant relies upon the technical and confusing provisions of Chapter 11 of the PAMD Act. The PAMD Act regulates wide areas of activity. Its long title is: “An Act to comprehensively provide for the regulation of the activities, licensing and conduct of resident letting agents, real estate agents, pastoral houses, auctioneers, property developers, motor dealers and commercial agents and their employees, to protect consumers against particular undesirable practices, and for other purposes.”
- The sections relevant to this application are to be found in Chapter 11 “Residential property sales”. This part of the PAMD Act has been the subject of criticism (much of it deserved) since it was first enacted in 2000. It has been the subject of amendments and is also the subject of the Property Agents and Motor Dealers and Other Legislation Amendment Bill 2010 in which it is proposed that more changes be made to Chapter 11. In Hedley Commercial Property Services Pty Ltd v BRCP Oasis Land Pty Ltd [2008] QSC 261, Fryberg J referred to one part of Chapter 11 – s 365 – as a confused mess. He said, at [83]: “No construction of it can be devised which conforms with the canons of interpretation and the accepted theory of the law of contract.” I agree.
- It is impossible to define the statutory intent with any sense of confidence. A reader’s understanding of this part of the PAMD Act is not assisted by the organisation of Chapter 11 itself.
- For reasons which are not immediately apparent the provisions of Chapter 11 deal with events in an order which is the reverse of that which would ordinarily apply in dealings between prospective vendors and purchasers.
- I will, in an attempt to decipher the requirements of this legislation, consider the sections of Chapter 11 out of the order in which they appear so that they might better be applied to the facts of this case.
- First, though, it is important to note the purposes of Chapter 11 which are set out in s 363:
“363Purposes of ch 11
The purposes of this chapter are—
(a)to give persons who enter into relevant contracts a cooling-off period; and
(b)to require all proposed relevant contracts or relevant contracts for the sale of residential property in Queensland to include consumer protection information, including a statement that a relevant contract is subject to a cooling-off period; and
(c)to enhance consumer protection for buyers of residential property by ensuring, as far as practicable, the independence of lawyers acting for buyers; and
(d)to impose obligations on seller’s agents, under part 5, about the advertising and availability of information on sustainable housing measures for the sale of particular residential property.” (emphasis added)
- In s 364:
- a “relevant contract” is defined as a contract for the sale of residential property in Queensland, other than a contract formed on a sale by auction. (A “proposed relevant contract” is not defined.)
- a “warning statement” is defined as a statement in the approved form that includes the information mentioned in section 366D(1).
- A warning statement is required to be given. The manner in which it is to be given depends upon the manner in which a proposed relevant contract is given. In this case, s 366B applies and it provides:
“366B Warning statement if proposed relevant contract is given in another way
(1)This section applies if a proposed relevant contract is given to a proposed buyer or the proposed buyer’s agent for signing in a way other than by electronic communication.
(2)The seller or the seller’s agent must ensure that the proposed relevant contract has attached a warning statement and, if the proposed relevant contract relates to a unit sale, an information sheet with the warning statement appearing as its first or top page and any information sheet appearing immediately after the warning statement.
(3)If the proposed relevant contract does not comply with subsection (2)—
(a) if the seller gave the proposed relevant contract—the seller; or
(b) if the seller’s agent gave the proposed relevant contract—the seller’s agent;
commits an offence.
Maximum penalty—200 penalty units.
(4)If the seller or the seller’s agent hands the proposed relevant contract to the proposed buyer, the seller or the seller’s agent must direct the proposed buyer’s attention to the warning statement and, if the proposed relevant contract relates to a unit sale, the information sheet and any disclosure statement.
Note—
A contravention of this subsection is not an offence. Under section 366D(3), in the circumstances of this subsection a warning statement is of no effect unless it is signed by the buyer.
(5)Subsection (6) applies if the seller or the seller’s agent gives the proposed relevant contract to the proposed buyer or the proposed buyer’s agent in a way other than by handing the proposed contract to the proposed buyer or the proposed buyer’s agent.
(6)The seller or the seller’s agent must include with the proposed relevant contract a statement directing the proposed buyer’s attention to the warning statement and, if the proposed relevant contract relates to a unit sale, the information sheet and any disclosure statement.
Maximum penalty—200 penalty units.
(7)It is a defence to a prosecution for an offence against subsection (3) or (6) for the seller or the seller’s agent to prove that the seller or the seller’s agent gave notice to the proposed buyer or the proposed buyer’s agent under section 366C.” (emphasis added)
- The contents of a warning statement and the prerequisites for its effectiveness are set out in s 366D:
“366D Content and effectiveness of warning statements
(1)The warning statement for a proposed relevant contract or relevant contract must include the following information—
(a) the relevant contract is subject to a cooling-off period;
(b) when the cooling-off period starts and ends;
(c) a recommendation that the buyer or proposed buyer seek independent legal advice about the proposed relevant contract or relevant contract before the cooling-off period ends;
(d) what will happen if the buyer terminates the relevant contract before the cooling-off period ends;
(e) the amount or the percentage of the purchase price that will not be refunded from the deposit if the relevant contract is terminated before the cooling-off period ends;
(f) a recommendation that the buyer or proposed buyer seek an independent valuation of the property before the cooling-off period ends;
(g) if the seller under the proposed relevant contract or relevant contract is a property developer, that a person who suffers financial loss because of, or arising out of, the person’s dealings with a property developer or the property developer’s employees can not make a claim against the claim fund.
(2)A statement purporting to be a warning statement is of no effect unless the words on the statement are presented in substantially the same way as the words are presented on the approved form.
Example—
If words on the approved form are presented in 14 point font, the words on the warning statement must also be presented in 14 point font.
(3)If the seller or the seller’s agent hands a proposed relevant contract to the buyer for signing, a warning statement is of no effect unless the buyer signs the warning statement before signing the proposed relevant contract.
(4)If a proposed relevant contract is given to the buyer for signing and subsection (3) does not apply, a warning statement is of no effect unless the buyer signs the warning statement.
(5)For subsection (3), the buyer’s signature on the warning statement is taken to be proof that the buyer signed the warning statement before signing the proposed relevant contract unless the contrary is proved.” (emphasis added)
- It is appropriate to deal with the requirements of s 366D now. Section 366D(3) deals with a situation where the seller or seller’s agent is in physical proximity to the proposed buyer – the seller “hands” the proposed relevant contract to the buyer for signing. This is to be contrasted with the requirements of s 366D(4) which covers all other circumstances such as the mailing or faxing of the documents. It is only when the proposed relevant contract is “handed” to the buyer that the buyer must sign the warning statement before signing the proposed relevant contract. This can be contrasted with s 366D(4) which only requires that the proposed relevant contract be signed. The use of the word “before” is not to establish some time limit (such as “immediately before”) but to emphasise that the purpose of the warning statement is to warn the buyer before the contract is signed, not after.
- If the warning statement is not given or if it does not comply with s 366D then the buyer’s rights are provided for in s 367:
“367 Buyer's rights if a warning statement is not given or is not effective
(1)This section applies if—
(a) a warning statement requirement for a proposed relevant contract is not complied with and notice is not given under section 366C; or
(b) a warning statement is of no effect under section 366D(2), (3) or (4).
(2)The buyer under a relevant contract may terminate the relevant contract at any time before the relevant contract settles by giving signed, dated notice of termination to the seller or the seller’s agent.
(3)The notice of termination must state that the relevant contract is terminated under this section.
(4)If the relevant contract is terminated, the seller must, within 14 days after the termination, refund any deposit paid under the relevant contract to the buyer.
Maximum penalty—200 penalty units.
(5)If the seller, acting under subsection (4), instructs a licensee acting for the seller to refund the deposit paid under the relevant contract to the buyer, the licensee must immediately refund the deposit to the buyer.
(6)If the relevant contract is terminated, the seller and the person acting for the seller who prepared the relevant contract are liable to the buyer for the buyer’s reasonable legal and other expenses incurred by the buyer in relation to the relevant contract after the buyer signed the relevant contract.
(7)If more than 1 person is liable to reimburse the buyer, the liability of the persons is joint and several.
(8)An amount payable to the buyer under this section is recoverable as a debt.
(9)In this section—
warning statement requirement, for a proposed relevant contract, means—
(a) if the proposed relevant contract is sent by fax—a requirement to comply with section 366(2) or (3); or
(b) if the proposed relevant contract is given by electronic communication other than fax—a requirement to comply with section 366A(2) or (3); or
(c) if the proposed relevant contract is given in a way other than by electronic communication—a requirement to comply with section 366B(2), (4) or (6).” (emphasis added)
- Section 365 sets out the circumstances in which the parties to a relevant contract will be bound. It relevantly provides:
“365 When parties are bound under a relevant contract
(1)The buyer and the seller under a relevant contract are bound by the relevant contract when—
(a) for a relevant contract, other than a relevant contract relating to a unit sale—the buyer or the buyer’s agent receives the warning statement and the relevant contract from the seller or the seller’s agent in a way mentioned in subsection (2); or
…
(2)For a relevant contract, other than a relevant contract relating to a unit sale, the ways are—
…
(c) by being handed or otherwise receiving the documents mentioned in paragraph (a)(ii) and (iii) other than by electronic communication, if—
(i) the warning statement is attached to the relevant contract and appears as the first or top page; and
(ii) the seller or the seller’s agent directs the attention of the buyer or the buyer’s agent to the warning statement and the relevant contract.
Example of receipt other than by electronic communication—
• post
Examples of how attention may be directed—
• by oral advice
• by including a paragraph in an accompanying letter
…
(3)Without limiting how the buyer may withdraw the offer to purchase made in the contract form, the buyer may withdraw the offer at any time before being bound by the relevant contract under subsection (1) by giving written notice of withdrawal, including notice by fax, to the seller or the seller’s agent.
…
(5)If a dispute arises about when the buyer and the seller are bound by the relevant contract, the onus is on the seller to prove when the parties were bound by the relevant contract.
(6)In this section—
buyer’s agent includes a lawyer or licensee acting for the buyer and a person authorised by the buyer or by law to sign the relevant contract on the buyer’s behalf.”
- At common law, a purchaser who had signed the proposed contract would be bound once the vendor had signed the contract. Section 365 imposes more requirements. Notwithstanding that the purchaser has already signed the warning statement and the contract, the purchaser is not bound unless:
- the warning statement (which has already been signed) is attached to the relevant contract as the first or top page; and
- his or her attention is directed to the warning statement (which has already been signed).
- I have referred above to the Property Agents and Motor Dealers and Other Legislation Amendment Bill 2010. That Bill was introduced in March this year and, it appears from the Bill, that it is intended that the Act commence on 1 October this year. The objectives of the Bill are to amend Chapter 11 of the PAMD Act and make parallel amendments to the Body Corporate and Community Management Act 1997 in order to simplify the processes for the delivery and presentation of contracts for the sale of residential property. In the Explanatory Note accompanying the Bill the following appears:
“The PAMD Act requires sellers to continuously draw a buyer’s attention to the warning statement, and the information sheet and disclosure statement if a unit sale, and to attach those documents to the proposed contract in a strict order. The documents must be delivered in that same order every time the buyer receives a copy of the proposed contract during the negotiation process. Different delivery methods for electronic or facsimile transmissions are prescribed and different processes must be followed. If not followed exactly by the seller, a right to terminate arises for the buyer at any time before settlement. The courts have confirmed this interpretation.
Once the contract is signed by the seller, the buyer is only bound by the contract when the documents are delivered to the buyer in the same strict order. Buyers can therefore claim they are not bound by a contract simply because it was not delivered in a particular way, although under contract law principles, the concept of offer, acceptance and communication of the acceptance is enough to bind parties to the contract. The cooling-off period commences when the parties become bound by the contract.”
- Of course, it is not a legitimate method of interpreting an Act to simply adopt what is effectively said by a legislature about a statute in a later enactment. Although the Acts Interpretation Act 1954 allows reference to a wide range of material in order to interpret a statute, an Act of Parliament which amends an earlier Act in order to achieve the purpose which was always intended does not require that Parliament’s interpretation of the earlier Act be applied. Parliament “does not alter the law by merely betraying an erroneous opinion of it”. (See Deputy Federal Commissioner of Taxation (SA) v Elder’s Trustee and Executive Co Ltd (1936) 57 CLR 610 at 625-6.) This must apply with greater force to an Explanatory Note to a Bill which has not yet become law. Until the Bill is passed, the will of Parliament is not known. I have referred to the construction of the current Act referred to in the explanatory note for the Amendment Bill of 2010 because it is, in my opinion, correct.
- The PAMD Act is highly technical and prescriptive in this area. The result of its faithful application may require actions which appear to be impractical. But, the practical consequences of the legislation have been recognised in MNM Developments Pty Ltd v Gerrard [2005] 2 Qd R 515 where de Jersey CJ said:
“[16] The context of the requirement set up by s 366 tells against a liberal interpretation of that requirement. Chapter 11 of the Act, in which s 366 occurs, contains a detailed set of technical requirements plainly directed to ensuring a form of consumer protection for purchasers of residential property. One of the objects of the Act, stated in its preamble, is ‘to protect consumers against particular undesirable practices’. That protection extends, in cases like these, to giving a purchaser a right to terminate even for quite technical contraventions, and whether or not the purchaser has suffered any material disadvantage. See, for example, s 366(4)(a), s 366(4)(b) (including the example) and s 367(2).”
- The result, then, is that there is an unnecessary complexity and technicality to these provisions, but while that construction might make negotiations somewhat more complicated, it does not frustrate them to such an extent that another interpretation should be found. In the words of de Jersey CJ in MNM Developments:
“[20] It would be an exaggeration to suggest that construction would frustrate commercial dealings. In the first place, the convenience of commercial dealings is, implicitly, only subsidiary. Of primary importance is the protection of purchasers of residential property.”
The “contracts”
- In the circumstances of this matter the PAMD Act requires that the relevant contract/s (or proposed relevant contract/s) be identified and characterised. In order to do that it is necessary to return to the events of early October 2007.
- On 6 October 2007 the seller’s agent handed Rothmont a proposed contract for signing. It had, as its first page, the necessary warning statement. Rothmont signed the warning statement first and then the proposed contract. The documents were submitted to the Doolans but they did not accept the offer. Through their agent, the Doolans proposed some changes to the special conditions contained within the offer document.
- The proposed changes were significant. The Doolans requested substantial amendments to the special conditions. They included:
- Clause 1 (Settlement) of the 6 October 2007 contract was removed;
- Clause 1.3 was inserted, which provided that the deposit would be non-refundable and the Buyer would have no claim against the Seller or Deposit Holder;
- Clause 2.1(a) (Buyer’s right to assign) was substantially amended;
- Clause 3.4 (Buyer causing damage to the property before settlement) was inserted;
- Clause 7 (Deletion of parts of Terms of Contract) was added, and removed Terms of Contract as to matters of inspection, inquiry and surveying;
- Clause 8 (Confidentiality) was amended;
- Clause 10 (No Representations) was added;
- Clause 11 (Caveat) was added; and
- Clause 12 (Guarantee) was added.
- Rothmont submitted that this constituted a separate contract as the initial special conditions were not accepted by the Doolans and acceptance must be unqualified (Hyde v Wrench (1840) 49 ER 132). Consequently, Rothmont argued, these changes to the special conditions and the inclusion of new terms constituted a counter-offer. In my opinion, this case falls within the description given by Bray CJ in Armour Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 where, at 277, he said: “[t]he signatory may be regarded as offering to treat on the basis of what he has signed and any additional particulars subsequently attached may amount to a counter offer by the other party needing acceptance by the first before any contract comes into existence.”
- Rothmont agreed to some of the proposed changes and, on 10 October, a new proposed contract was presented to it. In those circumstances s 366D(3) applied:
“If the seller or the seller’s agent hands a proposed relevant contract to the buyer for signing, a warning statement is of no effect unless the buyer signs the warning statement before signing the proposed relevant contract.” (emphasis added)
- There was a warning statement attached to the proposed contract in compliance with s 366B. It was the same warning statement which had been attached to the 6 October offer and which had been signed by Rothmont then. The Doolans argued that the section only applied where the proposed relevant contract is given to a buyer for signing and that, therefore, there was a triable issue as to whether the Doolan’s agent handed it to Rothmont “for signing” as against “for initialling changes”. I do not agree. The proper characterisation of the 10 October document is that it was a new offer made in the light of the counter-offer made by the Doolans and, thus, was a different “relevant proposed contract”.
- It was the Doolan’s contention that there was only a “single evolving offer which morphed into the relevant contract” – a description used by Wall DCJ in Rice v Ray [2009] QDC 275. That cannot be accepted. While there may be situations in which it will be difficult to determine whether there has been a refusal of an offer constituted by a request for a change in the terms of an offer – for example, where only a minor and essentially irrelevant change is sought – this was not such a case. The Rothmont offer was unacceptable to the Doolans. They proposed a changed set of special conditions which were, in large part, adopted by Rothmont in the offer it made on 10 October.
- Rothmont submitted that the warning statement referred to in s 366D(4) does not refer to a warning statement attached to an earlier proposed contract, that is, the warning statement attached to the October 6 proposed contract (see Hedley Commercial Property Services Pty Ltd v BRCP Oasis Land Pty Ltd [2008] QSC 261 at [63]-[64] and Rice v Ray [2009] QDC 275 at 8). I agree with what Wall DCJ said in Rice v Ray that the warning statement “is intended to be a warning applicable to the proposed relevant contract then under consideration.” Rothmont submitted, correctly I think, that this could only mean the contract given to it for signing on 10 October 2007.
- Although the proposed relevant contract of 6 October was similar to that of 10 October, the former had not been accepted. There were two separate, albeit related, contractual situations involving the first offer, and later, the second offer. The requirements of s 366D(3) applied to both.
- A somewhat similar situation arose in Hedley Commercial Property Services Pty Ltd v BRCP Oasis Land Pty Ltd [2008] QSC 261. A submission was made to the effect that when a proposed relevant contract is given to a buyer more than once, it is sufficient if the buyer's attention is directed to the warning statement on the first occasion this occurs. I agree with the observations of Fryberg J with respect to that submission:
“[63] … Section 366A(2) should not be construed as requiring a direction already given once to be given each time a further copy of the contract is given. Such an interpretation would be capable of producing a multitude of absurd results. The same applied where an amended copy of the contract was given to the buyer, at least where the amendments were minor and were given within a short time of each other. The proposed contract was the same proposed relevant contract.
[64] I cannot accept that submission. While (if accepted) it may produce a sensible result in cases where only a short time elapses between the occasions on which the proposed relevant contract is given to a buyer, it might not do so in other cases. A test dependent upon the length of time between occasions when the buyer was given a proposed relevant contract would result in considerable uncertainty as to the existence of a right of termination in many cases. If such a doctrine were to be extended to cases where the contract document had undergone even minor amendment in the meantime, even greater uncertainty would result. Moreover that interpretation does not sit comfortably with the words of the section. It could hardly be suggested that if the section be complied with once, it is sufficient thereafter to ignore it. Finally, it must be remembered that the section applies only where the proposed relevant contract is given to the buyer for signature. It does not have to be complied with where there is an exchange of drafts in the course of negotiations. When this is borne in mind some of the absurd results postulated on behalf of BRCP disappear into the realm of the improbable.”
- It follows, then, that for the purposes of this case, Chapter 11 required Rothmont to sign a warning statement (whether the one it had previously signed or another) prior to signing the proposed contract of 10 October. The omission to do that is a breach of s 366D(3) and, therefore, the warning statement attached to the 10 October contract is of no effect. A consequence of this is that Rothmont was provided with the right to terminate the contract at any time before it settled. Section 367(4) provides that if such a contract is terminated then the seller must, within 14 days after the termination, refund any deposit paid under the relevant contract to the buyer.
- This is a conclusion I reach reluctantly. Rothmont suffered no material disadvantage by not signing the warning statement attached to the 10 October proposed contract.
- Rothmont gave notice on 2 October 2008 and submitted that it did terminate within the time allowed in s 367(4). The Doolans argue that, as settlement had been fixed at 5.00pm on 1 October 2008, no effective termination could take place after that time. But the contract did not settle at that time. The section refers to the time when “the relevant contract settles” not the time when it is supposed to settle. It is well known that extensions can be given to the time of settlement and the purpose of s 367(4) is, among other things, to provide that termination on this ground cannot occur after settlement. The notice of termination was given within time.
- Other arguments were advanced by Rothmont but I need not consider them in the light of my findings above.
- The result of Rothmont’s application is that the application by the Doolans is dismissed. The deposit should be returned to Rothmont. I will hear the parties on costs and the appropriate form of orders.