Couronne Investments Pty Ltd v Bardot Pty Ltd, Gerring Pty Ltd, Japie Pty Ltd & Anor [1996] QSC 54

IN THE SUPREME COURT OF QUEENSLAND Brisbane No. 295 of 1992 [Before The Hon Justice White] [Couronne Investments v. Bardot Pty Ltd & Ors] BETWEEN: COURONNE INVESTMENTS PTY LTD Plaintiff AND: BARDOT PTY LTD First Defendant AND: GERRING PTY LTD Second Defendant AND: JAPIE PTY LTD Third Defendant AND: LOUIS LINDES MOSTERT Fourth Defendant REASONS FOR JUDGMENT - WHITE J Judgment delivered 10/04/1996 CATCHWORDSCONTRACTS for the sale of land - alleged collateral condition - Rule in Hoyts v. Spencer - obligation to use best endeavours - unilateral mistake - certainty of terms as to completion - Trade Practices Act - reliance - agency - measure of damages - valuation evidence. Counsel: Mr AJH Morris QC With him Mr AM Musgrave for the plaintiff Mr J Muir QC With him Mr D Kelly for the First, Third and Fourth Defendants Mr MA Kyle, Director, for the Second Defendant Solicitors: McLaughlins for the plaintiff Walsh Halligan & Douglas for the First, Third and Fourth Defendants Hearing dates: 24-28 October; 31 October; 2 and 11 November 1994 -- 1 of 71 -- IN THE SUPREME COURT OF QUEENSLAND Brisbane No. 295 of 1992 [Couronne Investments v. Bardot Pty Ltd & Ors] BETWEEN: COURONNE INVESTMENTS PTY LTD Plaintiff AND: BARDOT PTY LTD First Defendant AND: GERRING PTY LTD Second Defendant AND: JAPIE PTY LTD Third Defendant AND: LOUIS LINDES MOSTERT Fourth Defendant REASONS FOR JUDGMENT - WHITE J Judgment delivered 10/04/1996 In this action the plaintiff has sued the first, second and third defendants for damages for breach of contract alternatively damages for misleading and deceptive conduct. In the case of the fourth defendant it seeks damages for breach of warranty of authority, although by the conclusion of submissions it ceased to be an issue. In broad outline the issues for consideration are: • whether contracts in writing for the sale of certain parcels of land were subject to an oral collateral condition; • whether the fourth defendant was the agent of the -- 2 of 71 -- 2 second defendant; • the value of the land the subject of the contracts as at the date of the contracts on 1 November 1991. In or about October 1991 the first defendant, Bardot Pty Ltd ("Bardot") was the registered proprietor of a parcel of land in the Cupania Estate, Pacific Highway, Ormeau of some 87 hectares. The second and third defendants, Gerring Pty Ltd and Japie Pty Ltd ("Gerring" and "Japie") were the registered proprietors of 49 hectares of land adjacent thereto. Westpac Banking Corporation held a registered first mortgage over those lands ("the land") and Queensland Estate Development Pty Ltd held a second registered mortgage. From 31 August 1991, John Fitzgerald, the Managing Director of JLF Corporation Pty Ltd, the parent of the plaintiff company, ("Couronne"), was involved in negotiations with the fourth defendant ("Mr Mostert") with respect to the purchase of the land. Mr Mostert was a director of Bardot and Japie but not of Gerring. On 31 October 1991 Mr Mostert executed two contracts as vendor of the land to Couronne as purchaser. It is admitted on the pleadings by Bardot, Japie and Mr Mostert that Mr Mostert was the agent of the first and third defendants. Initially Gerring had admitted that Mr Mostert was its agent when represented by the same solicitors as the other defendants in a joint defence. In July 1994 just prior to the matter being called on for trial Gerring sought leave to withdraw that admission on the ground that it had given no -- 3 of 71 -- 3 authority to Mr Mostert to execute the contract to sell the land of which it was the registered proprietor nor to conduct the current litigation of which it maintained it had known nothing. The principals of Gerring are residents of Western Australia and the defendant companies would appear to be Western Australian companies. Leave was given to withdraw the admissions and, as a consequence, the trial was adjourned. The plaintiff's case is straight forward. It alleges that on 31 October 1991 it entered into two unconditional written contracts for the purchase of the land which contracts were dated the following day 1 November 1991. The defendants maintain that the contracts were subject to an oral condition that they were dependent on Westpac Banking Corporation giving its consent to the contracts which was not forthcoming and accordingly there were no enforceable agreements. The defendants raise other grounds if the contracts are found not to be subject to that condition as to why there is no enforceable agreement. The plaintiff maintains that it had contracted to buy the land at undervalue and seeks the difference between the market price and the contract price as damages. The Trade Practices Act aspect of the action was not strenuously advanced. 1. Background It is convenient to set out something of the background as it impacts upon the question of agency. Mr Peter Reynolds a Western Australian resident had studied the development of private adult estates where people lived around their own -- 4 of 71 -- 4 resort facility. Mr Reynolds' company, Cedar Developments Pty Ltd, owned this concept. Mr Louis Mostert, a South African engineer with experience on the engineering side of housing projects in the mining industry both in South Africa and Australia became interested in this concept. Gerring was and is the trustee of the Cedar (Q) Unit Trust. Mr Reynolds, his son Mr Christopher Reynolds and Mr Peter Kyle were directors of Gerring. Mr Kyle was the solicitor for Mr Reynolds' various interests and became a director of Gerring at Mr Reynolds' request. Apart from holding a few units in the trust, he was not involved and played no part in the activities of the company apart from giving legal advice. Japie was and is the trustee of the LL Mostert Investment Trust. Mr Mostert and his wife are the directors of Japie. In December 1989 Cedar Developments, Gerring and Japie entered into an agreement (exhibit 26) whereby Cedar Developments granted Gerring as trustee for Cedar Q and Japie half the profit arising from the use of the concept. Cedar (Q) and Japie entered into a partnership agreement to invest in and develop a private estate using the Cedar Development concept. Japie was to provide the funds to purchase suitable land. The subject land was identified by Mr Peter Reynolds and Mr Mostert in 1990 and they caused Gerring and Japie to incorporate Bardot Pty Ltd as the vehicle for the acquisition and development of the private estate land. Bardot was a company owned in equal shares by Gerring and Japie. Bardot purchased the land which was to be the private estate land from -- 5 of 71 -- 5 Pivot Projects Pty Ltd in January 1990. That land was more extensive than was needed for the private estate development. Gerring and Japie purchased an adjacent parcel of land from the same vendor as tenants in common in equal shares. That land was the subject of a joint venture agreement between Bardot, Gerring and Japie to subdivide and sell as residential lots. Cedar Developments, Gerring, Japie and Bardot entered into an agreement dated 1 June 1990 in respect of the development of the private estate land. Japie was to be the financier of the project. At the same time MCHA Pty Ltd (a company associated with Mr David McLaren which becomes relevant for valuation purposes) bought the balance of the land for development from Pivot. Mr Mostert personally provided a considerable part of the purchase monies for the land and Japie borrowed the balance from Westpac. Further monies were borrowed for development work from Queensland Estate Development Pty Ltd in approximately January 1991. Initially Mr Peter Reynolds lived in Queensland and was closely involved in marketing the project. His son was the salesman. Mr Mostert was concerned with the engineering aspects of the development and financing the project. The development did not do well. There was no market for and no financial interest in the private estate. In early 1991 Stage I of the residential development was opened and Mr Peter Reynolds returned to Perth leaving his son at Cupania, the name given to the development. Prior to Mr Reynolds returning to Perth the planned location of the private estate land within -- 6 of 71 -- 6 the land as a whole had changed from its original position of being entirely within the land held by Bardot and came to encompass a small part of the land held by Gerring and Japie. Mr Mostert and Mr Reynolds on behalf of their interests entered into a restructured agreement between Bardot, Gerring and Japie (exhibit 29) (undated). Essentially it gave Japie the entitlement to all profit from the subdivisional land and the right to deal with it. Gerring was to be the selling agent for this land. The parties agreed that Japie would decide if the development of the private estate was to proceed. If the land sold Japie was to retain all proceeds up to a certain amount and thereafter a sum was to be paid to Gerring should the development proceed at some time in the future. The restructure agreement made provision to reimburse Japie and for the distribution of the profits. Gerring was to be principal selling agent for the private estate land. Mr Mostert, without reference to Mr Peter Reynolds, decided to sell the land and placed it with several smaller agencies. There was some interest and negotiations commenced with Mr Fitzgerald of JLF Corporation towards the end of August 1991. Draft contracts were prepared in conjunction with the solicitors for the parties during October. Agreement was apparently reached as to the terms. Initially Mr Mostert was to come into JLF Corporation's offices at Southport to sign on 30 October but, at his request, this was changed to the following day. 2. The Agreement -- 7 of 71 -- 7 The defendants approached the question of the agreement in this way on the pleadings: By paragraph 7 they admit the execution of the contracts by Mr Mostert (putting aside the question of agency) but plead that prior to the execution of the contracts Mr Mostert told Mr Fitzgerald, Ms Simmons and Mr Loakes that any agreement between the parties was subject to the approval of Westpac Banking Corporation and that the contract should not be dated until that approval had been obtained. They allege that prior to the execution of the contracts Mr Fitzgerald did not dispute that any agreement would be subject to the approval of Westpac and told Mr Mostert that the documents would be dated the next day and that when the approval of Westpac was obtained the date would be altered to the date of such approval. The defendants plead that since contractual liability was dependent upon the approval of Westpac to the contracts which consent had not been forthcoming the contracts had no force and accordingly the defendants were not in breach. Mr Mostert attended at the offices of JLF Corporation with Mr Robert Walker, his real estate agent, on the morning of 31 October 1991. Mr Mostert's evidence of what was said and what occurred at the meeting was at variance with the evidence of the people from JLF Corporation in material respects. Accordingly whether there was such a collateral term as contended for by the defendants or whether the other matters of defence raised succeed, will depend upon the credit of the witnesses. Mr Walker was not called by either side although he -- 8 of 71 -- 8 was conceded to be the vendors' agent (apart from questions of agency between Mr Mostert and Gerring), and no explanation was advanced to account for this but both sides sought to call in aid the rule in Jones v. Dunkel (1958) 101 CLR 298 per Kitto J at p. 308 to have adverse inferences drawn against the other. The JLF Corporation people present, all of whom gave evidence, were: John Fitzgerald, property developer and managing director of JLF Corporation; Helen Simmons, legal liaison officer and conveyancer with JLF Corporation; and Robert Loakes, general manager for the JLF Group of Companies concerned with accounting, finance and administration. Before considering what occurred at that meeting it is convenient to make reference to certain provisions in the written contracts which were before the parties for execution on 31 October 1991 as they were referred to in the conversations in the course of execution. The two contracts are standard REIQ contracts with special conditions. They are identical save for the particulars of vendor, the description of the land and the price to be paid. It will be convenient to refer to the various clauses in the singular. By cl 35 the contract was conditional upon the purchaser satisfying itself as to the suitability of the land for the purchaser's subdivisional requirements within 30 days from the date of the contract. The purchaser was required to give notice in writing to the vendor upon being satisfied. Failure to give the satisfaction notice within 30 days would bring the contract to an end. That clause was expressed to be for the sole benefit -- 9 of 71 -- 9 of the purchaser. Clause 39 dealt with the payment of the purchase price. A sum was to be paid forthwith "upon the formation of the contract"; a sum on 2 December 1991 designated the date of possession in exchange for vacant possession and a mortgagees' deed described in cl 44; a sum on 2 March 1992; a sum on 2 June 1992; a sum on 2 December 1992; and "as to the balance" sum "on the date for completion". The date for completion was never inserted in the executed contracts although it was not disputed by the defendants that it appeared in earlier drafts. Clause 44 provided that the vendor would deliver to the purchaser on the date of possession in exchange for the sum designated in cl 39(a)(ii) a deed executed by the mortgagee of the land in a form acceptable to the purchaser in which the mortgagee consented to the contract, agreed not to take steps to enforce its security against the vendor of the land if the vendor was not in default, and, upon due payment by the purchaser, would deliver to the purchaser the relevant certificates of title and discharge its security. By cl 44(b) if the vendor failed to deliver the deed the purchaser might terminate the contract. Cl 44 was expressed to be for the sole benefit of the purchaser who might waive the benefit of it by notice in writing to the vendor on or before the date of possession. When Mr Mostert and Mr Walker arrived at the offices of JLF Corporation they were met by Ms Simmons and taken into the boardroom. I accept Ms Simmons as a witness who was able to be -- 10 of 71 -- 10 of assistance to the court. She impressed as being efficient and reliable. She spoke only of the conversations and conduct that she could recall clearly. These tended to be matters which concerned her role in the JLF organisation preparing contracts, their execution and conveyancing matters. Where there were differences between her evidence and the evidence given by Mr Mostert I preferred the evidence of Ms Simmons. Mr Mostert's evidence did not always follow as to detail the conversations attributed to him by his counsel when cross- examining the plaintiff's witnesses. For example, it was put to Ms Simmons that Mr Mostert explained to her that the date was not to be inserted in the contracts whilst she was making alterations to the special conditions just prior to execution because he needed his banker's approval, whereas Mr Mostert's evidence in chief was that he did not recall giving an explanation to Ms Simmons as to why she should not insert the dates into the contracts. Mr Mostert was represented by very experienced senior counsel. Mr Fitzgerald, Ms Simmons and Mr Loakes gave substantially the same evidence about the significant conversations and events which occurred in the boardroom at the time that the contracts were executed. They agreed that they had discussed these matters afterwards. It was suggested that this should cause their evidence to be regarded as suspect or unreliable. I would regard a denial by them that these matters had been discussed as most unusual and a ground for suspicion rather than the converse. I did not have the impression that the JLF -- 11 of 71 -- 11 Corporation people had set out to give the same evidence irrespective of its truth. There were differences in the detail of their recollections, for example, Mr Fitzgerald thought that the meeting took place in the late afternoon of the 31st but accepted that he was mistaken. Ms Simmons thought that Mr Fitzgerald came into the boardroom first followed some 30 seconds later by Mr Loakes whilst Mr Loakes said that he came in before Mr Fitzgerald. I did not regard these or other differences in their evidence as suggesting that they were to be regarded as unreliable. Mr Loakes had no role in the final preparation and execution of the contracts and simply came into the boardroom for the signing. Ms Simmons was closely involved in the drafting and typing of the amendments to the contracts, was a witness to the signatures and was responsible for the conveyancing aspects of the contracts. Their recollections should be seen in the light of their respective roles. Mr Fitzgerald's evidence-in-chief was particularly short. There was no reason why that should have exposed him to the criticism that it did. He gave the impression of having a clear recollection of essential matters. I accept that the contracts were in their final form when Mr Mostert and Mr Walker arrived at the JLF offices contrary to Mr Mostert's assertion that the documents were still being typed. This was unlikely as the initial appointment for execution had been the previous day. Ms Simmons took the contracts into the boardroom where they were perused by Mr Mostert and Mr Walker. Mr Mostert requested some changes -- 12 of 71 -- 12 described by Ms Simmons as "minor" to cl 41 which concerned the estate sales office. In the documents presented to Mr Mostert the sales office was to be available to the purchaser for 18 months without charge. Mr Mostert wanted the clause changed to charge the purchaser rental at $800 per calendar month for 18 months. Ms Simmons took the contract to Mr Fitzgerald and explained Mr Mostert's request to which he agreed. She then proceeded to make the changes to the contracts herself. She did this by physically taking apart the contracts and making the changes on her word processor. Mr Mostert said that while Ms Simmons was typing the contracts he asked her not to type in the date. I accept Ms Simmons' evidence when she said that Mr Mostert did not make this request to her at this time. Mr Mostert requested no other changes and when the changes to cl 41 were completed to Mr Mostert's satisfaction Mr Fitzgerald and Mr Loakes came into the boardroom. The preliminary matters between Mr Mostert, Mr Walker and Ms Simmons took about 45 minutes. After Mr Fitzgerald and Mr Loakes came into the boardroom they had some social conversation with Mr Mostert. Mr Fitzgerald asked Ms Simmons if the changes had been sorted out and she indicated that they had. The contracts were executed by Mr Fitzgerald on behalf of the purchaser and Mr Mostert as vendor. Ms Simmons witnessed their signatures. I accept Mr Fitzgerald's evidence that she said words to this effect, "Shall we date the contracts now?". According to Mr Fitzgerald and Ms Simmons, Mr Mostert said that he wished to -- 13 of 71 -- 13 have the contracts dated "tomorrow". Mr Loakes was not certain as to the sequence of events but also heard the request and the reason for it. According to the JLF Corporation witnesses Mr Mostert said that he had verbal approval from Westpac for the contracts and was going to Perth the following day to see the bank and would fax a written approval from Westpac to the purchaser. Mr Fitzgerald recalled that Mr Mostert said that his solicitor had said that the only outstanding matter with respect to the contracts was obtaining Westpac's approval. As far as Mr Fitzgerald and Ms Simmons in particular were concerned this was a reference to the deed of approval in clause 44. Mr Loakes' evidence does not support a conclusion that Mr Mostert said or he understood that this meant that the contracts themselves were conditional on the bank's approval. They said that it was of no real concern to the purchaser as the contracts were not dependent upon Westpac's approval. Mr Mostert's account of what was said differed markedly. He said that he requested Ms Simmons to leave the contracts undated prior to Mr Fitzgerald coming into the boardroom; that he had told Mr Fitzgerald that he had approval "in principle" from the bank for terms contracts; that he told Mr Fitzgerald that it was very important that the bank saw and approved the contracts; that Mr Fitzgerald asked him when he was to see the bank and that he replied that that was to happen on the following day; that Mr Fitzgerald then said, "We will date the documents the next day and if the Bank doesn't approve on that day, we can change it to whenever the Bank approves it" (t/s -- 14 of 71 -- 14 p.284). That Mr Mostert was thinking in terms of a cl. 44 deed when he spoke of the bank is supported by the letter which he wrote to Mr Walker dated 2 November 1991 where he wrote that there was no hope of coming to an agreement as defined in cl. 44 after talking to the bank. Mr Mostert said that he was confident that the contracts were not dated at JLF Corporation's offices and that he took away with him undated copies of the executed contracts. Ms Simmons recalled that when the formal part of the meeting ended she asked Mr Mostert if he wished her to courier the contracts by overnight courier to his Brisbane solicitors, but that he said that since he was calling on them that afternoon and it was unnecessary. Ms Simmons handed Mr Mostert a duplicate copy of each of the contracts and retained the originals. Ms Simmons immediately proceeded to deal with the conveyancing aspects of the transactions. She sent by facsimile transmission a letter to Walsh Halligan & Douglas, the purchaser's solicitors named on the contracts, that day. Much was made of this letter by the defendants. It was suggested that it was an attempt to make immediately binding an agreement which was known by the purchaser to be conditional upon Westpac's approval. The letter is in the following terms: "RE; COURONNE INVESTMENTS PTY LIMITED PURCHASE OF CUPANIA ESTATE FROM BARDOT PTY LIMITED, GEERING PTY LIMITED AND JAPIE PTY LIMITED We refer to the above and confirm that the relevant parties entered into two separate Contracts of Sale to purchase Lot 254 on Registered Plan No. 811707 (Vendor Bardot Pty Limited) and Lot 3 on Registered Plan No. 803496 (Vendor Geering Pty Limited and Japie Pty Limited). -- 15 of 71 -- 15 We confirm that at this point in time the Purchaser Company will be acting on its own behalf and we already have the original Contracts in our possession. Your client has the duplicate Contracts in his possession and we understand he will deliver same to you tomorrow morning. Enclosed please find Requisitions on Title for your further attention. We shall communicate with your further in due course . . . N.B. The original of this letter together with the Requisitions on Title will be forwarded to your office via overnight mail." Ms Simmons said that she liked to process the contracts the same day as executed and was particular about getting her requisitions on title out in good time. She said the letter was expressed in terms which she usually used and she was concerned to ensure that Walsh Halligan & Douglas were aware that the purchaser was acting for itself on the conveyance. She was challenged as to the need to send the letter by facsimile transmission when, in the ordinary course of post, it would arrive the following day. She was at pains to explain that she wished Walsh Halligan & Douglas to know that Feez Ruthning, the purchaser's solicitors named on the contracts and who had been involved in drafting the special conditions, were not acting on the conveyance and Mr Mostert had said that he would take the contracts that afternoon to his solicitors in Brisbane. It was not unreasonable for her to ensure that Walsh Halligan & Douglas did not contact Feez Ruthning about the contracts at the least in order to avoid incurring further fees. -- 16 of 71 -- 16 In the event Mr Mostert did not attend upon his solicitors in Brisbane but saw his Perth solicitors. He saw certain Westpac Bank officers and, according to Mr Mostert, they were not in favour of the contracts. I was not clear what Mr Mostert had told Westpac about the contracts prior to execution which gave rise to what he called the bank's agreement in principle. No one from the bank was called although apparently available and Mr Mostert's evidence was not always easy to follow. Mr Walker's letter sent by facsimile to Mr Mostert dated 6 November 1991 (Exhibit 9) stated: "I met with you a couple of days later [prior to execution] to discuss some changes to the Draft [contracts], at this meeting you told me that you had sent a copy to your bank and that the bank had given a verbal acceptance ..." This was not contradicted by Mr Mostert. Mr Mostert sent by facsimile the special conditions to Westpac on 11 November (Exhibit 65). The covering letter suggests that the bank had not seen the special conditions previously. "Dear Tony The purchase contract which I discussed, which I don't think any mortgage holder will accept. Agree?" Mr Mostert wrote to Mr Walker, his real estate agent, by letter dated 2 November 1991 as follows: "Re Option by JLF Pty Ltd After the very negative response I have had from Westpac on Friday, a meeting took place over lunch at my request at which Westpac advised that the draft agreement was totally unacceptable to them and they would under no circumstances release as mortgagee Certificate of Title and discharge its security under this draft agreement. -- 17 of 71 -- 17 Westpac's requirements incorporates payment of the majority of the purchase price up front and v. extensive guarantees to performance. This is miles away from what JLF/Couronne committed, so I see no hope of coming to an agreement as defined in Clause 44. Westpac wont compromise. I am afraid we need to stop any further involvement now before John spends money on his investigations. Sorry, but we need to cancel the possible Option. All your efforts was good! Regards . . ." Mr Mostert sent another communication along similar lines on 5 November. Mr Walker by facsimile reply dated 6 November 1991 already mentioned rejected any notion that the contracts were option contracts or possible options to buy. As I have mentioned, Mr Walker was not called as a witness. Each side sought to make something of this. Mr Mostert conceded that Mr Walker would not give evidence favourable to the vendors. There was no evidence that Mr Walker was on the side of the plaintiff to the extent that he would not give truthful evidence although he was apparently unhappy at losing his commission. A matter submitted by the plaintiff to be of fundamental significance as to what occurred at the execution of the contracts was the whereabouts of Mr Mostert's copy of the undated contracts which he said he took with him to Westpac in Perth. It was not put to the plaintiff's witnesses, particularly Ms Simmons and Mr Fitzgerald, that Mr Mostert left with undated contracts, but that was Mr Mostert's evidence in chief. No undated copy of the contracts has been discovered in this action. The relevant Westpac file was subpoenaed and I -- 18 of 71 -- 18 infer that it had no such copy upon it. On 11 November 1991, as mentioned, Mr Mostert sent by a facsimile transmission a dated copy of the contracts' special conditions to Westpac. He was unable to say from whom he had obtained those copies. There was no clear evidence as to how many copies were executed on 31 October but there were at least two: one retained by JLF Corporation Pty Ltd, and one taken by Mr Mostert. More than likely a third was taken by or sent to Mr Walker, the vendors' agent. That Mr Mostert had an undated copy of each contract would lend some credence to his evidence that the contracts were conditional upon the bank's consent, yet to be obtained. But all the evidence points to his having dated copies in his possession when he left. On 12 November Mr Mostert sent by facsimile transmission to Mr Wheeler of Westpac bank in Perth a copy of an opinion obtained from senior counsel in Brisbane. The second sentence of that opinion is submitted by the plaintiff to be instructive, namely, that "Bardot does not wish to proceed with the contract and my advice has been sought in relation to it". Mr Mostert did not disagree that that represented what he told counsel. Mr Mostert agreed that he was aware of cl. 44 dealing with Westpac's approval of the contracts which provided in sub cl. (c) that the clause was inserted solely for the benefit of the purchaser when he attended at JLF Corporation's offices on 31 October. It had been the subject of previous drafts before the contracts were finally executed. He agreed that he had not -- 19 of 71 -- 19 asked for that clause to be changed when amendments were being made to the contracts that morning. He said that he had previously requested changes to cl. 44 which had been refused by the purchaser and he knew that as far as Mr Fitzgerald was concerned that clause was not negotiable. Mr Mostert agreed that if he had asked for a term to be inserted in cl. 44 making the contracts conditional upon mortgagee consent the purchaser would have refused. Mr Mostert was not able or, at least, did not give, clear evidence as to what he said at JLF Corporation's offices on 31 October in respect of the consent of Westpac. The evidence was that he said that he was going to Perth the next day to get Westpac's approval. In an affidavit sworn on 18 December 1991 (Exhibit 66) Mr Mostert said that "I signed the two contracts and left them undated. The two contracts were signed in escrow on the express oral condition that they were subject to the approval of the first and second mortgagees of the subject property." Mr Mostert maintained that there was no appreciable difference in the two pieces of evidence. From the perspective of those hearing what he said on 31 October there is a great deal of difference. The exchange between himself and Mr Morris in the course of cross-examination at t/s 343-350 is illustrative. Perhaps the key lies in Mr Mostert's evidence at the foot of t/s 344 where he said that in his experience contracts rarely "end up the way they are". Just what had been discussed and agreed between Mr Mostert and the bank with respect to the Couronne purchase prior to 31 October never -- 20 of 71 -- 20 really emerged in evidence. What is clear is that Mr Mostert attended a formal meeting with the purchaser for the purpose of executing contracts the terms of which had been negotiated between the parties and drawn with the assistance of their solicitors over previous weeks in the knowledge that attempts to vary cl. 44 relating to the consent of Westpac to the contracts had proved unsuccessful. Mr Mostert was unable to give evidence of a clear statement made by himself to the purchaser's representatives prior to execution that those contracts were conditional upon, or would not come into effect until, Westpac (or the mortgagees) gave approval to their terms. He certainly thought that time would run for the purpose of cl. 35, the satisfaction clause, from the time of signature. He gave the impression of being muddled in his recollection and it may be that he was confused in his own mind on 31 October as to the effect of his signature on the contracts. However he was far from being unsophisticated in business matters and indeed had been involved in numerous commercial arrangements and the evidence which he gave about the development itself was sensible. It can be inferred from material placed before Metway at about this time that he was a man of considerable financial substance. There may have been some pressure on him to sign. Mr Walker's recapitulation of events leading up to the execution on 31 October in his fax of 6 November 1991 to which reference has been made, that on Wednesday prior to the execution of the contracts Mr Fitzgerald told Mr Walker that if -- 21 of 71 -- 21 they could not proceed to contract that evening he would no longer be interested in proceeding. The date was extended to 8.30am the next morning. On his own admission the Cupania Estate development was then in fairly desperate financial circumstances. At about that time Mr Mostert had applied to Metway for further finance for the project. The letter from Metway bearing date 29 October 1991 (Exhibit 69) directed to the directors of Japie at a post office box number in Ormeau offered approximately $750,000 by way of a loan to Japie in respect of the development. Mr Mostert was unable to say whether he had received that letter prior to attending at JLF Corporation's offices on 31 October but thought that he would have known of its contents before even if he had not received it. If he had not it was another factor which made the contracts with Couronne less necessary after he had executed them. I do not think, in the end, it is significant that Mr Fitzgerald agreed to post-date the contracts by a day although the defendants argued that it was so outside the ordinary experience of the JLF Corporation witnesses as to be explicable only on the basis that the contracts were conditional as they alleged. It is not unlikely that Mr Fitzgerald thought, as he said in evidence, that dating the next day was quite unimportant. His suggestion was that if he had given it consideration at the time there was some courtesy in allowing the contracts to bear the date that Mr Mostert -- 22 of 71 -- 22 obtained his bank's written approval is credible. I think it can fairly be inferred that Ms Simmons inserted "1 November 1991" onto the contracts after they had been executed by Mr Fitzgerald and Mr Mostert and witnessed by her in their presence. Mr Fitzgerald had a clear recollection that Mr Mostert asked to have the contracts dated the following day after they had been executed. Mr Mostert was adamant that the contracts were undated when he left but that Mr Fitzgerald had proposed that they might be dated the next day on the basis that they could be changed to whenever Westpac gave its approval. Dating the contracts the next day in that context does not make a great deal of sense. The ordinary response one might have thought would be to await notification of approval before dating if they were conditional. Mr Muir submitted that it was unthinkable that Mr Mostert would have exposed the vendors to such a disadvantageous contract without the prior approval of the mortgagee of the land. Mr Morris submitted that such a contract would not necessarily have had financially ruinous consequences as, in the absence of the bank's approval as set out in cl. 44 the purchase need not proceed or, if it did, the purchaser carried the risk of not getting clear title on completion. The defendants submit that it makes no sense to suppose that Mr Mostert was rushing off to Perth to get consent to a cl. 44 deed when it was not required until the date for possession on 2 December. The plaintiff does not suggest that -- 23 of 71 -- 23 Mr Mostert would have contemplated faxing the purchaser an executed cl. 44 deed the day following execution, or that that was understood by Mr Fitzgerald but rather that Mr Mostert wanted to let the purchaser know that it could proceed to investigate the suitability of the land pursuant to cl. 35, free from any uncertainty about getting good title. The defendants suggest that Mr Mostert's position is consistent as to the conditional nature of the contracts in that in his fax to Mr Walker of 5 November (Exhibit 8) he makes reference to "dating the document". Mr Mostert's Perth solicitor's letter dated 6 November 1991 to the purchaser refers to being provided with "copies of 2 Contracts of Sale both dated 1 November 1991 ...". Where those copies came from is not revealed. If they came from Mr Mostert they were dated. They may have come from Walsh Halligan & Douglas in Brisbane who had received dated copies from Ms Simmons. The solicitors do add that "the contracts were left undated ...". The plaintiff submits that by 2 November Mr Mostert did not wish to proceed with the contracts and was seeking to avoid them. Earlier drafts of the contracts had been exchanged and extensively commented upon by both Mr Mostert and Mr Fitzgerald. JLF Corporation's earlier proposal for a thirty day option to investigate the land before contract was refused by Mr Mostert in a letter dated 23 October 1991 showing that at that date Mr Mostert was only interested in executing a firm contract. On 31 October Mr Mostert had attended at the offices of JLF Corporation with the purpose of executing the contracts. -- 24 of 71 -- 24 The formality of the occasion was plain. I accept that whatever had to be worked out between the vendors and their bankers it was personal to them. If the vendors were unable to persuade the bank to execute a satisfactory deed pursuant to cl. 44, it was something in which the purchaser had an interest, of course, but it was at liberty to withdraw or not. Nothing that Mr Mostert said or did conveyed to the purchaser's representatives that the contracts themselves were conditional upon Westpac's approval. I have concluded that the contracts executed by Mr Mostert on 31 October were not subject to any oral condition that they would come into force only when Westpac gave its formal approval to them. A. The Rule in Hoyts v. Spencer There is no doubt that Exhibits 1 and 2, the subject contracts, apart from the failure to mention the date for the final instalment, on their face appear to contain all of the terms of the parties' agreement. If a contract has been reduced to writing then parole evidence is inadmissible to vary, add to or subtract from the terms of the document, Phipson Evidence 13th ed at p. 934 as referred to by Macrossan CJ in Day Ford Pty Ltd v. Sciacca [1990] 2 Qd. R. 209. The rule in Hoyts Pty Ltd v. Spencer (1919) 27 CLR 133 that a collateral agreement cannot be inconsistent with the main or principal contract has been consistently adhered to, eg., Maybury v. Atlantic Union Oil Co (1953) 89 CLR 507; Gates v. City Mutual Life Assurance Society Ltd (1986) 160 CLR 1. The -- 25 of 71 -- 25 defendants argue that the rule in Hoyts v. Spencer is not infringed in this case. They submit that the oral agreement was a pre-condition to the coming into effect of the written agreement and that accordingly there was no inconsistency between the agreement alleged that Westpac must give its written consent before the contracts could be entered into and the provisions of cl. 44. They submit that cl. 44 merely goes to the consequences of failure to provide a specific deed in particular terms by a particular time whereas the approval of Westpac required by Mr Mostert was with respect to the very entering into contractual arrangements. According to the plaintiff that oral condition would render nugatory cl. 44 or at least that part of the clause which expressly stipulates that the requirement for the mortgagees' consent is for the sole benefit of the purchaser and might be waived by the purchaser. In view of Mr Mostert's evidence that cl. 44 was not negotiable as far as the purchaser was concerned, the evidence that amendments were being made to the contracts on the morning of execution, that he did not seek to have the alleged condition incorporated into the written document because the purchaser would not have agreed, must support a conclusion that the condition sought to be added to the written contract orally was inconsistent with it. The rights accorded to the purchaser in cl. 44 would be derogated from if the alleged oral agreement were allowed to have force and that is what the rule in Hoyts Pty Ltd v. Spencer does not permit. -- 26 of 71 -- 26 B. Obligation to use reasonable endeavours If the contracts were subject to the collateral agreement that they would not become operative until Westpac's consent had been obtained then Mr Mostert was under an implied obligation to use reasonable endeavours to obtain that consent, Butts v. O'Dwyer (1952) 87 CLR 267 and Meehan v. Jones (1982) 149 CLR 571. The defendants do not dispute that proposition but argue that no such implied term was pleaded. However in paragraph 7(b) the plaintiff alleges that the defendants failed to comply with their obligations under cl. 44 of the contracts in that they failed to make all reasonable attempts to obtain a deed from the mortgagees in terms outlined in cl. 44 and were thus in breach of the contracts. Consistently with their characterisation of the oral agreement the defendants would submit that this relates to a different matter. It seems to be rather too nice a pleading point to argue that it has not been raised. If it were thought necessary to do so then an application to amend could be made at any time. Mr Mostert's evidence was the only evidence advanced by the defendants that reasonable endeavours had been made by the defendants to secure the approval of Westpac. As I have mentioned Mr Mostert gave no evidence as to the extent of the information which he had provided to Westpac so as to support his assertion to the JLF Corporation people that he had Westpac's verbal or oral agreement to the contract. There is some evidence Mr Walker's letter dated 6 November 1991 that Mr Mostert had told him prior to 31 October that he had sent the -- 27 of 71 -- 27 draft contracts to Westpac. Mr Mostert did not deny that he said that to Mr Walker but did not say that he had sent the contracts and Exhibit 65 seems rather against it. Mr Mostert did not call anyone from Westpac although he said that he was still in contact with Mr Catlow and Mr Wheeler with whom he had dealt at the time. On 11 November 1991 Mr Mostert wrote (Exhibit 65) to Mr Wheeler at Westpac "The purchase contract I discussed, which I don't think any mortgage holder will accept. Agree?" The special conditions of the contracts was the document to which Mr Mostert referred. On 12 November he faxed to Mr Wheeler senior counsel's opinion "attached copies of the QC's comment re the problem with Couronne". It will be recalled that that contains in the second paragraph the statement "Bardot does not wish to proceed with the contract ..." The defendants point to Mr Mostert's faxes to Mr Walker of 2 and 5 November in which he indicates that he has consulted with Westpac without success. It must be said that there is no other corroborative evidence of these meetings. The Westpac file was subpoenaed and was in court and it can be inferred that it contained no admissible memoranda in support of the defence contention that Mr Mostert did attempt to secure the bank's approval to the contract. The plaintiff has submitted that the explanation for Mr Mostert being unenthusiastic about obtaining Westpac's approval to these contracts was that he had, subsequent to executing the contracts as mentioned, received the Metway -- 28 of 71 -- 28 letter which indicated that Metway was prepared to give some financial accommodation to the projects and accordingly the defendants were no longer interested in the contracts with the plaintiff. The defendants have described this as "wildly speculative". Mr Mostert's evidence was that he had several possible lines of credit available to the project at the time he executed the contracts with the plaintiff and that in any event it was unlikely that a letter of the kind sent by Metway would have come unexpectedly without some earlier telephone or meeting contact with the relevant officer from Metway. Mr Fitzgerald met Mr Mostert after his return to Cupania in early November and offered to negotiate with Westpac himself. This did not occur. Although it is attractive to seek to find an explanation for conduct or lack of it, it seems to be unnecessary in this particular case. There really is no evidence to support the defence position that Mr Mostert exerted his best endeavours with Westpac in Perth following execution of the contracts on 31 October. There is, however, evidence to suggest that by 12 November he was stating to Westpac that those contracts were not likely to find favour. The defendants submit that by then Westpac had so clearly indicated that it was not prepared to give its approval to such agreements that there was no point in Mr Mostert seeking to persuade them otherwise. That might be an acceptable argument had there been some other evidence to support Mr Mostert's earlier attempts with Westpac. In the absence of any clear evidence from Mr Mostert at the trial as to what endeavours he -- 29 of 71 -- 29 engaged in, the failure to call Mr Wheeler from the bank who was available, the contents of his contemporaneous faxes to Mr Walker not explained and the evidence contained in Exhibits 65 and 68, I feel compelled to infer that Mr Mostert did not make reasonable endeavours with Westpac to secure their approval. C. Unconscionable conduct and unilateral mistake The defendants submit that if there was no oral condition then rescission for unilateral mistake is available when one party to a contract knows or ought to know that the other party is mistaken about its contents in relation to a fundamental term. They contend that the plaintiff through its agents knew or had reason to believe that Mr Mostert thought that binding contracts would arise only after bank approval or, that the contracts were conditional on bank approval. In not communicating to Mr Mostert that that was not its understanding of the agreement, but was solely contained in the written contracts, the plaintiff's conduct is alleged to be unconscionable. In that circumstance they submit that the corporate defendants were entitled to rescind the contracts. In Taylor v. Johnson (1982-3) 151 CLR 422 the majority (Mason ACJ, Murphy and Deane JJ) endorsed the court's equitable jurisdiction to set aside a contract on the ground of unilateral mistake. At p. 432 the majority said: "The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an -- 30 of 71 -- 30 order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension. What we have said is sufficient to demonstrate the broad basis of support which the authorities provide for that proposition. Moreover, and perhaps more importantly, it is a principle which is best calculated to do justice between the parties to a contract in the situation which it contemplates. In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party's actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it. Our comment can, for the present purposes, be limited in its application to the case where the second party has not materially altered his position and the rights of strangers have not intervened." The defendants submit that it is sufficient if circumstances existed from which a reasonable person (Mr Fitzgerald and possibly Ms Simmons and Mr Loakes) would conclude that the other party (the defendants through Mr Mostert) was mistaken as to the agreement. If the first party then seeks to enforce the written agreement without giving effect to the mistaken understanding of the other party that conduct is unconscionable and an order may be obtained rescinding the written agreement. The plaintiff denies that Taylor v. Johnson or other relevant authority goes so far as to support the proposition that the party in the position of the plaintiff "had reason to know" that the other party was labouring under a mistake. That expression is used in Taylor v. Johnson where the wrongful party is ignorant of the actual mistake because of "wilful -- 31 of 71 -- 31 ignorance". The equitable jurisdiction to set aside a contract has a common thread no matter in what context it operates, namely, where "... the court is of opinion that it is unconscientious for a person to avail himself of the legal advantages which he has obtained", Torrance v. Bolton (1872) LR 8 Ch App 118 at p. 124, cited in Taylor v. Johnson at p. 431. See also Cheshire & Fifoot Law of Contract 5th Australian ed at para 654. The majority in Taylor v. Johnson said at p. 431 that special circumstances will ordinarily need to be shown before it would be unconscionable for one party to a written contract to enforce it against another who was under a mistake as to its terms or its subject matter. Their Honours refer to Lord Denning's examples in Solle v. Butcher [1950] 1 KB 671 at p. 692, where the mistake of one party had been induced by the material misrepresentation of the other and the case where one party knowing that the other is mistaken about the terms of an offer or the identity of the person by whom it is made lets him remain under his delusion and concludes a contract on the mistaken terms instead of pointing out the mistake. They referred to Thomas Bates & Son Ltd v. Wyndham's (Lingerie) Ltd [1981] 1 WLR 505, a rectification case. The trial judge in that case had described the conduct of the defendant as "sharp practice". Buckley LJ preferred to discuss it as follows at p. 515 "The graver the character of the conduct involved, no doubt the heavier the burden of proof may be; but, in my view, the conduct must be such as to affect the conscience of the party who has suppressed the fact -- 32 of 71 -- 32 that he has recognised the presence of a mistake." He was of the view that the mistake must be one calculated to benefit the party who is aware of the mistake and failed to draw it to the notice of the other party. Eveleigh LJ at p. 520 did not think that it was always necessary to show sharp practice. Neither did he think it necessary to show that the mistake would benefit the party who was aware of it. He said at p. 521 "It is enough that the inaccuracy of the instrument as drafted would be detrimental to the other party, and this may not always mean that it is beneficial to the one who knew of the mistake." Brightman LJ speaking of the standard of proof in such cases observed at p. 521 "The standard of proof required in an action of rectification to establish the common intention of the parties is, in my view, the civil standard of balance of probability. But as the alleged common intention ex hypothesi contradicts the written instrument, convincing proof is required in order to counteract the cogent evidence of the parties' intention displayed by the instrument itself. It is not, I think, the standard of proof which is high, so differing from the normal civil standard, but the evidential requirement needed to counteract the inherent probability that the written instrument truly represents the parties' intention because it is a document signed by the parties." He did not think at p. 522 that "sharp practice" was necessary in a case of rectification for unilateral mistake. The majority in Taylor v. Johnson, referred to decisions in the United States and Canada at p. 432, "... in those jurisdictions the rule is expressed to apply to all contracts, formal and informal, when one party knows or ought to know that the other party is mistaken". Their Honours referred to McMaster University v. Wilchar -- 33 of 71 -- 33 Construction Ltd (1971) 22 DLR (3d) 9. Thompson J in the Ontario High Court held that the plaintiff must be taken to have known of the mistake. That was a very clear case. The plaintiff invited the defendant to tender on a building project. It did so and its tender was the second lowest tender. The court found that it would have been quite apparent to the tender committee prior to accepting the tender that the front page of the defendant's tender documents had been omitted. That was a page which included a wage escalator clause. Immediately the defendant became aware of the omission from its tender it notified the plaintiff which notification the court held occurred before the tender was accepted. Thompson J concluded at p. 22 "In the context, it should be stressed that one is taken to have known that which would have been obvious to a reasonable person in the light of the surrounding circumstances." In Taylor and Johnson the United States position was taken from a passage from Corbin Contracts (1960) vol. 3 s. 610 p. 692, "There is practically universal agreement that, if the material mistake of one party is caused by the other, either purposely or innocently, or was known to him, or was of such character and accompanied by such circumstances that he had reason to know of it, the mistaken party has a right to rescission". No Australian authority to which I was referred went so far. Cheshire & Fifoot, op. cit. at para 654 suggest that the majority in Taylor v. Johnson required some actual attempt to prevent the other party from discovering the truth before there could be a finding of unconscionable conduct such as to support -- 34 of 71 -- 34 rescission. The learned authors concluded that it remained to be seen whether in Australia silence alone could provide the basis for equitable intervention in cases of unilateral mistake. In General Credits Ltd v. Ebsworth [1986] 2 Qd. R 161 a case relied on by the plaintiff, de Jersey J with whom Connolly and Thomas JJ agreed said at p. 165 "It was first contended, although rather faintly, that the agreement might be invalidated for mistake. But clearly the only relevant mistake was that of the appellant, a mistake induced, on her evidence, by her solicitor. Such a unilateral mistake, occurring without knowledge or complicity of the respondent, could not operate to avoid the agreement. See River Lake Properties v. Paul [1975] 1 Ch. 133, 144-5 and Powell v. Smith (1872) LR 14 Eq. Cas. 85, 90." That is clearly a comment in passing and with respect appropriate for the facts of that case. In Everglades Country Club Ltd v. Eadie, unreported decision of Needham J of 13 March 1987 (No 2437 of 1984), after consideration of the authorities with respect to rectification of an agreement due to unilateral mistake his Honour concluded "... A person executing an agreement under a mistake as to a fundamental term favouring the other party or being detrimental to him, which is not shared by the other party, may obtain rectification if he can produce convincing proof of his mistake and of the fact that the other party knew or had reason to know that the first party was labouring under such a mistake. The term to be substituted for the one subject of the mistake must, of course, be capable of clear expression and not be contrary to the common intention of the parties." If the wider test, "had reason to know", is applied here, contrary to the plaintiff's submissions as to the state of the law, (and it is unnecessary to decide the matter further) the decision in Taylor v. Johnson is clear that there must be some -- 35 of 71 -- 35 reason in conscience why the contracts should not be enforced. The evidence does not allow of the conclusion that a reasonable person in the position of the purchaser's agent(s) would have thought that Mr Mostert was executing the contracts under a mistaken belief that they were conditional as to their coming into force upon Westpac's approval. Mr Mostert mentioned that his solicitor had told him that the only matter outstanding was the consent of Westpac - but that could be understood to be a reference to the cl. 44 consent. The contracts had been subject to detailed negotiation and attempts to alter cl. 44 had been abandoned by Mr Mostert. He told the JLF Corporation people that he had verbal approval from Westpac. Mr Mostert agreed that there was discussion that the 30 day investigation period of the suitability of the land under cl. 35 would commence immediately. The request to post date the contracts by one day to coincide with the written approval in all the surrounding circumstances would not alert an objective observer to think that Mr Mostert was labouring under any mistake that the contracts were conditional upon the mortgagee's approval. No basis has been established for ordering rescission of the contracts on this equitable ground. D. Certainty of terms By para 10 of the amended defence the defendants plead that because the contracts do not provide for a date for payment of the final instalment of the purchase price and thereby a date for completion the contracts are uncertain and -- 36 of 71 -- 36 therefore unenforceable. Clause 39 of the contract with Gerring and Japie (the only difference in the Bardot contract is the figures and they are irrelevant) provides: "(a) The purchase price shall be paid as follows: (i) as to the sum of Two Thousand Dollars (2,000) forthwith upon the formation of the contract; (ii) as to the sum of Seventy Thousand Dollars ($70,000) on 2nd December, 1991 (the "date of possession") in exchange for vacant possession of the Land and the deed referred to in Clause 44; (iii) as to the sum of Seventy Thousand Dollars ($70,000) on 2nd March, 1992; (iv) as to the sum of Four Hundred and Thirty Thousand Dollars ($430,000) on 2nd June 1992; (v) as to the sum of Seven Hundred Thousand Dollars ($700,000)on 2nd December, 1992; and (vi) as to the balance of Nine hundred and Ninety Eight Thousand Dollars ($998,0000) to the date for completion. (b) The Purchaser shall pay interest on so much of the purchase price payable pursuant to paragraphs (a)(v) and (vi) as shall from time to time remain unpaid calculated from 2nd June, 1992 with interest compounded and calculated monthly and payable half-yearly at the following rates: (i) for the period until 2nd December, 1992 - 5% per annum; (ii) for the period after 2nd December, 1992 - 10% per annum. (c) ..." Mr Fitzgerald said that it was a mistake not including either the date of payment of the final instalment and/or the date for completion in the contracts. He said that there had -- 37 of 71 -- 37 been previous drafts in similar terms and "in any other discussion it was six months after the third instalment". Mr Mostert did not contradict this in that he gave no evidence that the parties had not reached agreement prior to 31 October 1991 as to the date for completion. There was agreement that when a contract is silent as to the time for the doing of an act, it should be done within a reasonable time, Palmos v. Wilson (1955) 99 CLR 94 at p. 96 per Dixon CJ. The defendants submitted that where an agreement attempts to provide for the time of completion without actually fixing a precise date it is not open to the court to imply a reasonable time within which completion is to take place. They submit that where there is an express term, albeit defective, there is no room for an implied term. They referred to Johnson v. Humphrey [1946] 1 All E R 460 which held at p. 463 that a term may be implied into a contract for the sale of land that vacant possession shall be given on completion. In that case by the express terms of the memorandum completion was to be determined by reference to possession which was not provided for. In the housing crisis prevailing in post-war England the court resiled from embarking upon an enquiry as to what would be a reasonable time. In this case the coincidence of possession and completion cannot occur because by cl. 39(a)(ii) vacant possession was to be given on 2 December 1991 when the sum of $70,000 was to be paid with the balance to be paid in instalments. See Meehan v. Jones (1981-82) 149 CLR 571, at p. 593 per Mason J. The plaintiff submitted that what is a -- 38 of 71 -- 38 reasonable time may be determined from the contract. A scheme can be identified, it is suggested, in cl. 39 whereby the date for completion can be inferred. Cl. 39(a) provides for a payment of $2,000 on formation of the contract; $70,000 on 2 December 1991, the date of possession; $70,000 on 2 March 1992, three months later; $430,000 on 2 June 1992 three months after that; $700,000 on 2 December 1992 six months following; the balance of $998,000 on the date for completion. That some portion of the purchase price was to remain outstanding after 2 December 1992 is clear because a new interest rate of 10% per annum was to apply to amounts of the purchase price unpaid after that date. The conclusion which the plaintiff submitted could be drawn was that the completion date was intended to be six months after 2 December 1992, that is, 2 June 1993. The defendants submitted that no such scheme can be inferred and I think that is correct. Had the intervals of time between each payment referred to in cl. 39(a)(i) to (vi) been equal then there would be no obstacle in doing so, but the intervals are one month, two of three months and one of six months. The plaintiff submitted that Mr Fitzgerald's evidence that the final payment was to be six months after the third instalment should be taken to mean the instalments after possession on 2 December 1991, that is, after three instalments on 2 March, 2 June and 2 December 1992 - the third instalment referred to being that of 2 December 1992. That submission is not without attraction. -- 39 of 71 -- 39 This is a case in which, had the contracts remained on foot, rectification could have been sought and, in my view, given. It seems very likely that a line has been inadvertently dropped from the typed special conditions in cl. 39(a)(vi). As mentioned, Mr Fitzgerald said that agreement as to the date for the payment of the final instalment had been agreed between the parties and had appeared in previous drafts. There was no evidence from Mr Mostert or in cross-examination of Mr Fitzgerald suggesting that this was not the case. Here there was a common intention between the parties and by mistake the instrument failed to record it, Maralinga Pty Ltd v. Major Enterprises Pty Ltd (1973) 128 CLR 336 at p. 350 per Mason J. The rescission by the defendants was accepted by the plaintiffs and there was therefore no place for a pleading seeking rectification. But had the contracts been still alive extrinsic and parole evidence would have been admissible to support an application to rectify the documents, Hoyts Pty Ltd v. Spencer supra at p. 139. It is apparent from the uncontroverted evidence of Mr Fitzgerald that such evidence was able to be adduced. The contract would not fail for uncertainty as to terms. E. Notices pursuant to clauses 35 and 44 The defendants allege that if the contracts did come into existence • the plaintiff has not given any Satisfaction Notice as required by cl. 35 of the contracts on or before 1 December 1991 and accordingly the agreements came to -- 40 of 71 -- 40 an end on that date; • since each of the mortgagees of the property has refused to sign a deed in accordance with cl. 44 of the contracts and the plaintiff did not give notice in accordance with the contracts; the agreement thereby became impossible of performance in the terms contemplated and was frustrated. -- 41 of 71 -- 41 • Clause 35 By their solicitors' letter dated 29 November 1991 the plaintiff gave notice pursuant to cl. 35(d) of each contract that it waived the benefit of cl. 35 and regarded "the conditions imposed by cl. 35 of each of the contracts as having been satisfied" (Exhibit 3F). The notice under cl. 35 was not argued to be ineffective to fulfil the requirements of notice of satisfaction pursuant to that clause and sufficiently does so. • Clause 44 The date of possession provided for in the contract was 2 December 1991. On 29 November 1991 the plaintiff's solicitors wrote to the defendants' solicitors proposing to attend at their offices on 2 December 1991 to make the payments of $70,000 and $130,000 respectively pursuant to each contract and in return expected to receive vacant possession of the land and the cl. 44 deeds and other documents pursuant to cl. 36(b). The defendants' solicitors declined to accept payment on 2 December 1991 and the defendants failed to give vacant possession or to deliver deeds and other documents as required. By its letter dated 3 December 1991 the plaintiff "reserved its rights as regards the breaches". By letter dated 13 January 1992 the plaintiff's solicitors wrote to the defendants' solicitors that the plaintiff accepted the defendants' repudiation of the contracts evidenced by their failure to deliver the cl. 44 deeds and/or failure to deliver vacant possession. -- 42 of 71 -- 42 The plaintiff did not choose to waive the requirement of the provision of deeds from the mortgagees to the land as it was entitled to do under cl. 44(c) by notice in writing to the plaintiff on or prior to the date of possession, namely 2 December 1991. The defendants plead that in that circumstance, given that the mortgagees had refused to sign cl. 44 deeds, the agreements had become impossible of performance in the terms contemplated by the parties and were thereby frustrated. The plaintiff has pleaded that the defendants failed to use all reasonable endeavours to bring about the consents of the mortgagees and I have found were thus in breach of their obligations pursuant to the contracts. Further, cl. 44(b) provides that if the vendor fails to deliver the deeds the purchaser may terminate the contract by notice in writing to the vendor. The absence of the deeds and the failure to waive does not lead to the conclusion that the contract is impossible of performance. The purchaser may well have been prepared to wait for the deeds which may have been forthcoming in the future. The contracts were not frustrated by the failure to give notice of waiver on or before the date of possession. 3. Agency (a) Actual Agency Gerring denies that the fourth defendant executed the contract as its agent or was its agent for the purpose of giving instructions to solicitors to admit agency. The contract of sale between Couronne and Gerring and Japie showed -- 43 of 71 -- 43 Gerring and Japie as the vendors. Mr Mostert executed that contract as vendor without qualification. In paragraph 2A of its reply the plaintiff refers to the various agreements to which reference has already been made and two others to which I shall refer shortly, the Heads of Agreement and the Power of Attorney, and alleges that they gave expression to a business relationship between Mr Reynolds, Mr Kyle and Mr Mostert of a "co-partnership". In that circumstance the plaintiff alleges that Mr Mostert as partner representing the co-partnership entered into the contracts and instructed solicitors on behalf of all the defendants in respect of the present litigation including the admission of agency on behalf of Gerring. It is unnecessary to say anything more about this so called co- partnership. Neither the documents nor other evidence support its existence and the plaintiff expressly did not advance any submissions in respect of it. The defendants, other than Gerring, and the plaintiff joined in the balance of the submissions on agency. I have outlined the arrangements between Bardot, Gerring and Japie up until Mr Mostert executed the contracts on 31 October 1991. On 30 January 1992 Gerring, Bardot and Japie entered into an agreement known as the Heads of Agreement (Exhibit 30). That agreement was negotiated by Mr Reynolds, Mr Kyle and Mr Mostert and Mr Mostert's solicitors on behalf of their various interests. Neither the contracts (by then at an end) with the plaintiff nor the litigation was mentioned by Mr Mostert nor his solicitors to Mr Reynolds or to Mr Kyle on that -- 44 of 71 -- 44 occasion. In that agreement Gerring acknowledged and covenanted that it had no further interest or entitlement in respect of the development of the land; that it would procure the resignation of any officers to Bardot previously nominated by it; transfer its shares in Bardot to Japie; execute a power of attorney in favour of Mr Mostert to do all things and to execute all documents on behalf of Gerring and Bardot concerning the land, its development and sale; and transfer its interest in the land to Japie. In return Japie agreed, inter alia, that when 200 lots had been sold it would transfer 6 lots to Gerring. In the event of sale of the land other than by lot an alternative arrangement was provided for. Japie agreed to indemnify Gerring against any liability by reason of it being registered as the proprietor of the land. By a power of attorney (undated but presumably entered into on the same date as the Heads of Agreement) Gerring appointed Mr Mostert its attorney with unlimited powers in respect of the land. In particular Mr Mostert was authorised to sell or dispose of the land at a price in his discretion, to commence litigation and settle or litigate any dispute in which Gerring was "now" or in the future interested. At all relevant times until July 1994 Walsh Halligan & Douglas was Gerring's solicitor in Queensland. Gerring had not specifically authorised the firm to accept instructions from Mr Mostert on its behalf although Mr Peter Reynolds had introduced Mr Mostert to the firm when they first came to Queensland and acquired the land. Mr Christopher Reynolds shared an office with Mr Mostert -- 45 of 71 -- 45 at Cupania at the time that Mr Mostert executed the contracts and Mr Peter Reynolds shared an office in Perth with Mr Mostert. Both were of modest dimensions. Each said he was unaware of the contracts with the plaintiff and that Mr Mostert at no time had informed either of the negotiations, execution or subsequent litigation in respect of that land. Inferences were sought to be drawn that Mr Christopher Reynolds must have known of the negotiations and execution of the contracts in respect of that land but he swore that he had no such knowledge and he was not cross-examined on his affidavit. He did say that he was aware of an offer to buy the land by another party at that time. Mr Mostert did not say that he told him or anyone else from Gerring of the contract and subsequent litigation. The Reynolds and Mr Kyle swear in their affidavits that they did not authorise Mr Mostert to enter into agreements to sell the land on behalf of Gerring nor by the power of attorney did they intend to ratify Mr Mostert's past execution of the contracts and instructions which he gave to Walsh Halligan & Douglas in respect of both the contracts and the litigation. It is clear however that Mr Reynolds left Mr Mostert in sole control of the project at Cupania in January 1991. There is no suggestion from either side that his son performed any role other than that of a salesman. No enquiries were ever made of Mr Mostert as to how the project was proceeding until the negotiated Heads of Agreement in January 1992, a year later. The restructured agreement and any other subsequent non- -- 46 of 71 -- 46 written arrangements governed the rights and obligations between Gerring, Japie and Bardot at the time of execution of the contracts. The restructured agreement provided separately for the subdivisional land and the private estate land. By cl. 2 Japie had the exclusive right to determine the ultimate destiny of the subdivisional land whether by sale as a whole or in parts or by lots and was to have all the profit. Gerring was appointed the principal selling agent for the land. It will be recalled that the whole of the land the subject of Gerring and Japie's purchase initially was subdivisional land however by the time of the contracts the private estate project was shown as encroaching very slightly into the Gerring/Japie land (Exhibit 36). The private estate land was dealt with differently in the agreement. By cl. 2 Japie was given "the reasonable right" to determine if and when that development was to proceed. Clause 3 provided "if the parties decide that the development should not proceed and the land sold ..." that Japie would have the proceeds up to $2 million plus interest compounded at 20 per cent per annum and thereafter Gerring would get up to $200,000. On their face those clauses empowered Mr Mostert to sell the subdivisional land without further reference to Gerring but reserved to the parties the decision whether to sell the private estate land or not although Japie was entitled unilaterally to make a decision to develop or not on reasonable grounds. The private estate land on the Gerring/Japie land could be described as "a small slither" of land. -- 47 of 71 -- 47 Mr Mostert said that it was his understanding that as a consequence of the restructured agreement he was empowered to deal with all the land on behalf of Gerring, Bardot and Japie and that those companies through himself and Mr Peter Reynolds had decided that the development should not proceed and that the land be sold prior to 31 October 1991. None of Mr Peter Reynolds, his son, nor Mr Kyle support Mr Mostert's contention that he had, by virtue of the restructured agreement been given a free hand with the private estate development or that further oral agreement had been reached that Mr Mostert could, without reference to Gerring sell the private estate land. They were not cross-examined on their affidavits in respect of this matter. Nonetheless the evidence is clear that the restructured agreement was entered into prior to Mr Peter Reynolds returning to Perth and the development then had no prospect of coming to fruition. The restructured agreement in the context of what had happened gives some credence to Mr Mostert's assertion that by agreement with Mr Reynolds together with Mr Reynolds' failure to make any enquiries of him over the ensuing months, he had been given a free hand with the land. The restructured agreement authorised Mr Mostert to sell the subdivisional land without further reference to Gerring. That made up by far the bulk of Gerring and Japie's land. Against the background of the events that had occurred, notwithstanding that the relocated private estate development included a small part of Gerring's and Japie's land I think it plain that Mr Peter Reynolds as spokesman for the Gerring -- 48 of 71 -- 48 interests left a situation such that Mr Mostert could reasonably conclude that he was authorised to deal with that land without further reference to him. I conclude that Gerring authorised both by the restructured agreement and by its conduct through Mr Peter Reynolds that Mr Mostert act as its agent in respect of the disposition of the land of which Gerring and Japie were the registered proprietors. (b) Ratification The plaintiff alleges that if actual agency has not been made out that Mr Mostert ratified his own actions as purported agent of Gerring by instructing Walsh Halligan & Douglas to admit that he was the agent of Gerring in the original defence by virtue of the authority given to him by the power of attorney. The power of attorney (Exhibit 31) executed in January 1992 by cl. 19 authorised Mr Mostert to "settle, litigate ... any dispute in which Gerring (the Appointor) now is or at any time hereafter shall be in any way interested or concerned ...". The admission of agency was made on Mr Mostert's instructions by Walsh Halligan & Douglas after the execution of the Heads of Agreement and his appointment as attorney. The question is was it then within Mr Mostert's authority as agent appointed by Gerring to ratify his own act in executing the contract purportedly as Gerring's agent. The central question is whether the pleaded admission can be treated as ratification by the agent of his unauthorised act because Gerring did not have knowledge of the material facts at any relevant time. -- 49 of 71 -- 49 According to Bowstead, 15 ed. Article 16, in order that a person may be held to have ratified an act done without his authority, at the time of ratification he should have knowledge of all the material circumstances in which the act was done, unless he intended to ratify the act and take the risk whatever the circumstances may have been. It is not necessary that the principal should have knowledge of the collateral circumstances affecting the nature of the act. Clause 22 of the power of attorney provides that the appointor "hereby ratifies, confirms and allows and agrees to ratify ..." everything the attorney may lawfully do and, as mentioned, cl. 19 refers to existing disputes. This is very much a marginal case but I incline to the view that in appointing Mr Mostert its attorney with such wide powers including a reference to disputes already in existence and ratification of his conduct and at the same time making no enquiries, Gerring accepted the risk of ratifying whatever Mr Mostert may have done in the past outside his actual authority which was lawful. I am persuaded that Mr Mostert in fact had actual authority but if I am incorrect in that conclusion then the power of attorney did authorise Mr Mostert to ratify his earlier unauthorised acts as agent. The leave given to Gerring to withdraw the admission of agency cannot affect this as it was a matter to be decided at trial. (c) Breach of warranty of authority The parties agree that if Mr Mostert had authority to act on behalf of Gerring in executing the contract on 31 October or -- 50 of 71 -- 50 acquired it by ratification no question of breach of warranty of authority arises. If there was not agency either actual or by rectification the plaintiff may only recover damages from Mr Mostert if it may not recover the whole of any damages award to the plaintiff. If it may not, the damages are limited to what it would have been able to recover from Gerring if Mr Mostert did have that authority. All the evidence points to Gerring being without assets or resort to assets. Clause 3(c) of the Heads of Agreement gives Gerring a right of indemnity from Japie. The evidence reveals that Japie has an excess of liabilities over assets. However it is conceded that Japie would be liable for the whole of any judgment if there is found to be a breach of the contract in the absence of any authority in Mr Mostert to bind Gerring. -- 51 of 71 -- 51 4. Trade Practices Act By paragraph 7 of its amended statement of claim the plaintiff pleads that Mr Mostert and Mr Walker represented to the JLF Corporation people during the course of their discussions on behalf of the vendors (a) that Bardot, Gerring and Japie were willing to able to sell the land to the plaintiff; (b) that those companies would receive sufficient funds from payments made by the plaintiff to purchase the land to allow the discharge of the two mortgages; and (c) vacant possession could be given to the plaintiff on or about 2 December 1991 with the consent of the mortgagees because the vendors had sufficient funds to allow them to discharge those mortgages. The plaintiff offered no submissions in support of (b) and (c). Neither did it offer any submissions in respect of the allegations set out in paragraph 9 that by executing the contracts similar representations were made. Paragraph 10 pleaded reliance on those representations by the plaintiff in executing the contracts and causing the deposits to be paid to the vendors' agent. The plaintiff does persist in paragraph 7(a), namely that Mr Mostert and Mr Walker represented that all the vendors were willing and able to sell the land. I have concluded that Mr Mostert did have authority to execute the contract on behalf -- 52 of 71 -- 52 of Gerring and accordingly it is unnecessary to take these submissions very far but in the event that I am incorrect as to the question of authority then I should just say a few words on this aspect of the plaintiff's case. There is no evidence that the vendors were unable to sell the land and it is clear that both Japie and Bardot were willing to sell it. Although Gerring denies that it authorised Mr Mostert to act on its behalf that does not demonstrate that at the time it was not willing to sell the land. Practically the evidence goes only to Gerring's desire not be involved in this litigation. However if there was no authority in Mr Mostert there was no basis for representing that Gerring was a vendor. The representation must be in settling the terms of the contracts and participating in the execution on behalf of Gerring by Mr Mostert. If a false statement is embodied in a written contract it may nonetheless constitute misleading or deceptive conduct within s. 52 of the Trade Practices Act, see Accounting Systems 2000 (Developments) Pty Limited v. CCH Australia Limited (1993) ATPR 41-269 but it is fundamental that the plaintiff can show that it relied upon the misrepresentation as to authority to sell on behalf of Gerring in entering into the contract. Mr Fitzgerald gave no evidence that he relied upon representations either by conduct or by way of statements of Mr Mostert when he executed the contracts on behalf of the purchaser. The plaintiff submits it went without saying that Mr Fitzgerald relied upon representations as to authority -- 53 of 71 -- 53 (willingness to sell) when he executed the contracts. The defendants submit that Mr Fitzgerald would most likely have executed the contracts even had he been told by Mr Mostert that he did not have actual authority from Gerring to sell the land on its behalf but that he was confident of obtaining that authority. Because there was no evidence from Mr Fitzgerald one way or the other as whether he relied upon Mr Mostert's authority to sell on behalf of Gerring, I am not prepared to infer reliance from the mere fact of execution of the contracts, see Gould v. Vaggelas (1985) 157 CLR 215 per Wilson J at p. 236 and Lam v. Austintel Investments Aust Pty Ltd (1990) 12 ATPR 40-990 at p. 50, 882. The only damages which the plaintiff claims pursuant to the Trade Practices Act are solicitor's fees in the sum of $2,441.40, Gates v. City Mutual Life Assurance Society Ltd (1986) 160 CLR 1. If, then, Mr Mostert had no authority from Gerring to represent that it was willing to sell the land that representation was false but I am not prepared to infer reliance on the part of the purchaser in entering into the contract. 5. The Measure of Damages for Breach of Contract The appropriate measure of damages is the difference, if any, between the market value of the land at the date of contract and the contract price. 6. The Valuation Evidence The land the subject of the contract with Bardot is -- 54 of 71 -- 54 described as Lot 254 consisting of some 87 hectares and had a purchase price of $4,430,000. The land the subject of the contract with Geering and Japie is described as Lot 3 consisting of some 49 hectares and had a purchase price of $2,000,270. The valuers tended to treat the two parcels as one for valuation purposes. The plaintiff framed its relief as a loss relating to the whole land, not particularising the loss arising from the breach of each contract. This assumed that the quality of land in the parcels was the same and although Mr Herriott suggested that if purchased alone the Bardot land was more desirable I think that there was little perceived difference. The valuers valued the land at so much per hectare and the matter could be conveniently approached in that way. The plaintiff called two valuers Mr Bill Gardiner and Mr I Herriott. The defendants called Mr L Goggins. Those valuers were asked to value the two parcels of land the subject of the contracts as at 1 November 1991 the date of the contracts. Mr Gardiner valued the land at $8,870,000 adopting a value per hectare of $65,000. Mr Herriott valued the land at $7,600,000 adopting a per hectare value of $56,000. Mr Goggins valued the land at $6,000,000 with a $44,000 per hectare value. The plaintiff's case is that the contracts negotiated with the vendors were at a price for the land well below its then market value. The plaintiff had entered into negotiations to on-sell the land for, it alleges, a substantially greater amount than the prices in the contracts and is thereby entitled to what it claims is the difference in the market value of the -- 55 of 71 -- 55 land and the contract prices. The plaintiff does not seek to rely upon the value given by Mr Gardiner but quantifies its losses in the sum of $900,000. The defendants submit that the subject contracts were negotiated at arm's length and support the evidence of the market value at the time. Valuing the subject land as at 1 November 1991 was admitted by all three valuers to be a difficult exercise because, inter alia, of its relative isolation and the difficulty in valuing englobo land in a recessional period where there was little land sale movement for that type of land for comparison purposes. All three valuers accepted that market value is the best price for which a property might be sold at the date of valuation assuming a willing but not over-anxious vendor and purchaser, a reasonable period in which to negotiate the sale, an assumption that the value will remain static throughout that period, that the property will be freely exposed to the market and no account be taken of bids by a "special purchaser". They accepted that if those criteria could be shown to have applied in the case of the subject contracts then those contracts represented the market value of the land. Both Mr Herriott and Mr Gardiner sought to demonstrate that there were considerations which suggested that the market value of the subject property had not been achieved in those contracts. Mr Gardiner and Mr Goggins approached the valuation in broad terms on an understanding of the market for sales of large englobo parcels of land at the time and by reference to what they -- 56 of 71 -- 56 described as comparable sales. A major point of departure between them was the appropriateness of comparing sales of certain parcels of land with the subject land and the extent to which they had influenced the valuation. In the case of Mr Herriott, he produced a hypothetical development of the whole parcel of land whereby he arrived at his figure of $56,000 per hectare which he said was supported by his direct comparison approach. Mr Herriott valued the land at its highest and best use which he believed was as a mixed community, residential development given varying residential land uses and land sizes supported by ancillary uses such as local shops, facilities and parks. His hypothetical development plan was examined with that use in mind. In December 1991 Mr Gardiner provided a valuation report in respect of the land for the plaintiff exhibited to an affidavit (Exhibit 22) in which he considered that the highest and best use of the land was "some form of quality rural/residential development which capitalises on the image created of this locality by Old Ormeau Town Estate". By the time he made his report in July 1994 he had a slightly different view of how the land could best be utilised. In his opinion considering the nature of surrounding development, the location of the site, the time of valuation and the growth pattern of the Albert Shire Council, the best use of the land was some form of rural/residential development with potential for an increase in density and lot yield over that specified in -- 57 of 71 -- 57 the rezoning development plan. Mr Goggins thought that the highest and best use of the land in November 1991 was as a holding proposition awaiting an improvement in market conditions. At about the time that Mr Fitzgerald was negotiating with Mr Mostert for the purchase of the land he discussed with Mr David McLaren, a property developer who operated through a company, MCHA Property Limited, and who had bought land from the Pivot Group in Old Ormeau Town when Bardot, Gerring and Japie did, that he may be interested in acquiring some of the Bardot land. Mr McLaren was interested because his company was running out of land to develop and sell and the land adjoined his development. Mr McLaren had some time earlier approached Mr Mostert with a joint venture in mind but that had come to nothing. His proposal, described as an offer, was to purchase the land on terms over two years for $2 million. He said that he was serious about that offer and that it was a good price given the terms that he was seeking with no interest payable. Eventually MCHA purchased that land on 22 May 1992 for $1.2 million from Mr Mostert. On 25 August 1992 Delmoss Pty Ltd purchased most of Lot 254 plus developed subdivided lots in Stage I. On a terms contract Mr Gardiner has calculated its net present value on the date of purchase at $6,540,569. By that time approximately $3.54 million had been spent by Mr Mostert's interests on headworks development of the Group Title Village and associated administration costs. Approximately $1.07 million of that was -- 58 of 71 -- 58 contributed to headworks and on-site improvements to the land. The work was carried out from 1 November 1991 until 22 August 1992 the date of the sale of the land to Delmoss Pty Ltd on behalf of Mr Mostert and is detailed in Exhibit 23. Amongst the events which contributed to the increased value of the land were the completion of access roads and overpass roads, the construction by MCHA of a common sewerage main and main sewerage pit. Subdivisional approval had been given for the extra land purchased by MCHA and that successful company was to continue to be involved in development of the area. Nineteen homes had then been built and sold in the Group Title Village and the common facilities were completed. Street lighting was put in place along a major road in the development and a feeder electrical main from the high tension lines along the highway was constructed. The government confirmed its decision on the Gold Coast rail link. Mr Gardiner and Mr Goggins agreed that at the end of 1991 the market for englobo land was very flat due to the recession. Mr Herriott considered that the economic climate was uncertain with developers and financiers showing caution. In 1992 Mr Gardiner thought the market still flat whilst Mr Goggins thought there were signs of improvement. Mr Herriott, on the other hand, saw confidence rising in the marketplace with prudent developers making a move. A. Comparable Sales Because there were virtually no truly comparable englobo land sales the valuers were compelled to have regard to more -- 59 of 71 -- 59 distant developments or less apposite developments if closer. The reference or failure to refer to some sales was the subject of extensive, and at time, vigorous cross-examination. • Purchase of subject land from Pivot in 1990 The land was purchased by Bardot, Japie and Gerring by agreement dated 18 January 1990 to settle in June 1990 for $4.6 million. Mr Herriott considered that sale but thought it was below market value and assumed that it was a fortuitous negotiation due to the recession or for some other reason such as a trade exchange. Mr Goggins took it into account. Mr Gardiner was unaware of it and in cross-examination rejected the sale as being too remote in time. • The subject contracts Mr Herriott suggested that they were not sales available to be considered when seeking the market value of land. In any event, he regarded the sale as at an exceptional under-value and that the contracts did not settle which made them a less attractive basis for comparison. Mr Gardiner did not find it objectionable to have regard to the sales but thought them on very favourable terms and at a price well below market value. Mr Goggins considered the agreement to sell as a useful comparable sale and noted that the purchaser had pressed for settlement. • Letter of offer from MCHA to Couronne As mentioned, Mr McLaren of MCHA entered into negotiations with Mr Fitzgerald to on-purchase some of the land from JLF Corporation (Couronne) at about the time Mr Fitzgerald was -- 60 of 71 -- 60 negotiating and concluding his agreement with Mr Mostert. Mr Herriott did not refer to it as a comparable sale. Mr Gardiner considered it as an internal sale but commented that as negotiations had not been finalised the price may well have been reduced before a concluded agreement was reached. Mr Goggins thought that since it was not an accepted offer it was of no assistance. The price in the letter of offer would yield $58,410 per hectare. • MCHA purchase from Bardot Mr McLaren negotiated an agreement with Mr Mostert for the same land as above for $1.2 million which was concluded on 22 May 1992 some six months after the subject contracts. That was at a price of $38,910 per hectare. • Sale to Delmoss by Bardot, Japie and Gerring on 25 August 1992 This sale comprised of most of Lot 254 and developed subdivisional lots from Stage I. By the date of sale, approval had been granted for an adjoining village group title development and 19 homes and recreational facilities had been created on Stage I. Much infrastructure work to which reference has already been made had occurred and estimated to be worth $1.07 million. The contract was a lengthy terms contract. The net present value as at 28 August 1992 was calculated at $6.8 million for 99.6240 hectares. Mr Herriott did not use this as a comparable sale. Mr Gardiner did but his comment indicates that he approached it on the understanding that no improvements had been affected on the land by the vendor. Mr Goggins considered it as a -- 61 of 71 -- 61 comparable sale with a detailed understanding of the works carried out and made allowances for that fact. B. Other Sales A particular focus in the evidence was whether reliance could be placed on sales of certain englobo parcels of land at Mudgeeraba, Kopps Road, Gaven and Eggersdorf Road, Ormeau. Mr Herriott and Mr Gardiner made use of them whilst accepting that they were remote from and had different features from the subject land. Mr Goggins considered that those sales were of no assistance being very different land. The Kopps Road sale obtained $63,400 per hectare, the Mudgeeraba sale obtained $73,314 per hectare and the Eggersdorf Road sale indicated $65,043 per hectare. The Kopps and Mudgeeraba developments were of residential A land with higher density housing than the subject land. The Mudgeeraba area was very sought after, was close to the beach and other attractive facilities and was described as "a booming area". The Kopps Road land adjoined a very successful residential estate known as Studio Village and is in the fringe area of the Gold Coast close to the development at Helensvale and near Movieworld. Of the Eggersdorf Road property Mr Goggins said that the purchaser declined to proceed with that sale and the property was still in the original owner's possession and for sale at less than the February 1991 contract price. Mr Goggins made reference to a number of sales of generally much smaller areas of land with the exception of the sale to MCHA of 116 hectares, but which were closer to the -- 62 of 71 -- 62 subject land. He made it clear that those sales were nothing more than evidence which he used to establish a trend rather than as directly comparable sales. He regarded the sale from the Pivot Group to MCHA in March 1990 of about 116 hectares of englobo land with other smaller areas as of some interest because it was of similar area to the subject land, and adjacent to it. The sale equalled $23,818 per hectare improved. The sale was admitted to be under some pressure and there were accounting difficulties in arriving at an appropriate per hectare price, but nonetheless, Mr Goggins thought that it gave an indication of the market conditions then. Mr Goggins referred to a sale of 122 hectares at Mt Warren Park in 1989 which yielded $29,364 per hectare and a sale at Stanmore Road, Yatala of 37 hectares in February 1992 yielding $18,000 per hectare discounted for flood land. The Mt Warren land was suggested to be sold under financial pressure. The flooding of the Yatala land was suggested to detract from the site. Mr Goggins referred to slow sales trends in the adjoining Ormeau Town Estate, Mt Warren Park and Windaroo as well as market trends using graphs based on the developed stock and sales during the relevant period to show that the market in November 1991 was flat to slow. Whilst each of these factors was subject to some qualifying cross-examination it was relatively minor and did not affect the overall acceptability of Mr Goggins' analysis. Mr Goggins was working as a valuer in -- 63 of 71 -- 63 the area at the time and indeed, the other valuers' evidence of the slow market was not at odds with his. Whilst it is understandable that the valuers were compelled to have regard to land sales that as valuers they would not have used had directly comparable sales been available, nonetheless, the land at Mudgeeraba and Kopps Road had so little in common with the subject land as to be of no assistance at all. Neither can those sales be utilised even to show a trend since the land and situation were completely different. The sales referred to by Mr Goggins had the attraction that they were adjacent to the subject land or in its general area but they too suffered from a number of problems. The major criticism of use of the Pivot sales was the suggestion that they were forced sales. Pivot was described by Mr Goggins as "rationalising" its landholdings at the time. The sales were not mortgagee sales and Mr Goggins was not prepared to describe Pivot as an "anxious" vendor although he accepted in his report that the price was well below market value. No evidence was adduced from Mr McLaren, who gave evidence in the plaintiff's case, and whose company MCHA had purchased the adjacent Old Ormeau Town lots in March 1990 about the price that he gave for that land. C. The Hypothetical Development Mr Herriott's hypothetical development of the entire parcel of land as at June 1991 did not appeal to Mr Goggins and Mr Gardiner was silent about it. There were a number of difficulties in his exercise being accepted. Mr Herriott -- 64 of 71 -- 64 accepted that he had not allowed for $1,750 per lot for professional costs and $200 per lot for landscaping which he conceded he ought to have done. On the calculations done for the defendants that results in a per hectare value reduced to $50,740 and a total value of the land of $6,925,120. Another problem in Mr Herriott's development relates to the number of lots which could be realised from the land. Mr Herriott concluded his development could obtain 340. The average size of the blocks on his calculations was 4,000 square metres. In re-examination he said that in development terms this meant a mix of sizes. Accepting that explanation, nonetheless, it appears that Mr Herriott has not made proper provision for roads, parks, etc when deciding the number of lots which could be profitably obtained from the land. Mr Goggins thought that an allowance of 30% should be made for parks, footpaths and roads. On that evidence the defendants have made a 20% reduction in the land available for marketable parcels. That yielded a land value of $5,499,360 at $40,297 per hectare. The defendants have criticised the rate of sales of the hypothetical subdivision on the basis that it assumed a selling rate of 70 lots per year compared with a rate of 9 in the first year of the Stage I development and 65 per year for Old Ormeau Town development during 1987 and 1988. Mr Gardiner thought a potential development of the subject land would take 7-10 years whereas Mr Herriott had assessed it at 5 years. Mr Herriott accepted that he needed to make allowances for increases in developmental costs over the five year life of the development -- 65 of 71 -- 65 which he had proposed but had not allowed in his costing, but did not in fact make that adjustment. The defendants have argued that that is another factor which makes the adoption of his hypothetical valuation inappropriate. Mr Herriott costed his hypothetical subdivision on the basis of a report prepared by Rawlinsons for the costs of a typical development for a residential A subdivisional block. Mr Goggins pointed out that the hypothetical development was a mix of rural residential subdivisional blocks. Whilst the link-up for services would be less with larger blocks nonetheless it seems reasonable to agree with Mr Goggins that if more blocks can be taken from the land the costs would come down considerably. Exhibit 63 is the Weathered Howe costings in 1991 for Stage I of Cupania, a rural residential development. Their costs were $33,500 per lot compared with the Rawlinson hypothetical figure of $21,000. If those changed figures are taken into account the defendants submit that Mr Herriott's exercise brings the value of the land closer to Mr Goggins' valuation. D. Conclusion on Valuation I was impressed with the evidence given Mr Goggins and accept his approach to the valuation exercise rather than that of Mr Herriott or Mr Gardiner. I accept that the three valuers were attempting a very difficult exercise but I considered that Mr Goggins had a greater understanding of the details of the transactions to which he referred and also was able to answer impressively the questions put to him in cross-examination -- 66 of 71 -- 66 seeking to undermine the basis upon which he approached the valuation. I am of the view that he and Mr Gardiner were correct in making use of the subject contracts together with the earlier contracts in respect of this land bearing in mind the difficulties to which I have referred. Nothing was put to Mr Goggins to suggest that the subject contracts were not conducted on a basis which would permit a conclusion that they were an arm's length agreement culminating after a reasonable period of negotiation in an open market where the property had been available for sale for some reasonable time. The benefit of the terms agreement set out in the subject contracts, assuming a 2 March 1993 final settlement, was calculated by accountants to a net present value of a 60 day contract of $6,023,718 or at $44,140 per hectare with a 2 June 1993 settlement date that would be a little less. Mr Goggins' conclusion to his report summarises the accepted evidence: "November 1991 is considered to be at or near the bottom of the residential real estate recession. Demand for land both developed and englobo was poor with mortgagee sales still occurring. The land was purchased as a 150.22 hectare Rural A and C parcel in January 1990 for $4.6 million ($30,622/ha). Stage I comprising 51 lots was developed in January 1991 and an extensive marketing campaign resulted in only 8 sales by November at an average of $64,530 per block. Subdivisional development costs were estimated by Weathered Howe in January 1991 at $33,500 per lot which would not have made for an attractive development proposition. The first stage of the Group Title Develpment comprising 19 villas, zero lot homes and town house units were erected in early 1992, sewerage, water and electricity infrastructure was installed, main access completed and the market was showing signs of -- 67 of 71 -- 67 improving. The land was resurveyed and subsequently sold on 22 May 1992 (30.84 hectares) for $1,200,000 and 25 August 1992 (99.624 hectares) for $8,500,000 (adjusted present day 01/11/91 as 60 day settlement to $6,540,569). The sales (adjusted) average $59,333 per hectare. Excluding on-site development sum allocated at $1.07 million the sales would average $51,131 per hectare. We have considered the net return on the sales of these two parcels and after deducting legal and statutory fees on purchase, sales commission and holding costs we would consider these resales to result in no real profit and in fact a loss on the Couronne purchase of $6,700,000 or $6,023,718 adjusted. This is even after the improved market conditions during that time which does not support the concept that the Couronne sale price was below market value. The Village development was a financial disaster with developed town house and zero lot homes selling at below construction, development and holding costs. The external sales evidence of englobo land at that time varied considerably between $11,259 and $38,786 per hectare, however, there was no sale we could find that would indicate a value higher than that paid for the property in 1991. We believe the best evidence to be the sales of the subject property. They were all arms length transactions and the sales before and after the November 1991 contract tend to support the contract price at that date as the then current market value. In summary we would consider the adjusted price paid for the land as at 01/11/91 to be the top price achievable at that time. The final question then is whether other evidence not before him but before the court would impact upon an acceptance of Mr Goggins' valuation. The plaintiff submits that Mr McLaren was a serious purchaser for a portion of the land for $2 million. In valuation terms it was an offer which was little more than a negotiating position. Mr McLaren was regarded as a successful developer. He was able to purchase -- 68 of 71 -- 68 the same land for $.8 million less a few months later. It seems unlikely that $2 million would have been the agreed price. The sale to Delmoss I have already dealt with. It needed to have factored into it the developmental costs which the vendor had by that stage outlaid in infrastructure. There was no evidence to suggest that the subject agreements were not negotiated at arms length and between negotiating equals. Mr Mostert conceded quite readily that his development was in fairly desperate straits at the time but no evidence has been adduced from the Westpac file that there were any immediate demands by the mortgagee that the land be sold. Mr Mostert said that at the time he had several lines of finance in train including that from Metway. Immediately following the rescission of the contracts he was developing and selling the land. The negotiations had taken place over at least a number of weeks, had resulted in shifts by Mr Fitzgerald in favour of Mr Mostert's position and even last minute alterations at Mr Mostert's request. The land had been on the market for some 6 months and was known to be for sale although placed with smaller agencies. The letter from Mr Mostert to Mr Fitzgerald of 14 October 1991 (Exhibit 16) demonstrates that Mr Mostert was not overly anxious to sell the land on any terms. I conclude that there is nothing in the evidence that was not before Mr Goggins which would suggest that his approach to the valuation ought to be taken with some reserve. I accept his valuation. Accordingly, the plaintiff has not demonstrated -- 69 of 71 -- 69 that it has suffered loss as a consequence of the breach of the contracts by the defendants. 7. The Defendants' Counterclaim If there were found to have been concluded contractual arrangements, by virtue of unconscionable conduct on the part of the plaintiff's agents, the defendants seek an order declaring void ab initio any agreement between any of them and the plaintiff. In view of the findings that no unconscionable conduct has been demonstrated on the part of the plaintiff, the defendants' counterclaim must be dismissed. 8. The Plaintiff's Claim The plaintiff's claim is for damages for breach of contract and for misleading conduct pursuant to the Trade Practices Act. I have found that there were concluded contracts between the plaintiff and corporate defendants not subject to an oral condition and that the fourth defendant acted within authority in executing the contract of sale on behalf of Gerring. However I have accepted the evidence of Mr Goggins that the contract price reflected the market value as at 1 November 1991. The defendants have thus established no loss. I have not accepted the plaintiff's claim pursuant to the Trade Practices Act. I will hear or receive submissions as to the appropriate form of order. 9. Costs -- 70 of 71 -- 70 There are a number of factors which will need to be considered before making costs orders in this matter. I propose to allow 28 days for the reception of written submissions by my associate on or before 8 May 1996. The parties' legal advisers have cooperated well in the past with respect to the exchange of submissions and I would expect that they will be able to do so with respect to costs. 10. Orders It may be convenient if the parties indicate the appropriate form of order with their submissions as to costs. I give liberty to apply on the giving of 3 days' notice in writing to each other party with respect to any matters raised in these reasons pending final orders. -- 71 of 71 --