Caroda Investments Pty Ltd, Johns & Anor v Weiler Holdings Pty Ltd [1995] QSC 250

·. £. ;t6!'l2 ,;c~/ZSo --11'f6 State Reporting Bureau •.---------------------------------------- C ( \ ~' .. TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND ----------- CIY~~- JURISDICTION/ .,,,.... -~ WHITE J No 1040 of 1993 CARODA INVESTMENTS PTY LTD and BRIAN BRUCE JOHNS and WEILER HOLDINGS PTY LTD BRISBANE .. DATE 22/09 /95 .. JUDGMENT 1 REl/lS'.::D COPIES ISSUED State Reporting Bureau Date :r !(0 I Cj_ S First Plaintiff Second Plaintiff Defendant 4th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 227 4360. Facsimile: (07) 227 5532 -- 1 of 35 -- ·220995 dfc (White J) HER HONOUR: The first plaintiff's claim for specific performance of the contract dated 31 December 1992 is refused. Accordingly the defendant is entitled to judgment on its counterclaim. It is declared that the defendant validly terminated the contract for the sale of land dated 31 December 1992 on 23 April 1993. It is further ordered that the caveat lodged over the said land be removed. The defendant's rights with respect to any claim of damages which it might wish to make with respect to loss associated with the contract of 31 December 1992 and the caveat are reserved. (-) In the absence of submissions to the contrary, the plaintiffs must pay the defendant's costs of and incidental to the action and to the lodging of the caveat to be taxed. HER HONOUR: I would like to set a time for submissions on costs. They can be done in writing to save anyone appearing ( \ again in Court and expending your clients' money further. -......___.,./ Could I have written submissions on costs no later than 10 20 30 four o'clock on Thursday, 5 October? You can exchange those 40 amongst yourselves before that time. I won't make any particular formal orders about when you have to do that. Good sense will prevail. Unless my associate contacts your firms to the contrary I will give my ruling on the question of costs on Monday, 9 October at 9.15. If there is a consent arrangement with respect to the costs, of course, and that may well happen, then you can let me know about that. 50 JUDGMENT 60 2 -- 2 of 35 -- n ( ( IN THE SUPREME COURT OF QUEENSLAND Brisbane Appeal No. 1040 of 1993 Before the Hon. Justice White [Caroda Investments Pty Ltd & Anor v. Johns & Anor] BETWEEN: AND: AND CARODA INVESTMENTS PTY LTD & ANOR (First Plaintiff) BRIAN BRUCE JOHNS (Second Plaintiff) WEILER HOLDINGS PTY LTD (Defendant) JUDGMENT - WHITE J Judgment delivered 22/09/1995 CATCHWORDS Counsel: Solicitors: Hearing dates: CONTRACT for sale of land - identity of purchaser - failure to settle on due date - negotiations for extension of time - wh. agreement reached - wh. time of essence. Mr J Batch for plaintiffs Mr C Newton for defendant Barwicks for plaintiffs Bow & Company for defendants 1,2,3 August 1994 -- 3 of 35 -- n ( \, '·-. IN THE SUPREME COURT OF QUEENSLAND BETWEEN: No. 1040 of 1993 CARODA INVESTMENTS PTY LTD & ANOR (First Plaintiff) AND: AND: BRIAN BRUCE JOHNS (Second Plaintiff) WEILER HOLDINGS PTY LTD (Defendant) REASONS FOR DRAFT JUDGMENT - WHITE J Judgment delivered 22/09/1995 The plaintiffs (or one of them) seek specific performance of an alleged agreement with the defendant, the registered owner, for the sale of land on which is erected a block of shops on the Gold ( Coast Highway at Mermaid Beach ("the land"). The Identity of the Plaintiff On 31 December 1992 a standard form REIQ contract in respect of the land was executed on behalf of the defendant company by Mr Sun Chan, a director, and by Mr Bruce Johns, the second plaintiff, above whose signature appears the words "Caroda Investments". The purchaser's name is typed in the designated place on the document as "Caroda Investments". The proceedings in this action were brought in the name of Caroda Investments Pty Ltd and the defendant in its defence and counterclaim admitted that the company was a contracting party to the agreement of 31 December 1991. In the course of discovery the defendant became -- 4 of 35 -- 2 aware that in early January 1992 Mr-John~ had sought to have the business name "Caroda Investments" registered. ASC searches had revealed -that he· was not shown as a director of the company "Caroda Investments Pty Ltd". The defendant was granted leave to withdraw its admission and pleaded that the purchaser was not the company but Bruce Johns trading as Caroda Investments. Caroda Investments Pty Ltd caused Mr Johns to be shown as a director from 1 January 1993 in the ASC records of the company . . from 14 October 1993. Leave was given to join Mr Johns as second Q plaintiff. Just who was the contracting party on 31 December 1992 continued to be an issue at the trial. It will accordingly be convenient to refer to the "purchaser" in these reasons rather than to the "plaintiff". The Issues There is no doubt that the purchaser (whoever that might be) did not settle by tendering the purchase price cin the due date for settlement, 13 April 1992, under the written contract. Although sought, no extension had been granted by the vendor who required strict compliance with the contract in which time was of the essence. The purchaser argues that a new agreement was reached on 15 April 1992 whereby the date for completion of the written contract was extended on terms. The purchaser further argues that if it is found that Mr Johns was the contracting party on 31 December 1992, on 15 April 1993 the company was substituted for Mr Johns as purchaser. The defendant denies in its pleading that any concluded agreement was reached on 15 April, but if_ it was it. was subject to, inter alia, the payment by the purchaser of $10,000 on or-- before 16 April 1993 C) C) -- 5 of 35 -- 3 which did not occur. In submissions counsel conceded that terms for an extension of time were agreed by 16 April but were not fulfilled by the purchaser~ The defendant further pleads s. 59 of the Property Law Act that there was an insufficient memorandum in writing of the agreement if made on 15 April, 1993. The purchaser alleges that two payments of $5,000 made on 20 and 22 April and the provision of a guarantee by Mr Johns as director constituted part performance of the agreement of 15·April and n also gave rise to an estoppel. The defendant purportedly terminated the written contract on 23 April 1993 and declared the deposit forfeited. The Plaintiffs' Background Caroda Investments Pty Ltd has been the corporate trustee for the Harris Family Trust since 1981. Mr Harold (Hal) Harris is a director of the company. As from 1 January 1993 Mr Bruce Johns is shown as director in lieu of Mr Harris' wife Sally. The Harris' live on a grazing property near Stuart Town in New South Wales. Family members are the beneficiaries of the trust. Another company, Canoblagin Pty Ltd, was originally the trustee but after that company became involved in property development Caroda Investments Pty Ltd became the trustee of the family trust. Mr Johns is a close friend and business associate of Mr Harris. Their relationship began in about 1980. He is a director of Canoblagin Pty Ltd. Mr Johns has been a licensed real estate agent since 1975 and an auctioneer since 1980 but for some years has not worked in those capacities. He might best be described as a property dealer. He. identifies properties in which Mr Harris and others, might be interested. Mr Harris' role -- 6 of 35 -- 4 is to raise the finance for the purchase and/or development of those properties. When business transactions were under way Mr Johns and Mr Harris would be in touch with each other two or three or more times a week either by telephone or by fax. No formal partnership-type agreement has been entered into between Mr Harris · and Mr Johns. They were content to work in this informal way and had confidence in each other. Earlier in 1992 Mr Johns; Mt Harris and another property dealer, Mr Ray Aitkin, bought land close to the subject land in Karen Avenue from the defendant company. An extension of time was granted on that .. 0 contract and the defendant agreed to a transfer by direction to C) a third party to whom the land had been onsold for the payment of an extra $5,000. Mr Johns identified the subject land which he thought could be purchased on a long contract. The shops were run down and not fully tenanted. It was thought to tidy the buildings up and re-tenant them with some cons.ideration being given to strata () ti tlihg them. Mr Harris was not keen to use his development company, Canoblagin Pty Ltd, as the vehicle for the purchase because he had recently · conducted a major re-finance of its operations and did not wish to upset that in any way. He thought that the trustee company, Caroda Investments Pty Ltd, would be a suitable vehicle for the purchase of the property and that it would become active in Queensland. A purchase price of $750,000 was reached with a deposit of $10,000. Mr Harris said that at that time he was confident that he could raise the necessary funds to complete the purchase. The arrangement was that Mr Johns would provide the deposit, incidental expenses, and do the l)/ -- 7 of 35 -- 5 negotiations, while Mr Harris would provide extensive security and his brother-in-law, Mr Jarratt, would provide funds of about $140,000, the balance being borrowed. The Contract of 31 December 1992 (a) The Identity of the Purchaser All negotiations were conducted between Mr Johns and Mr Bob Kumnick who was the vendor's selling agent. Mr Kumnick had a number of rental properties owned by the defendant on his books n for which he had acted as landlord's agent including the subject property. He recalls that Mr Johns told him that he was buying ( ) on behalf of a syndicate in respect of the land. The contract was a standard form REIQ contract with three special conditions prepared in Mr Bob Kumnick' s office. contract in the way described above. Mr Johns executed the That document was then taken by Mr Kumnick to Mr Chan on 24 December 1992 for execution. Mr Chan wished to consult with his solicitors about the terms but agreed on the price. On 31 December 1992 Mr Chan, his wife and daughter, all directors of the defendant and Mr Bob Kumnick met at Mr Chan' s solicitor's office, Bow & Company. Mr Bow redrafted l_ the special conditions and the contract was executed by Mr Chan on behalf of the defendant. Mr Kumnick was instructed by Mr Chan to obtain Mr John's signature to the redrafted agreement that day. Mr Kumnick said that he heard Mr Bow say in the presence of the Chans "I haven't called for directors' guarantees". No one else present recalls hearing those words and Mr Bow does not recall saying them. If he did say them then there is nothing remarkable about that proposition since on the face of the contract the purchaser was not a company but a business name. -- 8 of 35 -- 6 When Mr Johns re-executed the contract he did so under the vendor's signature where "Weiler Holdings Pty Ltd per [ signature of Chan] Director" appears. This was the second occasion on which Mr Johns had written "Caroda Investments" and signed his name beneath it without qualification. He said that he understood that the purchaser was the company. Mr Johns had told Mr Kumnick that the purchaser was "Caroda Investments". Mr Kumnick and Mr Johns were both experienced real estate people and familiar with contracts and with companies contracting. The Q earlier purchase of land from the defendant was in a business name, RHB Consultants. It is quite difficult to accept that Mr Johns by an oversight did not tell Mr Kumnick that a company, Caroda Investments, was the purchaser and twice signed without adding "Pty Ltd" and/or indicating that he was signing behalf of .. another entity. However he appeared as a rather bluff person, not attracted to detail or precision, and said that he was not much given to "paper" matters. On 11 January 1993 Mr Johns made an application to register the business name "Caroda Investments" to the Department of Justice in Brisbane describing the nature of the business as "real estate industry services". The application cheque _was drawn on "BB Johns Travel Account" and signed by Mr Johns. Registration was refused because of possible confusion with Caroda Investments Pty Ltd. On 22 February 1993 a further application was lodged enclosing the consent of the company under seal a~d signed by Mr Harris permitting Mr ·Johns to register the business name "Caroda Investments" in Queensland. Mr Johns said that the business name was registered for ease of accounting, so 0 CJ CJ -- 9 of 35 -- () 7 that bills associated with Caroda Investments Pty Ltd could be paid by him and sent, as I understood his evidence, on a periodical basis to Mr Harris. The difficulties in dealing on the Gold Coast on behalf of a N.S.W. company whose documents and seal were difficult to access were thus to be avoided. Freestone & Kumnick, the plaintiffs' solicitors, by letter dated 8 January 1993, described the purchaser as "Caroda Investments". However in the same letter the vendor is not graced with "Pty Ltd" either. Mr Bob Kumnick's son, Mr Peter Kumnick, was the purchaser's solicitor. No point was made of (\, this but Mr Bob Kumnick seemed very sensitive about it. Mr Peter Kumnick did not give evidence. Bow & Company's letter of 12 January 1993 in response to the letter of 8 January described the vendor as a company and the purchaser as a business name. In its reply the next day Freestone & Kumnick referred to the purchaser as "Caroda Investments" and the vendor as "Weiler ( Holdings Pty Ltd" and continued in this descriptive vein in following correspondence. Similarly, the real estate agent's correspondence does not add "Pty Ltd" to the name "Caroda Investments". When taxed with this Mr Johns said that the solicitors were new and would not have known how the business was arranged. This was, one might think, a rather curious response. By its letter of 23 February 1993 the vendor's solicitors asked the purchaser's solicitors to let them have the " ... correct name and designation of the purchaser and in particular whether the purchaser is to be Caroda Investments Pty Ltd and· if so what the ACN number is." That letter was never responded to. In its letter of 5 April 1993 the purchaser's solicitor for the first time referred to the -- 10 of 35 -- purchaser documents 8 as "Caroda Investments Pty Ltd". The were prepared by Bow & Company and the transfer sale is described therein as "to Caroda Investments". Nothing was made of this in following correspondence but the purchaser's solicitors started to refer to Caroda Investments as "Pty Ltd" in the heading. By 13 April 1993 in a "without prejudice" letter offering terms for an extension, the vendor's solicitor has apparently accepted the possibility that the purchaser was a company and sought directors' guarantees. In September 1993, after the writ had issued, the defendant brought on a chamber application to strike for want of prosecution and for the removal of a caveat lodged by Caroda Investments Pty Ltd. The defendant's solicitor exhibited an ASC search to show that Mr Johns was not a director of the plaintiff company_. In his affidavit sworn on 9 September Mr Johns described himself only as "General Manager" of Caroda Investments Pty Ltd and not as director. The ASC was notified on 14 October 1993 that Mr Johns was a director of the company and had been from 1 January 1993. Mr Johns believed that he was a director from 1 January 1993 since the company was to be active in Queensland. Mr Harris said that he gave instructions to his accountants that Mr Johns was to be a director from 1 January 1993 but that the accountants had not carried out his instructions. Mr Harris said that his country accountants were always slow and that the company was fined regularly for failure to file its annual return on time. Initially Mr Harris said that Mr Johns' appointment would be found in the minutes of the 0 0 C) CJ -- 11 of 35 -- n 9 meeting of Caroda Investments Pty Ltd but then said that that would not be so. Of some assistance are the documents prepared by Mr Berther, a finance broker retained by Mr Johns to raise the loan to purchase, on information supplied by Mr Johns and Mr Harris. Mr Berther and Mr Johns had detailed discussions at the end of January 1993. In the finance brief the borrower is described as Caroda Investments Pty Ltd and Mr Johns as a director. Mr Jarratt is described as director "to be appointed" which is consistent with Mr Harris' evidence that if Mr Jarratt invested money into the venture he would be appointed a director but that (~ Mr Johns was already a director. In the resume of the company's past activities it is described as having signed the contract for the purchase of shops from the defendant. Mr Johns said that he had had a recent (November 1992) experience of unsuccessfully attempting to register land in a business name and it was unlikely that he would have made such an error again. Although (, as I have mentioned it is a matter for comment that Mr Johns signed the contract on two occasions as "Caroda Investments'' I have concluded that it was his intention, and he was so authorised, to sign on behalf of the company. He was not meticulous about details and I accept his evidence and Mr Harris' on this point. The defendant makes no plea that it intended to contract only with Mr Johns, indeed, its early defence admitted that the company was the other contracting party. Accordingly, I find that the contract of 31 December 1995 was between Caroda Investments Pty Ltd and the defendant. -- 12 of 35 -- 10 (b) From 31 December to 13 April The settlement date written into the contract was 9 April 1993. That day was Good rr±day and by virtue of the terms of the contract the date for settlement became Tuesday 13 April 1993. One of the special conditions in the contract permitted the purchaser access prior to settlement for the purpose and preparing to strata-title :the shops. Mr Johns entered and cleaned up the shops and did some external painting in order to attract tenants to the vacancies on the authority of Mr Bob Kumnick. It seems that new tenant(s) were attracted. On 12 0 March the purchaser's solicitor wrote a lengthy letter, somewhat indignant in. tone, alleging that the vendor had been commercially Q uncooperative in assisting to re-tenant the shops and that as a consequence the purchaser had been "deprived of the benefit of the bargain" and reserved its rights in respect of the vendor's "inaction and conduct". The writer concluded: "In view of the above premises, our client considers that it .should be afforded the opportunity of being able to secure tenants and to that end, our client requires an extension of time for completion to put it into the same position as existed at the time of entry into the contract. Our client believes that a reasonable period would be three months." Few particulars were given then or prior to settlement of the complaints except an allegation of delay by the vendor in considering offers from prospective tenants and by the vendor seeking "key money". This letter was not answered and Freestone & Kumnick wrote again on 30 March 1993 demanding an extension of time tO complete. Bow & Company replied on 2 April 1993 rejecting the alle·gation of lack of cooperation and emphasising that the vendor would not agree to any extension of time for 0 -- 13 of 35 -- () C 11 settlement "whatsoever" and indicated that the settlement figures would be advised in due course. Freestone & Kumnick responded on 5 · April 1993 ref erring to its letter of 12 March and mentioning that a caveat may be lodged. In its letter of 7 April 1993 Bow & Company, noting that the settlement date was a public holiday, indicated that the vendor would prefer to settle the day before on 8 April. In the absence of that agreement settlement would be on 13 April at Bow & Company's office and 12.00 noon was the nominated time. The writer emphasised again that no extension would be given and noted that no request had been received to return tr·ansfer documents for stamping prior to settlement. The settlement figures were included with the letter. On 8 April 1993 Bow & Company wrote again as follows: " We again have firm instructions from our client that by virtue of other commitments for the sale monies, no extension of time for settlement will be considered. Your client is required to effect settlement by not later than the due date 13 April 1993." The writer asked for agreement with the settlement figures previously provided and for a bank cheque on settlement in the sum of $737,443.15. In a letter of the same date Freestone & Kumnick maintained its tone of complaint adding that it was unreasonable to expect its client "to jump at the very last moment" where it had been prejudiced by prior delay and had not arranged for the necessary inspections. Somewhat obscurely the writer added: "With respect and without in any way admitting your client has acted properly and reasonably, your client has failed to take into account the usual matters which one would ordinarily expect in a commercial transaction." -- 14 of 35 -- 12 The writer asked for a 45 day extension, affirmed the contract and informed Bow & Company that a caveat was being lodged. By a fac·simile transmission on 13 April Bow & Company affirmed the vendor's requirement that settlement be effected that day and reserved the vendor's rights. Later that day Bow & Company sent a "without prejudice" letter setting forth terms upon which the vendor would agree to an extension of time. Al though considerable evidence was led as to the purchaser's capacity to obtain finance to settle the contract it is necessary to look only briefly at the purchaser's situation during the period from signing the contract to settlement. As I have mentioned, Mr Berther, a finance broker, had been approached just prior to Christmas 1992 by Mr Johns to find a lender of approximately $650,000. They met for discussion at the end of January 1993 when Mr Berther indicated what documentation and information he required to submit a proposal to a lender. The amount then to be borrowed was $611,000. In due course all documents requested were provided to Mr Berther except for copies of· the leases for the shops. The leases were required by the financier to evaluate the borrower's capacity to service the loan. Mr Johns said that the vendor was uncooperative about the provision of the leases. Notwithstanding the frequent correspondence between the solicitors in March and April prior to settlement there is no request for the leases made and no other evidence led as to any specific request. On 22 March 1993 finance had been conditionally approved by the lenders as arranged thrbugh Mr Berther. In his letter to Caroda Investments Pty Ltd of that date Mr Berther said that 0 C) 0 -- 15 of 35 -- n ( 13 further documents were required urgently "to expedite settlement procedure" including valuations on security properties and copies of leases for the subject land. Mr Berther said that he expected that the documentation could have been finalised and the funds made available for settlement on 13 April as far as his side was concerned. Mr Johns collected Mr Berther's letter on 22 March he said only as a matter of courtesy having formed the view by then that the sale would not settle on 13 April. He put the letter to one side expecting to use it at some time in the future. Mr Harris said that although he knew that the funds had been approved in principal "it didn't suit us [to settle on 13 April] because we were negotiating for an extension''. It appears that Mr Jarratt had not been approached for his contribution which would take some little time to realise being in investment bonds or the like. The Alleged Agreement for Extension As I have mentioned, by a "without prejudice" letter from Bow & Company on 13 April the vendor offered an extension of time to settle the sale. The terms were: • An extension for a period of 28 days from the date in the contract, 9 April 1993, to 7 May 1993; • Time to remain of the essence; • The deposit of $10,000 to be released in full. to the vendor; • The purchaser to pay a further deposit in the sμm of $20,000 by cleared funds to the vendor directlf; -- 16 of 35 -- 14 • The purchaser to pay interest on the balance settlement monies outstanding at 12.5% per annum for the period of the extension; • Personal guarantees of the directors of the purchaser company. The purchaser required a response to that offer by no later than 12.00 noon 13 April and continued to reserve its rights under the contract. Freestone & Kumnick responded ?n the same day with a counter proposal. The terms were: • Settlement 45 days from 13 April 1993; • Time of the essence; • The purchaser pay an additional amount of $10,000 on settlement not forming part of the original purchase price; • That Bruce Johns guarantee personally the performance of the contract. In a further letter sent by facsimile on the same date Freestone & Kumnick informed Bow & Company that a caveat was being lodged and that the purchaser wished to complete the acquisition of the property on the basis set forth in the letter of 8 April 1993. That simply asked for a 45 day extension. It is likely that this document preceded the one mentioning the $10,000 even though it appears sequentially after it in Ex. 4 which is the agreed document. prepared by the plaintiffs. There was some further correspondence that day about the failure to settle at 12.00 noon and the .entitlement of the vendor to nominate this time, but this was mere rhetoric because the purchaser could not and indeed did not intend to settle at any time on 13 April. 0 () CJ -- 17 of 35 -- n 15 A meeting was arranged at Mr Bob Kumnick' s real estate office for the morning of 15 April between Mr Sun Chan and Mr Johns in order to see if some agreement could be reached. There are significant differences between the participants at the meeting as to what occurred. Essentially Mr Johns maintains that an agreement for extension was reached whilst the defendant says it was not. Mr Bob Kumnick took Mr Brian Johns and Mr Sun Chan, his wife and daughter Irene who was to interpret, into a vacant tenancy near his office for the meeting which he "chaired". The meeting was conducted in English. Mr Chan spoke a few words of English and understood somewhat more. This was the experience (': of Mr Kumnick who had dealt with Mr Chan over a period of several years and it was also observable in court and in the witness box. Mr Chan said that he understood English figures. Mr Johns and Mr Kumnick thought that the tone of the meeting was "good" and ended on a cordial note while Mr Chan and his daughter thought the experience most unpleasant and were pleased to leave. ( Mr Kumnick and Mr Johns said that the office contained a desk and some chairs and was otherwise unremarkable. The Chans denied (_/ that it contained a desk, thought it dirty and, as I understand their evidence, that Mr Kumnick would have been embarrassed to take business associates to it. Miss Chan usually resided in Sydney but she had a very bad toothache that day and had come to the Gold Coast where her parents then lived for treatment. She had little understanding of the transaction that was being discussed but said that she could recall the words spoken. Mrs Chan did not speak during .the meeting. -- 18 of 35 -- 16 It is quite likely that fundamental cultural differences explain many of the differences in perception of the Chans on the one hand and Mr Kumnick and Mr Johns on the other rather than being differences going to credit which was urged by counsel in their submissions. I do not find that any witness was untruthful, but some I consider to be more reliable than others in recollection. Differences emerged in cross-examination from evidence in chief which suggested that the recollections of Mr Johns and Mr Kumnick were not precise. Mr Chan had with him a copy of the letter of 13 April 1993 from his solicitor to the purchaser's soli6itor setting out the 0 terms upon which the vendor would agree to an extension of time () which I have-set out above. I find that those terms were the basis on which any discussion commenced rather than the letter in response from Freestone & Kumnick. There was disagreement about the length of the meeting. The Chans said that it was "a short" meeting of about half an hour. Mr Johns had no real recollection and Mr Kumnick thought it took about ~n hour. All the witnesses agreed that it started at about 9.30am. It is not necessary to resolve this matter but ref~rence was made by the plaintiffs to a note prepared by Mr Bob Kumnick I said to have been written on 15 April to record what had happened at the meeting. He notes two times of 9.00am and 10.30am which Mr Batch submitted should be taken to refer to the starting and finishing times of the meeting. It is clearly is incorrect as to the starting time. Mr Johns' evidence was that at the beginning of the m~eting Mr Chan said in English words to the effect "you haven't got the 0 -- 19 of 35 -- n 17 money" in a threatening tone. Mr Johns said that his response was that the purchaser did have the money and that he would not waste Mr Chan's time "talking today" if "they" could not get the money. Miss Chan said that she translated for her father words to the effect that "you didn't settle on the settlement date, is that because you don't have enough fund in your company?" and that Mr Johns eventually responded that it was rude to ask personal questions. Miss Chan said that her father showed recognisable signs of anger at this response. Mr Kumnick said that he had seen Mr Chan angry on previous occasions and he did not appear angry then. I accept Miss Chan's evidence on this: It seems that something was lost in the translation. Even though Miss Chan' s English was correct I thought that she was, not surprisingly, very literal, and idiomatic language such· as was used by Mr Johns would have created some difficulties. Mr Kumnick said that that comment was made about halfway through the meeting. It is much more likely that it occurred at the l, beginning. Mr Johns said that he offered a variation on the proposal set out in the Bow & Company letter of 13 April. He· said that he offered $10,000 in addition to the contract price, interest on the extension which was to be for 45 days and that he wanted to get the consent of his partners. He said that he- then took up Mr Kumnick's real estate message pad which was on the desk and wrote down what he said was his final offer. He said he.wrote down the $10,000, the 45 days, the interest and the permission or approval of his partners. He thought that he wrote it out twice but was not certain, and that he handed one copy to the -- 20 of 35 -- 18 Chans and kept one for himself. There is some doubt in the recollection of the witnesses as to whether the note was handed to Mr Kumnick who handed it to the Chans or whether Mr Johns handed it directly to them but it is not necessary to resolve that matter. On the paper (Ex. 6) is written "10,000 to Weiler Holdings not as part of contract interest on balance. Subject to partners." As can be seen Mr Johns was not correct in his recollection that the 45 days was included in the writing. As he handed it over his evidence was that he said to Mr Chan "We can do that'' and 0 then changed his answer to "Will you do that?" Mr Johns' later Q evidence was that he said "That's what we're doing". In cross- examination he said that the note was to record the agreement that had been reached between himself and Mr Chan rather than as a proposal that could be discussed. Mr Chan's position is that he pointed to the 10,000 on Ex. 6, which had been translated to him by pi§ g.aughter, and said "today". Mr Johns denies that this () was said and that he said to Mr Chan that the money would be paid as soon as possible after he, Johns, had consulted with his partners. Mr Kumnick says that he did not hear Mr Chan's word but that it could have occurred at the time when people were getting ready to leave. His impression was that the parties had agreed in principle to certain matters but that they would leave the "fine tuning" to be done by the solicitors. He said that as far as he was concerned the parties still had to tie the agreement down to specifics as to the interest rate and the timing of the payment of the money. He was incorrect as to the interest as that had been agreed in correspondence. There was CJ -- 21 of 35 -- n ' ( '· 19 agreement that Mr Chan asked that Mr Johns' solicitor write to his solicitor, but Mr Johns said that that was merely to be a confirmatory letter while Mr Chan's position was that no final agreement had been reached. Mr Chan's evidence was that when Mr Johns said II subject to partner's approval II that he said the same. Neither Mr Johns nor Mr Kumnick heard this said, though Mr Kumnick would not have been surprised because in other negotiations Mr Chan referred matters to his partners. He also tended to have his solicitor check all agreements. The Chans stood up to leave and handshakes took place. Mr Johns said that he thought a firm agreement had been reached and handshakes were to confirm that the arrangement was fixed. As I have mentioned the Chans thought that the meeting was not a particularly pleasant one, that no agreement had been reached and left hurriedly for another appointment with their bankers. Because some time was devoted to it at the trial I should deal with the note, Ex. 6. I think it unlikely that Mr Johns wrote it twice. He handed the paper over to the Chans and they put it on the table as they left but this was not seen by Mr Johns or Mr Kumnick. Mr Kumnick noticed the note and indicated it to Mr Johns as his copy. He thought that the Chans had taken a copy with them. Miss Chan telephoned Mr Buckland, a solicitor with Bow & Company, after the Chans left the meeting. Mr Bow was away on holiday. Mr Buckland' s file note of this conversation relevantly was "agreement arrived at - p's solicitor to fax details to me within the hour." Mr Buckland has no recollection of the conversation. Miss Chan denied that she said an agreement had -- 22 of 35 -- 20 been reached. It is likely that Mr Buckland wr?te a reasonably accurate summary of what Miss Chan said, but he said that he used his own words. Mr Chan and his daughter then attended at his solicitor's office at 11 o'clock as had been arranged earlier. Mr Kumnick was telephoned and asked to attend. Mr Buckland received a facsimile transmission from Mr Peter Kumnick that morning shortly prior to the arrival of Mr Chan in the following terms: "We understand that our respective clients met this morning with a view to reaching agreement on the matters in dispute. We are instructed to confirm· our client's understanding of the arrangement, being as follows:- 1. That an ~mount of $10,000 will be paid to Weiler Holdings Pty. Ltd. subject to the approval of other directors; 2. Settlement is to occur on or within 45 days from the date hereof; 3. Our client will pay interest at the rate of 12.5% on the unpaid balance of purchase monies from 13 April, 1993 until the date of settlement. We would be pleased if you would confirm the above arrangement .. " Mr Kumnick said that the impression that he obtained when he 0 0 got to Mr Buckland' s office, from listening to Miss Irene Chan () speaking to Mr Buckland, was that an agreement had been reached. Mr Buckland then telephoned Mr Peter Kumnick. Mr Buckland said that he gave Mr Peter Kumnick details of Mr Chan's instructions in reply to the three proposals in the fax. He told him that the $10,000 the purchasers proposed to pay was required to be paid that day, that the second and third items, namely, that settlem~nt was to be on or within 45 days and interest on the unpaid · balance of purchase monies from 13 April to date of -- 23 of 35 -- n 21 settlement were satisfactory. He added that Mr Chan required further terms to be satisfied, namely, a personal guarantee from Mr Johns and that time was to remain the essence of the contract. Mr Peter Kumnick responded that he would get instructions and get back as soon as possible. Mr Peter Kumnick responded later that day and said that the proposal was accepted except as to the payment of the $10,000 that day. He told Mr Buckland that the purchaser was unable to get agreement with his partners that day and that he, Kumnick, would telephone Mr Buckland the following morning. Mr Chan instructed Mr Buckland, who was keeping in touch with him by telephone, that the money must be paid by 5.00pm on 16 April. Mr Kumnick telephoned Mr Buckland the following day, the 16th, to say that Mr Johns was unable to contact a third partner. Mr Harris was not told by Mr Johns that there was any urgency about the provision of the $10,000 and the identity of the "third partner" was never revealed. Mr Buckland advised that the vendor wanted the matter finalised that day or he would consider withdrawing from negotiations. Mr Buckland's evidence on these matters was not challenged. A facsimile transmission was sent (_ j by Bow & Company on 16 April referring to these discussions: "We refer to your letter 15 April 1993 and our subsequent telephone conversations regarding the terms and conditions on which our client is prepared to agree to an extension of the date for settlement. We note that we are still waiting confirmation from you that the amount of $10,000.00 referred to in your correspondence to us of the 15th instant will be paid today. .advise that should agreement for the (including payment client) , not be in all likelihood We have very firm instructions to the terms and conditions of the extension of the settlement date, of the sum of $10,000.00 to our finalised today our client will -- 24 of 35 -- 22 withdraw from any further settlement negotiations and withdraw all previous offers. In regard to the payment today of the additional sum of $10,000.00 our client requires that amount to be paid to the following account: ... " At no time was it suggested to Mr Buckland by Freestone & Kumnick that a_concluded agreement had been reached at the meeting on 15 April between the parties and that the vendor was not at liberty to impose different or additional terms upon those which had been reached, the most material of which according to Mr Johns, was that time for payment of the $10,000 was to be "as soon as possible". On Monday 19 April, in the afternoon, Freestone & Kumnick 0 sent a letter by facsimile transmission to Bow & Company () indicating that they had spoken to their client and that the monies were to be deposited "some time tomorrow". A guarantee to be signed by Mr Johns was included for approval as to form. By letter on 21 April Freestone & Kumnick noted that the sum of $10,000 "should be" in the vendor's account with $5,000 to be paid from country New South Wales and the balance by telegraphic () transfer from Singapore. An executed guarantee by Mr Johns was included. The second $5,000 was not deposited until 22 April. On 23 April in two letters Bow & Company advised Freestone & Kumnick that because of the purchaser's failure to settle on the due date specified by the contract it was in breach of the terms of the contract and accordingly elected to rescind the contract and sought forfeiture of the deposit. The writer noted that since the purchaser had failed to comply with the terms and conditions for an extension set out in the letter dated 16 April 1993 the vendor wished to discontinue those negotiations. On the C) -- 25 of 35 -- n 23 following Tuesday, 27 April, Freestone & Kumnick denied the vendor's entitlement to terminate the contract. On 28 April Bow & Company wrote to Freestone & Kumnick noted the purchaser's failure to settle on the due date and failure to pay the further amount of $10,000 by 16 April and that there would be no further negotiations to extend the settlement date or otherwise to keep the contract on foot. Again notice of termination of the contract was given and the forfeiture of the deposit declared. The writer continued that should the purchaser dispute the vendor's right to terminate the contract and forfeit the deposit then the vendor continued to reserve its rights to claim damages and would dispute any obligation to repay the further sum of $10,000 paid on the 20 and 22 April. An offer to settle was made by deducting the vendor's expenses incurred as a result of the failure to settle from the $10,000 and refunding the balance amount to the purchaser. On 24 May 1993 Freestone & Kumnick referred to "the mutually binding agreement dated 15 April 1993" and sought to inform the purchaser that time was no longer of the essence and that completion would take place within 45 days from the supply of \. __J "previously requested information". Whatever the validity of the complaints made by the purchaser to the vendor about delay on the part of the vendor in cooperating in the attempts to tenant the premises prior to completion, those matters form no part of the contract. They are not the subject of pleadings and should be disregarded for the purposes of characterising what occurred between the vendor and the purchaser. -- 26 of 35 -- 24 It was pressed that the memorandum made by Mr Kumnick, which he said that he had made at the end of the day on 15 April after the meeting, should be given considerable weight as being an almost contemporaneous record of what occurred at the meeting between Mr Chan and Mr Johns. I have concluded that Mr Kumnick must be mistaken as to when he recorded those matters. As I have mentioned, on a fair reading of the note the conference is said to have commenced at 9 .. OOam. The meeting was originally arranged for 9 o'clock but the Chans were late and the meeting started at around 9.30am according to all the witnesses. The explanation may well be that Mr Kumnick relied on a diary entry which indicated that a conference was arranged for that time. Relevantly the note reads: "Mr Chan referred to his letter of offer to extend $20,000 + $10,000 Deposit & Int 12½% release settle 30 days. Mr Johns offer $10,000 o/s contract plus interest 12½% subject to confirmation by his partners and arranging the money to be paid ASAP after approval." A line drawn on the paper and the following appears: ·"Mr Chan agreed and went to Sol. Robert Buckland 11.00am. They called me to the appt to discuss and he wanted to vary the verbal agreement by calling for the deposit but this was explained and left arrangement as before but required by Friday the $10,000." A somewhat curious aspect of Mr Kumnick's conduct is that with respect to the release of the $10,000 deposit to the vendor which was a condition of an extension. As Mr Kumnick well knew, by agreement between the vendor and the purchaser that amount had been released and paid to him in respect of commission that was earned by him on another sale some time earlier. That must have slipped the minds of Mr Chan and Mr Johns. Mr Kumnick had the 0 0 -- 27 of 35 -- ( i ' 25 letter from Bow & Company of 13 April setting out the terms and conditions upon which an extension could be granted on 14 April including that the deposit paid by the purchaser in the sum of $10,000 was to be forthwith released in full to the vendor. Mr Kumnick did not mention to Mr Chan or to Mr Johns that the deposit had already been released until the matter was raised at the meeting with Mr Buckland. He was very defensive about his receipt of the $10,000 when he gave evidence although neither counsel wished to discuss with him the proprietary of his receipt of that sum of money. However he kept referring to it to the exclusion of attending to the questions relating to the transaction in hand. He said that he thought it none of his business to raise the matter of the release. That must be regarded as an odd attitude. While Mr Kumnick_.was present the time for payment of the $10,000 being spoken of by Mr Chan was that day. According to Mr Buckland's file note it was not until later that day that the time for payment was extended to 16 April. It was likely that had occurred after Mr Kumnick had (, left. The next day Mr Kumnick had a meeting with Mr Johns who may have informed him that the $10,000 was to be paid that day. Mr Kumnick makes reference to settlement in 30 days in his note. No other witness mentions 30 days. These matters suggest that either Mr Kumnick did not write the note when he thought he did, or that he had a most unreliable grasp of what was going on at the time. I did not find Mr Kumnick's evidence on what happened at the meeting on 15 April of much assistance in resolving the issue as to whether an agreement was reached. -- 28 of 35 -- 26 Mr Johns gave the impression of being something of a "broad brush approach" person. He did not seem to be too troubled about detail when recounting what happened at the meeting and gave his impression of what occurred rather than being precise about events and conversations. This is consistent with the "honour" arrangements between himself and Mr Harris. I find that he was not a very reliable .witness as to what occurred, not from want of honesty, but because he seemed not to consider precision of ./-"-"11.A- expression important and he did not seem to care about his "answers. My impression was that he was quite convinced that an extension was to be had for the asking provided some consideration were offered. At least by 13 April the purchaser had found another buyer and was interested in on-selling, as had occurred in November 1992 with a previous purchase from Mr Chan' s company. It is unlikely .that Mr Chan would have been content with such an open ended agreement that permitted payment as soon as possible and was subject to agreement by Mr Johns' partners. This is particularly so when the purchaser had not settled on the due date and was apparently not prepared to discuss his financial 0 capacity to settle the contract in the immediate future. () Mr Chan's solicitor had previously identified to the purchaser an immediate use for the funds on settlement. It was reasonable for Mr Chan to require evidence of the capacity of the purchaser to settle by requiring the payment of the small sum of $10,000 immediately. I find that no agreement was reached at the meeting on 15th as to when the money was to be paid and this was an essential matter. Neither was the date from which the extension -- 29 of 35 -- 0 27 was to run fixed. By their amended pleading the plaintiffs have nominated three dates from which the 45 days was to run - 9th, 13th or 15 April 1993. The vendor had mentioned from 9 April in Ml.f41.•~ot the letter of offer of 13 April while the purchaser both 13th and " 15 April. It was very clearly an important date as time was to continue to be of the essence. Accordingly, although some terms were agreed for an extension at the meeting on 15 April, I have concluded that there was no concluded agreement reached as to other terms essential to the completion of an agreement ~R-e-.m-e-et-i~~S~~-P-~1-:- • This conclusion is supported by the conduct of the parties after the meeting when their solicitors engaged in a series of telephone conversations and written exchanges where terms and conditions quite different and in addition to those said to have been reached at the meeting were discussed without any suggestion from the purchaser's solicitors that a concluded agreement had already been reached on 15 April, Australian Energy Ltd v. Lennard Oil NL [1986] 2 Qd.R. 216. It is conceded by Mr Newton for the defendant that an agreement was reached between the parties via their solicitors l-" as to an extension on the evening of the 15th or on the 16 April. The terms were to be found in a combination of the letter of 15 April from Freestone & Kumnick, subsequent telephone conversations between the parties' solicitors and the letter from Bow & Company of 16 April. Those terms were: • $10,000 to be paid by 16 April; • Settlement to occur on or before 45 days from 15 April; -- 30 of 35 -- 28 • Interest at 12.5% on unpaid balance of purchase monies from 13 April; • Time to be of the essence; • Director's guarantee from Mr Johns. As I have mentioned, the guarantee from Mr Johns was provided on 19 April and the payment of $10,000 by two instalments deposited into the vendor's nominated bank account on 20 and 22 April, so it becomes necessary to see if time had ceased ~o be of the essence or conduct of the vendor induced the purchaser to act to its disadvantage. Time was of the essence in the contract due for settlement on 13 April 1993. Failure to pay on that date entitled the vendor to terminate the contract unilaterally, Mehmet v. Benson (1964-65) 113 C.L.R. 295 per Barwick CJ at p. 303. The vendor's solicitor's open letter of that date maintained its right to terminate. The ''without prejudice" letter reserved its rights to re~cind or affirm and put forward proposals for an extension of time with time to remain of the essence. The proposal for the extension did not .. have the effect of an election to affirm the contract, Tropical Traders Ltd v. Goonan (1964) 111 C.L.R. 41 per Kitto J at p. 55. In correspondence and telephone calls made by its solicitor the vendor insisted to the purchaser's solicitor that time was of the essence in respect of the conditions for the extension and in particular that the payment of the $10,000 was to occur by 16 April. The question is by failing to rescind immediately when payment was not made then and/or by allowing the purchaser's solicitor to return the executed guarantee by Mr Johns as director and engaging in discussion about the payment 0 (j -- 31 of 35 -- 29 of the $10,000 whether it waived ~he requirement as to time, Mehmet v. Benson, supra, per Barwick CJ at p. 303. The vendor's solicitor did a company search of Caroda Investments Pty Ltd on 13 April and noted that Mr Johns was not shown as a director of the company. The vendor's solicitor did not reject the "director's" guarantee from Mr Johns on that ground when it was received by facsimile transmission on 21 April or, indeed; when he received the draft guarantee on 19 April. There was no requirement that the director's guarantee be provided by the 16 April. There is no basis for concluding that by a receipt without objection of the executed guarantee by Mr Johns after that date time ceased to be of the essence. Neither is the ( ! vendor in some fashion estopped from rescinding the contract~ IU-V ~. ( Mr Bow returned to the office on Monday· 19 April. He telephoned Mr Peter Kumnick that day and advised.him that the sum of $10,000 had not been deposited to the vendor's account. He advised Mr Kumnick that the payment was to have been made on the 16th and requested that he urgently ascertain the position from \. his client pending instructions from the vendor. The next day he again spoke to Mr Peter Kumnick and advised him that the ~-/ monies were still not deposited to the vendor's bank account. Mr Kumnick advised that the purchaser was urgently arranging to have the money deposited on that day and that the guarantee was being signed by the director. Mr Bow again advised that the vendor had "definitely required" that the money be paid no later than Friday 16 April and that he could not give any guarantee that even if the money were now paid that the vendor would agree to an extension of time for settlement. Mr Chan telephoned -- 32 of 35 -- 30 Mr Bow several times a day during the early part of the week to see if the money had been paid on the Friday or if it had been paid at all. An appointment was made for 22 April for Mr Chan to see his l\ot€,.. solicitor. Mr Bow made a diary of his instructions from Mr Chan /\ on the 22tid to the effect that the agreement should be terminated because the money had not been paid on 16 April. examination Mr Bow's evidence was as follows: In cross- "The sequence of events was that I received instructions on the · 22nd to terminate. I wrote the letter, which was dated the 23rd by the time it was typed, terminating and later on the 23rd, that's when I received the advi6e - found the diary note they had checked and found I have a diary note on 23 April, 'Sun Chan $10,000 paid to bank and cleared. $5,000 on 20 April, $5,000 on 22 April but not going to proceed, terminate~' By that stage that was only reconfirming my instructions that I already had." T/S 231. In its letter of 28 April 1993 Bow & Company made a proposal with respect to the $10,000 which was not agreed to and the money was eventually returned to the purchaser. The purchaser was left in no doubt in conversations between 0 C) Mr Peter Kumnick and Mr Buckland on 16 April and Mr Bow on 19 and () 20 April that there could be no guarantee "whatsoever" that even if the monies were paid at some other time that the vendor would be prepared to accept that payment. I have concluded that the vendor did not elect to affirm the contract by not terminating immediately on 19 April or by not doing so before the two instalments of $5,000 were paid into its account on 20 and 22 April. Neither did it waive its requirement as to time. Without obtaining the vendor's agreement to a further extension of time for the payment of the $10,000 the purchaser paid over the money out of time and had not been induced to do so by any -- 33 of 35 -- ( . ' , 31 conduct on the part of the vendor. I find that the contract for the sale of land was lawfully terminated by letter dated 23 April 1993. Considerable time was spent in submissions on the statute of frauds defence. In view of my findings that the contract was with Caroda Investments Pty Ltd it is unnecessary to deal with this at any length. The contract was not terminated on the 13th although the vendor's right to do so was preserved. It is thus not correct to characterise the arrangements between the parties for the extension of time as a fresh contract for the sale of s-. land which required conformity with 59 of the Property Law Act. '\ Orders The first plaintiff's claim for specific performance of the contract dated 31 December 1992 must be refused. The defendant is entitled to judgment on its counterclaim. It is declared that the defendant validly terminated the contract for the sale of land dated 31 December 1992 on 23 April 1993. It is ordered that the caveat lodged over the said land be removed. The defendant seeks to reserve its right to claim damages for breach of the contract and any associated with the lodgment of the caveat. The valuation evidence would suggest that the land in question has substantially increased in value since 31 December 1992 and it may well be that there is no loss such as to found any right to damages. There may be damages as a consequence of the caveat and the defendant's rights in respect thereof, about which there was no evidence or indeed any pleading, and those matters together with any damages associated with the breach of contract should be reserved. -- 34 of 35 -- 32 In the absence of submissions to the contrary, the plaintiffs must pay the defendant's costs of and incidental to the action and to the lodging of the caveat to be taxed. 0 0 -- 35 of 35 --