Coral Sea Properties Pty Ltd v Duncombe [1990] QSC 214

10 20 30 40 50 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE KELLY S.P.J. CAIRNS, 21 JUNE 1990 J r:r,-::\·:;~::x: :.:·: ·~;~·.:. :::?::::ur::.D 7 I C~;~';', ;:·: : ..,:/.·: ~ :L;;-0:u..i l ~~ 1 ~/ 6~~~~~ ..-~.J No. 165 of 1989 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: CORAL SEA PROPERTIES PTY. LTD. -and- PAUL PATRICK DUNCOMBE JUDGMENT_ Plaintiff Defendant HIS HONOUR: I make an order for specific performance ,and consequential orders in terms of the minutes of order I randed up by counsel for the plaintiff as varied by me and which I have initialled. I publish my reasons. I would indicate as appears on the last page of those ~easons the variations I have made to the draft handed up; kn the sixth line: a I !for "execution", and purely verbal one substituting "effect" then in the order, paragraph (a), instead of "14 days" I have inserted "30 days" and as to the sum to be paid I have deleted "$975,000" and substituted "$945,000". Those are the only variations to the draft order. Govt. Printer, Old. 1 10 20 30 40 50 60 -- 1 of 13 -- IN THE SUPREME COURT OF QUEENSLAND CAIRNS DISTRICT REGISTRY BETWEEN: CORAL SEA PROPERTIES PTY. LTD AND: PAUL PATRICK DUNCOMBE JUDGMENT - KELLY S.P.J. Delivered the ;1.. / ..C.,,,V- day of ~,1990. No. 165 of 1989 Plaintiff Defendant The plaintiff is and was at all material times the registered proprietor of land at Holloways Beach. In December 1988 it approached Wayne Tait Real Estate· as its agent to sell the land and in about February 1989 that firm entered into an arrangement with Baillieu Knight Frank (Cairns) Pty. Ltd. ("Baillieu Knight Frank") whereby the listing of the property and any commission which became payable was to be shared between them. Mr. Norman, a director of the plaintiff company, was made aware of this arrangement but the plaintiff did not enter into any formal agreement appointing Baillieu Knight Frank as its agent for the purpose of selling the land. On 19th April, 1989 the defendant, who was a property developer, in company with a Mr. Anderson, who was a builder, had a discussion at the office of Baillieu Knight Frank with Mr. -- 2 of 13 -- 2 Fawke, who described himself as "one of the partners" of the Cairns office. The discussion concerned the possible purchase of the land and there is some conflict in the evidence as to what was said with which I shall deal subsequently. There is, however, agreement as to certain events which occurred, namely, that the defendant arranged to have sent to the office by facsimile transmission a copy of his letterhead bearing the name "Duncorp Properties" and he then drafted a document which was typed by Mr. Fawke's secretary onto the letterhead and signed by the defendant. The document was then sent by facsimile transmission to Wayne Tait Real Estate who in turn sent it by the same means to the plaintiff. The .document is dated 19th April, 1989 and is in these terms:- "The Manager,BAILLIEU KNIGHT FRANK (CAIRNS) PTY. LTD., Suite 6/135 Abbott Street, CAIRNS. QLD 4870 Attn: Mr. Raoul Fawke Dear Sir, Re: LAND BOUNDED BY CASSIA, POINCIANA & PANDANA STREETS HOLLOWAYS BEACH, CAIRNS Description: Lot 2 on R.P. No. 748098 and Lot 3 on R.P. No. 748098 Further to my inspection of the abovementioned property I wish to make a cash unconditional offer on theundermentioned terms and conditions. Price: Deposit: Settlement: $945,000.00 (Nine Hundred and Forty FiveThousand Dollars) $20,000.00 (Twenty Thousand Dollars) 120 days -- 3 of 13 -- 3 Extensions: The Purchaser shall have the right to extend settlement for a period of two months upon payment of $15,000.00 (Fifteen Thousand Dollars) per month. I would be pleased if you would submit this offer to owner forthwith. Yours faithfully, (Signed) P.P. Duncombe P.P. Duncombe Managing Director I hereby accept the terms and conditions of the abovementioned offer. Coral sea Properties Pty. Ltd. (Signed) R.J. Norman Director" The document was received by Mr. Norman who retransmitted it to his solicitor to whom he also spoke. Following this Mr. Norman photocopied the document he had received, whited out the words "copy only" which were placed on it by Mr. Fawke's secretary before transmission by her, then re-photocopied it and retransmitted it to the facsimile number of Duncorp Properties which appeared on the letterhead. Mr. Norman posted to Duncorp Properties by certified mail the document which contained his original signature and he subsequently went to the office of Baillieu Knight Frank where he inspected the document which contained the original signature of the defendant and which he later signed. Although for the sake of completeness I have set out this sequence of events in dealing with the document prepared by the defendant, nothing ultimately turns on it and henceforth it will -- 4 of 13 -- 4 be convenient to refer only to Ex. 2 which is the document signed by Mr. Norman in the office of Baillieu Knight Frank and which bears his signature and that of the defendant. The deposit of $20,000.00 was not paid and facsimile transmissions were sent from Baillieu Knight Frank to the defendant on 22nd May and 29th May, 1989 indicating the plaintiff's concern about this. By a letter dated 12th July, 1 "'69 addressed to "The Managing Director, Duncorp Properties" the plaintiff's solicitor requested that the deposit be forwarded forthwith, inquired as to what legal entity was trading as \ Duncorp Properties and advised that settlement was due on 17th August, 1989. No reply was received to thi.s letter and by a further letter dated 10th August, 1989 addressed to "The Managing Director, Mr. P.P. Duncombe, Duncorp Properties" gave notice of settlement on 21st August, 1989 with appropriate details. The dr~endant's solicitors replied by a letter dated 17th August, r 1989 in which they advised that their client was unaware of any binding contractual obligation to purchase the property and had n"-·· intention of attending settlement. The plaintiff then commenced this action seeking specific performance of the agreement of 19th April, 1989. By his defence, as amended pursuant to leave granted at the trial, the defendant pleaded, inter alia, that on the proper construction of the document dated 19th April, 1989 it was not a contract under which the defendant has undertaken personal liability to purchase the land; that if there was a contract as pleaded by the statement of claim the defendant is unable to perform the alleged w -- 5 of 13 -- 5 contract and that the contract is void for uncertainty. A number of matters raised by way of defence were not proceeded with at the trial. There were estoppel, s. 81 of the Companies (Queensland) Code, s. 59 of the Property Law Act, the inequitable conduct of the plaintiff and repudiation by the defendant accepted by the plaintiff. In its reply the plaintiff specifically denied that Baillieu Knight Frank acted as its agent in and about the sale of the land and alleged that the defendant knew at all material times that Baillieu Knight Frank was not the authorised agent of the plaintiff for any purpose associated with the making of a contract in respect of the sale of the land. The evidence of the defendant was that prior to April, 1989 there had been discussions between Mr. Anderson, a Mr. Spragg and himself regarding the formation of a joint venture company to purchase the land in question and construct a block of units on . it and they had agreed to do this. The defendant said that in the discussions at Mr. Fawke's office on 19th April, 1989 in company with Mr. Anderson he had advised Mr. Fawke that they wished to make an offer which was going to be made "under a company structure" and that he would ring his accountant in Brisbane to _check out the availability of a shelf company. He said that he did this and then proceeded to make the offer. He also said that it was Mr. Fawke's suggestion that to give the offer some credibility they should make it on some form of letterhead. The evidence of Mr. Fawke was that he had told the defendant that it was necessary to have some verification in writing, that -- 6 of 13 -- 6 he had asked the defendant to get a letterhead from Brisbane to give some credibility to the offer, that the defendant had then obtained a copy of his letterhead and that he (Mr. Fawke) had left the contents of the document entirely to the defendant because he (the defendant) said that he wished to do it. Mr. Fawke denied that the defendant had told him that the actual purchaser would be some corporate structure or corporate vehicle. He said he did not recall the defendant telephoning his accountant in Brisbane to find out if there was a shelf company available although it would be possible that such a call was made. Mr. Anderson gave evidence that the defendant, Mr. Spragg and himself had agreed to form a joint venture arrangement to make an offer on the block to see if they could purchase it and that the purchaser was to be a shelf company to b~ purchased between the defendant, himself and Mr. Spragg. However, in dealing with what took place when he and the defendant met with Mr. Fawke to discuss the making of an offer he made no reference to the defendant having told Mr. Fawke that the offer was to be made under a company structure or anything to that effect. I must say that I found the defendant most unimpressive as a witness; on occasions he appeared reluctant to give direct answers to questions and I formed the view that he was evasive. Whilst Mr. Fawke appeared to have some lack of recall on some matters of detail he appeared to me to be quite clear on the conversation which took place in his office on 19th April, 1989 and I regard him as a credible witness. I accept the evidence of l -- 7 of 13 -- 7 Mr. Anderson but he is not of assistance on the question of whether or not the defendant told Mr. Fawke that the offer was to be made under a company structure or said anything to that effect. I accept the evidence of Mr. Fawke in preference to that of the defendant on this matter and I find that the defendant did not tell Mr. Fawke that the offer was going to be made under a company structure or say anything which would have conveyed that meaning. Consequently the question of whether Baillieu Knight Frank was acting as the authorised agent of the plaintiff does not arise. I have found it unnecessary to resolve the conflict between the evidence of Mr. Fawke and the defendant as to whether Mr. Fawke accompanied the defendant and Mr. Anderson when they inspected the land as nothing appears to turn on this. As the intention for which the Court must look is the objective intention of both parties, whatever the subjective intention of the defendant may have been is not relevant. When a document in the terms of Ex. 2 is executed by one party without any indication being given to the other that the language used is intended to have a meaning other than that which it would ordinarily bear, there is no basis for having regard to what may have been in the mind of one party but which was not made known to the other (see Codelfa Construction Pty. Ltd. -v- State Rail Authority of N.S.W. (1981-1982) 149 C.L.R. 337, at pp. 347-353). The defendant claims that the offer was not meant to be binding on either party but was always intended to be a preliminary to going to contract. If this were so, he failed to indicate that to Mr. Fawke and there is no reference in Ex. 2 to -- 8 of 13 -- 8 any further contractual document. Consequently the matter does not fall within any of the categories dealt with in Masters -v- Cameron (1954) 91 C.L.R. 353, at p. 360). I do not accept the evidence of the defendant that his intention in this regard was as he alleges. It was he who drew the document, including the provision for acceptance by the plaintiff, and I am satisfied that the mutual intention of the parties was that on the execution of the document by both parties there should be a binding agreement between them. It is pleaded by the defendant that the agreement is void for uncertainty and it is submitted that it is uncertain in three respects, namely, as to the parties, as to the date for completion and because it does not provide a date by which the deposit is to be paid. It follows from what I have already said that there is no uncertainty as to the parties,' these being the plaintiff on the one hand and the defendant on the other. In my view there is no uncertainty as to the date for completion as the reference to "120 days" for settlement must be taken to mean 120 days from the date of the contract which is the 19th April, 1989. The failure to provide for a date by which the deposit is to be paid might well present some difficulty if it were sought to rely on non-payment of the deposit as a breach of the agreement but it does not have the effect of making the agreement uncertain. Consequently I find that the agreement is not void for uncertainty. There is then a binding agreement for the sale of the land which has clearly been repudiated by the defendant. I find that -- 9 of 13 -- 9 the plaintiff has at all times been ready, willing and able to perform the agreement and the remaining question is therefore whether a decree of specific performance should be made. In Sutter -v- Gundowda Pty. Ltd. (1950) 81 C.L.R. 418 the Court said, at pp. 438-439:- "Specific performance is not a remedy which should lightly be refused when the plaintiff has established the existence of a contract capable of specific performance which thedefendant has refused to complete. "It is well established that the court cannot judicially exercise its discretion by refusing the remedy in a case of the appropriate class, unless some sound and recognized reason is shown" (Fullers Theatres Ltd. -v- Musgrove (1923) 31 C.L.R. 524, at p.549). It would be necessary for the defendant to prove that a hardship amounting to an injustice would be inflicted onhim by holding him to his bargain and that it would not be reasonable to do so." The defendant advances two bases on which specific performance should be refused, these being to some extent related in that both rely on the financial situation ot the defendant. It is submitted that by reason of this, if specific performance were to be ordered against him, he could not possibly perform his obligation and that equity will not specifically enforce what cannot be done (Meagher Gummow & Lehane, Equity Doctrines & Remedies, 2nd ed., para 2028 and the cases there cited). Further it is submitted that decree should be refused on the ground of hardship. The evidence of the defendant was that neither as at 19th April, 1989 nor now did he have $945,000.00 to buy the land nor did he on his own have the facility to borrow that amount of money. Since 1983 he has owned a house property at st. Lucia in which he and his family reside and he has shares in various -- 10 of 13 -- ." 10 companies and he said that his borrowings both in his own name and in respect of the companies in which he has an interest was something in the order of $7 1/2 million. He said that in the last couple of weeks he had made unsuccessful approaches to three finance companies for a loan of $200,000.00 to provide working capital. The defendant also said that he had made no application for finance for the purpose of purchasing the land and he has never attempted to borrow money on the security of the land or made any enquiries for that purpose. Notwithstanding the view which I have taken of the defendant's credibility generally, I am prepared in the absence of any evidence to the contrary to accept this evidence as indicating broadly the defendant's financial position. In my view it has not, however, been shown that the defendant could not possibly perform his obligations under the agree~ent. In the event that he were to be compelled to perform those obligations he would then have the property which could be provided as a security for borrowing money and there is no evidence as to what sum might be thus raised or which would indicate that this could not be done. I note that in Nicholas -v- Ingram (1958) N.Z.L.R. 972, which is referred to by Demack J. in Ready Constructions Pty. Ltd. -v-Jenno (1982) 2 Qd.R. 78, at p. 82, Hutchinson J. held that mere financial inability on the part of a purchaser is not a reason for refusing to decree specific performance. However, as specific performance is a discretionary remedy, obviously the exercise of the discretion must depend on the facts of each case -- 11 of 13 -- 1 1 and in this case inability to perform has not been established. In this case I am not concerned with the question which was considered in Ready Constructions Pty. Ltd. -v- Jenne (supra) as to the time at which the hardship must exist as it would not appear that there has been any significant change in the financial situation of the defendant between the date of entering into the agreement and the present time. In Dowsett -v- Reid (1912) 15 C.L.R. 695, at p. 706, Griffith C.J. said "The Court is not bound to enforce a bargain which would work great hardship upon either party". Spry, Equitable Remedies, 3rd ed., at p. 191, points out that courts of equity in determining whether there should be a grant of specific performance distinguish carefully between two separate considerations, that is, between unfairness and hardship. Here there is no question of the agreement being in any way unfair and I am not pe~suaded that anything has been shown which should lead to a refusal of relief on the ground of hardship. The considerations to which I referred in dealing with the question of the inability of the defendant to perform his obligations under the agreement are relevant here also and the defendant has not proved that a hardship amounting to an injustice would be inflicted on him by holding him to his bargain and that it would be reasonable to do so (Sutter -v- Gundowda Pty. Ltd. (supra)). There was a further submission on behalf of the defendant · that, if I were to find there was a joint venture between the defendant and Messrs. Anderson and Spragg, since the other joint venture partners were not parties to the action specific -- 12 of 13 -- 12 performance should not be decreed against the defendant. In support of this submission reliance was placed on a passage in Meagher Gummow & Lehane (op.cit.) para. 2050, but I do not consider that this passage affords any authoritative support for the proposition advanced. It was not plead·ed that the agreement was made on behalf of the defendant and Messrs. Anderson and Spragg; on the contrary the pleading was that it was made on behalf of a proposed company representing the interests of those three persons. In the circumstances and on the findings which I have made I do not accede to this submission. In my opinion there is no basis for refusing to make a decree of specific performance and I accordingly do so. Counsel for the .plaintiff has handed up minutes of the order which is sought. There are three respects in which I would vary the terms of the proposed order. The first is simply verbal by substituting "carried into effect" for "carried into execution". The second relates to the time for performance, for which I would allow thirty days. As to the third, I am not persuaded that the plaintiff is in these circumstances entitled to increase the purchase price by $30,000.00 in reliance on the term of the agreement which gives it the right to extend settlement for a period of two months upon payment of $15,000.00 per month. The defendant repudiated the agreement and the plaintiff did not exercise its right to extend settlement, but on the contrary brought this action for specific performance. The amount to be paid is therefore $945,000.00. I make orders in terms of the minutes of order as thus varied. -- 13 of 13 --