Day Ford Pty Ltd v Sciacca [1990] QSCFC 1 [1990] 2 Qd R 209

-FC SO oOl ^3 IN THE SUPREME COURT OF QUEENSLAND FULL COURT WRIT NO. 4506 of 1988 BETWEEN: DAY FORD PTY. LTD., DAY CORP. PTY. LTD., RONALD JAMES MICHAEL STAGER AND THCMAS FRANCIS STAGER ( Plaintiff ) Appellants AND: ROSARIO SCIACCA, SALVATORE SCIACCA, CONCETTO SCIACCA AND GIUSEPPE SCIACCA (Defendants) Respondents CHIEF JUSTICE KELLY S.P.J. AMBROSE J. Reasons for judgment delivered by the Chief Justice on _ the 8th February 1990. Kelly S.P.J. and Ambrose J. agreeing with the reasons and order made. APPEAL DISMISSED WITH COSTS. [1990] QSCFC 1 -- 1 of 18 -- •PC ^ofool IN THE SUPREME COURT OF QUEENSLAND No. 4506 of 1988 Before the Full Court The Chief Justice Mr. Justice Kelly S.P.J. Mr. Justice Ambrose BETWEEN : DAY FORD PTY . LTD ■ , DAY CORP PTY. LTD . , RONALD JAMES MICHAEL STAGER and THOMAS FRANCIS STAGER (Plaintiffs) Appellants -and- ROSARIO SCIACCA, SALVATORE SCIACCA, CONCETTO SCIACCA and GIUSEPPE SCIACCA (Defendants) Respondents JUDGMENT - THE CHIEF JUSTICE Delivered the eighth day of February, 1990. CATCHWORDS: Counsel: Mr. K.C. Fleming Q.C. and Mr. M. Boulton for the Appellants. Mr. D. Jackson for the Respondents. Solicitors: H .A . Mellick and G.R. Smith and Associates for the Appellants. (Town Agents - Stubbs, Barbeler Grant ) Morrow and Co. for the Respondents. (Town Agents - Blakes) Hearing dates: 13th September, 1989 [1990] QSCFC 1 -- 2 of 18 -- HI OOf IN THE SUPREME COURT OF QUEENSLAND No. 4506 of 1988 BETWEEN : DAY FORD PTY , LTD ., DAY CORP PTY . LTD ., RONALD JAMES MICHAEL STAGER and THOMAS FRANCIS STAGER (Plaintiffs) Appellants -and- ROSARIO SCIACCA. SALVATORE SCIACCA, CONCETTO SCIACCA and GIUSEPPE SCIACCA (Defendants) Respondents JUDGMENT - THE CHIEF JUSTICE Delivered the eighth day of February, 1990. This appeal lies against the determination of the learned primary judge that a written agreement entered into in or about the month of May 1988 between the defendants as vendors and the plaintiffs as purchasers was void and unenforceable so that the plaintiffs' claim for specific performance should be dismissed. The case as argued for the plaintiffs at trial relied upon an oral agreement in addition to the written agreement but His Honour found that no such oral agreement as was claimed had in fact come into existence or if it had that it could not, in the circumstances, be relied on. The following account sufficiently states the issues. The plaintiffs' Statement of Claim referred to a written agreement of May, 1988 for the sale by the defendants to the plaintiffs of ten parcels of land each on separate certificates of title with improvements, chattels and other items for a total consideration of $500,000.00. One of the parcels bore the description Lot 2 on Registered Plan No. 36743. [1990] QSCFC 1 -- 3 of 18 -- 2 The defence and counter-claim relevant for the purposes of the appeal was delivered on behalf of two of the vendors, Concetto and Giuseppe Sciacca. It admitted a purported agreement of May, 1988 under which the parcels were to be sold as alleged in the Statment of Claim except that it said that the agreement provided for 2,000 square metres, being part of Lot 2 on Registered Plan 36743, to be excluded from the sale and transferred to the defendant Giuseppe Sciacca. It was pleaded that the agreement of May, 1988 therefore contravened the prohibition in s. 8 of the Land Sales Act 1984-1985 and was void and unenforceable. The terms of this section will be considered shortly . The plaintiffs' amended reply and answer denied that the written agreement of May, 1988 contravened s. 8 but, in the alternative, claimed that if it did so then an oral agreement entered into between the parties in April, 1988 could be relied on by the plaintiffs. The oral agreement was said to contain a number of terms which it is not necessary to discuss here at length although two of them were relevant to the plaintiffs' claim that the agreement had been partly performed. One further term of the oral agreement relied on by the plaintiffs in their amended reply and answer conceded that part of Lot 2 containing an area of 2,000 square metres was to be retained by the defendant Giuseppe Sciacca and alleged that he was to cause a plan of survey to be made and approved by the local authority and registered in the Titles Office. The reply and answer further said that there was a subsequent oral variation of that agreement [1990] QSCFC 1 -- 4 of 18 -- 3 whereby the area of 2,000 square metres was increased to 9,272 square metres. Exhibit 1 was said to be in the form of the written contract of May, 1988 except that ex. 1 contains a special condition for the exclusion from the sale of 2,000 square metres from Lot 2, it being said that this special condition was added subsequently. Exhibit 1 bears the date 25th October, 1988. The learned trial judge recites the circumstances in which a number of relevant events occurred. One of the plaintiffs Ronald Stager, who apparently acted on behalf of all of the plaintiffs, said that in April, 1988 he entered into an oral agreement with the vendors which settled all of the terms of the sale that subsequently became relevant except that concerning exclusion of the area of 2,000 square metres which has been referred to. There had been no discussions of that matter up to that point. A solicitor was engaged and when a written contract was prepared it was signed on behalf of the plaintiffs and returned with the deposit cheques to the solicitor. The special condition relating to the exclusion of the area of 2,000 square metres was added after Stager had been informed that the vendor Giuseppe Sciacca wished to retain that area. The contract was amended to provide for the exclusion of that area and was then executed by the vendors but not re-executed by the purchasers although Stager said that the plaintiffs consented to the amendment of the contract by the inclusion of the clause. A plan of sub-division was prepared in June of 1988 and it was approved by the local authority in August, 1988 and registered in the Titles Office on 5th December, 1988. The [1990] QSCFC 1 -- 5 of 18 -- 4 settlement date provided had been 1st December, 1988 and the solicitor then acting for the defendants notified the plaintiffs' solicitors in late November that the defendants would not be proceeding to settlement. An exclusion of certain land from the parcels referred to in the written contract was finalised with the result that following an amalgamation Giuseppe and one other became registered owners of a Lot 1 on Registered Plan No. 747842 with an area of 9272 square metres. This area had originally been part of the total area the subject of the written agreement for sale. The trial judge has found that there was no oral agreement to vary the agreement for the exclusion of an area of 2,000, square metres but that the defendant Giuseppe Sciacca unilaterally extended the area which was to be excised and this action was acquiesced in by the plaintiffs. It does appear that an important aspect of the case advanced by the plaintiffs was that even though the parties entered into a written agreement in May of 1988 a preceding oral agreement which was said to have been arrived at in the course of negotiations in the previous month somehow remained extant and survived the preparation and execution of the formal written contract. The learned trial judge however found that the oral negotiations of April did not result in an immediately binding contract. It was the case rather that as a result of the negotiations which had occurred the plaintiffs' representatives sent a written form of agreement to the defendants which the defendants signed after amending it to provide for the exclusion of 2,000 square metres. This the plaintiffs who had already signed the written form of agreement accepted. [1990] QSCFC 1 -- 6 of 18 -- 5 The finding of fact that there had been no preceding finally concluded oral contract causes immediate difficulties for the plaintiffs in their argument on the appeal. A further unfortunate aspect adds to their problems. The transcript of the evidence taken at the trial has been mislaid and was not available notwithstanding searches for it. The parties sought an opportunity to inspect the trial judge's notebook and they were afforded this opportunity but it did not assist the plaintiffs by providing any basis upon which His Honour's finding of fact that there was no concluded oral agreement could be challenged. Although the defendants called no evidence at the trial there was evidence led for the plaintiffs which was cross-examined upon. The record of this is simply not available for this Court. The rule which should apply has been stated in Savanoff v. Re-Car Ptv. Limited [1983] 2 Qd.R. 219 especially at 223 where Campbell C.J., after referring to authority, stated that when part of the evidence has been mislaid the parties are at liberty to supplement it. He quoted from the judgment of the Court of Appeal in Bradford Third Equitable Benefit Building Society v. Borders (No. 2) [1939] 3 All E.R. 611 at 612-613 where it was pointed out that "in an appeal raising issues of fact, it is for the appellant to satisfy this court that the decision of the court below was wrong, and, if the materials supplied to (this) court are insufficient to enable it to act, the result will be that the appeal will be unsuccessful". Further, it was said that if the official shorthand notes are not available then it is up to the appellant to bring evidence before the Appeal Court as [1990] QSCFC 1 -- 7 of 18 -- 6 best he can and if the material which he furnishes is inadequate then his appeal will fail. In this case faced with the difficulties which were due to the loss of the transcripts the plaintiffs did not supplement the deficient record. The result is that the trial judge's finding which cannot on its face be described as improbable must be accepted for the purposes of the appeal. This then means that there is no oral contract on which the plaintiffs can rely, they having been anxious to do so because of their argument that the Land Sales Act was restricted in its avoiding operation to certain contracts in writing and did not apply to oral agreements. Since there is no oral agreement which the plaintiffs can rely upon it is unnecessary to consider the sufficiency of the acts of part performance which were referred to in their case although it is possible that if it had been necessary to turn to consider them they may have been sufficient. The learned trial judge stated a further reason why no oral contract could be relied upon by the plaintiffs even if a concluded oral agreement had been arrived at before the written contract was prepared and signed. He considered that any preceding oral contract was superseded by and merged in the written contract. Although it is not strictly necessary to consider this further proposition it may be as well to state why it is possible to agree with His Honour's conclusions. There is a familiar rule that if a contract has been reduced to writing then parol evidence is inadmissible to vary, add to, or subtract from, the terms of the document: see e.g. Phipson on Evidence 13th ed. at 934. The rationale for the exclusion of extrinsic [1990] QSCFC 1 -- 8 of 18 -- 7 evidence in these circumstances does not command universal agreement . The most convincing explanation may be that when the parties "have deliberately put their agreement into writing, it is conclusively presumed . . . that they intend the writing to form a full and final statement of their intentions Phipson (supra) at 934. In a number of cases it is asserted that written agreements will merge in a corresponding deed which is subsequently executed but, although the principle may be the same, we are not specifically concerned here with deeds. The rule that the clear provisions of a written contract may not be varied or supplemented by parol extrinsic evidence is explained e.g. in Hawke v - Edwards (1948) S.R.(N.S.W.) 21 at 23 in the words of Jordan C.J. Exceptions to the rule of course exist, such as in the case where the writing represents a sham. A statement that a contract will merge in a deed is encountered often enough and may be found for example, in Knight Sugar Co . v. Alberta Railway Irrigation Co . [1938] 1 All E.R. 266 at 269. Of greater relevance for present purposes however is the statement of Bowen L.J. in Palmer v. Johnson [1884] 13 Q.B.D. 351 at 357 that while a rule cannot be laid down for all cases it is necessary to endeavour to see what the true intention of the parties was. He continued "suppose the parties should make a parol contract, with the intention that it should afterwards be reduced into writing; and that that which is reduced into writing shall be the only contract, then, of course, one cannot go beyond it; but if they intend, as they might, that there should be something outside such contract, they might agree that that should exist, notwithstanding it was not in the contract [1990] QSCFC 1 -- 9 of 18 -- 8 which was put into writing". A similar thought is expressed by Stanton J. in Rorison v. McKey [1952] N.Z.L.R. 398 at 401 where he says that if a bargain is made verbally but yet is reduced into written form and signed by the parties "it becomes the only record of the contract between the parties, and neither can rely on the original oral agreement for the purpose of proving the actual terms of the arrangement between them" . It must be accepted that, whether consciously or otherwise, this is the approach which lawyers are accustomed to adopt when they feel themselves obliged to have exclusive regard to a written contract entered into even when it incorporates terms which have been previously arrived at orally. That is so even in respect of a case which falls within the first class discussed in Masters v. Cameron (1954) 91 C.L.R. 353 at 360. It is probably correct to put the proposition as high as this: that there is what amounts to a presumption that the parties intend that their relationship shall be governed solely by the terms of the written contract which they have signed notwithstanding the existence of a preceding oral agreement arrived at and that they should be taken as having agreed to rescind the effect of their earlier oral contract . In Codelfa Construction Ptv. Ltd, v. State Rail Authority of N . S.W. (1982) 149 C.L R. 337 at 352 Mason J. was, with respect, dealing with a different point although his words have been relied on by the trial judge in this case. It is true that Mason J. referred to merger but he was not considering the merger of a concluded oral contract into a subsequently executed written contract. He was considering the admissibility of evidence of [1990] QSCFC 1 -- 10 of 18 -- 9 statements and actions of the parties reflective of their subjective intentions when contracts which arise out of negotiations have to be considered. It was the statements and actions of the negotiating parties not any preceding oral agreement which he said were "superseded by, and merged in, the contract itself" . However in the case of a concluded oral contract which is followed by the execution of a written contract incorporating its terms I would certainly be prepared to regard the earlier agreement as "superseded" by the latter and, in the sense which I have discussed, "merged" in it. No doubt the presumed intention of the parties to supersede their oral agreements in these circumstances can be rebutted and it is easy to think of examples where it might be necessary to consider whether this has happened although the problem will not often arise. For example, putting aside the circumstances of the present case, there may be legislation which declares that contracts dealing with a certain subject matter shall be illegal but only if they are entered into after a certain date or there may be a revenue provision which says that expenditure under contracts let for the construction of improvements shall be tax deductible but only if entered into prior to a certain date. In both these cases the position might be that parties have entered into a concluded oral contract before the named date but executed a written version only subsequently. Such examples, of course, may give rise to different problems and require to be solved by reference to other considerations. The answer in such cases may depend upon a point of statutory construction. [1990] QSCFC 1 -- 11 of 18 -- 10 Wigmore on Evidence Vol . IX 1981 ed. especially at pp. 6, 9, 75, 76 and 78 deals with the topic of superseding earlier arrangements by a subsequent written agreement in a way which is generally consistent with the suggestions here advanced. An analogous case for consideration might be where parties through a long series of correspondence and other writings have arrived at a contract but resolve to execute a single written document which will encapsulate their agreement. No lawyer would naturally think of returning to and relying upon such contract as it might be possible laboriously to trace through the earlier documents. He would content himself with looking at the subsequent written version. The critical point for present purposes is, however, the finding of the trial judge that there was in the present case no preceding oral agreement arrived at. This finding must stand. The result is that it is now necessary to consider whether the defendants' contention that the written contract of May, 1988 was avoided by the operation of the Land Sales Act , as the trial judge has found, is correct. In Levy v. Indooroopilly Golf Club (No. 2891 of 1986, unreported) I expressed the view that, unlikely as it might on first consideration appear, the effect of the Land Sales Act was to avoid only agreements in writing, that is "instruments" entered into in breach of the statute's provisions and not oral contracts. Although a number of subsidiary matters bear upon the question of construction the compelling feature is the effect of s . 5(2) of the Act which intrudes upon the construction of the relevant avoiding section s. 8(1) because it declares that a [1990] QSCFC 1 -- 12 of 18 -- 11 reference to "a sale or purchase of relevant land . . . shall be construed as a reference to a sale or purchase . . . under an instrument". I do not in any way depart from the conclusion arrived at on this aspect in Levy v. Indooroopilly Golf Club (supra) although the point may be put aside for the purposes of the present case because of the finding that the only relevant contract between the parties was one which was in fact in writing . It is then necessary to observe that in the present case there was a single contract for the sale of ten separate parcels all of which were on separate certificates of title and only one of which, Lot 2 on Registered Plan 36743, was, in terms of the agreement set out in the second special condition, to have a specified area excluded from it. No plan of survey to enable this to be done had been approved by the local authority at the time that the written contract was entered into in May, 1988. As His Honour observed, ex. 1 which is part of the record and which sets out the terms of the May, 1988 contract, is in fact dated 25th October of that year but there was no dispute that the written contract in that form was executed by the defendants in the month of May. The relevant statutory provision is found is s. 8(1)(a) of the Land Sales Act . It is in this form: "(1) a person shall not sell or purchase relevant land unless - (a) in the case of relevant freehold land, the sub-divisional plan of survey relating to it has been approved by the appropriate Local Authority under its common seal before the event that marks the entry of a person upon the purchase . . . and that approval subsists at the time of such event." [1990] QSCFC 1 -- 13 of 18 -- 12 Sub-section (2) then provides as follows "an instrument made in contravention of this section is void and any person who has paid money thereunder shall be entitled to recover the amount thereof, together with the amount of interest (if any) that has accrued in respect of that amount since the money was so paid, by action as for a debt due and owing to him by the person to whom the money was paid". Sub-section (3) provides that a person who contravenes the section by reason of a purchase (i.e. as opposed to a sale) is not guilty of an offence. Cases of illegality or contravention of statutory prohibition can raise questions which are fundamentally questions of construction and which must be answered before it can be decided whether or not the illegality or breach involved has the effect of avoiding, say, a contract which infringes. The considerations which bear upon the determination of this question are surveyed in Yango Pastoral Company Ptv. Ltd, v. First Chicago Australia Ltd. [1978] 139 C.L.R. 410 but those problems do not arise in the present case because the statute itself in sub-s. (2) of s. 8 declares that the "instrument made in contravention of (the) section is void". As has been pointed out there was one instrument only in the present case that is the written contract of May, 1988 and this instrument is under the words of the statute avoided. The effect is that it is avoided in its entirety. The plaintiffs tried to escape this effect in a number of ways. It was said that s. 8 was not infringed because at the time of sale the sub-divisional plan had not been prepared and lodged so that it was not a case where a sub-divisional plan of [1990] QSCFC 1 -- 14 of 18 -- 13 survey had not been "approved" . This argument is untenable when one has regard to sub-paragraph (b) of the definition of "relevant freehold land" in s . 6 which covers the proposed sub-divisional portions when land under the Real Property Act "is being or is about to be sub-divided by means of a plan of survey". At the time that the written agreement of May, 1988 was executed there is no doubt that one of the lots included within the sale was about to be sub-divided because the special condition included in the contract provided for the exclusion of an area from it and required the necessary survey and registration requirements to be attended to. These proposals were subsequently put in train so that the plan was prepared in June, received local authority approval in August and was registered in early December, 1988. The plaintiffs then sought to escape the avoiding effect of the statute by relying upon the doctrine of severance which can in certain circumstances save part of a contract which is affected by illegality. In Carney v. Herbert (1985) 59 A.L.J.R. 41 the Privy Council considered the question of severance in the case of a contract which contained an illegal term. Reference was made in that case to the statement of Jordan C.J. in McFarlane v. Daniell (1938) 38 S.R. (N.S.W.) 337 that if the elimination of the invalid promises "changes the extent only but not the kind of contract, the valid promises are severable". Their Lordships also accepted that there was a second question, namely, "whether, despite severability there is a bar to enforceability arising out of the nature of the illegality". A distinct occasion where illegality is involved but severance may [1990] QSCFC 1 -- 15 of 18 -- 14 nevertheless be possible occurs when part only of the subject matter to which the contract pertains is the source of the illegality so that its severance can make the contract in all its terms valid. This was the class of case arising for consideration in Langley v. Foster (1906) 4 C.L.R. 167 the continuing authority of which was affirmed in Firmin v. Gray & Co. Ptv. Ltd. [1984] 2 A.C.L.C. 338. The critical factor to which, however, it is necessary to return in the present case is that the statute makes the whole of the "instrument" void if the instrument is to be regarded as "made in contravention of ... section (8)". The conclusion is unavoidable that the contract of May, 1988 is made in contravention of s . 8 because that contract provided for the sale of land which was "about to be sub-divided by means of a plan of survey". The plaintiffs then relied upon certain things which had occurred and actions which were taken by them after the contract was executed. It was said that the defendants represented that one or other of the agreements was on foot and was to be performed and that they should be taken as having so represented because of their conduct in allowing the plaintiffs to take actions which were taken only the basis that the contract was still on foot and was to be performed. These matters included allowing the plaintiffs to enter the land and work it, causing a survey to be carried out, causing a transfer to be prepared and executed and so on. The plaintiffs thus incurred loss and expense and otherwise acted to their detriment, it was alleged, so that it would be unconscionable to allow the defendants to deny their liability to transfer the land. A number of cases [1990] QSCFC 1 -- 16 of 18 -- 15 consider the place of estoppel in supporting the enforcement of a contract which would otherwise be void for illegality. In Kok Hoonq v. Leong Cheong Kweng Mines Ltd . [1964] A.C. 993 reference is made to the familiar rule which in its ordinary form is stated in this fashion: a party cannot set up an estoppel in the face of a statute. At 1016 the Privy Council suggested that a test to apply in the type of case before it namely one involving the laws of money lending was to ask "whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public". A similar approach had been adopted in Maritime Electric Co. v. General Dairies L.D. [1937] A.C. 610 especially at 620 where it was said that in deciding whether an estoppel might be set up against the operation of a statute "the Court should first of all determine the nature of the obligation imposed by the statute, and then consider whether the admission of an estoppel would nullify the statutory provision". At 621 the Court declared that it was "unable to see how the Court can admit an estoppel which would have the effect pro tanto and in the particular case of repealing the statute" . There is no need to multiply examples by the citation of authorities since the appropriateness of this approach based on consideration of social and statutory policy is so amply supported. In the present case we see that the statute by s. 8 imposed an unconditional prohibition upon the very type of sale which the written contract of May, 1988 provided for. The plaintiffs' claim so far as they rely upon estoppel should be rejected. [1990] QSCFC 1 -- 17 of 18 -- 1 6 The result is that the judgment below should be affirmed and the appeal dismissed with costs to be taxed. [1990] QSCFC 1 -- 18 of 18 --