Denmac Nominees Pty Ltd v Muench [1990] QSC 51

10 2(\V 30 ..;o "iO 60 -- -·~ ....... _ ·---. -~li:.D f..-:f)Ptff-: 1 J1 11"-,, I .·' ,, IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION No .,, ·•·t Onpnrtil)CI_ f. ·• ,,. i?,_r _3_:& C/J /~<,; I 3992 of 1988 BEFORE MR. JUSTICE DOWSETT BRISBANE, 26 FEBRUARY 1990 BETWEEN: (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.) DENMAC NOMINEES PTY. LTD. - and - CHARLES ARTHUR MUENCH JUDGMENT Plaintiff Defendant HIS HONOUR: I will give judgment now, but I will probably have to revise it I suspect. At all material times the defendant was the owner of a home unit described as unit 25C "Deville" at the Gold Coast. The plaintiff at some stage became interested in acquiring that unit as a result of which, and also as a result of certain previous dealings, contact occurred between Mr. Major who was employed by P.R.D. at Southport and Mr. Holmes who was employed by P.R.D. at Surfers Paradise. These two real estate agencies are totally separate legal identities and were so at all material times. Mr. Holmes, I find, at all material times was acting as agent for the plaintiff. It has been submitted that he was in fact at some stage acting for the defendant as vendor. Although, as is in accordance with the usual practice, I have no doubt that had a contract been signed it would have provided I Go·,t. Printer, Olcl. -1- 10 20 30 40 50 6C -- 1 of 9 -- 10 20 30 40 for the agent to obtain his commission, I do not think that thei ! l defendant had at any time retained P.R.D. Surfers Paradise to act on his behalf with regard to these transactions. In the end I do not think that it matters very much. It went rather to matters of admissiblilty of evidence, all of which has, I think, been received in any event. I do not think that the 10 question of agency has, in the end, any relevance to the substantive issues. I referred to certain previous dealings between the defendant and P.R.D. I find that the defendant had asked P.R.D. Southport to obtain some valuation of the unit for him, and this was the basis upon which Mr. Major had an interest in the matter initially. The upshot of all of this was that on i 29 July 1988 Mr. Holmes wrote a letter to the defendant at his! I home in the United States enclosing a contract _which had been: 20 30 signed on behalf of the plaintiff as purchaser, showing a I purchase price of $330,000 with a completion date 60 days from[ the date of contract. The deposit was the sum of $5,000 • already paid, which is evidenced by Exhibit 2, and a further sum of $5,000 to be paid within five days of the vendor's signing of a contract. Mr. Muench, the defendant, was not interested in selling at this price, and I am satisfied that · al though he looked at the contract when it arrived, it was · subsequently lost from his office, probably by his throwing it into the rubbish bin. uncontradicted. The evidence on this point is However there is some minor discrepancy between the evidence of Mr. Muench and that of Mr. Holmes thereafter, although again it does not go to any significant issue. I, 40 50 , by -··'" i and large, preferred the evidence of Mr. Muench to that G,NL Printer. Old. -2- i! -- 2 of 9 -- ( ' 10 20 30 of Mr. Holmes. Mr. Holmes seemed to me to be reconstructing some of the conversations in a rather freehand way, and I felt that his account of particular conversations was generally unreliable. I am sure that he was trying to give the effect of the conversations, but he was a little too willing to reconstruct them, I thought. Mr. Muench, on the other hand, I thought was frank in all respects in his evidence and I thought also that his memory was probably better. The effect of this is that I am satisfied that on about 11 August, Mr. Muench' spoke to Mr. Holmes by telephone and was told that the unit might fetch between $350 and $380,000. I am satisfied that at some time on or about 15 August • somebody else, probably from P.R.D. Southport, telephoned Mr. Muench and offered him $400,000 on terms which he found lunacceptable. I am also satisfied that shortly thereafter, Mr. Holmes rang offering $380,000. I did not think that either party to the conversation made much of a job of informing me as to the actual words used. I am satisfied that Mr. Muench agreed to a purchase price of $380,000 and • that Mr. Holmes also drew his attention to the 60-day 40 i settlement terms and the deposit conditions. I am satisfied :also that the upshot of the conversation was that Mr. Holmes '.suggested to Mr. Muench that he vary the consideration in the draft contract already sent to him, sign the contract, initial the variation, and return it. From these circumstances 10 20 30 so 50 ----~i~i--' - the plaintiff submits that I should infer an agreement to sell. I am satisfied that when Mr. Muench looked for the contract, he .was unable to find it and as a result sent the fax message which is Exhibit 6. I will set out the contents of that in full: Govt. Printer, Old. -3- 6(; -- 3 of 9 -- 10 "We have evidentally (sic) misplaced the contract yourecently sent. However, as owner of unit 25C, Devillelot 101, I will except (sic) your offer of $380,000Australian cash only. If you will send another contract by DHL, I will sign and return the same way. Thank you for all you have done, we will wait to hear from you." Shortly thereafter a further fax was forwarded to P.R.D. by the defendant, it being Exhibit 7. In that fax Mr. Muench made it clear that he had been offered $400,000 and that he intended to proceed with that contract. P.R.D. Realty responded by letter of 18 August 1988, which is Exhibit 7, asserting that he was bound by his contract with the plaintiff. He replied by fax dated 18 August, Exhibit 9, saying that he did not consider that he was so bound; the actual wording used · being, "We do not have a signed contract and P.R.D. has no legal contract in selling the property." Subsequently on ! 24 August 1988 the defendant wrote saying, "Since I have not 30 40 received your contract for a firm offer for $380,000 for my unit 25C in Deville to date, I hereby withdraw that offer as of this date." The new contract contemplated by Exhibit 6 had in fact been forwarded on 24 August 1988 and was apparently received on or about the 26th, as Exhibit 13 reveals. Two issues fall for determination in this case. Firstly, was there a contract either oral or partly oral and partly in writing or perhaps wholly in writing? In the case of the first and second alternatives, was the contract sufficiently '5<J evidenced in writing for the purposes of the Property Law Act? Whether or not a contract has been formed between parties is a matter for the determination of the objective intentions of those parties. One does not look to the actual intentions of i but rather at the I 10 20 30 40 50 ____ 60 the parties as they assert them to have been, words which they have used and the context in I which those words ! 6u Govt. Printer. Old. -4- -- 4 of 9 -- 10 20 30 .:10 so ______?O have been used. Sometimes parties intend that there will be an immediate oral contract between them, notwithstanding an intention that it will at some time in the future be supplanted by a written agreement. In other circumstances the parties do not intend that there be any agreement until such • time as a writing has been prepared and executed. Masters v. Cameron (1954) 91 C.L.R. 353 provides the classical statement of the various possible distinctions. However, neither Masters v. Cameron nor, for that matter, any other case can do other than offer guidelines for resolving any particular fact situation. It is always necessary for the tribunal of fact to decide 1 on the objective evidence what the parties intended at the time at which they negotiated the terms of the proposed agreement between them. In this case it is urged by the plaintiff that all of the terms of the agreement had, in effect, been agreed. Mr. Muench had an opportunity, it is said, to read the terms of the agreement previously sent to him. He had agreed on the price, and all that therefore remained for him to do was to amend the contract .and sign it . In those circumstances it is urged that he in fact agreed in such a way as to bind himself to dispose of the land in accordance with those terms. The plaintiff submits that there ,was no reason why the parties should not have finally agreed in the course of the telephone conversation on or about 15 August between Mr. Holmes and Mr. Muench. The answer to this submission is that we must recognise the difference between 1whether or not the parties have decided the terms which will comprise their agreement and whether or not their conduct evidences a clear intention to be bound thereby immediately. 10 30 40 50 ___ __J 60 G01,.t. Printer, Ofd. -5- -- 5 of 9 -- 1 Very often cases in which a prior oral agreement is found to have been reached with a subsequent written agreement in contemplation will be circumstances in which it is likely that there will be some sort of a delay between agreeing on the terms and the preparation and execution of the agreement. It! iO 20 30 40 50 is for that reason, I think, that the parties are often found to have intended that they be bound immediately, although the ;terms they had agreed were subsequently to be reduced to i writing. However, there are other circumstances in which such a :conclusion could not be so readily drawn. For example, if • the parties were present at their solicitors' office, a draft contract had been prepared, and all that was necessary was to • insert the purchase price, it is probable, I think, that even !if the purchase price were agreed, it could not be concluded that the parties had agreed to be bound immediately. What they would have in mind, objectively speaking, would be the insertion of the purchase price in the contract and then execution. In those circumstances, as I say, I think it less likely that it would be inferred that they intended to,be bound as soon as they had reached agreement on the price. The present situation is between these two extremes. The plaintiff submits that the wording of Exhibit 6 gives support to its claim and to some extent this is so. The use of the formal description of the defendant as "owner" is consistent with an intent to create binding relationships. However, the use of the words "I will except" ( presumably "accept" ) might i also be taken as suggesting an intention only to be bound inl the future. The reference to sending "another contract" might also be taken as indicating an intention that the relations co ----- . ·----··-·---··--------------------- ---- Govt. Printer. Old. -6- 10 2 ,-, u 30 40 50 60 -- 6 of 9 -- 10 20 30 40 between the parties be regulated by a subsequent document to be prepared and executed. It is submitted that the contents of Exhibit 9 ( which refers to there being "no legal contract" ) might also be taken as suggesting an acknowledgement of a prior agreement. I am unable to so read that letter. I consider. that what is being suggested there is simply that there is no ! 10 agreement between the parties. The defendant points to special condition 30 as supporting! the submission that the contract was not binding. is the deposit clause and provides as follows: That clause· "The purchasers, having paid an initial deposit of $5,000, hereby agree to pay a further sum of $5,000 to PRD Realty Pty. Ltd. trust account within five days of the vendor. signing this contract." Thus it is suggested that if, as the plaintiff asserts, the parties were agreeing to the contract in accordance with the terms of this document, it would seem to follow that the document itself contemplated a binding relationship only upon execution by the vendor. This may be so, but in the end I think that I must primarily look to the conversations between Mr. Holmes and the defendant to resolve this dispute. The inference which I would draw from the conduct of the parties and their words, as best we have been able to discover them, would be that the contract was to be binding upon the document being corrected and executed by the defendant. I am 30 40 I unable to conclude on balance that there was any intention that I ~o there be any prior oral agreement. 50 An alternative argument for the plaintiff was put in evidence and in addresses. That was that Exhibit 6 may itself, when taken with the prior contract, comprise an enforceable agreement. However, I am unable to accept that argument._ When one looks at Exhibit 6 it is clear that the previous 6G Govt Printer, Old. -7- -- 7 of 9 -- 10 2C 30 40 so _____ EO __ contract had been misplaced. It would be a curious situation indeed if a person in the defendant's position were to be taken as agreeing to be bound by the terms of a contract when in fact what he was saying was that he had lost it. Objectively, I think what was being said in that letter was that Mr. Muench required to be furnished with another contract for execution. I 10 do not think it can be said that Exhibit 6 indicated an intention on his part to be bound by the contents of the misplaced document. In those circumstances, it is not necessary for me to consider either the adequacy of the evidence in writing or the defence of part performance, both of which have been raised by way of reply. There will be judgment in the action for the defendant against the plaintiff. I further order that caveat number 592900J be removed from Certificate of Title, vol. 6545 folio 132. I would find that in the conversation between Holmes and Muench, Muench indicated that he intended to execute the amended document, but will not find that there was an agreement to this. I will stay the judgment till 4 p.m. on Thursday upon the plaintiff giving the usual undertaking as to damages. I order the plaintiff to pay the defendant's costs of the action. I will order the plaintiff to pay the defendant's costs of the action. I consider that the caveat proceedings ought not to have been brought, given that the solicitors for the defendant were aware that the plaintiff was seeking to resolve the matter by action. It seems to me that on anybody's view of the matter it had to be resolved in that way. I think it most unlikely that any judge would have upheld an application to Govt. Printer, Old. -8- 30 40 50 60 -- 8 of 9 -- 10 38 40 50 ____(Q_ remove the caveat. In those circumstances, I consider that the application to remove the caveat ought to have been raised by way of cross-claim in this action and that the costs incurred in ' respect of originating summons No. 1107 were unnecessary. I order that the defendant pay the plaintiff's costs of , 1o 'and incidental to originating summons No. 1107. Since giving judgment, I have been referred to the! observations of Higgins J. in Barrier Wharfs Ltd. v. W. Scott ; Fell & Co. Ltd. (1908) 5 C.L.R.647 at p.650 as follows: "The law knows no gradations in the contractual relation. It knows nothing of virtual agreements, or honourable understandings. Even if the defendants were shown to have disappointed the legitimate expectations of the plaintiffs, for some unworthy reason - to have meanly backed out of' almost completed negotiations the action must fail. There is no contract unless the two parties mutually consented to be bound one to the other by one agreement. Moreover - though it ought to be superfluous to say it- it is one thing for two parties to settle what are to be the terms of an agreement, if it should be made; and quite another thing to make the agreement." This passage was approved by Griffith C.J. at p.666 on appeal and by the Full Court in Western Australia (Burt C.J., Wallace, Kennedy JJ.) in Woodside Offshore Petroleum Pty. Ltd. v. Atwood Oceanics Inc. (1986) W.A.R.253 at pp.258, 270 and 271. If I may say so, these words state with precision my view of the present case. 30 40 50 i I ·---------------------------·--·--__J 60 Govt. Printer, Q!d -9- -- 9 of 9 --