Supreme Court of WA|2007-07-31|Before: Jenkins J

BONI -v- KINGSOAK PTY LTD [2007] WASC 174 (31 July 2007)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : BONI -v- KINGSOAK PTY LTD [2007] WASC 174

Conveyancing - Caveats - Extension of a caveat - Purchaser's interest under an uncompleted contract for the sale of land - Vendor purported to terminate contract - Vendor's right to cancel contract if purchaser in default - Estoppel - Relief against forfeiture - Form of caveat

1 JENKINS J: Pursuant to s 138C of the Transfer of Land Act 1893 (WA) ("the Act"), the plaintiff applies, by originating summons dated 8 December 2006, for an order extending the operation of a caveat until further order of this Court.

2 The plaintiff lodged the caveat, No J930962 ("the caveat"), over the defendant's land known as 17 Jacaranda Heights, High Wycombe and being Lot 17 on Deposited Plan 49522 and being the whole of the land comprised in Certificate of Title Volume 2633 Folio 515 ("the subject land"). The interest claimed by the plaintiff in the caveat is an interest based on a contract for the sale of land entered into by the plaintiff and the defendant on 16 February 2006 or the doctrine of resulting trust.

3 The defendant denies that the plaintiff has any interest in the subject land and says that the caveat is defective. It therefore objects to the extension of the caveat. The defendant required the Registrar of Titles to serve a notice on the plaintiff pursuant to the Act, s 138B. The plaintiff then commenced these proceedings.

4 There are various matters of fact in dispute between the parties. It is not appropriate for me to resolve factual disputes in an application for an extension of a caveat because it is determined solely on the basis of affidavit evidence. Consequently, I will determine this application on the version of the facts most favourable to the plaintiff on the basis that they are the facts which the plaintiff would seek to prove at the trial of an application by him for specific performance of the contract.

5 The defendant contracted to sell the subject land to the plaintiff pursuant to the contract constituted by an offer and acceptance form dated 16 February 2006 ("the contract"). The contract incorporates the 2002 Joint Form of General Conditions for the Sale of Land ("the General Conditions") so far as they are not varied by or inconsistent with the terms of the offer and acceptance. The purchase price is $172,500 with provision for payment of a deposit of $2,000 to be paid within three days of acceptance and to be held by Transtate First National ("Transtate"), the defendant's real estate agent. The settlement date is stipulated as being on or before 21 days from the issue of the Certificate of Title, it having not been issued at the time of acceptance.

6 The contract contains standard conditions relating to the approval of finance which required finance to be approved within 28 days of 16 February 2006. There is no issue between the parties in respect to this clause.

7 The contract contains special conditions 6 and 7 which state:

"6. This Contract is subject to and conditional upon the Buyer entering into a Building Contract with Platinum Homes (WA) Pty Ltd (or its nominee) for the construction of a house of the Buyer's choice on the Property prior to Settlement Date. If the Buyer does not do so then the Seller will have the right at its election to cancel this Contract and refund any monies paid by the Buyer and this Contract will be at an end with no further claim by the Buyer against the Seller.

This offer is subject to a satisfactory house, land & site costs package to the buyer by Platinum Homes with all parties (Buyers & Sellers) in agreement to costings, within a 30 day time frame of acceptance. All deposit monies will be refunded to the buyer if an agreement is not met."

8 Thus, the contract is what is commonly known as a house and land package. The defendant is the developer of the Jacaranda Heights real estate development in which the subject land is situated. The defendant's only directors and shareholders are Mr Paul Felt and, his son, Mr Troy Felt. Mr Felt Snr deposes that Platinum Homes (WA) Pty Ltd ("Platinum") is a building company which is related to the defendant. Mr Felt Snr and his son are directors of Platinum. Its sole shareholder is Builton Group Pty Ltd which holds its shares beneficially. I am unaware of the shareholding of Builton. Mr Felt Snr has filed three affidavits in opposition to this application. Those affidavits are made on behalf of both the defendant and Platinum, although Platinum is not a party to this application.

9 Platinum was not registered as a builder until 27 September 2006. Until that date it was not permitted to enter into a building contract or hold itself out as a registered builder: Builders Registration Act 1939 (WA), s 4.

10 The plaintiff also relies upon clauses 23.1, 23.3, 24.1 and 24.2 of the General Conditions which state:

Neither Party may terminate the Contract as a result of the other Party's default nor may the Seller forfeit any money paid by the Buyer or retake possession of the Property because of the default of the Buyer, unless:

(a) the Non Default Party gives a Default Notice to the Default Party; and

(b) the Default Party fails to remedy the default within the time required under the Default Notice.

...

23.3 No Default Notice required for Repudiation

Clause 23.1 does not apply if the Default Party repudiates the Contract.

the Seller has each right in clause 24.2, in addition to any other right or remedy of the Seller.

24.2 Seller right on default or repudiation

...

(d) subject to clause 23.1, terminate the Contract by Notice to the Buyer, but only if the Default Notice given under clause 23.1 includes a statement that if the default is not remedied within the time specified in the Default Notice the Contract may be terminated; or

(e) where the Buyer repudiates the Contract - terminate the Contract by notice to the Buyer."

11 Clause 21.1 of the General Conditions requires that a notice under the contract must be in writing and signed by the party giving it or that party's representative. A default notice is defined to be a notice which specifies the default of a party and requires the party to remedy the default within 10 business days after the notice is given or within any longer period specified in the notice. Clause 22 provides that subject to cl 23, time is of the essence in relation to the provisions of the contract.

12 On 21 February 2006 the plaintiff paid the deposit of $2,000 to Transtate.

13 On 3 March 2006 the plaintiff signed a printed document entitled "Platinum Homes (WA) Pty Ltd Jacaranda Heights House and land package Preparation of Plans Agreements" ("the Plans Agreement"). It is framed as a request to Platinum to:

"1. Prepare Quotation Price based on a Concept Sales Sketch, dated ............

A Contour Survey and preparation of concept sketch plan

(a) Contract drawings and specification

(b) Specification addendum

(c) Building contract

The fee (including GST) for completion of the above activities is payable as follows:

(1) Payment on signing this agreement $900 (Initial

Fee)

(2) Payment on completion of the Preliminary $1,100 (The

Total Fee for this Preparation of plans Agreement $2,000"

The Plans Agreement has provision for execution by the plaintiff and Platinum. It also states that:

"Payment of 'The Balance' of fees will be taken as confirmation of acceptance."

14 On 28 March 2006 the plaintiff signed a form entitled "Extension of Time" which stated that the plaintiff sought an extension of time to 1 April 2006 to comply with special condition 7. The document was signed on behalf of the defendant on 22 March 2006 which suggests, as the plaintiff alleges, that it was the defendant who sought the extension.

15 Between 1 May 2006 and 24 May 2006 Platinum provided the plaintiff with four cost estimates for the construction of a house on the subject land. These were all for the construction of a standard "Jacaranda Series" home. They included the costs of various specified variations to the standard plan and included the cost of earthworks but not site costs and they did not include plans.

16 On 30 May 2006 the plaintiff met with Mr Graham Roycroft. The plaintiff dealt with Mr Roycroft as a representative of Platinum. Mr Felt Snr deposes that Mr Roycroft was a "sales contractor of Platinum". Mr Roycroft produced a Platinum printed document entitled "Costs Estimate No 4 for preliminary Job no 06913" dated 24 May 2006 ("the Costs Estimate No 4") which the plaintiff says both he and Mr Roycroft signed. The cost of the home was specified in the Costs Estimate No 4 as $165,153. However, it did not make provision for the cost of some items.

17 The defendant says that this document was not signed on behalf of Platinum. The only Costs Estimate No 4 in evidence is signed by the plaintiff alone. There would be an issue at trial as to whether Mr Roycroft signed the Costs Estimate No 4 and if so the capacity in which he did so. For the purpose of this application I will assume that the plaintiff will be able to prove that, once signed by the plaintiff, it constituted an agreement between him and Platinum. If that is proved then there may be an issue as to whether it was also an agreement with the defendant because at that time Platinum was not a licensed builder but the defendant was. Platinum's letterhead referred to the defendant and its builder's registration number.

18 The plaintiff also paid Mr Roycroft $1,100 being the balance required to be paid by him under the Plans Agreement. The plaintiff had already paid $900 in March 2006 under the Plans Agreement.

19 The plaintiff deposes that Mr Roycroft told him that he would take the costs estimate with him, photocopy it and send it to the plaintiff the following day. The plaintiff also believed that he would subsequently receive a formal written building contract for execution. He understood that this would be based on the plans for the standard "Jacaranda Series" home, as varied by the Costs Estimate No 4 and the standard Housing Industry Association contract, that the contract would be settled and Platinum would build his home.

20 The plaintiff did not receive the expected documents.

21 The parties are in dispute about the nature of the negotiations which occurred following the meeting on 30 May. The plaintiff says that he spoke frequently to Mr Roycroft and about making minor changes to the home. He says that he was told that minor changes prior to commencement of construction would not alter the contract price. He says he was also told that the site costs would be minimal. In contrast, Mr Felt Snr says that, after the Costs Estimate No 4 was signed by the plaintiff, Platinum began to prepare a contract quotation, a process that takes about six weeks to confirm all pricing. During this process the plaintiff requested two additional changes to the Costs Estimate No 4. He says that the Costs Estimate No 4 was not an agreement between the plaintiff and Platinum to build a home and neither did it constitute an agreement between the plaintiff and the defendant. He says that it was not possible to finalise the documents required by special conditions 6 and 7 because of the plaintiff's request for changes to Costs Estimate No 4. These are matters which will have to be resolved at trial.

22 In mid-July Mr Roycroft advised the plaintiff that the cost of building his proposed home had increased by approximately $14,800. Without committing himself to pay the increase, the plaintiff discussed the reasons for the increase in a telephone conversation with Mr Felt Snr. Approximately two days later, the plaintiff called Mr Roycroft and told him that he would accept the cost increase.

23 By letter dated 16 August 2006 from the defendant's settlement agent the plaintiff's settlement agent was notified that an application for new titles had been lodged and it would be advised when they had been issued.

24 On 22 September 2006 the defendant required the plaintiff to sign a document entitled "contract variation" and to return it in order for settlement to proceed. It stated that:

"1. The Seller and Buyer acknowledge and agree that settlement cannot proceed under the Contract in the terms of Special Conditions 6 and 7 of the Contract in that the Building Contract in the terms contemplated by the Contract at this time is not capable of finalisation (due to no fault or delay on the part of the Seller).

The Seller and Buyer acknowledge that, unless the Seller agrees otherwise, the Contract is liable to be cancelled by the Seller due to non-finalisation of the Building Contact [sic] and if the Seller exercised its rights to cancel the Contract the Buyer would lose the opportunity to both complete the purchase of the Property and to enter into the Building Contract with the Seller (or the Seller's nominee).
In consideration of the Seller agreeing to settlement of the sale of the Property without finalisation of the Building Contract in the terms as otherwise required by Special Conditions 6 and 7 of the Contract, the buyer covenants with the Seller that the Buyer will after settlement, enter into the Building Contract with the Seller (or its nominee) on terms and conditions contemplated by the Contract.
The Buyer, as the owner of the Property, to secure the performance of its obligation to enter into the Building Contract with the Seller (or its nominee), hereby charges its interest in the Property in favour of the Seller to the extent that the Seller may lodge a subject to claim caveat with respect to the obligation of the Buyer to enter into the Building Contract with the Seller (or its nominee) in the terms contemplated by the Contract.
The Buyer and the Seller will both use their best endeavours to finalise the Building Contract, and enter into the Building Contract, as soon as possible and in any event by 15 December 2006
The charge given by the Buyer to the Seller pursuant to Clause 4 of this Contract Variation is given in consideration of the Seller allowing settlement to proceed under the Contract, despite the non-finalisation of the Building Contract and the charge secures in favour of the Seller.

(a) The covenant by the Buyer to finalise and enter into the Building Contract with the Seller (or its nominee).

(b) The payment of all money due by the Buyer under the Building Contract to the Seller (or its nominee) as builder."

25 The plaintiff says that he did not sign the contract variation because he considered that, subject to him signing a formal written building contract with Platinum, there was nothing in the contract which remained incomplete or which inhibited settlement of the contract. The defendant says that there had been no agreement reached between the plaintiff and the defendant as required by special condition 7 of the contract and therefore the contract variation was necessary in order to keep the contract on foot.

26 Title to the subject land was issued on a date unknown to me but sometime towards the end of September 2006. Mr Felt Snr deposes that settlement was due to occur on or about 17 October 2006.

27 On 26 September 2006 the plaintiff's solicitor wrote to the defendant's settlement agent and advised it that the plaintiff did not accept that the contract was liable to be cancelled by the defendant. The letter stated that the plaintiff was "ready willing and able" to settle the sale of the subject land but made a without prejudice offer to vary the contract on the basis that it was a fundamental term that the house was built by 25 December 2006. In response, Mr Felt Snr sent a letter the same date to the plaintiff's solicitor. The letter was written on the joint letterhead of Platinum and the defendant trading as Eversee Developments. Mr Felt Snr signed the letter as General Manager of Platinum and the defendant. Amongst other things, the letter said:

"Therefore, given that your client has not specifically withdrawn from the contract and we can only assume they are concerned with the loss of their deposit of $2,000 on the Contract of Sale of the Land and the PPA sum paid to Platinum Homes. Accordingly, we shall authorise the selling agents CommercialFN.com to return the deposit monies and we undertake to have Platinum Homes refund the PPA sums paid without deduction (even though all these funds have been expended in providing quotes and documentation to date).

We formally advise you and your client that the contract for Sale of Land dated 15 February 2006 is now at an end based upon Clause 7 of the above mentioned Contract."

28 Thus, the defendant purported to terminate the contract on 26 September 2006. The defendant asserts that it validly terminated the contract for non-fulfilment of special condition 7 of the contract.

29 By letter dated 29 September, the plaintiff's solicitor said that the plaintiff required the contract to "be effected" and requested to be advised of the time and place of settlement. By implication the, the plaintiff did not accept the defendant's purported termination of the contract. The defendant later returned both the plaintiff's deposit of $2,000 and the Plans Agreement fee of $2,000. Those sums are held by the plaintiff's solicitors.

30 The plaintiff lodged the caveat on 27 September 2006. The caveat identified the estate or interest being claimed as "fee simple". The Registrar of Titles, quite rightly, pointed out to the plaintiff's solicitors that "fee simple" is not a caveatable claim and required the plaintiff to complete that panel of the caveat. By letter, which is now noted on the caveat, the plaintiff's solicitors said that the words, "The caveator claims an interest in the land based on the contract or the doctrine of resulting trust" should be inserted in the panel of the caveat where the caveatee is required to state the estate or interest being claimed. The contract referred to is the contract the subject of this application. It is expressly referred to in the caveat and is attached to it.

31 The plaintiff has commenced proceedings against the defendant seeking, amongst other remedies, specific performance of the contract.

Principles governing the extension of caveats

32 The Act, s 137 permits a person who claims any estate or interest in land to lodge a caveat forbidding the registration of any dealing affecting the claimed estate or interest. The purpose of a caveat is to act as a statutory injunction to the Registrar General to prevent registration of dealings with the land until notice has been given to the caveator. This enables the caveator to pursue such remedies as he or she may have against any person lodging a dealing for registration: J & H Just (Holdings) Pty Ltd v Bank of New South Wales [1971] HCA 57; (1971) 125 CLR 546 at 552 per Barwick CJ.

33 In 1996 the Act was amended to provide that the proprietor of land in respect of which a caveat has been lodged may apply for the caveator to be served with a notice to the effect that unless the caveator applies to extend the operation of the caveat it will lapse within 21 days. The Act, s 138C provides that on the hearing of such an application this Court, if satisfied that the caveator's claim has or may have substance, may, amongst other things, make an order extending the operation of the caveat.

34 It is clear from the statutory scheme that in an application under the Act, s 138C the onus is upon the caveator to satisfy the court that the caveator's claim has or may have substance. This has been interpreted as an onus to satisfy the court that there is a serious question to be tried as to whether a caveatable interest exists; that is that the plaintiff has an arguable case that he has a proprietary interest in the land. The caveator must also satisfy the court that the balance of convenience favours the retention of the caveat in that it would be better to maintain the status quo until the trial of the action by preventing the caveatee from disposing of the land to a third party. If there is a serious question to be tried it will be unusual for the balance of convenience to lie in the refusing of an application to extend a caveat: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42.

35 If there is a serious question to be tried but the validity of it can only be determined by findings of fact then the caveat should remain and the caveator should be left to proceed by way of action to establish the interest or estate: Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 at 141 per Brinsden J; Halse v Embling, unreported; FCt SCt of WA; Library No 970734; 22 December 1997 at [11] per Parker J.

A purchaser's caveatable interest under a contract for sale of land

36 A caveator has a right to lodge and maintain a caveat over land if the caveator has an estate or interest in the caveated land. It has been held that the interest of a purchaser under an uncompleted agreement for the sale of land has an interest in the land which may be protected by a caveat: Fernandes v Houstein (1963) 4 FLR 355 and the cases cited therein.

37 The decision of Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 has been cited in subsequent decisions, both in Western Australia and elsewhere, as authority for the proposition that a purchaser under an uncompleted conditional agreement for the sale of land has in interest in the land which may be protected by a caveat: see for example Forder v Cemcorp Pty Ltd [2001] NSWSC 281; (2001) 51 NSWLR 486.

38 The facts of Kuper's case were that the vendor purported to terminate a conditional contract for the sale of land for failure to fulfil the conditions which related to the obtaining of town planning approval and registration of a strata plan. The purchasers alleged that they were entitled to an order for specific performance of the contract and lodged a caveat to protect their interest in the land. The Full Court based its decision on the view that the extent of a purchaser's interest in the land to be purchased is to be measured by the protection which equity will afford the purchaser, including an injunction and specific performance. Malcolm CJ (Pidgeon and Seaman JJ agreeing) at 432 found that "in appropriate circumstances" a court would be prepared to grant an injunction or order specific performance. Thus "the estate or interest claimed by the purchasers was sufficient to grant a caveatable equitable estate in the relevant land, notwithstanding the conditional nature of the contract".

39 Kuper's case governs the situation where the caveator has an arguable case that the contract is still on foot, even though the vendor has purported to terminate it.

40 In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 at 43 [57] the majority of the High Court considered what, if any, interest in land a purchaser had under an uncompleted contract for the sale of land where the vendor has terminated the contract in the exercise of a contractual right to do so. This is a relevant issue because an interest in land is a pre condition to the lodgement of a caveat.

41 Their Honours in the majority judgment at [53] and [55] adverted to the circularity of the reasoning that the extent of the interest is commensurate with the availability of specific performance or an injunction where the availability of such a remedy is in issue between the parties. However, it appears that the dicta in Tanwar's case only questions the interest in land of a purchaser under an uncompleted contract for the sale of land which has been validly terminated by the vendor for breach of an essential condition of the contract, in circumstances where there is no relevant breach of contract by the vendor and no purchaser's lien. In such a case the High Court appeared to suggest at [57], without deciding, that a claim for relief against forfeiture based on the unconscionable conduct of a vendor would not give the purchaser an interest in the relevant land.

42 In any case, where the purchaser has an arguable case that the contract was invalidly terminated because the vendor was relevantly in breach of the contract or for any other reason, Kuper's case is authority for the proposition that a purchaser under an uncompleted conditional contract for the sale of land has a caveatable equitable interest in the relevant land.

43 The plaintiff submits that there are serious issues to be tried as to whether:

(a) the defendant had a contractual right to terminate the contract;

(b) if it did, it was estopped from terminating the contract; or

44 For the reasons given below, it is arguable that the first issue is to be answered in the negative. Thus, the plaintiff has satisfied me that a serious issue arises between the parties as to whether the plaintiff has an interest in the subject land. For the sake of completion, I briefly consider the second and third issues.

45 The defendant says that it was entitled to terminate the contract because at the time of termination special condition 7 had not been fulfilled. The plaintiff says that special condition 7 had been fulfilled in that there was a concluded agreement which was to be restated in a formal contract document with fuller or precise terms. In addition, the plaintiff must satisfy me that it is arguable that the Plans Agreement and the Costs Estimate No 4 comprises an agreement, not only between the plaintiff and the Platinum but the defendant. This is because special condition 7 required "all parties (buyers and sellers)" to be in agreement as to costings.

46 On a plain reading of special condition 7, as amended by the contract variation of 28 March 2006, it contains two requirements for fulfilment. The first is that Platinum was required to provide a house, land and site costs package to the satisfaction of the plaintiff. The date for fulfilment of this requirement is not stated. However, it seems controlled by the second requirement. The second requirement is that the plaintiff, the defendant and, arguably, Platinum must be in agreement as to the costings, presumably of the package, by 1 April 2006. Thus, it seems that the first requirement had also to be satisfied by that date.

47 In order to prove that the Costs Estimate No 4 is a binding contract between the parties to it, the plaintiff relies upon the dicta of the High Court in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360 where the Court said:

"Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v Miller when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. His Lordship proceeded: ' ... as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed." (Authorities omitted)

48 In respect to the first requirement of special condition 7, the defendant has a persuasive argument that the Costs Estimate No 4 does not constitute a "house, land and site costs package". This is because it does not have the specifications which would be expected in such a package. However, I acknowledge that apart from general assertions in the affidavits, untested by cross-examination, I have not received evidence as to what is industry practice to include in such a "package". Given the evidence before me, the point is not in my view so entirely unarguable that an extension of the caveat should be refused on this ground. Relying upon the dicta in Masters v Cameron (supra), it is arguable that the Costs Estimate No 4 is a binding contract between Platinum and the plaintiff.

49 In respect to the second requirement, the defendant has a persuasive argument that the Costs Estimate No 4 does not constitute an agreement as to costings. For example, it does not contain the costs of the site works. Ultimately, as this issue may depend on evidence whether the costs omitted from the Costs Estimate No 4 were minor or not, there remains a serious issue to be tried about this matter.

50 A lot of time at the hearing was spent on the question as to whether the Costs Estimate No 4 was an agreement between the plaintiff and the defendant. The defendant says that Platinum did not agree to the Costs Estimate No 4 and that, even if it did, it was an agreement between Platinum and the plaintiff rather than the defendant and the plaintiff, as required by the contract.

51 If the plaintiff is able to prove that Mr Roycroft signed the Costs Estimate No 4, in my opinion, there is an issue between the parties as to whether he was acting for both Platinum and the defendant at the time, especially given that Platinum was not a registered builder on the date that it was signed.

52 As to the fact that the Costs Estimate No 4 was signed on 30 May, rather than by 1 April, it would be open for the plaintiff to satisfy the Court at trial that the parties, by continuing to negotiate after 1 April, had waived compliance with that date.

53 Further, the plaintiff says that even if special condition 7 had not been fulfilled the defendant was not entitled to terminate the contract. It says that the failure to fulfil that condition made the contract voidable and the defendant was not entitled to terminate it if it was in default of the contract. The defendant agrees that when special condition 7 was not satisfied by 26 September 2006, the contract became voidable. It denies that it had breached the contract.

54 It is arguable that the contract contains an implied term that each party will do all that is reasonably necessary to secure performance of the contract and, thus, to enable each party to have the benefit of the contract; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 607 per Mason CJ (Barwick CJ, Gibbs, Stephen and Aickin JJ agreeing).

55 A party cannot rely upon a contractual right to terminate a contract upon any default by the other party where by its own conduct it has brought about the situation said to give rise to the right to terminate: Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 441.

56 It is arguable that the defendant failed to comply with the implied term by unreasonably failing to finalise the costs of the proposed home, failing to cause or request Platinum to finalise the costs of the proposed home or by failing to cause or request Platinum to present a house, land and site costs package to the satisfaction of the plaintiff. The defendant says that it was not possible to do any of these things because the plaintiff kept making changes to the proposed home. The plaintiff says that he was told that minor changes, such as he believed he was making, would not materially alter the costs. These are matters which have to be resolved at trial.

57 Thus, it is arguable that the defendant was not entitled to terminate the contract because it failed to take reasonable steps to secure performance of the contract, failed to co-operate in order to bring about the satisfaction of special condition 7 and thereby brought about the situation said to give rise to the right to terminate the contract.

58 The plaintiff also submits that the purported termination of the contract by the defendant was ineffectual because it did not comply with cl 23.1 of the General Conditions. The defendant says that cl 23.1 only applies were a party is relying upon the other party's default in failing to fulfil a promissory condition. It submits that the defendant was relying upon the failure to satisfy special condition 7 through no fault of either party. Thus, cl 23.1 did not apply.

59 The defendant submits that the decision in Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537 is apposite. In that case, Gibbs CJ at 546 said:

" ... I consider that when the time has elapsed for performance of a condition which is not a promissory condition, but a condition precedent to the obligation to complete a contract of sale, either party, if not in default, can elect to treat the contract as at an end if the condition has not been fulfilled or waived, and that it is not necessary first to give a notice calling on the party in default to complete the contract or fulfil the condition. What I have said is, of course, subject to any sufficient indication of a contrary intention in the words of the contract itself."

60 One matter requiring determination in respect to this issue is whether special condition 7 is a promissory condition or not. On the face of it, the defendant is correct, the special condition is a promissory condition and the defendant was entitled to terminate the contract without giving a default notice. Another issue requiring determination is whether the defendant was in default under the contract and, therefore, not at liberty to treat the contract at an end. A third issue, raised by the plaintiff, is whether the defendant was required to give notice of termination because it had continued to negotiate after the time for fulfilment of special condition 7 had passed. Those issues will have to be determined at trial.

61 A vendor under an uncompleted contract of sale may be estopped by their representations as to an existing fact or future conduct from terminating the contract. In Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 at 435 - 437 Mason and Deane JJ stated that there are a number of rules which are applicable to whichever form of estoppel is relevant. Two of the rules are:

(a) a representation must be clear before it can found an estoppel; and

(b) a person will not be estopped from departing from an assumption or representation "unless as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption is permitted".

62 In respect to the first rule, the defendant did not expressly represent that it was not going to rely upon its right to terminate the contract if special condition 7 was not met. However, five matters which the plaintiff relies upon are relevant. First, he asserts that Mr Roycroft continued to negotiate with him over minor changes to the plan and told him that these would not affect costs. Secondly, he says that Mr Roycroft said Platinum would produce the necessary plans as it promised in the Plans Agreement and at no time told the plaintiff that there was not time or sufficient agreement for it to do that. Thirdly, the Plans Agreement stated that payment of $1,100 was to be made on "completion of the Preliminary working drawing (Preparation of contract documents will also commence on receipt of this payment)". The plaintiff paid $1,100 on 30 May 2006 and the sum was accepted. Fourthly, the defendant's agent and Mr Felt Snr spoke to the plaintiff in July 2006 about a price rise in the proposed contract and obtained the plaintiff's agreement to it without mentioning any failure on behalf of the plaintiff to fulfil special condition 7. Fifthly, on 16 August 2006 the defendant's settlement agent, advised that the relevant Deposited Plans were in order for dealing and an application for new titles had been lodged. Having regard to these matters, I am of the view that there is a serious issue to be tried as to whether the defendant represented that it or Platinum was proceeding to prepare documents required for the fulfilment of special condition 7 and that it would not rely upon the failure to fulfil condition 7 by the date stipulated in the contract in order to terminate the contract.

63 As to the second rule, there is evidence of detriment in that the plaintiff continued to negotiate what he believed where minor changes, apparently not appreciating that by doing so he was creating a situation which the defendant would rely upon to terminate the contract. Implicitly, he relied upon what he says were the defendant's representations in doing so. The plaintiff also paid Mr Roycroft $1,100 on 30 May 2006 and paid the stamp duty on the contract on 27 September. Admittedly, this latter payment was made after the defendant purported to cancel the contract.

64 In my view there is an arguable case of estoppel, although it is by no means overwhelming.

65 Equity will prevent a party from exercising a right to terminate a contract for non-fulfilment of a condition where this would result in the forfeiture of a proprietary interest where it is unconscionable for a party to exercise the right: Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191. In Tanwar Enterprises Pty Limited v Cauchi (supra) the High Court considered a number of potentially conflicting judgments of the justices of the Court concerning the availability of relief against forfeiture. At [37] - [39] Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said:

"In Legione, Mason and Deane JJ instanced 'fraud, mistake, accident, [and] surprise' as elements which may make it inequitable to insist on termination of a contract for failure to observe its strict terms. Subsequently, in Stern, Mason CJ took Legione and Ciavarella as establishing that the court will not readily relieve against loss of a contract for sale validly rescinded by the vendor for breach of an essential condition; and, in particular, equity was not authorised 'to reshape contractual relations into a form the court thinks more reasonable or fair where subsequent events have rendered one side's situation more favourable'. That latter proposition is at odds with the approach by Gaudron J in Stern, to which reference has been made earlier in these reasons at [35], but, nevertheless, it should be accepted as an accurate statement of the law. ...

...

In Stern, Mason CJ also stated that equity intervenes only where the vendor has, by the vendor's conduct, caused or contributed to a circumstance rendering it unconscionable for the vendor to insist upon its legal rights. That helps explain why mere supervening events and changes in the relevant circumstances are insufficient. But it should be noted that cases falling within the heads of mistake or accident will not necessarily be the result of activity by the vendor. In addition, his Honour spoke in Stern of the circumstances being 'exceptional' to attract equitable intervention. That also emphasised the insufficiency of subsequent events which are adverse to the interests of one side. ..." (Authorities omitted)

66 In my opinion the plaintiff has not asserted any matters which would suggest that equity would relieve against forfeiture in this case which are materially different to those he relies on to establish an estoppel. Consequently, it is unnecessary for me to say more about this remedy than I have already said in respect to estoppel.

67 The defendant submits that even if the Court found in favour of the plaintiff, it would be futile to order the defendant to specifically perform the contract and the plaintiff would have only a claim for damages against the defendant. The reason for this, it submits, is that the fulfilment of special conditions 6 and 7 rely upon the co-operation of Platinum. The defendant submits that Platinum is not a party to the contract and if it does not want to enter in to the agreements referred to special conditions 6 and 7 the court can not compel it to do so. Mr Felt Snr deposes that Platinum is no longer prepared to build a home for plaintiff. Thus, the defendant submits that a court would not compel the defendant to specifically perform the contract.

68 I accept that a court will not order that a contract be specifically performed if it is futile to do so. However, a court may order specific performance of a contract if, after the parties have performed their obligations under a contract, the necessary conditions precedent to the performance of it have been satisfied. Although Mr Felt Snr deposes that Platinum is not prepared to build the plaintiff a home, I am not so satisfied that this would be the inevitable position if a court ordered the defendant to comply with its obligation to take all reasonable steps to fulfil the conditions of the contract. I am not prepared to decline to extend the caveat on the basis that an order for specific performance of the contract would be futile.

69 Next, the defendant submits that I should not exercise my discretion to extend the caveat because the plaintiff has failed to differentiate between the defendant and Platinum, in particular with respect to whether Mr Roycroft was acting on behalf of Platinum as opposed to the defendant. There is a degree of ambiguity in the affidavits filed by both the plaintiff and the defendant in this respect.

70 It is the plaintiff's case that Mr Roycroft was acting on behalf of both the defendant and Platinum in his negotiations with the plaintiff. For this reason, I am not prepared to refuse to extend the caveat because the plaintiff's affidavit sworn 1 February 2006 fails to state that Mr Roycroft was Platinum's sales representative and, rather, states that he was acting on behalf of the defendant. Both parties need to take care to ensure that the factual material they file does not draw conclusions about matters which are matters of both fact and law and which will ultimately require determination by the trial Judge.

71 Finally, it is asserted that the caveat ought not to be extended because it is in a defective form. There is no doubt that a defective caveat ought not to be extended; Jandric v Jandric [1999] WASC 22 at 48; Leros v Terara Pty Ltd [1992] HCA 22; (1992) 174 CLR 407 at 422-423. The question is whether the caveat is defective, as alleged.

72 First, it is said that there are no facts stated to support the contention that the plaintiff has an interest in the property because of a resulting trust. At the hearing of this application, the plaintiff disavowed any reliance on the claim for a resulting trust. The Act empowers me to extend the caveat if I am of the view that the plaintiff's claim may have substance. As I am satisfied that one of the claims specified in the caveat may have substance I should extend the caveat, even though it also refers to a claim which has not been pursued by the plaintiff.

73 Secondly, the defendant says that the contract was terminated before the caveat was lodged and yet this is not acknowledged in the caveat. I have found that there is a serious issue to be tried as to whether the contract was validly terminated. Consequently, I am of the view that the purported termination of the contract prior to the caveat being lodged and the failure of the caveat to refer to the purported termination is not an impediment to the extension of the caveat.

74 Lastly, it is said that the caveat fails to identify, in an adequate manner, the estate or interest claimed by the caveator.

75 A purchaser under an uncompleted contract for the sale of land should not allege that the interest which they claim is an estate in fee simple or a legal estate in the land. The interest which such a purchaser has is an equitable interest in the land as a purchaser of the fee simple under the uncompleted contract. The Act requires the caveator to describe the current interest which the caveator has in the land and which, therefore, entitles them to lodge the caveat; not the interest which the caveator will have once a court grants them a remedy and the contract is completed.

76 In this respect I refer to the note by Mr H W Tebbutt, "The Conveyancer" 54 ALJ 166 about the amount of detail required in a caveat of the estate or interest claimed by the caveator. At 171, whilst commentating on the Western Australian decision of Ioppolo v Ioppolo (1978) 4 Fam LR 124 the learned author said:

"In the first place, it is a fundamental principle, established by innumerable cases over the last one hundred years, that a caveator must allege a presently existing interest in the land (although, of course he does not have to prove the existence of that interest at the time he lodges his caveat: it is enough to claim it). Those cases also establish that the 'interest' must be an interest in the 'technical land law sense' (see the many authorities cited in Baalman, op cit pp 301-303, to which may be added Pearce v Pearce [1977] 1 NSWLR 170, at 179-180 per Helsham CJ in Eq). It is not enough to have (or claim) a potential, possible, or prospective 'interest' in property. For example, a mere 'spes successionis' will not suffice; nor will the fact that court proceedings have been commenced seeking a grant by the court of an interest in the property, no matter how 'viable' the caveator's suit."

77 The reader should now refer to the many authorities cited in Butt, P and Ticehurst F, "The Torrens System in NSW", Law Book Co at [74F.80].

78 In Kuper v Keywest (1990) 3 WAR 419, the Full Court considered what constituted a sufficient description in a caveat of the estate or interest claimed by a purchaser under an uncompleted contract for the sale of land in circumstances where the vendor had purported to terminate the contract. Malcolm CJ (Pidgeon and Seaman JJ agreeing) said:

"In my opinion the claim to 'an estate or interest as purchaser of an estate in fee simple' in the land described was a sufficient specification of the interest or interest claimed ..."

79 I am bound by the Full Court's decision in Kuper's case. Thus, I am not prepared to find that the caveat in its current form is defective. The form of the caveat is not ideal in that the incorrect reference to "fee simple" remains in the panel which identifies the estate or interest claimed by the plaintiff. However, I am of the view that the words added by the letter from the plaintiff's solicitor, read with the contract, are just adequate to rectify what is otherwise an incorrect description of the interest claimed by the plaintiff.

80 The defendant did not make submissions relating to the balance of convenience. No particular matters having been brought to my attention I am prepared to find that the balance of convenience favours the extension of the caveat.

81 For these reasons, the caveat is extended. I will hear the parties as to formal orders.

Registration Act 1939

BONI -v- KINGSOAK PTY LTD [2007] WASC 174 (31 July 2007)

At a glance

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Judgment (120 paragraphs)

BONI -v- KINGSOAK PTY LTD [2007] WASC 174 (31 July 2007)

Legislation Cited (2)

Cases Cited (14)