Charitou v The Owners of Strata Plan 10394

The issue

1. Mr Charitou says that he is now faced with a problem which causes him to contend that the Deed is void and of no force and effect. The problem is that the Council has said that it will not give the necessary consent to the process leading to registration of the separate lot on the current common property until the lot has been sequestered from the common property by physical construction.
2. Mr Charitou says that he entered the Deed on the basis that he thought that it was possible for the lot first to be registered as a separate lot and for the physical construction to take place afterwards. Mr Charitou says that, had he known that the Council would take the position that it now has, at the time that he entered into the Deed on 20 March 2012, then quite a different kind of negotiation would have taken place and different terms would have been agreed with the defendant, Body Corporate, to encompass the actual circumstances that he was facing.
3. Be that as it may, the Court must now apply the law to the evidence that has been advanced. Mr Xenos says the Deed is void and of no force and effect. Some of his submissions and his evidence seemed to indicate that reliance was proposed upon a subsequent amending deed which Mr Charitou advanced to try and cure the problem that has just been described, an amending deed which clearly reverses the order of construction of the lot and obtaining the Council's consent.
4. But it was pointed out to Mr Xenos in the course of argument that ordinarily in order to show that the Deed is void and of no force and effect, the Court must examine the circumstances at the time the Deed was made and cannot bring to bear the events occurring afterwards, such as amending deeds.
5. Submissions shifted to the time of execution of the Deed. It is not in contest that the Deed was properly executed by both Mr Charitou and by a properly appointed executive committee on behalf the Body Corporate. It is not in dispute that both were of full legal capacity, and it is not in dispute that both were legally advised at the time.
6. The contention seems to be, not that the Deed was voidable in equity in some way due to unconscionable conduct or the like, but that it is actually void and of no force and effect.
7. Whatever be the alleged defect which is said to make the Deed of no force and effect, there seems to be little evidence available on this application of Mr Charitou's state of mind which would be necessary to establish any such defect. All that his evidence does in support of the motion, in his affidavit of 1 June 2015, is to set out the course of events so far as the mediation, the making of the Deed and the Court's orders are concerned. Then Mr Charitou says that his solicitor Mr Regis advised him, and he believed that the Deed "was not capable of being complied with" and that Deed would "require a number of amendments".
8. Mr Charitou explains in the evidence that the Deed passed between his solicitor and those acting for the Body Corporate in October 2013. A licence to allow him to do work on the common property was discussed. But the affidavit evidence in support of the motion is completely devoid of any contemporaneous evidence about Mr Charitou's state of mind at the time he entered into the Deed.

Analysis

1. The submissions Mr Xenos put on Mr Charitou's behalf from the Bar Table about what he expected at the time the Deed was entered into are really not supported by the evidence. Taking the case presented at its highest, it may be said to be one of common, mutual or unilateral mistake, in common law or in equity.

Common mistake

1. It is possible for an agreement to be void at common law for common mistake. If a party makes an incorrect common assumption as to the existence of a state of affairs, without a warranty by either party that such state of affairs exists, and if the actual state of affairs does not exist without fault being attributable to either party. The non-existence of the state of affairs must render performance of the contract impossible and the state of affairs must be a vital attribute of the consideration to be provided or of the circumstances which must subsist if performance of the contract is to be possible: see Great Peace Shipping Ltd v Tsavliris (International) Salvage Ltd [2003] QB 679 at 703 and Australia Estates Pty Ltd v Cairns City Council [2005] QCA 328.
2. Mr Xenos puts from the Bar Table the scenario of a possible common mistake as to whether the Council would require the lot construction to take place first before giving its assent to the registration of the lot. But even analysed as a matter of common mistake the evidence on Mr Charitou's behalf is insufficient to found any form of relief based on common mistake. It does not establish that he made any such mistake at the time of execution of the Deed, or that such a mistake was not attributable to the fault of the other party, or that the non-existence of that state of affairs renders performance of the contract impossible. I am therefore not satisfied that I should make the declarations sought on the basis of doctrines of common mistake.

Mutual mistake

1. The current situation does not seem to me to be a candidate for being a mutual mistake: that is a situation where each party makes a different mistake. The evidence does not make clear what were the different states of mind of each party Mr Charitou and the Body Corporate.
2. I am prepared to look at the execution of the Deed as founding a possible common mistake, because one can infer some consensus from the form of the deed, which may found the common mistake. But there is insufficient evidence of differential intention as to engage doctrines of mutual mistake. So I will consider that no further.

Unilateral mistake

1. Equally, the principles of the equitable doctrine of avoidance of a contract based on unilateral mistake are well-established: Taylor v Johnson (1983) 151 CLR 422. But these doctrines are not engaged here. There is insufficient evidence of Mr Charitou's state of mind to ground such a mistake. Moreover there is no evidence that that mistake was intentionally induced by Body Corporate for the purposes of those equitable doctrines by the conscious intention of the defendant, Body Corporate.
2. For all those reasons, Mr Charitou's application fails. I dismiss the motion with costs.

The future of the proceedings

1. The next question is: where should the proceedings go now? The parties have not yet argued the question of whether the dismissal of this motion brings the proceedings to an end, or whether there is a possibility that Mr Charitou's underlying action may now be re-agitated.
2. Some hint as to what should follow now is provided by analysis of Deed, cl 23. It says that when the lot has been created and constructed, and the contemplated contract for sale of the lot has been entered into: "the parties each release the other, and their respective related bodies corporate and their officers, employees and agents from and indemnifies them against any or all present and future claims touching upon any matter which is or may be the subject matter of any dispute or of any claim by any party against any other party, other than in respect of that contract for sale."
3. It is common ground that because of the difficulties associated with performance of the Deed that the parties have entered into no such contract for sale. But the parties have not yet fully argued the question of whether there are other implied releases or other acts that have taken place that may have brought the proceedings finally to an end notwithstanding the current difficulty.
4. Because that issue has only emerged as a side-wind before me, it is not appropriate for me to decide it now. And I will permit the parties to argue it in the future, if they are so minded.
5. For that purpose I will adjourn the proceedings for 28 days to the Registrar's list, so that the parties can make up their minds within that period of time whether they either wish to take the opportunity to attempt to resolve the proceedings by further negotiations, which they began to do outside the courtroom today, or whether they wish to debate further whether the underlying proceedings should now be determined.
6. But I will give the parties an opportunity to vacate that proposed date before the Registrar by giving them liberty to approach the Registrar in chambers to file further terms of settlement giving effect to any further consensus they reach.
7. It is desirable for these parties to attempt to resolve the underlying issues between them. The tragedy of this case is that both sides seem to want to effect the separation of the lot, to allow the sale to go through and for the Body Corporate to receive the agreed $150,000 from Mr Charitou. Both sides would presumably then obtain some benefit. The Strata Plan would receive the $150,000 for the area now reserved for the lot and Mr Charitou would receive the lot that he seeks.
8. It seems not beyond the capacity of the parties to bridge their differences in the next 28 days to see if this can be achieved. I do not propose now to order a further mediation as there already has been one. The remaining differences now are not so great that they cannot be bridged by common sense.
9. In that connection I will perhaps remind the parties of something cited more often in the realm of politics than of law. I do not quote politicians in this court very often. But Edmund Burke, a great statesman and philosopher of the late 18th and early 19th-century, is famous for saying of compromise that "All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter." I would perhaps commend Edmund Burke's thoughts to the parties in this case for their common benefit.
10. So the orders of the Court will be as follows: 1. Motion dismissed 2. The applicant on the motion, plaintiff in proceedings will pay the defendant's costs of the motion, including all costs incidental thereto. 3. Adjourn these proceedings to the Registrar's list at 9am Monday, 31 August 2015. 4. Liberty to approach the Registrar in chambers before 28 August 2015 to file final terms of settlement and vacate the listing in order 3 above.

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