Dunn v Quayle

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1387/04 GARRY JON DUNN v MAX EDWARD QUAYLE & ANOR JUDGMENT 1 In September 2002, the plaintiff, Garry Jon Dunn, entered into a contract with the defendants, Max Edward Quayle and Anne Sandie Quayle, to purchase their property. Special provisions made the contract conditional upon local Council approval of a subdivision by a specified time. 2 The case ultimately presented to the court was a simple one. Mr Dunn submitted that an agreement was reached between the parties that neither the purchaser nor the vendors would rely on the special provisions and the contract would be settled whether or not Council approval of the subdivision was forthcoming. The Quayles submitted that no such agreement was reached and that they had validly rescinded the contract for failure of Council approval.

The original contract 3 The special provisions were as follows: "2 Settlement of this Contract is conditional upon the purchaser receiving development approval from Port Stephens Shire Council for a 23-lot subdivision of the land as set out in the draft plan which is attachment "B" to this Contract. 3 The purchaser must receive this development approval no later than 31st March 2003. If the purchaser has not received development approval by that date either party is entitled to rescind this Contract and the provisions of clause 19 shall prevail. 4 In addition to the consideration paid by the purchaser to the vendor pursuant to this Contract, the purchaser shall also cause to be transferred to the vendor the unencumbered title in fee simple to proposed lots 1 and 23 of the approved subdivision." 4 Clause 19 provided that if the contract expressly gave a party a right to rescind, the party could exercise the right only by serving a notice before completion. 5 It was common ground that the parties had agreed that the time for compliance with the special provisions had been extended to 15 December 2003. 6 A subdivisional plan signed by the Quayles for a 24-lot subdivision had been lodged with Port Stephens Shire Council. Sewerage works required by the Council were likely to cost between $800,000 and $1,000,000. Mr Dunn obtained Mr Quayle's agreement to lodge an application for a 29-lot subdivision to cover the additional costs.

The variation 7 In September 2003, Mr Dunn's solicitors wrote to the solicitors for the Quayles indicating that the 29-lot subdivision would not be considered by Council until November 2003 when Mr Dunn was reasonably confident of obtaining approval for something between 24 and 29 lots. The letter went on to state: "Therefore in consideration of the above our client elected and accordingly instructed us to settle the matter on or before 13 December 2003. We shall submit Transfer and settlement figures to your (sic) accordingly in due course." 8 The solicitors for the Quayles responded that their clients had no objection to Mr Dunn proceeding to settlement in accordance with the terms of the contract, but they were concerned with the timing of the registration of proposed lots 1 and 23 in their names. 9 In October 2003, Mr Dunn said he spoke with Mr Quayle and said he would definitely buy the property with or without a development application. He sought Mr Quayle's agreement to the lodgement of the 29-lot subdivision application saying that if that was not approved, he would re-submit the 24-lot application which the mayor and the town planners had confirmed would be approved by Council. He said Mr Quayle thanked him saying: "I really appreciate your calling in and I am relieved to hear that you're going ahead". 10 Mr Quayle agreed that Mr Dunn had said he would go ahead whether or not the Council agreed to the subdivision and that he had said he was relieved to hear he was going ahead. 11 In November 2003, Mr Dunn spoke with Mrs Quayle. She said she would not have spent the money in going overseas or in ordering a new car if she had any idea there might be a problem with the sale. Mr Dunn said that he told her not to worry. He would settle with or without the development application. 12 Mrs Quayle only had a vague recollection of what was said and she did not remember Mr Dunn saying on that occasion he would go ahead with or without Council approval. She remembered that he said he would release the deposit to enable her to pay for the new car in mid-December 2003 even if final settlement did not take place until after Christmas. 13 On 9 December 2003, a sub-committee of the Council comprising nine of the 12 councillors passed a resolution by six votes to three to recommend to Council that it approve the 29-lot subdivision subject to certain conditions concerning road dedication. 14 As I have said, the time for compliance with the special provisions had been extended until 15 December 2003. The parties were now confident that the approval would be forthcoming at the Council meeting to take place on 16 December 2003 and, by their conduct, the time was further extended by a day. 15 Mr Dunn said a further conversation took place after the meeting of 9 December 2003. He said Mrs Quayle asked whether he could release part of the deposit to pay for the car and he responded that he had already authorised the release of the full deposit. That conversation was not put to Mrs Quayle in cross examination. 16 On 12 December 2003, the solicitors for the Quayles wrote to Mr Dunn's solicitors in the following terms: "Thank you for your assistance in furthering this transaction. I confirm that the parties have negotiated the following understanding and arrangement: 1 On 16 December 2003, the deposit paid of $50,000.00 will be released unconditionally to the vendors. 2 If the revised plan of subdivision submitted by your client to Port Stephens Shire Council is approved by the council meeting on 16 December 2003, then the parties will proceed to completion of the transaction in accordance with the terms of the contract presently existing. 3 If your client's plan of subdivision, as submitted to the Council, is rejected by the Council on 16 December, then the parties agree to meet thereafter to negotiate further. To enable the deposit to be released to Mr and Mrs Quayle on 16 December, would you kindly arrange for your client to sign the enclosed authority and return to us as soon as possible so that we can arrange for Enrights Solicitors to release these funds." 17 On 16 December 2003, Mr Dunn's solicitors responded: "As discussed we attach herewith Duly Executed Authority. Furthermore our client confirms his positions (sic) with regards to this matter in that he is in a position to settle notwithstanding the result of tonight's Council Meeting." 18 The Council did not approve the subdivision. On 16 December 2003, negotiations took place between the parties for a new contract at an increased price without the transfer to the Quayles of one of the two lots originally proposed. The Quayles had received an offer at a higher price from a third party. Mr Dunn said he was prepared to negotiate, notwithstanding his view that he had a binding contract, to avoid litigation. The Quayles did not execute the new agreement and on 19 December 2003, notice of rescission of the contract was given.

Resolution 19 It was submitted on behalf of Mr Dunn that the conversations constituted an agreement on both sides that the special provisions would not be enforced. I reject that submission. Mr Dunn had indicated that he would not insist upon performance of the special provisions. There was nothing, however, in the Quayles' conduct that constituted an agreement by them not to insist upon compliance with the special provisions. 20 Accepting for this purpose the versions of the conversations to which Mr Dunn deposed, all Mr Quayle said was that he was relieved to hear that Mr Dunn was going ahead. That did not constitute his agreement that the Quayles would not insist on the performance of the special provisions. 21 The agreement to release the deposit was unusual. But that did not evidence Mrs Quayle's agreement to waive performance of the special provisions. Nor did her agreement that settlement could wait until after Christmas 2003. 22 The matter was put beyond doubt, in my view, by the terms of the solicitor's letter of 12 December 2003. Far from the Quayles waiving compliance with the special provisions, they clearly intended to enforce them. Paragraph 3 of the letter made it plain that if the plan of subdivision was rejected by the Council, the parties agreed to negotiate further. There was no challenge to any of this in the response by Mr Dunn's solicitors. 23 To establish waiver, it is necessary to show that the conduct relied upon demonstrates that the party in question has chosen to forego his or her rights and no other construction of the conduct is open. In Bedroff Pty Ltd v Rennie [2002] NSWSC 928 at [41] Young CJ in Eq said: "However, if waiver is the true subject of the analysis, the enquiry must be as to whether the conduct of the vendor was unequivocal in the true sense of the word, that is, "The conduct must be capable of one construction only, namely that X has chosen to forego its rights": Wilken And Villiers Waiver, Variation and Estoppel (John Wiley & Sons, Chichester, 1998) para [40.08] at p 48." 24 In my judgment, Mr Dunn has failed to establish the agreement for variation of or waiver of the special provisions upon which his case relied. 25 I will dismiss the amended summons and make a declaration in terms of paragraph one of the cross claim. Mr Dunn must pay the Quayles' costs. I direct the parties to bring in the short minutes of orders reflecting these reasons.

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