Johnston v Jewry & Anor

SUPREME COURT OF QUEENSLAND

CITATION: Johnston v Jewry & Anor [2007] QCA 188

PARTIES: PAUL ANDREW JOHNSTON (plaintiff/appellant) v BEVERLEY JUNE JEWRY (defendant/first respondent) Jepadcab Pty Ltd ABN 41 174 748 793 trading as Beachside North Shore Realty (third party/second respondent)

FILE NO/S: Appeal No 11352 of 2006 / SC No 8341 of 2004

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane

DELIVERED ON: 8 June 2007

DELIVERED AT: Brisbane

HEARING DATE: 28 May 2007

JUDGES: Jerrard JA, White and Atkinson JJ / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER: Dismiss the appeal Appellant pay the first and second respondents’ costs of and incidental to the appeal to be assessed

CATCHWORDS: CONVEYANCING – RELATIONSHIP OF VENDOR AND PURCHASER – STATUTORY PROTECTION OF PURCHASERS – OTHER STATES – where respondent agreed to sell to the appellant residential property – where Property Agents and Motor Dealers Act 2000 (Qld) required the respondent to attach a Form 30c "warning statement" to the contract "as its first or top sheet" – where failure to do this gave the appellant the right to terminate the contract by notice of prior settlement – where the appellant purported to exercise this right – where the respondent rejected termination – where the order of documents was the Form 27b agent's disclosure statement, then the Form 30c warning statement, and then the contract – where the appellant signed the documents in no particular order but signed the contract before signing the warning statement – whether the warning statement was attached to the contract as its first or top sheet – whether the warning statement was required to be attached when the prospective buyer receives the draft contract, or when the buyer signs the contract, or by the time the parties became bound – whether the appellant was entitled to terminate the contract and receive a refund of the deposit monies / STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – CONSIDERATION OF EXTRINSIC MATTERS – LEGISLATIVE HISTORY OF ACT – where Property Agents and Motor Dealers Act 2000 (Qld) was subsequently amended –where the subsequent amendments clarified the sections the subject of the ambiguity – whether the amendments can be used to ascertain the correct original intention of Parliament / Acts Interpretation Act 1954 (Qld), s 33(10), s 33(11) / Liquor and Other Acts Amendment Act 2005 (Qld) / Property Agents and Motor Dealers Act 2000 (Qld), s 138, s 363, s 364, s 365, s 365(1), s 365(3), s 366(1), s 366(2), s 366(3), s 366(4), s 367(2), s 367(4), s 368(1), s 598 / Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403, applied / The Deputy Federal Commissioner of Taxes (South Australia) v Elder's Trustee and Executor Company Ltd (1937) 57 CLR 610, applied / MNM Developments Pty Ltd v Gerrard [2005] QCA 230; [2005] 2 Qd R 515, followed / Ormond Investments Co v Betts (1928) AC 143, applied / Port of London Authority v Canvey Island Commissioners [1932] 1 Ch 446, applied

COUNSEL: A J H Morris QC for the appellant / P Mylne for the first respondent / J Sweeney for the second respondent

SOLICITORS: Rostron Carlyle for the appellant / Ferguson Conor Lawyers for the first respondent / Carter Newell Solicitors for the second respondent

JERRARD JA: I have read the judgment of White J and agree with the reasons and orders proposed therein.

WHITE J: On 16 September 2003 the appellant signed a standard form REIQ/Queensland Law Society Contract for Houses and Land 5th edition offering to buy the first respondent’s residential property at Mudjimba for a purchase price of $1.3 million.

The seller accepted that offer by executing the contract document and having the second respondent real estate agent return the executed document together with other documents to the appellant’s solicitors under cover of a letter dated 17 September 2003. The deposit of $65,000 was due on 23 September 2003 and was paid. Settlement date was to be 30 June 2004.

Correspondence passed between the parties’ solicitors during June 2004 raising various concerns about the property, but by letter dated 28 June 2004, the appellant’s solicitors wrote to the first respondent’s solicitors terminating the contract on behalf of the appellant because

“[w]e note that contrary to the acknowledgment signed by our client, the contract that we have in our possession does not have the PAMD form 30c attached as its first sheet as required by section 366 of the Property Agents and Motor Dealers Act 2000 (Qld). This requirement cannot be waived. The form 27b is in fact attached as the front sheet of our contract. The contract is still stapled and in the condition as it was when provided by the agent to our client for execution.”

The first respondent resisted the appellant’s entitlement to terminate.

The appellant instituted proceedings by originating application on 24 September 2004 seeking a declaration that the contract was validly terminated on a number of grounds, including that the contract did not have attached as its first or top sheet a warning statement as required by s 366(1) of the Property Agents and Motor Dealers Act 2000 (“the Act”) and seeking the return of the $65,000 deposit.

The affidavits raised disputed issues of fact and the matter was ordered to proceed by claim and statement of claim and thereafter pursuant to the Uniform Civil Procedure Rules pertaining to actions.

By the appellant’s amended statement of claim only the failure to attach the warning statement to the contract as its top or first sheet was pleaded to support the right to terminate the contract.

In his evidence, the appellant maintained that when he signed the Form 30c warning statement and the buyer’s acknowledgment that he had read the warning statement and signed it before signing the contract, that was not the case. He said he had “flipped” through the documents, being more concerned about, to him, more substantial matters and that the first document was a Form 27b agent’s disclosure notice required pursuant to s 138 of the Act. The next document was the Form 30c warning notice followed by the contract document. These documents, he said, were loose documents and he signed and initialled the pages in no particular order but did sign the contract before signing the Form 30c. An employee of the second respondent gave evidence that the Form 30c was signed by the appellant prior to executing the contract proper and that it was the first document in the bundle and was clipped (not stapled) to the contract.

The learned trial judge rejected the appellant’s evidence as to the order of the documents when he signed. It is unnecessary to set out his Honour’s analysis of the evidence on that matter since Mr AJH Morris QC, who appeared for the appellant, did not challenge that finding.

The second respondent’s administration officer, after receiving the documents executed by the first respondent, sent under cover of a letter dated 17 September 2003 to the appellant’s and first respondent’s solicitors the “original contract for sale … duly completed by all the parties”. The documents in the bundle to the appellant’s solicitor were stapled together. The expert evidence about stapling demonstrated that very likely the top document in that bundle was the Form 27b, the selling agent’s disclosure to buyer, then the Form 30c warning statement followed by the contract.

The appellant contended below and in written submissions on appeal that there is only one time when the Act mandates that the Form 30c warning statement must be attached to the contract as its first or top sheet and that is when the contract is returned to the buyer or the buyer’s agent having been executed by the seller. This, it is said, follows as a matter of strict construction of the legislation and to give effect to the purpose of the legislation to protect consumers from undesirable marketing pressure. In oral argument, Mr Morris (who did not appear below or prepare the appeal outline) submitted that while s 366(4) provided, in terms, that the warning statement must be signed by the buyer before the contract is signed by the buyer, nothing in the Act requires it to be attached to the front of the contract before that occurs. Mr Morris accepted that the form does make that stipulation. It is the case that the words on the form cannot inform the construction of the provisions in the Act.

The respondents argue that s 366(1) must refer to “contract documents” or the “proposed contract” and not to the concluded contract because to do so would defeat the purpose of the Act to protect consumers. This is because on many occasions the contract will be sent to the buyer’s solicitor after execution by the seller and not be seen again by the buyer during the five day cooling‑off period which is afforded a buyer of residential property under the Act if it is not bought at auction.

The learned judge below appears to have accepted the respondents’ argument because he makes no reference to the appellant’s submission, also made below, that the Form 30c must be attached as the first or top document to the contract when it is returned to the buyer or the buyer’s agent.

The relevant provisions of the Act which govern this transaction are to be found in reprint 2A and contained in chapter 11 which concerns residential property sales. Important amendments to the Act were made in November 2005 to which reference will be made. By s 363 the purposes of the chapter are set out, namely,

“(a)to give persons who enter into relevant contracts a cooling‑off period; and

(b)to require all relevant contracts for the sale of residential property in Queensland to include consumer protection information, including a statement that the contract is subject to a cooling‑off period; and

(c)to enhance consumer protection for buyers of residential property by ensuring, as far as practicable, the independence of lawyers acting for buyers.”

The provisions in chapter 11 were inserted to overcome unacceptable marketing practices involving the targeting of consumers to sell investment residential property, Explanatory Notes to the Bill, No. 62 of 2000, p.1950.

The expression “cooling‑off period” is defined in s 364 as a period of five business days starting on the day the buyer under the contract is bound by the contract ending at 5 pm on the fifth business day. The expression “relevant contract” means

“ … a contract for the sale of residential property in Queensland, other than a contract formed on a sale by auction.”

By s 365(1) such a contract becomes binding on the buyer and seller

“ … when the buyer or the buyer’s agent receives a copy of the contract signed by the buyer and the seller.”

Part 2 concerns warning statements and provides in s 366

“366 Warning statement to be attached to relevant contract

(1)A relevant contract must have attached, as its first or top sheet, a statement in the approved form (“warning statement”) containing the information mentioned in subsection (3).

(2)The seller of the property or a person acting for the seller who prepares a relevant contract commits an offence if the seller or person prepares a contract that does not comply with subsection (1).

Maximum penalty – 200 penalty units.

(3)The warning statement for a relevant contract must state the following information -

(a)the contract is subject to a cooling‑off period;

when the cooling‑off period starts and ends;

a recommendation that the buyer seek independent legal advice about the contract before the cooling‑off period ends;

what will happen if the buyer terminates the contract before the cooling‑off period ends;

the amount or the percentage of the purchase price that will not be refunded from the deposit if the contract is terminated before the cooling‑off period ends;

a recommendation that the buyer seek an independent valuation of the property before the cooling‑off period ends;

if the seller under the contract is a property developer, that a person who suffers financial loss because of, or arising out of, the person’s dealings with a property developer or the property developer’s employees can not make a claim against the claim fund.

A statement purporting to be a warning statement is of no effect unless -

(a)before the contract is signed by the buyer, the statement is signed and dated by the buyer; and

(b)the words on the statement are presented in substantially the same way as the words are presented on the approved form.”

If a warning statement is not attached or is of no effect under s 366(4) “the buyer under the contract may terminate the contract at any time before the contract settles” by giving a signed and dated notice of termination to the seller or the seller’s agent, s 367(2).

If the contract is terminated in this way then the deposit must be refunded to the buyer, s 367(4).

A buyer who has not waived the cooling‑off period for the contract may terminate the contract at any time before the cooling‑off period ends by giving a signed and dated notice to the seller or the seller’s agent indicating that the buyer terminates the contract, s 368(1).

The forms for use under the Act may, relevantly, by s 598, be approved by the chief executive, who, by virtue of s 33(10) and (11) of the Acts Interpretation Act 1954 is the chief executive of the public sector unit administering the Act - the Department of Tourism, Fair Trading and Wine Industry.

The appellant’s argument is that “contract”, where it appears in s 366(1) must be construed to mean a concluded agreement – the usual meaning of contract, see Pollock, Principles of Contract 13th edition, p.1; Chitty, On Contracts (2004) 29th edition, p.3. When the concluded agreement is returned to the buyer or the buyer’s agent, the point at which, according to s 365(1), the parties are bound by the contract, it must have attached as its top or first sheet the Form 30c warning statement. This meaning is submitted to be supported by the purpose of the legislation of protecting consumers that they should be reminded of the five day cooling‑off period which commences when the buyer receives the fully executed agreement.

Mr Morris accepts that that construction of s 366(1) means that “contract” has within the one provision two meanings, not an attractive outcome, unless, of course, the legislature has expressly provided for it. This is because when s 366(4) refers to “contract” as in “before the contract is signed”, it is undoubtedly referring to the contractual documents or proposed contract, rather than a contract as conventionally understood because at that stage there is no concluded agreement only an offer to buy. The definition of “relevant contract” in s 364 gives no assistance, merely excluding contracts formed on a sale by auction from other contracts for the sale of residential property.

A perusal of, for example, ss 365 and 366 of the Act shows expressions used by the draftsman without any apparent regard for consistency. Section 365(3) permits the buyer to “withdraw the offer to purchase made in the contract form”. This is a conventional expression of contract law. But s 366(2) refers to “contract” where the intention must clearly be to a “proposed contract” or “contract document”. Yet in s 366(3) the reference to “contract” to which the cooling‑off period relates is, by virtue of s 365, a reference to a completed contract. Again, the reference to “contract” in s 366(4)(a) which requires the warning statement to be signed and dated before the “contract” is signed must be a reference to an offer to buy.

All parties rely on observations made by this court in MNM Developments Pty Ltd v Gerrard [2005] 2 Qd R 515; [2005] QCA 230. The central issue for decision was whether a seller could comply with the obligation imposed by s 366(1) to have attached to a relevant contract a warning statement in the approved form by making a continuous facsimile transmission of the warning statement and then the contract. The appeal was from a decision to dismiss a buyer’s application for summary judgment for a declaration that it had validly terminated a contract under s 367(2). It had been assumed below that the time for the warning statement to be attached to the contract as the first document was at the “offer” stage and the issue was whether it had been “attached”. The learned District Court Judge had concluded that since the order of the documents faxed to the buyer was in conformity with the requirements of the section the warning statement was sufficiently attached.

The court drew the parties’ attention to the tension in the provisions of chapter 11 as a consequence of the apparently inconsistent meanings to be attributed to the expression “contract” and identified the date of the concluded contract as a possible time when the warning statement was required to be attached. There was no evidence about this so the court was unable to reach a final decision, but, at the request of the parties, dealt with the appeal issue, namely, whether the warning statement was “attached” when sent by facsimile transmission.

Their Honours, however, made observations about when the warning statement was required to be attached. The Chief Justice suggested, without analysis, that s 366(1) (and s 367(2)) referred to a concluded contract while “other references in those provisions to a ‘contract’ must be read as referring to a draft contract (eg s 366(2), s 366(4)(a))”, at 517 [6] and 518 [9].

Justice Williams took a different view. He observed that the provisions of the Act “are badly drafted” – criticism with which none would quarrel – but said at 521 [27], [29]

“… the reference in s 366(1) should not be to a ‘contract’ but to documents submitted to an intending purchaser.

…

What the legislature to my mind clearly intended to say, but did not, was that the documents presented to a potential purchaser for execution, and which would result in a relevant contract coming into existence, must have attached as the first or top sheet a warning statement. That would have the desired consequence of bringing to the potential purchaser’s attention prior to execution of the contract the contents of the warning statement. The sequence would then be, as provided by s 366(4), that the warning statement would be executed prior to execution of the contractual documents; thus prior to the relevant contract coming into existence the potential purchaser would have been duly warned and would have duly signed the warning statement.”

The respondents to this appeal embrace those comments.

Justice Philip McMurdo highlighted some of the inconsistent ways in which ss 366 and 367 could be construed and the factual consequences. He appears to agree with Williams JA that the reference to “contract” in s 366(1) must be “to a document which is intended to evidence and define the contractual relationship” at 524 [52]. And, his Honour added, by virtue of s 365(1) the relationship only commences when the buyer or buyer’s agent receives a copy of the contract signed by the seller. His Honour suggested that the legislation does not answer the question at what point in the dealings must the warning statement be attached to the contract document. He further suggests that s 366(2) – that the seller of property or an agent of the seller who prepares a relevant contract commits an offence if it does not comply with ss (1) – being penal refers only to the preparation of a concluded contract. His Honour then canvasses other possibilities for which he opines there is no clear implication of meaning. “Plainly” his Honour says at 524 [54],

“it [the warning statement] must be attached by the time there is a concluded agreement for, on any view, the document is by that time ‘a relevant contract’”.

The appellant seeks to employ this observation.

The many ambiguities and difficulties in the Act identified in Gerrard and by the real estate industry were addressed in wide‑ranging amendments introduced in November 2005 by the Liquor and Other Acts Amendment Act No. 61 of 2005 including the issue for decision on this appeal, see Explanatory Notes to the Bill at pp. 1636 and following. Section 366(1) now includes the words “proposed” before “relevant contract” and s 365 has been recast to provide that the parties to a relevant contract are bound when the buyer or the buyer’s agent receives the warning statement and the contract from the seller or the seller’s agent with the warning statement identified as the first document in a manner dependent upon whether the reception is by facsimile transmission, electronic means or hard copy (my italics).

I make reference to these amendments to see if they may throw some light on the provisions under examination. Dixon, Evatt and McTiernan JJ in The Deputy Federal Commissioner of Taxes (South Australia) v Elder’s Trustee and Executor Company Ltd (1936) 57 CLR 610, confronted with ambiguity as to the intended temporal operation of the Land Tax Assessment Act 1914 (Cth), quoted with approval from high authority at 625-6

“ … ‘Where the interpretation of a statute is obscure or ambiguous, or readily capable of more than one interpretation, light may be thrown on the true view to be taken of it by the aim and provisions of a subsequent statute’ (per Lord Atkinson (1)) [Ormond Investment Co v Betts [1928] AC 143 at 164].

In Cape Brandy Syndicate v Inland Revenue Commissioners (2) [[1921] 2 KB 403], Lord Sterndale said: ‘I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier’. In reference to this statement, Lord Buckmaster said in Ormond Investment Co v Betts (3): ‘That is, in my opinion, an accurate expression of the law, if by ‘any ambiguity’ is meant a phrase fairly and equally open to divers meanings’. But it is not permissible to construe an unambiguous phrase in an earlier Act by an erroneous assumption of its effect contained in a later Act which did not purport to alter or amend the earlier Act (per Lawrence LJ, Port of London Authority v Canvey Island Commissioners (4) [[1932] 1 Ch 446].”

It is clear from the observations made in Gerrard that the provisions of the Act with which this appeal is concerned are readily capable of more than one interpretation. There is no clear answer to be found in the purposes of chapter 11 because consumer protection can be effected by both constructions. Whatever those provisions said about consumer protection, the legislature in the 2005 amendments has made clear that the consumer is to be protected prior to signing the offer to buy and at the commencement of the cooling‑off period. However, whether the amendments were dictated by a legislative perception of lack of clarity in the original provisions or addressing omission is not spelt out.

I have concluded that a construction which favours a buyer being exposed to the warning statement prior to signing the contract advances the purpose of consumer protection more effectively than one which requires the warning statement to be drawn to the buyer’s attention after the buyer is bound by the contract, even though the cooling‑off period only commences from the time the contract is returned to the buyer or the buyer’s agent under s 365(1). This is because it is virtually certain that the buyer will be present to sign the contract (unless the buyer employs an agent) on the first occasion but in many, if not most cases, will not be when the executed contract is received from the seller usually by the buyer’s solicitor. In other words, I prefer the construction of the Act which was advanced by Williams JA in Gerrard at the paragraphs which have already been quoted. It follows that such a construction, namely that “contract” in s 366(1) must be read as “proposed contract” would not require the warning statement to be the first or top document when the contract is received from the seller as contended for by the appellant.

Accordingly, I would dismiss the appeal and order that the appellant pay the first and second respondents’ costs of and incidental to the appeal to be assessed.

ATKINSON J: I agree with the orders proposed by White J and with her Honour’s reasons.