The Nature of the Dispute in the Court Below
31 By 15 February 2007 a dispute had arisen between the Appellant and the Third Respondent concerning what they had achieved on 8 December 2006. The judge described that dispute (at [21]) as being:
"i. [The Appellant] contends that:
a) the parties['] common intention was that sub paragraph (a) of the undertaking was to be mandatory: that is to say that the parties agreed that in the event that any of the 9 units in the development were sold and a sale completed whereunder BBX credits in excess of BBX $100,000 constituted part of the purchase price, then [the Third Respondent] was bound to take the action provided for in sub paragraph (a);
b) it was only where the credits available for assignment were in an amount less than BBX $100,000 that sub paragraph (b) would be activated.
ii. [The Third Respondent] contends that it at all times had a right to elect as between:
a) on the one hand to engage sub paragraph (a) in which event that election would be binding ( meaning that once [the Third Respondent] had paid BBX dollars across to [the Appellant] it could not somehow claim them back as only having been paid on an interlocutory basis ) (cf transcript 222.28)
b) on the other hand to engage sub paragraph (b) and to do so regardless of the fact that BBX credits in excess of $100,000 were available as constituting part of the purchase price on any particular units (in which event the agreement would only constitute an interim holding measure pending agreement between the parties or further order in the proceedings)." (Original italics)
32 The practical consequence of the different positions can be illustrated by reference to the contracts for sale of five units that were envisaged as at 8 December 2006. Under them, a total of $862,500 was to be paid in BBX dollar credits. If the Appellant's contention were right, it would be entitled to receive all of those BBX dollar credits as the price of giving up its caveat and its claim to be paid $418,526.54 in ordinary Australian currency in priority to the Third Respondent. Further, if any of the remaining four units were sold for a price that included BBX credits in excess of BBX $100,000, the Appellant would be entitled to receive all of those BBX dollar credits as well. The Appellant would then be taking the risk that it might not be able to use the BBX dollar credits in a way that extracted from them their full face value.
33 By contrast, if the Third Respondent's contention was right, it would always have, in relation to each unit sold, the right to obtain the release of the caveat upon setting aside $60,000 to abide resolution of the dispute about whether the Appellant had a security interest in the units that had priority over the mortgage of the Third Respondent. If the Third Respondent chose to exercise that option in relation to all nine units, the result would be that a fund of $540,000 was set aside, to provide a means of payment of the Appellant's claim for $418,526.54 (presumably, plus interest and costs), if the Appellant succeeded in having the Court uphold that claim.
34 By the time the matter came to trial, the issues had been defined by pleadings. The relief claimed in the Appellant's Amended Statement of Claim included:
"7. A declaration that by agreement dated 8 December 2006, between the [Appellant] and the [Third Respondent], the latter agreed that in consideration for the [Appellant], at settlement of any such sale handing over Withdrawal of Caveats in relation to the unit being sold, the [Third Respondent] would, where the number of BBX dollars credits (net of commission) reserved at settlement of any unit sold was not less than BBX $100,000, cause the [Developers] to assign and/or transfer to the [Appellant] all BBX dollar credits (net of commission) reserved at settlement of each unit sold.
8. In the alternative to the previous paragraph, an order that the agreement dated 8 December 2006 between the [Appellant] and the [Third Respondent] should be rectified to provide that in consideration for the [Appellant], at settlement of any such sale handing over Withdrawal of Caveats in relation to the unit being sold, the [Third Respondent] would, where the number of BBX dollar credits (net of commission) reserved at settlement of any unit sold was not less than BBX $100,000, cause the [Developers] to assign and/or transfer to the [Appellant] all BBX dollar credits (net of commission) reserved at settlement of each unit sold.
9. A declaration that the [Third Respondent] is able to cause the [Developers] to assign and/or transfer to the [Appellant] all BBX dollar credits (net of commission) reserved at settlement of each unit sold to the [Appellant].
10. A declaration that the number of BBX dollar credits (net of commission) reserved at settlement of each of the units sold up to 28 May 2007 (ie units 1, 2, 3, 4 and 9) was not less than BBX $100,000.
11. A declaration that the [Appellant], at the settlement of each of the units sold up to 28 May 2007 (ie units 1, 2, 3, 4 and 9,) handed over the Withdrawal of Caveats required to be handed over by the said agreement dated 8 December 2006.
12. A declaration that the [Appellant] is ready, willing and able to complete the said agreement dated 8 December 2006.
13. A declaration that the [Appellant] is entitled to have its agreement dated 8 December 2006 with the [Third Respondent] specifically performed.
14. An order that the [Third Respondent] specifically perform the agreement dated 8 December 2006 by causing the [Developers] to assign and/or transfer to the [Appellant] all BBX dollar credits (net of commission) reserved at settlement of each unit sold."
35 After referring to the discussions between the legal representatives of the respective parties on 8 December 2006, the Amended Statement of Claim continued:
"55. Following these discussions, by agreement dated 8 December 2006, the [Appellant] and the [Third Respondent] agreed that in consideration for the [Appellant], (at settlement of the sale of a townhouse erected on the Property,) handing over Withdrawals of Caveats in relation to the townhouse being sold, the [Third Respondent] would:
(a) Cause the [Developers] to assign and/or transfer to the [Appellant] all BBX dollar credits (net of commission) reserved at settlement of each unit sold, provided that these credits were at least BBX $100,000; or otherwise
(b) Set aside the sum of $60,000.00 from the proceeds received on the discharge of its first mortgage or the proceeds received from any mortgagee sale of each unit sold into a fund to be held until agreement between the parties or until further order. (" the 8 December 2006 agreement ")
Particulars
The 8 December 2006 agreement is partly oral and partly in writing. The written part is constituted by the terms of the undertakings of the parties which were noted by the Court on 8 December 2006. The Plaintiff seeks leave to refer to the Court orders made on 8 December 2006 in these proceedings as if [sic] is fully set out herein.
The oral part consists of the various conversations that took place on 8 December 2006 and which required as a term of the agreement the provision of the Undertaking by the [Third Respondent] in paragraph 1(a). The Undertaking contained in paragraph 1(b) was only included to cover the scenario where the BBX dollar credits available from the sale of a unit were less than BBX $100,000.00 for that unit."
36 The Amended Statement of Claim then pleaded the manner in which, in the alternative, the Appellant sought that "the agreement actually reached on 8 December 2006 … should be rectified", the particulars of which were:
"(a) The [Appellant's] agreement contained in paragraph 2 of the Court Orders dated 8 December 2006 was in consideration of the Undertaking contained in paragraph 1(a) and (b) of the Orders.
(b) The [Appellant's] agreement as contained in paragraph 2 of the Orders was partly oral and partly in writing.
(c) The written part is constituted by the terms of the undertakings of the parties which were noted by the Court on 8 December 2006.
(d) The oral part consists of the various conversations that took place on 8 December 2006 and which required as a term of the agreement the provision of the Undertaking by your client in paragraph 1(a).
(e) The [Appellant] contends that the Undertaking contained in paragraph 1(b) was only provided in the event that the BBX dollar credits reserved at settlement of each Unit sold, were less than BBX $100,000.00."
37 The Amended Statement of Claim went on to plead that the Appellant, in part performance of its obligations, had handed over withdrawals of caveats at the sale of each of the five townhouses, but that the Third Respondent had, in breach of the agreement, "repeatedly refused to cause the [Developers] to assign and/or transfer to the [Appellant] all BBX dollar credits (net of commission) reserved at settlement of each townhouse sold." It pleaded the Appellant was ready willing and able to perform all its obligations under the agreement of 8 December 2006, and that it was entitled to have that agreement specifically performed.
38 (The pleading of part performance in the Amended Statement of Claim was premature, as part performance is a matter for the plaintiff in a specific performance suit to raise in reply, when and if the defence pleads that the agreement is unenforceable for lack of writing: Azize, El Khoury and Finnane, Pleading Precedents, 6th ed (2009) Lawbook Co at 13; Jenkins, Bullen & Leake's Precedents of Pleadings, 10th ed (1950) Stevens & Sons at 595n (a passage discarded in the methodical deletion in later editions of swathes of valuable collections of substantive law). Part performance is a matter to plead in reply because acts of part performance are circumstances that make it unconscientious for a defendant to rely on the statutory defence of lack of writing: Steadman v Steadman [1976] AC 536 at 558F-H per Lord Simon of Glaisdale, at 566E-F per Lord Salmon. Thus, the occasion to allege that there have been acts of part performance only arises once a defendant has pleaded lack of writing as a defence (see, eg, Broughton v Snook [1938] Ch 505 at 511-3 & esp 513 per Farwell J; May v Gibson (1970) 71 SR (NSW) 79 at 86B-C, 87A-D per Hope J (as his Honour then was); Steadman v Steadman at 544B-C per Lord Morris of Borth-y-Gest, at 565F-6B per Lord Simon of Glaisdale; In re Gonin [1979] Ch 16 at 30F per Walton J). As things eventuated, the defence did not raise any allegation of unenforceability of any agreement through lack of writing. However, this peculiarity of the pleadings does not affect the outcome of the appeal.)