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[2005] QCA 230
Court of Appeal (Qld)
2005-06-24
de Jersey CJ, Williams JA and McMurdo JSeparate, reasons for judgment of each member of the Court, each concurring as to the, orders made
Original judgment source is linked above.
Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: MNM Developments P/L v Gerrard [2005] QCA 230
PARTIES: MNM DEVELOPMENTS PTY LTD ACN 103 948 509 (applicant/applicant) v WILLIAM ALAN GERRARD (respondent/respondent)
FILE NO/S: Appeal No 1323 of 2005 / DC No 404 of 2004
DIVISION: Court of Appeal
PROCEEDING: Application for Leave s 118 DCA (Civil)
ORIGINATING COURT: District Court at Southport
DELIVERED ON: 24 June 2005
DELIVERED AT: Brisbane
HEARING DATE: 14 June 2005
JUDGES: de Jersey CJ, Williams JA and McMurdo J / Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDERS: Leave to appeal grantedAppeal dismissedThe appellant pay the respondent’s costs of and incidental to the appeal to be assessed
CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE – ELECTION AND RESCISSION – STATUTE GIVING RIGHT TO AVOID CONTRACT – where respondent agreed to sell to appellant residential property – where Property Agents and Motor Dealers Act 2000 (Qld) required respondent to “attach” a “warning statement” to the contract “as its first or top sheet” – where failure to do this gave appellant right to terminate contract by notice prior to settlement – where appellant purported to exercise this right – where respondent rejected termination – where warning statement sent as part of continuous fax, comprising disclosure statement, warning statement, contract and directors’ guarantee – where appellant signed disclosure statement, warning statement and contract, in that order, and faxed, and separately sent original documents, back to respondent – where respondent then executed original contract – whether “attach” requires some physical joinder or incorporation – whether warning statement was attached to the contract as its first or top sheet – whether warning statement required to be attached when prospective buyer receives draft contract, when buyer signs contract or by time parties become bound – whether the appellant was entitled to a declaration that it had validly terminated the contract and a refund of deposit monies / District Court of Queensland Act 1967 (Qld), s 118(3) / Property Agents and Motor Dealers Act 2000 (Qld), s 138(1), s 363, s 365, s 366(1), s 366(2), s 366(4), s 367(2) / Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246, cited / Horinack v Suncorp Metway Insurance Ltd [2000] QCA 441; [2001] 2 Qd R 266, cited / M P Management (Aust) P/L v Churven & Anor [2002] QSC 320, SC No 1704 of 2002, 9 October 2002, approved / Sidbent P/L & Anor v Reinisch [2003] QSC 203, SC No 1304 of 2003, 15 July 2003, not followed
COUNSEL: H B Fraser QC, with P W Hackett, for the applicant / A J H Morris QC, with L Jurth, for the respondent
SOLICITORS: Schultz Toomey O'Brien Lawyers for the applicant / Short Punch & Greatorix for respondent
de JERSEY CJ: By a contract dated 10 June 2003, the respondent agreed to sell to the appellant, for the sum of $1.25 million, residential property at the Gold Coast. The Property Agents and Motor Dealers Act 2000 (Qld) applied to the transaction. It obliged the respondent to “attach” to the contract, “as its first or top sheet”, a “warning statement” advising the appellant of its rights (s 366(1)). In the event that did not occur, the appellant gained a right to terminate the contract by notice prior to settlement (s 367(2)). The contract was due for completion on 4 June 2004. On 24May that year, the appellant faxed the respondent’s solicitors advising that it terminated the contract under s 367(2). The respondent rejected that termination.
The appellant sought a declaration that it validly terminated the contract, and an order for repayment of the deposit monies of $62,500. On the basis there was no relevant dispute about the facts, a learned District Court Judge dismissed the application, because he concluded the warning statement had been attached to the contract as required by s 366(1).
Because that judgment was not a “final judgment” (Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246), it was necessary for the appellant, challenging the judgment, to seek leave to appeal (s 118(3) District Court of Queensland Act 1967 (Qld)). Because the construction of the statutory provision has not yet been settled at appellate level, and the determination of this case may have a significant impact on contracts for the sale of residential property, the court granted leave to appeal.
The critical provision, s 366, is in these terms:
“366Warning 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;
(b)when the cooling-off period starts and ends;
(c)a recommendation that the buyer seek independent legal advice about the contract before the cooling-off period ends;
(d)what will happen if the buyer terminates the contract before the cooling-off period ends;
(e)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;
(f)a recommendation that the buyer seek an independent valuation of the property before the cooling-off period ends;
(g)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.
**(4)**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.
Example for paragraph (b) –
If words on the approved form are presented in 14 point font, the words on the warning statement must also be presented in 14 point font.”
The purchaser’s right to terminate is established by s 367, as follows:
“367Buyer’s rights if warning statement not given
**(1)**This section applies to a contract to which a warning statement must be attached.
**(2)**If a warning statement is not attached to the contract or is of no effect under section 366(4), the buyer under the contract may terminate the contract at any time before the contract settles by giving signed, dated notice of termination to the seller or the seller’s agent.
**(3)**The notice of termination must state that the contract is terminated under this section.
**(4)**If the contract is terminated, the seller must, within 14 days after the termination, refund any deposit paid under the contract to the buyer.
Maximum penalty – 200 penalty units
**(5)**If the seller, acting under subsection (4), instructs a licensee acting for the seller to refund the deposit paid under the contract to the buyer, the licensee must immediately refund the deposit to the buyer.
Maximum penalty – 200 penalty units
**(6)**If the contract is terminated, the seller and the person acting for the seller who prepared the contract are liable to the buyer for the buyer’s reasonable legal and other expenses incurred by the buyer in relation to the contract after the buyer signed the contract.
**(7)**If more than 1 person is liable to reimburse the buyer, the liability of the persons is joint and several.
**(8)**An amount payable to the buyer under this section is recoverable as a debt.”
The respondent contended before the learned primary Judge that the attachment of the warning statement to the front of the contract arose in the following circumstances. On 26 May 2003, the respondent’s agent sent to the appellant a continuous – ie single extended sheet, fax, comprising, in this order, a cover sheet/letter; a form 27b (“Selling Agent’s Disclosure to Buyer” – s 138(1)); a form 30c (“Warning Statement”), the second page of which was headed “important information you should read before you sign this warning statement and the attached contract”; then the contract. The appellant’s director signed the disclosure statement, the warning statement and the contract, in that order, and faxed the executed documents back to the respondent’s agent. The appellant’s director separately sent the original documents back to the agent. The respondent then executed the original contract. There was apparent compliance with s 366(4): the issue agitated in the District Court was whether the warning statement was “attached” to the contract, “as its first or top sheet”. While s 366(1) and s 367(2) refer to a concluded contract, 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)).
The learned Judge set out, in his reasons for judgment, the following observations of Muir J in M P Management (Aust) Pty Ltd v Churven [2003] Q ConvR 54-581 at p 60,877:
“[20]The word ‘attached’, in its less restrictive sense, may mean ‘accompanying’ or ‘associated’ (Bosaid v Andrey [1963] VR 465 at 473) and, in that sense of the word, one thing may be ‘attached’ to another without physical joinder. (Elliott Common School District No. 48 v Country Board of School Trustees Tex Civ App, 76 SW 2d 786, 780.)
[21]In its more restrictive sense and, I rather think, every day sense, ‘attached’ connotes some form of joinder, fastening or affixation. There is nothing in the context of s 366 or s 367 which would tend to indicate that the word should be construed broadly, quite the contrary. The aim of the sections appears to be to give prominence to the warning statement by ensuring that not only is it inseparable from the contract proper but that it is the first document to be seen by a prospective purchaser when perusing the contract.
[22]Subsection (1), by requiring a contract to ‘have attached’ the warning statement ‘as its first or top sheet’, suggests that more than the mere placing of the warning statement on the contract or providing it in a folder together with the contract is required and that some form of physical joinder or incorporation is necessary.
[23]It may be that the requirements of s 366(1) could be complied with without the warning statement being stapled, pinned to or bound up with a contract. For example, if the warning statement was the first of a number of loose sheets placed together in a folder and numbered or otherwise identified as the first sheet of the bundle, it may be arguable that the warning statement was ‘attached’ to the other documents …”
The primary Judge then reasoned as follows:
“Where a contract for the sale of land involves facsimile transmission between the parties, the more restrictive sense of the word ‘attached’, as identified by Muir J, will obviously not be applicable. In these circumstances it is the order in which the documents are transmitted that is important rather than the means by which they are affixed …
In the present case, it should be remembered, the Warning Statement was placed immediately in front of the Contract in a continuous facsimile transmission. In my view, the Warning Statement was, therefore, ‘attached’ to the Contract as its first or top sheet, thus satisfying the requirement in s 366(1) of the Act.”
At the hearing of the appeal, we drew attention to the parties’ and the court’s focus below on the facsimile transmission in May, rather than the pleaded concluded contract of 10 June. The relevant statutory requirement relates to the concluded contract (s 366(1)), as does the provision according the right of termination (s 367(2)). While the evidence below did not address the physical configuration of that concluded contract, and that remains so, we were asked by both parties to express our conclusions as to the issue of statutory construction. There is utility in our doing so, even though – on my approach – the matter would have to be sent to trial. That is because while I believe the learned Judge erred in his construction of the statutory provisions, the relevant factual situation was not established clearly by the evidence, or addressed. For that reason, summary judgment could not have been, and could not now be, entered.
I turn now to the question of statutory construction.
Counsel for the appellant submitted “that the warning statement [must] be attached to the contract as the first or top sheet (by binding, stapling, pinning, clipping or other form of attachment), and not merely associated with it (such as by mere physical closeness, internal cross references or the like)”.
Counsel for the respondent submitted that the legislature could not have intended to exclude the exchange of contracts for the sale of residential property by electronic means, including facsimile transmission. Because physical attachment of a warning statement to a contract is impossible in that medium, something falling short of actual attachment must have been contemplated. Accordingly, it was submitted, it sufficed, for there to be attachment within the scope of s 366(1), that the warning statement formed part of a single continuous facsimile transmission, with the statement immediately preceding the contract.
Under its primary meaning, you “attach” one document to another by “fastening, affixing, joining or connecting” (Macquarie Dictionary) the two together. The related meaning offered in the Shorter Oxford English Dictionary is “to tack on; to fasten or join (to) by tacking, tying, sticking, etc”. As Muir J observed, this would require “some form of physical joinder or incorporation”.
The respondent supports a construction which will maintain the availability of facsimile transmissions to facilitate the making of agreements of this character, and refers to the specific provision for facsimile transmission in s 365:
“365When parties are bound under a relevant contract
**(1)**The buyer and the seller under a relevant contract are bound for all purposes by the contract when the buyer or the buyer’s agent receives a copy of the contract signed by the buyer and the seller.
(2) For subsection (1) and without limiting how the buyer or the buyer’s agent may receive a copy of the signed contract, the buyer or the buyer’s agent may receive the copy by fax.”
It is however significant that that section deals only with copies.
The context of the requirement set up by s 366 tells against a liberal interpretation of that requirement. Chapter 11 of the Act, in which s 366 occurs, contains a detailed set of technical requirements plainly directed to ensuring a form of consumer protection for purchasers of residential property. One of the objects of the Act, stated in its preamble, is “to protect consumers against particular undesirable practices”. That protection extends, in cases like these, to giving a purchaser a right to terminate even for quite technical contraventions, and whether or not the purchaser has suffered any material disadvantage. See, for example, s 366(4)(a), s 366(4)(b) (including the example) and s 367(2).
In Sidbent Pty Ltd v Reinisch [2003] QSC 203, White J suggested that because a failure to attach attracts criminal sanctions (s 366(2)), a broad interpretation of what amounts to attachment might be favoured. But if the natural construction of this remedial provision is clear, then that should be adopted. While a particular statutory construction may sometimes produce inconvenience, that does not justify departure from that construction if it is clear (cf. Horinack v Suncorp Metway Insurance Ltd [2001] 2 QdR 266, 267, 269).
My view is that on the factual basis adopted below, this warning statement was not attached to the contract, as its first or top sheet. That “factual basis” assumed the concluded contract was in the facsimile form discussed by the primary Judge, which may or may not prove to be correct. But accepting that assumption for the present, the pages of the warning statement appeared in the midst of a series of pages comprising a different form, the relevant statement, the contract and the directors’ guarantee. The legislature intended that a purchaser, picking up the contract, would necessarily have first to confront the warning statement. That is achieved by adopting here the ordinary concept of “attach”, which I am satisfied was plainly the legislature’s intent. One could not reasonably say this statement was attached to the contract, as its first or top page, where the only physical relationship between the documents, within the continuous fax, was that where the warning statement ended, the separate contract began.
While on this scenario it may be said that this warning statement was “attached” to this contract, being adjacent in that same continuous stream of paper, it was not attached as the first or top sheet of the contract. For that to occur, in order to satisfy the intention of the legislature as I comprehend it, the seller must present the two documents, one on top of the other, with the former physically confronting the reader as he or she sets about perusing the latter, being the contract. The rather fortuitous connection between the warning statement and contract, as presented here, could not fulfil that stipulation, a stipulation obviously directed to consumer protection, not the convenience of vendors of residential property.
It would be an exaggeration to suggest that construction would frustrate commercial dealings. In the first place, the convenience of commercial dealings is, implicitly, only subsidiary. Of primary importance is the protection of purchasers of residential property. Also, this approach would in no way impede negotiations by fax. But it would mean the act of contracting must be done by the exchange of original documents, a course probably reflected by s 365, and a course most contracting parties, even in this electronic age, would favour anyway, to ensure the security of their binding dealings.
Finally, had the parliament intended to sanction a situation like this, it would have done so by using language less prescriptive than, “as its first or top sheet”. It is those terms which to my mind compellingly exclude the respondent’s position. The legislature has considered an exacting obligation justified to secure the goal of consumer protection.
But in the end, because the relevant issue was not addressed, and not capable of being addressed because the relevant facts were not clearly established, the matter was not susceptible of summary determination, and that remains the position.
I would make the following orders:
grant leave to appeal;
dismiss the appeal;
order the appellant to pay the respondent’s costs of and incidental to the appeal to be assessed.
WILLIAMS JA: After the close of pleadings the appellant (plaintiff) sought summary judgment of its claim for a declaration that it had validly terminated a contract dated 10 June 2003 for the purchase of a residential property from the respondent. The application was dismissed and the appellant has appealed.
Both the application for summary judgment and the statement of claim refer to a written agreement dated 10 June 2003 ("the contract") between the respondent as seller and the appellant as purchaser for a purchase price of $1.25 million. That allegation was admitted in the defence and it was also not in dispute that the contract was for the sale of "residential property" within the meaning of that term as defined in the Property Agents and Motor Dealers Act 2000 (Qld) ("the Act"). It was further agreed that the deposit was paid on 11 June 2003, and all calculations of time appear clearly to be based on a contract dated 10 June 2003.
The contention of the appellant is that there was a failure to comply with s 366 of the Act (which is fully set out in the reasons for judgment of the Chief Justice) and that in consequence it was entitled to terminate the contract pursuant to s 367 of the Act (again set out in the reasons for judgment of the Chief Justice) and did so on 24 May 2004, being a date prior to settlement.
The provisions of the Act in question are badly drafted; the reference in s 366(1) should not be to a "contract" but to documents submitted to an intending purchaser. (The possible ways in which the section may be applied discussed by McMurdo J in his reasons highlight other deficiencies in the drafting.)
A contract required to be in writing, as is the case here because it is concerned with real property, comes into existence when the document is duly executed by each party thereto. Until such execution there is no contract.
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 obligation is on the party who prepares the contractual documents (and it is not unheard of for that to be the purchaser) to ensure that the documents submitted to the purchaser for execution comprise the necessary contractual documents to which is attached as the first or top sheet the approved warning statement. In the present case it seems clear that the documents were prepared by the respondent and in consequence there was an obligation on the respondent to present the documents to the appellant for execution in that form.
The critical question to be determined in deciding whether or not the appellant had its asserted right of termination is whether or not the documents as presented for execution by the appellant complied with that statutory requirement.
Unfortunately the facts of the case are far from clear.
Paragraph 6 of the statement of claim alleges that on or about 26 May 2003 the appellant was sent for signature and return documents (which it is now agreed) were in the form of a continuous fax. The agreed order in that continuous fax was:
Form 27(b) - selling agent’s disclosure to the buyer pursuant to s 138(1) of the Act;
Form 30c being the warning statement referred to in s 366 of the Act;
REIQ Contract for House and Land.
It appears to be agreed that the appellant executed the documents where necessary and returned them, in the same order, to the respondent by fax. Further, it appears to be agreed that some executed documents were returned to the respondent by some other means. It is not clear whether what was involved was returning the original facsimile executed by the appellant, or some other form of the documents.
Paragraph 3 of the statement of claim, as already noted, refers to "a written agreement dated 10 June 2003". Paragraph 7 of the statement of claim alleges that on or about 10 June 2003 the seller’s agent "sent the original contract referred to in paragraph 3 herein to the Plaintiff for execution". That is admitted in the defence. An affidavit of the respondent setting out the relevant chronology also alleges that his solicitors on 10 June 2003 sent out "contract to be signed" and that "original was returned with signed contract". The next step according to that affidavit was the solicitor sending the contract to its client, the respondent, "for signing".
Various affidavits filed on the hearing of the application for summary judgment exhibit a great deal of correspondence, but there is nothing which amounts to a covering letter with respect to sending out a further set of documents for execution by the appellant on 10 June 2003. Further, the material is silent as to how on that date the relevant documents were "sent". More importantly there is nothing to indicate the form in which those documents were sent, that is the order in which the documents appeared, and nothing to indicate what documents, if any, were bound together in some way.
The material from either side is so vague and uncertain that it is not clear whether a set of documents was executed on or about 26 May 2003 and another set on or about 10 June 2003; the material is clearly open to that conclusion. If there were two sets of documents executed by the parties then it is clear from the pleadings that the operative documents were those executed on or about 10 June 2003.
All that one can say with respect to documents sent out for execution by the appellant on 10 June is that it is alleged in the statement of claim and admitted in the defence that the documents were "in the following order" whatever that means; that order being:
Form 27(b) signed by the appellant on 26 May 2003;
Form 30c signed by the appellant on 26 May 2003; and
REIQ contract for house and land.
If that be accurate then what was sent out for execution as alleged in paragraph 7 must only have been the REIQ contract - the other documents already being signed on 26 May. That would appear to be the case as paragraph 7 goes on to allege that the appellant then "executed . . . the original contract of sale referred to in paragraph 3 herein" and sent back to the agent the documents in the following order: Form 27(b) signed by the appellant on 26 May 2003, Form 30c signed by the appellant on 26 May 2003 and REIQ contract for house and land signed by the appellant on or about 10 June 2003. All of that is admitted in the defence.
On the application for summary judgment, notwithstanding what was said in the pleadings, the concentration was on the documents sent out by continuous facsimile on 26 May. Given the state of the material there was a clear factual issue as to whether or not the signing of the documents sent by facsimile on 26 May was the operative act of the appellant in the sense that it was that execution which, after execution by the respondent, brought the contract into existence. If the relevant execution was of documents sent out on or about 10 June then the relevant enquiry for purposes of s 366 and s 367 of the Act would have been with respect to those documents.
It is clear in the circumstances that the first question to be determined is what set of documents constituted the relevant contract for purposes of s 366 and s 367. For all this court knows at this stage when the documents were sent out on 10 June to have the REIQ form of contract executed by the appellant the Form 30c could have been "attached" as the top sheet of that REIQ form.
Once the facts relating to the formation of the relevant contract are established it will probably be relatively easy to determine whether or not there has been a breach of the requirements of s 366 of the Act entitling the appellant to terminate the contract.
The learned judge at first instance was asked to determine the matter on the basis of documents executed on or about 26 May when ultimately that may not prove to be the relevant question.
For the reasons given by the Chief Justice I agree that if the relevant documentation is the continuous fax forwarded to the appellant on 26 May then s 366 of the Act was breached; given the nature of the continuous fax it cannot be said that the warning statement was attached to the contractual document as the first or top sheet thereof. To that extent the reasoning of the learned District Court judge at first instance must be rejected.
In my view s 365 of the Act is not an indication that the documents prepared for execution can be forwarded by fax. That section is dealing with the forwarding of a copy of the executed contract to the purchaser, a step required by the Act. It would be unusual to have the original contract documents forwarded by facsimile and there is no hardship in requiring the documents prepared for execution being submitted to the intending purchaser in a way which complies with the statutory requirements.
The consequence of dismissing the application for summary judgment is that the matter will have to proceed to trial. For the reasons given above that is obviously the only appropriate course open. Though the learned judge at first instance erred in his reasoning in arriving at the conclusion that the application for summary judgment should be dismissed, the appropriate order for this court to make is that the appeal be dismissed; as noted, that means the matter will go to trial.
Because the relevant facts were so unclear it ought to have been obvious to the appellant that an appeal was doomed to fail. The appellant should pay the respondent's costs of the appeal to be assessed.
The orders should therefore be:
Grant leave to appeal;
Appeal dismissed;
Order the appellant to pay the respondent's costs of and incidental to the appeal to be assessed.
McMURDO J: I agree that the appeal should be dismissed and with the other orders proposed by Williams JA.
As the judgments of the Chief Justice and Williams JA discuss, the factual basis upon which the case was argued before the learned primary judge did not correspond with the facts which are common ground on the pleadings. According to the pleaded facts, it is possible that the requirements of s 366 were satisfied by the attachment of a warning statement to the relevant contract document, if it was not attached by the transmission of facsimile copies as occurred on 26 May 2003. That possibility is indicated by the pleadings, but more facts than those which are pleaded would have to be found before the question of ultimate compliance with s 366(1) could be determined. At the hearing in this court, the parties were asked to agree, if possible, upon such further facts as would enable this court to determine the question. The parties cannot agree, and the facts must be found at a trial.
There are several potential questions as to the interpretation of s 366 and s 367 which could arise in this case. Some discussion of them is necessary in order to explain why the facts must be investigated at a trial.
Section 366(1) provides that a relevant contract must have attached, as its first or top sheet, a warning statement. A relevant contract means a contract for the sale of residential property in Queensland, other than a contract formed upon a sale by auction.1 In the context of s 366, the term relevant contract refers to a document which is intended to evidence and define the contractual relationship. That relationship commences, that is the parties are contractually bound, only when the buyer, or the buyer’s agent, receives a copy of the contract signed by the buyer and the seller: s 365(1). But at what point in the dealings must the warning statement be attached to the contract document?
The legislation does not expressly answer that question. Section 366(2) might indicate an answer, by providing that the seller 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 s 366(1). But at what point is that offence committed? Is an offence committed if no contract is formed? It is far from clear that it is intended that a seller, or his estate agent or solicitor, should be caught by the offence provision if the relevant document remains but a draft. Otherwise, for example, an agent might commit an offence simply by faxing the draft contract and warning statement (as occurred here), assuming for the moment that the documents are not thereby attached. The offence is committed by the preparation of a document but only a document meeting the description of “a relevant contract”, and at least on one view, a document is not of that description unless and until it does record a contractual relationship. If that is correct, s 366(2) does not strongly indicate that the warning statement must be attached before the buyer receives the draft contract.
Section 366(4) requires the warning statement to be signed by the buyer before the contract is signed by that party. But it does not provide that the warning statement is to be attached to the contract when either the warning statement, or in turn the contract, is signed by the buyer. Nor does s 367 stipulate the point by which the statement must be attached. Plainly it must be attached by the time there is a concluded agreement for, on any view, the document is by that time “a relevant contract”.
It would be logical to require the warning statement to be attached when the prospective buyer receives the (draft) contract. That might enhance the prospects of the buyer’s signing the warning statement before signing the contract. But there is no clear implication that the statement must be attached by that point in time. An alternative interpretation is that the statement must be attached by the time the buyer signs the contract. That interpretation would make the warning equally effective but it would allow for some greater convenience and expedition. Assuming for the moment that a statement is not attached to the contract by a buyer receiving copies by facsimile transmission, this alternative interpretation would permit the buyer’s copies, as printed from the fax machine, to be signed by the buyer.
A further alternative interpretation is that the warning statement must be attached to the contract document by the time the parties become bound. That would still provide a warning consistently with the purposes expressed in s 363. It would still require the warning to be signed and dated by the buyer before the buyer signs the contract. And the attachment of the warning to the front of the contract would serve an important purpose, although the attachment was not made until the buyer or the buyer’s agent was sent a copy of the contract, signed by the buyer and the seller. That is because the cooling-off period only begins when the parties become bound. The content of a warning statement, as prescribed by s 366(3), seems largely to be designed to assist the buyer to decide whether to opt out during the cooling-off period. Of course, it is also relevant for the buyer’s decision to sign the contract, for otherwise the section would not require the warning statement to be signed prior to the contract being signed. But the subsequent attachment of the warning statement serves a substantial purpose in informing purchasers during the cooling-off period. The benefit of the cooling-off period is enhanced by the prominence of the warning as to what the purchaser should or could do within that period. Indeed, that was the purpose of the warning statement which is identified by Professor W D Duncan, in his report which was laid before the Legislative Assembly before the enactment of this Act.2
It is unnecessary to determine on this appeal which of these interpretations is correct. Nor is it necessary to determine whether the primary judge was correct in holding that the statement was sufficiently attached by the facsimile transmission to the plaintiff of 26 May 2003. Those questions are related, because if there can be no attachment by faxing copies of the document, or by e-mailing them, then the argument for the attachment being required at a point subsequent to the buyer’s receipt of the documents becomes more persuasive. That argument is also supported by the fact that, as Williams JA has noted, sometimes the contract document is compiled by the buyer’s side.
According to the pleadings and the present evidence, it is impossible to say whether what ultimately became the contract document had attached a warning statement, and if so, when that attachment was made. Possibly the warning statement signed by the plaintiff on 26 May was attached to the draft form of contract if, as is agreed on the present pleadings, those documents were sent to the plaintiff on or about 10 June 2003. Unless s 366 requires the warning statement to be attached to the contract prior to the statement itself being signed, that would represent compliance with the section. It is at least strongly arguable that those facts would constitute compliance and there is some potential, even from that factual possibility alone, for the defendant to succeed if the learned primary judge’s view as to attachment by fax is incorrect.
Therefore I agree with Williams JA that not only should the appeal be dismissed but that there must be a trial. I also agree with his Honour’s proposal that the appellant pay the respondent’s costs of this appeal. Each of the parties approached the hearing of this appeal on the basis that it involved only the attachment by fax point, and overlooking what their own pleadings say was the contract document. But the appeal was, of course, instituted by the appellant and its costs should follow the event.
MNM Developments P/L
Gerrard [2005] QCA 230
(1981) 147 CLR 246