The notice mentioned at (c) is the notice about the cooling-off period.
15 Messrs Willis & Bowring contended in correspondence to the effect that there was an enforceable contract, and on 21 November 2005 indicated an intention to commence proceedings for specific performance. However in correspondence of 23 January 2006 they gave notice to complete by 10 February 2006, and on 10 February 2006 they took the position that the Contract was terminated. On behalf of the defendants they refused to return the deposit.
16 The plaintiff commenced these proceedings on 28 March 2006. Her principal claims relate to the deposit; she seeks a declaration to the effect that there was no valid and binding contract, a declaration that the notice to complete was void and of no effect, and an order that the deposit be refunded with interest.
17 The plaintiff paid the deposit by taking a bank cheque for $29,250, 5% of the purchase money of $585,000, to Mr Williams at some date before 29 June 2004. The form of contract provided for the deposit to be paid to the vendor's agents LJ Hooker Cronulla and invested at interest. Mr Williams sent the bank cheque to the agents soon after 29 June 2004 and the deposit with interest is still held by them. The Contract provides (in both counterparts) for the deposit to be $58,500, 10% of the price. However an arrangement made directly between Ms Parkin and Mr Pagliuca before 29 June 2004 established that a 5% deposit would be acceptable. This does not appear to be recorded in writing. (Additional cl 45.2 and printed cl 7.2.1 do not relate to the amount of the deposit).
18 To anyone who read the counterpart which Ms Parkin signed with lawyer-like attention, or with close attention at all, a suspicion that there was something missing could be formed readily. One basis for suspicion is the very usual practice of including printed clauses, especially a statement about the cooling off period, in contracts for the Sale of Land using copyright forms. To anyone who has handled conveyancing business and knew the printed forms, the absence of the printed clauses would be striking and should lead to enquiry. There are many cross-references in the counterpart signed by Ms Parkin which cannot be understood unless printed clauses are part of the document. On the front page numbers of three clauses are given - Clause 3, Clause 13 and Clause 28 -but the document does not contain clauses with those numbers. There are similar anomalies on the second page. The Additional Clauses are numbered and the first number is 30. An informed mind would probably wonder where the previous 29 clauses were; or might turn away on the thought that some standard Additional Clauses had been used without correcting the numbering. Throughout the Additional Clauses there are many references to earlier clauses with numbers that simply do not appear; many of these are in amendments, which can mean nothing unless the earlier clause is available. See for example Additional Clause 45. There is express reference to printed cll 1 to 29 in cl 46.2.
19 However it is not altogether clear that parties would not enter into a contract of Sale of Land without the printed clauses; unlikely as it is, it is possible that parties might rely on the earlier pages, the Additional Clauses and attached documents; they might rely on the conditions incorporated by Sched. 3 of the Conveyancing Act. There is no doubt about the materiality of the printed pages 3 to 11. The contractual relationship between the parties is altogether different if those pages do or do not form part of the contract. If they do not form part of the contract, the contract would still be enforceable; some of the provisions found there would be supplied, not in the same terms, by reference to Sched 3 to the Conveyancing Act or by implication, while some of the printed clauses in fact had no relevant operation.
20 Ms Parkin was cross-examined very closely, twice, about her reading or review of the counterpart and her understanding of anomalies. I am entirely satisfied that she did not understand or believe, at the time she signed the counterpart, returned it to Mr Williams, and paid the deposit, or at any time which is relevant, that clauses or pages which Mr Williams intended to form part of the document had been omitted. She has not had a great deal of experience in dealing with real estate contracts apart from the particulars of the transaction relevant to finance applications and I do not find it strange or improbable that she, like (I rather think) most people, does not have lawyer-like habits of reading through documents and checking out all the cross-references. The absence of nine pages of printed clauses, which to a lawyer might be grossly obvious, is not necessarily evident to a person without relevant experience, and I am satisfied that in truth and in fact she did not observe their absence.
21 It was not suggested to Ms Parkin that she had noticed that there were missing clauses and deliberately decided to ignore their absence. It is plain that she did not do this.
22 In cross examination and also in submissions there were many references to "standard conditions". This terminology is inherently unsatisfactory, as amendments and variations to the printed form are made frequently. There is no basis for finding that Ms Parkin knew what the conditions forming part of the copyright form, 2000 Edition were; there is no evidence that anyone told her. There is no basis for thinking that she knew of the four modifications which Mr Williams made. Her evidence shows that she would have accepted standard conditions if they had been included in her contract: but she was never asked to do so.
23 According to Ms Parkin's evidence representations were made to her before 29 June 2004, during the period of negotiation, by Mr Peter King about the size of the bedroom on the first floor of Unit 5. There is no plan in evidence which shows the interior dimensions. The registered Strata Plan should show them: but it is not in evidence, and was not prepared until long after 29 June 2004. A Draft Strata Plan may have shown them: Mr Williams referred to the Draft Strata Plan as if it were an annexure in Additional Clause 31.1 but it was not annexed to either counterpart and may not yet have existed. On the plans annexed to the counterparts no interior dimensions are given. The bedroom on the first floor is depicted as the location of a double bed, but there is no statement about the dimensions of the bed. Similarly for a wardrobe. On the floor plan for the first floor level there are some exterior dimensions but they are not complete and do not show the exterior dimensions of the part of Unit 5 which is on the first floor; there are no interior dimensions. On the floor plan for the ground floor there are no exterior or interior dimensions. High inherent probability supports the plaintiff's evidence that she enquired about internal dimensions before signing the counterpart, and received representations about the size of the unit.
24 The representations which she says Mr King made to her were not very precise but I have no difficulty in accepting, notwithstanding his denial of evidence, that he made them. Mr Pagliuca's evidence shows that some problem or experience which he encountered in the course of construction meant that the first-floor bedroom was not as big as he had expected, and was unsatisfactory in some way. He had misapprehensions about the size of the first-floor bedroom, expected the plaintiff to be dissatisfied with it, and entered into renegotiation with her in which the size of the first-floor bedroom was the prime subject; this led to arrangements, which were never carried through, for her to enter into a contract to buy Unit 1 and give up the project of buying Unit 5.
25 According to Ms Parkin's evidence, she was assured, at an early stage in negotiations, by Mr King that the bedroom on the first floor was a standard sized bedroom, and Mr King saw the bedroom in the dwelling she then occupied, stepped out its dimensions and told her that the bedroom on the first floor of Unit 5 was the same size. Mr King denied that he had made representations like these, and also he had seen the bedroom of Ms Parkin's then dwelling, or stepped it out. I accept Ms Parkin's evidence about the representations; it is very strongly supported by the probabilities. It would be difficult for two people to talk intelligently about the proposed purchase of an as yet an unbuilt home unit off-the-plan without discussions turning to the subject of the size of the rooms; if there is anything improbable about her evidence, it is that she asked so little. The representation that the bedroom would be a standard sized bedroom means very little until Mr Pagliuca's concerns about the size of the bedroom at a later stage become known. It is plain from Mr Pagliuca's evidence that the first-floor bedroom as constructed was not of a standard size, or of a size acceptable to Ms Parkin; this was clear to Mr Pagliuca and explains his being ready to enter into further discussions about the subject. While I dispose of the litigation on other grounds and the effects of the misrepresentations have not been put to the test, it is probable that Ms Parkin would have been entitled to some significant remedy in respect to the misrepresentation if there had been an attempt to enforce the contract against her; she may be entitled to rescission, to some statutory remedy or to resist specific performance on grounds of hardship.
26 Discontent with the bedroom as constructed was one of the principal sources of Ms Parkin's dissatisfaction with the purchase. Another source was that she came to believe, correctly, that the value of the unit when constructed would be considerably less than the amount that she agreed to pay. By early 2005, about February, she was very discontented with the sale, to the point where she conducted negotiations with Mr Pagliuca about substituting Unit 1 for Unit 5.
27 Exchange of contracts is very well established means of forming a binding agreement for the sale of real property. Long established and well established practices and customs among solicitors in New South Wales which affect what is understood as formation of a contract by exchange are described in the judgment of the High Court in Sindel v Georgiou (1984) 154 CLR 661. After communications in which it is established that the vendor and purchaser are each prepared to enter into a written agreement, and the terms are established, their solicitors meet, each produces a form of contract signed by the solicitor's client, and the two documents so produced are compared to confirm that the counterparts conform exactly. Then the counterparts are exchanged, literally: each solicitor hands the counterpart signed by his client to the other solicitor, and this event is the formation of their written contract. The parties may or may not have reached agreement and had a written or oral contract before that event; there are a number of possibilities, illustrated by Masters v Cameron (1954) 91 CLR 353 and the learning on that leading case.
28 When there is an exchange in this way each of the counterparts is an original contract; they are duplicate originals. It is open to the party to add his signature to the counterpart which his solicitor has received on the exchange, although it has not been the custom to do this. Another method of contract formation which, as a conjecture, may have been followed before customs about exchanging counterparts emerged, is that all parties should meet on the same occasion and they all should sign the same document on that same occasion. The large advantage of contract formation by exchange of contracts is that after exchange each party is in possession of a memorandum of contract in writing signed by the other party, satisfying the Statute of Frauds and its successor provisions ss.23C and 52A of the Conveyancing Act 1919. This advantage is enhanced by recent legislation prescribing matters which a Contract for Sale of Land must say in writing.
29 If the counterparts do not correspond exactly with each other it becomes doubtful whether the parties formed a binding contract by the exchange, because viewed objectively the intentions to form a binding contract which they manifest were different. Unless the differences are immaterial, discrepancy between the counterparts usually leads to a conclusion that no binding contract was formed by the exchange. However there may be circumstances in the previous dealings or arrangements between the parties which produce a different result.
30 An aspect of the facts of the present case is that before Mr Williams completed the two counterparts by writing in the date 29th June 2004 there was no event in which the parties evinced a common intention to form an agreement for the Sale of Land on defined terms. Their dealings always took place on the basis that there was to be an agreement in writing which Mr Williams was to prepare, and was to put before each of them for approval and instructions, and the process of obtaining approval and instructions could lead to modifications.
31 In Sindel v Georgiou the High Court regarded the exchange of contracts between solicitors as a customary conveyancing practice for formation of a contract for the sale of real estate; see 664. The High Court's interpretation of the facts of that case was that there was an identifiable contractual consensus between the parties on the terms on which they were able to agree, and rectification was available to correct the counterpart which did not conform with that common consensus so as to conform with the counterpart that did. Sindel v Georgiou was not itself a case where there had been an exchange of counterparts between solicitors for the parties in the customary way: the facts as set out at pages 664 and 665 show that in the only event which could be thought of as an exchange of contracts Mr Vaughan solicitor acted for the vendor (the appellant) and dealt with the first respondent Mr Georgiou in person. Mr Georgiou had authority to purchase the land as agent of the second respondent Mr Griffith (but does not seem to have disclosed the existence of that authority on the day of the sale), and acted in person and wrote in his own name as purchaser, adding the words "or his nominee". These events took place on the day of the auction in negotiations after the property was passed in. The vendor's solicitor had previously prepared forms of contract in duplicate and it is obvious that when the parties negotiated in the agent's office these forms of contract were before them - "on the table" - and their negotiation was by reference to them. At the end of the events at the agent's office, each side had a counterpart, one of the duplicates prepared by the vendor's solicitor, signed by the other side. However there were discrepancies -- see page 665; and some further information was written and typed in the counterparts after they were exchanged - see page 665.
32 In my understanding the basis of the High Court's disposition appears from the following passage on pages 154 CLR 667-668:
The appellant submits that, if it be an essential characteristic of exchange that the two parts should be in identical terms, rectification can be no answer to the existence of a material discrepancy. This is because exchange is the event which brings into existence a binding contract - without exchange there is no contract and hence no basis on which to found a rectification. Rectification is a remedy which cures erroneous expression of the parties' true intention in a contract which is already binding. It is not a remedy which brings a contract into existence in a situation in which the parties have not by their own acts arrived at a concluded contract.
An unqualified acceptance of the proposition that delivery of two parts in identical terms is crucial to an effective exchange would exclude the parties' intention as the governing or, even as a relevant, factor. The question whether the delivery of parts in identical terms is essential must ultimately depend on the parties' intention. The answer to this question determines the manner in which the contract becomes binding. And as Lord Greene M.R. emphasized in Eccles v. Bryant [1948] 1 Ch., at p.99, the manner in which the contract is to be created so as to become binding is to be gathered from their intention, express or implied. In ascertaining their intention, we must take account of those factors which favour an insistence on documents in such a form as will evidence with certainty a contract and the terms of that contract, factors expressed and underlined by Lord Greene M.R. in Eccles v. Bryant [1948] 1 Ch., at p.99 and by Lord Denning M.R. in Harrison v. Battye [1975] 1 W.L.R., at p.60; [1974] 3 All E.R., at pp. 832-833. We must also take account of the real intention of the parties, giving due weight to their objective - the making of a binding contract by means of the exchange of parts. And if the parties, through negotiations between their solicitors, have agreed on the terms of their bargain and settle on an exchange of parts in order to seal that bargain, it would usually accord with their intention to treat the exchange as creating a binding contract, notwithstanding the lack of correspondence in the parts, so long as that lack of correspondence is capable of being remedied by rectification. It will be otherwise when it appears that the parties intend to be bound only by an exchange of parts in identical terms or when the prior negotiations do not completely settle the terms of the bargain and the parties look to the parts as exchanged to fix these terms.