Plaintiff v Defendants

2 In purported reliance upon those charging clauses, the defendants have lodged caveats over the plaintiff's real estate. The plaintiff contends that the caveats are not maintainable, because it did not accept the finance offers within the seven day period specified in the offers. Accordingly, the plaintiff applies for removal of the caveats.

3 The application for removal of the caveats was heard in the Practice Court. Judgment was given orally upon the conclusion of argument. These are my revised reasons. Their brevity reflects the circumstances in which the judgment was given.

4 On or about 1 February 2011, well outside the seven day offer period, the plaintiff purported to accept the offers. It is common ground that the late acceptances were not acted upon in any material respect by the defendants when received. The acceptances and other offer documents simply remained on the desk of an employee of the defendants and were, in his words, 'unactioned'.

5 Although it purported to accept the project finance offers, the plaintiff determined that it would not proceed with the relevant property development for which funding had been sought. Instead, by contract dated 25 May 2011, it sold the relevant property to a third party. That sale is unable to be completed unless the caveats lodged by the defendants are removed.

6 The application was the subject of commendably concise submissions by both counsel. They isolated the following issues for determination:

(1) Were the late acceptances of the finance offers effective to bring contracts into existence on the terms of the offers?

(2) If not, did the late acceptances constitute counter-offers to accept the funding offered and, if so, were those counter-offers accepted by the defendants?

7 On the first issue, I find that the late acceptances did not give rise to finance contracts on the terms offered. Where an offer is made subject to a time stipulation for acceptance, and is not revoked by the offeror before the specified time, the offer automatically lapses on the expiry of the specified time; with the result that later acceptance is ineffective.[1]

8 As to the second issue, a purported acceptance outside the time within which an offer may be accepted constitutes a counter-offer from the offeree to the original offeror. Unless the original offeror accepts the counter-offer, neither party is bound.[2] I find that the late acceptances constituted counter-offers by the plaintiff to the defendants to accept funding from the defendants on the terms specified in the original offers made on 6 January 2011. The counter-offers were available for acceptance, unless revoked beforehand, within a reasonable time.[3] Of course, like any other offer, a counter-offer must be accepted by unequivocal conduct of the offeree which clearly conveys a decision by the offeree to be bound by the terms of the offer.[4] In that regard, it is sufficient if there is a clear indication from the whole of the evidence that the offeree is treating the offer as accepted.[5]

9 It was submitted on behalf of the defendants that they accepted the counter-offer by their silence, thus indicating that they were prepared to proceed with the finance on the terms offered; and that this implied acceptance was confirmed when demands were made for fees alleged to be due under the terms of the offers. I reject those submissions. The defendants' silence was not sufficiently unequivocal to convey acceptance of the counter-offers. The demands for fees came after the plaintiff indicated that it did not wish to proceed with the project or to satisfy the conditions precedent to obtaining funding on the terms offered.

10 The position may have been different if, for example, the defendants had instructed a valuer of the relevant land and had communicated that fact to the plaintiff, thus acting in accordance with the terms of the original offers and impliedly communicating acceptance of the counter-offer. There is no such evidence. The defendants relied upon a valuation obtained by the plaintiff before the offers of finance were made. However, that valuation cannot support an inference that the defendants accepted the counter-offer.

11 The parties accepted that the onus lies upon the defendants, as caveators, to demonstrate a serious question to be tried as to whether they have a caveatable interest. For the reasons given, they have failed to satisfy that onus. There is no arguable case that contracts on the terms of the original finance offers came into existence. The charging clauses relied upon are thus ineffective. In these circumstances, there is no occasion to consider the balance of convenience.

13 (Discussion as to the form of order and as to costs).

[1] Carter Peden & Tolhurst, Contract Law in Australia (5th Edition), [3-54].

[4] Ibid [3-20], citing Ballas v Theophilos (No 2) [1957] HCA 90; (1957) 98 CLR 193.