DISCUSSION
43There is no doubt from the contemporaneous emails that the Plaintiff's directors intended that all negotiations were exclusive of GST and that the ultimate contract price would be expressed as such.
44The Plaintiff's agent Mr Hezari and Mr Pazios as facilitator, each intended the very same thing. Although the accounts given by Mr Pazios of various conversations especially with Mr Kearney do not include one in which he can recall mentioning GST he believed he made it clear in his emails which he purported to send to all relevant parties.
45Mr Paul Kearney was obviously annoyed at the increase of $50,000 (the difference between $1,510 000 and $1,560 000), with which he was confronted without warning on Monday morning 26 July. He believed he had shaken hands and sealed the agreement on Friday 23 July at $1,510,000. He says he was prepared ultimately to go to $1,570 000 (a further $60,000 on his original offer) as long as it was understood as his final position. All those figures according to him he understood were to be inclusive of GST.
46Assuming he always believed that all offers were inclusive of GST, his reaction when the ultimate contract with its substantially higher price was put in front of him for signature, again without warning on the afternoon of 26 July, was only to complain privately to his solicitor and then somewhat meekly sign the contract. This is in my mind more than a little odd and stretches credibility. I find the following exchange when he was cross-examined insightful:
"Q: You made no complaint to anyone that the price was 100 odd thousand higher than the one you thought you bargained?
A: No
Q: Did it occur to you this might have been an error and I wanted to fix it up in accord with the deal we struck?
A: As I said, it was uppermost in my mind to seal the deal and stop this bidding war that's going on. It was still within our budget. I took a commercial decision to sign the contract.
Q: Without any complaint at all?
A: I complained to Mr Lee. I said I was unhappy.
Q: I want to suggest to you when you saw the contract, the third page which is at page 204, you mistakenly thought the $1,657,700 represented a price which was 1,570,000 plus GST; that's why you didn't complain.
A: I can't recall.
Q: Put it directly, you didn't think there was an error on the face of the contract as regards the deal you thought you had struck?
A: Well, it was a moveable feast. The price was all over the place.
Q: I want to suggest to you you thought that contract represented 1,570,000 plus GST?
A: I did not think that."
47When he was confronted with the new price he did not seek to speak to the vendors directly as the persons he had shaken hands with or to have his solicitor register any form of complaint formally or otherwise with the vendors solicitors. The new price even on his view of negotiations amounted to a further unilateral increase of $87,700 ($1.657,700 -$1,570,000), as I have said, without warning.
48I find his explanation that he just wanted to end a bidding war in the context simply implausible. In the witness box he impressed me as an astute businessman. He did not attempt to suggest for example that he thought the final price was a bargain or that commercially it was imperative that the property be acquired. He simply said it was within his budget and he took a commercial decision to sign. 38
49All relevant participants on one side of the negotiations were discussing and negotiating a price exclusive of GST and intended that to be so and yet the other side (at least Mr Kearney) may as well have been in an entirely different universe if I accept the Defendant's contentions. Mind you not all relevant witnesses for the Defendant were called.
50There were two witnesses in particular not called by the Defendant. Mr Peter Kearney, Mr Paul Kearney's son, and Mr Alexander Lee, solicitor. At a minimum they could have corroborated Mr Kearney's assertion of complaint on the afternoon of the 26 July because both were present in Mr Lee's office when it apparently occurred. I can I believe comfortably draw the inference that they would not have assisted the Defendant's case in that regard if they had been called. 39No explanation has been proffered to explain their absence.
51I consider Mr Peter Kearney falls into a very special category all of his own for a number of additional reasons. It seems to me he was very much involved in the negotiations and the details of transaction generally. For example in his email to Mr Pazios of the 19 July 40he was seeking to identify the precise name of the vendor so the contract could be prepared. Secondly he was along with his father a director and/or substantial shareholder of the Defendant. He was a co-signatory to the contract. 41
52He and his father were specifically required to provide as directors and/ or substantial shareholders of the purchaser, a guarantee and indemnity of the purchasers obligations under the contract including the payment the of the purchase price. 42
53These factors in my mind are of considerable significance.
54Mr Pazios who played a role as a facilitator and Mr Hezari the vendor's agent were experienced agents. Both were at pains in their emails to refer to price as exclusive of GST. Mr Pazios said he could not remember expressly raising the topic of GST in conversation with Mr Paul Kearney.
55Much was made by the Defendant of the fact that Mr Kearney asserted he never received an email form Mr Pazios. To concede that he had would cause great damage to the Defendants case because the two emails in particular of the 14 and 26 July and which were purportedly sent to Mr Paul Kearney both refer to offers plus GST. Mr Kearney put two reasons as to why he did not receive either email. First he asserted at some point in July he changed his email address 43and secondly he said he never authorised Mr Pazios to put the offer contained in the email of 26 July.
56There is no doubt that Mr Pazios and Mr Kearney spoke on the morning of 26 July (once according to Mr Pazios or twice according to Mr Kearney) about putting an offer of $1,570,000. Mr Pazios could not recall mentioning GST. Mr Kearney expressly denies it was mentioned.
57There is also no doubt that the agreement was to be subject to contracts being exchanged that afternoon which was discussed with Mr Kearney as is clear from the email. It is also plain from the email that he must have told Mr Pazios he was seeing his solicitor at 3pm in the afternoon, which had been previously arranged. 44There is no evidence that either Mr Peter Kearney or Mr Lee had any conversations with Mr Pazios, so the source of these details had to be Mr Paul Kearney. The question of price was also clearly discussed.
58I accept that Mr Pazios was at pains to make clear the offer would be exclusive of GST. I am certain Mr Kearney would have wanted to be quite precise about that as well one way or the other. There is no reason to doubt that the email is a contemporaneous record of a conversation between Mr Pazios and Mr Kearney. As I have already observed whatever Mr Pazios' recollection might be in relation to his various conversations it was not put that his email was a mistake or contrived. The evidence supports the view that he sent this email as well as the earlier email of 14 July very soon if not immediately after his conversation on each occasion with Mr Kearney. I am firmly of the view that Mr Pazios was accurately conveying the instructions he received from Mr Kearney and Mr Kearney is simply mistaken in his asserted recollections to the contrary. I am of course not obliged to accept Mr Kearney's assertions to the contrary. 45This is particularly so given the absence of any contemporaneous notes made by him which might corroborate the contrary. I am of the view that the probabilities therefore favour Mr Kearney having told Mr Pazios he wished to offer $1,570,000 plus GST and I so find. I have come to this view independently of the fate of any of the emails purportedly sent by Mr Pazios to Mr Kearney.
59Further as I have already observed it was put to Mr Kearney in cross examination 46that the reason he was prepared to sign the contract at the new price was because he mistakenly thought that the $1,657,700 represented a price of $1,570,000 plus GST. If I may say so, somewhat tellingly, he answered, "I can't recall". 47That answer is so much at odds with his evidence otherwise that he deliberately agreed to the ultimate price notwithstanding he had no prior warning simply to conclude the transaction. I am persuaded that he did indeed believe that the ultimate contract price was intended to be $1,570,000 plus GST and that the $1,657,700 was meant to reflect that but he did not check the precise calculations at the time he signed the contract.
60In addition and independently of the above considerations, one email which I regard as having particular significance especially with regards to Mr Peter Kearney is that from Mr Pazios of the 14 July. It was sent to Ms Jerrison at 12.48 pm and apparently forwarded to Messrs Paul and Peter Kearney at 12.53pm. It is an email that simply has their names on the top and not their complete email addresses.
61Mr Pazios was asked to concede that on the top of his email of 26 July there appeared the full email addresses of Ms Jerrison and Mr Powells whereas it only showed Mr Paul Kearney's name. He agreed but indicated that was how his computer in particular his Outlook mail system worked. I took that to mean that if the full email details of the intended recipient was in his mail system it would automatically direct the email accordingly without the need for him to type it out at the beginning of each email.
62Mr Pazios in evidence did not indicate that any of his emails to Mr Paul Kearney (or for that matter anyone else) were returned to his mailbox as undelivered. There was importantly no evidence that Mr Peter Kearney however had at any time changed his email address but of course no evidence from him personally as to whether or not he had received the email of the 14 July.
63The email of 14 July is part of a chain. Linked to that email is an email from Mr Peter Kearney to Mr Pazios with a copy to his father of 19 July.
64Mr Paul Kearney does not deal with this email in his evidence nor was he asked whether he received it. It is reasonable to assume however that he did and that Mr Peter Kearney would have had the correct email address for his father as at the 19 July. Although it does not deal with price it is nonetheless important because it shows Mr Peter Kearney involving himself in the detail of the transaction. The real question is what inferences I should draw from this chain in circumstances where Mr Peter Kearney was not called.
65The Plaintiff contends I should find that Mr Peter Kearney received the chain of emails and in particular the one of 14 July. On that basis it would therefore be clear that he was aware of the fact that the offer as at that date was exclusive of GST. It was submitted by the Plaintiff that that would lead to an inference that Peter Kearney was from 14 July fixed with knowledge that GST was to be added to the sale price. This would have a significant effect on the credibility of the evidence of his father and the Defendants case generally. Inferences should accordingly be drawn by reason of his not being called.
66The Defendant on the other hand submits that as Mr Peter Pazios gave no evidence that emails were or were not returned undelivered I should draw no inference that Mr Peter Kearney received that email.
67I should observe that the Defendant did not seek to explore the question of undelivered emails with Mr Pazios when he was in the witness box. Mr Pazios's evidence proceeded on the basis that the emails were delivered and that was what in effect what he believed and assumed. He was asked in cross examination about his emails and he never once mentioned any being returned as undelivered. I must say I would have expected him to have done so if that had happened. He impressed me as doing his best to give his evidence to the best of his recollection. Indeed he was completely candid about the extent of his recollection especially when it came to his conversations with Mr Paul Kearney. As I have already observed he explained how his address system worked on his computer. It is plain that Ms Jerrison and others did receive emails from him and in turn corresponded with him. It is also clear that Mr Peter Kearney corresponded with Mr Pazios by email.
68The Defendant submitted that there was no room for the application of Jones v Dunkel and no inferences should accordingly be drawn adverse to the Plaintiff by reason of the fact that the Defendant did not call Mr Peter Kearney. There was no suggestion he would not have been available if the Defendant had wished to call him.
69In Jones v Dunkel , Kitto J made the following observation:
"One does not pass from the realm of conjecture into the realm of inference until some fact is found which positively suggests, that is to say provides a reason, special to the particular case under consideration, for thinking it likely that in that actual case a specific event happened or a specific state of affairs existed. I therefore agree that in the present case a verdict for the plaintiff could not properly have been based upon such a general reflection as that a collision on a curve, where the road is substantially banked with a fall to the inside, and where the vehicle with the outside running is travelling downhill, is more likely to have been caused by the driver of that vehicle cutting the corner than by the driver of the opposing vehicle swinging wide. But there are some specific primary facts which the jury could have found on the evidence presented to them and which, if found, would suggest, as it seems to me, that the collision probably occurred on the diesel truck's wrong side of the road and therefore, prima facie as a result of negligent driving by Hegedus."
70Kitto J goes on to say:
"But what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for that inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation in his absence. The jury should at least have been told that it would be proper for them to conclude that if Hedeges had gone into the witness box his evidence would not have assisted the defendants by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff's evidence. In my opinion what his Honour said on the point amounted to a misdirection."
71It was also said by Menzies J , that:
"In my opinion a proper direction in the circumstances should have made three things clear: (i) that the absence of the defendant Hegedus as a witness cannot be used to make up any deficiency in evidence; (ii) that evidence which might have been contradicted by the defendant can be accepted more readily if the defendant fails to give evidence; (iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstances that the defendant disputing it might have proved the contrary had be chosen to give evidence is properly to be taken into account as circumstances in favour of drawing the inference."
72Windeyer J also observed:
"Then, I think, his Honour should, when the juryman asked his question, have given an answer in accord with the general principles stated in Wigmore on Evidence 3 rd ed. (1940) vol.2 s.285 p.162 as follows: "The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances, which made some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted ... This is plain commonsense. If authority be needed, two passages from R v Burdett (1) may be cited. Abbot CJ said: "No person is to be required to explain or contradict, until enough has been proved to warrant a reasonable and just conclusion against him, in the absence of explanation or contradiction, if the conclusion to which the proof tends to be untrue, and the accused offers no explanation or contradiction; can human reason do otherwise than adopt the conclusion to which the proof tends? The premises may lead more or less strongly to the conclusion, and care must be taken not to draw the conclusion hastily, but in matters that regard the conduct of men, the certainty of mathematical demonstration cannot be required or expected." (2) and Best J said: "Nor is it necessary that the fact not proved should be established by irrefragable inference. It is enough, if its existence be highly probably, particularly if the opposite party has it in his power to rebut it by evidence, and yet offers more; for then we have something like an admission that the presumption is just."(3)
73The rule in Jones v Dunkel can operate against parties not bearing the burden of proof and those who do bear it as well. 48
74The Defendant embarked upon a strategy at the trial, which involved a direct challenge to Mr Pazios' belief that any email he purported to send to Mr Paul Kearney was ever received. Mr Kearney in his evidence denied he ever received emails from Mr Pazios and provided as part explanation that his email address had changed and asserted that Mr Pazios' records needed to be updated. 49
75There was no evidence that Mr Peter Kearney had changed his email address. There was no denial of course from him that he did not receive the email of the 14 July.
76The whole thrust of the Defendant's case in this regard was to deny that Mr Paul Kearney and by implication Mr Peter Kearney had ever any understanding that the price was being discussed as one that was exclusive of GST, and therefore considerable effort was taken to distance the Defendant and Mr Paul Kearney in particular from any emails which would make him privy to such an understanding.
77I can only assume that a deliberate forensic decision was made not to call Mr Peter Kearney because of a fear to do so. He would have been exposed to cross examination on the email of 14 July. As I observed, had he received it, it would have made him privy to negotiations of price exclusive of GST. 50
78I consider that the probabilities are that Mr Peter Kearney did receive the email of the 14 July in part by reason of it being part of a chain of communications between himself and Mr Pazios. In addition as at that date Mr Paul Kearney had asked Mr Pazios to put the offer of $1,510,000 and his son would have been aware of that fact. Although he and his son were yet to inspect the property they had clearly decided to buy it. Mr Pazios must have had Mr Peter Kearney's email details in his mailbox system and he did not it seems have any mail returned as undelivered that was directed to him. The email of 19 July from Mr Peter Kearney makes perfect sense in that context with him busying himself with necessary details for the preparation of documentation with an offer on the table as it were.
79I therefore cannot accept the Defendant's submissions to the contrary on this point. On the basis of his having received the email of 14 July Mr Peter Kearney was privy to an offer expressed as exclusive of GST as at 14 July. That overwhelmingly supports the Defendant having the same contractual intention as that asserted by the Plaintiff prior to the execution of the agreement. I can more confidently arrive at that conclusion by reason of the failure to call Mr Peter Kearney.
80However even without a finding that Mr Peter Kearney received the email of 14 July, I am firmly of the view for reasons otherwise stated and independently of my analysis above that Mr Paul Kearney and hence the Defendant did indeed understand and intend that offers would be exclusive of GST at all relevant times.
81There I have no doubt that both parties intended to contract upon that basis.
82In their respective haste to consummate the transaction and exchange contracts it is clear to me that both sides fell into error and signed a document which did not accurately reflect their common intention.
83I am in no doubt that there was a common mistake and the Plaintiff has made out its case. 51
84Given the common mistake, the contract should be accordingly rectified.
85In all the circumstances I find for the Plaintiff and accordingly make the following orders:
- I declare that it was the common intention of the plaintiff and the defendant at the time of entry into contract that the contract price was one million five hundred and seventy thousand dollars ($1,570,000.00) plus GST.
- I order that the contract be rectified to give effect to such intention as outlined in paragraph 33(1) above by providing that the contract price is one million five hundred and seventy thousand dollars ($1,570,000.00) plus GST.
- I order that the Defendant pay the Plaintiff's costs of the proceedings.