(a) Was QBE obliged to pay the deposit to the vendor
13The deposit bond provided that QBE undertook to pay the vendor on demand the amount demanded, up to $169,000. It provided that QBE would make payment if four matters were satisfied. The vendor in its letter dated 6 November 2012 referred to these four matters and purported to comply with them. Ms Chatfield raises two arguments as to why the vendor did not comply.
14In the first place, Ms Chatfield says that the original deposit bond was provided on 7 November 2012 and the deposit bond was paid on 9 November 2012. This is significant, so Ms Chatfield says, because once the deposit bond was returned to QBE there remained no continuing undertaking. It follows, submitted Ms Chatfield, that the undertaking expired on 7 November 2012 and thus, QBE was under no obligation to pay the deposit on 9 November 2012.
15It can readily be seen that there is some tension between the third bullet point in paragraph 5 of the deposit bond and the fourth bullet point in paragraph 3. The former operates to determine the obligation under the deposit bond when the original bond is returned, the latter requires the return of the bond in order to enliven that same obligation.
16Contracts are not to be read in a vacuum. Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40] requires that:
"This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction"
17In my view, the return of the deposit bond to QBE in these circumstances was not intended to determine the obligations under it. In particular, where the original of the bond is returned with the other documents in paragraph 3 of the bond, the copy of the notice of termination, the vendor's statement, and a written demand, the undertaking did not cease, or at least it did not cease so as to relieve QBE of the obligation to pay the amount to the vendor. To otherwise construe the deposit bond would be to give it an unreasonable construction and make it unworkable. If correct, Ms Chatfield's argument would result in the deposit bond never becoming payable, because payment required receipt by QBE of the original bond and receipt of the original bond, on the argument, ends all obligations under the bond.
18Ms Chatfield argued that the deposit bond could still work if there was simultaneous exchange of the original deposit bond and the cheque in payment. This construction does not sit comfortably with the opening terms of paragraph 3, which provides that the obligation to pay arises only upon receipt. Further, that construction is impractical. The deposit bond would still be terminated if, for any reason, one of the other three documents in paragraph 3 were provided subsequent to the provision of the original bond.
19Further, there is no suggestion in the bond application or the bond that there need be an "exchange". That could easily have been the subject of expressed provision if it were intended.
20Moreover, paragraph 2 of the deposit bond contemplates that only part of the maximum sum may be demanded but nevertheless still requires provision of the original undertaking. The construction submitted by Ms Chatfield would preclude any further recovery after valid demand of a part.
21In my view, the return of the original deposit bond would only terminate the obligations under the bond if the circumstances of that return implied such an intention. If, on the other hand, the provision of the original deposit bond was for the purpose of demanding payment, the third bullet point of paragraph 5 of the deposit bond would have no application.
22I have considered whether the terms of paragraph 3 of the deposit bond were sufficient but not necessary circumstances for payment of the bond, in that QBE might be obliged to pay on demand as provided in cl 2 without the fulfilment of cl 3. But neither party submitted that this construction was correct, and in any event, that issue does not strictly arise.
23Accordingly, I reject the argument that the deposit bond expired on the receipt by QBE of the original of the bond on 7 November 2012, so as to relieve QBE of an obligation to pay.
24The second argument advanced by Ms Chatfield is that there was non-compliance with the second bullet point in the third paragraph of the deposit bond. This is because the vendor's demand did not repeat verbatim the statement in the deposit bond. Ms Chatfield relied upon the decision in Reliance Developments (NSW) Pty Limited v Lumley General Insurance. Limited [2008] NSWSC 172. That case involved a vendor seeking to enforce a deposit bond. Bryson AJ stated at [41]:
"[41] In my opinion the words of the Bond intractably require strict formal compliance. Formality is everything; if the formalities are met, Lumley has to pay".
25Apart from the difference in the parties in that case - there the vendor was seeking to enforce the bond whereas here the purchaser complains about payment of the bond - the bond was also in different terms. In particular, the bond in the Reliance decision contained a clause stating:
"Lumley has no liability whatsoever under this Deposit Bond unless and until a demand by the Vendor is made strictly in accordance with the terms of this Deposit Bond".
26The present bond does not have a clause that demands the same strictness. Further, the indirect speech in the second bullet point of the instant bond militates against the requirement of a verbatim reproduction of those words. Ms Chatfield went so far as to suggest that it would not be sufficient if the statement said, for example, "the purchaser has not paid the deposit to the vendor" because the requirement was that the statement say, "the deposit has not been paid to the vendor by the purchaser" even though the statement is conveying the same information by the more conventionally acceptable active voice. I do not accept this argument. In my opinion, if the statement conveys the substance of the matters required in the second bullet point that is sufficient. It is immaterial that the precise words were not used.
27In this particular case the additional words, "following the termination of the contract" are merely descriptive of the circumstances alleged earlier in the letter. Those words do not preclude the further statement, "the vendor is entitled to the deposit provided by the purchaser under the contract" from satisfying the requirements of the bond. Similarly, the reference to "under the contract" is not materially different from "in accordance with the terms of the contract of sale". In my view, the vendor's demand complies in all respects with the requirements stated in the bond and QBE was obliged to pay the sum of $169,000.
28The plaintiff advanced an alternative argument, that in any event the terms of the application signed, sealed and delivered by Ms Chatfield provided:
"l/we:
· irrevocably indemnify QBE against all actions, claims, demands, liabilities, Goods and Services Tax liabilities, losses, damages, costs and expenses (including, without limitation, legal expenses on a full indemnity basis) which QBE at any time suffers or incurs directly or indirectly under or in connection with the Deposit Bond".
29QBE submitted that the funds were paid "in connection with the deposit bond and were thus subject to the indemnity". I accept this submission. Indeed, it seems to me that Ms Chatfield's rights are confined to the terms of the deposit bond application and not to the deposit bond itself. The bond regulates the obligations between QBE and the vendor, but not QBE and the purchaser.
30For Ms Chatfield to avoid the indemnity she must, in my view, identify a provision in the signed deposit bond application that gave her an entitlement that was not fulfilled. She was unable to do this. Ms Chatfield submitted that the reference to the deposit bond in the application required that the indemnity only applied if there was strict compliance with the deposit bond (in whatever form it took).
31I have found that QBE complied with the terms of the deposit bond. But I do not think that is crucial so far as Ms Chatfield's rights are concerned. She agreed that "QBE is irrevocably authorised to pay out the deposit bond upon a request for payment being made". QBE provided a deposit bond that required more than this from the vendor before payment, but I do not think that the form of the deposit bond enlarges Ms Chatfield's rights.
32Against this background Ms Chatfield agreed to indemnify QBE for any monies paid "in connection with the deposit bond". There can be no argument that the $169,000 paid to the vendor was an expense paid in connection with the deposit bond, and Ms Chatfield is thus liable to indemnify QBE for its loss.
33Ms Chatfield also submitted that there remained a triable issue and that the matter was inappropriate for summary judgment. However, there was no factual contest between the parties. I invited counsel for Ms Chatfield to indicate whether there might be further evidence that might impact upon the construction of the relevant documents. Both parties indicated that there would be no further relevant evidence.
34Thus, the defendant's argument that there was a triable issue depended upon there being a complex question of construction. I do not think that the construction issue raised in this case is complex. Further, in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at p 130, the High Court recognised that summary judgment was available even if complex questions of law may be involved:
"On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed".
35For all these reasons, I propose to grant summary judgment in favour of QBE. There is no issue about the total sum which, including interest and the stamp duty, amounts to $176,918.32.