Sabroni Pty Ltd v Bogaty [2002] VCAT 275

3. I dismiss the application made for a stay on the repayment referred to in paragraph 2.

4. Pursuant to s109(2) of the Victorian Civil and Administrative Tribunal Act 1998, being satisfied it is fair to do so under s109(3)(a) and 109(3) (e) of such Act, I order the Applicant to pay the costs of the Respondents (according to County Court Scale D on a party/party basis) of and incidental to the Summons in this matter filed on 29 November 2001 including the costs of appearing in the Tribunal in argument on such Summons on the following dates: 18 December 2001, 21 December 2001, 26 March 2002 and 29 April 2002.

5. In default of agreement between the parties as to such costs by 20 May 2002, I refer the assessment of such costs to the Principal Registrar pursuant to s111 of the Victorian Civil and Administrative Tribunal Act 1998. The Respondents must file and serve a bill of costs in taxable form by 31 May 2002. The Applicant, if objecting, must do so in writing by document filed and served by 21 June 2002. Thereafter the Principal Registrar shall carry out his assessment. In the event that he sees a need to do so while carrying out such assessment, he is at liberty to refer to me any question or questions that may arise concerning the amount to be allowed for Counsel and for preparation.

1. On 25 January 2002 I delivered Reasons in this matter in which I determined that the Terms of Settlement between the parties are void as far as they require a dispute to be referred to arbitration.

2. My ruling on that occasion relied upon s14 of the Domestic Building Contracts Act 1995.

3. On this occasion, following a directions hearing on 26 March 2002 I am asked to determine the effect or effects of my determination. That is a summary of the questions I set aside for myself on that occasion. In particular I now am asked to rule whether the Terms of Settlement are now void altogether.

4. It is argued by the Respondent owners that the Terms are void in their entirety. This is put on the basis, principally, of uncertainty. Considering the terms which are made void by reason of s14, it is argued that the remaining Terms cannot be given meaning and must fail.

5. The Applicant Builder, on the other hand, contends otherwise. The submission made is that the voidness of the Terms under s14 does not affect all the Terms and some are still capable of operating. In particular, reference is made to Releases in Clauses 11 and 20. The Applicant argues that these remain valid and binding and that it is entitled to keep the $25,000 paid by the Respondents on the faith of the Terms. The consideration said to be in support of that is the release given by the Applicant.

6. I have re-considered the Terms of Settlement in the light of s14. It seems to me that the intention of the parties - both of them - in entering into the Terms, was to achieve a settlement which had in it an arbitration mechanism for the resolution of disputes between the experts. This, it seems to me, was what they principally sought to achieve by the Terms. It just so happens, though, that an agreement along those lines cannot be entered into by reason of s14, despite their intentions.

7. Uncertainty in the law of contract which vitiates is uncertainty in the sense of an absence of meaning: Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd [1968] HCA 8; (1968) 118 CLR 429. If I subtract the clauses which are void under s14 from the Terms, it seems to be that there is nothing left which has any definite meaning - or that there is, at least, an absence of meaning about the remainder. But whether this be so or not, and in my view it is so, I have nothing left which matches or resembles in any way what was the intention of the parties. The existence of the arbitration procedure set out in the Terms was fundamental, obviously, to the parties' negotiations and to what they wanted to agree upon. The clauses which are made void by s14 are central and essential to their intentions and to what they intended as their agreement.

8. In my view the clauses of the Terms, other than those already made void by s14, must also fail. They fall for lack of certainty for absence of meaning. They also fail for lack of resemblance to the intention of the parties. Were they to stand alone they would bear no relation to what was agreed. In that regard I take into account, as I am entitled to do, the clauses made void by s14.

9. All the Terms therefore fail. This includes also clauses 11 and 20. Considering the parties' mutual intentions, to be found also in the clauses made void by s14, it was clearly not their intention that the Releases should stand on their own in the absence of the arbitration clauses. They manifestly were intended to operate together. The parties plainly were not ad idem that they should operate separately and apart from one another. I note too that the Releases themselves could not stand as deeds under seal. In any event it is quite clear to me that properly construed Releases are only good, as it were, while there is the rest of the agreement in the Terms in operation. I refer to the word "shall" in clause 11 also. Moreover, clause 11 operates as a Release in respect of rights including rights which might have existed apart from the Terms. So clause 11, in other words, contemplates only a contingent release in any event - rights are forsaken which might exist apart from the Terms. That can have no meaning if the Terms themselves are void. As regards clause 20, I note simply that it takes effect in the event of "default under [the] Terms". But if the Terms are void, as I find they are, there can be no default occurring.

10. In any event, even if the Releases could stand on their own, and they do not or cannot in my view, I would see them as void under s10 of the Domestic Building Contracts Act 1995 as restricting the rights of the Respondents to claim a breach of the warranties implied by sections 8 and 9.

11. As I have found that the Terms including the Releases are all void, I find also that there is nothing of a contractual nature which obliged the Respondent owners to pay the Applicant the sum of $25,000 in two amounts of $12,500. It simply cannot be fair that the Applicant should be able to retain that sum, where authority to do so is absent. Accordingly under s 53(2)(f) of the Act, I order such sum to be repaid to the Respondent owners. In my view the Terms of Settlement under which it was paid constitutes a `void domestic building contract'. In any event I would see such an order as justified under s53(1) of the Act.

12. Application however is made to stay repayment of that sum. It is argued that the Applicant may retain it because of an alleged set-off. I refuse such a stay. The payment was made under Terms I find are void. That means there was no contractual duty to make the payment and no contractual right to claim it. No set-off has been established in evidence before me. Moreover to allow the Applicant to retain the sum would be to give it the status of a judgment creditor in advance of judgment.

13. Application also is made for costs by the Respondents. Under s109(2), considering ss109(3)(a) and (e), I am quite satisfied it is fair to order all the costs on the Summons, as detailed in my Orders. It is true that the Applicant succeeded on the x14 point but mere success does not mean costs follow. The actions of the Applicant I am satisfied have been shabby. The Applicant entered into Terms voluntarily, and not under duress, and then argued their invalidity for voidness under s14. This amazing turnaround has caused the Respondents unnecessary loss and expense. It was obviously difficult for Counsel to explain how this had occurred. But it seems clear that it must have been that, for one reason or another, despite having made promises in writing, the Applicant felt that it could now resile from those promises.