Property Law Act 1969, s 34(1)(a)

Redden v Wilks & Anor [1979] WAR 161

Bahr v Nicolay [1988] HCA 16; [1987] 78 ALR 1

Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622

Coal Cliff Collieries v Sijehama Pty Ltd (1991) 24 NSWLR 1

Foran v Wight [1989] HCA 51; (1989) 168 CLR 385

Gaston v United Newspapers Ltd (1915) 32 TLR 143

Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor, unreported; SCt of WA; Library No 6414; 25 August 1986

Masters v Cameron [1954] HCA 72; [1954] 91 CLR 353

Millington v Loring (1880) 6 QBD 190

Niven v Grant (1903) 29 VLR 102

Packard v Transport Trading Agency Co Ltd (1912) 14 WALR 191

Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499; (1999) ATPR 41-691

Rod Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurstville) Pty Ltd [1971] 1 NSWLR 472

Sinclair Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310

Speidel v Plato Films Ltd [1961] AC 1090

Wright v Somerton [2004] QSC 231

1 MASTER SANDERSON: The defendant in these proceedings applied to strike out the plaintiffs' statement of claim. There followed extensive discussions between the parties, leading to the production by the plaintiffs of a document entitled Draft Amended Statement of Claim ("the minute"). Solicitors for the defendant were not satisfied that the minute was in a proper form. They therefore proceeded with their strike-out application. When the matter came on for hearing it proceeded as an application by the plaintiffs for leave to amend in terms of the minute. In fact the plaintiffs are entitled to amend without leave, pursuant to O 20 r 8(4). But rather than delay the matter further by the plaintiffs amending without leave and the defendant being required to apply to strike out, both parties were content to treat the matter as an application for leave to amend in terms of the minute.

2 The action concerns the purchase or intended purchase by the plaintiffs of a property at 18 Tain Street, Applecross ("the property"). By par 2 it is pleaded that:

"By an oral agreement on or about 29 July 2004, evidenced in writing dated 29 July 2004, it was agreed that the defendant would sell and the plaintiffs would purchase ... (the property)".

3 This oral agreement is defined in the pleading as "the Agreement". Particulars of the Agreement are provided. It would seem that the Agreement was reached in a telephone discussion between the first-named plaintiff on behalf of the plaintiffs and one Paul Baster on behalf of the defendant. This conversation is said to have taken place "on or before 29 July 2004". It is then said that the Agreement was evidenced in writing by a facsimile dated 29 July 2004 from Paul Baster to the first-named plaintiff.

4 It is worth pausing at this point to note precisely what the plaintiff has pleaded. It is said that there is an oral agreement which is evidenced in writing. Such a plea runs up against s 34(1)(a) of the Property Law Act 1969. That section is in the following terms:

"34(1) Subject to the provisions hereinafter contained in this Act with respect to the creation of interests in land by parole -

(a) no interest in land is capable of being created or disposed of except by writing signed by the person creating or conveying the interest, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law."

5 The status of such an oral agreement was considered by Burt CJ in Redden v Wilks & Anor [1979] WAR 161. His Honour said (at 165):

"In my opinion, the decision of the High Court in Adamson v Hayes [1973] HCA 6; (1973) 130 CLR 276 requires one to hold, as I do, that a verbal contract for the sale of land or for the disposition for valuable consideration of an interest in land is an agreement which creates an interest in land within the meaning of s 34(1)(a) of the Property Law Act and accordingly, 'subject to the provisions hereinafter contained in this Act with respect to the creation of interests in land by parole' such an agreement is ineffective and cannot be specifically enforced. This, I think, would be so even if there existed a good memorandum in writing of the verbal agreement, because it is the verbal agreement which creates the interest and not the memorandum. Hence in a suit for specific performance it is no answer to a plea of s 34(1)(a) of the Property Law Act to plead ... the existence of a memorandum."

6 So what the plaintiffs have pleaded by par 2 of the minute is an ineffective contract. The Agreement created no interest in the property, it could not be specifically enforced, it could not ground a caveat, it could not support an injunction restraining the defendant from dealing with the fee simple in any way she chose. It also probably could not have given rise to a claim for damages if the defendant were to sell the property to a third party. Furthermore, as Burt CJ said, the subsequent evidencing of the Agreement in writing was of no consequence. It is the Agreement itself which, pursuant to s 34(1)(a) must be in writing.

7 Returning to the minute, by par 3 the plaintiffs plead what is said to be express terms of the Agreement. Paragraph 3(d) pleads that there was a term to the effect that:

"the agreement for the sale of the property would be drawn up in a proper form based on the Real Estate Institute of Western Australia's form of contract for sale of land or strata title by offer and acceptance ('the REIWA contract')."

8 It is to be noted that this term is said to be an express term of the Agreement. That must mean that it was a term of the Agreement relating to the sale and purchase of the property. As I have already indicated, the Agreement is ineffective. The question is whether or not the express term that the parties would enter into the REIWA contract can stand alone and represent an effective agreement between the parties. That issue can be put to one side for the moment, while the rest of the minute is considered.

9 The plaintiffs plead that the REIWA contract was drawn up and signed by the defendant on 9 August 2004. The express terms of the REIWA contract are pleaded. There is then pleaded an amendment to the REIWA contract which is not material for present purposes. By par 10 of the minute it is pleaded that by letter dated 18 August 2004 the defendant's solicitors advised that the defendant "refused to perform the REIWA contract, alternatively the Agreement". The plaintiffs seek specific performance of the REIWA contract.

10 The defendant makes a number of complaints about the form of the minute. Without wishing in any way to understate the breadth of the defendant's objections, it is, I think, fair to say that they claim to be embarrassed by the pleading of both the Agreement and the REIWA contract. They say it is not clear how the two relate one to the other and whether or not the terms of one are to be incorporated in the other. With respect, their complaints are, in my view, well-founded.

11 Given that the Agreement is ineffective, it is hard to see why it should be mentioned in the minute at all. It may be that the plaintiffs feel, for some reason, they need to mention the Agreement because to succeed in their action they need to establish why it was the parties entered into the REIWA contract. Quite why that should be so I am not sure - it did not emerge either from the written or oral submissions. But if the alleged Agreement to enter into the REIWA contract is important, then the plaintiffs need to plead that this term of the Agreement is severable from the REIWA contract. That argument may or may not succeed. But if it is to be pleaded, it must be pleaded as a stand-alone contract severed from the Agreement.

12 Once that is done, it is simply a matter of the plaintiffs pleading the REIWA contract. It is on the REIWA contract that they will stand or fall. In fact, it is difficult to see why the plaintiffs should not simply plead the REIWA contract and leave it at that. However, as I have mentioned, it would be open to them to plead the Agreement to enter into the REIWA contract.

13 The defendant complained about the way in which the REIWA contract was pleaded. In particular, counsel referred to the plea of the amendment to the REIWA contract. The minute does not specify what amendment was made. If the amendment was relevant to the present dispute, the terms of the amended clause ought be pleaded. Otherwise no reference need be made to the fact of the amendment.

14 I would not allow the plaintiffs to amend in terms of the minute. I would, however, allow them to bring in a fresh minute. I will hear the parties as to the form of orders and as to costs.