Smits v. Tabone; Blue Coast Yeppoon Pty Ltd v Tabone [2007] QCA 172

Court of Appeal (Qld)|2007-05-30|Before: Jerrard JA

[1] JERRARD JA: This matter was the hearing of applications for stay orders in two separate appeals. Appeal CA No 2651/07 is from a judgment of the Supreme Court given on 5 March 2007, granting an application by Dorothy Tabone for the removal of a caveat lodged on 9 February 2007 by Mr Smits, on Lot in the County of Livingstone Parish of Yeppoon, being title reference 50629570 ("the land"). The applicant Leonardus Smits, the respondent below, claimed in the caveat to have an equitable interest in that land as a purchaser in fee simple. Appeal CA No 4208/07 is from a judgment of the Supreme Court given on 14 May 2007, in which the same learned judge upheld a second application by Dorothy Tabone, for the removal of a caveat lodged over the land on 26 March 2007, this time by Blue Coast Yeppoon Pty Ltd ("Blue Coast"). In that caveat Blue Coast claimed to have an equitable interest as purchaser of an estate in fee simple in the property, or alternatively an equitable interest created by the registered proprietor's conduct.

[2] The reasons for judgment given on 5 March 2007 record that on 29 September 2005 the current registered proprietor's predecessor in title (her father)[1] entered into a contract to sell the land to a company Capricornia Blue Pty Ltd ("Capricornia Blue"), for $4,600,000. On 31 August 2006 the applicant Mr Smits entered into an agreement with the principal share holder of Capricornia Blue, to buy the entire issued share capital in Capricornia Blue. Completion of the share sale agreement was fixed to be simultaneous with the date of completion of the purchase of the land; the object of the share purchase by Mr Smits was to enable him to get effective control of the land.

[3] In November 2006 Mr Smits, through his solicitor, began negotiations to purchase the land directly from the registered proprietor, and on 10 November 2006 sent an offer to buy the land for $4 million. In an affidavit sworn on 28 February 2007, Mr Smits described a conversation held on 28 November 2006 between himself and a Mr Deaves, a solicitor acting for Dorothy Tabone, in which Mr Smits recalled that Mr Deaves said to him words to the effect that Mr Smits (or his corporate nominee) would be the successful purchaser of the land from Dorothy Tabone, subject to agreement upon a price with Mrs Tabone. In an affidavit sworn 11 May 2007, Mr Smits expanded on his description of that conversation, to record that Mr Deaves had said that he (Mr Deaves):

"cannot see any problem in her going ahead with you if the sale to Hogbin is not completed and the price is right."

[4] The latter remark reflected the fact that at the time of that conversation (November 2006) there was the contract between Capricornia Blue and the registered proprietor, which in fact did not go ahead after that date. On 6 December 2006 that company failed to complete the contract, and that contract was terminated at 5 pm on that date. Later that day Mr Smits' solicitor delivered a second offer to purchase for $4 million, accompanied by a cheque for $25,000 by way of a deposit. The offer was signed by Mr Smits as a Director of Blue Coast. As at that date, that company had not been incorporated.

[5] On 11 December 2006 the registered proprietor's solicitors responded to Mr Smits, advising that the registered proprietor did not wish to discuss the sale of the land until the New Year. Solicitors for Mr Smits wrote on 12 January 2007 to the registered proprietor's solicitors, asking for an indication as to whether the terms of the contract were acceptable, and whether it was likely in the foreseeable future that the contract would be counter signed. On 19 January 2006 the registered proprietor's solicitors replied that they had no present instructions from their client in respect of the contract submitted by Mr Smits' solicitors.

[6] On Mr Smits' affidavit evidence of 28 February 2007, he was told by Mr Hogbin on 29 January 2007 that Mrs Tabone:

"...had accepted my purchase price of $4.6 million and that the replacement contract would be executed with my company within the next week."

[7] Mr Smits' affidavit evidence before the learned judge (and on this application) had only described offers of $4 million by him, as at that date.

[8] The learned judge expressed that in this fashion in the reasons for judgment:

"Between then and the 30th of January it is alleged by Mr Smits that the registered proprietor had a discussion with Mr Hogbin in which Mr Hogbin was told that the registered proprietor would sell the property for $4,600,000."

[9] Mr Smits' solicitors then wrote on 30 January 2007 to the solicitors for Mrs Tabone, saying:

"We refer to the above and are instructed to make an offer for your client's land in the amount of $4.6 million. As you are aware you hold a cheque from our client for $25,000. If your client requires a further amount by way of deposit would you please advise so that we can take instructions from our client about making payment of such larger amount. The basis upon which our client is proposing settlement is unconditional in 10 business days. If these terms are satisfactory to your client would you please prepare a contract for immediate execution."

[10] That letter was written on behalf of Blue Coast; in a statement of claim filed by the two applicants as plaintiffs, on 26 March 2007 (after the judgment in the application against Mr Smits) it is pleaded that on or about 29 January 2006 Dorothy Tabone offered to sell Lot 1 to Mr Smits or his nominee for $4.6 million, and that on or about 30 January 2007 Mr Smits accepted her offer. That pleading appears to rely for the offer on the conversation between Mr Smits and Mr Hogbin, in which Mr Hogbin assertedly repeated what Dorothy Tabone had said to him; and upon the letter of 30 January, in terms making an offer, as the acceptance.

[11] The reasons for judgment of 5 March 2007 record that on 31 January 2007 that offer of $4.6 million was rejected, and a counter offer made at a price of $6 million. Despite those circumstances, the argument advanced on Mr Smits' behalf to the learned trial judge was that there was an oral agreement to sell the land to him for $4.6 million.

[12] The judge held that conclusion would only be reached if the conversation between Dorothy Tabone and Mr Hogbin amounted to a binding offer by her to sell the land for that price, and also if the letter by Smits' solicitors dated 30 January 2007 could be construed as an acceptance of it. The judge noted that it was not alleged to the judge that Mr Hogbin was an agent for either Mr Smits or Dorothy Tabone at the time of that conversation with Dorothy Tabone, and it appeared to the judge to amount to no more than a discussion between Dorothy Tabone as registered proprietor and a third party, to the effect that she would sell the land at that price. Further, the letter of 30 January 2007 did not purport to accept that offer, but instead made an offer. The judge thought that conclusion abundantly clear. In those circumstances, there was no oral agreement for the purchase of the land.

[13] The learned judge heard argument that an equitable interest had arisen on the basis of an equity of expectation, of the sort described in Riches v Hogben [1985] 2 Qd R 292. The learned judge dismissed that argument too, essentially on the ground that whatever steps Mr Smits had taken in the expectation there would be a contract, those steps could only have been taken on the basis that Dorothy Tabone would negotiate with him concerning the price, and with the prospect that if an agreement on price could be reached, a contract might be entered into. The judge concluded that no estoppel could arrive in those circumstances, and accordingly there was no arguable case for the claimed interest in support of the caveat.

[14] In respect of the appeal by Blue Coast, the learned judge heard an application on 14 May 2007, and noted that his decision of 5 March 2007 was presently the subject of an appeal, but that as yet no application for a stay had been made. An affidavit from Mr Smits sworn 11 May 2007 was read on that hearing on the company's behalf, in which Mr Smits deposed in more detail to the conversation with Mr Deaves on 28 November 2006. The learned judge considered that the more detailed version still reached the same end result, namely that price had not been agreed between the parties, and that Mr Deaves had said that he could not see any problem with Dorothy Tabone going ahead with Mr Smits if the sale to Hogbin was not completed and if the price was right.

[15] The learned judge added that to create an estoppel by expectation there must be more than simply an expectation that, subject to an agreement being reached, a contract would be entered into. The judge saw no reason to come to any different conclusion than that in the earlier judgment, and ordered that the caveat lodged by Blue Coast be removed.

[16] The learned judge granted a stay of 14 days, and that led to the application to this Court, for an extension of the stay order until the hearing of the appeal from the two orders. An extension was ordered on 25 May 2007, of the stay granted by the judge, until the publication of these reasons and orders.

[17] The grounds of appeal attack the findings of fact by the judge and the conclusion that Dorothy Tabone was not estopped from denying the existence of an agreement to sell, or an enforceable promise to sell. The written submissions in support of the stay application contend that Mr Smits behaved consistently with the expectation created by Mr Deaves in the conversation on 28 November 2006, particularly in taking no steps to complete the purchase of shares in Capricornia Blue, and contend that because the property is a unique parcel of land, damages would not be an adequate remedy if the appeal succeeds. Accordingly, success would prove abortive if a stay were not granted. The applicants contend there is a serious question to be tried with respect to the formation and existence of a contract to convey the property, and likewise with respect to the equity of expectation.

[18] There are difficulties with the appeal on its merits, apart from the status of Mr Hogbin and his capacity to bind Dorothy Tabone. Council for the applicants argued on the stay that it did not matter that they did not plead or contend Mr Hogben was an agent of either Dorothy Tabone or Mr Smits at the time of the conversation on 29 January 2007. Counsel agreed he did not contend that Mr Hogbin was an agent of the respondent, authorised to communicate agreement to sell at $4.6 million. He contended that nevertheless the circumstances gave rise to an arguable case for an equity, because Dorothy Tabone could not tell Mr Hogbin she would sell to Mr Smits for $4.6 million, and then refuse to do so the next day. He contended that was supported by the judgment in Riches v Hogben [1985] 2 Qd R 292 at 300-301; but there is a dearth of evidence here of conduct by the respondent encouraging either applicant to act on any representation by her, and thus making it unconscionable for her to depart from assumptions she had induced in the applicants.[2]

[19] The applicant's letter of 30 January was an offer, in its terms, not an acceptance. No writing is pleaded or proved which could satisfy s 11 or s 59 of the Property Law Act 1974 (Qld), and no acts of part performance are described as taking place after 29 January 2006. Further, as to the equity of expectation, at all times Mr Smits understood that the price had to be "right", and that it had not been agreed between him and Dorothy Tabone.

[20] In my opinion the applicants demonstrate insufficient prospects of success on the appeals against the orders removing the caveats to justify the grant of a stay of that order. Even though an undertaking as to damages was given, I consider the existing stay should be lifted, and order that the applications for a stay be dismissed, the stay ordered by myself on 25 May 2007 be discharged, and the applicants pay the respondent's costs of this application assessed on the standard basis.

[2] Riches v Hogben [1985] 2 Qd R 292 at 301_; Waltons Stores (Interstate) Ltd v Maher_ (1988) 164 CLR 387 at 427-429, per Brennan J; Austotel P/L v Franklins Self-service P/L (1989) 16 NSWLR 582 at 585, 610 and 618.

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