Update Pty Ltd v Commissioner of State Revenue

Update Pty Ltd v Commissioner of State Revenue - [2012] VCAT 1166 - VCAT 2012 case summary — Zoe

[8]

At all relevant times prior to 17 August 2009, Douglas and Sandra Borthwick (the vendors) were the registered proprietors of the land. Some time around June 2008, Andrew Cowper of Cowper & Associates Pty Ltd secured the permission of the vendors to sell the land. At all material times, Andrew Cowper was a registered real estate agent and had been so registered for a period of approximately 20 years from the date of this hearing.
At all times, Souhail Mondous (Mondous) was a real estate developer and had been a real estate developer for many years prior to 2008. He gave evidence that he had purchased 10 parcels of land prior to the subject land. In 2008, Mr Mondous was associated with a Sebastian Canzoneri (who was also involved in real estate development but is a management consultant).
Mr Mondous and Mr Canzoneri are directors of the applicant.
In June 2008, Mr Cowper approached Mr Mondous to purchase the land and subsequently both Mr Mondous and Mr Canzoneri inspected the land in company with Mr Cowper.
Subsequent to the inspection of the land, Mr Mondous and Mr Canzoneri offered to purchase the land for the sum of $1,200,000 and I am told a cheque for a nominal amount was provided to Mr Cowper but not banked. The offer was rejected and, insofar as Mr Cowper can recollect, the cheque was returned.
The interest of Mr Mondous and Mr Canzoneri in relation to purchasing the land was rekindled in November 2008. As a result, in November 2008, Mondous on behalf of himself and Canzoneri made an offer to Cowper that they would purchase the land for the sum of $1,400,000 and settlement would take place in six months.
Mr Cowper gave evidence that he communicated that offer to the vendors who accepted the same. On 1 December 2008, Mr Cowper spoke to Mr Mondous and informed him that the offer that Mr Mondous had made to purchase the land had been accepted. Arrangements were then made between Mr Cowper and Mr Mondous for the contract to be signed by the purchasers the following day on 2 December 2008.
Mr Cowper then altered the contract that had been prepared in June 2008 (which apparently accompanied the previous offer) in preparation for the purchaser's signature. The relevant parts that were amended are as follows :

[92]

The cases referred to by Mr Young strongly suggest that I must judge the parties' intention by the subjective circumstances and those circumstances can also include matters which may take place after the contract. See Chen's case. The applicant's solicitors by letter of 25 February 2009 make it clear that they accept the vendors' proposal and agree to amending the day of sale to 9 December 2008.
In a letter from Cowper & Associates Pty Ltd written by Andrew Cowper dated 5 January 2009, it was clear that the contracts were exchanged on 9 December 2009, 5% deposit was paid into the agent's trust account on 8 December, and the balance of the 10% deposit was banked on 9 December. Thus, it is clear the deposit was paid and the actual contract came into being on 9 December 2008. It is further clear from the letter from the estate agent of 23 August 2010, that the $10,000 paid by Mr Mondous on 1 December 2008, was for the purpose of showing "the purchaser was serious about securing the property". There is no suggestion in that letter that the $10,000 was a deposit.
Further, I agree with the matters referred to by Mr Young above, that the strong objective evidence in this proceeding, is the parties intended to contract on 9 December 2008, not before. That is, when the contract was executed and exchanged.
This contract was for a large and important piece of land insofar as the purchasers were concerned. Mr Mondous gave evidence that he owned adjoining land and the land being purchased would enhance that land considerably and give it a better frontage and a corner position. Thus, it was something that was extremely important and substantial.
The fact that a written contract was provided in advance creates an inference that the parties only intended to agree on the contract being executed by both of them.
This contract was in the REIV form just as the contracts referred to in Allen v Carbone were in the form adopted by the Real Estate Institute of New South Wales in that state. In Victoria, as in New South Wales, the use of the standard form contract by signing an exchange is the usual way that transactions take place in this state. As in Carbone's case, here I find that there was no departure intended from that normal practice.
The particulars of sale making reference to solicitors in itself, in my view, indicates that the parties intended the contract to be in writing.
Further, without repeating each of the clauses referred to by Mr Young in the written contract, which clauses I have referred to above (see paragraph [46] hereof), it is clear from those clauses, that it was the written contract and the written contract alone that the parties were relying upon, not any oral discussions that may have taken place prior to the written contract being fully executed and exchanged. Putting the negotiations in the setting of the matters referred to by Mr Young in paragraph [45](a)-(e) hereof fortifies that conclusion.
Given the matters discussed in the last paragraph, it is clear that the parties on 1 December 2008 had neither reached finality in "arranging all the terms of their bargain" or to be "immediately bound to the performance of those terms" as in the first principle of Masters v Cameron (see paragraph [22] hereof).
In relation to the fourth principle of Masters v Cameron (see paragraph [23] hereof), it is clear by the fact of the clauses in the contract and in particular the "date of sale" in the contract being "2/12/2008" and the matters referred to in paragraphs [45] and [46] hereof, that the parties were not "content to be bound immediately and exclusively by the terms they had agreed".
In the cases referred to by Mr Young - (Allen v Carbone; Goulburn-Murray; G R Securities and Chen's cases), it is proper in the circumstances of this proceeding to look at the objective intentions of the parties. The words of the High Court in Allen v Carbone at 532 are appropriate here :

[95]

In the G.R. Securities case (see paragraph [42] hereof) even though there had been an exchange of letters by the parties, the Court was unwilling to infer a legally binding contract in relation to the sale of land. It held because of the magnitude of the transaction it was necessary for a binding contract, to be signed and exchanged ordinarily "in the form approved by the Real Estate Institute and Law Society". A similar view was expressed by Tadgell J in the Supreme Court of Victoria in Chen's case.
Mr Tisher relied on the Air Great Lakes case (see paragraph [24] hereof) for the proposition that there can be an oral contract relating to land. However, Mahoney JA at 330 made it clear that "the existence of a contract is a consequence which the law imposes upon, or sees as a result of, what the parties have said and done". Looking at what the parties have said and done in this case all point to the fact that there was to be no contract until the contract was fully executed and exchanged.
In my view, the Futuretronics case relied on by Mr Tisher (see paragraphs [28] and [29] hereof) does not assist on the facts of the present case. The Futuretronics case concerned misleading and deceptive conduct under the Fair Trading Act 1985 and the conduct of a purchaser at an auction after the property had been knocked down to him. The situation here is entirely different. Here, there had been long negotiations between the parties and the cases I have referred to above make it clear that there needed in a situation such as he present to be a signed contract and an exchange.
Mr Tisher relied on the fact that both Mr Mondous and Mr Cowper gave evidence that it was the intention that the agreement was concluded when the vendors' acceptance was notified to Mr Mondous on 1 December 2009. In my view, that is subjective intention of the parties and should be given little, if any, weight whatsoever.
In this particular instance, for the reasons I have stated above, and because of the submissions made by Mr Young, which I accept, I find that at all times the parties to the contract did not intend the contract to come into being until 9 December 2008 and I find that was the date of the contract for the purposes of s 201RB(d)(iii).

[100]

Mr Tisher said that as this is a contract partly written and partly oral, the merger rule does not apply.
I have considerable difficulty with the submission by Mr Tisher that the contract is partly oral and partly written. There are no necessary or any terms to the contract that are not in writing. The whole of the parties' agreement is embodied in the written contract. It is not necessary for any oral evidence to be called for the contract to be enforced.
However, if one were to look at the situation prior to 2 December 2008, there is clearly not sufficient for the contract to be enforced. It does not fulfil the statutory requirements of s 126 of the Instruments Act or s 53 of the Property Law Act. Without more, neither party could have brought an action on the agreement without the writing for either damages or specific performance. Without being able to bring an action for breach of contract, it is, in my view, nonsensical to say that the contract, with the importance of this contract, was formed at a time when such an action could not be brought. Given those circumstances, I cannot see how any of this contract is oral at all and I cannot see that the oral part of whatever was the understanding between the parties is sufficient to come within the meaning of the word "contract" in the relevant section. This is reinforced by what I have discussed above, that is, the subject intention of the parties strongly point to the parties' intention to only be bound by a written contract that is signed and exchanged.
Thus, I conclude that whatever the oral understanding between the parties was prior to 2 December 2008, the same has been merged or integrated into the written contract. Therefore, it cannot be said that there is a "contract" within the meaning of the section between the parties prior to 1 December 2008.
In those circumstances, it necessarily follows that the exemption referred to in s 201RB(d)(iii) is not applicable in this situation.
For the above reasons, the assessment of the respondent is affirmed and the disallowance of the applicant's objection is affirmed.

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Decision date

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Judgment (101 paragraphs)

Update Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 1166 (3 August 2012)

Parties

Cases Cited (10)