Tait v Bonnice

[1975] VR 102

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(Judgment by: Menhennitt, J)

Tait
v Bonnice

Court:

Judge:
Menhennitt, J

Subject References:
Income tax
Return of income
Misstatement inserted by innocent agent
Offence committed by person who directed agent

Legislative References:
Income Tax Assessment Act 1936-1971 (Com.) - s230(1).

Hearing date: 11-13 September 1974
Judgment date: 16 September 1974

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Judgment by:
Menhennitt, J

In this action the plaintiffs, Brian Terrence Tait and Patricia Ann Tait, claim specific performance of an agreement in writing dated 14 April 1973 for the sale of the land situate at and known as 31 Summit Road, Frankston. They claim as purchasers of that land; they claim, in the alternative, damages. The defendants are the vendors under the contract relied upon by the plaintiffs, namely, Paul Anthony Bonnice and Patricia Mary Bonnice. It is agreed by both sides that on 14 April 1973 the plaintiffs and defendants signed a sale note which, in its terms, provided for the sale and purchase of the property at 31 Summit Road, Frankston.

It has been decided in a number of cases, including a decision of Little, J, in Koikas v Green Park Construction Pty. Ltd., [1970] VR 142, and three unreported decisions of my own, namely, Chin v Lazdins, decided on 23 April 1974; Normar Nominees Pty. Ltd. v Psarianos, decided on 2 September 1974, and Mason v Papageorgiou, decided on 5 September 1974, that a sale note in the form of the sale note signed by the parties in this case can be a valid and enforceable contract for the sale of land. No submission to the contrary was advanced before me in this case and I, accordingly, decide that that sale note was a valid and enforceable contract for the sale of the land in question. As I have pointed out in one of the decisions of my own to which I have referred, the headnote in Koikas' Case, supra, in what is recorded as being first held, is, in my view, in error and should refer to the Third Schedule as the standard form of contract, and I conclude that, in the present case, the conditions of sale contained in the form of contract of sale prescribed under s8 of the Estate Agents Act 1958 incorporate by reference the standard form of contract in the Third Schedule to the Statutory Rules No.111 of 1964, termed the Rules of the Estate Agents Committee 1964, and that form in the Third Schedule so incorporated by reference includes condition 3(a), namely: "So far as this contract relates to land under the operation of the Transfer of Land Act 1958 the conditions in Table A of the said Act shall apply hereto." That means that there was applicable to this contract the conditions in Table A of the Transfer of Land Act, including condition 6 of Table A.

That sale note, signed by the parties on 14 April 1973, included some special conditions, the last of which was in the following terms: "Subject to purchaser successfully obtaining a loan of not less than fifteen thousand dollars from Hotham Permanent Building Soc."

Some of the findings I make are dependent upon findings of fact as to which there is controversy. But the finding I make on this matter does not depend on any controverted question of fact, and so I go to it straight away.

It is agreed by both counsel that the condition to which I have just referred is a condition subsequent, which I think it clearly is. It contemplates something being done in the future, and in its subject-matter is obviously referable to the subject of the provision of the purchase money, which looks to settlement.

There was, however, basic controversy between the parties as to whether that condition is a condition for the benefit of both parties, or whether it is a condition for the benefit only of the purchasers; and I deal with that matter at this stage.

In my opinion, that condition was a condition for the benefit of the purchasers alone. I come to that conclusion for the following reasons. The prime starting point in looking at and construing any document is the document itself, and in its terms it appears to be a matter which is of concern to the purchasers only, and one for the protection of the purchasers only. The language, "Subject to purchaser successfully obtaining a loan" etc., points to a benefit for the purchasers: namely, a means of them obtaining finance to satisfy the contract. In its subject-matter also, as well as its terms, it appears to me to be a matter for the benefit of the purchasers.

It was argued that the vendors have an interest in this condition, but, in my view, the vendors' only interest is in obtaining payment of the purchase moneys when they were due. It is a matter of complete indifference to them where the money comes from, so long as it is forthcoming when it is due. In reality, in my view, the submission on behalf of the vendors really amounted to--although it was not put in this form--a contention that they had an interest in the purchase price being payable; and that is clearly so. But that interest is covered by the provision for the payment of the balance of the purchase moneys--whenever that might be--and there is, in my view, no real sense in which it can be said that this condition is one for the benefit of the vendors.

Going from the terms of the condition itself to what happened, the surrounding circumstances all, in my view (if it is permissible to look at them), strongly reinforce the conclusion I have stated. The question of obtaining finance through the Hotham Permanent Building Society was raised by the purchasers in the presence of the agent alone, when the vendors were not present. The agent took the step of including it as a condition, and thereby, whether they wanted it or not, the purchasers obtained the benefit of it as a special condition. The first time the vendors heard about the condition, or were aware of it, was when they read the sale note, after it had been signed by the purchasers, when the sale note was presented to the vendors for signature. Having seen it there, they accepted it, and signed the same. There is nothing in that conduct which suggests that the condition was one otherwise than for the benefit of the purchasers.

Nothing in what subsequently happened, in my view, is of assistance or throws any real light on the meaning of this condition. The agent subsequently prepared a contract of sale which, in one form or another, was signed by both parties but was never exchanged. But the agent, he admitted, merely took a precedent from some other transaction. The fact that he then drew a condition which made it for the benefit of both parties reveals no more, in my view, than that he was inexpert in this whole field and was doing no more than drawing upon a precedent but not attempting to put into a contract something that had already been agreed to. Nor does the fact that the purchasers' solicitor was prepared to and did advise his clients to sign the contract of sale, in my view, throw any light on what had been agreed to before the solicitor was consulted.

If the parties had executed the contract of sale prepared by the agent, their agreement would have been a different one from the one they made on 14 April, and the purchasers' Solicitor was prepared to let them sign an agreement in that form. But the contract was not varied in that way, and the fact that he did that does not appear to me to throw any light on what the parties did. The same is true of the answer given in evidence by the male plaintiff, that he regarded the condition in the contract of sale as being an expansion of the special condition. Expansion is an ambiguous expression, and if you expand anything it is usually larger, and it may be different. His views on the matter do not appear to me to throw any useful light on what the condition means and for whose benefit it is in law.

The conclusion I have stated, as to this being a condition subsequent for the benefit of the purchasers only, is, in my view, supported by the authorities. Counsel for the defendants relied upon decisions of the High Court and the Full Court of this Court in relation to conditions, where it was held that they were for the benefit of both parties. One case was Suttor v Gundowda Pty. Ltd. (1950) 81 CLR 418 ; [1950] ALR 820 , a case which concerned a condition as to consent being obtained from the Treasurer. Another was Gange v Sullivan (1966) 116 CLR 418 , where the condition concerned the use of the property under local government provisions. A third was the decision of the Full Court of this Court in Charles Lodge Pty. Ltd. v Menahem, [1966] VR 161; where again the question was one of obtaining permission from a local authority as to use.

The subject-matter of the conditions in all those three cases was very different from the subject-matter of the condition in the present case, which, in my view, is a very material fact in deciding for whose benefit the condition is.

I should add that even where the subject-matter of the condition is the use of the property, the condition can still be for the benefit of the purchasers alone. That was the position in Koikas v Green Park Construction Pty. Ltd., [1970] VR 142, to which I have referred. But, nonetheless, Little, J, held that the condition in that case was for the benefit of the purchaser only, and in one of the decisions which I have given, namely, in Normar Nominees Pty. Ltd. v Psarianos, where the condition was as to compliance with an existing Housing Commission's order for repairs, I held that in the circumstances the condition was a condition subsequent for the benefit of the purchaser alone.

However, in relation to a condition as to obtaining finance, the conclusion I have reached is strongly supported by a case dealing with conditions as to obtaining finance and, in particular, the reasons of the Full Court in Zieme v Gregory, [1963[ VR 214, which affirmed the decision of Hudson, J In that case, the condition was in these terms: "This contract is conditional upon the purchaser obtaining a first mortgage loan of 4000 pounds upon the security of the said land from a life assurance society or other lending institution on or before settlement." In my view, both the Full Court and Hudson, J, decided that that condition was for the benefit of the purchaser alone. Although the word "alone" was not used, in my view, that is what the Full Court and Hudson, J, meant when they dealt with this matter. The Full Court said at p. 222: "It was intended to confer rights upon the purchaser", and I think the clear impression is on the purchaser alone, and at p. 216, Hudson, J, said, after referring to the condition: "This condition clearly, in my opinion, was introduced for the benefit of the purchaser", and then when his Honour goes on to indicate why, the language he uses points, in my view, to the conclusion that he intended to say for the benefit of the purchaser alone. The decision of Hudson, J, in Lombardo v Morgan, [1957[ VR 153; [1957] ALR 429 , points to the same conclusion, although that was not a condition as to finance, but the reasoning, I think, supports the conclusion I have stated. For all of those reasons, I conclude that, as I have said, this was a condition for the benefit of the purchasers alone.

It is convenient, whilst dealing with the condition, to deal with another aspect of the matter, namely, the meaning of the word "obtaining", or the expression "obtaining a loan" in the condition. In my view, that expression means obtaining a loan in the sense of procuring the moneys and not in the sense of obtaining approval for the loan. That appears to me to be the ordinary meaning of the words. One does not obtain a loan until one has the actual moneys available, and until the moneys are available the prospective lender might change its mind. One cannot be said to have obtained a loan until one actually has the money. This, I think, is the view the Full Court took in Zieme v Gregory at p.222, when they said: "Treating the word 'obtaining' as involving something more than a mere acceptance of the terms of a prospective loan", etc. [His Honour then decided the other issues in the case and held that the contract between the parties should be specifically performed and pronounced the following judgment and gave the following directions, there being two mortgages over the land.]

I pronounce the following judgment: The Court declares that the contract between the plaintiffs and the defendants, embodied in the sale note dated 14 April 1973, signed by the plaintiffs and the defendants, with respect to the property at 31 Summit Road, Frankston (that sale note being exhibit "B1" in the action) be specifically performed on Thursday, 31 October 1974, and gives the following directions with respect thereto, namely:--

(1)

that the matter is referred to a master to ascertain the moneys due under the said contract on the said date of settlement, namely, 31 October 1974, and the moneys payable on that date to the mortgagees under mortgages registered Nos. E 238220 and E 599037;

(2)

that upon the said 31 October 1974 the plaintiffs do pay into court the amount so ascertained to be due on that date, namely, 31 October 1974, and that the defendants do, on the said 31 October 1974, produce to the master at a time to be specified by him all titles, deeds and discharges of mortgages and an executed transfer or other document or documents so as to enable the plaintiffs to become the unencumbered registered proprietors of the land referred to in the said sale note, being the whole of the land on Lot 30 on Plan of Subdivision No. 11532 Parish of Frankston, County of Mornington, and being the whole of the land described in certificate of title volume 8898 folio 982;

(3)

that the defendants do cause the mortgagees under the said mortgages registered Nos E 238220 and E 599037 to execute discharges of the said mortgages to be exchanged for the moneys to be paid to the said mortgagees on the said 31 October 1974, as hereinafter ordered;

(4)

that out of the moneys so paid into court by the plaintiffs, there be paid--

(a)

first, to the mortgagee under the said mortgage, No. E 238220, the moneys so ascertained as payable to it on the said 31 October 1974 in exchange for a discharge, executed by the said mortgagee, of the said mortgage;

(b)

and secondly, to the mortgagee under the said mortgage, No. E 599037, the moneys so ascertained to be payable to it on the said 31 October 1974 in exchange for a discharge, executed by the said mortgagee, of the said mortgage;

(c)

and thirdly, to the plaintiffs' solicitor, the plaintiffs' taxed costs of and incidental to this action, including pleadings, discovery, interrogatories and transcript, other than the costs of the amendment of pleadings granted to the plaintiffs this 16 September 1974;

(d)

and fourthly, to the defendants the balance, should there be any balance remaining, and it is ordered that if there should be no such balance, and there be any deficiency in the plaintiffs' taxed costs not met out of the moneys paid by the plaintiffs into court, such deficiency be paid by the defendants to the plaintiffs;

(5)

that upon the said moneys being paid into court by the plaintiffs, the defendants do, on the said 31 October 1974, give to the plaintiffs vacant possession of the said land.

Solicitor for the plaintiffs: Peter J. Callahan.

Solicitors for the defendants: P. D. Armstrong and Gillman.