Beware the second offer!

In conveyancing of all types, it is very common that a contract will only be formed after often lengthy negotiations which may involve a counter-offer or multiple counter-offers. At common law, the laws of contract that govern these arrangements are well known and well understood. However, the legislative overlay imposed by the requirements of the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMDA’) can create difficulties as illustrated by the result in Rice v Ray [2009] QDC 275.

Ready willing and able or not?

A recent decision of the Queensland Court of Appeal (Keane JA, Fryberg and Applegarth JJ) will be of considerable interest to conveyancers. The decision is Davidson v Bucknell [2009] QCA 383.

Joinder to a later unsigned document?

It is well known that a statutory requirement of formality is associated with contracts concerning land. In this regard, s 59 of the Property Law Act 1974 (Qld) provides: No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised. In addition to the possibility of a formal contract, the statutory wording clearly contemplates reliance on an informal note or memorandum. To constitute a sufficient note or memorandum for the purposes of the statute, the signed note or memorandum must contain details of the parties to the contract, an adequate description of the property, the price and any other essential terms. It is also accepted that the doctrine of joinder may be invoked in circumstances where the document signed by the party to be charged contains an express or implied reference to any other document. In this way, a sufficient note or memorandum may be constituted by the joinder of a number of documents.

Can compensation be claimed under the standard commercial land and building contract where the property sold has no legally enforceable vehicular access?

This was the question that confronted Wilson J in Jarema Pty Ltd v Michihiko Kato [2004] QSC 451. Facts The plaintiff was the buyer of a commercial property at Bundall. The property comprised a 6 storey office building with a basement car park with 54 car parking spaces. The property was sold for $5 million with the contract being the standard REIQ/QLS form for Commercial Land and Buildings (2nd ed GST reprint). The contract provided for a “due diligence” period. During this period, the buyer’s solicitors discovered that there was no direct access from a public road to the car park entrance. Access to the car park was over a lot of which the Gold Coast City Council was the registered owner under a nomination of trustees, the Council holding the property on trust for car parking and town planning purposes. Due to the absence of a registered easement over the Council’s land, the buyer’s solicitors sought a reduction in the purchase price. The seller would not agree to this. Finally the sale was completed with the buyer reserving its rights to seek compensation.

A superannuation fund as a buyer?

In Bennett v Stewart McMurdo J considered the operation of a contract where the buyer was described as a superannuation fund. The Bennetts signed a standard REIQ contract as buyers of the Stewarts’ house and land. However, the reference schedule to the contract document contained these words next to the word ‘buyer’: ‘Bennett Superannuation Fund’ The Bennetts wished to enforce the contract. In response, the Stewarts (the sellers) raised two issues: • As the ‘Bennett Superannuation Fund’ was a trust and not a distinct legal entity capable of making a contract, the contract did not specify who was the buyer, so that the contract was void for uncertainty; and • The contract was unenforceable as there was no sufficient note or memorandum for the purposes of s 59 of the Property Law Act 1974 (Qld) as s 59 requires, amongst other things, an identification of the parties. McMurdo J did not accept either of these arguments and made an order for specific performance in favour of the Bennetts. Looking at each issue separately:

Mortgages and insolvency

With an amalgam of statutory and common law duties, great care has always been required when considering the obligations of either mortgagees or receivers when exercising power of sale. Unfortunately, that position has only become more complicated with the enactment of the Property Law (Mortgagor Protection) Amendment Act 2008 (Qld).

Changes to the REIQ contract and conveyancing case law update

The Reference Schedule to the REIQ houses and land contract and the lots in a Community Titles Scheme (“CTS”) contract has been amended to contain provision for disclosure concerning the installation of an approved safety switch. This section will not be required to be completed if the land is vacant (in the case of the houses and land contract) or if the present use is a commercial use (in the case of the lots in a CTS contract).

The source of the good faith obligation in the performance and enforcement of commercial contracts

There are many issues associated with good faith that will ultimately confront the Australian High Court and a number of these have been well canvassed. However, one significant issue has attracted relatively little comment. To date, a number of Australian courts (lower in the judicial hierarchy) have been prepared to hold directly, tacitly accept or assume (without making a final determination) that good faith is implied (as a matter of law) in the performance and enforcement of a very broad class of contract, namely commercial contracts per se. This broad approach is demonstrated in decisions from the Federal Court, the New South Wales Court of Appeal, the Supreme Courts of Victoria and Western Australia and has crept into pleadings in commercial matters in Queensland

Acquire a practical overview of 'good faith' in commercial contracting

The twists and turns in the ongoing development of the implied common law good faith obligation in the commercial contractual arena continue to prove fertile academic ground. Despite a lack of guidance from the High Court, the lower courts have been besieged by claims based, in part, on the implied obligation. Although lower court authority is lacking consistency and the ‘decisions in which lower courts have recognised the legitimacy of implication of a term of good faith vary in their suggested rationales’, the implied obligation may provide some comfort to a party to ‘at least some commercial contracts’ faced with a contractual counterpart exhibiting symptoms of bad faith.