SOMMERS v PEARSE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY AP SHELLER and POWELL JJA 21 October 1993, 16 December 1993 [1993] NSWCA 249 Practice and Procedure — Specific Performance — Stamp Duty — Vendor and Purchaser — Pleading — Readiness and willingness to perform Practice and Procedure — Specific Performance — Pleading — Oral term omitted from memorandum — Undertaking or submission to order to perform Stamp Duty — Agreement for sale of land — Allegation that agreement structured so as to avoid stamp duty — Effect if allegation proved Mehmet v Benson (1964-1965) 113 CLR 295 London and Birmingham Railway Company v Winter (1840) Cr and Ph 57 Alexander v Rayson [1936] 1 KB 169 Effie Holdings Properties Pty Ltd v 3A International Pty Ltd (1984) NSW Conv R55-174 Vendor and Purchaser - Agreement for sale of land - Collateral agreement to pay vendor's "expenses" - Specific performance - Whether conditional upon performance of collateral agreement. ORDER that the Appeal be dismissed. ORDER that the Appellant pay the Respondent's costs of the Appeal. Mahoney AP The facts are detailed in the judgment of Powell JA which I have had the advantage of reading. I agree that the appellant fails in this appeal. In deference to the careful and detailed arguments of Mr McDougall QC for the appellant, I shall add to what has been said by Sheller JA and Powell JA some observations of my own. 1. THE CONTRACTUAL RELATIONSHIP BETWEEN THE PARTIES: It is proper to approach this matter upon the basis of the findings of fact made by the learned trial judge. In my opinion no effective attack has been made upon them. Relevantly, the parties did two things: they entered into a written contract of sale which bears the date 16 April 1988 ("the contract of sale"); and they made an agreement which involved the payment of an additional $50,000 ('the agreement"). In my opinion, the agreement was not part of the contract of sale: it was related and collateral to it but it was not part of it. The defendant Mrs Sommers was prepared to enter into the contract of sale only if the plaintiff Mr Pearse entered into the agreement with her. Upon his doing so, she entered into the contract of sale. This view of the two transactions accords, in my opinion, with what the parties intended and with what they did. The intention of the parties was or related to two things: the making of a contract of sale for the sale of the land for $650,000; and the payment by Mr Pearse to Mrs Sommers of an additional sum (subsequently quantified at $50,000) to cover "her costs and her expenses". The parties kept these two things conceptually separate. The written contract of sale was signed, 2 UNREPORTED JUDGMENTS as to separate counterparts, by the respective parties and dated 16 April 1988. The fact that an exchange took place (or at least that the counterpart signed by Mr Pearse was made available to Mrs Sommers) only towards the end of April 1988 does not, I think, affect the matter. The written contract of sale was treated separately in subsequent negotiations between the parties, eg, in relation to the amount of the deposit and otherwise. A handwritten document was signed by Mr Pearse in relation to the agreement. That was signed subsequently and the amount of $50,000 payable under it was dealt with separately from the amounts payable under the written contract of sale. The parties might have structured their contractual arrangements differently. Thus, they might have incorporated the contract of sale and the agreement in one contract and embodied that contract in a single document. They chose not to do so: at least, they did not do so. I see no reason in principle why the court should not accept the contractual relations between them to be what they intended them to be. The evidence supports the conclusion that the contractual relationships they intended were those to which I have referred. The matter was dealt with at length in the cross examination of the plaintiff Mr Pearse. His evidence establishes, in my opinion, that Mr Pearse did not intend to make a contract "any higher than" the price of $650,000 offered by him. To meet the difficulty posed by Mrs Sommers' requirement that "her costs and her expenses" be met, he was asked to "offer to pay her costs and expenses later on" and they were suggested to be "$50,000 or about that, whatever she wants". Mr Pearse said: "Well, I could probably get the money later on if she would agree to do it after I settle on the contract". It was that which the parties agreed to do. Mr Pearse said that Mrs Sommers told him that she would "throw in some extra machinery", to which she referred, "to sweeten the deal up". He said: 'At the end of the day she said to me, 'if you could pay my expenses and my costs, I will sell the property and I will throw in a few other things". Mr Pearse affirmed that he was not prepared to pay $700,000 "to become the purchaser of Rayleigh Park" but he was "comfortable in finding the extra $50,000 to pay her solicitors' costs and her advertising costs and her expenses". And he reiterated that "the figure of $650,000 was as much as you could do on contract". Mr Pearse has maintained his willingness to pay the $50,000 provided for by the agreement. As I understand his case, he has at all relevant times been prepared to pay that sum without reference to the transfer to him of machinery, equipment or the like. The inability or unwillingness of Mrs Sommers to transfer such to him does not, I think, affect relevantly his rights under the transaction. On this basis, the transaction is one in which Mr Pearse offers to perform the agreement by payment of $50,000 and seeks specific performance of the contract of sale. I see no conceptual difficulty in such an approach. 2. ILLEGALITY: If the transaction be viewed in this way, it does not appear that any issue of illegality arises. Stamp duty is, of course, payable on the contract of sale. It has not been suggested that, under the Stamp Duties Act 1920 the stamp duty payable on the contract of sale is affected by the fact of the agreement. That matter has not been investigated. If it should be that the agreement had such an effect, no doubt the plaintiff Mr Pearse would meet the relevant stamp duty. URJ SOMMERS v PEARSE (Sheller JA) 3 Once it be accepted, as in my opinion it should, that there was no intention to avoid stamp duty and that the structuring of the transaction in the way it was structured was not undertaken with the intention or purpose of avoiding stamp duty, no issue of illegality arises. 3. THE PLAINTIFF'S READINESS. WILLINGNESS AND ABILITY TO PERFORM THE CONTRACT: A plaintiff claiming specific performance of a contract must be, at the relevant date, ready willing and able to perform the contract as far as it remains to be performed by him. If that does not appear, the other party to the contract may resist specific performance. Reference was made in argument to, eg, Mehmet v Benson (1965) 113 CLR 295 and Green v Sommerville (1979) 141 CLR 594. There is no doubt that a defendant in a proceeding for specific performance may succeed if the plaintiff's readiness, willingness and ability to perform does not appear. But I confess to the feeling that in many cases, of which this is one, defences of this kind have about them an air of artificiality. The point is often taken rather by ambush than to enforce the substantial merits of the case. In the days when pleadings were precise and demurrers were taken if they were not, the omission to particularise such matters in the statement of claim or to prove them formally in evidence could be fatal. A plaintiff could fail notwithstanding that there was in substance no question but that he would and could complete the contract. The law must be observed and what is to be proved must be proved. But the view may now be adopted, I trust, that pleadings and proofs are to serve, not to govern, the determination of disputes according to their substantial merits and that, if there be defects in the pleading, particularisation and proof of such matters, such defects can, when pointed out, be adjusted. In the present case, there were no formal pleadings. The matter proceeded on summons and the claims made by the parties were particularised less formally. It is, in my opinion, plain that Mr Pearse was at all relevant times willing and anxious to complete the contract of sale and the agreement and was able to do so. 4. REPUDIATION: It was submitted or suggested that the plaintiff had repudiated the transaction by refusing to perform "except on his terms". If the transaction be as I have held it to be, the plaintiff was, in my opinion, willing to perform it in accordance with its true purport. It was submitted or suggested that the defendant had not repudiated the transaction. It is sufficient that she refused to perform the contract of sale. That, in the circumstances, entitles the plaintiff to specific performance of it. 5. THE FORM OF THE ORDER: I agree with what has been said in this regard by Powell JA. On this basis, I agree that the appeal should be dismissed with costs. Sheller JA I have had the benefit of reading the judgment prepared by Powell JA. His Honour has set out the facts in his judgment and I need not repeat them in detail. McLelland J, as he then was, said that in all the circumstances he was not prepared to make a finding that Mr Pearse, the respondent, in executing the contract in the form which it took was intending to defraud the Crown by evading the payment of additional stamp duty. Like Powell JA I can see no basis upon which this Court can interfere with this conclusion. The appellant, Mrs Sommers, challenged the correctness of his Honour's observations that the amount of stamp duty saved was relatively small and that the potential incidence of capital gains 4 UNREPORTED JUDGMENTS tax might have provided a stronger motive to maximise the stated contract price than the incidence of stamp duty would have provided to minimise it. Read in context I do not regard these as inappropriate matters for his Honour to refer to in reaching the conclusion he did having seen the respondent in the witness box. It follows that the appellant's claim that the agreement for sale should not be enforced because it was structured to achieve an unlawful purpose fails; see the discussion of the cases by Giles J in Yaroomba Beach Development Company Pty Ltd v Coeur de Lion Investments Pty Ltd (1989) 18 NSWLR 398 at 413 and following. Formal pleadings were not filed but the matter proceeded with points of claim and a defence which were amended from time to time. In his points of claim dated 5 April 1989 the respondent described the agreement to be enforced as one to purchase the property for $650,000 and asserted he was ready and willing and offered to do anything remaining to be done to complete that contract. In a final version of the points of claim, which was apparently filed in September 1992 pursuant to leave granted by McLelland J on 4 September 1992 before the appellant closed her case, the respondent persisted with that claim but said in addition that he was ready willing and able to pay to the appellant the sum of $50,000 upon completion or alternatively if it should be found that the agreement was one to purchase the property for $700,000 of which $650,000 was to be paid upon completion and as to $50,000 upon completion or within a reasonable time thereafter he was ready willing and able and offered to do anything remaining to be done to complete that contract. McLelland J regarded the conflict as being one as to whether the oral agreement was that the additional $50,000 be payable after completion or merely as part of the purchase price. He considered it probable that the oral part of the agreement reached between the respondent and Mr Gordon as the appellant's agent was that the additional $50,000 would not be payable on settlement but could be paid by the respondent within a reasonable time. Consistent with this it seems to me that the respondent was entitled to a transfer of the property upon the payment of $650,000. His Honour was satisfied that the respondent.was "presently ready and willing to complete the purchase and to pay the balance of the $700,000". Part of the appellant's case at first instance and on appeal was that the contract which the respondent was seeking to enforce was not the contract which the evidence showed was the true contract between the parties. The appellant relied upon a passage in the judgment of Windeyer J in Mehmet v Benson (1965) 113 CLR 295 at 314 which points to the need for a plaintiff in an action for specific performance to allege in his pleading and prove at the hearing his readiness and willingness to perform the contract, readiness involving an ability to perform it. His Honour said: "At the date when the suit is commenced the plaintiff must then be in a position to say that he is ready and willing to do at the proper time in the future whatever in the events that have happened the contract requires that he do.... " In Green v Sommerville (1979) 141 CLR 594; although the plaintiff respondent alleged her readiness and willingness to perform the contract, by insisting that it was agreed that the payment of interest should be waived, she insisted on a mode of performance of the contract to which she was not entitled. What is more, she did not in her statement of claim offer to perform the contract on its true construction. At 600-1 Barwick CJ said: "Tt is a condition precedent to success in a purchaser's action for specific performance that the purchaser should, at the institution of the suit, be ready and willing to perform the contract. It is quite true in this case that the respondent URJ SOMMERS v PEARSE (Sheller JA) 5 took an erroneous view of her obligation in respect of payment of interest on the unpaid money. Indeed, as the Full Court decided, both parties adopted erroneous views in relation to that matter. None the less, in my opinion, on the facts as they appeared before the primary judge, it could not be said that the respondent was unwilling to perform the contract according to that construction of it which the Court might put upon it. The adoption by a party of an erroneous construction of the contract is not necessarily fatal to the proposition that, none the less, the party remains ready and willing to perform the contract according to its terms properly construed. In my opinion the Full Court was not in error in concluding that the respondent was ready and willing to perform the contract. " At 611, in a judgment with which Murphy and Aickin JJ agreed, Mason J said after referring to the circumstances which I have set out: "However, in the circumstances of this case I do not think that these considerations are inconsistent with a finding that the respondent was ready and willing to perform the contract at the commencement of the suit. First, the respondent was, on the view which I take of the contract, ready and willing to perform her essential obligation under the contract, that is, by paying the balance of the purchase price. Secondly, it is a general principle of the law of contract that the court will not readily infer from a party's insistence on a wrong construction of a contract that he is unwilling to perform it according to its true construction. This principle applies to The plaintiffs readiness and willingness in a suit for specific performance (Sweet and Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 at 734). Although there is, as far as I am aware, no recorded instance of the application of this or of a similar principle to circumstances in which the plaintiff, as here, has insisted on an oral variation of the contract which is determined against her, 1 can see no reason why the principle should not apply to a case in which there is a dispute as to the nature and effect of an oral agreement and the view for which the plaintiff contends is bona fide held by her. The fact is, as the primary judge found, that both parties maintained an incorrect view as to the amount of interest payable. In this situation 1 agree with Burt Cl in the Full Court when, quoting the observations of Stephen, Mason and Jacobs JJ in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432, he said that it was a case in which the respondent 'though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor'. It was not a case in which the plaintiff persisted in an untenable view of the contract. Nor was it a case in which it could be said that the respondent came with unclean hands. This is important because the concept of readiness and willingness is an exemplification of the maxim 'He who comes to equity must come with clean hands'." For my part I see no reason why, there being no strict pleading, the respondent should not be permitted to obtain relief on the basis of the amended points of claim which were filed by leave and without objection. In my opinion McLelland J was entitled to conclude as he did that on the final analysis the appellant's argument depended upon the proposition that the respondent had continued to assert that the agreement for the additional $50,000 was collateral to the contract for sale, whereas the true analysis of the position was that it was part of the contract for sale. McLelland J said: "T do not consider that there is any substance in the defendant's argument on this point, since the plaintiff has at all material times conceded the matter of substance, namely that he is obliged to pay the additional $50,000." 6 UNREPORTED JUDGMENTS His Honour, being satisfied that the plaintiff was presently ready and willing to complete the purchase and to pay the balance of $700,000, ordered that the agreement for sale of land entered into on 16 April 1988 between the defendant as vendor and the plaintiff as purchaser be specifically performed and carried into execution. I am satisfied that the findings his Honour made were open to him and that based on those findings it was open to him to make an order for specific performance. I agree that the appeal should be dismissed with costs. Powell JA It seems to me mat the fate of this appeal from a Judgment delivered, and Orders made, by McLelland J (as he then was) in proceedings brought by the Respondent ("Mr Pearse") against the Appellant ("Mrs Sommers') for the enforcement of an Agreement for Sale, said to have been made on 16th April 1988 between Mrs Sommers, as vendor, and Mr Pearse, as purchaser, in relation to a farm property known as "Rayleigh Park", is, in reality, determined by the findings of fact - which, as it appears to me, were clearly open on the evidence tendered at the trial - made by His Honour, and incorporated by him in his Judgment. That this should be so will, I believe, be apparent from the history which I set out below. In 1988 Mrs Sommers was registered as the proprietor of the lands comprised in Certificate of Title Registered Volume 13469 Folio 163, which lands comprised the farm property known as "Rayleigh Park". Although she seems not to have acquired the property until August of the previous year - the purchase price being some $650,000.00 - in about January 1988, Mrs Sommers determined to dispose of the property, following which she retained the services of William Inglis and Son Pty Ltd ("William Inglis") for the purposes, first, of conducting a clearance sale of the horses and equipment on the property - this appears to have taken place in February 1988 - and, second, for the purpose of selling "Rayleigh Park" itself at auction - the auction sale later being appointed for 16th April 1988 - a Saturday - on the property - the member of the staff of William Inglis with whom Mrs Sommers dealt for this purpose was a Mr Terry Gordon who appears to have been located at the Camden office of William Inglis. It seems clear enough that, prior to 16th April 1988, Mrs Sommers' then solicitors, Messrs Wilkinson Throsby and Edwards, had prepared a form of Agreement for Sale for use at the auction. That form of Agreement for Sale - based upon the 1986 Edition of the standard form of Agreement for Sale approved by the Law Society of New South Wales and the Real Estate Institute of New South Wales - which provided for the inclusion in the sale of "inclusions in the house" as well as a number of items of plant, contained a number of Special Conditions, of which, for present purposes, the only relevant one was the following:- "D. TIME FOR COMPLETION AND NOTICE TO COMPLETE Completion shall take place thirty-five (35) days from the date of this agreement. If completion does not take place then, the parties agree that fourteen (14) days is a reasonable and sufficient period of notice for a Notice to Complete making time of the essence of this agreement." Prior to the commencement of the auction on 16th April 1988, Mrs Sommers, in a conversation with a Mr Inglis, who was to conduct the auction, and Mr Gordon, set a reserve of $700,000.00 on "Rayleigh Park". At the auction, Mr Pearse was the highest bidder, but, as his bid of $440,000.00 fell below the reserve, the property was passed in; however, as the highest bidder, Mr Pearse was then invited to make a further offer for the property. URJ SOMMERS v PEARSE (Powell JA) 7 While so much of the history as I have just recorded does not appear to be the subject of any dispute, what occurred in the course of the negotiations which followed is the subject of significant dispute, a situation which His Honour thought to be due to the fact that, as he held was, in all probability the case, contrary to what seems to have been the common recollection of each of Mr Pearse and Mrs Sommers - neither of whom he believed had any clear, or accurate, recollection of what had occurred - "very little if any of the relevant negotiations were carried on between (them) face to face" and that "during the significant part of the negotiating process (Mr Pearse) and (Mrs Sommers) were in separate rooms in the homestead and Mr Gordon acted as their channel of communication". Before passing on, it should be noted that, although present at the hearing, Mr Gordon was not called to give evidence. Although His Honour has not made any detailed findings as to the course of the negotiations, it is implicit in his findings that, after Mr Pearse had made two offers - the first of $600,000.00, and the second $650,000.00 - each of which, when communicated to her, Mrs Sommers had rejected, Mr Gordon sought to have Mr Pearse pay a further $50,000.00 by indicating to him (Mr Pearse) that Mrs Sommers would be prepared to accept the offer if he (Mr Pearse) were to agree to reimburse Mrs Sommers her expenses, which expenses, so it was suggested, amounted to $50,000.00. It is also implicit in His Honour's findings that, after Mr Pearse had told Mr Gordon that he would be agreeable to doing so if he were to be allowed to defer the payment of the additional $50,000.00 until after settlement, Mr Gordon, having apparently consulted with Mrs Sommers, informed Mr Pearse that she (Mrs Sommers) would be prepared to accept Mr Pearse's offer if he were to agree that, in the event that settlement had not taken place by 27th July 1988, he would pay her (Mrs Sommers) $200,000.00 representing part of the purchase price, to enable her (Mrs Sommers) to pay out some bank bills which were to fall due on that day. That further stipulation having been agreed to by Mr Pearse, Mr Gordon then completed the form of Agreement for Sale by (inter alia) filling in details of the price - $650,000 - and deposit - $65,000 - and by adding to the Special Conditions a further condition reading: - "G. If contract is not completed by 27th July 1988 purchaser will release $200,000 (Two hundred thousand dollars) of purchase price to vendor." following which each of Mr Pearse and Mrs Sommers signed their respective parts of the Agreement for Sale. Despite the terms of the standard form of Agreement for Sale as to the payment of the deposit, Mr Pearse did not then pay, or hand over, to Mr Gordon a cheque for the amount of, the deposit. Although Mrs Sommers appears to have become aware of this fact on 19th April 1988, in the events which have happened, nothing turns on the fact. On 20th April 1988, Mr Pearse went to the Camden office of William Inglis where he gave Mr Gordon a cheque for $45,000.00 on account of the deposit, at the same time promising to return on the following day with a bank cheque for the balance. While Mr Pearse was at the Camden office of William Inglis on this occasion, Mr Gordon wrote out, and had him (Mr Pearse) sign, a document in the following - not entirely appropriate terms. "T hereby acknowledge owing Mrs Marjorie Sommers $50,000 (Fifty thousand dollars) to be paid in cash, for the purchase of Rayleigh Park. To be paid to Terry Gordon as Mediator." 8 UNREPORTED JUDGMENTS at the same time amending the original and counterpart of the Agreement for Sale - both of which remained in his custody - by striking through the words and figures "thirty-five (35) days from the date of this agreement" where appearing in Special Condition D and overwriting the words and figures "prior to 31st August 1988". Although in an Amended Defence and Cross-Claim filed on the second hearing day, Mrs Sommers alleged first, that the alteration to Special Condition D was made without her authority, and, second, that the alteration constituted a repudiation by Mr Pearse of the Agreement for Sale, in his Judgment (at 13) McLelland J recorded that it was unnecessary for him to pursue the first question as Mrs Sommers did not contend "that the alteration had the effect of avoiding the contract, and the contractual date for completion (had) ceased to be of significance". (see also Appeal Book at 182) Mr Gordon appears to have telephoned Mr Pearse later on the same day or on the following day to ask whether he (Mr Pearse) would be prepared to release the part deposit of $45,000.00, in which event Mrs Sommers would not require payment of the balance of $20,000.00 required to make up the full deposit - to this enquiry Mr Pearse replied that he would agree if his solicitor approved and if the arrangement were acknowledged by Mrs Sommers' solicitors. The counterpart of the Agreement for Sale which had been signed by Mr Pearse appears to have been made available to Mrs Sommers, or her solicitors, at the end of April 1988, and a copy of the handwritten document signed by him on 20th April 1988 given to Mrs Sommers' son on 9th May 1988. Thereafter, on 13th May 1988, Mrs Sommers' then solicitors forwarded to Mr Pearse's solicitors, by facsimile, a letter which was, in part, as follows:- We ask you to obtain instructions on the following points: - 1. Deposit of $45,000 only has been paid and we are told by the agent that your client has since promised to pay the remaining $20,000 to bring the deposit to the 10 per cent. Will you please see that this is done without any further delay. 2. We are also instructed that after exchange of contracts the parties verbally agreed that the deposit was to be released to our client immediately. We are instructed that without prejudice to our clients rights under the contract she would be prepared to accept the deposit of $45,000 now paid in lieu of the 10 per cent deposit if the amount already paid is released to her forthwith. 3. We are also instructed that notwithstanding the provisions of Special Condition D, which provides that settlement is to take place prior to 31 August 1988, our client agreed that the extension of time for completion was a date no later than 14 August and we would appreciate your confirming that your client will agree to complete the transaction before 14 August... After what appears to have been a course of negotiation, Mrs Sommers' then solicitors, on 18th May 1988,forwarded to Mr Pearse's solicitors, by facsimile, a "FAX message" in the following terms: "We confirm our instructions that our client agrees to the deposit of $45,000.00, which we note your client has agreed to release, being paid to her account 'M. Sommers Rayleigh Park' account No. 03 519 3607 at the Bowral branch of the National Australia Bank branch no. 082-476 and an authority could be sent to the agent to account in this manner. We also confirm that we are instructed that in consideration of the release of the said amount of $45,000.00 now, our client will accept $155,000.00 in lieu of $200,000.00 payable in accordance with special condition G. Please confirm." URJ SOMMERS v PEARSE (Powell JA) 9 On the following day, Mr Pearse's solicitors authorised William Inglis to pay the $45,000.00 to Mrs Sommers' bank account. On 23rd May 1988, Mr Pearse's solicitors forwarded Requisitions on Title to Mrs Sommers' then solicitors. On 9th June 1988, Mr Pearse paid to Mr Gordon the sum of $6,000.00 on account of the sum of $50,000.00 which he had agreed to pay to reimburse Mrs Sommers' "expenses". On 14th June 1 988,Mr Pearse's solicitors forwarded to Mrs Sommers' then solicitors for their approval, and for execution by Mrs Sommers, a form of Memorandum of Transfer. It seems to have been at about this time when Mrs Sommers retained fresh solicitors, one of the principals of which firm of solicitors, on 4th July 1988, wrote to Mr Pearse's solicitors as follows:- "RE: SOMMERS - SALE TO - PEARSE PROP: 'RAYLEIGH PARK' BIFFINS ROAD, MOUNT HUNTER I advise that I now act for Mrs Marjorie Sommers in the above matter. On her behalf, I give you notice that my client will not complete the Agreement for Sale of Land dated 16th April 1988 as the Agreement is void. Please advise to whom the part-deposit is to be refunded." Mr Pearse's solicitors continued to proffer performance, on 26th July 1988 forwarding to Mrs Sommers' new solicitors a cheque for $155,000.00 as provided for in Special Condition G as varied in May 1988; however, Mrs Sommers' attitude continued. In consequence, there was filed on behalf of Mr Pearse a Caveat, given dealing No. X733708, forbidding any dealing by Mrs Sommers with "Rayleigh Park". These proceedings were commenced on 30th November 1988, when there was filed a Summons in which Mr Pearse sought specific performance of the Agreement for Sale. It would appear that, at some time, Directions were given for the filing of Points of Claim, for, at some stage, there was filed a document entitled "Points of Claim", dated Sth April 1989, in which document, after alleging the making of the Agreement for Sale, and Mrs Sommers' refusal to perform it, it was alleged that: - " 4. The Plaintiff is ready and willing and hereby offers to do anything remaining to be done on its (sic) part to complete the said contract." In a form of Defence - apparently filed in November 1991 - Mrs Sommers, having asserted that the purchase price for "Rayleigh Park" was, not $650,000.00, but $700,000.00, alleged, inter alia, that the Agreement for Sale was illegal and unenforceable by either party, and, in an accompanying Cross-Claim, Mrs Sommers sought an Order for the withdrawal of the Caveat lodged on behalf of Mr Pearse. Both the original Points of Claim and the original Defence were amended during the course of the hearing before McLelland J in respects which it is not now necessary to record. However, it is to be noted that in pursuance of leave granted by His Honour at the conclusion of the oral evidence, there appears later to have been delivered to McLelland J further Amended Points of Claim in which it was alleged (inter alia):- " 10 UNREPORTED JUDGMENTS 2. On or about the 16 April, 1988 the plaintiff agreed to purchase and the defendant agreed to sell the said land and property for the sum of $650,000.00. 2A. On or about the 16 April, 1988 the Plaintiff agreed with the defendant that in consideration of the defendant agreeing to sell to the Plaintiff the said land for the sum of $650,000 the plaintiff would pay the defendant the sum of $50,000 such sum to be payable within a reasonable time after completion of the sale of the said property. 2B. On or about the 20 April. 1988 the Plaintiff Paid to the defendant the sum of $4,000 in Performance of the said agreement for the sale of Raleigh Park. 2C. On or about the 9 June. 1988 the plaintiff Paid to the defendant's agent Mr Gordon the sum of $6,000 Pursuant to the agreement described in para3 above. 3. The defendant has been requested by the plaintiff to complete the said agreement for sale of Raleigh Park but has neglected and refused and continues to neglect and refuse so to do. 4. The plaintiff is ready, willing and able and hereby offers to do anything remaining to be done on its part to complete the said agreement to sell the property. 4A. The plaintiff is further ready, willing and able to pay to the defendant the sum of $50.000 upon completion of the said contract for sale of the property in accordance with the agreement described in para3 above." In his Judgment, McLelland J dealt with the various issues which had been argued before him in the following way: - In all the circumstances, I am not prepared to make a finding that the plaintiff in executing the contract in the form which it took was intending to defraud the Crown by evading the payment of additional stamp duty. I consider it probable that the oral part of the agreement reached between the plaintiff and Mr Gordon as the defendant's (at least ostensible) agent was that the additional $50,000 would not be payable on settlement but could be paid by the plaintiff within a reasonable time. The defendant contends that the plaintiff has not shown that at material times he was ready and willing to complete the purchase. Since the defendant repudiated the contract before the contractual date for completion arrived, and such repudiation has continued up to the hearing, the plaintiff is not obliged to prove that as at any time before the hearing he had, or was in a position to obtain, the purchase price (see Davis v Spalding (1974) 231 Estates Gazette 373; Traurig v Farrow Mortgage Services (8 August 1988, Young J, unreported)). I am satisfied that the plaintiff is presently ready and willing to complete the purchase and to pay the balance of the $700,000.00. Counsel for the defendant has further sought to resist the plaintiff's claim on the basis that the contract which the plaintiff is seeking to enforce is not the contract which the evidence shows was the true contract between the parties. On the final analysis this argument insofar as it is relevant to the facts as found depends upon the proposition that the plaintiff has continued to assert that the agreement for the additional $50,000.00 was collateral to the contract for sale, whereas the true analysis of the position is that it was part of the contract for sale. I do not consider that there is any substance in the defendant's argument on this point, since the plaintiff has at all material times conceded the matter of substance, namely that he is obliged to pay the additional $50,000. Nor is there any substance in the defendant's contention that the plaintiff is precluded by delay from obtaining equitable relief. After the defendant's repudiation of the contract, the plaintiff continued to assert his rights and URJ SOMMERS v PEARSE (Powell JA) 11 commenced these proceedings within a reasonable time. It has not been shown that any delay in the matter coming on for hearing is attributable to the default of the plaintiff, nor that the plaintiff has suffered any prejudice by reason of any such delay. The plaintiff is entitled to an order for specific performance.... The formal Order of the Court, which was later entered, was, so far as is relevant for the purposes of this Judgment, limited to the following:- "THE COURT ORDERS that- 1. The agreement for sale of land entered into on 16th April, 1988 between the Defendant as vendor and the plaintiff as purchaser be specifically performed and carried into execution. In her Notice of Appeal, which was, by leave, amended on the hearing of the Appeal, Mrs Sommers took a number of grounds of appeal; however, it seems to me that, in substance, those grounds of appeal come down to two, they being:- 1. that McLelland J ought, first, to have found that the true purchase price was, not $650,000.00, but $700,000.00, and, second, to have held that, because, in entering into the Agreement for Sale in the form which it took, Mr Pearse intended to defraud the revenue, the Agreement for Sale, if not illegal and void, was at least unenforceable by Mr Pearse; 2. that, whether there be one contract - the purchase price being $700,000.00 - or two contracts - one in which the purchase price was $650,000.00, and a collateral one for the payment of $50,000.00 for "expenses" - Mr Pearse was disentitled to an Order for specific performance as, so it was submitted, he had failed to demonstrate that, at all relevant times, he was willing and able to perform the totality of the obligations cast upon him. So far as concerns the first of these attacks upon His Honour's Judgment, it seems to me, as I have earlier foreshadowed, that, even if one accepts, as I do, the principle that, if a transaction is structured in a particular way in order that an unlawful purpose might thereby be effected, the person who is, or the persons who are, privy to that purpose is not, or are not, able to seek the aid of the Court to enforce the transaction, at least if the unlawful purpose has been given effect to (see, for example, Alexander v Rayson [1936] 1 K.B. 169; Effie Holdings Properties Pty Ltd v 3A International Pty Ltd [1984] NSW Conv R55-174; cp Tanotti v Corsaro 84 ATC 4269) that principle has no room for application in the present case, in which His Honour has declined to find that, in executing the Agreement for Sale in the form which it took, Mr Pearse was intending to defraud the revenue. This was a stance which, as it seems to me, it was clearly open to His Honour to take on the evidence which was placed before him, and, as his decision to adopt it appears clearly to have been affected by his assessment of the weight to be given to the evidence of each of Mr Pearse and Mrs Sommers, it ought not to be disturbed (see Abalos v Australian Postal Commission (1990) 171 CLR 167). So far as concerns the second of these attacks Upon His Honour's Judgment, it seems to me that, to a large extent, it is deprived of substance by His Honour's conclusions. I say this since, if, as His Honour concluded, the purchase price for "Rayleigh Park" was $650,000.00 rather than $700,000.00, Mr Pearse's agreement to pay Mrs Sommers $50,000.00 as "expenses" being collateral to the Agreement for Sale, Mrs Sommers' refusal to complete the Agreement for Sale constituted a repudiation of it, it following - as Mr R.C. McDougall QC, who appeared with Miss J.A. Needham for Mrs Sommers, seemed to concede - that 12 UNREPORTED JUDGMENTS Mr Pearse was not obliged to establish that, as at the contractual date for completion, he was ready, willing and able to complete the Agreement for Sale. This notwithstanding, Mr McDougall submitted, first, that it was incumbent on Mr Pearse, both to plead, and to establish by evidence, that, both at the commencement of the proceedings, and at the hearing, he was ready, willing and able to complete the Agreement for Sale and to perform his obligations under the collateral agreement to pay "expenses"; and, second, that, as - so it was submitted - Mr Pearse had, both failed to plead, and failed to establish by evidence, that he was ready and willing do so, the proceedings ought to have been dismissed. In the course of developing his submissions, in this respect, Mr McDougall referred, first, to what was said by Windeyer J in Mehmet v Benson ((1964-1965) 113 CLR 295, 314-315), and, then, to the decision of Lord Chelmsford LC in Hawkins v Maltby ((1867) LR 3 Ch App 188, 194-195), although I confess that, at the time, I was unable to discern, as I still am unable to discern, how the passages to which Mr McDougall drew our attention were said to provide support for his submissions in this respect. Thus, in the passage in the Judgment of Windeyer J to which Mr McDougall referred, His Honour said: - "\.. It is necessary that the plaintiff in an action for specific performances should allege in his pleading and prove at the hearing his readiness and willingness to perform the contract on his part: and readiness involves an ability to perform it: Ellis v Rogers ((1884) 29 Ch D 661, 667); McDonald v McMullen ((1908) 25 WN 142); Alan v Preston ((1988) 38 SR 475); Bando v Goldberg ((1944) 62 W.N. 87); King v Poggioli ((1923) 32 CLR 222, 247). At the date when the suit is commenced the plaintiff must then be in a position to say that he is ready and willing to do at the proper time in the future whatever in the events that have happened the contract requires that he do: see Fullers' Theatres Ltd v Musgrove ((1923) 31 CLR 524, 549). And he must show too that he performed or been ready and willing to perform the terms of the contract on his part: see Fry on Specific Performance, 6th ed (1921) at 435. But if, notwithstanding earlier breaches, the contract remained on foot, then it seems to me a plaintiff is not necessarily barred from having a decree for specific performance if those breaches, not having resulted in a valid rescission, can be made good by the payment of interest. An allegation in the terms of para5 of the statement of claim is not a novelty in equity pleading: see, for example Van Heythuysen, Equity Draftsman, 2nd ed by Hughes (1928), vol 1, at 15. No doubt it negatives any suggestion that the plaintiff had ever repudiated the contract. But,generally speaking, it is I think sufficient that the plaintiff in a purchaser's suit should allege that he is presently ready and willing and offers to pay the purchase money and that it is not strictly necessary in every case for him to go further: see e.g. Drewry, Forms of Claims and Defences in the Chancery Division (1876) at 12. If some conditions had earlier been waived in the plaintiffs favour and therefore not complied with, it is inappropriate to allege that he was always ready and willing to perform, the contract on his part according to its terms. However that may be, I do not think that in this case the appellant should have been refused specific performance because he did not prove all that he alleged.... while the passage in the Judgment of Lord Chelmsford L.C. - which passage, given McLelland J's findings, seems to have nothing to say which is relevant to the present case - was as follows:- " URJ SOMMERS v PEARSE (Powell JA) 13 But then comes another question, upon which I feel compelled to come to a conclusion in favour of the decree, though upon totally different grounds from those mainly relied upon in the argument. It is clear that a Plaintiff must proceed secundum allegata et probata. Now by this bill the Plaintiffs seek specific performance of an agreement with the Defendant for the sale of these forty shares in consideration of the sum of Pounds 202.10s, and that particular contract the Plaintiffs pray that the Defendant may be decreed specifically to perform. But, is there proof of any such contract? The only proof given is this transfer, which is expressed to be in consideration of Pounds 145 paid to the Plaintiff Hawkins by the Defendant; and if I were to make a decree for specific performance of the contract alleged by the bill, I should compel the performance of the contract into which the parties never entered. The proof of the contract alleged in the bill entirely fails, and it is, therefore, impossible that the Plaintiffs should be entitled to relief on his bill. Whether upon a bill properly framed the Plaintiffs would have been entitled to relief, it is unnecessary to say; but, under the circumstances, I feel myself compelled to say that the Plaintiffs have failed in their proof of the contract of which they seek specific performance, and therefore I must affirm the decree and dismiss the appeal, but certainly without costs, and without prejudice to any other bill which may be filed." It will readily be observed that, although, in his Judgment, Windeyer J referred to the then need for a plaintiff seeking specific performance to include in her, or his, pleading both an allegation of readiness and willingness and, where appropriate, an offer to pay the purchase price, His Honour did not exclude the possibility of a plaintiff obtaining a decree for specific performance notwithstanding past breaches on her, or his, part - indeed, as Barwick C J had earlier said in Mehmet v Benson ((supra) at 307), although relevant to the question, past defaults do not, without more, establish that the plaintiff was not, in the relevant sense, ready and willing to perform the contract. So far as concerns the course taken by Lord Chelmsford L.C. in Hawkins v Maltby (supra), it is to be observed that although the taking of a similar course in any case in which the agreement proved at the trial varies from that alleged by the plaintiff may well be appropriate (see, for example, Joynes v Stratham (1746) 3 Atk 388; Legal v Miller (1750) 2 Ves Sen 299; Lindsay v Lynch (1804) 2 Sch and Lef 1; Jeffrey v Stephens 6 Jur (NS) 947) it will not always be so; on the contrary, as was pointed out by Lord Cottenham L.C. in London and Birmingham Railway Company v Winter ((1840) Cr and Ph 57,61) in a case in which a variation is set up, and established by a defendant:- "\.. it will depend on the particular circumstances... whether that is to defeat the Plaintiff's title to have a specific performance, or whether the Court will perform the contract, taking care that the subject matter of this parol agreement or understanding is carried into effect, so that all parties have the benefit of what they contracted for." (see also, Smith v Wheatcroft (1878) LR 9 Ch D 223). However, while these passages may not provide support for Mr McDougall's submissions in this respect, the questions remain: what is the relevance to Mr Pearse's claim for specific performance of the Agreement for Sale of his (Mr Pearse's) agreement to pay "expenses", and what, if any, is the course which the Court may, or ought, to take in respect of that agreement? The decision in London and Birmingham Railway Company v Winter (supra) and the later decisions in Martin v Pycroft ((1852) 2 De G M and G 785); Smith v Wheatcroft (supra) and Scott v Bradley ([1917] 1 Ch 850) would suggest that, 14 UNREPORTED JUDGMENTS in cases in which, either, a term of an oral agreement benefiting any party has been omitted from a memorandum, or formal record, of that agreement, or, there has been a parol variation of a formal agreement, and the relevant term, or variation, was one benefiting the defendant in a suit for specific performance, the Court, in concerning itself to see "that all parties may have the benefit of what they contracted for" should refuse specific performance unless the plaintiff is prepared, either, to undertake to the Court to perform the term, or variation, or, to submit to an Order to the same effect. It would, however, seem that, if the term sought to be raised be found to be, not a term, or variation, of the agreement of which specific performance is sought, but an independent, or collateral, agreement, the Court will not require such an undertaking, or submission, as the price of an Order for specific performance. Although it is strictly not germane to the present issue, it might, perhaps, be of use to note, here, that the approach to terms omitted from a memorandum, or formal record, of an oral agreement or parol variations of a written agreement, to which I have just referred has now been extended, as appears from the following passage in Williams on Vendor and Purchaser (4 Ed (1936) Vol 1 at 4): - "Tt is essential, however, whether the writing given in evidence is of a formal or an informal nature, that the terms of the agreement sought to be proved thereby shall be sufficiently ascertained therein. The parties to the contract and the property to be sold must therefore be sufficiently described, and the price, or the means of ascertaining it, be stated; and any other terms of the bargain (except, of course, such as are implied by law, as that a good title shall be shown) must be defined. It appears, however, that if a stipulation, which is to the detriment or for the benefit of one of the parties exclusively, is omitted from the memorandum, that party may submit to perform it or waive the benefit of it (as the case may require), and may with such submission or waiver specifically enforce the contract as stated in the memorandum." (An example of a case in which a plaintiff, by waiving a term not contained in a memorandum, was able to obtain specific performance is provided by the decision of Younger J (as he then was) in North v Loomes [1919] 1 Ch 378; cp Hawkins v Price [1947] 1 Ch 645; Burgess v Cox [1951] 1 Ch 383). Although McLelland J, in his Judgment, has not dealt directly with the question, it seems to me that, as it was Mr Pearse's agreement to pay "expenses" which induced Mrs Sommers to enter into the Agreement for Sale, the agreement to pay "expenses" is to be regarded as collateral to the Agreement for Sale (see, for example, De Lassalle v Guildford [1901] 2 KB 215). Accordingly, although, during the course of argument, I was inclined to view that, even if the appeal were otherwise dismissed, the Orders made by McLelland J ought to be amended so as to incorporate an Order that Mr Pearse carry out the agreement to pay "expenses", what I have earlier written would indicate that such an Order is not necessary. However, as the matter was dealt with by McLelland J upon the basis that Mr Pearse conceded that he was, and is obliged to pay the additional $50,000.00, it is unnecessary to express a concluded view on the matter. For these reasons, I propose the following formal Orders. ORDER that the Appeal be dismissed. ORDER that the Appellant pay the Respondent's costs of the Appeal. Counsel for the Appellant: R C McDougall QC and Miss J A Needham Counsel for the Respondent: C J Birch URJ SOMMERS v PEARSE (Powell JA) 15 Solicitors for the Appellant: Robert Johns and Company (Bowral) by their City Agents Turner Whelan Solicitors for the Respondent: Nicholas Angelos and Co (Newtown)