Ali v Savusavu Town Council [2008] FJHC 155; HBC0030.2004 (31 July 2008)

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IN THE HIGH COURT OF FIJI
AT LABASA
NORTHERN DIVISION
CIVIL JURISDICTION

Appearances: Mr A. Sedhakar for the Plaintiff
Mr T. Tuitoga for the Defendant

[1] This is a matter where the Plaintiff is seeking damages for an alleged breach of contract in relation to a tender for the sale of freehold property in 2003 by the Defendant. The Defendant says that it was under no legal obligation either to complete the sale or to convey the property to the Plaintiff as the Defendant had rejected the Plaintiff’s counter-offer and that was where matters stood until the Defendant then sold the property to a bona fide third party.

[2] In 1982, the Plaintiff’s father allegedly purchased land for Mohammed Khalil and Sons from Narain Constructions in the amount of $6,500.00. Apparently, before the title was transferred, Narain Constructions went into Bankruptcy and Price Waterhouse Coopers (PWC) took over the land.

[3] In an unclear chain of events, another group took over from PWC and then somehow the Town Council took over the land in late 1980s. The Plaintiff alleged that instead of their father getting the money back which they had paid so far ($3,250.00), the agreement with the local Town Council was that they would be given some land as a replacement. It was questioned at the hearing of the present matter whether this prior dispute was relevant to the present case (even though approximately 25 of the 57 documents in the "Agreed Bundle of Documents" appeared related to that dispute) and perhaps the basis of a separate action between the Plaintiff and the Town Council. It was also an issue which was not pleaded by the Plaintiff is his Amended Statement of Claim.

[4] In any event, on or about 6 November 2003, the Defendant Town Council advertised and called for tenders to purchase a freehold property.

[5] On 10 November 2003 (Doc.26), the Plaintiff made an offer of $55,000 inclusive of VAT with 50% payable within 14 days.

[6] On 17 November 2003 (Doc.27), the Plaintiff withdrew his first offer of 10 November 2003 and submitted a second offer of:

(b) Council to undertake to create access to the lot with the adjacent lot owners;

[7] On 24 November 2003 (Doc.28), the Defendant Town Council wrote to the Plaintiff awarded him the tender with the following main conditions:

(a) That he was pleased to pay $55,000.00 but not the extra VAT as his tender was VAT inclusive;

(b) $3,250.00 was owed by the Council to the Plaintiff (from the earlier matter involving the Council and the Plaintiff’s father) and that sum allegedly owed by the Council would be the deposit with the balance ($51,750) payable on day of settlement; and

[9] On 27 November 2003 (Doc.31), the Defendant responded (marked as "Posted at 12 pm PO Box 335") [the Plaintiff’s PO Box at Savusavu] that:

[10] On 27 November 2003 (Doc.30), the Plaintiff sent a further letter to the Defendant (marked as received on "27/11/03 2.30pm") whereby he:

"This case concerns certain dealings between the Plaintiff and the Defendant (the local council) regarding land. The Defendant engaged in some discussion with the Plaintiff and his family (particular his father) to give them a piece of land. The land was eventually acquired by the Defendant with an understanding that the Plaintiff would receive some credit by the council for the payments that they have made to the previous owner in relation to the land.

The Defendant will be alleging that Mr. D Lal (Town Clerk) had discussions with the Plaintiff and agreed to give an alternative piece of land. The Plaintiff through a tender process applied to purchase the land and the Defendant accepted the tender. The Plaintiff wrote a letter to the Defendant enquiring as to that and the Defendant wrote to the Plaintiff that the tender was accepted plus VAT. The Plaintiff wrote back to the Defendant that the tender was $55,000 (VAT inclusive). The Defendant said that the Plaintiff had to pay the VAT.

When the Plaintiff approached the Defendant to pay the deposit of the tender, the Defendant said "we have put a price and don’t want to deal". The Defendant had told the plaintiff you have to pay 50% deposit ie. $31,000.00. The Plaintiff took his deposit to pay the council who advised that the Defendant was no longer in a position to deal with him. In fact, the Defendant had sold the property to a third party and, therefore, the Plaintiff is not seeking specific performance but damages."

[12] By contrast, according to the opening submissions of Counsel for the Defendant, this case is about five letters:

1. Document 26 dated 10 November 2003 – whereby the Plaintiff submitted his tender;

2. Document 27 dated 17 November 2003 – whereby the Plaintiff withdrew his tender and submitted a new tender;

3. Document 28 dated 24 November 2003 – from the Defendant Town Council to the Plaintiff advising that they had awarded him the tender but subject to a number of conditions;

4. Document 29 dated 25 November 2003 – this was the first mention of $3,250.00 owing from previous dealings between the Plaintiff’s father and the Town Council. The Defendant’s argument is that this sum is not relevant to these proceedings.

5. Document 30 dated 27 November 2003 – according to the Defendant, this is the relevant document. By contrast, the Plaintiff has submitted that this document accepted the earlier offer from the Defendant Town Council of 24 November 2003 (Doc.28).

[13] A summary of the arguments of both parties is contained in the following table:

	Doc.26	Doc.27	Doc.28	Doc.29	Doc.30
	10/11/2003	17/11/2003	24/11/2003	25/11/2003	27/11/2003
Plaintiff	Plaintiff submitted 1st tender: 55,000 inclusive of VAT with 50% payable within 14 days	Plaintiff withdrew 1st tender AND submitted a 2nd tender: $55,000 with 4 conditions – 1. Access to lot; 2. 10% dep. within 14 days; 3. 40% upon new access plan; 4. Balance on release of title	Defendant advised awarded tender to Plaintiff on following basis: 1. $55,00 plus VAT =$61,875 AND 2. 50% deposit $30,937.50 within 7 days	Plaintiff submitted: 1. $55,000 VAT incl. 2. Deposit $3,250 owed by Council to Plaintiff (from an earlier matter); 3. Balance $51,750 on settlement; 4. Access	Plaintiff submitted: Accepts Defendant’s terms of 24/11/03 1. $61,875 BUT 2. Deposit $20,000 (32 per cent) within 7 days
Plaintiff	No Agt.	No Agt.	Contract formed	No Agt.	Acceptance of Offer of 24/11/03 contract formed
Defendant	No Agt.	No Agt.	No Agt.	1st mention of $3,250; No Agt.	No Agt.

[14] The Plaintiff was the only witness called by either party in the matter. The following excerpt from the cross-examination of the Plaintiff is revealing:

"Q: Your address is Private Box 335, Savusavu?
A: Yes.
Q: That was your postal address in 2003?
A: Yes.
Q: Do you accept it is 10 minutes by car from the council?
A: Yes
Q: Do you accept all offers from you were VAT inclusive?
A: Yes.
Q: Do you accept the council wanted VAT?
A: Yes.
Q: $55,000-00 plus VAT?
A: Yes.
Q: Do you accept that you withdrew your offer in document 26 i.e 10th Nov -03?
A: Yes.
Q: It was withdrawn in document 27 – 17th Nov 03 where you said "I would like to declare null and void"?
A: Yes.
Q: So do you accept document 27 you then made a counter offer?
A: Yes it was the same amount.
Q: But it was VAT inclusive?
A: Yes.
Q: You offered to pay 40% within 14 days?
A: Yes.
Q: You offer $55,-000-00?
A: Yes.
Q: And balance [after] 40%?
A: Yes.
Q: Depending upon approval of access land?
A: Yes.
Q: If look at document 28 the letter from the council dated 24th Nov 03 – do you accept the amount there differed from your original tender offer?
A: Yes.
Q: Do you accept is that the council wants $61,000?
A: Yes.
Q: And 50% deposit within 7 days
A: Yes.
Q; Do you accept Council’s offer was not acceptable to
you?
A: Yes ...
Q: The offer was $55,000 from you inclusive of VAT and the council wanted $55,000 plus VAT so you accept the two amounts are different?
A: Yes.
Q: If you look at document 30 your letter 27th Nov 03 – do you accept i.e difference that is that you accept the council’s offer of the 24th Nov 03 and withdraw your letter of the 25th Nov 03?
A: Yes.
Q: If you look at document 28 24th Nov 03 do you accept the Council refused?
A: Yes.
Q; Do you accept that you were not prepared to pay $61,875.00?
A: No.
Q: But you only wanted to pay $55,000 inclusive VAT?
A: Yes.
Q: When you wrote document 30 i.e letter 27th Nov 03 that is all you wanted to pay is $55,000 inclusive of VAT?
A: Plus VAT.
Q: But you wanted the council to accept $20,000-00 deposit?
A: Yes.
Q: You accept, however, that the Council wanted as per their letter of 24th Nov 03 $30,000 deposit?
A: Yes.
Q: When you wrote the letter of 27th Nov 03 document 30 do you accept that you knew that the Council was not prepared to sell for $55,000?
A: Yes.
Q: The advertisement in the Fiji Times said nothing about VAT?
A: Yes ...
Q: You said your last offer, document 30, attached a bank cheque with it?
A: Yes.

[15] On the Plaintiff’s own evidence it is difficult to find that there was ever a meeting of minds.

[16] Even accepting for the moment, however, the Plaintiff’s argument and his "best case scenario" that by his letter of 27 November 2003 (Doc.30) he meant to be conveying his acceptance of the Defendant’s counter-offer of 24 November 2003, there was still no meeting of minds as:

(i) that he accepted the tender terms stipulated by the Defendant in their letter dated 24 November 2003;

(ii) but he then added that he was only willing to pay a deposit of $20,000.00 within 7 days of acceptance.

[18] Clearly there was never a meeting of minds on one of the essential terms, that is, the amount of the deposit. If the Plaintiff was only prepared to be pay $20,000.00 as a deposit (which is just under 32 per cent), then, in effect, the Plaintiff left his acceptance on one of the essential terms (the deposit) short by 18 per cent.

[19] Even the cheque which the Plaintiff drew in favour of the Plaintiff from the ANZ Bank on 27 November 2003 (Doc.32) was in the amount of $20,000.00 which the Plaintiff did not rectify until some six days later when, on 3 December 2003, he drew another cheque from the ANZ Bank (Doc.33), this time in the amount of $31,000 (which still wasn’t the correct amount stipulated by the Defendant being 50% of the purchase price, that is, $30,937.50).

[20] Even in his own evidence in chief, the Plaintiff accepted that with his last offer of 27 November 2003 (Doc.30) he attached a bank cheque for $20,000 which he knew was not the correct amount (leaving his acceptance on this term short by 18 per cent):

"Q: Did you pay the deposit?
A: I paid $20,000-00 in a bank cheque attached to my letter of the 27th Nov 03 and took it with me to the Town Clerk and they refused to accept it.

[21] On the above "best case scenario" analysis for the Plaintiff, his claim must surely fail. It is not necessary, therefore, to consider many of the other arguments submitted. For completeness, however, I will deal with the other two scenarios raised by the parties:

(a) The Plaintiff’s claim that a contract was formed as per the Defendant’s letter dated 24 November 2003; AND

(b) The Defendant’s claim that the offer was revoked as per the Defendant’s letter dated 27 November 2003.

1. The Plaintiff’s claim that a contract was formed as per the Defendant’s letter dated 24 November 2003

[22] One of the Plaintiff’s arguments is that a contract was formed as early as 24 November 2003, that is, when the Defendant Town Council wrote to the Plaintiff awarding him the tender.

[23] It is important to recall what had been the tender by the Plaintiff as contained in his letter of 17 November 2003 (Doc.27) whereby the Plaintiff submitted a second offer of follows:

[24] The Defendant replied on 24 November 2003 (Doc.28) with the following conditions:

[25] On a clear reading of the two letters there has been no meeting of minds.

[26] Indeed, on the Plaintiff’s own submissions he accepts that the initial offer he made of 10 November 2003 (Doc.26) for $55,000 inclusive of VAT with 50% payable within 14 days was withdrawn by the Plaintiff’s subsequent letter of 17 November 2003.

[27] The major difference between the two Plaintiff’s offers is NOT the totalamount of the purchase price with each offer being $55,000 inclusive of VAT but details as to the amount of deposit:

(b) compared with 10% within 14 days in the second offer as well as a further 40% upon approval of a new access plan to the lot.

[28] Thus, how can the Plaintiff on the one hand acknowledge that there is a difference between his own offers of 10 and 17 November 2003 when the overall purchase price remained the same but the amount of deposit payable differed, and then argue that there is no difference between his second offer of 17 November 2003 and the Defendant’s counter offer of 24 November when clearly there is a difference as to:

(b) differences on the amount of deposit, when it was to be paid and that the offer was subject to a condition regarding access.

[29] Indeed, as the Plaintiff alleges, if there was a "meeting of minds" on 24 November 2003, then why did the Plaintiff respond on 25 November 2003 (Doc.29) submitting:

(a) That he was pleased to pay $55,000.00 but not the extra VAT as his tender was VAT inclusive;

[30] For the reasons outlined, clearly on its face there was no contract formed as at 24 November 2003.

2. The Defendant’s claim that the offer was revoked as per the Defendant’s letter dated 27 November 2003

[31] As noted above, according to the opening submissions of Counsel for the Defendant, this case is about five letters (Docs.26-30). The Defendant has submitted that if the Court accepts that there was no meeting of minds after either the Defendant’s letter of 24 November 2003, or three days later by the Plaintiff’s letter of 27 November 2003, then there is no need to consider the Defendant’s rejection letter also of 27 November 2003. Even though the Court has accepted the Defendant’s submission on this point, it is important, however, to make some brief comments on this alternative scenario.

[32] After the Plaintiff’s letter of 25 November 2003, the Defendant replied on 27 November 2003:

(a) "That the price for the land resolved by the Council was ($61,875.00 vip) and the Council maintains the price without any change";

(b) "Therefore, we regret to advise you that the Council is not in a position to do any further dealings forthwith regarding the said Lot."

[33] According to the submissions by the Defendant, this was the end of the matter.

(a) That a handwritten notation on that letter was marked "Posted at 12 pm PO Box 335", which was where the letter was sent to the Plaintiff’s PO Box 335 at Savusavu; and

(b) That his letter of the same date was "stamped": "Savusavu Town Council received D.Lal Town Clerk/Chief Executive Officer" with the handwritten date and time as "27/11/03 2.30pm".

[35] The Plaintiff queried as to why this was the only correspondence between the parties which "had any notation as to time".

[36] By the Plaintiff’s own evidence, however, he withdrew his "$20,000-00 in a bank cheque attached to my letter of the 27th Nov 03 and took it with me to the Town Clerk and they refused to accept it". Unsurprisingly, the Town Clerk has formally marked the date and time of receipt of the letter, the details of which the Plaintiff never disputed in his evidence. The Plaintiff agreed that the Council refused to accept the cheque (which was for the wrong amount anyway as $20,000.00 – as noted above – was just under 32 per cent leaving his acceptance on this essential term short by 18 per cent).

[37] Whether the notation on the Defendant’s letter of 27 November "Posted at 12 pm PO Box 335" was incorrect, was never pleaded as an issue by the Plaintiff. Further, it was not raised at the hearing in either the Plaintiff’s opening submissions, or before the end of the trial, that he wished to amend his pleadings. Thus this submission is disregarded by the Court.

[38] It is significant that there is also no specific mention in either the Plaintiff’s "Amended Statement of Claim" or their "Reply to Defence" of the Defendant’s letter of 27 November 2008. The problem for the Plaintiff is that it was never raised in his evidence in chief that he had not received the letter from the Council of 27 November 2003. This is a significant omission. It was not for the Defendant to raise it in cross-examination to allow the Plaintiff to repudiate in re-examination. Instead, the Defendant dealt with the matter this way:

"Q: When you wrote the letter of 27th Nov 03 document 30 do you accept that you knew that the Council was not prepared to sell for $55,000?
A: Yes."

[39] Further, this issue was not clarified or even raised in the Plaintiff’s reexamination thus leaving the answer from his cross-examination as the evidence.

[40] In his submission, the Plaintiff has stated "the Defendant purportedly wrote to the Plaintiff on 27th November 2003" and further that "the Plaintiff states that he had not received this letter".

[41] This submission conveniently leaves open as to whether the statement is inferring:

(a) That the Plaintiff had not received this letter "BY THE TIME HE MADE HIS OFFER OF THE SAME DATE"; or

(b) That the Plaintiff had not received this letter "AND, IN FACT, NEVER RECEIVED IT".

[42] A review of the hand-written transcript from the hearing reveals no such evidence was ever given by the Plaintiff in his evidence in chief.

Indeed, as noted above, if it had been, then surely the Defendant would have cross-examined him upon it as well as dealt with it in his closing submissions. Instead, the Defendant has submitted that the Plaintiff’s evidence inferred the opposite: "The Plaintiff admitted during his cross-examination that he knew that the Defendant had effectively withdrawn the Defendant’s Counter-Offer before he purported to accept to by letter dated 27 November 2003." Interestingly, there was no reason proffered by the Plaintiff as to why he withdrew his letter of only two days previously (25 November 2003) and suddenly wanted to accept the Defendant’s counteroffer of 24 November 2003.

[43] Accordingly, for the reasons outlined, the Court rejects the Plaintiff’s submissions on this point.

1. Was there a meeting of minds in either the Defendant’s letter dated 24 November 2003 or in the Plaintiff’s letter of 27 November 2003?

[44] As discussed above, the Plaintiff’s offer of 17 November 2003 (Doc.27) sought:

(b) Council to undertake to create access to the lot with adjacent lot owners;

[45] The Defendant replied on 24 November 2003 (Doc.28), saying it had awarded him the tender on the following main conditions:

[46] As to how the Plaintiff can even suggest there has been a meeting of minds as at 24 November 2003 is beyond me. Indeed, I am reinforced in this view by the fact that the following day, 25 November 2003, the Plaintiff sent a counter-offer clearly realising that the parties were not "ad idem".

[47] The situation as occurred in Jones v Daniel [1894] UKLawRpCh 52; [1894] 2 Ch. 332 comes to mind where the parties had agreed as to the purchase price but when the vendor’s solicitors forwarded the contract of sale to the purchaser for signature it contained some special terms not previously discussed including that a deposit was to be paid of 10 per cent and fixing a date for completion. The purchaser returned the contract unsigned. The Plaintiff sought specific performance. As Romer J held at 335:

"I find it is a document which contains special terms which had never been referred to in the offer, and those terms include a payment of a deposit of 10 per cent. by the purchaser, a stipulation fixing the day for completion, a provision limiting the title to be shown by the vendor, and other important conditions. Now, what would anybody when he received that letter fairly understand to be the meaning of it? Certainly I think he would understand it to mean this: ‘So far as the price is concerned we are agreed. I now enclose you terms which I require you to assent to. If you assent to them and sign them and pay the deposit, then there will be a binding contract between us, but not till then.’ I think that is what the letter really meant, and what it was intended to mean.

It was not an acceptance simpliciter of the Defendant's offer forming a contract, and a mere reference to an enclosed document as carrying out the contract so made. In my opinion, it would not have been fair as against the Plaintiff to have said on behalf of the Defendant, if he had been willing so to say immediately he received that letter, that the Plaintiff was bound by an absolute contract for £1450 without obtaining a deposit and without any conditions whatever as to title or otherwise. (My emphasis)

[48] In relation to whether there had been a meeting of minds as at 27 November 2003, it is important to recall what was allegedly "on the table" on that date (despite the Plaintiff’s earlier letter of 25 November 2003 which he withdrew and to which I will turn shortly):

(i) that he accepted the tender terms stipulated by the Defendant in their letter dated 24 November 2003;

(ii) but then added that he was only willing to pay a deposit of $20,000.00 within 7 days of acceptance.

[49] As noted above, clearly there was never a meeting of minds on one of the essential terms, that is, the amount of the deposit. If the Plaintiff was only prepared to pay $20,000.00 (just under 32 per cent), then, in effect, the Plaintiff had left his acceptance on this essential term short by 18 per cent.

[50] For the reasons discussed above citing Jones v Daniel, there was still no meeting if minds. As Carter and Hartland have observed (see J.W, Carter and D.J. Harland Contract Law in Australia, 3rd edn, Butterworths, NorthRyde, 1996, para 222, ‘Additional or different terms’, p. 39): "A purported acceptance which agrees to the offer in general terms but which seeks to qualify the scope of some of the detailed provisions contained in it is at most a counteroffer ... Thus an offer for the purchase of land is not rendered binding by an ‘acceptance’ which contains terms not contained in the offer; and this will be so even if the terms (for example, a requirement that the purchaser pay a deposit) are normally agreed to in that type of transaction ... (Jones v Daniel)" (My emphasis)

2. Could the Plaintiff by his letter of 27 November 2003 still accept the Defendant’s counter-offer of 24 November 2003 after his letter of 25 November 2003 had rejected the Defendant’s counter-offer?

[51] As the Defendant has again correctly outlined in his submissions, apart from the factual scenario of the Plaintiffs’ behaviour (that is, there was still no meeting of minds) even as at 27 November 2003 when the Plaintiff attempted to revive the Defendant’s offer of 24 November 2003, the legal aspect of whether he could do what he claimed needs also to be considered.

[52] The Plaintiff by his letter of 25 November 2003 had clearly rejected the Defendant’s earlier offer of 24 November 2003.

[53] It is usually the case that a counter offer is taken as rejecting an earlier offer such that a party cannot then say that they withdraw their count-offer and accept the earlier offer. The Plaintiff’s offer of 25 November 2003 rejected the Defendant’s offer of 24 November 2003, and it was not competent for the Plaintiff then to try and "revive" the Defendant’s offer two days later by accepting it.

[54] As the then Master of the Rolls, Lord Langdale, said in Hyde v Wrench [1840] EngR 1054; [1840] 3 Beav. 334; 49 ER 132 at 133 (which involved a similar factual scenario):

"The Defendant offered to sell it for £1,000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contact; instead of that, the Plaintiff made an offer of his own, to purchase the property for £950, and he thereby rejected the offer previously made by the Defendant. I think that it was not afterwards competent for him to revive the proposal of the Defendant, by tendering an acceptance of it; and that, therefore. There exists no obligation of any sort between the parties ..." (My emphasis)

[55] As Carter and Hartland have observed (Contract Law in Australia, supra, at para 251, ‘Offer terminated by rejection’, page 69):

"A counter-offer is treated as impliedly rejecting an offer. It follows that any subsequent attempt by the offeree to accept can at most be a counter-offer which the offeror is free to accept or reject."

[56] Moreover as Cheshire & Fifoot’s Law of Contract (see JG Starke, NC Seddon and MP Ellinghuas, 6th edn, Butterworths, North Ryde, 1992, para 121, page 63 ) have noted:

"The offeree must unreservedly assent to the exact terms proposed by the offeror. If, while purporting to accept the offer as a whole, the offeree introduces a new term which the offeror has not had the chance of examining, he or she is in fact merely making a counteroffer. The effect of this in the eyes of the law is to destroy the original offer. Thus in Hyde v Wrench ... it was held that no contract existed ... the plaintiff had rejected the original offer and he was no longer able to revive it by changing his mind and tendering a subsequent acceptance. As a rule, when new terms are included in the purported acceptance, there is no contract ..." (My emphasis)

[57] Thus as Chitty on Contracts (see H.G. Beale (ed.), vol.1, 29th edn. Sweet & Maxwell, London, 2004, para 2-090, page 166) has succinctly concluded:

"... the offeree had, by making a counter-offer ... rejected, and so terminated, the original offer".

1. There was no meeting of minds in either the Defendant’s letter of 24 November 2003 or the Plaintiff’s letter of 27 November 2003.

2. In the alternative, the Plaintiff’s counter-offer of 25 November 2003 had rejected the Defendant’s earlier offer of 24 November 2003. As such, the Defendant’s offer could not be revived by the Plaintiff’s subsequent letter of 27 November 2003. That is, the effect of the Plaintiff’s counteroffer of 25 November 2003 was to "kill off" the Defendant’s offer of 24 November 2003.

(b) this judgment does not affect any separate action the Plaintiff may have against the Defendant in relation to the prior dispute between his father and Narain Constructions mentioned at the beginning of this judgment.

Solicitors:
AK Lawyers, Ba, for the Plaintiff (Town Agents Sarju Prasad, Labasa)
Munro Leys, Suva, for the Defendant (Town Agents Gibson and Co, Labasa)

High Court of Fiji

Ali v Savusavu Town Council [2008] FJHC 155; HBC0030.2004 (31 July 2008)