Abraham v Johns (No 2)
[2010] VSC 212
•24 May 2010 (but corrected for error and republished on 30 June 2010)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 5127 of 2008
| DAVID SYDNEY ABRAHAM | Plaintiff |
| v | |
| PAMELA DOROTHY JOHNS | Defendant |
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JUDGE: | Mukhtar AsJ |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 26 March, 14 April, 3, 7 and 14 May 2010 |
DATE OF JUDGMENT: | 24 May 2010 (but corrected for error and republished on 30 June 2010) |
CASE MAY BE CITED AS: | Abraham v Johns (No 2) |
MEDIUM NEUTRAL CITATION: | [2010] VSC 212 |
SALE OF LAND ― Deposit paid by purchaser ― Deposit held by vendor’s agent as stakeholder ― Mortgage over sold land ― Prospect that balance of purchase price insufficient to discharge mortgage ― Whether purchaser entitled to direct deposit moneys and balance of purchase price directly to mortgagee at settlement ― Parties’ rights over deposit ― Sale of Land Act (Vic) s 24, 26, 27
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REASONS FOR DECISION
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P R Best | Hogan Dodds & Moore |
| For the Defendant | Mr C Northrop | Wightons |
HIS HONOUR:
On 19 February 2010, the Court published its reasons for deciding that the defendant as vendor must specifically perform a contract for the sale of residential land at Barwon Heads – see Abraham v Johns [2010] VSC 33. But the Court decided, in the peculiar circumstances, to absolve the defendant from specifically performing special condition 15 of the contract. That was a problematic clause requiring the defendant, before settlement, to register a restrictive covenant over an adjoining piece of land also owned by her. I decided the clause was promissory, and ordered an enquiry into any damages suffered by the plaintiff by reason of the non performance of that clause. I dismissed the defendant’s counterclaim in which she sought a declaration to be relieved from the contract and an order to remove the plaintiff’s caveat over the sold land.
The Court gave the parties the opportunity to consider the judgment, which was substantial, and agree or make submissions on the precise form of final orders. The parties are now in further disputation in this saga. The distrust in this case is palpable. This has necessitated an approach to composing meticulous and regimented orders to ensure the transaction is properly completed.
There are six issues to be resolved by the Court. Before dealing with them, it is necessary to expose the financial predicament that has now arisen, which hovers above these issues.
The plaintiff bought the property at auction on 10 November 2007 for $1,110,000 on a 90 day settlement. He paid a 10% deposit of $111,000 to the vendor’s agent, Mr Michael Keating of AAB Global Pty Ltd. If all had gone to plan, completion of the sale would have taken place on 8 February 2008 but a dispute arose about special condition 15 leading the vendor to say the contract was unenforceable. The plaintiff filed his writ on 12 March 2008.
The land was mortgaged to National Australia Bank Limited. On 9 October 2009 the National Bank obtained judgment for possession of the land, and judgment for $1,000,964 plus interest of $13,711.50 and costs of $2,700. A warrant of possession was issued on 29 October 2009. The trial commenced on 7 December 2009.
The evidence is that as at 11 March 2010 the “indicative” payout figure on the mortgage was $1,045,117. Interest is accruing at a daily rate of $118.87 under the secured loan agreement. On 24 February 2010 the plaintiff’s solicitor informed AAB Global that the deposit would have to be applied to pay out the National Bank. (The deposit is also precious because the agent has sued the defendant in the Magistrates’ Court for his commission and expenses, but that case is stayed pending the outcome of this case.) About two days later, AAB Global transferred to itself the commission and sale expenses of $68,804 leaving a balance of $42,195.02 in a trust account. The outcome, according to the evidence, is that even with $42,195 from the deposit, there will be a substantial shortfall in the amount required to repay the mortgage. The plaintiff calculates that about $71,000 will be needed.
The defendant’s solicitor has sworn that his client is in a “parlous financial state” She also owned an adjoining piece of vacant land, known as Lot 2. Before agreeing to sell Lot 1 to the plaintiff, she mortgaged Lot 2 to service the interest payments to the National Bank for the mortgage over Lot 1. She then gave a second mortgage for the same purpose, as well as borrowing money from friends to service the loan. She defaulted under the mortgage over Lot 2, and Perpetual Trustees, is now in possession.
To add to the complications, the plaintiff has discovered on the internet an advertisement for the sale of Lot 1 by auction on 12 June 2010, presumably on the instructions of the National Bank.
I shall now turn to deal with each of the issues.
First issue: is the defendant entitled to interest under the contract for the delayed settlement?
This was not part of the defendant’s counterclaim; nor was it otherwise activated as an issue at trial. Nevertheless, Mr Northrop contends it arises logically from my decision not to decree specific performance of special condition 15. He submits that as that term “has been removed” from the contract, settlement ought to have taken place 90 days after the date of contract, that is, on 8 February 2008. He says the plaintiff is therefore retroactively in default under the contract, and the delay in completion of the contract has had a disastrous effect on the defendant’s financial situation.
To tackle this issue requires a brief revisitation to the elements of the principal dispute. The starting point is the contract. Before it was hastily amended on the day, the auction contract required settlement within 90 days of 10 November 2007, that is, 8 February 2008. I am told the payment of the residue of $999,000 would have been enough to pay out the mortgage loan as it then existed.
Clause 4 of Table A of the Seventh Schedule of the Transfer of Land Act states that if either party defaults in payment of money due under the contract, then interest at 2% above the rate under the Penalty Interest Rates Act on the money overdue shall be paid on demand made by the offended party. That was modified by special condition 12 of the contract so as to delete the words “on demand made by the offended party” and to substitute a rate of 5% instead of 2%.
In the ordinary course, special condition 11 of the contract required the purchaser to deliver a transfer not less than 7 days before the settlement date. A failure to do so is a default under the contract. In essence, because of the dispute that arose, endeavours were made by the plaintiff to tender a transfer but the defendant’s attitude towards the enforceability of the contract meant that it was never accepted.
These are the steps of Mr Northrop’s argument –
(a) after the contract was altered on auction day, it said that settlement would be effected within 14 days of special condition 15 being satisfied;
(b) up until the second last day of the trial (10 December 2009), the plaintiff persevered with his claim for specific performance of the whole contract, including special condition 15;
(c) then, the plaintiff amended the relief sought (but, I add, nothing else) by saying that if the Court regarded special condition 15 as being problematic to the extent that it was not just or convenient to compel specific performance of it, then in the alternative, the Court should decree specific performance of the contract without special condition 15;
(d) at no time before that amendment was the plaintiff willing to sever or waive the benefit of special condition 15; the most it was willing to do was to waive the timing requirement under that special condition by being willing to accept performance at settlement rather than 14 days before settlement;
(e) now, nearly two years later, the Court has decided that special condition 15 is problematic to the point where it was unwilling to decree specific performance of it;
(f) logically, now that special condition 15 has been “removed” from the contract, the settlement date goes back to 8 February 2008;
(g) therefore, going back in time, it was incumbent on the plaintiff as purchaser to deliver a transfer not less than 7 days before 8 February 2008, and there was nothing to prevent the plaintiff, back then, from producing a transfer without special condition 15 and proceeding successfully to settlement.
The outcome, so the defendant would have it, is that her position concerning special condition 15 has been vindicated and the plaintiff is liable to her for the delayed settlement. She calculates the interest from 8 February 2008 to 14 April 2010 at the contractual rate to be $342,807 and accumulating at $410per day. When pressed to characterise this claim, counsel said it was not a claim for damages but a claim for a liquidated sum due to the vendor under the contract which must be accounted for at settlement. It was also said to be an order available in the Court’s equitable jurisdiction as a condition of specific performance to suit the justice of the case.
I reject this argument, and the claim. It overlooks some relevant facts and the Court’s legal analysis in deciding the case.
The right to interest under General Condition 4 of Table A is attracted if there is a default. But the Court has found that the plaintiff was not in default. Paragraph 59 of my judgment states –
Thus, I think the fallacy of the defendant’s case is to say that special condition 15 entitled her to rely on its non fulfilment. In my view, special condition 15 is for the benefit of the plaintiff only, and therefore only the plaintiff could rely on its non-fulfilment. It had the effect that the plaintiff (not both parties) was under no obligation to complete the sale until the condition was fulfilled or waived.
But special condition 15 was not fulfilled by the defendant. She adamantly refused to do so, contending that it was impossible and senseless for her to contract with herself, as special condition 15 seemed to require of her as owner of Lot 1 and Lot 2. She went further and said for that reason the whole contract was therefore unenforceable. But the Court has found that the fulfilment of special condition 15 was not a condition precedent of the defendant’s obligation to complete the contract, and moreover, that it was promissory. The Court found the problem could have been overcome by the defendant making the covenant at settlement.
Neither was the plaintiff willing to waive the benefit of special condition 15. It was a substantial benefit. It was not a mere incidental or subordinate obligation on the defendant. But the plaintiff was willing at all times, in order to try and get the deal done practically, to relieve the defendant of the timing requirement under special condition 15 and accept a transfer at settlement containing the restrictive covenant thus overcoming the problem of having to covenant with herself before then. The defendant would not co-operate; indeed contended at trial that the waiver of the timing requirement was a variation of the contract to which she was not bound to agree. But, in my judgment, I have found that the plaintiff was entitled to waive the 14 day requirement, and was legally entitled to use a transfer of land as the mode of performing special condition 15.
Thus is not right to say the plaintiff was in default. Nor is it right to say that special condition 15 has been “removed” by reason of the Court’s decision. The real problem, as the Court saw it, was the problematic content of special condition 15 and the prolongation of the problem by a decree of specific performance which would likely involve more contentious applications or dealings with the Titles Office and possible legal challenges. The problem was such that in the interests of finality and avoiding the necessity of the Court’s continuous supervision of orders, it was not unjust to refuse specific performance of that clause and confine the plaintiff to damages. But none of that removes the clause; just that it will not be ordered to be specifically performed.
Therefore, I think it a misconception to say that the Court must go back in time. It is neither logically nor legally required to do so. There having been no default there is no obligation to pay interest under the contract.
If there was no default under the contract, I cannot see a principled basis for saying that equity would, despite the common law dictates of the contract, require payment of interest. Is it a matter of equitable compensation? But how? There was no breach of equitable right or obligation. The argument for seeking interest as a condition of specific performance seems to be that it has taken the defendant two years to “give up” on special condition, and now that he has given it up he cannot do so without incurring obligations absent special condition 15. But, as I have said already, the plaintiff did not “give up" or reprobate, nor has special condition 15 been removed.
Perhaps it was being put on the basis that the plaintiff must do equity to get equity. But that maxim has no application in the circumstances of this case. It is not as if the plaintiff has derived some benefit under the contract since 2008. Indeed, until recently, the defendant has been in possession. The defendant’s financial difficulties seem to be entirely self-induced. Had she been willing to adapt to the predicament and sign a transfer at settlement as was reasonably requested the sale would have been completed and the mortgage discharged. I see nothing unconscientious, to the point of requiring intervention, in the plaintiff as its primary case seeking to compel performance of special condition 15 and putting a case in the alternative of special performance of a lesser extent. I see no unconscionable insistence on strict legal rights. In my assessment, it is the defendant who has, from beginning to end, stood on her strict legal rights in this case.
For those reasons, even if this claim could be entertained procedurally, I would reject it. The plaintiff is not liable for interest on the purchase price under the contract.
Second issue: in order to discharge the mortgage, can the Court direct the agent to apply the deposit or part of it directly to the National Australia Bank at settlement to ensure a discharge of mortgage?
There is a point of principle here and a question concerning the form of order.
I have already referred to the facts concerning the deposit. On 3 May 2010 Mr Keating appeared in person and he was given until 7 May to obtain legal advice. On that day he appeared by Counsel and I granted leave for him to be heard on condition that he undertook to be bound by any orders the Court would make about the handling of the deposit. Those undertakings were given.
Subsequently, the Court was informed that by arrangement with the plaintiff Mr Keating is willing to pay over $71,000 to the plaintiff from the deposit moneys to enable the National Bank mortgage to be is discharged, and to obtain clear title at settlement. The plaintiff believes that an order for $71,000 should suffice after allowing for a further delay for the finalisation and performance of orders.
The defendant’s initial position was to say that under the Sale of Land Act, upon completion of the contract, the deposit must be paid to the vendor in her own right or as she directs. Initially it was said the legislation did not contemplate an ability of the purchaser to dictate what is to happen to the deposit before then, nor could it be implied. But this submission was not developed. Later, her position was that the proposed order would have no utility because the agent was not bound to comply as he was not a party to the proceeding. But the agent has now given undertakings to be bound. The defendant’s counsel did not wish to be heard on the question of the agent’s position and sought to be excused, and counsel was. (It must be remembered she was sued by the agent, and she sued him in this Court.) Above all, there is nothing said on the defendant’s behalf that an order concerning the deposit is unnecessary because the defendant intends providing clear title. In the end, the defendant’s departing submission seemed to that it was a matter of seeing what the agent was willing to do.
So the question is whether the Court has the power to direct the deposit to be paid in the way proposed. With the assistance of a clear an able submission from Mr Best the following legal principles or propositions can be stated in brief–
(a) A deposit is an earnest to bind the bargain, and a part payment of the purchase price.
(b) At common law, if the deposit is paid to the seller’s agent as stakeholder. It is conjectural whether a stakeholder holds the money as trustee or in contract or quasi contract: see Skinner v Reed[1]; Burt v Claude Cousins[2]; Re Kimberley[3]; Re Burman [4] and Rockeagle v Alsop Wilkinson[5].
[1][1967] 1 CH D 1194 at 1200D;
[2][1971] 2 QB 426 at 435H
[3][1989] FCA 350 at [95].
[4](1993) 1 Qd R 49 at 52, 54.
[5][1992] Ch 47 at 52F to 53.
(c) How the stakeholder deals with a deposit depends on the future event. Unless the vendor lawfully rescinds, the deposit remains the purchaser’s money until there is a settlement with a transfer and a discharge of mortgage. In that event, the deposit will be accounted for and paid to the vendor. Only if the money becomes the property of the vendor can the vendor’s agent take his commission. The agent has a lien once the deposit becomes the property of the vendor. See Skinner v Reed.[6]
[6][1967] 1 Ch 1194 , 1200.
(d) At common law, before settlement, if both parties agree as to the way in which the deposit should be paid or otherwise transferred, the stakeholder is obliged to follow that requirement: Rockeagle v Alsop Wilkinson[7].
(e) Under section 24 of the Sale of Land Act, an estate agent holds deposit moneys as a stakeholder until the purchaser becomes entitled to a transfer of the land, at which time the deposit moneys may be paid to the vendor in his own right or as the vendor directs. The Act does not define stakeholder but it can be taken to have the usual meaning as being a person for the purpose of holding it until it can be ascertained who is entitled to it: see re Tenuta[8]
(f) A situation can arise where the deposit is dealt with before completion. Under section 26(1)(a) if the purchaser defaults and the vendor rescinds, then the vendor is entitled to the deposit money of the Act. That is consistent with the view that a deposit is by nature an earnest of performance. Under section 26(1)(b), if the vendor defaults, and the purchaser rescinds, the purchaser is entitled to the return of the money. That is consistent with the common law view that the deposit is always the purchaser’s money until forfeited by default. Otherwise under section 27(1), before completion the purchaser can in certain circumstances “empower” (which connotes it is the purchaser’s money) the estate agent to release the money to the vendor. In that situation, under section 27(9) the estate agent can retain his commission and expenses out of the deposit.
[7][1992] Ch 47 at 52F to 53
[8](1991) 33 FCR 56 at 62
In the present case, the contract says the plaintiff is not entitled to a transfer until he pays the price and any other moneys due under the contract. The vendor is obliged to discharge the National Bank mortgage so as tho give clear and unencumbered title to the plaintiff. Until then the agent holds the money for both the vendor and purchaser. But the vendor has no claim until settlement. And the agent has no claim yet against the deposit for his commission and expenses. Before settlement, it is the purchaser’s money.
What is the position if the deposit and balance of the purchase price are insufficient to discharge the mortgage, or that is likely to be the case ? Mr Best relies on Skinner v Reed. [9] In that case, Cross J had to deal with such a case involving bankrupt vendors. His Honour held that the purchaser had a right to have any part of the purchase price, which was unpaid, applied in discharge of encumbrances, which it was the duty of the vendors to discharge on or before completion. His Honour said:[10]
When the purchaser affirms the contract the vendor cannot in my judgment claim payment of the deposit in the hands of a stakeholder so long as there are outstanding encumbrances on the property sold which it is the vendor’s duty to discharge. For this purpose a deposit in the hands of a stakeholder is, I think, in exactly the same position as the balance of the purchase price. The purchaser cannot be compelled to pay the balance of the purchase price to the vendor but can apply it in discharge of encumbrances on completion, and similarly, I think, he can so apply a deposit which he has paid to a stakeholder and, if a stakeholder is an auctioneer, his lien will attach only to so much of the deposit as is not needed to discharge the encumbrance.
[9][1967] 1 Ch. 1194 at 1201 A-B
[10]At 1202 A-C
That case needs to be considered with a decision of Menhennit J in Cowan v Cavanagh.[11] To which I was also referred. There, a purchaser obtained a decree of specific performance in a contract that called for the transfer of an unencumbered title. The amount of the deposit and the residue was insufficient to discharge the mortgage but this was not known to the purchaser at the time of judgment. The purchaser then paid a surplus to get the settlement done. The purchaser then sought to claim the surplus as damages in the same proceeding against the vendor. His Honour held that damages may be awarded subsequently in the same proceeding against the vendor for that sum, even though the judgment for specific performance had been passed and entered.
[11][1978] VR 665
The prospect of damages to the plaintiff in this case may be of no comfort if the vendor’s financial state is parlous. Hence, there is significance to an order directing the deposit, or $71,000 of it, to be paid directly to the mortgage at the time of settlement.
At common law then, there is an authoritative basis for saying that this Court has the power to direct the deposit to be paid to the mortgagee on settlement where the vendor cannot discharge the encumbrance and is contractually bound to do so. I see no reason why the same power should not be exercised if, as here, there is real doubt that the vendor may be able to do so or be willing to do so, or at least no positive evidence from the vendor that she intends to do so. . The question is whether s 24(1) of the Sale of Land Act would lead to any different result. I accept the plaintiff’s submission (not really challenged by the defendant, and not addressed by the agent) that it does not because –
(a) s 24 is predicated upon the vendor being entitled to the deposit in her own right;
(b) the vendor will not be entitled to the deposit or any part of it until the purchaser is entitled to a transfer of an unencumbered title, that is, upon payment of the settlement sum and the tender of the transfer;
(c) until the vendor does so, or establishes that it can do so, then the ground for the payment of the deposit is not activated as the moneys do not become the property of the vendor.
I see no destruction of statutory rights or interference with other legal rights in this conclusion. It is being done in the interests of completing this contract, and not exacting some undue advantage. The deposit belongs presently to the purchaser. The agent has an interest if settlement occurs, but is content to hand over $71,000 of the $111,000 deposit. The vendor is passive. She is bound to deliver clean title. All that is happening is that the $71,000 is going to the mortgagee to clear the title. She would be liable in damages anyway for any shortfall to discharge the mortgage.
Accordingly, in my view there ought be an order ancillary to the decree for specific performance that $71,000 of the deposit, together with the balance of the purchase price ($999,000 with any adjustments) be paid to the plaintiff to be paid in turn directly to the mortgagee.
Third issue – the plaintiff’s prospective claim for damages
The plaintiff does not yet know the precise pay out figure so this issue only arises in the event that the purchase price, including the $71,000 of the deposit, is not sufficient to discharge the mortgage. In that case, on the authority of Cowan v Cavanagh, the plaintiff is entitled to damages accordant to any additional sum required to discharge the mortgage.
The defendant submitted that no such order should be made because the damages constituted by any shortfall was no part of the case at trial, and no evidence was led. She submitted that the only question of damages that arose at trial was the possibility of damages in lieu of a remedy of specific performance, namely the loss of the bargain.
It is true that there was no claim for damages by the plaintiff in the event that the purchase price was insufficient to discharge the mortgage. But I do not think that precludes the prospect of making, as part of this proceeding, the contingent claim that is proposed. The decision of Cowan v Cavanagh stands for the proposition that such a claim can be made even after a decree for specific performance if at the time the decree is made it was not known that there would be a deficiency. Further, it stands for the proposition that the reservation of liberty to apply when a decree is given is sufficient to enable the purchaser to make such a claim.
Further, as I see it, there are two other factors at work. First, the Court should do all it can to avoid a multiplicity of actions where the claim has a sufficient nexus with the existing proceeding. And this one certainly does. Secondly, as I stated in my judgment, it is in the interests of justice that there be finality to this dispute between these parties. Given the financial predicament the defendant is in, and the prolongation of this case, it is just as well for this Court to do what it can to put an end to this dispute.
Accordingly, I think it proper and constructive to make orders recognising the prospect of the Court having to assess damages by reason of any damages suffered by the plaintiff in having to “put his hand in his own pocket” and pay out the mortgage. It may never come to that. The $71,000 may be sufficient.
Fourth Issue: given my various findings at trial, what should be the order for costs?
The defendant submits -
In the circumstances, the defendant is the successful party. Her position as disclosed in the pleading and correspondence has proved correct. The plaintiff on a number of occasions had an opportunity prior to trial to accept what the defendant asserted but chose not to do so.
The defendant acknowledges that the plaintiff has succeeded in obtaining a decree for specific performance. But, she submits, the case was always about whether the defendant was obliged to provide a covenant in the form of special condition 15. Because I have found that clause to be problematic to the point that it should not be specifically performed, the defendant submits that she, not the plaintiff, has succeeded. And she adds, the plaintiff is now in a worse position than he would have been in had he signed the contract on which he bid at auction. That is, had he been content with the best endeavours clause, or had he agreed to sever or waive the clause in its entirety, this litigation would have been unnecessary. She submits the plaintiff should pay the defendant’s costs; should pay the defendant’s costs up to the time of the amendment of its relief.
In Luxmore Pty Ltd v Hydedale Pty Ltd[12] the Court of Appeal said that, on a costs question, judges should not be required to give elaborate reasons averting to every matter debated in argument and parties should assume every matter addressed in argument had been considered.
[12](2008) VR 481 at [12]
My first conclusion is that, although I have decided that special condition 15 ought not to be specifically enforceable, it cannot be said that the plaintiff should have always realised that the problems were so great with the clause that the plaintiff should never have proceeded with it. There are cases, in the context of indemnity costs orders, where the courts make adverse orders where proceedings are commenced or continued in wilful disregard of known facts or clearly established law or are cases prolonged by a groundless claim. This is not such a claim.
Secondly, the plaintiff has succeeded in obtaining a decree for specific performance of the contract. That is the paramount relief. What manifestly induced this litigation, according to the evidence, was the defendant’s strident contention that the problem with special condition 15 made the whole contract unenforceable. That was the major point. I have rejected that case. Then, the defendant contended the plaintiff could not waive the timing requirement in clause 15. That was a major point. I rejected the defendant’s case on that point.
Thirdly, it is true that I rejected the two arguments put about the means to satisfy special condition 15, namely under the Planning and Environment Act and the Subdivision Act or possibly under s 72(3) of the Property Law Act. Even so, they were put forward for demonstrative purposes and the defendant did not seek to compel the defendant to take either step. The plaintiff said the most efficacious means of satisfying the clause was to compel the defendant to sign a transfer at settlement. I accepted that. The problems which led the Court to decline to compel performance of special condition 15 were the foreseeable delays and conjecture which were outweighed by the desire of finality. But the plaintiff was entitled to damages in lieu.
Accordingly, I cannot see any reasonable basis for the defendant to say her position has been vindicated. I think to say that the defendant has been successful in this litigation is fanciful.
On the areas where the plaintiff has not obtained what was precisely sought, I apply the established rule that absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim: see Tayles v Davis (No 2) [13] Has there been disqualifying conduct?
[13][2010] VSCA 107 at [11].
A moralist or pragmatist may say to Mr Abraham that he should have been content with obtaining this home at the price he did, and not go further and insist on altering special condition 15 especially as he had bid on the basis of the unaltered contract. But the point is: the defendant agreed to it. Both parties agreed to it believing, erroneously, that it would be efficacious. When the problem arose about the inability of the defendant to contract with herself, the plaintiff’s solicitors made every reasonable endeavour to overcome the situation but this was resolutely ignored. It became apparent that the vendor was willing to honour her legal obligations and no more.
Facts are stubborn things. In circumstances set out in my judgment this plaintiff was able to buy, without foul means, this land at auction for $650,000 below the defendant’s reserve and up to $400,000 below her agent’s estimate of selling price. A few days after the contract was signed the defendant asked the agent, not flippantly, “what do I have to do to get out of the sale? I cannot have that awful man as my neighbour”. Thereafter and consistent with that, as I assess the documented facts, the defendant blocked every endeavour made by the purchaser’s solicitors to work out some practical measures in good faith to enable her to comply with special condition 15.[14] She seized upon the problem with special condition 15 and resolutely contended that the whole contract was unenforceable. All this despite the fact that the clause was prepared on her behalf, with her approval, to satisfy a prior request by the plaintiff, and even though her agent on auction day and her agreed to the amendment which created the very problem that she identified. Even after the exchange of reasonable communications from the purchaser, as I would assess them, her stated attitude was “We invite the purchaser to issue proceedings if he is so confident of his position”.
[14]See paragraphs [40] to [49] of my judgment.
As I assess the evidence the plaintiff’s solicitors were looking to find a solution to the problem which could have been solved if a vendor was otherwise looking to honour the contract rather than being determined to escape it. I conclude there is no conduct of the plaintiff to disqualify him from relying on the usual rule that costs follow the event.
Fifth issue: should the plaintiff immediately remove his caveat over Lot 2?
There is no claim by the defendant in these proceedings, but the plaintiff accepts that his caveat over the adjoining Lot 2 is unsustainable. He proposes to withdraw it after settlement, or at settlement. He submits the caveat is not blocking any dealing.
In my view, if the caveat is unsustainable, it should be removed sooner than later. It is not dependant on the dispute over Lot 1. I think a notice of withdrawal should be given soon after the making of my orders.
Sixth issue: the form of order
There were various submissions from the plaintiff, and exceptions made by the defendant, about the precise form or verbiage of the orders. I will not repeat them. I think this case calls for a litany of orders to ensure that the settlement be administered in a way to ensure the implementation of the decree. The orders are too numerous to reproduce here, and are fashioned to meet the peculiar circumstances of this case. They involve the Court nominating the Prothonotary under s 22 of the Supreme Court Act to be the person executing the transfer as transferor in case the defendant does not.
Although it appears to be a situation where the Court is in effect laying down the mechanical or integral steps to effect a conveyance, the Court is doing so to minimise the prospect of future disputation.
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