Abraham v Johns (No 2) - [2010] VSC 212

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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Abraham v Johns (No 2)

Details

AGLC: Abraham v Johns (No 2) [2010] VSC 212
Case: [2010] VSC 212
Decision Date: 24 May 2010 (but corrected for error and republished on 30 June 2010)

CaseChat Overview and Summary

In the Supreme Court of Victoria, the case of Abraham v Johns (No 2) involved a dispute between the plaintiff, David Sydney Abraham, and the defendant, Pamela Dorothy Johns, regarding the sale of residential land at Barwon Heads. The case arose from a contract signed on 10 November 2007, where the plaintiff purchased the property at auction for $1,110,000 with a 90-day settlement. A 10% deposit of $111,000 was paid to the vendor’s agent, Mr Michael Keating of AAB Global Pty Ltd. However, a dispute arose about special condition 15 of the contract, leading the vendor to claim the contract was unenforceable. The plaintiff filed his writ on 12 March 2008. The land was mortgaged to National Australia Bank Limited, which obtained judgment for possession and the outstanding mortgage amount on 9 October 2009.The Court needed to resolve six issues in the case. The first issue was whether the defendant was entitled to interest under the contract for the delayed settlement. The Court found that the plaintiff was not in default and that the defendant's argument was based on a misconception of the Court's decision. The second issue was whether the Court could direct the agent to apply the deposit or part of it directly to the mortgagee at settlement to ensure the discharge of the mortgage. The Court concluded that it had the power to direct the deposit to be paid to the mortgagee in such circumstances. The third issue was the plaintiff's prospective claim for damages if the purchase price, including the deposit, was insufficient to discharge the mortgage. The Court decided to recognise the prospect of the Court having to assess damages. The fourth issue was the order for costs, where the Court decided that the plaintiff should recover its costs as the successful party. The fifth issue was whether the plaintiff should immediately remove his caveat over the adjoining Lot 2, to which the Court concluded that it should be removed sooner rather than later. The final issue was the form of order, which involved a litany of orders to ensure the implementation of the decree and to minimise the prospect of future disputation.

Orders