Abraham v Johns (No. 3) - [2010] VSC 461

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 5127 of 2008

DAVID SYDNEY ABRAHAM	Plaintiff
- and -
PAMELA DOROTHY JOHNS	Defendant

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JUDGE:	Mukhtar, AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	11, 24 August 2010
DATE OF JUDGMENT:	18 October 2010
CASE MAY BE CITED AS:	Abraham v Johns (No. 3)
MEDIUM NEUTRAL CITATION:	[2010] VSC 461

JUDGMENTS AND ORDERS ― Distinction between orders and reasons ― Construction of order ― Literal meaning ― Resort to reasons and conduct of the case to confirm or clarify intention of order

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T. Scotter	Hogan Dodds & Moore
For the Defendant	Mr C. Northrop	Wightons

HIS HONOUR:

The plaintiff’s purchase of a luxury coastal holiday home from the defendant for an unexpectedly low price at an auction has become a battle of attrition. This is my third judgment in the case because the defendant now makes a dispute about the meaning or operation of the Court’s orders made on 25 May 2010. The orders in question cannot be understood without an exposition of their provenance. Only then can a view be taken of their intended object or purpose. It will be seen the orders now in dispute were designed to undo a tangle, worsened by the manifest distrust between the parties, and to bring finality.

The defendant lost this case where it really mattered. On 19 February 2010, I decided that the plaintiff was entitled to a decree of specific performance of the sale contract, but I absolved the defendant as vendor from performing a special condition concerning registration of a restrictive covenant.[1] The contract price was $1 110 000. The plaintiff had paid a deposit of $111 000 which was still held by the selling agent. The land was subject to a mortgage to the National Bank(“the NAB”) who, by the time of judgment, had taken possession of the land.
[1]See [2010] VSC 33.

Disputations then broke out over some consequential issues of substantive law, as well as the content of proposed final orders.

The defendant was in a parlous financial state and her mortgage debt had been accumulating. The purchaser was especially concerned that the defendant might not be able to discharge the mortgage and give him clear and unencumbered title as she was obliged to do under the contract. The balance due under the contract ($999 000) would not be enough to pay out the NAB. The plaintiff’s attention turned naturally to the deposit. If that could be paid directly to the NAB then the problem would be solved.

But the agent swore an affidavit[2] saying he was suing the defendant in the Magistrates’ Court for his commission and disbursements, and she was defending it. (That case was suspended pending the decision in this case.) He also said he had already transferred to himself $68 804.39 from the deposit in payment of his commission and disbursements, leaving $42 195.62 in trust. There…

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. 3)

Details

AGLC: Abraham v Johns (No. 3) [2010] VSC 461
Case: [2010] VSC 461
Decision Date: 18 October 2010

CaseChat Overview and Summary

In the case of Abraham v Johns (No. 3), the dispute arose from the purchase of a luxury coastal holiday home by the plaintiff, David Sydney Abraham, from the defendant, Pamela Dorothy Johns. The central issue was the interpretation and enforcement of court orders concerning the deposit held by the real estate agent, the discharge of a mortgage, and the calculation of damages if the deposit and purchase price were insufficient to cover the mortgage debt. The dispute began after the original sale contract was decreed for specific performance, with the defendant absolving from performing a special condition concerning the registration of a restrictive covenant.

The legal issues before the court included whether the court had the authority to direct the payment of part of the deposit directly to the mortgagee and whether damages could be awarded if the deposit and purchase price were insufficient to discharge the mortgage. The court found that the deposit, being part of the purchase price, could be treated no differently than any other part of the purchase price. It also held that damages could be awarded if the deposit and purchase price were insufficient to discharge the mortgage, even after the judgment for specific performance had been passed and entered.

The court's reasoning was based on the conduct of the case and the orders made, which contemplated that $71,000 of the deposit would be paid directly to the mortgagee, with damages awarded if that amount was insufficient. The court rejected the defendant's argument that there was no shortfall because the contract purchase price was not considered. Instead, the court found that a shortfall did occur when the deposit and purchase price were insufficient to discharge the mortgage, entitling the plaintiff to damages.

The final orders of the court assessed damages in the sum of $35,075.71 together with statutory interest from the date the plaintiff had to apply that amount to complete the settlement, which was 9 June 2010. The court also rejected any attempt to join the agent as a party to seek contribution, stating that any claim against the agent could be pursued in separate proceedings.

Orders