Andersons Practising Accountants Pty Ltd v Maria Concetta De Rubeis

[2006] VMC 4

IN THE MAGISTRATES COURT OF VICTORIA AT MELBOURNE

CIVIL

Case No. T02878016

Andersons Practising Accountants Pty Ltd  Plaintiff v

Maria Concetta De Rubeis  Defendant

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MAGISTRATE:	S Garnett
WHERE HELD:	Melbourne
DATE OF HEARING:	7 December 2006
DATE OF DECISION:	13 December 2006
CASE MAY BE CITED AS:	Andersons Practising Accountants Pty Ltd v Maria Concetta De Rubeis
MEDIUM NEUTRAL CITATION:	[2006] VMC004

REASONS FOR DECISION

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Catchwords: BREACH OF CONTRACT – whether a binding agreement existed – whether agreement was conditional on a property valuation

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APPEARANCES:Counsel  Solicitors

For the Plaintiff  Mr Holzer

For the Defendant  Mr Ravida

HIS HONOUR:

1.  The Plaintiff alleges that it had an agreement with the defendant to obtain loan finance for her in order to assist her in purchasing a floral art business situated at

145 Bell St Preston. In particular, the plaintiff relies on a document signed 20 June

2005 and titled; Appointment and Authority to Act as an Accountant, a Consultant, sole and exclusively mandated Agent and Proctor; and “Letter of Offer” also signed by the plaintiff on that date.

2.  In accordance with that documentation the plaintiff was to obtain loan finance for the defendant in the sum of $600,000 with an interest rate of 12.95% fixed interest only with a term of 24 months with a right of early repayment after 12 months with 1 months notice in writing. The terms provided that an application fee of $300 and consultancy fee of $2,700 were non-refundable. Of particular importance was the inclusion of a term that upon presentation of a letter of offer the procuration fee of 2% of the loan sum plus disbursements was payable.

3.  The plaintiff seeks payment of the procuration fee of $12,000 plus GST totalling

$13,200.

4.  The defendant in essence denies a formal “offer” was made or in the alternative alleges that it was an “indicative offer” not capable of acceptance by the defendant.

5.  On behalf of the plaintiff evidence was given by;

-    Malcolm Murphy Director and Principal of the Plaintiff accounting business;

-    Robert LeTet, a financier and Director of Questco P/L,

-    George Eid, a facilitator of finance and Director of Quality Services P/L.

6.  On behalf of the defendant evidence was given by;

-  Maria De Rubeis, the defendant,

-  Jennifer Balbo, the defendant’s sister.

7.  A number of documents were tendered including the “Appointment Document” dated

16 June 2005 and signed 20 June 2005 referred to above, the “Offer Letter” dated 16

June 2005 and signed 20 June 2005 relating to a loan facility of $600,000, the subsequent $100,000 loan facility letter dated 16 June 2005 and signed 20 June

2005, the Loan Application document and Property Valuation document.

8.  The evidence indicates that Angelo Veiss wanted to sell his business, “Floral Art” situated at 145 Bell St Preston. Jennifer Balbo was aware of this as she had her own floral business at the Werribee Plaza. Mr Veiss introduced her to George Eid on the basis that Mr Eid could help her arrange finance for the purchase of the business. It was originally intended that Jennifer Balbo and her younger sister, Josephine, would purchase the business but it became apparent that they would not be able to provide enough security so they approached their sister, the defendant, to see if she was interested. A meeting was conducted on 4 June 2005 between George Eid, the defendant, her sisters and Jenny’s husband, whereby the defendant signed a Loan Application.

9.  Mr Eid then approached Mr Murphy whom he had known as a result of reciprocal referral arrangements with clients and was aware that Mr Murphy was able to secure finance. Mr Murphy then approached Mr LeTet to ascertain whether he would be

interested in providing the finance in the sum of $700,000 to be disbursed in two stages, the first $600,000 against the San Remo property owned by the defendant and her husband and the balance of $100,000 on a charge over the business La Minuette Enterprises P/L the directors of which were Jason Balbo and Josephine Italia.

10. Mr LeTet gave evidence that he assessed the application and confirmed the offer of finance by Facsimile Transmission dated 16 June 2005 to Mr Murphy, which, apart from setting out the terms and conditions of finance, stated; “subject to satisfactory due diligence, independent sworn valuation and any other conditions which the mortgage may be subject to, finance may be provided on the following basis”. In essence the offer of finance provided that as security for the loan of $600,000, the defendant, Josephine Italia and Jason Balbo would need to provide security in the form of the San Remo property and a charge over La Minuette Enterprises P/L together with guarantees and for the loan of $100,000, a 2nd mortgage over the San Remo property, a charge over La Minuette Enterprises P/L and guarantees. Mr LeTet confirmed that once he received the “up front” payment of out of pocket

expenses and the valuation fees he then proceeded to instruct valuers to perform the necessary valuation.

11. A meeting was then held at Mr Eid’s office on 20 June 2005 between Mr Eid, Mr Murphy, Jennifer Balbo and her husband, Josephine Italia, the defendant and her husband where the abovementioned document and the document prepared by the plaintiff company dated 16 June 2005 and titled; “Appointment and Authority to Act as an Accountant, a Consultant, sole and exclusively mandated Agent and Proctor”, was discussed and signed by Josephine Italia, the defendant and shortly thereafter, Jason Balbo.

12. This document recited the terms of the offer of finance and included provision for the payment of an application fee of $300 and consultancy fee of $2,700 (which was

paid by the defendant on 22 June) and a procuration fee of 2% of the loan (the subject matter of this claim). The document stipulated that the application fee and consultancy fee were non refundable.

13. Of particular significance were the terms;

6. We agree that on presentation of a Letter of Offer, the Procuration Fee together with all disbursements including photocopying charges and out of pocket expenses are due to be paid to Andersons.

7.We understand that any offer to lend is subject to valuation and due diligence and certify that all information provided is accurate, truthful and correct. We agree that if this is found not to be the case, all fees paid are forfeited and all undertakings given by Andersons are withdrawn and void.

9.We agree that in the event we withdraw from this application after such time a Letter of Offer is presented, all fees and charges are payable including the Consultancy Fee and Procuration Fee.

14. The “offer of finance” and “Mandate letter” was expressed to be open until the close of business on 22 June 2005.

15. The evidence was conflicting as to what transpired at the meeting on 20 June 2005 when the documents were signed. Mr Murphy gave evidence that the documents were read and discussed by all concerned over a period of 40 minutes and no issues

were raised. He vehemently denied expressing that the agreement was subject to valuation of the San Remo property. The defendant ultimately conceded during cross examination  that  she  had  read  the  documents  albeit  scantily  and  was  more interested in the “coffee machine” and that she signed them on the basis that the proposal was subject to valuation of the San Remo property as stated to her by Mr Murphy. Jennifer Balbo described the 20 June meeting as “laid back” and that the defendant and her husband were more interested in the “coffee machine” than the discussions.

16. There was also conflicting evidence as to what transpired subsequent to the 20 June meeting which resulted in the loan not proceeding. Mr Murphy gave evidence that he discovered that the defendant was withdrawing her application for finance so rang her on 29 June to find out the reason. His evidence was to the effect that the defendant wanted a refund of the monies paid (on 22 June) without a reason given by the defendant and was told by him that as the paperwork had been done and a valuation arranged she would not receive a refund. His evidence was that he was not aware at this time that the valuation of the San Remo property had been conducted (valuation according to Report & Valuation dated 27 June 2005 conducted by Market Line - $550,000) and was not informed of it until the 4th or 6th July when he received it from Robert LeTet who had organised it. He also denied informing the defendant that as a result of the valuation of the San Remo property the defendant would require further security or collateral in order to proceed with the loan.

17. Mr  LeTet  gave  evidence  that  he  was  told  by  Mr  Murphy  in  late  June  that  the defendant did not wish to proceed with the loan finance and he received a faxed copy of the Report & Valuation from Market Line on the 4th July and sent it to Mr Murphy on 6 July.

18. The defendant alleges that as she had not heard from Mr Murphy she contacted him on 29 June or “early July” and was told that the valuation of the San Remo property was  only  $550,000  and  that  she  would  need  more  collateral  to  proceed.  She allegedly told him that as she could not provide more collateral she wanted to withdraw from the deal.

19. The defendant confirmed during cross examination that she subsequently obtained finance through the Bendigo Bank with whom she had banked with for over 20 years and obtained an interest rate of 7.5% and that she was now a full shareholder of the business, Floral Art P/L. She denied that she had “shopped around” for a better deal.

20. Jennifer Balbo gave evidence that Mr Murphy contacted her within a week of the 20

June meeting and was told by him that they would need another property as security as the valuation of the property was less than anticipated. He allegedly inquired as to whether she had another property or whether her parents’ property was unencumbered.

ORDERS:

After considering the evidence I make the following findings;

1.  The defendant entered into an agreement with the plaintiff on 20 June 2005.

2. Mr Murphy did not make any representation that the agreement was conditional on an appropriate valuation of the San Remo property.

3. The defendant accepted the terms of the written agreement to the effect that she was liable for the procuration fee on presentation of a Letter of Offer.

4.  The Letter of Offer was presented to the defendant on 20 June 2005.

5. I accept the evidence of Mr Murphy that he had no knowledge of the valuation of the San Remo property until the 4th or 6th July 2005, subsequent to his discussion with the defendant where she indicated that she wanted to withdraw from the application/agreement.

6. The defendant decided to withdraw from the agreement of her own volition and as a result of the binding agreement is liable for the fees claimed by the plaintiff.

7. I am of the opinion that the decision in Woodards (Central) P/L v Luntz & Co (a firm) 2004 VSC 41 is distinguishable on the facts on the basis that in Woodards the offer made was clearly indicative which is not applicable on the facts of this matter.

As a result, I find in favour of the Plaintiff.