Bastian v Prukev Nominees Pty Ltd

[2022] VCC 597

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CI-22-00679

PETER JOHN BASTIAN

and

ROBYN YVONNE BASTIAN

First Plaintiff

Second Plaintiff

v

PRUKEV NOMINEES PTY LTD

and

REGISTRAR OF TITLES

First Defendant

Second Defendant

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JUDGE:	HIS HONOUR JUDGE MACNAMARA
WHERE HELD:	Melbourne
DATE OF HEARING:	20 April 2022
DATE OF RULING:	20 April 2022
CASE MAY BE CITED AS:	Bastian & Anor v Prukev Nominees Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2022] VCC 597

REASONS FOR RULING
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Subject:Removal of Caveat

Catchwords: Application by registered proprietors to remove caveat – email correspondence agreeing upon sale of property and price – no formal contracts signed – emails by one joint proprietor with evident authority of the other – no written authority – agreement unenforceable – section 126 Instruments Act 1958 – requirement for equitable estoppel made out – no serious question or prima facie case established – caveat removed.

Legislation Cited:      Transfer of Land Act 1958; Instruments Act 1958

Cases Cited:Piroshenko v Grojsman & Ors (2010) 27 VR 489; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Masters v Cameron (1954) 91 CLR 353; Waltons Stores (interstate) Limited v Maher (1988) 164 CLR 387; Woden Squash Courts Pty Ltd v Zero Builders Pty Ltd [1976] 2 NSWLR 212; Harvey v Edwards Dunlop and Co Limited (1927) 39 CLR 30; Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 575; Yamine v Mazloum [2017] VSC 601

Judgment:                  Application successful.  Order for caveat to be removed.

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr N. Paterson	Taits Legal
For the Defendants	Ms G. Berlic	Madgwicks

HIS HONOUR:

1This proceeding has been brought by Mr and Mrs Bastian, who are the registered proprietors of a commercial property at 118-120 Lava Street, Warrnambool. This property, according to the evidence, is let to the well-known retailers, Adairs.  It is apparently a sought after commercial property in Warrnambool.

2According to the defendant, Prukev Nominees Pty Ltd (“Prukev”), on 5 November 2020, entered into a contract to purchase the Lava Street property from Mr and Mrs Bastian, who hold that property as trustees of the Peter Bastian Superannuation Trust. 

3When that contract was not completed and it became apparent that, to use popular language, Prukev may have been `gazumped’, a caveat was lodged approximately 10 days after the date of the alleged contract. Mr and Mrs Bastian have brought this application under s90(3) of the Transfer of Land Act 1958 seeking to have that caveat removed from the title of the Lava Street property. They say that, in the circumstances, contrary to the contentions of Prukev, that there is no specifically enforceable contract of sale and so the caveat which claims a freehold interest in the property, pursuant to a contract of sale dated 5 November 2021, ought to be removed.

4The parties are agreed that the approach which should inform the court on hearing such an application is set out in the judgment of Warren CJ in Piroshenko v Grojsman & Ors (2010) 27 VR 489. In broad terms, her Honour said that the approach upon an application under s90(3) of the Transfer of Land Act, such as the present application is, requires consideration, first, of whether there is a serious question to be tried as to the estate or interest which the caveat claims and, secondly, whether the balance of convenience favours the maintenance of the caveat or its removal.  The test is therefore similar, or perhaps identical, to the one which the court has to consider in determining whether to grant or refuse an interlocutory injunction.

5More recent authority, namely Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 might suggest the test should be applied as to whether the caveator has made out a prima facie case relative to the estate or interest which is claimed by the caveat.

6Whichever formulation is adopted, it is common ground that the court is not required at this stage to predict the outcome of any ultimate hearing, nor to refrain from continuing the caveat, unless satisfied that the caveator is more likely to succeed at trial than to fail.

7The factual circumstances surrounding this transaction or transactions have been meticulously examined in a series of affidavits, including affidavits from Mr and Mrs Bastian, and affidavits from the Riddells (the family controlling Prukev) and the vendor’s agent, a Mr Ryan.  Interestingly, Mr Ryan has affirmed or sworn affidavits which have been put into evidence of behalf of Prukev.

8In broad terms, what the affidavits show is that on 5 November 2020, Mr Ryan, as selling agent, conveyed the details of an offer to purchase made, according to him, by the Riddells at a price of $3.2 million with a 30-day settlement date.  The contract was not conditional on finance but did contain certain provisions as to construction works relative to the carpark onsite. 

9Mr Bastian responded by email, stating, “I accept”, and then referred to the terms of the contract.

10The evidence shows that Mr and Mrs Bastian are estranged from one another.  He resides in Thailand and she resides in Coolangatta in Queensland.  Therefore, whatever inferences one might draw relative to the authority of one spouse to bind another spouse to legal obligations where the two are in happy cohabitation, those inferences do not obviously apply in the present case.

11However, having been taken to a series of emails between the parties and being referred to the affidavits of Mr and Mrs Bastian, the picture emerges in which Mr Bastian is acting as the spokesperson for both himself and his estranged wife in the sale of the property.  I have not been taken to any material where Mrs Bastian has instructed the solicitors involved. 

12In a general sense, for the purposes of considering whether there is a serious question to be tried, or whether there is a prima facie case, I conclude that Mr Bastian acted with the authority of Mrs Bastian.

13Also on 5 November, documents described as “draft documents” were forwarded to the solicitors for the Riddells, Messrs Madgwicks.  Whilst the email correspondence to which I have been referred would have given the impression that any offers or sales which might have been referred to were purchases by Mr and Mrs Riddell, the fact that a draft contract in the name of Prukev was submitted by the solicitors for Mr and Mrs Bastian, indicated that at some point the identity of Prukev, the caveator, as the proposed purchaser must have been decided upon.

14Mr Paterson, on behalf of Mr and Mrs Bastian, has pressed an array of arguments as to why the caveat lodged by Prukev should be removed.  In broad summary, they amount to a contention, first, that there was no concluded agreement reached by the parties by reference to the framework for analysis of these matters authoritatively stated by the High Court of Australia in the celebrated case of Masters v Cameron [1954] 91 CLR 353. Secondly, that, in any event, no note or memorandum sufficient to meet the requirements of s126 of the Instruments Act 1958 has been established. Thirdly, even if grounds were made out for some form of estoppel in accordance with the principles stated relative to equitable estoppel by the High Court in Waltons Stores (interstate) Limited v Maher (1988) 164 CLR 387, upon analysis, no detriment such as is required by those principles could be shown and, in any event, since no reference is to be found in the caveat to equitable estoppel, either there was no jurisdiction to introduce it by way of amendment to the form of the caveat or, if there were jurisdiction, it ought not to be exercised.

15Logically, as it seems to me, the first question which I must determine is whether, in the circumstances, there was an agreement between the parties to sell.  The email exchanges of 5 November, which I will not bother traversing, in my view, establish at least a serious question to be tried or a prima facie case that such agreement came into effect.  The terms of the sale and purchase are set out there.  There is no reference to Prukev. 

16However, Ms Berlic, who appeared on behalf of Prukev, the caveator, said it was permissible to read a multiplicity of documents together to derive a note or memorandum sufficient to satisfy the requirements of s126 of the Instruments Act.  However, I put that question to one side for the moment. 

17The fact that the solicitors that now act for Mr and Mrs Bastian submitted on the very same day a draft contract showing Prukev as purchaser indicates, in a general sense, that this was what had been agreed upon.  Again, a survey of the email correspondence and earlier correspondence indicates that Mrs Bastian was, if you will, “on board” with what was happening.  Further, she was copied in as the “cc” noted on one of the key emails which indicates, in a general sense, therefore, that there was an agreement binding all of the parties if the emails sufficiently set out the terms.  The identity of the purchaser was, as I have said, already known and Mrs Bastian was, to use colloquial language, “on board”.  There was an agreement to sell, therefore, unless we regard it as something preliminary, something which did not purport to bind the parties pending their entering into a formal contract of sale of land – a draft of which was submitted by Tait Legal, the solicitors for Mr and Mrs Bastian.

18This brings us to a consideration of the categories into which preliminary agreements, or apparent agreements, ought to be placed, as stated by the High Court in Masters v Cameron.  The first category referred to in the joint judgment by their Honours was arrangements whereby parties make a preliminary agreement which clearly contemplates that there will be a further agreement entered into, but such agreement contains all of the key requirements and the parties intend to be bound forthwith, whether the more formal agreement is ultimately entered into or not.

19The second category entails preliminary agreements whereby a term of such preliminary agreement is that a formal agreement be entered into.  Those agreements are enforceable because the obligation to enter into the formal agreement is specifically enforceable. 

20The third category constitutes preliminary agreements which are preliminary to the extent that no legal obligation is imposed on either party unless and until the formal agreement is entered into. 

21Given that there are well-established formalities for the sale of land which have not been availed of here because, it seems, Mr and Mrs Bastian did not go on with those formalities in the face of a better offer and a higher price from another purchaser, Mr and Mrs Woodfall, there must be a strong argument to say that no binding agreement was intended to be reached.

22Ms Berlic, however, noted that there are authorities in which a fourth category has been added to the Masters v Cameron analysis.  This fourth category constitutes cases where the parties enter into what is an informal or preliminary agreement intending to be bound immediately, but contemplating the possibility that a further and more formal agreement might or might not be entered into, which might or might not include further or different obligations as between the parties.  Commentators have observed that in the past 30 years, when the Masters v Cameron analysis has been resorted to, there has been a predominance of findings by courts in reported cases of instances of the fourth category, rather than of any of the first three.

23In my view, there is a serious question to be tried as to whether what occurred between the parties on 5 November 2021 constituted such a fourth category agreement.  Alternatively, the caveator, Prukev, has made out a prima facie case that such an arrangement was reached.  The more difficult issue which arises is as to whether, in the circumstances, the agreement to which I have referred is enforceable. 

24Mr Paterson referred to and relied upon s126 of the Instruments Act, which states:

“(1)An action must not be brought to charge a person upon a special promise to answer for the debt, default or miscarriage of another person or upon a contract for the sale or other disposition of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note.

(2)It is declared that the requirements of subsection (1) may be met in accordance with the Electronic Transactions (Victoria) Act 2000.”

25I was not taken to this last statute (viz, the Electronic Transactions (Victoria) Act 2000), but the argument was conducted upon the assumption that an email signed “Mr Bastian” was the equivalent of a document with his manuscript signature upon it.

26As has been observed, the requirement that an agent signing an agreement or memorandum, to meet the requirements of s126 of the Instruments Act, must be authorised in writing, is a provision apparently unique, in the Anglo-Australian legal world, to Victoria and the Australian Capital Territory.  I was not taken to the authorities as to the “thereunto lawfully authorised in writing provision”, but it is well-established, I think that an estate agent authorised in the normal way, is regarded as authorised to find a purchaser, not to enter into a contract for the sale of land.

27Mr Paterson contended that Mr Bastian should be regarded as being in a position similar to the estate agent as regards his wife.  Authorised to act as spokesman authorised to do the business, he was not authorised to sign off the contract.  Mr Paterson referred me to email traffic in which Mr Bastian advised the selling agent that Mrs Bastian must necessarily sign the contract and the vendor statement.  This correspondence, he said, was consistent with Mr Bastian’s limited role and authority as regards his estranged wife.

28Ms Berlic said that this was a case in which discovery might bring to light some sort of written authority existing in favour of Mr Bastian to sign an agreement, or note, or memorandum on behalf of Mrs Bastian.  She also said, by reference to post-5 November 2021 correspondence, that apparently there had been a contract signed.  She said that there must be doubt as to whether the form of contract which Mrs Bastian apparently signed in Thailand was the one which Mr Bastian apparently thought it was, namely the sale for a higher or `gazumped’ price to the Woodfalls on the one hand or, on the other hand, the sale to Prukev, which is the subject of the caveat.

29There is always a reluctance to determine matters based on statute of frauds considerations.  According to one view of the law, statute of fraud points are points that are not taken by gentlemen or, in the more equal opportunity atmosphere of recent generations, ladies.  However, the statute of frauds provisions have existed in Anglo-Australian law since 1677, and if they are somehow reprehensible it is for Parliament to remove them, not for me to take it upon myself to regard a statute of frauds point as somehow unworthy and necessitous of being rejected at all costs.

30Plainly, what the parties are arguing about here is a contract for the sale of the whole of the fee simple interest in the Lava Street property.  Ms Berlic complained that the superannuation trust deed had not been put into evidence.  That appears to be true, but the general rule as to trustees is that they must act unanimously, and it is, I think, the sheerest speculation to think that anything inconsistent with that would be found in a superannuation deed.

31In the circumstances, therefore, whilst I have found that there is a prima facie case or a serious question as to whether a contract was made, I am not satisfied that the requirements of s126 of the Instruments Act have been made out as regards Mrs Bastian.

32In my view, in accordance with the authorities relied on by Ms Berlic, namely Woden Squash Courts Pty Ltd v Zero Builders Pty Ltd [1976] 2 NSWLR 212 at 218 in the judgment of Holland J, and the High Court in Harvey v Edwards Dunlop and Co Limited (1927) 39 CLR 302 at 307, the draft contract and the email correspondence may be read together so as to disclose all of the requirements necessary for a note or memorandum of the contract alleged, including the identity of the purchaser, Prukev. However, the lack of authority on the part of Mr Bastian in writing to sign on behalf of Mrs Bastian, indicates that that conclusion does not avail Prukev in its resistance to the present application.

33As a fallback contention, Ms Berlic relied on the well-known case of Waltons Stores (interstate) Limited v Maher (1988) 164 CLR 387. She referred to the elaborate analysis of Brennan J (as he then was) as to when an equitable estoppel of the relevant type which the court gave effect to in that decision might arise. She noted that such an estoppel in accordance with his Honour’s formulation could be regarded as made out here, and that the High Court in the Waltons Stores case had decided that the appropriate remedy to give effect to that estoppel, in effect, was to render enforceable a contract which the defendant, Waltons Stores, was estopped from denying.  The caveat could be amended so as to make reference to the equitable estoppel.  The strictures in some of the authorities against amendments to caveats in proceedings such as these, namely Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 575 and Yamine v Mazloum [2017] VSC 601, would not apply.

34First, there would be no necessity to amend the estate or interest claimed – something which Menhennitt, J in the Midwarren Estates case said ought never, or almost never, to be contemplated.  The grounds for claim would be only slightly modified given that effectuation of the equitable estoppel would entail, ultimately, bestowing the very freehold estate on Prukev, which the unenforceable contract would have provided to be conveyed.  She said that, in the circumstances, the relevant detriment which was needed to render the estoppel effective, in accordance with Brennan J’s formulation, was to be found in the payment of the 10 per cent deposit which Prukev had handed down and which, it was common ground, remained in the trust account of Mr and Mrs Bastian’s solicitors.

35Mr Paterson observed, however, that the detriment which the High Court found was sufficient in the Waltons Stores case, a case which he said was an exceptional one, was the demolition of part of Mr Maher’s premises to make way for a promised, but never delivered, lease to Waltons Stores.  The payment of a 10 per cent deposit, which Mr Paterson said his clients were only too willing to refund, could not possibly rank as the necessary sort of detriment.  Legal costs incurred relative to review of the contract were not mentioned.  However, Mr Paterson said that if they had been pressed on behalf of Prukev, they would not have been regarded as sufficient either.  Anyone who engages in negotiation of a legal agreement which ultimately falls through must contemplate that sort of risk.

36For reasons urged by Mr Paterson, I am not satisfied that the necessary equitable estoppel in accordance with the Waltons Stores case principle has been made out.  These findings I think should, in themselves, lead to the success of the application given that I have found that no serious question to be tried or prima facie case exists in favour of Prukev.  However, I mention the balance of convenience.

37Ms Berlic said that the `gazumped’ contract, if you will, was conditional upon the removal of the caveat.  Therefore, if the caveat stood, there would be no loss to Mr and Mrs Bastian.  She said that the Lava Street property was plainly a valuable one, and depriving Prukev of the opportunity to purchase it would be regarded as contrary to the balance of convenience.  She noted that, in accordance with standard authority, every piece of real estate is to be regarded as unique.  She conceded, however, that there was no special valuation evidence indicating that this piece of real estate was more unique than any other.  Also, there was no evidence as to where the market, in Victoria generally and Warrnambool in particular, was moving as between November and the present or some future time.

38In all those circumstances, in my view, the balance of convenience points neither in favour nor against the continuation of the caveat.  The other findings which I have made necessitate, however, the success of the application.