Casey, Graham Lawrence v Ryan, Vikki Lisa

[2009] VCC 1475

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-08-05515

GRAHAM LAWRENCE CASEY	First-named Plaintiff
and
JULIET ANN CASEY	Second-named Plaintiff
v
VIKKI LISA RYAN	First-named Defendant
MPRE BERWICK PTY LTD
(ACN 114 708 762) Trading as HARCOURTS BERWICK	Second-named Defendant
and
BRADLEY ROBERT NICHOLLS	Third-named Defendant

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	19 November 2009
DATE OF JUDGMENT:	27 November 2009
CASE MAY BE CITED AS:	Casey, Graham Lawrence & Anor v Ryan, Vikki Lisa & Ors
MEDIUM NEUTRAL CITATION:	[2009] VCC 1475

REASONS FOR JUDGMENT
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Catchwords: PRACTICE AND PROCEDURE – Application to set aside default judgment – whether default judgment regularly entered – whether default judgment for a debt – explanation for default – whether a prima facie defence: County Court Civil Procedure Rules 2008, Rule 21.03

SALE OF LAND – right of vendor to terminate the contract during the cooling off period– whether right must be exercised in writing – Sale of Land Act 1962, s.31.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J G Pennell	A J Mahon & Associates Pty Ltd with Yuncken & Yuncken
For the First Defendant	Mr R Antill	Gilberthorpes Business Lawyers
For the Second and Third	Mr D Thomas	Ligeti Partners
Defendants  HIS HONOUR:

1          The first defendant applies to set aside a default judgment entered on 10 February 2009 in default of appearance. I heard the matter in the Directions List on Thursday, 19 November 2009. I reserved judgment because I wanted to consider the question, which arose during the course of submissions, whether the default judgment had been regularly entered.

Whether Judgment was Regularly Entered

2 This issue turns on whether the judgment was one for a debt or was for damages, in which latter case the appropriate procedure would have been to enter an interlocutory judgment with damages to be assessed: see Rule 21.03 of the County Court Civil Procedure Rules 2008.

3          The plaintiffs sued three defendants. The claim against the first defendant is that she failed to pay the balance of a purchase price of $748,000 for a property purchased from the plaintiffs by a contract dated 23 October 2007. The second and third defendants were the plaintiffs’ real estate agent and its director.

4 The plaintiffs allege that following the first defendant’s default in paying the purchase price and the rescission of the contract they resold the property for a lower price than the first defendant had agreed to pay. They allege that the first defendant is indebted to them for the balance of the deposit and damages pursuant to s.26 of the Sale of Land Act 1962 and Condition 6 of Table A of the Transfer of Land Act 1958.

5          Paragraph 17 of the Statement of Claim is of importance. It is expressed as follows:

“Further by reason of the fact referred to in paragraph 12 herein the

Plaintiffs have suffered loss and damage totalling $140,080.34.

Particulars

[The] Plaintiffs have incurred loss and damage as a result of the First

Defendant’s breach of the contract totalling $140,080.34 being:

(a)	Additional Interest	$28,680.04
(b)	Advertising Costs (Frank Facey)	$3,414.00
(c)	Advertising Costs (Ray White)	$1,389.00
(c)	Commissions Paid (Frank Facey)	$14,740.00
(d)	Conveyance Costs	$770.00
(e)	Loss on sale	$78,000.00
(f)	Penalty interest and rescission costs	$10,887.30
(g)	Accounting fees	$2,200.00”

6          The relief sought by the plaintiffs is pleaded in the following manner:

“(a)	Damages, being $140,080.34;
(b)	Costs;
(c)	Interest.”

7          The relevant part of the Default Judgment for Debt was expressed as follows:

“The Judgment of the Court is that:

The firstnamed defendant pay the plaintiff as follows:

1 Claim $140,080.34

Less credits $0.00

$140,080.34”

8          Interest and costs were then listed and a total judgment sum of $143,837.82 recorded.

9 Rule 21.03 provides relevantly as follows:

“1	Where a claim is made for the recovery of a debt, damages or any property, whether or not another claim is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with Rule 21.01 or Rule 21.02 the plaintiff may –
(a) for the recovery of a debt, enter final judgment against that defendant for an amount not exceeding the amount claimed in the writ or, if the plaintiff has served a statement of claim, the amount claim in the statement of claim together with interest from the commencement of the proceeding to the date of the judgment –

(i)      or on any debt which carries interest, at the rate it carries;

(ii)     on any other debt, at the rates payable on judgment debts during that time;

(b)	for the recovery of damages, enter interlocutory judgment against that defendant for the damages to be assessed;
…”

10        As stated above, the issue is whether the judgment entered was for the recovery of a debt or, properly characterised, was for the recovery of damages. If it is the latter it is accepted that the judgment was irregularly entered and would need to be set aside.

11 The commentary in Williams’ Civil Procedure Victoria, at p.3309 states:

“In r.21.03 and elsewhere in the new rules ‘debt’ takes the place of ‘debt or liquidated demand’ in the former rules. The word has the same meaning as the former expression. It means a pecuniary demand where the amount due is fixed and specific or where it can readily be reduced to certainty by a mathematical calculation: City Mutual Life Assurance Society Limited v Giannarelli (1977) VR 463 at 468 ….

Where the claim is not for a debt but damages, a judgment entered under this rule in the form of a final judgment is irregular and will be set aside: Alexander v Ajax Insurance Co Ltd [1956] VLR 436.”

12        The plaintiffs relied on condition 6 of Table A in the Seventh Schedule of the Transfer of Land Act 1958 which was incorporated into the Contract of Sale and which provided that when the contract was rescinded by the vendor because of default by the purchaser then the vendor was entitled to:

“(ii) resell the land in such manner as he sees fit and recover any deficiency in the price on the re-sale and any resulting expenses by way of liquidated damages.” (emphasis added)

13        The plaintiffs argued that its judgment was therefore for liquidated damages and therefore for a debt.

14        I was referred during argument to the decision of Rossco Developments Pty Ltd v O’Halloran[1] where it was decided that the right given to the vendor by a conveyancing contract to recoup any deficiency upon resale of the land and the expenses of the resale was a right to recover an ascertainable sum as liquidated damages and was therefore a liquidated demand that required the endorsement specified by Order 4, Rule 6 of the Australian Capital Territory Supreme Court Rules. That endorsement was in the form of a statement that if the defendants paid the demand within four days after service further proceedings would be stayed. Blackburn CJ stated in respect of the vendor’s rights under the particular contract:

“This latter alternative is simply a power to resell and no more: it is not a power to rescind and resell: see Voumard's Sale of Land 3rd ed, p 414ff. Under it, the vendor has no right to any damages save the amount of the deficiency and the expenses of the resale: Hoskins v Rule [1952] GLR (NZ) 565; [1952] NZLR 827. The right of the vendor under this alternative provision is a right precisely defined in the contract: there would be no such right unless that provision appeared in the contract. It is a right to recover an ascertainable sum of money as liquidated damages. To enforce such a right, the statement of claim must comply with O 4, r 6. The plaintiff is, therefore, debarred from enforcing that right in these proceedings, for the same reason as that which prevents its enforcing the right (if it exists) to the unpaid deposit.”[2] (emphasis added)

[1] (1980) 29 ACTR 1

[2]             (supra), at 5

15 In my opinion, the reasoning of Blackburn CJ is equally applicable to the present question. The passage I have emphasised is applicable to the right given to a vendor under the condition set out in paragraph 12 above. The reality of the plaintiffs’ judgment is that it was for a liquidated damages and therefore for a debt within the meaning of Rule 21.03 (1)(b). The default judgment was therefore regularly entered.

16        I next consider whether the first defendant has made out her case to have the judgment set aside. The discretion to set aside the default judgment is given by Rule 21.07.

Explanation for Failure to File an Appearance

17        The first matter I consider is the explanation given by the first defendant of her failure to enter an appearance. The Writ was served on 7 January 2009.

18        In her first affidavit of 28 October 2009, the first defendant states: “I cannot recall receiving the writ in this proceeding”. In her second affidavit of 18 November 2009, the first defendant states that towards the end of 2008 she and her husband were under a great deal of financial stress because their home was about to be taken from them due to them being behind in their mortgage payments. She then refers to her husband’s financial difficulties and states that a number of process servers came to the house at the time, but she could not recall being served with the Writ. She states:

“I am now informed by my husband that he did telephone the office of Mahons and that he was informed that the person dealing with it at their office was on holiday but that they would contact him on their return which I am informed did not happen.”

19        Mr Austin the plaintiffs’ solicitor in his affidavit of 17 November 2009 gives a different account and states that the first defendant’s husband phoned his office on or about 9 January 2009 and advised a staff member in the office that his wife had received Mr Austin’s letter to his wife but because their solicitors’ office was closed they would not be able to respond until 29 January 2009.

20        In any event there is no explanation by the first defendant of why she or her husband did not follow the matter up. I do not consider the evidence to which I have referred to be a satisfactory explanation as to why there was no appearance to the Writ. However, I would not dismiss the application on that ground alone.

Delay in Applying to Set Aside Default Judgment

21        The second matter is the question of delay. The first defendant says that she was not aware of the default judgment until 5 October 2009. The solicitor for the plaintiffs states that notice of the default judgment was sent to the first defendant on 1 October 2009.

22        The Summons to set aside the default judgment was issued on 29 October 2009. On this issue I find that the first defendant acted reasonably promptly after she became aware of the default judgment.

Whether an Arguable Defence

23        The final issue is whether the first defendant has shown an arguable defence providing a purpose for setting aside the default judgment. In my opinion, none of the arguments advanced on behalf of the first defendant disclosed an arguable defence.

24        The primary matter argued was that the first defendant had ended the contract because on or about 26 October 2007, she attended the offices of the second and third defendants and informed the third defendant that she was “pulling out” of the contract document under the cooling off provisions contained in the contract, in it telling the third defendant that she did not have the finance to proceed with the proposed purchase. This matter was identified as the sole positive defence asserted in the proposed draft defence exhibited to the first affidavit of the first defendant.

25        The first defendant, in her second affidavit, states:

“On or about the 26 October 2007 I attended the offices of the second and third defendant[s] and informed the third defendant that I was pulling out of the Contract of Sale under the cooling off provisions in the contract document. I told the second and third defendant[s] that I did not have the finance to proceed with the proposed purchase.

My husband and I were expecting to receive a sum of money from an inheritance.

I felt that the sum of money would not be in our hands in time to go ahead with the contract and that it would be best that I pulled away from the contract as I could not guarantee anything. I told the third defendant that the whole thing was making me sick because of the stress of the money from the inheritance not being released. I also informed the third defendant that I had no control over it and when the money would go into our account.

The third defendant tried to persuade me to continue with the contract and not pull out but I kept repeating to him that I was not confident that the money was going to be there. The third defendant said that I should apply for bridging finance but I told him that I would not do that.

I am now informed by my husband and believe that he gave a cheque for $70,000 to the second defendant in November 2007. I am now informed by my husband that he asked the second defendant not to present the cheque until he told the second defendant that sufficient money was in his account to clear the cheque. It appears that the second or third defendants presented this the next day and it was dishonoured.”

26 Section 31(2) of the Sale of Land Act 1962 states:

“(2) Where a purchaser under a contract for the sale of land signs that contract he may at any time before the expiration of three clear business days after he has signed the contract give notice to the vendor that he wishes to terminate the contract and where he has signed that notice and given it in accordance with the provisions of this section the contract shall be terminated.”

27        The Contract of Sale Real Estate entered into by the first defendant contained, on its first page, the following statement:

“IMPORTANT NOTICE PURCHASERS ON COOLING OFF PERIOD

– SECTION 31, SALE OF LAND ACT 1962

If none of the exceptions listed below apply to you, you may withdraw from this contract within 3 clear business days of signing it.

To withdraw from this contract within this time, you must either give the vendor or the vendor’s agent notice that you are ending the contract or leave such notice at the address of the vendor or the vendor’s agent.

If you end the contract in this way, you are entitled to a refund of all the money you paid EXCEPT for $100,000 or 0.2% of the purchase price (whichever is more).

EXCEPTIONS – The 3-day cooling off period does not apply if:

• You bought the property at or within 3 clear business days of a publicly advertised auction; or

• You received independent advice from a legal practitioner before signing the contract; or

• The property is used principally for industrial or commercial purposes; or

• The property is more than 20 hectares in size and is used principally for farming; or

• You previously signed a similar contract for the same property; or

• You are an estate agent or a corporate body.”

28 This statement was clearly intended to comply with the provisions of s.31(6) of the Sale of Land Act 1962, which requires that a relevant contract must contain a conspicuous notice of the purchasers’ right to terminate the contract during the period of three clear business days after the purchaser signs the contract.

29 The question is whether a notice given by a purchaser under s.31(2) of the Sale of Land Act must be in writing. It is clear that it must be in writing because of the words in s.31(1) commencing “and where he has signed that notice”. No authority was cited to me to suggest a contrary conclusion or, that a contrary conclusion was arguable.

30        No written notice was given in this case.

Additional Arguments

31 During the course of submissions an argument was developed by counsel for the first defendant that the agent, Mr Nicholls, who is the third defendant, by not informing the first defendant of an obligation to give notice in writing to terminate the contract, had engaged in conduct which estopped his principal from relying on the terms of s.31, insofar as it required a cooling off notice to be written.

32        It was also argued that on the first defendant’s version of events, that the third defendant had engaged in misleading or deceptive conduct or conduct that was likely to have that effect,[3] so as to provide the first defendant with an arguable defence, or presumably, although it was not expressly put in that manner, a counterclaim.

[3] Trade Practices Act 1974 (Cth) - s. 52 and Fair Trading Act 1999 - s.9

33        The third defendant, in an affidavit sworn 17 November 2009, denies that the first defendant gave him or the second defendant any instructions “that she was pulling out of the contract document under the cooling off provisions”. He states further:

“In fact contrary to those instructions I received text messages confirming that the deposit of $70,000.00 would be paid. Additionally, Ms Ryan never requested a refund of the $500.00 initial deposit paid by her upon signing the Contract of Sale.

On or about 12 November 2007 a cheque in the amount of $70,000.00
was paid to the Second Defendant’s trust account as deposit for the
purchase of the property. This cheque was subsequently dishonoured.”

34        The plaintiffs pointed to a number of factors suggesting that there was no attempt by the first defendant to exercise any right to terminate the contract. These included:

(a)	a letter dated 27 October 2007 from Cardinia Conveyancing, the first defendant’s representative in the purchase of the property, in which the first defendant sought a two-week extension of time for the payment of the deposit monies rather than seeking to cool off from the purchase of the property. The first defendant states that she made no request to Cardinia Conveyancing to take such action;
(b)	the fact that the first defendant’s husband paid a cheque for $70,000 dated 12 November 2007 to the second defendant, i.e. sixteen days after the alleged notice of cooling off was said to have occurred, but the cheque was subsequently dishonoured; and
(c)	the correspondence between the parties indicated that the first defendant continued to attempt to arrange for payment of the deposit monies up until the date of the Rescission Notice dated 30 January 2008.

35        I am conscious that applications to set aside interlocutory judgments are not appropriately determined by assessing the strength of a likely defence from the form of the applicant’s affidavit. It is generally not appropriate to determine disputed questions of fact on an application to set aside a default judgment.

36        However, I do have to be satisfied that the defences sought to be relied have some possible or arguable substance, otherwise there is no point in setting the judgment aside.

37        I have determined that there is no arguable defence that the contract was ended by the exercise of purchaser’s right of “cooling off”.

38        I do not consider that the material before me reveals any possible basis for an arguable plea of estoppel of whatever character. The manner in which any such estoppel binding the plaintiffs might be established in this case, even to an arguable degree, was not developed in argument. Taking the first defendant’s affidavit at its highest, the third defendant attempted to talk her out of ending the contract. It is not alleged that the third defendant made any representation to the first defendant that she had given a valid notice or about the form of notice that was required to be given.

39        This last comment also has application to the suggested possible claim of misleading or deceptive conduct. On the material before me, I do not consider that such a claim is established as a possibly arguable defence. There are circumstances in which a party may engage in misleading or deceptive conduct because of their silence, or because of an omission to provide information. But on the material provided to me, I do not consider that there is an arguable case established of the plaintiffs’ agent engaging in misleading or deceptive conduct by not informing the third defendant of the need to give written notice to end the contract, or by any other conduct which is described in the affidavits.

40        The first defendant raised other grounds which were said to raise an arguable defence, including relying on correspondence attached to an affidavit sworn by Kelvin Robert Austin, the solicitor for the plaintiffs, to contend that the s.32 Notice attached to the contract was in some way deficient and also attacking the claim for commission which formed part of the damages. I do not consider that either of those matters establish an arguable defence.

41        My view is that there is no arguable defence established on the material relied on by the first defendant. I reach this conclusion, because the primary defence of termination of the contract cannot be sustained and because the other matters advanced as possible defences lack any real arguable substance.

42        I also consider that viewed in the aggregate, the material does not establish an arguable or prima facie defence.

43        I dismiss the first defendant’s Summons dated 29 October 2009.

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