Chiodo v Coulton

[2011] VCC 508

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-10-05828

MICHAEL PAUL CHIODO	Plaintiff
v.
GRAEME CAMERON COULTON & OTHERS	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	5 May 2011
DATE OF JUDGMENT:	5 May 2011 (Revised 6 May 2011)
CASE MAY BE CITED AS:	Chiodo v. Coulton & Ors
MEDIUM NEUTRAL CITATION:	[2011] VCC 508

REASONS FOR JUDGMENT

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Catchwords:  Practice and procedure – Summary judgment application – Auction contract – Property passed in after the defendant’s bid was not accepted – Whether collateral contract or duty of care that required bid to remain open for acceptance during post auction negotiations and/or until formally retracted – Plaintiff’s care against defendant has “no real prospect of success” – s. 62 Civil Procedure Act 2010

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Searle	Berry Family Law
For the Third Defendant	Mr M. Robins	Nathan Kuperholz
HIS HONOUR:

consideration of the third defendant bidding to purchase the property at the said
auction, then the plaintiff would, if the highest bid at the auction were made by the
third defendant and the property were passed in on such bid, first negotiate with the

third defendant for the purchase of the property
special condition 1 of the contract of sale. It is then asserted that an announcement to
such effect was made by the auctioneer prior to the commencement of the auction.

1           The plaintiff has made a claim arising from an auction of his house property on 24 August 2009. The claim is made against his agent, his auctioneer and the third defendant who was the highest bidder at the auction. The third defendant says that the claim is hopeless and should be terminated at this stage.

2 The appropriate test for the Court to apply is set out in section 62 of the Civil Procedure Act 2010. I must determine whether the plaintiff’s claim against the third defendant “has no real prospect of success”. It was intended that the test included in the Civil Procedure Act 2010 should be broader than the traditional test for summary judgment proceedings brought by a plaintiff or defendant. Some guidance may be found in decisions of the Federal Court and courts of other states where a similar test to that introduced by section 62 has been in existence for some years.

3

In my view, it is not necessary to consider the scope of the test introduced by the Civil against the third defendant is hopeless and would have failed under the previous test.

4           The claim against the third defendant is pleaded both in contract and in tort. In support of the contract claim, the plaintiff asserts that “it was a term of the auction

agreement that no bid made by the third defendant would be retracted so long as

such bid had not been rejected by the plaintiff”. The term is said to arise from a
statement made to that effect prior to the commencement of the auction or must
necessarily implied in order to give business efficacy to the auction bidding
agreement.

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Alternatively, a tortious claim is made that the third defendant breached a duty of care passed in on a bid which the third defendant intended to retract”.

6           The statement of claim pleads that it was part of the auction agreement that “in

”. Particulars are given referring to his pleading, provides that “the property is offered for sale by auction, subject to the

vendor’s reserve price. The rules for the conduct of the auction shall be as set out in
Schedule 1 to the Sale of Land Regulations 2004 or any rules prescribed by

regulation which modify or replace those rules”.

7           The Sale of Land Regulations 2005 provide in Schedule 1 the following relevant rules:

a.	Rule 4 provides that “the auctioneer may withdraw the property from sale at any time”;
b.	Rule 7 provides that “if a reserve price has been set for the property and the

property is passed in below that reserve price, the vendor will first negotiate

with the highest bidder for the purchase of the property”.

8           In his statement of claim, the plaintiff pleads the following facts:

a.	He instructed the first and second defendants that the reserve price was $2,250,000 and that if a bid were made in that sum the property should be put on the market, those present at the auction so advised and the property knocked down to the highest bidder at or over that price;
b.	A bid of $2,250,000 was made at the auction;
c.	The first and second defendants failed to advise those present at the auction that the property was on the market;
d.	The third defendant made a bid of $2,300,000;
e.	The property was not knocked down to the third defendant but was passed in on that bid.

9           In my view, it is clear from these facts that:

a.	Pursuant to Rule 7 of the Sale of Land Regulations 2005, the plaintiff had an obligation to “first negotiate with the highest bidder for the purchase of the property”;
b.	At the time the third defendant’s bid was made, no statement had been made by the auctioneer that the property was on the market;
c.	The third defendant’s bid was not accepted and the property was passed in;
d.	The auction had been terminated, subject to the plaintiff being required to negotiate firstly with the third defendant as the highest bidder, before he negotiated with any other person.

10   To suggest that in the circumstances the third defendant was under any obligation to negotiate or to negotiate on the basis that his bid, which had not been accepted, must remain open during that negotiation, has no basis in fact or law.

11 Any suggestion that evidence might be led of an announcement prior to the commencement of the auction that any bid made by a person at the auction could not be retracted so long as such a bid had not been rejected by the vendor is inconsistent with the asserted reference by the auctioneer to Special Condition 1, and Rules 4 and 7 imported into the auction agreement by the Sale of Land Regulations 2005.

12   Further, the suggestion makes no sense unless it be asserted that the auctioneer announced prior to the commencement of the auction that such a provision related only to the final bid before the property was passed in. If this is the only basis upon which the plaintiff asserts that his claim is not hopeless then it would not, in my view, be appropriate to allow the action to proceed to trial.

13   During the course of argument, reference was made to the decision of Ormiston J in Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, and to similar decisions in other states. Although the Futuretronics case involved a claim for the enforcement of a contract between a vendor of property and the successful bidder at an action, where the successful bidder failed to execute a document complying with the Instruments Act, nevertheless in my view the reasoning of Ormiston J is entirely apposite to the facts of the present case.

14   There is no possibility in my view of the plaintiff establishing either a collateral contract or a duty of care which would enable the plaintiff to claim damages against the third defendant in circumstances where the plaintiff asserts that the third defendant’s final bid should have remained open to be accepted by him for an unspecified period. The statement of claim alleges that “the third defendant retracted the bid before it had been accepted or rejected by the plaintiff”. No particulars are given of the alleged retraction of the bid. No assertion is made in the pleading that the plaintiff at any time after the passing in of the property purported to accept the final bid made by the third defendant.

15   The plaintiff’s claim as against the third defendant must be dismissed. I will make the following orders:

a.	Judgment for the third defendant for an order that the plaintiff’s claim against the third defendant be dismissed with costs to be taxed on Scale D on an indemnity basis, including any reserved costs and the costs of the defendant’s summons dated 13 April 2011. Certify $3,300 for counsel’s brief fee for the appearance today.
b.	Reserve any other issues relating to any certifications that the third defendant may require, for example in relation to the solicitor’s hourly fee, if those matters cannot be resolved by the Costs Court without reference to this Court.

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Certificate

I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 5 May 2011 and revised on 6 May 2011.

Dated: 6 May 2011

Hannah Christensen

Associate to His Honour Judge Anderson