Clancy v Carlson

Case [2020] QDC 164

DISTRICT COURT OF QUEENSLAND

CITATION:

Clancy v Carlson [2020] QDC 164

PARTIES:

JOHN EDWARD CLANCY

(plaintiff)

v

TESSA JANE SEDDON CARLSON

(defendant)
FILE NO/S:

D306/2019

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court, Southport

DELIVERED ON:

17 July 2020

DELIVERED AT:

Southport

HEARING DATE:

26 June 2020

JUDGES:

Kent QC, DCJ

ORDER:

1.   Paragraphs 21, 22, 24, 26, 27 and 29(a) of the amended defence filed on 19 February 2020 are struck out pursuant to r 171 of the Uniform Civil Procedure Rules with leave to re-plead within 28 days.

2.    The counterclaim filed on 19 February 2020 is struck out pursuant to r 171 of the UCPR with leave to re-plead within 28 days.

3.   Paragraph 29(c) of the amended defence filed on 19 February 2020 is struck out pursuant to r 171 of the UCPR with leave to re-plead within 28 days.

4.   The defendant is to pay the plaintiff’s costs of the application.

5.   The defendant is to pay the plaintiff’s costs thrown away by reason of the relief granted.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OF DEFENCE – where the applicant agreed to sell real property to the respondent – where the respondent paid the deposit but failed to pay the balance of the purchase price – where the applicant terminated the contract and sued the respondent for damages – where the respondent seeks, by way of counterclaim, return of the deposit – where the respondent argues that the contract had been mutually abandoned by the parties – where the applicant contends that the pleaded defence is bad in law and should be struck out – whether the court should exercise its discretion to strike out the pleaded defence and counterclaim – whether there should be leave to re-plead.

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCNES TO ACTION FOR BREACH – DISCHARGE BY AGREEMENT – where the applicant agreed to sell real property to the respondent – where the respondent paid the deposit but failed to pay the balance of the purchase price – where the applicant terminated the contract and sued the respondent for damages – where the respondent argued that the contract had been mutually abandoned by the parties – whether the parties’ conduct constituted a mutual abandonment of the contract in the circumstances.

COUNSEL:

Morgan Clarke for the Applicant

Michael Bland for the Respondent
SOLICITORS:

CJM Lawyers for the Applicant

QBM Lawyers for the Respondent

Nature of application

  1. The plaintiff is applying for a number of orders: that a number of paragraphs of the amended defence of the defendant be struck out without leave to re-plead; a number of other paragraphs be struck out with leave to re-plead; the amended counterclaim be struck-out without leave to re-plead; and consequential orders such as costs.

  2. The facts are to a degree uncontentious (although in some ways obscure, as set out below).  In the context of a…

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AGLC
Clancy v Carlson [2020] QDC 164
Case
[2020] QDC 164
Decision Date

CaseChat Overview and Summary

The case of Clancy v Carlson involved a dispute regarding the sale and purchase of real property, specifically residential lots in a community titles scheme. The plaintiff, Clancy, agreed to sell the property to the defendant, Carlson, for $1,105,000, with a deposit of $75,000 paid by Carlson. However, Carlson failed to pay the balance of the purchase price, leading Clancy to terminate the contract and sue for damages. In response, Carlson counterclaimed for the return of the deposit. The key issue in this case was whether the contract had been mutually abandoned by the parties and, if not, whether the pleaded defence of mutual abandonment and counterclaim should be struck out. The court was required to decide whether the defence and counterclaim disclosed a reasonable cause of action or defence.

The court found that the defence of mutual abandonment was not supported by the facts as pleaded and was therefore bad in law. The court relied on the case of Fitzgerald & Anor v Masters, where the High Court held that a contract is not abandoned simply because of inactivity or delay. The court held that for a contract to be considered abandoned, there must be an extended period of time during which neither party attempts to perform or calls upon the other to perform the contract. In this case, the court found that the conduct of the parties did not amount to a mutual abandonment of the contract. The court also noted that the parties had not provided any evidence to support their claims regarding the alleged mutual abandonment.

As a result of the court's reasoning, it was determined that the pleaded defence of mutual abandonment and counterclaim should be struck out. However, the court granted leave for the defendant to re-plead within 28 days. The court also ordered the defendant to pay the plaintiff's costs of the application and any costs thrown away by reason of the relief granted.

In summary, the court found that the pleaded defence of mutual abandonment and counterclaim were not supported by the facts and were therefore bad in law. The court struck out the defence and counterclaim, but granted leave for the defendant to re-plead within 28 days. The court also ordered the defendant to pay the plaintiff's costs of the application and any costs thrown away by reason of the relief granted.

Orders

Orders of the court

1. Paragraphs 21, 22, 24, 26, 27 and 29(a) of the amended defence filed on 19 February 2020 are struck out pursuant to r 171 of the Uniform Civil Procedure Rules with leave to re-plead within 28 days.

2. The counterclaim filed on 19 February 2020 is struck out pursuant to r 171 of the UCPR with leave to re-plead within 28 days.

3. Paragraph 29(c) of the amended defence filed on 19 February 2020 is struck out pursuant to r 171 of the UCPR with leave to re-plead within 28 days.

4. The defendant is to pay the plaintiff’s costs of the application.

5. The defendant is to pay the plaintiff’s costs thrown away by reason of the relief granted.

Background

Background to the litigation

The facts are to a degree uncontentious (although in some ways obscure, as set out below). In the context of a contract for the sale and purchase of real estate which was allegedly breached, the amended defence pleads mutual abandonment of the contract, which the plaintiff argues is without merit and should be struck out. Thus the central issue is whether the pleading should stand, and if not, should there be leave to re-plead. The matter is to be determined on the pleadings; there is no filed affidavit material relevant to this application.The facts as pleaded The parties entered into a contract on 25 October 2018 whereby the plaintiff agreed to sell to the defendant real property described as residential lots in a community titles scheme, namely a unit in a complex on the Gold Coast Highway at Miami. The purchase price was $1,105,000 and a deposit of $75,000 was paid. The settlement date was 28 June 2019. The defendant paid the deposit, however, she failed to pay the balance of the purchase price. This is pleaded to be a breach of an essential term of the contract and entitled the plaintiff to affirm or terminate the contract. The plaintiff’s case as pleaded is that he terminated the contract by notice in writing on or about 18 November 2019.[1] [1]Statement of claim, document 2 on the Court file, para 8. The plaintiff accordingly claims damage and loss as a result, including the difference between the purchase price and the relevant market value; legal fees associated with the contract and agent’s commission. He reserves his right to claim for contractual damages constituted by a shortfall on resale should that occur.[2][2]Paragraph 12 of the statement of claim. The defendant went into possession of the property prior to the proposed settlement, from 29 March 2019, in respect of which occupation she was to pay a $900 per week licence fee to the plaintiff. It seems common ground that the defendant moved out of the property in early July 2019 and thereupon ceased paying the licence fee. Thus the plaintiff also claims the licence fee on a weekly basis up until termination of the contract, which was 18 November 2019, on the plaintiff’s case. Other damages are claimed for restitution of the property after the defendant vacated.The Pleadings The amended defence and counterclaim[3] pleads firstly that the plaintiff purported to tender settlement of the contract and hold the defendant in breach thereof on and from 28 June 2019 (this was the settlement date of the contract[4]). It is then pleaded that on 28 August 2019 the plaintiff gave notice to the defendant of his termination of the contract (as set out above, this is not the date relied on by the plaintiff). Notably, in paragraph 2 of the amended reply and answer to the counterclaim, this allegation is not responded to; the plaintiff instead pleads that as paragraph 26(a) of the amended defence admits the allegations in paragraph 6 of the statement of claim, and the matters in paragraph 22 are not relied on in support of the allegations in paragraph 24 (particulars of the mutual abandonment), the allegations are confusing or embarrassing and thus he does not plead to them. This immediately creates something of a mystery; is it correct or not that there was a notice of termination on the 28th August? If so, what is its relationship to the admitted purported termination by notice in writing of the 18th November (paragraph 8 of the statement of claim, paragraph 26(b) of the amended defence and counterclaim)? Did the plaintiff terminate twice? Further, what if anything was happening in the meantime? Neither side has filed any evidence, for example correspondence, addressing this point or what was happening in the interim.[3]Document 6 on the Court file. [4]Statement of claim, paragraph 4(a)

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

There are various submissions made by the parties as to the other contentious paragraphs of the defence. However, those matters are all in a different category to the idea of mutual abandonment, in that the plaintiff does not resist leave to re-plead, if necessary, and they are far less central to the merits of the action. Of course, as the parties recognise, if the central plank of the defence of mutual abandonment is struck out without leave to re-plead, it is tantamount to, in substance, a summary judgment in the plaintiff’s favour, because the defendant would have no defence remaining as to the central issue in the case.Consideration(a)Plaintiff’s Arguments The central concept in resolution of this matter is the nature of the defence of mutual abandonment in a contractual case. The plaintiff argues, in essence, that the concept is reserved for a situation where the parties essentially ignore the contract, for an extended period of time, often many years, such that they can be regarded as having each mutually abandoned it; in effect the contract is terminated by mutual agreement. He refers in particular to Fitzgerald & Anor v Masters.[9] The High Court there considered a case where a contract had been entered into for the purchase of an interest in a farm in 1927, from which point the farm was to be worked in effect as a partnership but the actual transfer of the interest in the land was not to take place until the plaintiff had paid in full. The matter proceeded in that way for some time but in 1932 the plaintiff left the farm. Between then and 1948 the plaintiff had no apparent connection with the working of the farm, but then began corresponding with the other party and that continued until the latter’s death in 1951. The proceedings by the plaintiff were not commenced until 1953, and constituted a suit for specific performance against the defendant’s executors. The High Court held that although the partnership seemed to have been dissolved, the contract had not been abandoned and thus the discretionary remedy of specific performance should be granted. This was on the basis that the plaintiff had an equitable interest not destructible by mere inaction not amounting to release or abandonment and that there were no circumstances apart from delay why the court should refuse the remedy. The delay (though obviously lengthy) did not prejudice the parties. [9](1956) 95 CLR 420. The applicant referred to a passage at page 432 of the judgment of Dixon CJ and Fullagar J:“Is abandonment, then, to be inferred from the long silence and inactivity that followed? In considering this question, we think that the period to be regarded is a period of about sixteen years – from 1932 to 1948. For, although the respondent’s solicitors, when they wrote to the deceased in 1948, made no reference to the contract of sale, we agree with McLelland J that their letter should be regarded as an intimation that the respondent intended to assert his rights, whatever they might be.There can be no doubt that, where what has been called an ‘inordinate’ length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them, it may be inferred that the contract has been abandoned. A good example is to be found in Pearl Mill Co Ltd v Ivy Tannery Co Ltd. See also Mathews v Mathews and G W Fisher Ltd v Eastwoods Ltd per Branson J. What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that (in the words of Rowlatt J) ‘the matter is off altogether’.It is impossible, in our opinion, to infer a discharge of the contract in the present case …” (citations omitted)