Conroy v Vaughan

[2000] QDC 435

[2000] QDC 435

IN THE DISTRICT COURT
HELD AT BEENLEIGH

QUEENSLAND

Appeal No. 27 of 1999

BETWEEN:

BADEN LINDSAY GORDON CONROY
AND

SHIRLEY ANN CONROY

Appellants

AND:

ROGER VAUGHAN

Respondent

REASONS FOR JUDGMENT

This is an appeal by Baden Lindsay Gordon Conroy and Shirley Ann

Conroy (the Appellants) from a Judgment in the Magistrates Court at

Beenleigh delivered on the 3rd March, 1999. The dispute between the

parties is primarily over which of them is entitled to payments made

under an instalment contract for the purchase of a house and land after

termination of the contract.

In order to understand the issues which arose for determination by the

Stipendiary Magistrate, it is necessary to set out a brief chronology;

(a) The appellants and respondent agreed to respectively to sell and

purchase a home and land at 9 Casius Street Woodridge. The

respondent signed the contract of sale on 8th May, 1996.

(b)

The contract provided;

(I)	For a purchase price of $65,000;
(II)	For settlement on 20th May, 1997;
(III)	For an initial deposit of $500;
(IV)	For monthly payments of $630 by way of part payment

(deposit) until settlement; and

(V) For the respondent to take up possession of the property

on 24th May, 1996.

(a) In November, 1996 the respondent told the appellants he was

expecting funds from his father’s estate. The parties agreed the

contract would be settled when the respondent received these

funds.

(b) On 6th October, 1997 the male appellant wrote to the respondent in

the following terms;

“I received this unpaid rate notice today, you were to pay it, please

rectify it.

The insurance for Casius Street runs out 10th of this month, so you will

have to get your own insurance as it is now your responsibility now.

I was refused finance last week because of Casius Street, there can be

no more extensions, there is a bloke down the coast that loans bad debt

people. You will have to get a bridging loan. I cannot carry this any

longer.”

(c) On 6th December, 1997, the appellants wrote to the respondent in

the following terms;

“The contract on 9 Casius Street, Woodridge expired on the 20th

February, 1997.

Therefore it is no longer valid.

If you wish to proceed with purchase the price is the Commonwealth

Banks payout of $59,500.

If you no longer wish to purchase the property please vacate the

premises within 7 days.

Please leave it in the clean tidy condition it was when you entered on

the 24th May, 1996.”

(d) On 20th December, 1997 the Solicitor for the respondent wrote to

the appellants in the following terms;

“We have received instructions to act on behalf of Mr Roger Vaughan in

his purchase from you of house premises at 9 Casius Street,

Woodridge. We have cited a photocopy of the contract and note the

completion date was the 20th February, 1997. We also note that special

condition 1 obliged the purchaser to pay you by way of further deposit

the sum of $630 per month. We understand from our client that you

have been banking those payments and the last payment being made

on the 5th December, 1997. We are further instructed that our client has

been paying the rates on the property.
Our client has handed us your letter of the 6th December, 1997

purporting to end the contract. As the contract is an instalment contract

under the Property Law Act, your must give the purchaser at least thirty

(30) days prior written notice if your intention is to end the contract.

Our client has deposited the balance of purchase money into our Trust

account and we called for settlement on the 19th December, 1997.

We enclose the undermentioned documents which require your

signatures;

(1) Form 1 Transfer;

(2) Form 24 Property Information sheets;

(3) Letter of Direction;

(4) Undertaking.

Please note that your signatures on the Transfer have to be signed in

the presence of a Justice of a the Peace or Solicitor. After you have

signed the documents could you return then to us on our undertaking to

use the transfer for no purpose other than stamping prior to settlement.”

(a) By December, 1997 the respondents payments amounted to more

than 10% of the purchase price ($14,360). Under the Property Law

Act the contract is deemed to be an instalment contract.

(b) On the 20th December, 1997 the respondents solicitor wrote to the

appellant’s solicitor in the following terms;

“We understand from Mr Conroy that you are now acting on behalf of the

vendors in this transaction. Your clients are in possession of a letter we

sent them on 10th December, 1997 a copy of which is attached.

The writer will contact you to discuss the matter as we understand Mr

Conroy is reluctant to settle the matter unless a payment of $59,500 is

made at settlement.”

(c) On 16th December, 1997 the appellants signed a transfer and

subsequently returned it to the respondents solicitor.

(d) On the 17th December, 1997 the appellant’s solicitor wrote to the

respondent’s solicitor in the following terms;

“We refer to the above matter and to instructions from our client.

We hereby confirm our original advice that our client will not settle the

matter unless he receives the sum of $59,000 on settlement.

We are advising the Commonwealth Bank that the pay out is

$58,650.33.”

(e) On the 19th December, 1997 the respondent’s solicitor wrote to the

appellant’s solicitor in the following terms;

“We refer to the above transaction and specifically to the contract dated

8th May, 1996. Under the terms of that contract settlement was to take

place on the 20th May, 1997. We understand from our client that

extensions were agreed to and we note that the vendor has continued to

receive payments from our client in the amount of $630 per month in

accordance with special condition one of the contract.
By letter dated 10th December, 1997 we called for settlement on the 19th

December, 1997. Transfer Document and Form 24 were enclosed. We

have calculated settlement figures in accordance with the contract and

they are set out hereunder;

Purchase price	$65,000
Less deposit paid	$ 500
$64,500
Less release fees on mortgage	$ 87
$64,413
Less payments made by purchaser
Under special condition 1	$12,600
$51,813

We have not made a rate adjustment as our client paid the last rates

notice.

We note your written advice to us on the 17th December, 1997 that the

pay out to the Commonwealth Bank the first registered mortgagee was

$58,650.33. Our client is ready and willing to settle today, however we

note your verbal advice to us that your clients will not settle today unless

they receive form the purchaser the sum of $59,000. We assume that is

what is meant in the second paragraph of your letter the 17th December,

1997.

If your clients have had a change of attitude, please let us know

immediately so that we can attend settlement at the Commonwealth Bank, Stafford branch as advised by you on the 16th December, 1997. If

settlement does not proceed today our client has instructed us to lodge

a caveat over the property.”

(f) On 19th December, 1997 the appellant’s solicitor wrote to the

respondent’s solicitor in the following terms;

“We refer to the above matter and to your without prejudice letter of

even date.

We confirm that the offer is unacceptable and our client requires the

sum of $59,000 to be paid.”

(g) On the 13th January, 1998 the solicitor for the respondent wrote to

the solicitor for the appellants in the following terms;

“We confirm the writers telephone conversation with you this morning

that our client has elected to rescind the contract due to your clients

breach of contract by not settling on the 19th December, 1998 and their

repudiation of the contract by consistently maintaining through your prior

to Christmas in a number of telephone conversations and your

conversation with the writer on 12th January, 1998 that they would not

settle the contract unless they received a payment of $59,000 at

settlement. Their insistence is a clear repudiation of the contract as

$59,000 was not due and payable under the terms of the contract.

Our client claims a refund of $13,100 being the deposit sum that he has

paid under the contract terms. Could you please let us know urgently if

you have instructions to refund the $13,100.”
The Stipendiary Magistrate found:

(I) The respondent paid a total amount of $14,360 by

way of monthly payments of $630;

(II) The appellants repudiated the contract on the 6th

December, 1997;

(III) The appellants were in breach of the contract on 19th

December, 1998 by refusing to complete the contract for

the agreed consideration;

(IV) The respondent accepted the appellants repudiation

of the contract and rescinded it on the 13th January, 1998.

All of these findings are challenged by the appellants. Mr Crowley QC,

who appeared for the appellants, argued the informal notice to complete

communicated in the solicitor’s letter of 10th December, 1997 was

ineffective as insufficient time was allowed to the appellants to settle.

On this view the respondent’s purported recision of the contract on the

13th of January, 1998 was itself a repudiation of the contract. Mr Curran,

who appeared for the respondent, made it clear he relied on the

appellant’s conduct in refusing to complete unless paid $59,000 on

settlement, as well as their declaration in the letter of 6th December,

1997 that the contract was terminated as the relevant acts of repudiation

by the appellants. In order to discuss these opposing submissions it is

necessary to discuss the basic facts in greater detail.
The appellants demanded a payment of $59,000 (or $59,500) on

settlement because the mortgage debt was approaching $59,000[1]. The

[1] As at 17th December, 1997 it was apparently $58,650.33 (see the letter of 17th December, 1997 from

differential between the amount demanded ($59,000) and the amount

payable under the contract was approximately $7,200. The letter of the

6th December, 1997 was written by the appellants personally and

represents persuasive evidence they did not regard themselves bound

by the existing contract and were instead demanding the payment of an

increased purchase price if the respondent wanted to proceed with the

contract. At that point the respondent had paid $14,360 in monthly

payments and was in a position to settle the contract. The response to

the appellant’s letter was in the circumstances a reasonable one. As I

interpret the correspondence the problem with fixing the 19th December

for settlement was not that insufficient time was allowed to the

appellants before settlement2 but that they were not prepared to settle

for less than a further payment of $59,000. This is evident from the

subsequent correspondence and verbal communications between the

two solicitors.

In my respectful opinion the Stipendiary Magistrates general conclusion

the appellants had repudiated the contract was correct. Any reasonable

person considering the sequence of events from the 6th December, 1997

would conclude the appellants no longer intended to be bound by the contract. At best for the appellants they refused to perform the contract

unless the other party complied with the demand that the price be

increased by a substantial sum3. In my opinion, the appellants refusal to

complete amounted to a renunciation of the contract.

Mr Crowley QC argued the demanded increase in price was not

substantial and the respondent had other remedies under the Real

Property Act. I am satisfied the additional funds demanded were

substantial relative to the contract price. Mr Curran suggested that

resort to the Real Property Act was not a practicable course open to the

respondent given the existence of the bank mortgage over the property.

Whether that is so or not, I am satisfied the Stipendiary Magistrate’s

conclusion the respondent rescinded the contract by letter on 13th

January, 1998 was a correct analysis of the situation.

Special condition one (1) of the contract, provided for the payment of

$630 each month by way of deposit. Special condition three (3)

provided that “Should this matter not proceed to settlement for any

reason whatsoever, all monies paid by way of deposit shall be forfeited

to the vendor and not be refunded under any circumstances.”

Under the general law, a purchaser is entitled to recover any purchase

monies paid if the contract fails4. In a case where the parties by express

agreement give the vendor the right to retain the instalments paid, equity

2 To both attend to the mechanics of the proposed conveyance and to obtain any additional funds

necessary to pay out the mortgage at settlement.
3 An increase from $65,000 to $72,200 is in my opinion a substantial increase in the price.
4 McDonald V Dennys Lascelles 48 CLR 457 at 477, 478.

will nonetheless relieve the purchaser from forfeiture of the instalments[5].

[5]McDonald V Dennys Lascelles 48 CLR 457 at 478.

The appellants below did not rely on special clause 3 to prevent the

return of the instalments to the respondent6. Mr Crowley QC, however,

relied on the clause on appeal. In my view the clause has no

application;

(1) The appellants, having renounced the contract cannot rely on a

clause in it to govern the rights of the parties to the instalments

after termination of the contract. The clause could only came into

effect after the contract failed to proceed to settlement. Before that

time the appellants had repudiated the contract.

(2)	On equitable principles the special clause would be regarded as a
forfeiture. Equity would relieve the respondent from forfeiture of the
instalments in the circumstances of this case.

Mr Crowley QC submitted the Stipendiary Magistrate had no equitable

jurisdiction to relieve against forfeiture. Mr Curran took issue with this

point, relying on S4 (c) of the Magistrates Court Act of 1921. I agree

with Mr Curran’s submissions on this aspect of the case.

There were no other substantial points argued in the appeal. The

conclusions of credit and the several findings of fact reached by the

Stipendiary Magistrate were undoubtedly open to him on the evidence.

Mr Anders reasons for judgment seem to me to have been thoughtfully

prepared and both logical and sensible. Although there may be some technical difficulty in the declaration made concerning the $500

deposited with the stakeholder in fact the monies have since been paid

to the solicitor for the respondent. In those circumstances it is

unnecessary to interfere with the declaration made.

I am satisfied in all the circumstances that the appeal should be

dismissed.

6 See the Stipendiary Magistrate’s reasons for decision P9.

the appellant’s solicitor).