Damco Nominees Pty Ltd v Moxham
[2012] VSC 79
•9 March 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2012 00382
| DAMCO NOMINEES PTY LTD | Plaintiff |
| – and – | |
| BRIAN DAVID MOXHAM | Defendant |
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JUDGE: | Mukhtar AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16, 23 February, 1 March 2012 | |
DATE OF JUDGMENT: | 9 March 2012 | |
CASE MAY BE CITED AS: | Damco Nominees Pty Ltd v Moxham | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 79 | |
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SALE OF LAND ― Purchaser’s inability to complete contract ― Lack of finance ― Vendor’s service of notice requiring default to be remedied ― Dispute over validity of notice ― Caveat lodged by purchaser ― Vendor’s termination of contract for failure to remedy default ― Action to remove caveat ― Default notice not invalid ― Contract terminated ― Caveat ordered to be removed ― Transfer of Land Act 1958 (Vic), s 90(3)
EQUITY ― Relief against forfeiture ― Termination of contract by vendor for purchaser’s failure to complete ― Finance subsequently available ― Applicable principles ― Relief unavailable
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M A Robins | Nathan Kuperholz |
| For the Defendant | Mr M C McKenzie | Bellili King & Associates |
HIS HONOUR:
This is an application under s 90(3) of the Transfer of Land Act by an owner of land to remove a caveat lodged by the defendant. It is commonly referred to as a purchaser’s caveat; that is, a caveat which claims an interest in the land on the grounds of an uncompleted contract for the sale of the land. In circumstances I shall expose, the defendant purchased the vacant land for $1.9 million for a residential multi-site development. But he could not obtain the finance to complete the sale on the agreed date, and the contract was not conditional on finance. The vendor then served a notice under the contract giving the purchaser 14 days to remedy the default failing which, so the notice said, the contract would end. On the thirteenth day, the purchaser contended the notice was defective, and he also lodged the caveat. He did not proceed to complete the sale the following day. It is the fact that he did not have the finance. The vendor has always maintained the notice was valid and efficacious to bring the contract lawfully to an end. In these proceedings, the purchaser says he now has the finance and wants to purchase. The vendor says the contract is over.
By all outward manifestations, when the proceedings were filed and the hearing was underway, the only apparent issue for both the plaintiff and the Court was whether the notice of default was invalid, or more precisely, whether there was a prima facie case to say that it was. That is an objective exercise, largely having regard to the content or the “four corners” of the notice itself, together with any relevant objective circumstances.
But, the caveator’s case mutated at the hearing. This became consequentially a three day hearing with cross examination, subpoenaed documents, and the verisimilitude of a trial. The conduct of the caveator’s case also required the Court to intervene and give four procedural rulings (as transcribed) to stabilise the case to ensure the grounds of the caveat (and therefore the issue for determination) became immovable, and to ensure, in running, that all evidence as the caveator sought fit to adduce was before the Court. In short, I allowed the defendant to propound a companion argument that if the notice was valid to terminate the contract, then the purchaser ought be relieved from forfeiture of the contract. But, I would not allow the caveator to make a bemusing case in the alternative that the contract itself ― that is, the contract on which the caveat was based and from which relief from forfeiture was being sought ― was not enforceable and therefore the deposit paid under it was refundable and the prospective right to a refund was protectable by an equitable lien over the land for which a caveat (that is, not the caveat as lodged) would be legitimate. Such a case was not only unsubstantiated and vague, but was so fundamentally inconsistent to the whole foundation of the caveat and the two issues as settled, that I regarded it as causing intolerable disorder to civil procedure.
I mention this at the outset not only to make clear the issues for determination. The Court had to struggle with the caveator to ensure that he understood the confinement of the case and the evidentiary expectations. The plaintiff had put in all the documented facts concerning the contract and events up to and after the service of the notice. On the relief from forfeiture question, there was mere assertion that the purchaser was now ready willing and able to settle. Counsel for the caveator, Mr McKenzie, stated his task was to do no more than show an arguable case, akin to a lowered hurdle when the Court deals routinely with an application for summary judgment. Even so, the caveator’s evidence as it stood on the second day of hearing was lacking. It would not have even established an arguable case for relief against forfeiture. My rulings and orders on the second day of hearing gave the defendant the opportunity to bring in better evidence on the relief from forfeiture claim, if it existed.
It is well established that the power to remove a caveat under s 90(3) of the Transfer of Land confers a discretion upon the Court. It is analogous to the determination of an interlocutory injunction. Discussion of the applicable principles and reference to authorities in this area was conveniently undertaken by Macaulay J in Percy & Michele Pty Ltd v Gangemi[1] and I need not re‑state them. It is enough to say since the decision of the High Court of Australia in Australian Broadcasting Commission v O’Neil,[2] the first limb of the test requires the caveator to show that there is a probability on the evidence before the Court that the caveator will be found to have the asserted equitable rights or interest as claimed in the caveat. And, that probability has to be sufficient to justify the practical effect which the caveat has on the freedom of the owner to deal with the land in question. O’Neill speaks of the necessity to show a “prima face case” which means a sufficient likelihood of success to justify the maintenance of the caveat. Then, it is matter of seeing where the balance of convenience lies. However, this proceeding came to involve an exposure and analysis of the facts and the applicable law, and comprehensive submissions. That put the Court in a sound position to delve into, and assess the merits of the caveator’s case on both issues. That is, it was possible and expedient and efficient for the Court to investigate the case as put by the caveator. And I think in caveat cases, Courts should; that is, if they are to give service to the ethos of the Civil Procedure Act
[1][2010] VSC 530 at [38] cf.
[2](2006) 227 CLR 57, 83-4.
For the reasons that follow, I would order that the caveat be removed. The attacks on the notice were, I think hyper technical and unmeritorious and none of the mistakes were of a quality to make the notice invalid. Purchaser’s default was plain, involving as it did the fundamental obligation to complete. The purchaser did not have finance. The notice was clear and unambiguous to enable the purchaser to understand the default alleged and what was required of him to prevent termination of the contract. All in all, I think the facts show that this purchaser was not in a position to complete the contract and lodged the caveat in a transparent stratagem to attack the notice on any possible technical basis, require another one to be given, and in the meantime an attempt could be made to arrange the finance to save the deal.
Secondly, I see no case at all for relief against forfeiture. The caveator barely adduced evidence but the insurmountable fact is that did not get the finance. There was no accident, mistake or misadventure here. The owner did not contribute to the breach. The breach was fundamental. In those circumstances, the law does not regard it as unconscientious for a vendor to insist on his contractual rights, which is all the vendor has done in the face of non compliance and it gave the purchaser plenty of warning. It does not merit equitable intervention for the purchaser to now say, nearly two months after termination that he has obtained finance and can complete. To do so in effect is asking equity to alter contractual relations to make this a contract conditional on finance, which it was not.
Many of the facts are documented, fortunately. Such is this case, that it will be necessary to make copious reference to the informative documents. In the end, I think the facts speak for themselves and show there is no injustice in removing the caveat. The outcome is to do no more than make people honour a contract made.
The facts concerning the relevant contract
By a contract dated 19 January 2011, the defendant, Brian David Moxham “and/or nominee” agreed to purchase from the plaintiff the vacant land at 175 McMahons Road in Frankston for a price of $1.9 million plus GST. According to the plan of subdivision the area of the purchased land is 5738 square metres. The completion date of the contract was almost a year later, on 20 December 2011.
Moxham is a land surveyor. He bought the land to develop it into multiple building sites. There is sufficient to infer that the long settlement period of one year was to enable him to obtain the relevant planning permits and take any other preparatory steps ― including obtaining finance ― before proceeding to completion. To that end, General Condition 40 of the contract permitted the buyer to have reasonable access to the property for the purpose of enabling the buyer’s consultants to do investigative works preparatory to the proposed development.
The contract required a deposit of $190 000 by 21 January 2011 of which, the contract said, $10 000 had been paid. Moxham says the $10 000 was paid on 31 December 2010. But that is before the date of the contract. Nothing turns on the deposit as such, but its earlier payment brings into the picture something which caused an unexpected turn in this proceeding, and a “moving target”. I shall not dwell on that event because it does not affect the adjudication of this application which, so I ruled, concerned the caveat as lodged, and according to the estate claimed and the grounds stated in that affidavit. But something should be said at this juncture about the caveator’s attempt to put an alternative case.
The oddity that arose was this. As I have said, this caveat is a purchaser’s caveat based explicitly on the contract of sale dated 19 January 2011. It is that caveat and its claimed estate and grounds that brought the vendor to Court to seek a removal. That caveat is based manifestly on Moxham saying that he made this contract; that as purchaser he has an enforceable interest under this contract; the vendor’s default notice under this contract is invalid; and he is willing to proceed with this contract; and therefore this caveat over the land bought under this contract ought not be removed.
One would think therefore that there could be no issue about the phenomenon of this contract. Yet Mr Moxham attempted to do so. He filed an affidavit saying that the parties had signed an earlier standard form REIV[3] contract of sale on 20 December 2010 for the same land and the same price and with same completion date of 20 December 2011. He swears that after signing that (first) contract he was presented with a new contract which he signed on 19 January 2011, being the foundation of his caveat. He says this, and only this
[3]That means the Real Estate Institute of Victoria.
1.I initially signed a Contract of Sale of Real Estate on 20 December 2010 being the terms agreed to between the parties. Now produced and shown to me marked “BDM-1” is a copy of the Contract of Sale (“the First Contract”).
2.I paid $10,000.00 towards the deposit on 31 December 2010.
3.During January 2011 I communicated with a representative of the vendor about “cleaning up” the contract and that a new contract had to be signed, which contract would be the same as the First Contract. I do not recall whether the communication was verbal or by correspondence.
4.After this, during January 2011, I was presented with a new contract that I signed on 19 January 2011 ... (“the Second Contract”).
5.I did not receive any legal advice on the Second Contract. I believed that the Second Contract was the same as the first with no significant changes. I am now advised that the changes to the Second Contract were significant.
6.The two Contracts differ substantially in that the Second Contract, clause 32.5, limits the buyer’s claim against the seller to 10% of the price.
From there, his counsel announced to the Court on the first day of hearing that if the Court found that the rescission notice was valid, then he would contend that the deposit under this contract was not to be forfeited because the contract was not binding. When pressed to identify the vitiating element, it was said to be on the grounds of unconscionability or maybe, mistake. Counsel contended that a caveat (not this one) over the same land would then be supportable on the basis of an equitable lien which was security for the recoverability of the deposit.
The inconsistency is palpable. If the “second” contract was being disowned by Mr Moxham then his caveat as lodged had no basis at all. But if he was saying that the default notice under the “second“ contract was invalid, and he wanted to proceed with that contract then that conflicts with his case that the “second” contract was somehow to be set aside because he did not receive any legal advice after signing the “first” contract.
But he cannot have it both ways. Mr Robins of counsel for the plaintiff contended that the purchaser should have to make an election between those two inconsistent courses; that is, either acknowledge the contract on which the caveat was based explicitly or disown it. I made two determinations in a ruling. First, if the position of the caveator involved an amendment of the caveat, I would not allow it because it involved the assertion of a manifestly inconsistent position. The factors that this Court considers when an amendment to a caveat is proposed are well set out in two recent decisions: Martorella v Innovision Developments Pty Ltd[4] and Percy & Michele Pty Ltd v Gangemi.[5] It is sufficient to say that an amendment in these circumstances would involve alternative claims not only to the interest or estate claimed but also to the grounds. It would amount to a new and different caveat. Further there was nothing to explain an error, if that’s what it was, in the formulation of the caveat. Further still, looking at the overall merits of the caveatable interest of the kind that would be sought by the amendment, all the facts of this case and all the actions of the parties have been predicated on the reality of the “second” contract. The balance of the deposit was paid under that contract. All dealings have been on the basis of that contract. Moreover, the facts to support a claim that the second contract was vitiated are vague and feeble. The law does not set aside a contract, partly performed, when a surveyor and property developer says that he did not get legal advice.
[4] [2011] VSC 282 at [65] (Dixon J).
[5] [2010] VSC 530 (Macaulay J).
Secondly, I had my doubts, without further time consuming submissions, whether the Court could truly put the caveator to an election. The doctrine of election can be, I think, a difficult area of the law: see recently Agricultural & Rural Finance Pty Ltd v Gardiner.[6] It might be applied to inconsistent rights or inconsistent remedies. In its equitable form, which fastens upon conscience, equity requires a party to choose between taking the benefit and accepting the burden of any conditions, or rejecting the benefit, usually expressed as saying one cannot approbate and reprobate. At common law it is said that if something happens which gives rise to the existence of two alternative rights, and one of those rights is satisfied, the other is no longer available.
[6][2008] 238 CLR 570 at [56]ff.
The outcome on the first day of hearing was for the Court to confine the defendant to the caveat as lodged based as it was, and had to be, on the “second” contract. If the Court ordered a removal of the caveat, then it was a matter for the purchaser whether he would then try and lodge a successive caveat based on saying the second contract was vitiated.[7] In that event, a Court could then deal with the inevitable contention by the owner that by the doctrine of election or some other preclusionary doctrine, such a caveat was unsustainable or vexatious.
[7]As to successive caveats, see s 91(4) of the Act and generally Colbran and Jackson, Caveats (FT Law & Tax, 1996).
But the target moved again by the second day of hearing. It became apparent the caveator was looking to claim relief against forfeiture of the contract should the Court find the notice was valid. On the day before the resumption of the hearing, a letter[8] was sent to the vendor’s solicitor saying in substance that:
As a matter of clarity, we once again confirm that our client simply wishes to purchase the property and we have been requested to again seek your client’s agreement to resolve this matter by booking in a settlement for our client to settle the purchase of the property with or client paying all relevant interest and any default costs payable up to the date of settlement. Although our client does not believe that your client was entitled to issue proceedings in this matter, our client has no objection to include the costs of these proceedings as part of the default costs.
…we request your client reconsider its position and agree to book in a settlement for the purchase immediately which would avoid further expense being incurred by all parties.
[8]Exhibit P5.
Over objection on Aon[9] grounds, the Court allowed the caveator to adduce any additional evidence to try and support the preservation of the caveat on the grounds that he had a case for relief against forfeiture of the contract. I made an order requiring further affidavits to be filed in a certain time together with a proposed statement of claim. No further affidavit evidence was filed at all.
[9]Aon Risk Services Australia v ANU (2009) 239 CLR 175.
Thus, it came to this. By the Court’s intervention, this case was stabilised and proceeded only on the basis of the caveat as lodged based on the contract of 19 January 2011. The issue was this: was the notice valid? And if not should there be relief against forfeiture?
The facts, continued
The purchaser had about a year to complete this contract. On 1 November 2011, there were the first signs that he was facing financial difficulties. He asked the vendor for a loan, to put him in sufficient funds to settle by 20 December 2011. A letter from him personally to the vendor’s solicitor Mr Kuperholz said:
Further to discussions through the Agent, Tom Davies, I would like to apply to the vendor for a second mortgage for a period of up to 1 year.
The property was bought under a terms contract last year and settlement is due 20/12/2011.
A first mortgage has been given preliminary consent to by the NAB of 60%.
This second mortgage is sought up to 70% (i.e. $190,000) preferably with interest capitalised.
…
The reference in that letter to a “terms contract” appears to be a fallacy. This does not on its face a terms contract, and was not contended to be so on the hearing. The reference to “preliminary consent” by the NAB is unclear.
At all events, the vendor refused the request for a loan. The vendor’s solicitor made the position clear by saying in an e-mail transmission on 2 November 2011 that (where relevant):
The request is declined and the Vendor will insist on the contract settling according to its terms on due date, pending which all of the Vendor’s rights remain reserved.
Will you please let me have an instrument of transfer and statement of adjustments as required by the contract well in advance of the settlement date.
The next event was for the purchaser on 5 December 2011 to exercise his rights to nominate a substitute purchaser. A right of nomination was conferred under clause 31 of the contract which said:
31.1Nomination only under this condition
The Buyer cannot nominate a Buyer’s Nominee except in accordance with this General Condition.
31.2How nomination is to be made
To nominate a Buyer’s Nominee the Buyer must deliver to the Seller:
(a)a notice of nomination signed by the Buyer’s Nominee and by the Buyer;
…
(c)a deed in the form of the attached Deed Regarding Nomination properly signed by the Buyer’s nominee;
…
(e)$385 representing the costs (including GST) that will be incurred by the Seller in relation to that nomination and which costs are payable by the Buyer’s Nominee under the deed referred to in this General Condition.
The nominee was 140 Wedge Road Pty Ltd, a company of which Mr Moxham was sole director and shareholder. But, his solicitor Mr Bellili, tried to avoid paying the $385 costs under clause 31.2(e) contending that:
We refer to special condition 31 of the contract of sale herein which stipulates that our client must pay $385.00 representing costs in relation to the nomination. Please note that our client is not seeking to nominate pursuant to the Contract but rather is exercising the unrestricted common law right to nominate. The requirement of the purchaser to pay costs is in breach of Section 42(3) of the Property Law Act and therefore, will not be paid by our client.
Although nothing comes to turn on this, it was another early sign of tension which would have led any vendor and solicitor to become apprehensive. This led to argumentative correspondence where the vendor’s solicitor, correctly I think, contended that the contract contained a complete code for nomination procedures under the contract and that the agreed charge of $385 was lawful. There was also a problem because Mr Moxham did not comply with the requirement to include a deed in the form as attached to the contract as properly signed by his nominee.
As the settlement day of 20 December 2011 was looming, Mr Kuperholz was preoccupied with reminding Mr Bellili of the completion date and obtaining from him a statement of adjustments (including GST). Under clause 15 of the contract the purchaser was obliged to pay the vendor the GST as part of the price of the land. On 6 December 2011 he wrote to the purchaser’s solicitor:
I otherwise note that settlement is to occur on 20 December 2011 and I will be appointing a time and place for settlement on that date shortly. … Please let me have a Statement of Adjustments which, of course, must additionally allow for GST which is payable.
On 15 December 2011, the Mr Bellili sent a statement of adjustments and said he would “look forward to receiving cheque details in a timely fashion prior to settlement”. He also delivered the requisite deed for the nomination but was challenging the $385 charge by saying “We note your Contract does not comply with legislation and the purchaser reserves its right in this regard.” The deed of nomination which was sent was undated. These may be thought to be small points but these were signs that things could become difficult. And all this in the context of an agreed charge of $385 under a $1.9 million contract.
The statement of adjustments is significant for the issue concerning the default notice. After adjustments, and an allowances for GST, it states the balance due at settlement. That is the amount due and payable under the contract. On 16 December 2011 the vendor’s solicitor corrected an error in that statement. He said, and the purchaser’s solicitor accepted, that GST had to be applied to not only the purchase price of $1.9 million but also the adjustment of $2137.73. The point is this: although GST is a government impost, it is, according to the contract, nevertheless money due to be paid to the vendor as part of the price under the contract.
I will abstain from referring to the detailed content of correspondence between solicitors at this stage of preparation for completion. It is sufficient to say by 16 December 2011 Mr Kuperholz did as he was asked by the buyer’s solicitor, and did what would be expected of a vendor. He described the documents that would be required at settlement; he stated the amount of the bank cheques to be provided; and he identified the documents that he, for the vendor, would hand over at settlement. He provided to the purchaser’s solicitors a copy of the certificate of title, a transfer of land signed by the vendors, a goods statutory declaration as required by the State Revenue Office and a tax invoice for GST purposes. The invoice showed the balance due under the contract on 20 December 2011 was $1 902 351.50 including GST. For his part, the purchaser’s solicitor sent a revised statement of adjustments showing a balance due at settlement of $1 902 351.50 which included GST. He was still cavilling at the requirement to pay $385 for the nomination, saying that the fee was payable not by the buyer but by the buyer’s nominee. Despite that, the matter was scheduled to proceed to settlement on 20 December 2011 at Mr Kuperholz’s office.
Settlement did not proceed. A letter from the purchaser’s lawyers dated 20 December 2011 asked for a penalty free extension of three days in these terms:
We refer to settlement which is due this day.
Our client has advised that the funding for settlement is from two different sources and one of those sources is unable to effect the settlement this day.
On behalf of our client we request a penalty free extension to the 23rd December, 2011.
Would you kindly obtain your client’s instructions and advise this office of same at your earliest convenience.
The vendor was willing to give a two day extension but not on a penalty free basis. The vendor’s position was stated in this firm way on 20 December 2011:
In reply to your even dated fax I am instructed to record as follows:-
1.If your client does not settle today, he and his nominee will be in breach of contract.
2.My client will extend the time for settlement to 2:00 pm on Thursday 22nd December 2011 (but no longer) on condition that your client then settles in accordance with the Statement of Adjustments as previously agreed but additionally pays interest (in accordance with general condition 33.1 of the contract) at the rate of 14.5% on the balance of the purchase price of $1,710,000.00 for two days amounting to $1,358.63 and my client’s costs consequent upon that default (pursuant to general condition 35.1) in the amount of $350.00 plus GST.
3.Your client’s nominee must also pay the nomination fee of $350.00 plus GST previously referred to.
This offer is open for acceptance by your client until 2:00 pm today failing which it will be deemed withdrawn and my client will immediately act upon your client’s default as my client may deem fit and be advised.
All of my client’s rights as a consequence of your client’s expected breach of the contract remain expressly reserved.
This offer was accepted by the purchaser’s lawyers on 20 December 2011. The precise communication was:
Our client has instructed that he is agreeable to the contents of your facsimile and we shall contact you further once we have confirmed a booking with our client’s mortgagee.
Come 22 December 2011, Mr Kuperholz was insisting that the settlement proceed as agreed. A communication to the purchaser’s solicitors said:
I have just left a telephone message for you, Ms Kitchen, stating that settlement must occur by 2:00 pm today at my office as scheduled with the payments being as previously identified and that no extensions of time will be afforded to the purchaser or its nominee.
If settlement does not occur as scheduled, the purchaser and its nominee will be deemed in default.
No extensions of time will be afforded.
The purchaser did not complete the sale on the agreed date, or at all. On settlement day his lawyers said:
We refer to telephone conversation of today and to assist you and to avoid the need to put settlement arrangements in place, we confirm that our client is experiencing difficulty with is financier and is therefore unable to settle today.
On the following day, 23 December 2011, Mr Kuperholz served a “Notice of Default and Rescission” on Mr Moxham and his nominee company. He took the step of having the notice served by courier to his residence in Monbulk as well as serving it by email and facsimile transmission to his solicitors.
Given the challenge made by the caveator, the notice must be reproduced completely. It says:
To:BRIAN DAVID MOXHAM of 80 Moores Road, Monbulk, Victoria, 3793 (“the Buyer”)
And To:140 WEDGE ROAD PTY LTD (ACN 152 298 630) with principal place of business at 80 Moores Road, Monbulk, Victoria, 3793 (“the Nominee”)
Background
A.By Contract of Sale dated 19th January 2011 (“the Contract”), Damco Nominees Pty Ltd (ACN 005 063 927) (“the Seller”) sold to the Buyer and the Buyer bought from the Seller the property known as 175 McMahons Road, Frankston, Victoria, 3199 and being the land described in Certificate of Title Volume 10993 Folio 065.
B.The Buyer nominated the Nominee as an additional or substitute Buyer of the property.
C.The Buyer has defaulted under the Contract in that the Buyer has failed to pay to the Seller on the 22nd day of December 2011 (being an extension of two days after the original settlement date specified in the Contract and which was agreed to by the Seller with the Buyer and the Buyer’s nominee as being the deferred date for settlement of the Contract) the following sums, totalling $1,904,405.13 (“the Settlement Amount”):
(a)$1,710,000.00 being the balance of the purchase price;
(b)$2,137.73 being the adjustments payable on settlement of the sale;
(c)$190,213.77 being GST payable on the purchase price and the said adjustments;
(d)default interest payable in accordance with General Condition 33.1 of the Contract at the rate of 14.5% per annum on the balance of the purchase price of $1,710,000.00 for two days (which the Buyer and the Buyer’s Nominee agreed to pay) in the amount of $1,358.62; and
(e)the Seller’s costs consequent upon the default by the Buyer and the Buyer’s Nominee in not settling the Contract on the original date for settlement and payable pursuant to General Condition 35.1 of the Contract (which the Buyer and the Buyer’s Nominee agreed to pay) in the amount inclusive of GST of $385.00.
Take Notice
The Seller GIVES NOTICE that unless the said default is remedied and the Seller’s proper legal costs occasioned by that default (which costs are in the sum of $1,100.00, including GST) and interest on the Settlement Amount – and which interest amounts to $756.42 per day (calculated at the rate of 14.5% per annum from and including 23rd December 201 to and including the date of payment) – are paid within fourteen (14) days from the day of service of this Notice, the Seller intends to exercise its rights arising out of the said default.
Take Further Notice
That unless the said default is so remedied within the said period, then under General Condition 37.2 of the Contract, the Contract will be at an end.
The letter accompanying service on the purchaser’s solicitors dated 23 December 2011 was conscious about the default costs of $1100. It said the costs were higher because they included $115 for courier’s charges from the city to Monbulk. I mention this seemingly trivial or immaterial point now because much time was taken up with cross‑examining Mr Kuperholz on the $1100 figure including a serious challenge to the reasonableness of using a courier as a means of service. The issue brought in two opposing costs consultants each of whom were cross examined. The case of the purchaser, tenaciously pursued, was that the charge of $1100 was unreasonable and that of itself was a ground invalidating the notice.
The letter from Mr Kuperholz enclosing the notice went on to say:
If you wish to arrange settlement on reasonable notice and strictly in accordance with the terms of the Notice of Default and Rescission, when my office is closed from this day until 9:00 am on 9th January 2011, you can contact me on my mobile number … and I will make appropriate arrangements to attend to that settlement.
Pausing there, there should be no doubt on the evidence that the vendor was ready, willing and able to proceed to complete the sale on the original agreed date, the extended date and within the 14 day remedial period under the notice. The correspondence shows that at every step of the way after November 2011, Mr Kuperholz was making it plain that the vendor would insist on timely performance, but was giving the purchaser every opportunity to meet its contractual obligation and to that end was willing to make any practical arrangements convenient. I mention this only because the caveator’s counsel sought to make much of the fact that the notice was served on 23 December 2011, two days before Christmas day as part of a general attack on the vendor as acting high handedly.
The 14 day notice was due to expire on 6 January 2012. On 4 January 2012 the purchaser’s lawyer Mr Bellili offered, by telephone, to pay the vendor a further $50 000 “on account of the Buyer’s obligations under the Contract” (which I take to mean an additional $50 000 to the settlement sum) in exchange for an extension of time within which to comply with the vendor’s notice. No date was mentioned. The vendor would not agree.
On the following day, 5 January 2012, the caveat was lodged. Also on that day, the purchaser’s lawyers sent the following letter which really forms the foundation of the challenge made to the validity of the notice. The letter said:
We act on behalf [of] Mr Brian David Moxham and 140 Wedge Road Pty Ltd.
We are in possession of your Notice of Default and Rescission delivered to our clients on 23 December 2011. Firstly, we express our concern that a Rescission Notice was served on 23 December 2011, being the day on which your client knew that our office, as with most legal firms in Victoria, would be closing for the Christmas vacation.
It is our instructions that the Notice of Default and Rescission is defective as follows:
1.The “Settlement Amount” of $1,904,405.13 on which your calculations are based, being the totals of the amounts reflected in paragraphs C(a) to C(e), was incorrectly totalled.
2.The interest calculation in the paragraph headed “Take Notice” is incorrect. The calculation is based on an incorrect “Settlement Amount” This “Settlement Amount” also includes two days’ interest. Your interest calculation of $756.42 per day is incorrect as it includes double and/or prematurely compounded interest.
3.An amount of $385.00 is claimed in paragraph C(e) in respect of purchaser not settling on the original date pursuant to general condition 35.1. In this regard, you are referred to paragraph 35.5 of the general conditions where an amount of $150.00 plus GST is fixed for the rescheduling of settlement. This also constitutes a duplication of costs. In this regard we refer you to the paragraph headed “Take Notice” where an amount of $1,100.00 for all costs occasioned by Purchaser’s default is claimed is excessive.
In light of the above your Notice of Default and Rescission dated 23 December 2011 is invalid and your client is hereby required to withdraw it by 3.00pm today, failing which, our clients reserves all their rights.
We await your urgent response.
There also followed argumentative correspondence about the validity of the notice. The vendor’s position stated as at 10 January 2012 was that the notice was valid, the purchaser was not able to complete, and the contract came to an end on 6 January 2012. And the fact is the purchaser was not ready, willing and able to proceed with the sale. A letter from Mr Bellili dated 11 January 2012 shows there was more to it saying (with my emphasis):
Our client denies the validity of your Notice of Default and Rescission and denies that the Contract has ended effectively at midnight on 6 January 2012.
With regard to the telephone conversation between yourself and our Mr Jerry Belleli on 4 January 2012, we confirm that our Mr Belleli informed you that the purchaser was let down by his financier, that alternative, but expensive, finance was available but that our client preferred not to use that source and would rather pay an additional $50,000.00 to your client (upfront) in exchange for an extension to the beginning of February 2012.
In light of your client’s rejection of an extension of time, we confirm that our client requires your client to proceed to settle this matter.
Kindly contact us to arrange a date and place for settlement.
That is, I think, a bumptious letter coming from a party that had no funds to complete the purchase as agreed, yet “requires” the vendor to proceed; and even then on an unspecified date in February well after the agreed date. To say he was “let down” is to say no more than he did not get funding. To say that he “preferred” not to take more expensive finance is to say that has elected not to settle as a matter of financial convenience and expected or required the vendor to keep the contract alive while the purchaser sought finance elsewhere.
If the letter is true, the purchaser has chosen not to settle. To say that “our client requires your client to proceed to settle this matter” does not amount to saying that the purchaser was ready, willing and able to do so except on terms, unspecified, suitable to the purchaser. It supports the view that the caveat was used as a device to try and keep the vendor at bay whilst finance was obtained. And I think it casts a shadow on the merits of the case that the notice was invalid.
It was not until 23 January that the plaintiff first learnt that the caveat had been lodged. On 27 January 2012 these proceedings were commenced. When the matter first came before a judge in the Practice Court on 2 February 2012 for hearing and determination, the only affidavit relied upon by the caveator was an affidavit of a litigation lawyer from Mr Bellili’s firm, Hugh Stanley Clarkson. There was no affidavit from Mr Bellili who had obviously been handling the transaction for the purchaser and responsible for all the correspondence. Mr Clarkson’s affidavit (sworn 1 February 2012) said, where relevant:
13.I am instructed that the purchaser has received approval for the provision of finance to enable the purchase of the subject property to proceed.
14.The purchase will thus be ready, willing and able to complete the purchase and to pay the vendor plaintiff in full the balance of the purchase money together with the interest payable under the contract in respect of the delay from the due date of 20 December 2011 and the extended date 22 December 2011, to the date of settlement.
It is surprising that such evidence was not substantiated in some way by documentation of the sort one would expect to see from a borrower and financier to demonstrate that finance had been obtained. Mr Clarkson was cross examined on this and was content to say they were his instructions, and the question of finance was his client’s responsibility in which he played no part. He said that Mr Moxham could not settle in December and proceeded to apply for new finance and that a finance broker, a Mr Paul McCombe, said that finance had been approved. Yet when preparing that affidavit Mr Clarkson conceded he saw fit not to obtain some documentation to substantiate those instructions despite the importance of the matter. Then he revealed the day before this hearing (16 February 2012) he saw documentation from Macquarie Bank and Eastwood Finance giving approval for finance, but did not produce them to the Court because, he later said, Mr Moxham was still waiting for confirmation of the balance of the finance from Eastwood. When pressed why the finance documents were not produced to the Court he said “We didn’t have enough time to do it. I don’t know. We did not”.
This case will not turn on my assessment of Mr Clarkson’s credibility or his assiduousness as a lawyer. He gave his evidence with indifference and seemed unconcerned, as the litigation solicitor, that material documents to advance the defendant’s case were not adduced into evidence. I will say no more because the greater problem for the defendant was the absence of any evidence from Mr Bellili the lawyer who was responsible for the deal for the purchaser. No less troubling was the failure of Mr Moxham to file affidavit material by the time the case advanced to a second day on 23 February.
The upshot was that there eventually came into evidence a letter from Eastwood Securities Pty Ltd in South Australia to McCombe Finance saying that a recent loan application for $1.53 million was approved unconditionally awaiting finalisation of security documentation. There are also three letters to Mr Moxham each dated 10 February 2012 from Macquarie Bank Limited saying that his loan application was formally approved. The three separate loan amounts were: $216 000 and $196 000 and $248 056.
The evidence from Moxham under cross examination about the finance was not satisfactory. It was discursive. He seemed unwilling to attend to matters of detail. The outcome is that first of all he confirmed the objectively apparent fact that he was in no position to settle by 6 January 2012. He said as at 23 February 2012 he had signed mortgage documents with Macquarie and he signed the mortgage documents with Eastwood on 28 February 2012. That is as far as the evidence went. On 23 February 2012 the Court made a plain and explicit order requiring the defendant to put on any further affidavit evidence in support of the claim for relief against forfeiture. Nothing was filed.
The fact is, the defendant chose not to file a single affidavit concerning the precise terms of his finance, his financial capacity to give an undertaking as to damages should the caveat be preserved, and has said nothing about his own financial position or that of his nominee company of family trusts. There is enough to infer from the facts as I have set them out that if by November 2011 he was asking the vendor to provide second mortgage finance, and if he was unable to settle on the extended occasion, he is under severely strained financial resources. He has given no explanation about his failure to adduce any further evidence that he is ready, willing and able to complete the purchase. There is no evidence at all adduced from the financiers or any other persons such as the broker. These considerations all attract the well‑known adverse inference to be drawn under Jones v Dunkel.[10] Moreover, the same inference can be applied as against Mr Moxham personally where he has failed without explanation to adduce evidence about his financial means and resources: see R v GEC.[11]
[10](1959) 101 CLR 298 at 322-1.
[11](2001) 3 VR 334.
I turn now to analyse the two issues for determination.
The validity of the notice - applicable legal principles
There are quite a few decisions which have considered the applicable legal principles concerning a notice of the type served here, which are not complicated. In essence, the principle is that the rescission notice must be sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt on how and when the notice is intended to operate. The authorities were considered extensively by Campbell J in Robinson v Becata Pty Ltd.[12] See also Hargrave J in U108 Pty Ltd v Sing Fan and ors.[13] I need only refer to two authorities of this Court. Reference is usually made to the statement by Brooking J in Catley v Watson,[14] where his Honour expressed the principle this way:
A notice is not unequivocal, in the sense in which such notices are required to be unequivocal in relation to their essential contents, if a reasonable person, having considered the notice as a whole, fairly and properly, might entertain a doubt as to its meaning in relation to some essential matter, even though he would form in his mind a preference for one view, rather than the other of what the notice was intended to convey. It must be possible to say that, after the appropriate consideration, any doubts that may have arisen would be quieted and the purchaser would not be left in any uncertainty as to the meaning of the notice.
[12](2004) NSWSC 310 at [24]ff.
[13][2010] VSC 12 at 43 ff.
[14](1981) Vic Conv Rep 54-003.
But it is important to remember I think that in assessing whether a notice is clear and unambiguous, regard must also be had as part of the objective exercise to the surrounding circumstances as relate to the default, all in the context of the recipient being knowledgeable about the terms of the contract. That was the important qualification I think made by Winneke P in Greyday Pty Ltd v Malilane Pty Ltd,[15] where his Honour said:
However it should not be thought that the ‘reasonable person’ to which his Honour [Brooking J] refers is a person who is a stranger to the circumstances which have given rise to the notice. That much is, I think, clear not only from his Honour’s concluding words in the passage cited (name that ‘the purchaser would not be left in any uncertainty as to the meaning’) but also from the remarks made by Ormiston, J.A. in Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd [citation omitted]. As his Honour pointed out, the ‘reasonable reader’, to whom Brooking, J. referred, must be the ‘reasonable reader in the position of the purchaser’ who is knowledgeable not only of the terms of the contract but also ‘the circumstances in which and the purposes for which notices of default might be given pursuant to [the relevant conditions]’. Thus, before it can be said that a notice is not, relevantly, ‘clear and unambiguous’:
Such of the surrounding circumstances as relate to the default and such understanding as would flow from referring to the very terms of the contract entered into by the parties are all relevant matters to take into account when construing this notice from the viewpoint of the reasonable recipient and in determining whether or not it is sufficiently clear for it now to be given effect.[16]
[15][2003] VSCA 27.
[16]Per Ormiston J at 66,903.
As I understood Mr McKenzie’s argument, he does not contend that the recipient here would have any doubt about the meaning or purport of the notice. The facts as I have recited them demonstrate that at all material times, the vendor’s solicitor was placing the purchaser’s lawyer on heightened notice that the purchaser had to complete on time failing which the vendor exercise its contractual rights. Rather, Mr McKenzie sought to expose compositional errors within the notice, in order to contend that if had to adhere punctiliously to the provisions of the contract which stipulated what the notice must say and do. He submitted that a failure to do so meant that another notice had to be sent and the 14 day remedial period would start again
I will confine myself only to salient clauses of the contract and then deal with each of the attacks in turn.[17] Clause 36.2 says:
[17]The Court does so by reference to counsel’s revised written submissions dated 1 March 2011.
36.2Contents of notice of default
A notice of default must:
(a) specify the particulars of the default; and
(b)state that it is the offended party’s intention to exercise the rights arising from the default unless, within the relevant period referred to in this General Condition:
(i)the default is remedied; and
(ii)the reasonable costs incurred as a result of the default and any interest payable are paid.
Clause 36.3 says:
36.3Period to cure default
The period to be stated in a default notice must be:
(a)in respect of failure by the Buyer to pay any part of the Deposit by the due date for payment of it – 1 day from the day of service of the notice of default;
(b)in respect of failure by the Buyer to give to the Seller in accordance with this contract any guarantee and indemnity signed by its directors or principal shareholder or other person approved of by the Seller – 2 days from the day of service of the notice of default;
(c)in respect of all other defaults – 14 days from the day of service of the notice of default.
Clause 37.1 says:
37.1Acceleration of payments
All unpaid money under this contract becomes immediately payable to the Seller if the default has been made by the Buyer and is not remedied and the costs and interest are not paid.
First, it was submitted that the sending of the notice to the nominee as well as the buyer was a defect, enough he said, to invalidate it. I reject that that submission. Of course, as a matter of law, the effect of a nomination clause is usually no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser’s nominee. The nominee does not acquire any rights as against the vendor because the nominee is not privy to the contract and therefore has no standing in equity to obtain an order for specific performance of the contract. The nominee’s interest in the land equivalent to that which the purchaser had or would have had under the contract of sale: see Rise Home Loans Pty Ltd v Dickinson,[18] applying Commissioner of State Revenue v Politis.[19] Even so, the circumstances called for Mr Kuperholz to proceed with much caution, and it was prudent to name the nominee in the notice as its interests are affected. In my view, doing so caused no embarrassment or confusion or loss of clarity in the purport of the notice, especially as the nominee was Moxham’s company anyway. Both recipients were
[18][2009] VSC 555 at [18].
[19][2004] VSC 126, 11.
Secondly, much attention was given to a figure of $1 904 405.13 in paragraph C under the heading of “Background”. The notice says that is the total of the figures in sub‑paragraphs (a) to (e). But that figure is an incorrect addition. It should have said $1 904 095.93 being a difference of $310.
Anybody doing the arithmetic (and Mr Bellili did so to expose the error after getting the notice) would realise the arithmetical error. But Mr McKenzie persisted in a submission that it is no answer to say “just add up items (a) to (e)” because he said the items themselves may be incorrect. But the items were agreed in exchange for the 2 day extension. So there is nothing new or different here.
I shall go further. The purchaser cannot dispute the figure in C(a). That is the balance of the purchase price. The adjustments figure in C(b) is correct. That is the figure stated in the statement of adjustments prepared by Bellili, and repeated in the tax invoice sent by Kuperholz. The same can be said for the figure in (c). As for (d), the purchaser was liable for interest under the contract for the two day default and the evidence is clear, and in writing, that the purchaser agreed, in the exchange of correspondence on 20 December 2011, to pay interest at the rate of 14.5 per cent on the balance of the purchase price of $1 710 000 for two days amounting to $1358.83. As for C(e), the liability arose under clause 35.1 The correspondence also shows that the purchaser agreed to pay the vendor’s costs consequent upon that default of $350 plus GST which is $385.
Therefore I see no embarrassment and no confusion to the recipient in the making of the arithmetical error. The vendor has in paragraph C specified the default precisely as required by clause 36.2(a) of the contract. I reject this second attack on the notice.
Next counsel turned his sights to the content of the notice under the heading “Take Notice”. Clause 36.2 requires the notice to say that the vendor intends to exercise the rights arising under the default within 14 days “unless the reasonable costs incurred as a result of the default and any interest payable” are paid. The notice does not say “reasonable costs”. It says “proper legal costs”. It was submitted the difference in language was fatal, whether or not the costs quantified were the same under both expressions. I reject that submission. The word “must” is used in the contract, but I would not construe the contract as meaning that if it does not, then the whole notice fails. Under modern legal principles of construction, the Court looks to a commercially sensible meaning attributable to reasonable people in the position of the contracting parties. The law eschews a narrow or pedantic approach or semantic form. Here it is plain even at the time the notice was served that the costs being sought by reason of the default were the costs for the taking of legal steps by reason of the default, such as courier service. “Reasonable costs” can naturally include legal costs. The question will be whether the proper legal costs of $1100 were reasonable. That is what the contract requires.
On that question the caveator’s attack on the claim for $1100 as the costs of the default (which for a $1.9 million dollar deal took up an inordinate amount of time in Court and provoked the need to adduce expert evidence from costs consultant) was not made out. If anything, the attack strengthened the reasonableness of the amount, as I saw it. I shall not go into detail. The evidence of Kuperholz was credible and I think reasonable. He was facing an unstable situation with captious conduct by the defendant. He had to proceed with care and, as events have shown, ensure that all steps were properly taken (even though arithmetical slip ups can so easily occur). A unilateral step such as issuing a default notice attracts care and requires a diligent solicitor to re-examine the contract, check facts, and consult with the client about the proposed step, all in the knowledge that litigation can so easily ensue.
The plaintiff’s costs consultant Mr De La Rue was I think professional and diligent in his assessment. He had the good sense, and the independence of approach, to assess the costs both under the solicitor client basis under the Rules of Court as well as under the non litigious basis in the Practitioners’ Remuneration Order. His figures came in at $1106 and $1244 respectively which are both above the $1100 figure in the notice. So it matters not which scale of costs represents “reasonable costs” under the contract. The defendant’s costs consultant Mr Wood regarded the remuneration order as the apposite basis. But even so the difference between the experts was the amount of $274 and $374 allowed by Mr De La Rue for the task of Mr Kuperholz having to revisit the contracts and the documents (known as “scanning“ and “perusal” in the esoteric language of legal costing) as part of the preparation for service of the notice. Mr Wood regarded those tasks as double counting because, he opined, the perusing of the contracts was a “once and for all” exercise at the beginning of the deal and should not be allowed again at the default stage. He conceded, as he had to, that the need for a practitioner to revisit the contractual documentation would depend on the circumstances particularly if the matter was becoming contentious. He was attacked as lacking independence and being an advocate rather than an impartial expert. He did not seem to appreciate the position the vendor’s solicitor was in and the demands of the situation. I do not think the issue calls for a judicial appraisal of a witnesses’ credibility. I take leave to doubt whether Mr Wood was given all the documentation or a briefing to make him appreciate the situation the vendor was in, and the seriousness of taking the step of serving the notice. Contrary to his evidence, I find that the figure of $1100 was reasonable. I find that the troublesome circumstances made it necessary for Mr Kuperholz to have apprehensions, requiring him to revisit the contract, think about it, ensure the vendor’s position and rights and options, and approach this difficult purchaser with care and defensiveness in all steps, knowing that conveyancing and rescission has its traps particularly with a captious purchaser. Mr Kuperholz was cross examined on his legal labours. It served to demonstrate to me the work he truly had to do, and that he did the work. This part of the attack on the notice must fail.
Next came an attack on the interest claimed. The interest figure of $756.42 per day was accepted as arithmetically correct. And as another twist in the caveator’s position, it was accepted as being calculable according to the correct principal figure of $1 904 095.13 as the settlement amount under paragraph C. But Mr McKenzie submitted that on a proper construction of the contract, it was improper for the vendor to claim interest because it was being levied partially on the adjustments figure in paragraph C(b), the GST figure in paragraph C(c) and the default interest figure in paragraph C(d) His thesis as I understood it was that the vendor was bound to recalculate the settlement amount as if it was to occur on the 14th day of the remedying period.
I reject that submission. The submission legally treats the 14 day period as if it was a postponement or rescheduling of the completion date. But it is not. The obligation to pay the money payable under the contract had already been incurred under contract. What had to be paid on the agreed completion date was the settlement sum which included GST the adjustments figure and the two days of interest. That was the money owing under the contract on the agreed completion date (as extended) of 22 December 2011. The date for completion had passed. The purchaser was in breach. That then attracts clause 33.1 of the contract which says in plain terms that ”Interest…is payable on any money owing under this contract during a period of default…” For Mr McKenzie to complain that interest is being paid on interest and on the government imposed GST is not to the point. For this transaction, those two components of the price constitute moneys owing under the contract on which the purchaser agreed default interest would be paid.
Next, Mr McKenzie attacked the content of the notice under the heading “Take further notice”. It refers to condition 37.2 of the contract. It says:
37.2 Termination of contract
The contract immediately ends if:
(a)the notice of default also states that unless the default is remedied and the Buyer’s reasonable costs and interest are paid, this contract will be ended in accordance with this General Condition; and
(b) the default is not remedied and the reasonable costs and interest are not paid by the end of the period stated in the notice of default.
The reference to the “Buyer’s” costs is an obvious error. Of course it should say Seller’s costs. This contract was not a pro forma contract but was prepared by the vendor’s solicitor. Mr McKenzie submits that, unless rectified according to law the contract says what it says, and that the absence of any reference to the “Buyer’s” in the notice is fatal. In any case, he says, the absence of any reference to Seller’s costs, if that is what it should have said, also invalidated the notice.
I reject that submission. There is no need for rectification. The reference to Buyer’s costs is a clear and obvious mistake. It is absurd to think the innocent seller has to pay the defaulting buyer’s costs. Rectification and construction are two different things, but in a case as plain as this a court of construction has jurisdiction to read a word as intending to mean something else. I also reject the ancillary submission that the absence of reference to “Seller’s reasonable costs” is fatal. The sellers costs are those “proper legal costs” claimed at $1100 which, as I have found were reasonable. Likewise the necessity to claim interest is satisfied by the contents under the “Take Notice” section of the notice.
Accordingly, in my view the defendant does not have a prima facie basis to sustain the caveat on the asserted ground that the notice was defective. I regard the caveator’s case as baseless. I think the purchaser was looking for any defects he could find in the notice to obtain time to find finance. As the notice was valid, the contract was terminated on 6 January 2012. The remaining question is whether there is a prima facie case to be made that the caveator should be relieved from forfeiture of the contract.
Relief against forfeiture
Time was stated to be of the essence of the contract: see clause 10.1. The hard facts are that purchaser was unable to obtain finance and proceed to complete the sale on 22 December 2011; that on 4 January 2012, before the effluxion of the 14 day notice, the purchaser had alternative “expensive” finance but chose not to use that source; and that he could not complete the sale by 6 January 2012, after the expiration of the notice. Despite that, the defendant seeks to make a prima facie case for relief against forfeiture. He relies on these facts:
(a) on 11 January 2012, he asked the vendor for an extension to February 2012 and was willing to pay $50 000 in exchange and asked the vendor “to proceed to settle this matter”;
(b) the documents from Eastwood Securities Pty Ltd and Macquarie Bank show that as at 10 February (in the case of Macquarie) and 22 February (in the case of Eastwood Securities) there was unconditional finance approved for the deal to go ahead;
(c) on 22 February 2012, whilst this matter was part-heard, he stated his willingness in correspondence to proceed to settlement and requested the vendor to reconsider its position and book in a settlement;
(d) he has spent almost $100 000 on the preparation of the relevant plans for the development of the property to enable sub‑division and construction on 33 sites and was expecting a “positive outcome” on his application for a planning permit from the responsible authority;
(e) a valuation “for discussion purposes only” from In Property Pty Ltd puts a value on the land for first mortgage security purposes of $2.065 million;
(f) a “market appraisal” from estate agents Rained & Horne states a belief that each of the 33 sites on the land could sell for $80 000 giving an aggregate realisable value of $2.64 million;
(g) the plaintiff will obtain a windfall in the value of the property through no endeavours or expenditures of its own;
(h) the defendant stands to lose his deposit of $190 000;
(i) it is unconscionable for the plaintiff to purport to determine the contract and to deprive the defendant of his interest in the property; and
(j) he is now able to complete and purchase the property and can compensate the plaintiff for being held out of its money until that time.
This judgment is lengthy enough without a discourse of the law concerning relief against forfeiture. The applicable principles where a contract for the sale of land is terminated for a purchaser’s breach of an obligation to pay under an essential time stipulation were reviewed instructively by Dodds‑Streeton J in Aussie Invest Corporation Pty Ltd v Pulcesia.[20] It synthesizes varying judgments in the three High Court’s decisions of Legione v Hateley,[21] Stern v McArthur[22] and TanwarEnterprises Pty Ltd v Cauchi.[23] I will confine myself to the revisitation and refinement of principle in Tanwar which produced a joint judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. It was also a case in which the vendor terminated for breach, and finance became available the following day. Relief against forfeiture was held to be unavailable even though the vendor stood to obtain the benefit of development approvals obtained by the purchaser.
[20](2005) 13 VR 168.
[21](1983) 152 CLR 406.
[22](1988) 165 CLR 489.
[23](2004) 217 CLR 315.
Tanwar does not favour an expansive view of the equitable jurisdiction to relieve against forfeiture. It issues caution in the ill considered use of the epithet, or the conclusion, “unconscionable” because, the majority said, it encourages the false notion there is an equitable defence to the assertion of any legal right where it has become unconscionable for a plaintiff to rely on that legal right.[24]
[24]At [24]
The starting analytical point in Tanwar was the recognition that a termination of a contract by a valid rescission notice extinguishes both the contract and the purchaser’s interest in the land, thus it was not right to consider the availability of relief by reference to a terminated contract. The real issue is whether specific performance is available despite the rescission of the contract. The question is,[25] “Wherein lies the alleged unconscientious use by the vendors of their legal right to terminate upon failure by [the purchaser] to complete in accordance with the essential time stipulation?”
[25]At [5] and [19]
To that question, the following propositions as put by plaintiff’s counsel, Mr Robins, as emanating from Tanwar (incorporating parts of the earlier High Court authorities), can be accepted:
(a) the circumstances do not have to be exceptional before equity intervenes, but without something more, relief against forfeiture is not available where the vendor validly terminated the contract due to the purchaser’s failure to tender the purchase price by the specified date, where time was of the essence;
(b) at least where accident and mistake are not involved, it is necessary to point to the conduct of the vendor as having in some significant respect caused or contributed to the breach of the essential time stipulation;
(c) there is no “accident” where the event which has come to pass is one for which an express exculpatory provision might have been made, but was not sought or was not agreed to, and where to relieve against its consequences after it has occurred would deprive the other party to the contract of an essential right;
(d) therefore, a contract which was not subject to finance ought not to be construed in equity as if it was a contract subject to finance for equity does not intervene to reshape contractual relations in a form the court thinks more reasonable or fair, simply where subsequent events have favoured one side over the other; and
(e) even if a purchaser has improved the value of a property, for example by a planning application, for which the vendor may benefit on termination, then such a ‘windfall’, is not sufficient to deny the vendors’ right to rescind, in circumstances where the improvements were made at risk of the operation of the contractual provisions for termination.
On these principles, it is simply not enough for the defendant to say that he can now settle (two months late) but the vendor is acting unconscientiously in refusing to deal. I am unable to identify any aspect of the vendor’s conduct which makes it unconscientious to have terminated the contract. There is no evidence at all of any accident or mistake or any other conduct by which the vendor has somehow contributed to the breach. The plain fact is that Mr Moxham was not able to complete and, so I find, set about looking to put up unmeritorious arguments concerning the validity of the notice of rescission whilst pursuing alternative finance, and to that end lodged the caveat to hold the position. The expenditure incurred by him to obtain a planning permit (not yet issued) does not necessarily benefit the vendor in this case. But in any event, it is not unconscientious for a vendor to receive such a benefit as a result of a validly terminated contract, for which the defaulting purchaser might otherwise have made provision in the contract, but did not. This purchaser has obtained a predicament which is entirely of his own making.
The defendant is really saying this: despite the contract I have made, and despite my breach, I can now settle and financially compensate the vendor, therefore the vendor is acting unconscionably in no longer talking to me and insisting that the contract was terminated. There is no such principle of “unconscionability” and it is the “false notion” dispelled in Tanwar. I hold there are no facts at all to show that the vendor has done things which make it unconscientious for the vendor to insist on strict performance of the agreed terms of the contract concerning the settlement day.
Accordingly, I would order that the caveat be removed. The Registrar of Titles is not a party to this proceeding. I could make a direction under s 103 of the Act to have the Registrar remove the caveat, or require the plaintiff to take responsibility for the preparation of a withdrawal of caveat and make ancillary orders that such a notice be signed by the defendant. I shall hear submissions on final orders.
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