Dattner v Wharton

[2011] VSC 610

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT

No. S CI 2011 00637

NICHOLAS RICHARD DATTNER	Plaintiff
v
STEPHEN WHARTON	Defendant

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 NOVEMBER 2011
DATE OF JUDGMENT:	1 DECEMBER 2011
CASE MAY BE CITED AS:	DATTNER v WHARTON
MEDIUM NEUTRAL CITATION:	[2011] VSC 610

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Contract – Whether email from plaintiff was an offer to sell property which was capable of acceptance – Whether defendant accepted all of the conditions of the plaintiff’s offer to sell – Whether payment of owners corporation fees and council rates created equitable estoppel against plaintiff denying any contract of sale had been concluded.

Practice and Procedure – Application for summary judgment for possession of property – Whether defence and counterclaim alleging concluded contract of sale or equitable estoppel had no real prospect of success – Civil Procedure Act 2010, ss 63, 64.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr SG Hopper	Emma Crean
For the Defendant	Mr WG Stark	Melbourne Legal Partners Pty Ltd

HIS HONOUR:

Introduction

1. This is an appeal from an order of an Associate Judge made on 21 October 2011:

(a)dismissing the plaintiff’s summons seeking summary judgment for possession of the land described in the statement of claim, and

(b)      giving the defendant leave to defend.

1. Pursuant to r 77.06(7) of the Supreme Court (General Civil Procedure) Rules 2005 (“the Rules”), the appeal is by re-hearing de novo. For the reasons given below I have decided that there should be an order that the plaintiff have possession of the property in question.

The Factual Background

1. The plaintiff, Nicholas Dattner, is the registered proprietor of the land situated at and known as Unit 16 and Accessory Unit 46, 26 Wellington Street, Collingwood in the State of Victoria, being the land more particularly described in certificates of title volume 10359 folio 774 and volume 10359 folio 802 (“the Property”).

1. By a contract of sale made on 30 April 2008 Mr Dattner sold the Property to the defendant, Stephen Wharton, or his family trust and/or nominee for the sum of $1,868,750 payable by a deposit of $10,000, 14 equal monthly instalments of $7,500 each commencing on the settlement date of 30 June 2008 and the balance of $1,753,750 on the day 15 months following the settlement date (“the first contract of sale”).  Vacant possession of the Property was to be given to Mr Wharton on the settlement date but title was not to pass until payment in full.  Mr Wharton started occupying the Property on or about 30 June 2008.  A title search showed that a caveat lodged by Mr Wharton in the capacity of “purchaser/fee simple” was registered on 21 July 2009. 

1. By a letter dated 21 May 2010 Mr Dattner’s then solicitors gave Mr Wharton 14 days’ notice of rescission for default under the first contract of sale.  However, Mr Wharton did not vacate the Property.

1. Instead, by an agreement dated 29 June 2010 Mr Dattner gave Mr Wharton a licence to occupy the Property until 4.00 pm on 12 July 2010 (“the first licence”).  The agreement recited that the parties intended to enter into a contract of sale of the Property in the form annexed thereto.  It was agreed that in the event that they did enter into a contract of sale of the Property on or before 4.00 pm on 12 July 2010 the licence would continue until the date of settlement of the contract of sale.  It was further agreed that:

2Upon being presented with Owners Corporation invoices relating to the occupation of the Licensee, the Licensee hereby agrees to pay to the Licensor all amounts outstanding in respect of Owners Corporation fees relating to the Premises on or before 4 pm 12 July 2010.

1. By a second agreement dated 12 July 2010 Mr Dattner gave Mr Wharton a licence to occupy the Property until 4.00 pm on 26 July 2010 (“the second licence”).  This agreement relevantly contained terms similar to those of the first licence and a number of others which do not need to be set out.  It should be noted, however, that the equivalent of clause 2 of the first licence referred not only to Owners Corporation fees but also the City of Yarra rates in respect of the Property.

1. By a third agreement dated 26 July 2010 Mr Dattner gave Mr Wharton a licence to occupy the Property until 4.00 pm on 3 August 2010 (“the third licence”).  This agreement relevantly contained terms similar to those of the second licence.

1. By a fourth agreement dated 4 August 2010 Mr Dattner gave Mr Wharton a licence to occupy the Property until 4.00 pm on 31 August 2010 (“the fourth licence”).  This agreement relevantly contained terms similar to those of second and third licences.  Mr Wharton said in his affidavit sworn on 16 June 2011 in opposition to the application for summary judgment that on or about 31 August 2010 Mr Dattner granted him “continuing rights to occupy the Land without being governed by any licence agreement” pending the entry into a new contract of sale because Mr Dattner’s solicitor had been unavailable at the time to deal with finalisation of that contract.  This was not disputed by the plaintiff.

1. Then, by a contract of sale made on 19 September 2010 Mr Dattner sold the Property to Mr Wharton or his family trust and/or nominee for the sum of $2,004,750 payable by a deposit of $335,500 and the balance at settlement on 29 October 2010 (“the second contract of sale”).  The deposit of $335,500 was the total of the monies previously paid by Mr Wharton.  It was a special condition of the second contract of sale that:

The Vendor warrants that he has occupied the premises for residential purposes and the City of Yarra has approved the premises for residential use in accordance with the Certificate of Final Inspection effective 16 October 2000.

A title search showed that a caveat lodged by Mr Wharton in the capacity of “purchaser/fee simple” was registered on 29 October 2010.

1. However, by a letter dated 29 October 2010, Mr Wharton’s then solicitors wrote to Mr Dattner’s then solicitors enclosing a notice of rescission for breach of the above warranty.  The notice stated that unless Mr Dattner remedied the default and paid legal costs of $550 within 14 days of service of the notice the contract of sale would be rescinded.  In their letter, Mr Wharton’s solicitors advised that he would be continuing to reside in the Property until the expiration of the rescission notice which would end the contract of sale or until the settlement of the contract of sale, whichever occurred first.

1. By a notice dated 29 October 2010 to Mr Wharton and his then solicitors, Mr Dattner’s then solicitors gave 14 days’ notice of rescission of the second contract of sale for failure to settle on the due date.  By a letter dated 12 November 2010 from Mr Dattner’s current solicitor, Emma Crean, to Mr Wharton’s then solicitors, Ms Crean set out arguments in support of the claim that Mr Dattner was not in breach of the above warranty.  The letter also revoked the rescission notice dated 29 October 2010 but included a new notice giving Mr Wharton 14 days’ notice of rescission of the second contract of sale if he did not pay the balance of the purchase price within that time.

1. There can be no doubt, therefore, that the second contract of sale came to an end in November 2010, on either 12 November 2010 if Mr Wharton validly rescinded for default or 26 November 2010 if Mr Dattner validly rescinded for default.  Any right of Mr Wharton to occupy the Property also ended on one or other of those dates.  Mr Wharton was in no doubt about where he stood with respect to his continued occupation of the Property.  In an email to Mr Dattner on 15 November 2010 he wrote:

Whilst your solicitor invites us to settle the contract we now can’t deal with this contract because our default notice has expired and it has been rescinded.  Effectively we cannot “unscramble the egg”.  Our next step is to move out without some alternative agreement between us …

1. Mr Wharton’s then solicitors were also of the same view.  By a letter dated 26 November 2010 they wrote to Ms Crean that “the contract is now rescinded” and demanding payment of the $335,500 deposit.  On the same day Ms Crean wrote to Mr Wharton’s then solicitors advising that she held “instructions to issue summary proceedings for the recovery of land without further notice” if Mr Wharton wrongly remained in possession after the expiry of the vendor’s default notice.

1. Despite the above correspondence, Mr Wharton remained in possession of the Property.  By a writ issued on 15 February 2011 Mr Dattner sought possession of the Property, damages and mesne profits for the period between termination of the fourth licence and him regaining possession.  It was pleaded in the statement of claim indorsed on the writ that at or around the execution of the second contract of sale the plaintiff and the defendant agreed to extend the fourth licence until the settlement of that contract.  Alternatively, it was pleaded that the defendant continued to occupy the Property as a tenant at will for so long as the second contract of sale continued to exist.  It was further pleaded that the extended fourth licence had been determined by the defendant’s repudiation of it and by the termination of the second contract of sale.  Alternatively, it was further pleaded that the tenancy at will had been brought to an end by the termination of the contract of sale or by Ms Crean’s letter of 26 November 2010 or by service of the writ in this proceeding.

1. However, for some unexplained reason the writ was not immediately served on Mr Wharton.  Instead, Mr Dattner and Mr Wharton met at a café on Tuesday 5 April 2011.  In a lengthy email sent at 8.28 am on 7 April 2011 Mr Dattner summarised their conversation in which the possibility of a further contract of sale of the Property was discussed.  Relevantly, Mr Dattner noted:

I raised the issue of the body corporate fees, drawing attention to the fact that I would have to pay them plus interest.  I asked you whether you would pay them and you assured me that you would (I would be grateful for confirmation that you have done so).  I also drew your attention to the rates shortly to arrive.

He further recorded that Mr Wharton had proposed that prior to or as part of the new contract he would demonstrate his ability to settle by getting bank documents and other forms of proof that he could raise the funds.  The email continued:

As I considered what you were saying, I suggested that if I was to take you seriously, then yes, you would need to provide compelling evidence that you would settle.  I then put it to you that and [sic] amount of $50,000 be put into a trust account and that if you failed to provide adequate proof then you would forfeit all monies paid to date as well as the $50,000 and that you would leave.  You agreed in principle to this or a similar requirement to be formulated.

Now, we accepted that we had got to a point where we had possible directions we could take.  You would settle, one way or another, leave with some refund or we would go down the court route until they resolved the outcome.  However, your preferred option was to enter into a new contract as you could assure me that settlement this time was a certainty.

1. Later on 7 April 2011, Mr Wharton replied that he had “just quickly scanned” Mr Dattner’s email but needed time to read it in full.

1. On Saturday 9 April 2011 Mr Wharton sent an email to Mr Dattner attaching “a brief summary” of his proposal to settle the purchase of the Property.  Mr Wharton’s email continued:

It possibly needs more work but is a starting point for discussion.

That summary was not in evidence.

1. In the afternoon of the same day Mr Dattner sent the following email to Mr Wharton:

It is a brief summary indeed and as yet, does not provide what I would need to consider whether or not I should enter into another contract with you.

Here are critical points that need to be resolved.  They are not to the exclusion of any others that might arise and they are not in a final form.  The purchase price is to be determined but in principle, I am prepared to use the former amount as the basis for doing so.

Also, if we are to do anything, it has to happen by then [sic] end of next week.  I am not prepared to go beyond that and any excuses or delays will bring the process to an abrupt end and result in immediate legal action.

So, please address the following immediately.

The contract would be for ninety days (say April 15 to June 15), thirty of which would be raising finance.  The contract should be entered into by the end of next week.  It should be as simple as possible and contain the following conditions:

1.That at the expiration of thirty days (not 35 as you suggested) from commencement of contract, the purchaser shall provide clear and unequivocal evidence to the effect that he is able to settle.  This shall be in the form of documentation from his lender indicating that they will, in principle, provide funds.  The purchaser shall also provide evidence in the form of documentation that the balance (funds from his own sources) can be paid at settlement.  Should the purchaser fail to do this to the reasonable satisfaction of the vendor, the purchaser shall forfeit all monies paid upon signing of a contract and shall vacate the premises forthwith.

2.The purchaser shall meet the cost of the preparation of the contract and pay for this in advance.

3.That interest be paid on the balance that was payable at the end of the last contract which expired at the end of October 2010, up to whenever the new settlement date is.  Approx. 1.7 million at 6.5% (prevailing bank interest) which is roughly $73,000.

4.That $50,000 (not $30,000) be paid as a further deposit and released upon the signing of the contract.

5.The purchaser shall, prior to the signing of any contract, pay all outstanding outgoings and provide proof of such.

6.The purchaser shall, prior to the signing of a contract, act to remove caveats and shall provide proof of having done so.

7.That the purchaser sign a statutory declaration stating that, should he fail to settle, he will leave the property forthwith (or any other similar and meaningful undertaking).

8.That the purchaser shall forfeit all monies paid if settlement does not occur.

There you have it.  Please deal with this now.

1. On Sunday 10 April 2011 Mr Dattner sent a further email to Mr Wharton:

A follow up on my last email.

I am hoping you’ll act quickly on this if there is to be an agreement by the end of the week.  I have a thought in mind about how that agreement might be put in place.

I am holding off alternative action as you know for now.

Please respond by tomorrow with a clear indication of how you are going to take this to the next step.  It is vital that what you say now is credible and not designed to delay.

1. Early in the afternoon of Monday 11 April 2011 the following SMS exchange took place:

Mr Dattner to Mr Wharton – I now have to pay that bc fee.  R u going to pay it now or not?  Nick.

Mr Wharton to Mr Dattner – Yes.  Have they advised an amount. Stephen.

Mr Dattner to Mr Wharton – Email on it’s [sic] way to u now.  Please confirmed [sic] when paid. Nick.

1. Later that afternoon Mr Wharton sent the following email to Mr Dattner:

I looked at this briefly over the weekend and just want to clarify a few things.

You talk about a 90 day contract starting say 15 April but then say 15 April to 15 June.  I presume you mean 15 July which would be the approx 90 days from April 15.

I assume the $50,000 to be paid in clause 4 is not an additional amount to the interest in clause 3.  It is just a further deposit payment towards the total cost of the contract.

The evidence to be provided under clause 1 to the “reasonable satisfaction of the vendor” is probably a lawyers drafting.  But it could be scope for a dissagreement [sic] which I would want to avoid.  I would not want to enter into an agreement then 30 days later be arguing about this and find myself being pressured to leave when there is 60 days to settle.  I did say in my proposal that we need to have a degree of flexibility.

1. Mr Wharton resent the same email to Mr Dattner just after midnight on Thursday 14 April 2011 presumably because he had heard nothing from Mr Dattner.  On Friday 15 April 2011 Mr Wharton sent the following email to Mr Dattner:

I have not had any response to my queries of 11 April.

I have, however, drafted a contract of sale for your comment as per attached.

I am thinking the elements of our agreement related to any interest due and payable since 29 October 2010, the additional deposit payment, payment of rates and Body Corporate fees etc and other conditions outlined in your email of 9 April be dealt with separately.

1. Mr Wharton said in his affidavit sworn on 16 June 2011 in opposition to the summary judgment application that he and Mr Dattner had “entered into an agreement to enter into a new contract of sale of real estate” because he accepted the plaintiff’s “offer” of 9 April 2011 on 11 April 2011 and paid the body corporate fees on the same day and the Yarra City Council rates on 15 April 2011 “as required under the agreement”.  He said that he advised Mr Dattner of this by text on 15 April 2011.  Mr Wharton also said that he prepared:

a contract of sale of real estate with settlement terms of 90 days from the date of sale, the normal conditions for forfeiture of deposit monies if settlement does not occur which is what the Plaintiff required under the agreement, and without any special condition as to any planning permission or permitted use of the property or Land.

I have contacted the solicitor who lodged the caveats in respect of the previous contracts of sale … requesting him to prepare the relevant documents to remove the caveats.  Following the service of the Writ and my lodging of the Defence and Counterclaim that instruction has been limited to the caveat relevant to the First Contract of Sale.

The other items outlined in the Plaintiff’s email of 9^th April 2011 relevant to the agreement would as I said in my email dated 15^th April 2011 … be dealt with separately to the contract of sale of real estate that I had drafted.  The Plaintiff has now by the commencement of these proceedings purported to repudiate the agreement prior to completion of any documentation in that regard.

1. The contract of sale prepared by Mr Wharton was a standard form of contract prescribed by the Estate Agents (Contracts) Regulations 2008.  It correctly included the names of the parties and the details of the Property.  The special condition about the vendor warranting that he had occupied the Property for residential purposes and that the City of Yarra had approved it for residential use was correctly omitted.  The contract also stated that the purchase price was $2,004,750 and that settlement was due “90 days from the Day of Sale specified in this contract”.  The Day of Sale specified in the contract was “the date by which both parties have signed this contract”.  However, the contract of sale forwarded by Mr Wharton had not been signed by him and it was never signed by Mr Dattner.

1. In his first affidavit in support of the summary judgment application sworn on 25 May 2011, Mr Dattner said that he “never entered any subsequent agreement” for the sale of the Property to Mr Wharton.

1. Sometime after 15 April 2011 the writ was purportedly served on Mr Wharton. On 27 April 2011 Mr Wharton personally entered a conditional appearance. He did so because he maintained that the writ had not been “properly served” on him as it had been left in the letterbox for unit 16 on 18 April 2011. Mr Wharton did not, however, follow the procedure required by r 8.08 of the Rules with the consequence that by 12 May 2011 his appearance had become unconditional.

1. By a letter dated 16 May 2011 Ms Crean, the solicitor acting for Mr Dattner, wrote to Mr Wharton pointing out that he had no basis for continuing to occupy the Property as the second contract of sale and fourth licence had been terminated.  She informed Mr Wharton that an application for summary judgment for possession would be issued if he did not explain how he claimed to be entitled to occupy the premises by 21 May 2011.  Mr Wharton replied by letter dated 21 May 2011 in which he stated, under the heading “With regard to occupancy of the premises”:

The Contract of Sale entered into and dated 19 September 2010 and subsequent emails, communications, correspondence, conversations and waivers gave rise to an ongoing entitlement to occupy the premises and in those circumstances Nick Dattner is estopped from seeking possession.

Secondly, in April this year by a series of conversations, a meeting, an exchange of emails and correspondence Nick Dattner made an offer to me to enter into a new contract of sale of real estate which I accepted and was induced to pay valuable consideration in respect of the offer and acceptance, which was paid.  The agreement between us provided for my ongoing occupation of the premises.

1. The summons for summary judgment for possession was issued on 25 May 2011.  It was returnable on 16 June 2011.  The summons was supported by Mr Dattner’s first affidavit and an affidavit by Ms Crean both sworn that day.  These documents were subsequently served on Mr Wharton.  On 30 May 2011 Mr Wharton filed a defence and counterclaim which he had prepared.  In the defence, Mr Wharton pleaded that Mr Dattner had waived his right to issue the proceeding:

through a series of emails, correspondence, conversations and communications from October 2010 to April 2011 and the Defendant has relied upon the waiver and incurred costs in respect to its [sic] occupation of the Land to the detriment of the Defendant that it [sic] would not have otherwise incurred.  In the circumstances the Plaintiff is estopped from bringing this proceeding …

Mr Wharton also pleaded that on 11 April 2011 he accepted the plaintiff’s offer contained in the email of 9 April 2011, that he paid the body corporate fees as required under the terms of the plaintiff’s offer and that accordingly the plaintiff and the defendant entered into a new agreement in respect of the Property (“the April 2011 Agreement”).  That agreement was said to be partially in writing, namely the plaintiff’s email of 9 April 2011, and partially implied.

1. In the counterclaim, Mr Wharton first pleaded that Mr Dattner had repudiated the April 2011 Agreement and claimed an order for specific performance of that agreement and execution of a contract of sale of the Property; a declaration that the proceeding for possession be set aside and/or discontinued; alternatively damages.  He then pleaded further matters concerning service of the writ and sought an order that the proceeding be struck out and/or set aside.  Finally, in the alternative, further matters concerning the second contract of sale were pleaded and a claim was made for repayment of the $335,500 deposit monies and damages.

1. On 9 June 2011 Mr Dattner swore a second affidavit in support of the summary judgment for possession.  Exhibited to, or set out in, this affidavit were the emails and the text of the SMS messages exchanged between Mr Dattner and Mr Wharton.

1. On 16 June 2011 the application was heard by the Associate Judge. Mr Dattner was represented by counsel and Mr Wharton appeared in person. His Honour reserved his decision. On 21 October 2011 he published his judgment and made the orders previously referred to. By notice filed on 28 October 2011 the plaintiff appealed against the orders made by his Honour. He sought special leave, pursuant to r 77.06(7)(b) of the Rules, to rely on two affidavits not before the Associate Judge. The plaintiff also sought leave to amend the application for summary judgment to include an application for summary dismissal of the defendant’s counterclaim insofar as it sought to enforce a continuing right to possession. I deal with these applications below.

1. On 11 November 2011 an appearance containing his new address for service was entered for the defendant by the solicitors now acting for him.

The Submissions

1. Mr Hopper of counsel, who appeared for the plaintiff, submitted that for various reasons, which I discuss below, the email of 9 April 2011 did not contain an offer capable of acceptance because its terms were not certain.  He submitted that the correspondence between the parties showed that the terms of any new agreement had still not been agreed as late as 15 April 2011.  Therefore, no agreement had been concluded between the parties by the time the deadline was reached (“the end of next week”) on Saturday 16 April 2011 and accordingly the plaintiff was entitled to terminate the negotiations.

1. Mr Hopper further submitted that the payment of the owners corporation fees and the council rates was either a gratuitous goodwill payment by the defendant or, at most, a payment in consideration for which the plaintiff continued to negotiate with the defendant.  To the extent that the payments might create an estoppel, Mr Hopper submitted that a court would only require the minimum to be done to do equity between the parties, which would be an order that the plaintiff refund those payments to the defendant.  There was no arguable case, he submitted, that any estoppel could give rise to an enforceable contract of sale and/or a continued right to occupy the Property.  He distinguished the facts in the present case from the very different facts in the leading authority of Waltons Stores (Interstate) Ltd v Maher.[1]

   [1](1988) 164 CLR 387.

1. Finally, Mr Hopper submitted that any licence or tenancy at will which might have been created as a result of the negotiations between the parties in April 2011 was terminated by notice from the plaintiff after the negotiations concluded.  Counsel initially relied on four different ways in which he submitted notice had been given.  They were:

(a)       the letter dated 16 May 2011 from the plaintiff’s solicitor;

(b)the filing and service of the summons dated 25 May 2011 seeking summary judgment for possession;

(c)the making of an oral demand for possession in court during the hearing before the Associate Judge on 16 June 2011;  and

(d)the delivery to the Property of a further letter of demand on 9 November 2011.  It was in order to prove this ground that the plaintiff sought special leave to rely on the two additional affidavits.

1. However, during the course of the hearing before me it became apparent that the writ had not been served on Mr Wharton before the April 2011 negotiations, even though it had been issued in February 2011.  As stated above, Mr Wharton said the writ had been left in his letterbox on 18 April 2011.  Mr Hopper accordingly added the service of the writ as an additional way in which notice of termination of any licence or tenancy at will had been given to the defendant.

1. Mr Stark of counsel, who appeared for the defendant, submitted that the defendant was entitled to retain possession because he was entitled to an order for specific performance of the April 2011 Agreement pleaded in the defence and counterclaim.  He submitted that the emails and SMS texts disclosed that an agreement had been concluded between the plaintiff and the defendant, or at least that this was an arguable proposition.  Mr Stark submitted that the plaintiff’s offer by his email of 9 April 2011 was accepted by the defendant on 11 April 2011 by the defendant agreeing to pay the owners corporation fees and then doing so on the same day.  He also submitted that in addition there were three further unequivocal acts of acceptance, the payment of the council rates, the preparation and forwarding of the contract of sale and the giving of instructions to the solicitor to remove the caveats, which were all done before the plaintiff repudiated the April 2011 Agreement by purporting to serve the writ.

1. When Mr Stark submitted that it was sufficient for leave to defend that there was a triable issue about whether or not an agreement had been entered into, I asked him what more evidence there was on this issue other than the emails and SMS texts which were in evidence before me.  He replied that that was “the entirety of the evidence”.  After lunch he qualified this concession by saying that this was “the whole of the written evidence” and that Mr Wharton should be given the opportunity to give evidence at trial about what he said were the terms of the agreement and why he took the steps such as paying the owners corporation fees.

1. Mr Stark further submitted that even if there was no concluded agreement there was an equitable estoppel in favour of the defendant because of the above acts performed by the defendant to his detriment in the expectation that there would be a contract of sale entered into and that this was an arguable defence to the plaintiff’s claim for possession.

1. Next, Mr Stark submitted that as no defence had been filed in answer to the counterclaim, the plaintiff should be taken to admit the allegations in the counterclaim including the claim that the defendant was entitled to specific performance of the April 2011 Agreement and therefore the plaintiff had no right to possession of the Property.

1. Finally, Mr Stark very fairly indicated that he could not argue that no notice of termination of the alleged licence or tenancy at will had been given.  He did not go on to state which of the various ways relied on by the plaintiff was conceded to be a valid giving of notice, although he did oppose the giving of special leave to the defendant to rely on the two additional affidavits.

Consideration of the Issues

1. Although there was no reference in the summons for summary judgment of the sources of power for the making of such an order, such an application can now be brought relying on ss 61 and 63 of the Civil Procedure Act 2010 (“the CPA”) or on r 22.02(1) or r 23.01(2)(a) of the Rules or on the Court’s inherent jurisdiction. There is no doubt, in my opinion, that the test under the CPA (“no real prospect of success”) is less stringent than the test under the Rules or the inherent jurisdiction (a question that “ought to be tried” or an arguable defence on the merits). This means that an application which does not succeed under the CPA test must also fail under the Rules test.

1. After a careful analysis of the relevant authorities and the policy considerations lying behind the introduction of the new test in the CPA, Dixon J in Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd[2] summarised the principles which he considered now applied to a summary dismissal application.  They were as follows:

   [2][2011] VSC 222, [7]-[17].

(1)If a proceeding or defence, or any particular claim, cause of action or ground of defence (“claim”) is hopeless, untenable, bound to fail, or could not possibly succeed, then it ought be summarily dismissed. In other words, a claim which ought be dismissed under the old test will be dismissed under s 63.

(2)Section 63, however, is less stringent. It does not direct an inquiry into whether a certain and concluded determination could be made that the proceeding, or a claim, would necessarily fail. What is required is a practical judgment by the court as to whether a claim has more than a “fanciful” prospect of success.

(3)The court’s discretion whether to exercise the power of summary dismissal is very wide. Section 64 of the Act expresses that the power is based in a consideration of the interests of justice. The Act provides direction in Part 2.1.[3]  The discretion is to be exercised to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute between the parties.  The court’s powers in furthering the overarching purpose are facilitated by having regard to the objects and matters set out in s 9 of the Act.

(4)The court may be satisfied, on an interlocutory application, that there is no real prospect of success in a civil proceeding but nevertheless consider the dispute to be of such a nature that only a full hearing on the merits is appropriate.  Whether a full hearing on the merits is appropriate is a relevant discretionary consideration in the circumstances of each proceeding.

(5)The power to order summary dismissal is to be exercised with great care, as a trial upon evidence of issues raised is the well-settled approach to the determination of litigation.  When proceeding on a summary application to assess the prospect of success, a judge ought to feel confident that an assessment can properly be made of whether the overarching purpose is facilitated on dismissal of the impugned claims.

(6)That argument directed to the issues relevant on the application, perhaps even extensive submissions, may be necessary to demonstrate that the case of the plaintiff has no real prospect of success is not ordinarily a relevant consideration.[4]

[3]Sections 7-9.

[4][2011] VSC 222, [18].

1. In my opinion, these principles apply mutatis mutandis to an application by a plaintiff for summary judgment, such as the present one seeking summary judgment for possession.

1. As previously stated, Mr Wharton said in his affidavit that he had accepted Mr Dattner’s “offer” of 9 April 2011 on 11 April 2011.  This was the basis of the defendant’s primary submission as to why he should have leave to defend.  For a number of reasons, I do not consider that Mr Dattner’s email of that date was an offer capable of acceptance and thus one that could create a legally binding agreement. 

1. First, Mr Dattner commenced his email by saying that he was not yet in a position “to consider whether or not I should enter into another contract with you”.  A number of critical points needed “to be resolved”.  That is not the language of an offer. 

1. Secondly, the critical points he set out were “not to the exclusion of any others that might arise and they are not in a final form”.  Once again, this is not the language of an offer.  There was no certainty about what was contained in the offer. 

1. Thirdly, the purchase price was yet to be determined.  The reference to using the former amount as the basis for determining that price was an agreement only “in principle”.  It was not a firm offer. 

1. In my opinion, Mr Dattner’s email was an invitation to treat not an offer.  He was telling Mr Wharton some of the conditions that he would require to be included in any offer by Mr Wharton.  But if there was no offer made by Mr Dattner then there was nothing to accept and no legally binding agreement could result.

1. In case I am wrong in this conclusion I turn to consider what the situation would be if the email of 9 April 2011 is regarded as an offer capable of acceptance.  For a number of reasons, I do not consider that the evidence shows that Mr Wharton accepted all of the terms of the offer, or, even if he did, that he communicated his acceptance to Mr Dattner, so that a concluded agreement was reached.

1. First, the defendant’s case for leave to defend depended on the argument that his acceptance of part of one of the plaintiff’s conditions, namely payment of the owners corporation fees, constituted acceptance of all of the plaintiff’s conditions.  In my opinion, this argument has no real prospect of success.  Nowhere in the evidence, including the various emails and SMS texts, can one find evidence that the defendant accepted all of the conditions of the plaintiff’s “offer” or that he communicated that acceptance to the plaintiff.  The same problem arises with respect to each of the other acts of acceptance relied on by the defendant.

1. Second, in his email of 11 April 2011 the defendant did not say that he accepted all the terms.  Rather, he wanted to “clarify a few things”.  This is not acceptance.  One of the matters that needed clarification was the settlement date.  Was it 15 July (approximately 90 days from 15 April) or 15 June (as stated by the plaintiff)?  A second matter to be clarified was whether the $50,000 in point 4 was just a further deposit payment and not additional to the interest in point 3.  The third matter to be clarified concerned point 1 about the purchaser providing early evidence of ability to settle.  The defendant’s response does not suggest that he was at that stage agreeing to such a condition.  At the very least, he was disagreeing with the suggested wording. 

1. Third, it is clear from the defendant’s pleading of the condition relating to the provision of early evidence of ability to settle, that the defendant is not alleging that he accepted the plaintiff’s wording of this condition.  The term of the April 2011 Agreement pleaded in paragraph 22.9(d) of the defence makes no mention of the evidence of ability to settle having to be “to the reasonable satisfaction of the vendor”.  If just this one condition was not accepted in its entirety by the defendant, then the plaintiff’s “offer” has not been accepted.  I reject the defendant’s submission that the disagreement over the wording of this condition was just a “mechanical issue” which did not affect the purchase of the Property.

1. Fourth, when explaining his concern about point 1 the defendant stated that he “would not want to enter into an agreement then 30 days later be arguing about this”.  Clearly, he was of the view that at that time there was not yet any concluded agreement with the plaintiff.

1. Fifth, the defendant correctly pointed out in his email of 15 April 2011 that he had not had “any response to my queries of 11 April”.  This is not indicative of a concluded agreement having already been reached.

1. Sixth, the contract of sale the defendant drafted and forwarded with his email of 15 April 2011 was merely for the plaintiff’s “comment”.  Once again, this suggests that there was still no concluded agreement in existence.  Mr Stark submitted that the statement of the purchase price in the proposed contract of sale indicated that the defendant accepted the plaintiff’s “offer” to sell for the former amount of $2,004,750.  I have already held that there was no firm offer to sell at that price.  But even if there was now agreement on the purchase price, it was still uncertain whether the plaintiff otherwise agreed with the wording of the proposed contract of sale.  Given that it did not contain all of the conditions which the plaintiff had stated should be included, there is a high likelihood that he would not find the contract acceptable.

1. Seventh, the contract did not contain all of the conditions required by the plaintiff.  It is not to the point that the defendant may have been going to include them in a separate agreement.  The “offer” was that the contract of sale had to contain all of the stipulated conditions. 

1. Eighth, the email of 15 April 2011 does not contain any statement by the defendant that he accepted all of the stipulated conditions, even if it was acceptable that they be “dealt with separately”.  For example, did the defendant agree that there would be a condition of the agreement that he would sign a statutory declaration stating that, should he fail to settle, he would leave the Property forthwith?  Or, did he agree that there would be a condition that he would forfeit all monies paid if settlement did not occur.  I do not accept the defendant’s submission that this email contained his acceptance of all of the plaintiff’s conditions.  The reference to “the elements of our agreement” can only mean a future agreement not an existing agreement because the defendant’s queries had not yet been answered. 

1. Ninth, it was expressly stated by the plaintiff in his “offer” that the contract had to be “entered into by the end of next week”.  He was not prepared to go beyond that deadline (presumably Saturday 16 April 2011) and any excuses or delays would “bring the process to an abrupt end and result in immediate legal action”.  It is clear that there was no concluded agreement by “the end of next week”, which meant that an “offer” made by the plaintiff had expired.  The defendant can hardly complain about the plaintiff insisting on the stated deadline.  I refer to the defendant’s statement that he had only looked “briefly over the weekend” at the plaintiff’s “offer”; that his email seeking clarification was sent at 4.44 pm on the Monday; that he did not follow up his request for clarification until the Thursday; that the contract of sale was not sent “for comment” until the Friday and that no separate proposal or document dealing with the conditions required by the plaintiff was forwarded at that time.  The evidence does not reveal that the defendant did anything on Saturday 16, or even Sunday 17, April 2011 to finalise the agreement with the plaintiff.

1. Finally, even if, as was submitted by the defendant, he was acting under the belief that there was a concluded agreement, it is a matter of what objectively has been agreed, not what the subjective belief of one party might have been.[5]

   [5]Taylor v Johnson (1983) 151 CLR 422, 428-429 (Mason ACJ, Murphy and Deane JJ); Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, [74] – [81] (Heydon JA), [173] (Ipp AJA; Mason P agreeing).

1. Therefore, I am satisfied that there is no arguable case disclosed on the evidence before me that a concluded agreement was reached between the plaintiff and the defendant concerning the terms and conditions of a new contract of sale of the Property.  It has no real prospect of success, in my opinion.

1. I reject the submission that nevertheless this part of the dispute should go to trial so that the defendant could give evidence about what had occurred.  There was no dispute that he had paid the owners corporation fees and the council rates.  Any conversations relating to the making of the alleged April 2011 Agreement should have been referred to in the defendant’s affidavit in opposition to the summary judgment application but none were.  The particulars of the alleged April 2011 Agreement did not state that there were any relevant conversations.  Apart from an implication from the wording of one of the conditions stipulated in the email of 9 April 2011 concerning the defendant’s continued right to occupy the Property, the defendant’s pleaded case was that the terms of the concluded agreement were to be found in the plaintiff’s email of 9 April 2011 which the defendant accepted by paying the owners corporation fees.  In seeking the opportunity for the defendant to give evidence at a trial, counsel now appearing for the defendant did not suggest that this would cure the problem about the lack of evidence of acceptance of all of the conditions in the plaintiff’s “offer” or the lack of evidence of communication of that acceptance to the plaintiff.

1. Further, in my opinion, s 64 of the CPA does not assist the defendant. I am not satisfied that it would be “not in the interests of justice” to give summary judgment for possession. On the contrary, it seems to me that the interests of justice clearly favour that result when the defendant’s arguments about the making of a new agreement to sell the Property to him are fatally flawed. Nor do I consider that the dispute about possession “is of such a nature that only a full hearing on the merits is appropriate”. In this case, all of the relevant evidence, namely the emails and SMS texts, is before the Court. The question is whether they support the claim that a new contract of sale was entered into. I consider that I am in as good a position as a trial judge to decide that question.

1. Clearly, the defendant has an arguable case about a possible equitable estoppel arising from the payment by him of the owners corporation fees and council rates and of any costs incurred by him in preparing the contract of sale and giving instructions for the removal of caveats.  Mr Hopper made the point that the defendant suffered no detriment in removing the caveats because he no longer had a caveatable interest under the first and second contracts of sale. Whether or not there was a detriment is an argument for another day.  The important issue for present purposes is that the defendant really had no argument to overcome the plaintiff’s submission that a court would only require the minimum to be done to do equity between the parties and that could be achieved by ordering the plaintiff to refund the payments made by the defendant.  That would be the best outcome the defendant could hope for.  I agree with the plaintiff’s submission that no court would find that the alleged equitable estoppel, because of the payments made by the defendant in the circumstances set out above, prevented the plaintiff from denying that a concluded agreement was reached between the parties concerning the terms and conditions of a new contract of sale of the Property.

1. The short answer to Mr Stark’s point about the absence of a defence to the counterclaim was that, as Mr Hopper informed me, the question of further interlocutory steps, including a time for the filing of a defence to counterclaim was deferred by the Associate Judge until after he had delivered his judgment.  Once that was done and the appeal was brought these matters were in effect again deferred.  In the same way, I will give directions about the future interlocutory steps once the question of the summary judgment for possession has been determined.

1. With respect to the question of whether notice of termination of any alleged licence or tenancy at will had been given after the April 2011 negotiations, I consider that both the service of the writ and the issuing and service of the summons seeking summary judgment for possession constitute appropriate notice.[6]  As Mr Hopper submitted, both of these steps gave the recipient of the documents an unequivocal demand for possession of the Property.  Further, a reasonable time had elapsed between these events on 18 April and 25 May 2011 and the hearing on 16 June 2011.[7]

   [6]See Bradbrook, Croft and Hay: Commercial Tenancy Law, Third Edition, 2009, para 2.19 citing Martinali v Ramuz [1953] 1 WLR 1196 and City Mutual Life Assurance Society Ltd v Lance Creek Meat Works Pty Ltd [1976] VR 1.

   [7]Minister of Health v Bellotti [1944] KB 298.

1. Although it is not strictly necessary, therefore, to consider the other methods of giving notice advanced by the plaintiff, I will deal briefly with them.  I am not persuaded that the plaintiff’s solicitor’s letter of 16 May 2011 constituted the required unequivocal demand for possession.  Rather, what Ms Crean said was that if Mr Wharton did not explain how he claimed to be entitled to occupy the Property by 21 May 2011 an application for summary judgment for possession would be issued.  Presumably Mr Wharton gave what he considered to be a satisfactory explanation of why he was entitled to occupy the Property so that he would not have considered that the claim for possession would be pursued.  Any uncertainty was, however, removed by the service of the summons dated 25 May 2011.

1. Whatever else one might say about the suggested oral demand before the Associate Judge, there was no admissible evidence before me of the making of such a demand.

1. Finally, there was the question of the delivery of the further letter of demand on 9 November 2011.  As I am satisfied that notice of termination was properly given by either of the methods referred to above and the defendant does not dispute this issue, I do not consider it necessary to decide whether or not the plaintiff should be given special leave to rely on the two additional affidavits.  That application will, therefore, be refused.

1. The one remaining issue was an application by Mr Hopper to amend the summons for summary judgment for possession to include a claim for summary judgment on the defendant’s counterclaim for specific performance of the April 2011 Agreement.  This application was made because the learned Associate Judge in his reasons for judgment had stated:

14The counterclaim ventilates the same issues set out in the statement of claim.  The plaintiff has not made application for summary judgment on the counterclaim nor has it made application for dismissal of the counterclaim.  Accordingly, the usual procedure is to allow the defendant unconditional leave to defend or, if appropriate,  allow the plaintiff judgment on its claim but stay the same until the hearing and determination of the counterclaim.

…

28The issue of whether or not a notice to terminate any licence or lease is required and, if so, whether the letter of 16 May 2011 was sufficient to constitute such notice are sufficiently arguable issues to negate the concept that the defence has no real prospect of success. Further, in any event, even if summary judgment was allowed on the plaintiff’s claim, those issues would still need to be agitated at trial on the defendant’s counterclaim. Accordingly, this is a matter appropriate for the discretion to be exercised pursuant to s 64 of the Civil Procedure Act.

1. I do not, with respect, agree that simply because the plaintiff had not made application for summary judgment on that part of the counterclaim seeking specific performance of the April 2011 Agreement, that this in any way affected the plaintiff’s right to obtain an order for summary judgment for possession and to have that order enforced if the defendant did not leave the Property.  Even if the claim for specific performance remained in the counterclaim the issues relevant to that question would not need to be agitated again at the trial because they would have already been determined by the Court in giving the plaintiff summary judgment for possession.  There would be an issue estoppel in respect of the question of whether there was a concluded agreement made in April 2011.  What would remain for determination at trial would be different issues, such as the plaintiff’s claim for mesne profits and the defendant’s counterclaim for repayment of the $335,500 deposit under the second contract of sale and for refunding of the owners corporation fees and council rates paid by the defendant in April 2011.

1. In my opinion, there is sense in allowing the plaintiff to amend his summons and to give summary judgment for the plaintiff on the defendant’s counterclaim for specific performance of the April 2011 Agreement as well as summary judgment for possession.  It makes it clear what issues remain for determination at trial.  Moreover, the defendant is not prejudiced by allowing the amendment on appeal because another way of achieving the same result would be to refuse the application to amend but to make an order striking out that part of the defendant’s counterclaim seeking specific performance of the April 2011 Agreement on the basis that once there was summary judgment for possession, on the basis that no concluded agreement had been reached between the plaintiff and the defendant for the sale of the Property, then there was an issue estoppel about that part of the counterclaim.  It seems to me that the first way is simpler and tidier.  I therefore propose to order that the plaintiff have leave to amend his summons filed 25 May 2011 to include a claim for summary dismissal of that part of the defendant’s counterclaim seeking specific performance of the April 2011 Agreement.

Orders

1. I will hear from the parties on what orders should now be made in accordance with these reasons for judgment, including the question of costs.  I will also hear from the parties concerning directions for the future conduct of this proceeding.

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