Denysenko v Dove

[2010] VCC 7

IN THE COUNTY COURT OF VICTORIA	Revised
AT MELBOURNE CIVIL DIVISION, COMMERCIAL LIST (GENERAL DIVISION)	(Not) Restricted

Case No. CI-09-03302

MATTHEW STEVEN DENYSENKO and BODHAN DENYSENKO	Plaintiffs
v.
BELINDA JANE DOVE and PAUL ROBERT DOVE	Defendants

Case No. CI-08-03878

BELINDA JANE DOVE	Plaintiff
v.
MATTHEW STEVEN DENYSENKO	Defendant
and
WOLLERMAN & SHACKLOCK (a firm)	Third Party
JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	20-22 and 25 January 2010
DATE OF JUDGMENT:	8 February 2010
CASE MAY BE CITED AS:	Denysenko v Dove
MEDIUM NEUTRAL CITATION:	[2010] VCC 0007

REASONS FOR JUDGMENT

Catchwords:  Sale of land – Collateral contract to carry out repairs to property prior to
settlement – Advances to the vendor prior to settlement – Whether sufficient
evidence to establish collateral contract or advances – Shortfall at settlement
secured by loan agreement and mortgage – Whether solicitors failed to
explain nature of documents to the mortgagor – Enforceability of mortgage –
Claim for indemnity and damages against solicitors.

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Cook	Goldsmiths Lawyers
For the Defendant	Mr D A Klempfner	Rickards Legal
For the Third Party	Mr S E Marantelli	Wisewould Mahony Lawyers
HIS HONOUR:

1           In 2004, Bodhan (“Danny”) Denysenko ran a car yard, “Cars on Plunkett”, in Dandenong. Belinda Dove was an employee between July and early December 2004. Mrs Dove was separated from her husband. The Doves had for some months been attempting to sell their property at 5 Prince Crescent, Seaford, without success. In about September 2004, Mr Denysenko and Mrs Dove reached an agreement for Mr Denysenko to purchase the property for $225,000.

2           Mr and Mrs Dove had originally employed solicitors, Terry Brennan & Associates, to prepare a s.32 certificate. However, following a discussion between Mr Denysenko, Mrs Dove and Mr Denysenko’s solicitor, Mr Peter Shacklock, of Wollerman &

Shacklock Solicitors, Mr Shacklock agreed that the firm would act on behalf of both
the vendors and the purchaser in the conveyancing transaction. A contract of sale
was drawn up and executed by Mr & Mrs Dove as vendors and Mr Denysenko’s son,
Mykola Denysenko, “and/or nominee” as purchaser. Later another son, Matthew
Denysenko, was nominated and substituted as the purchaser.

3           Matthew Denysenko borrowed about $180,000 from Bank West. This left a shortfall of about $45,000. On the day of settlement, Matthew Denysenko executed a loan agreement and mortgage to secure the sum of $40,000 effectively “left in” by the vendors at settlement. The loan agreement and mortgage were prepared by Mr Wollerman of Wollerman & Shacklock.

4           In about September 2004, Mr Danny Denysenko had inspected the property with Mrs Dove before he made the offer to purchase. Mr Danny Denysenko said in evidence that Mrs Dove had, during the inspection, pointed out a number of aspects of the property that were in poor repair and where remedial works were required. Mr Denysenko said that Mrs Dove had agreed to carry out these works prior to settlement. Mrs Dove denied that any such conversation had taken place save that she had agreed that a broken window in the master bedroom would be repaired.

5           Mr Shacklock, Mr Wollerman and Ms Lauren Beckwith, the conveyancing clerk who handled the transaction, denied that they had ever been told by Danny Denysenko or any other person of an arrangement that Mrs Dove would carry out repairs before settlement. Mr Denysenko said that he had told his solicitors of these matters on at least two occasions before settlement.

6           Further, Mr Danny Denysenko said that, on a number of occasions in about October 2004, Mrs Dove had requested that he advance monies to her so that she could find a new place to live and pay for certain expenses she would incur as a result of

relocating. He said Mrs Dove had told him that she needed to move out of the
Seaford property before the repair work could be carried out.

7           Mrs Dove said that although the contract of sale referred to a “$50,000 deposit”, no money was received at that time. This was not disputed by the Denysenkos. Mrs Dove said that she had received a cash cheque for $2,500 from Mr Denysenko. She took it to the bank and used half to pay one month’s rent in advance and, with the other half, she obtained a money order for the bond for the property to which she was relocating. She admitted that cheque number 1212 dated 16 November 2004 for the sum of $2,500, noted in the cheque butt as having been paid to “Belinda,” was likely to be the cash cheque she received from Danny Denysenko.

8           Mrs Dove said that in addition Mr Denysenko gave her a further cash cheque for $1,000. When she cashed it, she gave Danny Denysenko $500 and kept the balance of $500 which she used to pay for a new uniform and books for her son, Joshua. She said that she had changed Joshua’s school because he was being bullied and she had requested money from Mr Denysenko to help with the necessary expenses.

9           Mrs Dove agreed that cheque number 983 dated 1 September 2004 for $1,000, noted in the cheque butt as having been paid to “Belinda”, was likely to be the cash cheque she had received from Mr Denysenko. The sum of $3,000 to cover the advances by Danny Denysenko was brought to account at settlement in the statement of

adjustments as a “deposit” paid. Apart from this sum, Mrs Dove denied that she had
received any further monies from Mr Denysenko in relation to the property.

10         Mr Wollerman and Mr Shacklock denied that they knew anything, prior to settlement, about any further monies advanced by Mr Denysenko to Mrs Dove, apart from the $3,000. Mr Danny Denysenko said that he had told Mr Wollerman before settlement that there were monies that had been advanced and settlement should not proceed until the total amount of the advances had been clarified.

11         Prior to settlement, which was to occur shortly before Christmas 2004, it became apparent that the purchasers would have a shortfall of about $40,000-$45,000. Mr Wollerman said he told Mr Denysenko that certain documentation would need to be signed before the vendors would agree to proceed with the settlement and that otherwise they would rescind the contract of sale. At Mr Wollerman’s request, Mr Denysenko instructed his son Matthew to go to the solicitors’ offices and sign the documents. Matthew Denysenko attended the solicitors and signed a loan agreement and mortgage. He clarified with Ms Beckwith that these were documents his father knew about, but said that otherwise the documents were not explained to him. The loan agreement provided for Matthew Denysenko to repay the amount of $40,000 owing to the Doves by eight instalments of $5,000.

12         Settlement took place on 22 December 2004. Following settlement, when the Denysenkos took possession of the property, Mr Danny Denysenko considered that its condition had considerably deteriorated since his inspection in about August 2004 and noted that no repair works had been carried out. He and Matthew Denysenko met with Barry Dove at the property. They said that Mr Dove agreed that he would take steps to do work to the property which his wife had failed to carry out.

13         Mr Matthew Denysenko arranged for Archicentre to inspect the property on 10 January 2005. Archicentre reported that the property was “in a deteriorating condition due to age, weathering and lack of adequate repair and maintenance”. A copy of the report was sent to Mrs Dove in mid-January 2005. In a response dated 17 January 2005, Mrs Dove noted that “both you and your father inspected 5 Prince Crescent together and none of these problems were raised”.

14         In February 2006, the Denysenkos commenced Magistrates’ Court proceedings against Mr & Mrs Dove. These proceedings were later transferred to the County Court and were ordered to be heard with a County Court proceeding issued in 2008

by Mrs Dove. In the Magistrates’ Court proceeding, the Denysenkos claimed
$19,591, as the cost of rectifying certain matters at the property, and further
unspecified damages.

15         The claims were made on the basis that:

a.	Mrs Dove had failed to carry out the work in breach of the agreement she had reached with Mr Danny Denysenko in about September 2004;
b.	Mr Dove had failed to carry out the work in breach of the agreement he had reached with the Denysenkos in December 2004, shortly after settlement of the purchase.

16         In the 2008 proceeding commenced in the County Court, Mrs Dove claimed possession of the property pursuant to the mortgage as a consequence of breaches of the loan agreement constituted by Matthew Denysenko’s failure to pay the instalments due under the agreement, including the first instalment due in January 2005.

17         In his Defence, Matthew Denysenko said that he was not obliged to pay monies to Mrs Dove because:

a.	she had not completed the repair works to the property;
b.	she had not taken account, at settlement, of monies advanced to her by his father prior to settlement;
c.	the loan agreement and mortgage had been executed by him without adequate advice and explanation by the solicitors.

18         Matthew Denysenko brought a counterclaim against Mr & Mrs Dove in similar terms to the claims made in the Magistrates’ Court proceeding. Matthew Denysenko also issued third party proceedings against the solicitors, Wollerman & Shacklock, for

breach of contract and negligence as a consequence of the firm’s failure to take a
number of steps including advising Matthew Denysenko as to the nature of the loan
agreement and mortgage and the fact that they did not, at settlement, take account of
the Doves’ failure to carry out the works to the property or the advances made by
Danny Denysenko to Mrs Dove prior to settlement.

19         The issues for determination in the proceedings are:

a.	whether Mrs Dove entered into an enforceable agreement to carry out repair works to the property prior to settlement;
b.	whether Mr Dove entered into an enforceable agreement after settlement to carry out repair works;
c.	whether Mr Denysenko made monetary advances to Mrs Dove between September and November 2004 (in addition to the sum of $3,000 allowed at settlement) which were required to be repaid or taken account of in the settlement of the purchase;
d.	whether the loan agreement and mortgage were binding as between Matthew Denysenko and the Doves;
e.	whether Wollerman & Shacklock are liable to indemnify Matthew Denysenko in respect of any losses he may have suffered as a result of any failure to explain to him the nature of the documents he executed on 22 December 2004 or to ensure that the repair works were carried out, and all advances were repaid or taken account of, at settlement.

Issues of credit

20         There are disputes on the evidence about most issues. Mr Danny Denysenko had convictions for offences of dishonesty in the late 1990s. Matthew Denysenko said in evidence that although he was the nominated purchaser of the property and he had lived in the property for about two years after settlement, his father effectively made all decisions about the matter and he simply did what his father asked him to do. Matthew Denysenko had sworn an affidavit in the proceedings on 21 September 2009 setting out the circumstances in which he executed the loan agreement and the mortgage. It was apparent, however, that there were certain matters in the affidavit about which Matthew Denysenko had no personal knowledge.

21 evidence in a confident and forthright manner. Mrs Dove was, however, unable to
offer any credible explanation as to why she had not replaced the broken window at
the property prior to settlement, as she had promised to do. Similarly, Mr Dove’s
explanation as to his failure, as he promised, to fix a broken tap and broken windows

Danny and Matthew Denysenko and Belinda and Paul Dove each gave their “followed him up about the matter”, also lacked credibility.

22        In the circumstances, it is difficult to accept the uncorroborated evidence of any of these witnesses. Generally, however, I preferred the evidence of Mr & Mrs Dove. Mrs Dove’s account was consistent with the contemporaneous correspondence and with the way the case was pleaded by her solicitors. On the other hand, the assertions by Danny Denysenko received little support from the contemporaneous documents and was inconsistent with the way in which the case had been pleaded on the Denysenkos’ behalf in the Magistrates’ Court and in the County Court proceeding.

Agreement for Mrs Dove to carry out repair work to the property

23         Mr Bodhan Denysenko said that in about September 2004, when he inspected the property, Mrs Dove had pointed out a number of matters requiring repairs and said that she would complete the work before settlement. This included:

a. repairs to the walls;

b.	broken tiles in the bathroom and laundry;
c.	a hole in the floor;
d.	electrical work including wires coming out of wardrobes;

e. wardrobes not completed;

f. plasterwork at the entrance to the passageway past the dining room area;

g. rotting window frames;

h.	the burnt out motor to the garage door;
i.	replacement of broken windows.

24         Mr Danny Denysenko said that in the initial telephone conversation with Peter Shacklock, during which Mrs Dove was present with him, he had explained to Mr Shacklock the purchase price they had agreed, the fact that Mrs Dove would be carrying out repairs and that he had given her a car, the value of which was to be deducted at settlement. None of these matters were included in the Contract of Sale executed by the parties. The Contract of Sale included Clause 2.2 of the general conditions of contract which provided that “the vendor must delivery the property and

the chattels to the purchaser at settlement date in their present condition (fair wear

and tear accepted)”.

25         Mr Denysenko said that shortly before settlement he had asked Mrs Dove for a key to the property so that he could ascertain whether the repairs had been completed satisfactorily. He said Mrs Dove had told him that her husband had the key.

26         Shortly before settlement was due, Mr Denysenko said he telephoned the woman at the solicitors’ office handling the conveyancing and told her that he was having trouble inspecting the property and he had been unable to see if the repairs had been completed. He drove down and had a look at the property and found that windows were broken, a tap was smashed and the water cut off, spouting had been damaged and he was unable to see inside the house. These matters had not been present when he first saw the house in September. He telephoned the woman at the solicitors’ office and told her about the further damage and that he needed to get inside and he would not settle if he were unable to inspect the property.

27         Ms Lauren Beckwith gave evidence confirming file notes she prepared on 22 December 2004. In one note she recorded a conversation with Mr Denysenko where he “said there was smashed windows” and “said Matthew looked at the house on the weekend”. There are no further notes about this matter and it appears that the parties then concentrated on the issue of the shortfall of funds available to the Denysenkos at settlement. Mr & Mrs Dove indicated they would not settle unless some provision was made to secure the outstanding $40,000-$45,000. Settlement took place without a further inspection by the Denysenkos.

28         In the circumstances, the only conclusion reasonably open is that the solicitors were unaware that repair work was to be completed by the Doves before settlement and were unaware that the Denysenkos required settlement to be delayed until an internal inspection was undertaken. In fact, Mr Denysenko was insistent that settlement proceed and that Mr Wollerman draw up the appropriate agreements in relation to the outstanding balance owing to the Doves to enable settlement to take place.

29         Before settlement, Matthew Denysenko had gone to the property with his father. He said he did not inspect the property but simply sat in the lounge room with Mrs Dove for a short time. He said he thought the property was run down but could not see

coverings were removed. Matthew Denysenko said that he had told Mrs Dove not to
worry about cleaning up the property as he would get his girlfriends to help. He said

many of the defects which had later became apparent when the furniture and other that some painting work had been carried out when he first went to the property.

30         Mrs Dove said that she had carried out painting work when the property had been put on the market earlier that year and denied that there were the matters requiring repair as detailed by Mr Danny Denysenko, apart from the single broken window which she had pointed out and which had been boarded up at that time. Mrs Dove said she was

not aware of further damage at the time of settlement.

31         Mr Dove said his wife was “house proud” and during 2004 he had regularly visited his wife to see two of their children who were living with her. He also denied that the matters listed by Danny Denysenko as requiring repair reflected the condition of the property. He did agree that when he attended the property after settlement and spoke with the Denysenkos, he had undertaken to repair the broken windows, the broken tap and to remove bags of rubbish which had been left at the property and to arrange to have the lawns mown.

32         Mr Shacklock said that Mr Denysenko had, in the initial telephone conversation, made no mention of repairs being required to the property or any agreement that Mrs Dove would carry out repairs prior to settlement. Both Mr Wollerman and Ms Beckwith denied that at any stage prior to settlement had they been told that there was any arrangement for Mrs Dove to carry out repairs.

33         On 15 December 2004, Ms Beckwith made a file note which recorded that settlement was “not likely to happen until 22/12” and continued, “Need to get Matthew to inspect before we settle though and let me know any problems”. Although Mr Danny

Denysenko tried to tie this note to a suggestion that the inspection was to ensure that satisfied that this was the case.

34         The primary focus of the file notes appears to be Mr Danny Denysenko’s desire to settle the purchase without any delay. I have already referred to Ms Beckwith’s file note on 22 December 2004, which records that Danny Denysenko telephoned and, “said there was smashed windows … said Matthew looked at the house at the

weekend”. Ms Beckwith apparently then telephoned Mr Dove and her subsequent file
note suggests that Mr Dove would “organise” repairs. It is difficult, because of the
limited recollections of the witnesses, to determine why matters were left as they
were and why, for example, monies were not retained at settlement to cover the cost
of repairing the “smashed windows” reported by Danny Denysenko to Ms Beckwith or
possible further damage inside the house.

35         In my view, however, the Denysenkos have not satisfied the onus upon them to establish that an enforceable agreement had been reached in about September 2004 between Mr Danny Denysenko and Mrs Dove. I reach this conclusion for the following reasons:

a.	Mr Denysenko’s evidence is not specific as to the precise work that Mrs Dove agreed she would perform or the standard of work to be achieved;
b.	although there is some support in the evidence of Matthew Denysenko that Mrs Dove had agreed to carry out certain works, in face of the denials by Mrs Dove, and also by Mr Dove as to the existence of works requiring repairs, it is difficult to

accept Matthew Denysenko’s evidence without independent support;

c.	the agreement was not documented by the solicitors and it was denied by Mr Shacklock, Mr Wollerman and Ms Beckwith that they had been told of the arrangement;
d.	at the time of settlement, Mr Danny Denysenko did not insist upon the fulfilment of any obligation on the part of Mrs Dove to complete repair works as a pre- condition to settlement;
e.	although it was clear that after settlement the Denysenkos were concerned at the state of the property, this appeared to be because of the further broken window and damaged tap and because the house was discovered to be more run down than they had anticipated. This seemed to be the focus of the discussion with Mr Dove;
f.	this is also supported by reference to the Archicentre report and the letter to Mrs Dove by Matthew Denysenko in mid-January 2005. The letter, whilst referring in general terms to “the things that you said you would do” also referred to the “poor”
condition of the house and not to the specific matters referred to by Mr Danny Denysenko in his evidence;
g.	these specific matters of complaint appear to be derived from work specified in quotations obtained from tradesmen and suppliers in December 2005 and January 2006, shortly before the issue of the Magistrates’ Court proceeding.

36 of quantum, the evidence about the cost of rectification work was unsatisfactory. The

Although, in view of my decision on this issue, it is unnecessary to consider matters January 2006. They initially intended to primarily prove the loss and damage by evidence from a building consultant who made estimates of the cost of carrying out works described to him by Mr Danny Denysenko. I refused to permit the evidence to be given largely because Mr Denysenko had not given any evidence of the matters which were said to be “the assumptions” upon which the expert’s evidence was based and because of the lateness of the expert’s report, in breach of both the Rules of Court and a number of directions orders.

37         Mr Danny Denysenko was recalled to give further evidence about the cost of work undertaken at his direction after the purchase of the property, including during the last two or three years. There was no documentation to support the evidence. To explain the lack of documents, Mr Denysenko referred to a break-in at his office in July 2006 and difficulties encountered the previous evening trying to follow-up the present location of the tradesmen who might have carried out the works.

38         If I had reached another conclusion about the obligations of Mrs Dove to carry out works prior to settlement, it would have been very difficult, on the basis of the evidence about the cost of remedial works, to have assessed the damages to which the Denysenkos may have been entitled. It is clear, however, that there was an agreement to replace the broken window that was present in September 2004 at the time of the first inspection and that further damage occurred to the property, probably after Mrs Dove moved out in November 2004. This included the damage to the tap, a further one or two broken windows and the removal of rubbish.

39        Mr Dove gave evidence that the cost of replacing a broken window would be about $180-$200. I consider in the circumstances $750 would represent the reasonable cost of the Denysenkos carrying out the work to replace the

broken windows and tap and remove rubbish after they took possession of the
property.

Agreement for Mr Dove to carry out repair work to the property

40         I have generally discussed the evidence in relation to the issue of the responsibility of Mr Dove for repairs to the property. In my view, any obligation cannot rest upon the conversation between Mr Dove and the Denysenkos shortly after settlement but rather upon the obligation in general condition 2.2 of the contract of sale and the assurance given by Mrs Dove, on behalf of both herself and Mr Dove as the vendors of the property, that the broken window would be attended to prior to settlement.

41        It was suggested in supplementary submissions that Matthew Denysenko, as a nominee purchaser, could not enforce rights under the contract of sale against the Doves. I consider, however, that if the Doves are to be permitted to exercise rights as chargees or mortgagees of the property, it is appropriate for an allowance of $750 to be taken into account in the final determination of the sum required to extinguish Matthew Denysenko’s indebtedness to the Doves.

Monetary advances by Mr Denysenko to Mrs Dove between September and November 2004

42         I have already set out the evidence of Mrs Dove in relation to the advances she said that she received. Her evidence is consistent with the contemporaneous documentation and the fact that the total sum of $3,000 was taken into account when the purchase was settled. There were inconsistencies in the evidence given by Mr Danny Denysenko on 20 January and the following day when he produced cheque butts and a sheet from the general ledger for his business and the way the case was pleaded in the Magistrates’ Court proceeding and in the Denysenkos’ Defence and Counterclaim in the County Court proceeding.

43         I will briefly set out the alternative versions:

a. in the Magistrates’ Court proceeding, the Denysenkos alleged an agreement with Mrs Dove that she would “carry out or cause to be carried out certain works to the house on the property prior to settlement of the sale” and that in about August

2004 the Denysenkos had advanced to her “a total of $10,000 to be applied

toward the cost of carrying out the works” and “a bond payment and one month’s

rent in advance for accommodation…during the time the works were carried out

on the house”. A separate claim was made against Mr Dove on the basis that “in or about December 2004 or January 2005”, Mr Dove agreed with the Denysenkos “to carry out the works which [Mrs Dove] had agreed to carry out”;

b.

in the Defence and Counterclaim to the County Court proceeding, Matthew Denysenko alleged:

i.	as part of “the purchase agreement” (in conversations between the Denysenkos and the Doves in September 2004), the Doves agreed that they “would carry out repairs to the Seaford property prior to settlement” (which repairs were listed);
ii.	by “the first loan agreement” in October 2004, Matthew Denysenko gave Mrs Dove a loan of $10,000 to pay for the agreed repairs; and
iii.	by a second loan agreement, a further sum of $10,000 was provided for Mrs Dove “to pay a bond and rent of another property and to move out of the Seaford property”.

No separate agreement was alleged with Mr Dove, by which it was said he agreed to effect repairs.

44         In his evidence on 20 January 2010, Mr Danny Denysenko said that after the purchase agreement, Mrs Dove told him that she had to move out of the house so that the repairs could proceed. She had found a new house but needed to enrol her children in a new school and required uniforms and books and bond money for the new property. Mr Denysenko said he wrote out a cheque for the bond in a sum of between $2,000-$3,000 and gave Mrs Dove an additional $7,000 in cash. Later he said that in a conversation Mrs Dove had said she could not commence the repairs to the house because she did not have any money, so he gave her a further $10,000 in cash.

45         On 21 January 2010, when Mr Danny Denysenko continued his evidence, he produced cheque butts and a ledger sheet which he said disclosed the following payments either to Mrs Dove or which he made at her request:

Date	Chq No	Alleged payee	Amount
17 August 2004	914	Payable to RACV for insurance	$1,327.38

of motor vehicles for Mrs Dove

and her partner, Mr Chapple.

1 September 2004	983	Paid to Mrs Dove.	$1,000.00
6 September 2004	1001	Payable to Matthew Chapple at	$922.62
Mrs Dove’s request.
16 November 2004	1212	Payable to Mrs Dove.	$2,500.00
17 November 2004	1214	Payable to Wollerman &	$500.00
Shacklock Solicitors on Mrs Dove’s behalf.
18 November 2004	1218	Paid to Mrs Dove.	$800.00
18 November 2004	1221	Paid to Mrs Dove.	$3,000.00
18 November 2004	1229	Paid to Mrs Dove.	$3,700.00

46

Cheque numbers 1218, 1221 and 1229 were described in the ledger as for purchase of the Doves’ property at Seaford. However, the ledger page contained a balance carried forward of $68,705 and it appeared, from cheques paid on 12 November 2004, that the ledger column “purchase” also related to the purchase of motor vehicles; cheque number 1202 for $6,500 was payable to “Auto Group” and cheque number 1207 for $8,600 was payable to “Frankston Toyota”.

47 August 2004 to RACV. She thought that this cheque was to reimburse her for
insurance, on the Nissan motor vehicle she had purchased from Mr Danny
Denysenko, from a payment Mr Denysenko had received from a finance company.
Mrs Dove was unable to explain why the cheque butt referred to a “Vectra” as well as
the Nissan. Her partner, Matthew Chapple, had purchased a Holden Vectra from Mr
Denysenko and Mrs Dove had explained that cheque number 1001 dated 6
September 2004 probably related to the insurance on Mr Chapple’s Holden Vectra.
Nevertheless, Mrs Dove’s inability to satisfactorily explain the notations on the

Mrs Dove provided an explanation for the payment by cheque number 914 on 17 by Mr Denysenko, does not, in my view, assist Mr Denysenko’s case. There is little, if any, support for the versions that he has given and the general evidence of Mrs Dove is consistent with the steps taken prior to settlement of the purchase and what was written on the other cheque butts.

48         In notes of a telephone conversation with Mrs Dove shortly after 9 am on 22 December 2004, Mr Wollerman recorded that “Denysenko has threatened to take

action against them for $6,000 - $3,000 he has given plus $1,200 house and contents

and transportation costs
referred to the amounts admitted by Mrs Dove as having been advanced to her by Mr

”. It appears likely, in my view, that the figure of $3,000 refers to a policy of insurance taken out by Matthew Denysenko prior to settlement and the “transportation costs” refers to Matthew Denysenko’s costs of relocating to the property rather than (as was suggested in cross examination of Mrs Dove) to monies advanced to Mrs Dove by Danny Denysenko to assist her to relocate.

49         In the circumstances, the Denysenkos have not made out the claim in the Magistrates’ Court or the counterclaim in the County Court proceeding insofar as it relies upon an alleged failure by Mrs Dove to repay advances made to her by Mr Danny Denysenko. I am not satisfied that Mr Denysenko told Mr Wollerman prior to settlement on 22 December that there were outstanding amounts which he would need time to quantify and that in the meantime settlement should not proceed. Mr Wollerman denied that any such conversation had occurred and it appears inconsistent with the evidence of Danny Denysenko that settlement was to proceed after Matthew Denysenko had executed the documents to be drawn up by Mr Wollerman to secure payment of the shortfall of the purchase price.

Whether loan agreement and mortgage binding as between the Doves and the Denysenkos

50         The contract of sale provided for a deposit of $50,000 upon signing. Mr Shacklock said that he had included this figure in the contract because Mr Denysenko had told him to “put in a decent amount”. In letters to the Doves dated 29 September 2004, Wollerman & Shacklock noted that they had “not received the deposit of $50,000 and

understand that a separate arrangement has been made between yourselves and [Mr

Denysenko] in that regard”. As settlement approached, Mr Dove apparently became concerned about the $50,000. The solicitors’ file contains file notes by Ms Beckwith which suggest that the matter was resolved by an agreement reached in a

conversation between Mr Dove and Mr Danny Denysenko that the Doves would
receive the outstanding monies over a period of months. The existence, or precise
nature, of any such agreement was not clear from the oral evidence.

house purchase. Mr Wollerman told him that he would draw something up and asked
whether Matthew Denysenko would be available to sign the documents. Mr Danny money” to Mrs Dove. He told Mr Wollerman, however, that he needed to settle the Matthew to drop off a bank cheque for about $1,900 and for the paperwork to be signed. Mr Denysenko said that until the conversation with Mr Wollerman he did not understand that the Doves wanted security for their money. He said that he was prepared to pay the $20,000 which was owing once he could inspect the property.

51         Mr Wollerman made a note on the file of a telephone conversation at 5.20pm on 21 December 2004 in which he advised that unless the sum of $41,923.44 was paid by the Denysenkos at settlement, the contract would be rescinded by the Doves. On 22

December 2004, a letter to Matthew Denysenko (care of his father’s facsimile) at 9 am required the Denysenkos to produce a bank cheque payable to the Commonwealth Bank for $41,923.44. A later facsimile at 10.15 am offered the alternative of “an agreement to be entered into between yourself and the vendors

allowing for the payment of the balance of deposit as follows. Initial instalment -
$1,923.44 today on signing of loan documentation and registration of caveat over
property. Balance due – by eight monthly instalments of $5,000 due on the 22nd day

of each month payable direct to the vendors”. Mr Denysenko said that he did not
receive this letter prior to the settlement which took place that afternoon.

52         Mr Wollerman made a file note at 11.05 am recording that Mrs Dove was “ok with the deal”, and at 11.10 am that Mr Dove was “ok with the deal”. The file note records the “deal” as:

a. “allow Denysenko to pay off the $40k to get settlement”;

b. “secure by caveat/loan agreement”;

c. “advised if we can get a second mortgage would try to do so but couldn’t be sure. A maybe only due these sketchy instructions on what was discussed

with D’Senko…”.

53         Mr Danny Denysenko gave evidence that, before settlement, Mr Wollerman had told him that Paul Dove was worried about the $40,000 which was owing. Mr Denysenko said he told Mr Wollerman that it was “not $40,000 as he had already given some

54         Mr Wollerman had advised him to “worry about it after settlement”. He had sent Matthew down to the solicitors to sign documents because Mr Wollerman had said that he would prepare documents which needed to be signed in order to allow settlement to proceed because the Doves “would not settle until they got security for the money owing to them”.

55         Matthew Denysenko said that when he attended the solicitors he simply asked if his father knew about the documents. He said he signed the documents at reception without reading them and the only matter he was concerned about was whether his father was aware of the documents.

56         In order to settle the property, Matthew had obtained a loan from Bank West of approximately $180,000. The relevant documents were sent to Wollerman & Shacklock so that an appropriate solicitor’s certificate could be prepared. On 24 November 2004, Mr Wollerman signed the solicitor’s certificate certifying that he had complied with the appropriate certification procedures prescribed by the Law Institute of Victoria. Matthew Denysenko signed a certificate that, “I have been handed a copy

of the certificate. I have read the certificate. I am the client named. The above

information is true”. The certificate noted, “I explained to the borrower, before the

borrower signed the documents, the general nature and effect of the documents
required to be signed by the borrower including the risk of loss of any security and

other assets owned by the borrower” and that “following the above explanations the

borrower stated to me that he/she/they understood the general nature and effect of
the documents. It appeared to me that they did have such understanding. That
he/she/they were signing these documents freely, voluntarily and without pressure

from any other person”. Mr Wollerman signed the certificate.

57         Matthew Denysenko gave evidence that he did not recall seeing Mr Wollerman to have the Bank West mortgage signed, that he did not recall saying anything to Mr Wollerman and he did not read anything in the solicitors’ office. Matthew Denysenko

60 agreement would be secured by simply the lodgement of a caveat or the execution of
a second mortgage was in some doubt. A note of a telephone conversation between
Mr Wollerman and Paul Dove at 9.25 am notes “second mortgage not agreed – try
though”. Mr Wollerman said that he telephoned Danny Denysenko early on 22
December 2004. He told Mr Denysenko that he would need to come up with $41,923
or the Doves would rescind the contract. Mr Denysenko told him to try to “come to
some arrangement” with the Doves. Mr Wollerman said that he discussed the matter

said that the statement in paragraph 4 of his affidavit sworn 21 September 2009 that understanding of the agreement but he did not know when such an agreement had been entered into.

58         Matthew Denysenko relied entirely upon his father and his only interest was whether his father knew about the documents and that they were satisfactory to him. In those circumstances, Matthew Denysenko would have signed any document put before him

and taken little interest in the process. Mr Danny Denysenko wanted the settlement to proceed and was aware that the Doves required documentation to be executed by Matthew, as the purchaser, in order to secure the repayment of at least the sum of

$20,000 which he admitted was owing.

59         The documents presented to Matthew Denysenko in the solicitors’ office were clearly headed “Mortgage of land” and “Loan Agreement”. The loan agreement, in clause 6, contained a charge and a requirement that the borrower could be required, if called

upon to do so, to execute “a mortgage or charge in a registered form over the said

existing or future acquired property to the lender to better secure all monies for the
time being then owed to the lender. Such mortgage to be in such form and to contain

such covenants and conditions as to the lender shall reasonably acquire [require]”.

The solicitors’ file notes in evidence suggest that the issue of whether the loan “secured by a loan agreement, a caveat and a mortgage (if possible)”.

61 prepare have to do
a loan agreement, caveat and mortgage”. Mr Denysenko insisted that he was “not
going to pay interest”. My Wollerman agreed but said that “default interest” would
need to be paid. Mr Denysenko replied that, in any event, he would be paying out the

Mr Wollerman said he telephoned Mr Denysenko and told him that he would “”. Mr Wollerman said that, at the time, the main considerations were that the Doves were (appropriately) threatening to rescind, that the Denysenkos would suffer no prejudice if Matthew Denysenko were required to give a second mortgage and that Danny Denysenko had instructed him “to do what he needed to do”.

62 him through the Loan Agreement and the Mortgage. She said she explained the
documents, had asked him to read them and had asked if he had any questions. She

Ms Beckwith said that she had met Matthew Denysenko at reception and had taken depth”. She witnessed Matthew Denysenko’s signature on the documents. Ms Beckwith had not previously needed to explain mortgage documents to a client.

63         The Loan Agreement named Mr Danny Denysenko as the ”guarantor” and contained the usual provisions of a guarantee. The copy of the Loan Agreement in evidence does not include an execution clause for the guarantor and it is not clear what document was sent to Mr Denysenko in January 2005. The guarantee would have further secured the money left in at settlement by the Doves. Mr Wollerman said that he “suspected” that the guarantee was not raised with Mr Denysenko. In any event, Mr Denysenko later refused to execute the guarantee. In the circumstances, the guarantee appears to have little relevance except for perhaps providing some indication that the extent of the security documentation was not fully explained to Mr Danny Denysenko by Mr Wollerman.

64         Mr Matthew Denysenko complains that Wollerman & Shacklock were negligent in their handling of the conveyancing transaction, principally as a result of their failure:

a.	to ensure that the Denysenkos were able to inspect the property prior to settlement;
b.	to properly inform the Denysenkos as to the nature of the documents Matthew Denysenko would be required to sign.

65         As I have determined that no agreement for Mrs Dove to carry out repairs has been established, any failure to ensure that the Denysenkos inspected the property prior to settlement is of little significance. The Denysenkos’ rights in respect of the further broken windows and broken tap were provided for in the contract conditions and an appropriate allowance can be made to Matthew Denysenko as a condition of the Doves obtaining an order for possession.

66

As regards the security documentation, it appears that the solicitors were faced with a security for the monies the Doves were leaving in at settlement. However, I am satisfied that the Denysenkos were aware that the monies to be left in at settlement by the Doves would need to be repaid over a number of months and would be appropriately secured. When Mr Wollerman spoke to Mr Danny Denysenko on 21 January 2005, he noted that Mr Denysenko “claims that the only arrangement that he

had and the agreement that he struck with them was that they would pay the principal
sum without interest and it was secured only by a Caveat and not a mortgage. He

claims his son didn’t know what he was signing”.

67         The loan agreement contained a clause charging the property (and possibly other property) and requiring the execution of a mortgage or charge in registrable form at a later time. The execution of the mortgage entitled the Doves to register the mortgage rather than simply lodge a caveat based upon the charge in the loan agreement. Whilst there is a distinction between the registration of a caveatable interest and a mortgage, in the circumstances of the present case, the distinction is not of significance. There is no basis, in my view, for not enforcing both the mortgage and the loan agreement against Matthew Denysenko.

68         It is difficult to see how any loss or damage flows to the Denysenkos as a result of any failure by the solicitors to explain the distinction between the security offered by the loan agreement and the security offered by the mortgage or to require any consequential relief against the solicitors following the making of an order for possession of the property in favour of the Doves.

Conclusions

69         In the Magistrates’ Court proceeding it is appropriate that the proceeding be dismissed with costs.

70         In the County Court proceeding:

a.	on the claim by Mrs Dove, there will be an order for possession of the property subject to an appropriate allowance of $750 to Matthew Denysenko in respect of the damage to the property to be deducted from the amount owing, calculated in accordance with the loan agreement. There will also be an order for the costs of the proceeding.
b.	the counterclaim and the third party proceeding will each be dismissed with costs.

71         I will make final orders after hearing further submissions from the parties.

Certificate

I certify that these 22 pages are a true copy of the reasons for decision of His Honour

Judge Anderson delivered on 8 February 2010.

Dated: 8 February 2010.

Hannah Christensen

Associate to His Honour Judge Anderson