Dickinson & Thompson v Gribble - [2017] SADC 108

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
DICKINSON & THOMPSON v GRIBBLE & ANOR
[2017] SADC 108
Reasons for Decision of Her Honour Judge Tracey
28 September 2017
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL - PARTICULAR CASES
Application pursuant to s 119(G) of the Real Property Act 1886 to extend caveat over property until plaintiffs’ claim for specific performance determined at trial. Plaintiff contracted on three occasions to purchase property from the defendants. Parties agreed to terminate the first two contracts. Third contract subject to a condition the plaintiffs to obtain finance. Defendants’ Agent served Form 1 before the third contract signed and informed purchaser’s agent that a new Form 1 would be forwarded. No deposit paid. After valuation by finance provider, plaintiffs contacted Agent and defendants regarding contract price. Defendants purported to terminate the contract on basis plaintiffs had not obtained and communicated approval of finance. Plaintiffs inform Agent prepared to settle within 14 days. Defendants forward notice of termination on ground no deposit paid. Whether there is a prima facie case – whether balance of convenience favours extending the caveat.
Held: There is a prima facie case, serious issue to be tried and balance of convenience favours extending the caveat
Real Property Act 1886 (SA) s 119(G); The Land and Business (Sale and Conveyancing) Act 1994 (SA), referred to.
Australian Broadcasting Corporation v O’Neill [2006] HCA 46; Cini & Others v Pets Paradise Franchising (SA) Pty Ltd & Others [2009] SASC 7; McInnes v Davies [2015] SADC 88; McInnes v Davies [2014] SASC 184; Laurinda Pty Ltd v Capalba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; Shevill and Another v Builder’s Licensing Board 149 CLR 620, considered.

DICKINSON & THOMPSON v GRIBBLE & ANOR
[2017] SADC 108
Background

The plaintiffs Kylie Dickinson and Jeremy Thompson have made an application pursuant to s 119(G) of the Real Property Act 1886 (SA) to extend a caveat over land described in Certificate of Title Register Book 5436 Folio 77 (‘the property’) until their claim for specific performance of a contract for the sale of the property is determined at trial.
On 14 September 2017 I ordered that time for removal of the caveat be extended until further order, to allow for the hearing of the application. In support of the application, affidavits of Kylie Dickinson sworn on 8 September 2017 and 12 September 2017 and 13 September 2017 have been filed. In reply, I have received affidavits from the first defendant Donald Gribble, sworn on 20 September 2017, real estate agent Jane Willson (‘the Agent’) sworn on 20 September 2017, and the defendants’ conveyancer, Robyn Steer (‘Ms Steer’) sworn on 20 September 2017.
The defendants are the registered proprietors of the property located at 29 Tolley Road, Nuriootpa. The defendants engaged the Agent to sell the property.
The plaintiffs own and operate a furniture removal business and were interested in the property given its location, size, industrial zoning and proximity to local freight routes.[1] On 24 March 2017 the parties entered into a contract for the sale of the property for the purchase price of $550,000 (the ‘first contract’). The first contract contained special conditions as to finance, the sale of the plaintiff’s property and Council approval for a change of use of the property to satisfy the plaintiffs’ business plan objective.
[1] Affidavit of Kylie Dickinson, sworn 8 September 2017.
As a result of discussions between the Agent and plaintiffs’ conveyancer Robyn White (‘Ms White’) the parties agreed to terminate the first contract and entered into a new contract on 5 April 2017 (the ‘second contract’).
The second contract provided for a deposit of $2,500.00 to be paid on the next day following the expiration of the cooling off period, being 2 business days after the service of the Form 1. The plaintiffs acknowledged receipt of the Form 1 on 26 April 2017.[2]
[2] Exhibit JPW6 to Affidavit of Jane Willson.
An email sent by the Agent to the plaintiffs dated 2 May 2017, providing details of the account into which the deposit should be paid, was sent to the wrong email address.[3] Ms Dickinson has alleged that she made requests for the relevant bank details but none were forthcoming, something which I note has been denied by the Agent who says she spoke to the plaintiffs about the requirement that they pay a deposit on a number of occasions.[4]
[3] Affidavit of Kylie Dickinson, sworn on 13 September 2017.
[4] Affidavit of Jane Willson, para 17 and 26.
On 31 May 2017 the second contract was again terminated by agreement between the parties.
•

The plaintiffs’ financier, ANZ Banking Group Ltd (‘ANZ’), by letter dated 26 June 2017, offered finance to the plaintiffs in the sum of $330,000. The offer was subject to various conditions which included that ANZ receive a valuation for the property showing a market value of no less than $550,000.[5] There is no dispute that a copy of that letter had not been provided to the defendants.
[5] Exhibit KSMD8 to Affidavit of Kylie Dickinson, sworn on 13 September 2017.
The parties entered into another contract on 1 July 2017 (the ‘third contract’). The third contract provided for:
1A purchase price of $550,000;
2A deposit of $5000, again required to be paid on ‘the next day following the expiration of the cooling off period’;
3Settlement to take place on 8 August 2017 or within 7 days of all of the special conditions being satisfied, whichever is the later.
As to finance, the Special Condition provided as follows:
SC1         FINANCE
SC 1.1       This Contract is conditional upon the Purchaser obtaining, on or before the Latest Date for approval specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the Purchaser may accept) at the interest rate and on terms that the lender requires but acceptable to the Purchaser, to assist in purchasing the property (the ‘approval’). Upon notification of the approval to the vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract as the Vendor will rely on a notification of finance approval.
SC 1.2       The Purchaser will use best endeavours to obtain the loan. The Purchaser will apply for a loan by the Latest Date to apply below specified to apply and will inform the Vendor and or its agent and deliver copies of all finance applications and responses to the Vendor or its agents immediately on request, and if finance is advised as being approved or refused then immediately upon notice being received, and failure to copy the information to the Vendor as herein detailed will be deemed a breach of warranty of best endeavours entitling the Vendor to serve a notice of intention to terminate and then to terminate for any continuing breach in default, being deemed a breach of the warranty of best endeavours.
SC 1.3       In the event that any finance approval or refusal is not obtained and communicated to the Vendor on or by the latest Date for Approval and provided the Purchaser has not waived this special condition and communicated such waiver to the Vendor in writing then either party may terminate this Contract by giving notice in writing to the other party (but, in the case of the Purchaser, provided it has complied with SC 1.2).
SC 1.4       In the event of termination of this Contract pursuant to SC 1.3 and provided the Purchaser has complied with SC 1.2 all monies paid by or on behalf of the Purchaser will be repaid to the Purchaser.
SC 1.5       In the event of termination of this Contract pursuant to SC1.3 in circumstances where the Purchaser has failed to comply with SC 1.2 the Vendor will be entitled to the deposit which is forfeited to the Vendor and the Vendor may proceed against the Purchaser for damages for breach of Contract.
Latest Date for approval        7 July 2017                 at 4pm
Latest Date to apply              __________________
Amount of Loan                  $  (or less than)
Interest Rate  market % per annum (or less than)
Clause 9.1 of the third contract provided the defendants with the right to immediately terminate the contract in the event that the plaintiffs failed to pay the deposit. In the event the purchaser was in default of any other obligation under the contract, the Vendor was, pursuant to Clause 9.2, entitled to give notice in writing requiring the purchaser to remedy the default within 7 days. If the purchaser failed to comply with that notice, the Vendor could then terminate the contract by further written notice.
Clause 13 provided for notice provisions relating to service of notices under the contract as follows:
13.4 A notice served by registered mail will for all purposes be deemed served two (2) clear business days after posting.
13.5 Service may be effected by facsimile transmission to the party or the party’s representative to such facsimile number advised from time to time such service being deemed immediate service.
13.6 Service on one or more of the persons together comprising the Vendor or Purchaser as the case may be will for all purposes be deemed service on all persons comprising the Vendor or Purchaser.
13.7 Service may be effected personally, by facsimile or by registered mail to the address of the person detailed in the Contract or the representative of the party.
13.8 Where a party is entitled to immediately terminate the Contract, such termination is to be effected by service on the other party of a written notice to that effect.
On 5 July 2017, the Agent emailed Ms White attaching a copy of the third contract and informing her that the defendant’s conveyancer ‘will be updating the searches and Form 1 as we speak. We will forward the updated Form 1 once received’.[6] The ANZ informed the Agent by email dated 5 July 2017, that ‘we already have approval subject to valuation’.[7]
[6] Exhibit KSMD3 to Affidavit of Kylie Dickinson, sworn on 8 September 2017.
[7] Exhibit KSMD5 to Affidavit of Kylie Dickinson, sworn on 12 September 2017.
In an email dated 31 July 2017, from the ANZ to the Agent, they advise that ‘will keep you posted once we have meet (sic) the finance conditions’.[8]
[8] Exhibit JPW9 to the Affidavit of Jane Willson.
On 3 August 2017, a valuer appointed by the ANZ valued the property at $475,000. The ANZ emailed the Agent asking for her assistance by way of support for comparable sale information so as ‘to do our best to see if we can pull this transaction together’.[9]
[9] Exhibit JPW10 to the Affidavit of Jane Willson.
In email communications between Mr Steer and Ms White, on 4 and 8 August 2017, Mr Steer was informed finance had not yet been approved.[10]
[10] Exhibit RLS1 to the Affidavit of Robyn Steer.
On 7 August, the Agent provided a report to the ANZ in support of the price set for the property.[11]
[11] Exhibit JPW11 to the Affidavit of Jane Willson.
The Agent has said she was contacted by the plaintiffs who informed her they were now, in view of the valuation, only prepared to pay $475,000.00 for the property.[12] On 8 August 2017, Mr Thompson sent a text message to Mr Gribble in the following terms:[13]
Hi Dean,
Just wanted to keep you updated. We have looked over the valuation and the news isn’t good. The bank has also looked at. Jane was going to contact you after I spoke to her. If you would like to see the valuation we can bring it round for you to have a look at.
[12] Affidavit of Jane Willson para 40.
[13] Exhibit DDG2 to Affidavit of Donald Gribble.
On 9 August 2017 the defendants purported to terminate the third contract by a notice emailed by Mr Steer to Ms White on the ground that the plaintiffs had not obtained and communicated that ‘acceptable finance approval’ had been obtained or had not waived the special finance condition.[14] While there is no dispute that the notice came to the attention of the plaintiffs, they argue that it was not served in accordance with the terms of the third contract.
[14] Exhibit RLS2 to Affidavit of Robyn Steer.
On 11 August 2017, the defendants entered into an unconditional contract with a third party. Settlement scheduled for 25 August 2017 could not proceed due to the caveat lodged over the property by the plaintiffs. The new purchasers, despite no settlement having taken place, have taken possession of the property and are said to have already started renovation and demolition of part of the residence located on the property. The defendants have been unable to settle on their new property as they do not have the funds necessary to do so and say they are reliant on the funds to be received from the sale of the property. They are now residing on a motor home on their new property which is extremely small and uncomfortable and expect they will soon be asked to pay rent. Both defendants are said to suffer health issues.[15]
[15] Affidavit of Donald Gribble paras 12-20.
On 22 August 2017, the plaintiffs contacted the Agent and informed her they had finance approval and wished to settle in 14 days.[16] On 24 August 2017, the defendants’ solicitor sent a termination notice by email to both the plaintiffs and Ms White, terminating the contract on the ground that the plaintiffs had failed to pay the necessary deposit.[17]
[16] Affidavit of Jane Willson para 44.
[17] Exhibit LRB1 to Affidavit of Leon Budden.
It has been submitted on behalf of the plaintiffs that they have sold their property and remain there at the discretion of the new owner.
Analysis
On an application for the extension of time for the removal of a caveat, the court will apply the same test as that applicable to an interlocutory injunction.[18]
[18] Cini & Others v Pets Paradise Franchising (SA) Pty Ltd & Others [2009] SASC 7 at [15].
In Australian Broadcasting Corporation v O’Neill Gummow and Hayne JJ explained the principles are to be applied by the court in the following way:[19]
The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”
By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:
“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”
[Footnotes omitted].
[19] Australian Broadcasting Corporation v O’Neill [2006] HCA 46 at [65], (2006) 227 CLR 57 at 81 - 82.
Do the plaintiffs have a prima facie case?
The plaintiffs had argued that the third contract has not been validly terminated by either the first or second notice of termination and that they have an arguable case on the merits. Furthermore, the balance of convenience favours them.
The defendants have submitted that the plaintiffs do not have a prima facie case as i) the contract is void for uncertainty; ii) the plaintiffs have not fulfilled the special condition as to finance; and iii) the plaintiffs have repudiated the contract.
Is the contract void for uncertainty?
The plaintiff argues that by virtue of the lack of detail as to the finance to be obtained by the plaintiffs, the contract is void for uncertainty. As I found in McInnes v Davies[20] the real objective of a special condition as to finance, is to benefit the purchaser to ensure they are under no obligation to complete the contract if unable to obtain finance. The third contract was prepared by the Agent on behalf of the defendants. It is a matter for the plaintiffs to decide whether the finance they have been offered was sufficient for them to exercise their right to terminate the contract.
[20] McInnes v Davies [2015] SADC 88 at [45].
Have the plaintiffs failed to fulfil the special condition as to finance?
From the material before me, the special condition as to finance had not been fulfilled, nor had the plaintiffs waived the special condition as at the time the notice of termination was sent to them on 9 August 2017. Whether or not the plaintiffs intended to supplement the bank finance to satisfy the purchase price is not to the point. However the first notice of termination does not appear to comply with Clause 9.2 which required a Vendor to give written notice to remedy a default, allowing termination if there was no remedy within seven days.
Have the plaintiffs repudiated the contract?
The first defendant has said that on 4 August 2017 the plaintiffs attended unannounced at the property to discuss the sale and purchase directly with his wife and himself. They told him that the valuation of the property had come in too low and that as a result they did not get finance. There was an hour long discussion in which time the plaintiffs told them of their dissatisfaction with the valuer. On 8 August 2017 the first defendant received a text message from the first plaintiff stating that the written valuation had come in and that the news was not good, but that she believed the valuation was spot on. He took this as an attempt to renegotiate the contract and replied by text message that he was not willing to settle for anything less than the $535,000.00.
Repudiation will be established if the conduct of the plaintiffs conveys to the defendant the inability or unwillingness of the plaintiffs to perform the contract or to only perform it in a substantially inconsistent way to his obligations.
In Laurinda Pty Ltd v Capalba Park Shopping Centre Pty Ltd, Mason CJ said:[21]
There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way.
[21] Laurinda Pty Ltd v Capalba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 648 and 658.

In Shevill and Another v Builder’s Licensing Board Gibbs CJ said:[22]
Such a contract may be repudiated if one party renounces his liabilities under it — if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way. In such a case the innocent party is entitled to accept the repudiation, thereby discharging himself from further performance, and sue for damages.
[Footnotes Omitted]
[22] Shevill and Another v Builder’s Licensing Board 149 CLR 620 at 625.
The making of a counter offer would indicate an unwillingness on the part of the plaintiffs to be bound by the contract, however given the plaintiffs’ assertion that they did not at any time convey an intention that they would not complete the contract for the contracted price, there must be an assessment of the evidence to determine whether the plaintiffs’ conduct can be said to have amounted to repudiation.
Failure to pay deposit
The plaintiffs assert that as no Form 1 was served, the cooling off period has not expired and accordingly the defendants are not entitled to terminate the contract for the non-payment of the deposit.
The defendants rely on the service of the Form 1 on 26 April 2017, requiring a deposit to be paid on 5 July 2017. The contract clearly provided for immediate termination for non-payment of the deposit. The Land and Business (Sale and Conveyancing) Act 1994 (SA) provides that the Vendor’s statement (Form 1) may be served on the purchaser before the making of the contract for the sale of land.
Even if it were accepted that the plaintiffs made efforts to try and get the bank details for the payment of the deposit, that were not forthcoming, that would not in the ordinary course explain or excuse the plaintiffs’ failure to pay the deposit pursuant to the terms of the contract.
The contract provides that the deposit is due on the day following the expiration of the cooling off period. The cooling off period if the Form 1 is served before the contract is signed, expires by the end of the second clear business day after the date of the contract.
The difficulty here however, is that the Agent made a representation that a further Form 1 would be provided. There is, at least on the material before me, no evidence that the Agent gave any indication to the plaintiffs that there would not be an updated Form 1. Although I note the Agent has said she informed the plaintiffs the deposit needed to be paid at the time of signing the third contract and the plaintiffs had been told payment was overdue.[23] However, it remains arguable that the Agent’s representation has been relied on by the plaintiffs and the defendants should not now have the benefit of the Agent’s misleading conduct. Evidence on this matter is necessary to determine the issue.
[23] Affidavit of Jane Willson paras 26 and 27.
In all of the circumstances, I am satisfied that there is a prima facie case and there are serious issues to be tried.
The balance of convenience
Clearly both parties have much to lose in relation to the determination of the issue of whether the caveat should be extended. There would appear to be no overwhelming case for the defendant without an assessment of the evidence, some important aspects of which I note are in dispute. Given I have found that there is a prima facie case, there is nothing to justify depriving the plaintiffs of the protection of the caveat pending the trial.
In McInnes v Davies[24] Stanley J, in discussing whether it was appropriate to take into account the respective strengths of the parties’ cases, said:
…while the judge found the appellant’s case is weak, that characterisation of his case is not conceded by the appellant. In any event, assuming the judge’s characterisation of the strength of the appellant’s case to be correct, the fact that the refusal to extend the caveat would effectively put an end to the appellant’s action is a factor overwhelmingly in favour of extending the caveat. The judge’s exercise of his discretion amounted to a summary disposal of the appellant’s action without reference to the principles applicable to summary judgment. At common law, that requires formation of a certain concluded determination that a proceeding would necessarily fail. But in this matter, far from the judge reaching such a concluded determination, he found the existence of a prima facie case. In these circumstances the judge’s conclusion that the balance of convenience did not favour extending the caveat discloses a failure properly to exercise his discretion. The incompatibility of the finding that a prima facie case existed with the refusal to extend the caveat, resulting in the final disposition of the appellant’s claim, offends the principle of coherence of the law.
[24] McInnes v Davies [2014] SASC 184.
Given that on the material before me I am unable to form a concluded view that the plaintiffs’ claim will necessarily fail. I order that the caveat be extended until further order and the matter be listed for trial.