Douglas v Simons Builders Pty Ltd - [2015] VSC 118

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S CI 2014 04459

BETWEEN:

STEPHEN ROSS DOUGLAS	Plaintiff
v
SIMONS BUILDERS PTY LTD (ACN 006 467 656) and PETER CHARLES EVANS	Defendants
AND BETWEEN:
SIMONS BUILDERS PTY LTD (ACN 006 467 656) and PETER CHARLES EVANS	Plaintiff
v
STEPHEN ROSS DOUGLAS and NELLA DOUGLAS	Defendants

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JUDGE:	Derham AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	24 March 2015
DATE OF JUDGMENT:	8 April 2015
CASE MAY BE CITED AS:	Douglas v Simons Builders Pty Ltd
MEDIUM NEUTRAL CITATION:	[2015] VSC 118

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PROPERTY – Contract for sale of land – Payment of the balance of the deposit by promissory note – Whether valid payment – Whether right to rescind for default suspended pending maturity of promissory note – Contract on proper construction required payment of deposit by cash, bank cheque or personal cheque – Promissory Note not accepted by Vendor as payment under Contract – No valid payment made – Notice of Default and Rescission operative in accordance with its terms – Contract validly terminated by Vendor – Vendor entitled to possession of the land.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Defendants by counterclaim	Mr Ian Hone, Solicitor
For the Defendants/Plaintiffs by counterclaim	Mr J Arthur	Mackinnon Jacobs Lawyers

HIS HONOUR:

Summary

The defendants apply for summary judgment on their counterclaim, and to dismiss the plaintiff’s proceeding. The first defendant is the vendor and the plaintiff the purchaser under a contract for the sale and purchase of land occupied by the plaintiff (and his wife and family) under a licence agreement. The second defendant, who is a director of the first defendant, has been misjoined and it is agreed that he should not be a party.

The main question thrown up by the parties is whether the delivery of a promissory note by the purchaser for the amount of the balance of the deposit is a payment of the deposit in accordance with the contract. If it is, a Notice of Default and Rescission given by the vendor is not effective to bring the contract to an end, with the consequence that the first defendant’s application for summary judgment, insofar as it is based on termination of the Contract, must fail.

I have concluded for the reasons given below that the delivery of the promissory note in this case is not effective as payment of the balance of the deposit under the contract. Given that conclusion, there is no dispute that the Notice of Default and Rescission given by the vendor has operated to terminate the contract.

In any event, the vendor is entitled to possession of the land as the plaintiff’s occupation of it is pursuant to a licence agreement, which has been validly revoked. The first defendant is, accordingly, entitled to the relief it seeks, including possession of the land.

Defendant’s Application for Summary Judgment

The defendants apply by summons filed on 25 November 2014 for the following relief:

(a) For summary judgment against the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 118
Decision Date: 8 April 2015

CaseChat Overview and Summary

In the case of Douglas v Simons Builders Pty Ltd, the dispute arose from a contract for the sale of land. The buyer, Douglas, intended to settle the balance of the deposit using a promissory note, which the vendor, Simons Builders Pty Ltd, did not accept as valid payment. The dispute reached the court to determine the validity of the payment method and the consequences of the default under the contract terms.

The primary legal issues for the court to decide were whether the promissory note constituted a valid payment under the contract and, if not, whether the vendor's right to rescind for default was suspended pending the maturity of the promissory note. The court also needed to ascertain whether the contract required the deposit to be paid by cash, bank cheque, or personal cheque, and if the vendor's acceptance of payment was necessary for the contract to be fulfilled.

The court found that the contract explicitly required the deposit to be paid by cash, bank cheque, or personal cheque, and since the promissory note was not accepted by the vendor, no valid payment was made. Consequently, the vendor's right to rescind for default was not suspended. The promissory note did not meet the contractual requirements for payment, and the vendor's notice of default and rescission was operative in accordance with its terms. Therefore, the contract was validly terminated by the vendor, who was entitled to possession of the land.

The court ordered that the vendor, Simons Builders Pty Ltd, was entitled to terminate the contract due to the buyer's failure to make a valid payment as required, and that the vendor was entitled to possession of the land. The promissory note did not constitute a valid payment under the contract, and the default notice and rescission were effective, leading to the termination of the contract.

Orders