Dvoretsky v Pridmore
[1989] TASSC 51
•30 October 1989
Serial No 49/1989
List "A"
CITATION: Dvoretsky v Pridmore [1989] TASSC 51; (1989) Tas R 247; A49/1989
PARTIES: DVORETSKY
v
PRIDMORE
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 1130/1986
DELIVERED ON: 30 October 1989
JUDGMENT OF: Underwood J
Judgment Number: A49/1989
Number of paragraphs: 40
Serial No 49/1989
List "A"
File No 1130/1986
DVORETSKY v PRIDMORE
REASONS FOR JUDGMENT UNDERWOOD J
30 October 1989
For 36 years Mr and Mrs Dvoretsky lived at 46 Faraday Street, West Hobart. There they raised their family of two daughters. Mrs Dvoretsky (the plaintiff) stayed on at 46 Faraday Street after her husband's death on 13 January 1982. By then her two daughters had grown up and left home. One of them, Mrs Phillips, married and lives with her husband in Hobart. The other, Mrs Kavuzlu lives in Sydney, and until after the relevant events was unmarried. The plaintiff and her daughters are a close family unit. During the years following her husband's death, the plaintiff found the Faraday Street home too big for her to manage and, following many discussions with her daughters and son–in–law, it was agreed that 46 Faraday Street should be sold and the proceeds used to buy the plaintiff a home unit in which she would live. The plaintiff and Mr and Mrs Phillips looked around for a suitable home unit and in June 1986, found one in Regent Street, Sandy Bay. The purchase price was $62,000. At that time, the Faraday Street house was on the market for $55,000. It was agreed between the plaintiff and her daughters that the difference between the sale price of Faraday Street and the purchase price of Regent Street would be found by Mr and Mrs Phillips and given to the plaintiff.
On 3 June 1986 the plaintiff signed a contract to purchase the unit in Regent Street. It was subject to a condition precedent that, within 30 days of 3 June 1986, the plaintiff enter into a contract to sell Faraday Street. The agreement provided for completion within 30 days of the fulfilment of the condition precedent.
The agent advised the plaintiff to offer Faraday Street for sale by public auction. This advice was accepted but before auction, the defendant offered the plaintiff $53,250 and, after consultation between the members of the family, this offer was accepted. A written agreement of sale was made by the plaintiff and the defendant on 23 June 1986. It provided for a purchase price of $53,250 and for completion to be effected on or before 25 July 1986. The contract was not subject to any conditions precedent except that there were no restrictions on the use of the property for the purpose of a residential dwelling. The contract was in the form of a standard form Law Society agreement for the sale of real estate. Clause 6 provided:
"The vendor shall supply a good marketable documentary title free from any charges payable or to become payable to any municipal or other authority in respect of works done at this date and the vendor indemnifies the purchaser against any claim or demand to be made in that respect".
The agent sent a copy of the contract to Mr AD Holmes, the plaintiff's solicitor. It became apparent that the matter was not as straightforward as the plaintiff and her daughters had believed it to be. The plaintiff was not the registered proprietor of 46 Faraday Street. Alexander Dvoretsky, the plaintiff's late husband, was the registered proprietor. By his last will he appointed Arthur Lindsay Pearce and Arthur Harry Hinman his executors and trustees. He devised and bequeathed the whole of his estate to his trustees upon trust, after payment of debts, to his wife for life and upon her death to his children in equal shares. The will had not been admitted to probate.
The trustees of the will were not trustees for the purposes of the Settled Land Act 1884 as defined by that Act, s2(8) and the Settled Land Act 1911, s14. The defendant's solicitors, Messrs Murdoch, Clarke, Cosgrove and Drake, soon became aware of this. Accordingly, the defendant could not be compelled to take title from the life tenant until trustees were appointed and there had been compliance with the provisions of the Act. See In re Fisher and Grazebrook's Contract [1898] 2 Ch 660; Wheelwright v Walker (1883) 23 Ch D 752.
The plaintiff left all legal matters in the hands of her solicitor, her two daughters and her son–in–law. Her family were content to acquiesce in any proposal which would enable the Faraday Street contract to be completed and the plaintiff to buy the unit in Regent Street. They all agreed to the following proposition put forward by Mr Holmes, that:
1The plaintiff disclaim any benefit accruing to her from the estate of her late husband.
2The executors of the estate of the late Mr Dvoretsky, Messrs Pearce and Hinman, renounce their executorship.
3The plaintiff's daughters, later confined to the plaintiff's daughter who lived in Hobart, Mrs Phillips, apply for Letters of Administration with the will annexed.
4.After grant of the Letters of Administration Mrs Phillips make application to be the registered proprietor pursuant to the Lands Titles Act 1980, s99.
5Mrs Phillips transfer title to the defendant.
The above proposal was put into effect. A deed evidencing the plaintiff's disclaimer of any benefit from the estate was executed on 27 June 1986. The executors renounced by a document executed on 24 June 1986. Letters of Administration with the will annexed were granted to Mrs Phillips on 19 August 1986. An application by Mrs Phillips to become the registered proprietor was signed on 23 July 1986 and a memorandum of transfer of title from her to the defendant was subsequently executed.
Early in July 1986 there were some discussions between the solicitors with a view to delaying the completion date to enable time for the Court to grant Letters of Administration. No agreement had been reached with respect to this by 14 July when the defendant's solicitors advised Mr Holmes that the defendant wished "to get out of the contract as the [plaintiff] could not contract and the [defendant] urgently wanted possession". Mr Holmes responded by advising that "the [plaintiff] has power to sell by virtue of her life tenancy" and it was intended to enforce the contract.
The defendant's solicitors maintained that the plaintiff could not exercise any power of sale until trustees for the purposes of the Settled Land Act had been appointed. The date for completion passed.
By notice dated 14 August 1986 the defendant's solicitors made the provision as to time for completion of the agreement of the essence of the contract and required completion on or before 28 August 1986. By letter dated 20 August 1986, the plaintiff's solicitors provided figures for settlement and appointed 26 August 1986 as the date for completion. The defendant's solicitors maintained that they would not accept title in the absence of duly appointed trustees for the purpose of the Settled Land Act.
On 26 August 1986 Mr Egan of the defendant's firm of solicitors and Mr Holmes, solicitor for the plaintiff, met. Mr Egan had a bank cheque for the required amount. Mr Holmes offered him the following documents in exchange for the cheque:
1 Production slip for the Letters of Administration with the will annexed.
2 Application by Mrs Phillips to be registered proprietor.
3 Transfer from Mrs Phillips to the defendant.
4 The relevant certificate of title.
It was an agreed fact at the trial that, had the defendant accepted the above documents and lodged them with the Recorder of Titles, he would have become the registered proprietor of an estate in fee simple of 46 Faraday Street.
However, Mr Egan declined to accept the title offered. At that time he had sighted the late Mr Dvoretsky's will but not the plaintiff's deed of renunciation. Mr Egan withdrew from the settlement conference advising that he would consider the matter and contact Mr Holmes. The next day he searched the Probate Registry and sighted the Letters of Administration with the will annexed and the plaintiff's deed of disclaimer of interest in the estate. The defendant's solicitors still maintained their refusal to accept the title offered on the basis that it was not from the plaintiff as agreed by clause 6 of the contract, nor from any person (Mrs Phillips) compellable at the direction of the plaintiff. With respect to the latter point, the defendant's solicitors' argument was that there was no agreement between the plaintiff and Mrs Phillips supported by consideration or under seal, by which Mrs Phillips was compellable at the direction of the plaintiff to effect the transfer to the defendant. In these circumstances and in the absence of trustees for the purpose of the Settled Land Act, the defendant claimed that the plaintiff was in breach of clause 6 of the agreement.
On 28 August 1986 Mr Egan advised Mr Holmes that the defendant would not settle. On 1 September 1986 the plaintiff commenced these proceedings claiming (inter alia) an order for specific performance and damages. Subsequently, 46 Faraday Street was put on the market for resale and, by an agreement dated 2 February 1987, sold to another for $47,000. This agreement was completed on 13 February 1987.
In the meantime, the plaintiff was let into possession of the Regent Street unit on 25 August 1986 in anticipation of the sale of Faraday Street being completed on 28 August 1986. The vendor of the unit permitted the plaintiff to remain in possession upon payment of rent until the sale of Faraday Street was completed. The purchase of the unit was completed on 13 February 1987 at the same time as the completion of the resale of Faraday Street. The short fall in the purchase price for the unit and the rent of $1,920.00 was found by Mr and Mrs Phillips and paid on settlement.
What obligation was imposed on the plaintiff pursuant to clause 6 of the contract? Leaving aside the reference to municipal charges and the indemnity, the term is no more than a statement of that which, by operation of law, is implied in an open contract; an obligation to supply a good marketable documentary title. That is, a documentary title which, in accordance with the terms of the contract, can be forced upon the defendant. See Johnson v Clarke [1928] Ch 847; MEPC Ltd v Christian Edwards & Ors [1981] AC 205. Clause 1 of the contract provides that the "vendor [plaintiff] agrees to sell and the purchaser [defendant] agrees to purchase free from encumbrances all the property described in the first schedule ...". The first schedule describes the property as:
"All that piece or parcel of land situate in Tasmania and known as 46 Faraday Street West Hobart together with the improvements thereon as per Vol 786 Folio 96".
Although not expressly stated, it is readily implied that the plaintiff agreed to sell the fee simple interest. See Hughes v Parker (1841) 8 M & W 244; Travinto Nominees Pty Ltd v Vlattas & Anor (1973) 129 CLR 1.
Williams on Real Property (23rd edn) defines a good marketable title at p655 as:
"One which will enable the party acquiring it to sell the property without the necessity of making special conditions of sale restrictive of the purchaser's rights".
There was no suggestion that the documents tendered were not a good marketable title in the sense referred to in Williams'. The defendant's case rested on the proposition that clause 6 of the contract obliged the plaintiff to supply a title from herself or from some person compellable at her direction and that the word "supply" meant that if the title was offered from a person compellable at the plaintiff's direction, that fact must be proved to the defendant at the time title was offered. Learned counsel for the defendant submitted that, it was common ground that the title offered was not from the plaintiff and that, on the evidence, it was not from some person (her daughter) who was compellable at the plaintiff's direction or alternatively, if the daughter was compellable this had not been proved at the time title was offered. By reason of these matters the defendant claimed that the plaintiff was in breach of clause 6 and he was entitled to damages on the counter–claim.
The obligation imposed on the plaintiff by clause 6 had to be discharged on completion of the contract. The fact that a vendor does not have title at the time the contract is entered into is immaterial provided he or she can make title at the time of completion. See Harold Elliott & Anor v Pierson [1948] 1 Ch D 452 at p455; Hoggart v Scott (1830) 1 Russ and My 293; Brickles v Snell [1916] 2 App Cas 599.
This proposition is subject to the equitable rule that a purchaser is not bound to wait to see if the vendor can obtain a good title by the settlement date but may repudiate upon discovery of the defective title. See Halkett v Earl of Dudley [1907] 1 Ch 590. Nevertheless, a purchaser is obliged to give the vendor with a defective title a reasonable opportunity to remedy the defect unless the defect is one "which can be cured without the consent of some person who is under no obligation to consent". See Bell v Scott (1922) 30 CLR 387 at p398.
Counsel for the defendant based his submissions upon the following passage in Voumard, The Sale of Land, (4th edn) p347 under the heading "Vendor's Obligation as to Title":
"A vendor who has no title or only a defective title is not entitled to call upon the purchaser to take an assurance from a person who has a valid title and is willing to give a conveyance or transfer, but who is under no obligation to do so at the instance of the vendor; for this would be tantamount to compelling the purchaser to make a new contract with that person."
It was submitted that the above passage properly reflected the law as stated in Re Bryant and Barningham's Contract (1890) 44 Ch D 218 and the other authorities cited by the learned author and that it accurately described the obligations of the plaintiff pursuant to clause 6 of the contract. That submission requires a careful examination of the cases.
As a preliminary point, it can be observed that the vendor's obligation with respect to title is the same whether the proceedings are for equitable relief or common law remedy. See Souter v Drake 5 B. and AD 992 at p1000, 110 ER 1058 at p1061; Purvis v Rayer 9 Price 488, 147 ER 159.
Re Bryant and Barningham's Contract was an application for orders on a vendor and purchaser summons.
By the contract the vendors contracted to sell as trustees for sale. At the date of the contract the vendors had no title as they were trustees without a power of sale until after the death of the tenant for life. On discovering that the tenant for life was still alive and that the vendors had no power of sale the purchasers were told that the tenant for life would make title under the Settled Land Act and that an application to the court to appoint trustees for the purposes of the Act was pending. The purchaser responded by declining to enter into the proposed arrangement and demanded the return of the deposit and costs of investigating the title. The vendor replied advising that the trustees had been appointed, had waived the requirement for notice of sale and had consented to the sale. The purchaser took out the summons seeking a declaration that a good title in accordance with the contract had not been shown. The case is one in which the contract made express provision for the manner in which title was to be made; as trustees for sale. Upon discovering that they had no power of sale the trustee/vendors offered to make title, not as agreed, but from the tenant for life. It was held both at first instance and on appeal that to declare a title from the life tenant a good title in accordance with the contract would be tantamount to forcing the purchaser to enter into a new contract. Cotton LJ said at p224:
"The purchaser has contracted with the vendors that they should make a good title as trustees under the will, and he has never agreed to purchase from the tenant for life."
Although a contractual term specifying the manner in which title will be made may be of significance in a conveyance of land other than under the provisions of the Lands Titles Act as it may affect the quality of the title received, indefeasibility of title upon registration of a transfer pursuant to the Lands Titles Act, 1980 makes such a term of little consequence.
Re Spencer and Hauser's Contract [1928] Ch 598 was another case in which the contract expressly stipulated the manner in which title was to be made. Clause 6 provided, "the vendors ... are selling ... as trustees for sale under the will of Richard Elias Evans Spencer who died on April 22 1923." The will appointed no trustee for sale. On discovery of this difficulty, the vendor's solicitor advised the purchaser that the vendor could make a good title as personal representative of the deceased. This the plaintiff would not accept, claiming that the only title he was obliged to take was one from the vendors as trustees for sale. A vendor and purchaser summons was taken out. The issue appears from the following passage in the judgment of Tomlin J. at p606:
"Now so far as these vendors are concerned, the point is not that they could not make a good title as personal representatives of the testator, but is whether, having regard to the form of this particular contract, they are bound to make a title in a particular way – namely, as trustees for sale under his will, meaning thereby no doubt trustees exercising an express trust for sale created by the will – and, if they cannot make a title in that way – although they may make a perfectly good title as legal representatives – whether the purchaser is entitled to repudiate the contract."
His Lordship held that the issue was one involving a question of the construction of a contract and held on the facts of the case that the clause in the contract in question was indicative only of the vendor's intention and not a warranty to make title in the particular form mentioned. A similar process of reasoning was applied in In re Baker and Selmon's Contract [1901] 1 Ch 238 and In re Atkinson and Horsell'sContract [1912] 2 Ch 1. See also George Wimpey & Co Ltd v Sohn& Anor [1966] 2 W.L.R. 414. Cf Green v Whitehead [1930] 1 Ch 38.
Clause 6 of the present contract contains no warranty as to the manner in which title will be made. It simply provides that the plaintiff will supply a good marketable documentary title. The case of In re Head's Trustees and MacDonald (1890) 45 Ch D 310 is instructive. The trustees of a testator entered into a contract to sell certain lands. Under the will their power of sale was postponed until after the death of the life tenant who was entitled to receive the rents and profits of the estate during her life time. The plaintiff raised an objection to title upon discovering that the tenant for life was still alive. The vendor proposed that the objection could be overcome by the life tenant surrendering her life interest and the beneficiaries concurring in the conveyance. Before this was done the plaintiff repudiated the contract. The vendor took out a summons. The Court of Appeal held that a title from the trustees and the beneficiaries was not the title the plaintiff agreed to take but at p317 Fry LJ said:
"The objection having been taken to the title, the vendors said that they would obtain the concurrence of the beneficiaries. Now, if that had been done at an early stage of the proceedings, and if the trustees had been able to show that the beneficiaries did in fact consent to join, and an opportunity had been given of investigating their title, and it had been shown that they would concur in reasonable time, it is by no means clear to me that the vendors might not have enforced their contract. It is not necessary to decide that point."
It appears to me that the general proposition stated by the learned author of Voumard on which the defendant relies namely, that a purchaser cannot be compelled to take a transfer from a person other than the vendor unless that person is compellable at the direction of the vendor, arises out of cases in which the contract contains an express term as to the manner in which title is to be made and/or in which the vendor has sought to repudiate the contract before completion on the ground that the vendor is then unable to make title and is unable to show that he can compel another to make title by the time completion is due. In Forrer v Nash 35 Beav 167, 55 ER 858 the Master of the Rolls said at p171 (860):
"When a person sells property which he is neither able to convey himself nor has the power to compel a conveyance of it from any other person, the purchaser, as soon as he finds that to be the case, may say, 'I will have nothing to do with it'."
This proposition was affirmed in Brewer v Broadwood (1883) 22 Ch D 105 at p109 and Bell v Scott (supra). Cf where the vendor has the power to bring in outstanding estates and thereby make title (Bell v Scott at p392).
In the present case, the defendant did not seek to repudiate the contract on discovering that the plaintiff could not make title either herself or through some person compellable at her direction. He chose to wait until the completion date. At that time the plaintiff, by her solicitors, tendered a bundle of documents which it is admitted would have provided the plaintiff with the unencumbered fee simple title to the property described in the schedule had they been lodged for registration in accordance with the provisions of the Lands Titles Act 1980. No question of the compellability of the transferee (Mrs Phillips) at the direction of the plaintiff arose at that stage, for she had done all that was required to be done to transfer title to the defendant. The situation may well have been different had the defendant sought to repudiate the contract before the plaintiff was in a position to tender the documents offered on 26 August 1986. In that case the defendant would only have been bound to the contract if the plaintiff was able to establish that she could make title or that she could compel another to do so. The contract contained no provision with respect to the manner in which title would be made. In Travinto Nominees Pty Ltd v Vlattas (supra) Barwick CJ said at p12:
"If an area of land is contracted to be sold without conditions, i.e., under an 'open' contract, the law will import an obligation on the vendor first to show a good title in fee simple to the land, i.e., by an abstract of title or delivery of particulars of title, to prove that title, as on production of deeds or on examination of the register and on settlement to make such title by appropriate conveyance or memorandum of transfer. If it be land the title to which is held under the Real Property Act the vendor under such a contract must place the purchaser on settlement in a position to have himself immediately registered as the proprietor of the land for an estate in fee simple."
The plaintiff complied with the obligation imposed on her by clause 6. Not obliged to make title in any particular capacity or in any specified manner, by the documents tendered on settlement, she then placed the defendant "in a position to have himself immediately registered as proprietor of the land [being the subject matter of the contract] for an estate in fee simple". On searching the Probate Registry and sighting the Letters of Administration and plaintiff's deed evidencing her disclaimer of interest in her late husband's estate, the defendant's solicitors had documentary proof that the title offered by the plaintiff was one which, on registration, would make the defendant the registered proprietor of the land he had agreed to buy. At that time, the date by which completion had to be effected had not passed. I turn to the question of the plaintiff's damages for the defendant's breach of contract.
Clause 9 of the contract provided (inter alia) that if the purchaser failed to complete the agreement in accordance with its terms the deposit should be forfeited to the vendor. The deposit of $5,325.00 was paid to the agent as stakeholder. The plaintiff is entitled to recover this sum. It was agreed at trial that the plaintiff's reasonable legal costs and disbursements of the contract were $489.00 and that if it was held that the defendant was in breach of the contract the plaintiff was also entitled to recover that sum.
In addition the plaintiff claimed either the sum of $1,920.00 rent for the Regent Street unit or interest on $47,925.00 from 26 August 1986 to 13 February 1987 at 16%, $3,550.00. Since reserving judgment I have read Hungerfords v Walker & Ors, a decision of the High Court handed down on 9 February 1989. This case deals with the entitlement to recover interest by way of damages for the loss of the use of money paid away or withheld as a result of breach of contract or negligence. It appears not to follow the previously reported cases which support the proposition that damages cannot be awarded for the loss of the use of a specified sum of money which, by the wrongful act of the defendant, has been paid away or withheld. This case was not referred to during argument and, as it appears to have a direct bearing on part of the plaintiff's claim for damages, I propose to invite counsel to make further submissions before directing that judgment be entered for the plaintiff for a specified sum of money.
Since delivering the above reasons I have heard further submissions from counsel. It was common ground that Hungerfords' case, reported (1989) 84 ALR 119, was authority for the proposition that if a plaintiff sustains loss or damage by reason of the loss of use of a specific sum of money which the wrongful act of a defendant has caused to be withheld, that loss is recoverable in accordance with the ordinary principles governing the assessment of damages for tort or breach of contract. Mason CJ and Wilson J. said in their joint judgment at p130:
"The cost of borrowing money to replace money paid away or withheld, in consequence of the defendant's breach of contract or negligence, is directly related to the wrong and is not too remote in the sense in which the common law regarded the loss attributable to the late payment of damages as being too remote. We reach this conclusion more readily, knowing that legal and economic thinking about the remoteness of financial and economic loss have developed markedly in recent times. Likewise, opportunity costs should not be considered as being too remote when money is paid away or withheld."
Relying on this principle the plaintiff claimed $1,920.00 rent paid for the Regent Street property and abandoned the alternative claim for interest. Counsel for the defendant submitted that the plaintiff had suffered no loss as the money was found by her daughter and son–in–law. This is no answer to the claim.
Had the defendant not been deprived of the proceeds of sale of Faraday Street she would have been in a position to effect timely completion of the Regent Street purchase. Kept out of funds by the wrongful act of the defendant she incurred a liability to pay $80.00 per week until Faraday Street could be resold and she thereby placed in a position to finalise the Regent Street contract. It is immaterial that the plaintiff's daughter and son–in–law subsequently gratuitously came to her financial rescue for her loss was occasioned by the incurring of the liability subsequently quantified at $1,920.00. See Joyner v Weeks [1891] 2 QB 31; Mayne and McGregor on Damages (13th edn) para244 et seq.
Counsel for the defendant also submitted that the plaintiff had failed to mitigate her loss because Faraday Street remained unoccupied until its resale on 13 February 1987. However, I am not persuaded that, having regard to the commitment to purchase Regent Street and the decision to resell Faraday Street, the failure of the plaintiff to let Faraday Street or re–occupy it herself until resale was unreasonable. Accordingly, the plaintiff is entitled to recover $1,920.00 as part of her damages. In result there will be judgment for the plaintiff against the defendant for the sum of $7,734.00.
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