CONTRACT – Interpretation – Implied terms – Sale “off the plan” conditional on its registration by given date – Vendor to use best endeavours to procure registration by that date – Either party at liberty to rescind thereafter but before plan registered – Whether any implied obligation on vendor to procure registration after date.
PROCEDURE – Amendment – Of statement of claim – Re-formulation of contractual term as implied – Whether for “determining real question in controversy” – Discretion – At close of trial, on judge’s suggestion – R.S.C. Ch. I, R.36.01(1).
PROCEDURE – Leave to appeal – Against costs order – Whether required by party challenging principal relief as well – Whether required by solicitors ordered to pay costs – Supreme Court Act1986, s.17A(1)(b).
PROCEDURE – Costs – Order against solicitors for a party – Whether they “caused costs ... to be wasted by ... negligence” – More than breach of duty of care needed – R.S.C. Ch. I, R. 63.23(1).
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APPEARANCES:
Counsel
Solicitors
For the Appellants
Mr. R.M. Garratt, Q.C.
Hall & Wilcox
and Mr. P.D. Corbett
For the Respondents
Mr. W.F. Lally, Q.C.
Moustafa & Associates
and Mr. S.P. Newton
CHARLES, J.A.:
I agree with Batt, J.A.
CALLAWAY, J.A.:
I also agree with Batt, J.A.
BATT, J. A.:
The detailed facts out of which this appeal from the decision of a judge of the Trial Division arises will be found in his Honour's full and careful reasons. For the purposes of dealing with the grounds of appeal and notice of contention I state the material facts summarily. In doing so, I borrow heavily from his Honour.
The contracts
The appellant Frank Etna (whom I shall call "the appellant" notwithstanding that there is now a second appellant), the defendant below, was at all material times the registered proprietor of the land and improvements known as 347 Beaconsfield Parade, St. Kilda ("the land"). In about 1993 he resolved to develop the land as residential apartments. A plan of subdivision was prepared which proposed the construction of 13 apartments and the provision of 11 car parking spaces. By contract of sale dated 26 November 1993 the appellant agreed to sell to the third respondent, Ersoy Arif, the fourth plaintiff below, Unit 2 and an associated parking unit on the proposed plan of subdivision No. PS325755G to be constructed as part of the development for a price of $205,000, of which a deposit of $10,250 was paid that day. This contract, like the others I shall…
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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AGLC
Etna v Arif [1999] VSCA 99
Case
[1999] VSCA 99
Decision Date
CaseChat Overview and Summary
In the matter of Etna v. Arif, the respondent sought to rescind a contract for the sale of real estate “off the plan” on the basis that the vendor had failed to use best endeavours to have the plan registered by a specified date. The vendor argued that, although the contract was conditional on registration by that date, there was no implied obligation to use best endeavours to achieve registration after that date. The trial judge found for the respondent and ordered that the contract be rescinded. The vendor appealed on the grounds that the trial judge had misconstrued the contract and that the respondent's solicitors had negligently wasted costs by causing the respondent to pursue a claim which was not available at law. The respondent cross-appealed from an order against him for costs.
The primary legal issues were whether the contract contained an implied obligation to use best endeavours to register the plan after the specified date, whether the trial judge had erred in permitting the respondent to amend the statement of claim to include an implied term, and whether the trial judge had correctly ordered the vendor's solicitors to pay part of the respondent's costs. The court held that the contract did not contain an implied obligation to use best endeavours to register the plan after the specified date. The court also held that the trial judge had erred in permitting the respondent to amend the statement of claim to include an implied term, as it did not determine the real question in controversy. However, the court held that the trial judge had correctly ordered the vendor's solicitors to pay part of the respondent's costs, as they had caused the costs to be wasted by their negligence.
The appeal was dismissed and the cross-appeal allowed. The order made on 12 November 1998 was set aside and in lieu thereof it was ordered that the plaintiffs' application for an order that the solicitors for the defendant pay part of the plaintiffs' costs of the proceeding be dismissed with costs. The court noted that dates stated in ancillary orders had been overtaken and would require to be varied.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
As regards the purchase price, by Special Condition 4 the deposit was to be paid to the appellant's (conveyancing) solicitors, Messrs. Phillips Fox, to be held on trust for the purchaser until registration of the plan and then as stakeholder pursuant to s.24 of the Sale of Land Act 1962. The Particulars of Sale provided that the residue should be paid on the later of (a) 10 days after notification to the purchaser of registration of the plan of subdivision pursuant to Special Condition 2 and (b) 10 days after notification to the purchaser of the issue of a certificate of occupancy pursuant to Special Condition 3. The settlement date was defined as the date upon which vacant possession of the property and the chattels sold should be given, namely, upon acceptance of title and payment of the purchase price. The background facts His Honour found that by October 1994 an application had been made to the Port Phillip City Council on behalf of the appellant for a permit for the proposed subdivisional development on the land. The permit that his Honour found was granted on 8 December 1995 required, amongst other things, a contribution of 5 per cent of site value towards public open space purposes. The site value of the land as at 19 October 1995 was determined by the Council in April 1996 as being $520,000, so that the 5 per cent contribution payable was $26,000. The appellant apparently accepted that valuation. The appellant formed a company to enter into a contract for the construction of the units with a builder. He financed the construction by borrowing pursuant to a finance agreement entered into with Esanda Finance Corporation Ltd. ("Esanda") by himself (seemingly as guarantor) and his company. Construction began in about August 1994. As security for the financial accommodation granted, Esanda took, amongst other things, a registered first mortgage of the land by the appellant. The project ran into difficulties in October 1994. Work under the construction contract ceased for almost 12 months. By April 1995 the appellant and his company were in arrears in interest payments under the agreement with Esanda. Plans had to be re- drawn and new planning and building permits were required. Another company, Catani Gardens Investment Pty. Ltd. ("Catani"), of which the appellant was a shareholder and sole director, was incorporated to undertake the project and enter into a building contract with a new builder in September 1995. On 22 December 1995 Catani entered into a new finance agreement with Esanda, guaranteed by the appellant, pursuant to which Esanda agreed to provide a loan to Catani of almost $3.6M, including advances already made of $1.1M. Further problems were experienced, and some two and a half years later the second builder was still working on the project and the amount owed to Esanda had grown to $4.6M. For the purposes of deciding certain issues before him the trial judge traced in detail the appellant's financial difficulties from late 1997. It is sufficient for present purposes to say that on 12 March 1997 a proceeding which Esanda had commenced against the appellant and Catani for possession of the land was settled on terms which in essence required the appellant and Catani to complete the project by 20 May 1998 and to repay Esanda in full by that date, failing which Esanda was to be at liberty to enter judgment for possession. The judge found that the evidence advanced by the appellant about his financial position and that of his companies revealed that substantial sums of money were owed and that it would be of assistance to the appellant if he were able to sell the three units the subject of the three contracts summarised earlier at current market value, since, if he did so, an amount of between $385,000 and $470,000 could be obtained over and above the contract prices. Indeed the appellant said as much in an affidavit. The rescission history
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
For the foregoing reasons, I consider that the pre-requisites for the making of the order against the solicitors in the Court’s discretion were not satisfied. Their appeal should therefore be allowed. Conclusion In my opinion, the appellant's application for leave to appeal against the order against him as to costs should be refused and his appeal should be dismissed, whilst the like application of the second appellant should be granted so far as necessary and its appeal allowed. Paragraph 2 of the order made on 12 November 1998 should be set aside and in lieu thereof it should be ordered that the plaintiffs' application for an order that the solicitors for the defendant pay part of the plaintiffs' costs of the proceeding be dismissed with costs. With the passage of time since his Honour’s order of 5 November 1998 was made, dates stated in ancillary orders have been overtaken and will require to be varied. I would hear counsel on that aspect of the order below and on any similar aspects.