Fiore Group Pty Ltd v Dain Pty Ltd - [2022] WASC 141

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   FIORE GROUP PTY LTD -v- DAIN PTY LTD [2022] WASC 141
CORAM:   MASTER SANDERSON
HEARD:   21 APRIL 2022
DELIVERED          :   26 APRIL 2022
PUBLISHED           :   26 APRIL 2022
FILE NO/S:   CIV 1367 of 2022
BETWEEN:   FIORE GROUP PTY LTD
Plaintiff
AND
DAIN PTY LTD
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Property law - Application to extend caveat - Turns on own facts

Legislation:

Transfer of Land Act 1893 (WA)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	GJ Douglas
First Defendant	:	M Hotchkin
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Douglas Cheveralls Lawyers
First Defendant	:	Hotchkin Hanly
Second Defendant	:	No appearance

Case(s) referred to in decision(s):

Custom Credit Corporation Limited v Ravi Nominees Pty Ltd (1992) 8 WAR 42
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] 128 FCR 1
Perron Investments Pty Ltd v Tim Davies Landscape Pty Ltd [2009] WASCA 171
Porter v McDonald [1984] WAR 271

MASTER SANDERSON:

This case brings to mind a question which might have been set for a end of year real property examination. The scenario, although highly unlikely, is not entirely improbable. There are relevant facts and facts which, although they appear irrelevant, colour the final decision. Resolution of the application requires consideration of the nature of caveats and examination of the provisions, particularly the default provisions, of the Standard Form Contract for Sale of Land with equitable principles thrown in for good measure. Any lecturer who set this problem could be well satisfied it would fully test a student's grasp of the principles applicable to caveats. Any student reading this question for the first time would be horrified.
This is the plaintiff's application for an extension of a caveat over a property at 52 The Esplanade, Peppermint Grove. The plaintiff says his interest in the property is as purchaser pursuant to a contract for sale of the property entered into between the parties on 6 August 2021. It is the first defendant's position the contract is at an end, the plaintiff has no interest in the property and accordingly has no caveatable interest. Given the plaintiff is seeking an interim extension of the caveat until trial of the action, it was for the plaintiff to establish it had an arguable case and the balance of convenience favoured the caveat being maintained. There was no difference between the parties as to the applicable test.
It is necessary to put the present application in context to recite the history of the dealings between the plaintiff and the first defendant.
On 4 November 2019, Jonathan Charles Fiore, as trustee for the Fiore Group Property Trust No 1, entered into a contract of sale with the defendant for the property with a purchase price of $14,750,000. The parties refer to this contract as the '2019 Contract'. A copy of the contract appears as attachment JF3 to an affidavit of Mr Fiore sworn 13 April 2022.
The contract provided for the payment of a deposit of $1,000,000 within five days of acceptance of the offer. Settlement was to take place 'on or before 14 days of acceptance of this offer'. Given the amount involved in this transaction, the timeframe for payment of the deposit and settlement of the transaction was remarkably short. I will have more to say on that fact later in these reasons.
The selling agent for the property was James Mackenzie Hall and it was Mr Hall who at all material times represented the interests of the vendor and conducted all discussions with the plaintiff. Mr Hall has sworn an affidavit of 19 April 2022. He says that the day prior to the date on which the deposit was to be paid - that is 8 November 2019 - he received from Mr Fiore a request to extend the date for payment of the deposit to the date of settlement, being 18 November 2019. In fact, the deposit was not paid until 20 November 2019. Mr Hall duly banked the deposit in his trust account.
On 30 November 2019, the parties agreed to extend the settlement date on the 2019 Contract to 12 December 2019. The plaintiff still was not able to settle and a further extension of the settlement date to 10 January 2020 was agreed. Still the plaintiff was unable to settle. A further extension until 28 January 2020 was agreed. This agreement was on the basis that the sum of $675,000 out of the deposit be released to the first defendant. The plaintiff failed to settle again on 28 January 2020 and a further extension was agreed until 27 March 2020. This further extension was granted on the basis the purchase price was increased to $15,000,000 and the remaining tranche of the deposit was released to the first defendant.
The property still did not settle. Mr Hall says that at all times Mr Fiore maintained he was intent on purchasing the property but it seems could not raise the necessary funds. On 10 December 2020, the first defendant issued a default notice. The plaintiff did not rectify its default as required by the notice. Eventually Mr Hall informed Mr Fiore that if settlement did not take place on or about 7 May 2021 the 2019 Contract would be terminated. Termination pursuant to this default notice did not occur. A further settlement date was set for 29 April 2021, but settlement did not take place. A further default notice was issued on 13 May 2021. Further discussions then took place between solicitors for the plaintiff and solicitors for the first defendant. Those discussions are not presently relevant. It is sufficient if I say that no agreement was reached, and on 29 June 2021 and the plaintiff issued a notice of termination of the 2019 Contract. There is no dispute between the parties that the notice of termination was effective and the 2019 Contract came to an end.
It is worth pausing here to note two points. First, the contract between the parties was entered into in November of 2019 and was terminated in June of 2021. It is reasonable to assume that although Mr Fiore had made a cash offer with a very tight timeframe for settlement, he did not have available the funds to complete the purchase. Mr Hall in his affidavit says on a number of occasions Mr Fiore advised that he wished to proceed with the transaction. The only possible inference to draw from the facts is that Mr Fiore made his offer to purchase without the funds necessary to complete the transaction, and further, during the following 18 months he was unable to raise those funds. Put another way, Mr Fiore may have been ready and willing to complete the transaction but he was not able to do so.
Second, there is no dispute the deposit which was paid by Mr Fiore was forfeited and properly forfeited pursuant to the 2019 Contract. There are no grounds for suggesting Mr Fiore was entitled in any way to claw back any part of the deposit. In fact, he had agreed to release the whole of the deposit to the first defendant. That fact is not relevant to the legal position of the parties. What is important is that pursuant to the terms of the offer and acceptance on termination of the contract the deposit of $1,000,000 was forfeited.
At this point it may have been prudent for Mr Fiore to cut his not inconsiderable loss and look to purchase a more modest property, perhaps in Darch or Rockingham. However, he clearly had his heart set on acquiring 52 The Esplanade, Peppermint Grove. Soon after the 2019 Contract was terminated, Mr Fiore contacted Mr Hall with a fresh offer to purchase the property. This contract is referred to by the parties as the '2021 Contract'. The 2021 Contract required a deposit of $500,000 to be paid within seven days of acceptance. The offer was accepted on 13 August 2021 so the deposit was to be paid by 20 August 2021. Settlement was to take place on 24 August 2021 - again a remarkably short timeframe. The plaintiff failed to pay the deposit and failed to settle on the due date. Mr Fiore advised Mr Hall he did not have funds available to pay the purchase price by the settlement date. Again, it would seem Mr Fiore had made a cash offer to purchase when he did not have cash available.
Mr Hall then instructed the first defendant's solicitors to issue a default notice. This was done on 31 August 2021. A copy of that notice appears as attachment JF6 to Mr Fiore's affidavit. (It is to be noted that the purchaser named in the 2021 Contract was the present plaintiff as distinct from Mr Fiore who was the purchaser in the 2019 Contract. There had been a change in trustee of the Fiore Group Property Trust No 1. Apart from noting this change of trustee and the consequent change in the name of the purchaser, nothing turns on these facts). Despite the fact the plaintiff did not rectify its default, the first defendant did not move to terminate the 2021 Contract. On various occasions, settlement was booked but never took place. The history of these failed settlement attempts is set out in par 10 of Mr Fiore's affidavit. That paragraph reads as follows:
I am informed by Jarrad Loughridge of Envoy Settlement agency ('Envoy'), the settlement agent engaged by the plaintiff for the purpose of the Land, and believe that:
(a)on 21 January 2022 Envoy set up a Pexa workspace and booked settlement for 10 February 2022.
(b)this was accepted by Stirling Conveyancing for the defendant as Seller.
(c)on 11 February 2022 the settlement was re‑arranged and accepted by all parties for 18 February 2022.
(d)on 18 February 2022, settlement was rebooked and accepted by all parties for 25 February 2022.
(e)on 25 February 2022, settlement was rebooked and accepted by all parties for 4 March 2022.
(f)on 28 February 2022, your firm issued the notice of termination for the 2019 Contract on behalf of the Seller.
(g)on 1 March 2022 Stirling Conveyancing withdrew from the Pexa workspace, and on 3 March 2022 Valenti Lawyers withdrew.
On 28 February 2022, the first defendant purported to terminate the 2021 Contract. However, there was a mistake in the wording. The notice read as follows:
NOTICE OF TERMINATION
SALE OF 52 THE ESPLANADE, PEPPERMINT GROVE
As you are aware, we act for Dain Pty Ltd ('Seller').
By Contract for Sale of Land dated 4 November 2019 as varied by Variations of Contract for the Sale of Land dated 30 November 2019, 12 December 2019, 10 January 2020 and 11 March 2020 ('Contract'), the Seller care of Hotchkin Hanly at Level 1, 28 The Esplanade, Perth in the State of Western Australia, agreed to sell, and Jonathan Fiore as trustee for the Fiore Group Property Trust No. 1 (subsequently changed to Fiore Group Pty Ltd as replacement trustee for the Fiore Group Property Trust No. 1) ('Buyer') agreed to buy the property known as 52 The Esplanade, Peppermint Grove, Western Australia, being more particularly described as Lot 100 on Diagram 71487, Volume 1842 Folio 15 ('Property') for the purchase price of $14,750,000 ('Purchase Price').
By Notice of Default dated 31 August 2021, the Seller demanded the Buyer:
(a)pay to the Seller the balance of the Purchase Price;
(b)pay interest at the agreed rate of 6% on the balance of the Purchase Price from 24 August 2021 until the day of settlement; and
(c)complete settlement of the sale of the Property,
within 10 business days after service of that Notice of Default, which was deemed served on 31 August 2021, and which Notice of Default was not complied with.
TAKE NOTICE that the Seller hereby terminates the Contract, effective immediately, in accordance with clause 24.2(d) of the 2018 Joint Form of General Conditions for the Sale of Land ('General Conditions').
The Seller reserves the right to:
(a)claim damages against the Seller, plus interest and all costs and expenses incurred by the Seller arising from the default and the termination;
(b)charge you legal costs associated with this notice under condition 24.17 of the General Conditions; and
(c)any further action available to it.
What seems to have happened is that the first paragraph of the notice of termination was lifted from the notice of termination directed at the 2019 Contract. The second paragraph and the rest of the notice of termination refers to the 2021 Contract. But there is no doubt there was an error on the face of the notice of termination.
At the time the notice of termination was issued by the plaintiff, a settlement had been set for 4 March 2022. Based upon the notice of termination, the first defendant pulled out of the settlement. On 17 March 2022, the plaintiff issued a notice of default to the first defendant. That notice said the plaintiff was ready, willing and able to settle and required the first defendant to settle within 10 days. On 18 March 2022, the first defendant issued a further notice of termination. This document referred to the 2021 Contract. Clearly it was issued for the express purpose of terminating the 2021 Contract if it was found the purported notice of termination of 28 February 2022 was of no force and effect. It was the plaintiff's position that, having by that time issued its own notice of default, it was not possible for the first defendant by the notice of termination dated 18 March 2022 or otherwise to terminate the contract.
During the course of their submissions, I put to counsel the real question for determination in this case was whether it was arguable that neither the notice of termination of 28 February 2022 nor the notice of termination of 18 March 2022 was effective. Both counsel agreed these were the two crucial issues. It must be emphasised it was not for me to make a final decision on the issues. What I have to determine is whether or not there is a serious question to be tried.
It is convenient at this point to outline the legal principles which apply to a case such as this. Under s 137(1) of the Transfer of Land Act, any person claiming an estate or interest in land may lodge a caveat. Under s 138(1) once a caveat is lodged the registered proprietor of land is prevented from dealing with the property. Any proprietor who is of the view the caveator does not have an interest in land which would justify lodging a caveat may, under s 138B(1), ask the registrar to serve notice on the caveator that unless within 21 days the caveator seeks an order from the court the caveat will lapse. Under s 138C(2) the operation of the caveat can be extended if an order is obtained from the Supreme Court. Section 138C deals with the Supreme Court's powers on application by a caveator. It reads as follows:
138C . Supreme Court’s powers on application by caveator
(1) A caveator who is served with a notice under section 138B(1) may apply to the Supreme Court, in accordance with rules of the court, for an order extending the operation of the caveat.
(2)On the hearing of an application under subsection (1), the Supreme Court —
(a)if satisfied that the caveator’s claim has or may have substance —
(i)may make an order extending the operation of the caveat for such period as is specified in the order; or
(ii)may make an order extending the operation of the caveat until the further order of the court; or
(iii)may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;
and
(b)if not satisfied that the caveator’s claim has or may have substance, shall dismiss the application; and
(c)may make such ancillary orders in relation to the application as it thinks fit.
(3)An interim order under this section may be made ex parte unless the court orders otherwise.
(4)The applicant shall ensure that the Registrar is served with a copy of each order made by the court on an application under subsection (1).
Under s138C(2)(a) the making of an order is dependent upon the court being satisfied the caveator's claim 'has or may have substance'. The authorities have interpreted this provision to mean it is for the caveator to establish there is a serious question to be tried - the test which applies to interlocutory injunctions. There is no mention in s 138C(2) or elsewhere in that section of the balance of convenience - the second aspect of the test for granting an interlocutory injunction. It has generally been assumed that the discretion undoubtedly contained within the subsection allows the balance of convenience to be taken into account.
The proper approach to an application for extension of a caveat now appears to be well settled. The leading authority is the decision of the Full Court in Custom Credit Corporation Limited v Ravi Nominees Pty Ltd (1992) 8 WAR 42. Owen J (as his Honour then was) cited with approval what was said by Rowland J in Porter v McDonald [1984] WAR 271. His Honour said:
In Porter v McDonald [1984] WAR 271, this Court considered the approach to be taken to an application for removal of a caveat. Rowland J, with whom Burt CJ agreed, said (at 276):
"The practice with respect to the removal of caveats is one of long standing. The caveat will not be removed unless the claim to an estate or interest in the land appears to be without foundation. The courts will not, except in the most exceptional case, decide the matter on summons … It is also true that in more recent cases courts have indicated that in the exercise of discretion they will have regard to matters that would be relevant to an application for an interim injunction: see Martyn v Glennan[1979] 2 NSWLR 234; Re Clement's Caveat [1981] Qd R 341; Re Jorss' Caveat [1982] Qd R 458. In all those cases the issue is whether the plaintiff or the caveator had an enforceable or existing interest in the land. The Privy Council recently in Eng Mee Yong v Letchumanan[1980] AC 331 said (at 335):
'The caveat under the Torrens System has often been believed to be a statutory injunction of an interlocutory nature restraining the caveatee from dealing with the land pending the determination by the court of the caveator's claim to title to the land in an ordinary action brought by the caveator against the caveatee for that purpose. Their Lordships accept this as an apt analogy with its corollary that caveats are available in appropriate cases for the interim protection of rights to title to or registrable interest in land that are alleged by the caveator but not proved'.
At 341 they reiterated the old rule ‘in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit'."
In Southern Rolled Oats Pty Ltd v Bride (unreported, Supreme Court, WA, Library No 7552, 9 March 1989), Malcolm CJ quoted this passage, with approval, and went on to say:
“As a result of the analogy to which their Lordships [in Eng Mee Yong] referred, in the exercise of the discretion whether or not to cause the caveat to be removed or to remain pending resolution by proceedings, the courts have taken into account those matters that would be relevant to an application for an interlocutory injunction … "
Porter v McDonald(supra) was a case where the caveatee did not dispute the validity of the interest in the land which the caveator claimed. The caveatee contended that he had an independent claim for damages and could raise an equitable set off which would extinguish the caveator's claim. Removal of the caveat was refused. In Southern Rolled Oats Pty Ltd v Bride(supra) the court decided that the caveator had not raised “a vestige of an arguable case" to support the existence of a caveatable interest. Eng Mee Yong v Letchumanan (supra) was also decided on the non-existence of a caveatable interest.
Having adopted this statement of principle, and reviewed a number of other authorities, his Honour went on:
The point which I have decided in this appeal is not determined by this review of the authorities. However, the review does demonstrate that although considerations relevant to an interim injunction are applicable, they may not necessarily be used in the same way. In relation to a caveat the question has to be decided bearing in mind the peculiar statutory context.
In my opinion, the balance of convenience is a factor to be considered in an application under s 138. However, it seems to me that interlocutory removal of a caveat where an arguable case as to the existence of the caveatable interest has been demonstrated, will be unusual. It is important to bear in mind the nature and purpose of a caveat under the Torrens System. By its very nature, a caveatable interest must be a proprietary interest in land. The purpose of the caveat is to restrain the registered proprietor from dealing with the land in a way which will defeat or derogate from the incidents attaching to that proprietary interest until the respective rights of the parties have been honoured (if there is agreement) or determined (if there is disagreement). In many cases, removal of the caveat will have the effect of destroying for all practical purposes, the benefit of the proprietary interest. For example, a creditor, having a specific security interest in land, will rant as an unsecured creditor once the property, the subject of the specific security, no longer exists. This will often be the result of removal of a caveat which permits the registered proprietor to sell the property free from any practical obligation to account to the secured creditor for the proceeds of sale.

The Custom Credit decision and other authorities do make it plain the question of the balance of convenience may not be as relevant to determining whether or not a caveat should be maintained as might be the case when an application is made for an interlocutory injunction. Nonetheless, the balance of convenience can be taken into account in determining the application. As will be seen from these reasons the balance of convenience has played a part in my determination of the issues arising between the parties.
The fact that the application is to extend a caveat - a form of statutory injunction - cannot obscure the fact it is for the caveator to establish there is a serious question to be tried. This matter was considered by the Court of Appeal in Perron Investments Pty Ltd v Tim Davies Landscape Pty Ltd [2009] WASCA 171. For present purposes, it is unnecessary to detail the facts in that case. It is sufficient to say one of the arguments put by the appellant was that there was no serious question to be tried and, as such, the extension of the caveat which I had granted was unwarranted. In the course of his reasons Newnes JA (with whom Pullin JA agreed) quoted with approval the Custom Credit decision. His Honour then went on:
42Those principles, however, must now be understood in light of the decision of the High Court in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 82 so that the existence of a serious question to be tried involves showing 'a sufficient likelihood of success to justify in the circumstances the preservation of the status quo' pending trial. How strong the likelihood of success needs to be depends upon the nature of the rights asserted and the practical consequences likely to flow from the order sought.
43In that context, it is important to bear in mind, as Owen J (as his Honour then was) pointed out in Custom Credit (50) that the purpose of a caveat is to prevent the registered proprietor from dealing with the land in a way which will defeat or derogate from some other proprietary interest in the land, and that in many cases removal of a caveat will have the effect of destroying for all practical purposes the benefit of that proprietary interest.
44The potential seriousness of the consequences of refusing relief must not, however, distract attention from the obligation that lies on a party seeking to maintain a caveat to show a sufficient likelihood of success to justify in the circumstances the maintenance of the caveat. A party who fails to show any likelihood of success does not overcome that by showing that they would suffer very severe consequences if relief were refused.
There was no dispute between the parties as to the principles which I have outlined above. It was the plaintiff's position there was a serious question to be tried and the balance of convenience favoured extending the caveat. The first defendant took the opposite view - perhaps placing more emphasis on the balance of convenience than is usual in cases such as this.
The first question to be determined is whether or not the notice of termination dated 28 February 2022 was effective. The starting point in that enquiry is the terms of the contract governing the parties' relationship. It was common ground the 2021 Contract incorporated the 2018 General Conditions 'Joint Form of General Conditions for the Sale of Land'. Clause 23 of the joint conditions deals with 'default notice'. It reads as follows:
23. Default Notice
23.1 Requirement for Default Notice
Neither Party may terminate the Contract as a result of the other Party's default nor may the Seller forfeit any money paid by the Buyer or retake possess!on of the Property because of the default of the Buyer, unless:
a)the Non Default Party gives a Default Notice to the Default Party; and
b)the Default Partyfails to remedy the default within the time required under the Default Notice.
23.2.No limit on right to issue further Notice
The giving of a Default Notice under clause 23.1 does not prevent the Non Default Party from giving a further Default Notice,
23.3No Default Notice required for repudiation
Clause 23.1 does not apply if the Default Party repudiates the Contract.
The effect of clause 23 is that it is a prerequisite to the vendor taking action under clause 24. Of course, if a default notice is given, and the default is remedied, no further rights (at least with respect to termination of the contract) accrued to the vendor. But if the default is not remedied then the vendor can take action. Relevantly, clause 24.1 ‑ 24.3 read as follows:
24.1 Buyer Default
If the Buyer:
a) is in default under the Contract and has failed to comply with a Default Notice; or
b) repudiates the Contract,
the Seller has each right in clause 24.2, In addition to any other right or remedy of the Seller.
24.2 Seller right on default or repudiation
If clause 24.1 applies, the Seller may:
a)affirm the Contract and sue the Buyer for damages for default;
b)affirm the Contract and sue the Buyer for:
(1)specific performance of the Contract; and
(2) damages for default In addition to or instead of specific performance;
c) subject to clause 23.1, retake possession of the Property;
d) subject to clause 23.1, terminate the Contract by Notice to the Buyer, but only if the Default Notice given under clause 23.1 Includes a statement that if the default Is not remedied within the time specified !n the Default Notice, the Contract may be terminated; or
e)if the Buyer repudiates the Contract, terminate the Contract by Notice to the Buyer.·
24.3 Further Seller right on termination
If the Seller terminates the Contract under clause 24.2 (d) or 24.2(e), the Seller may, subject to the further- provisions of this clause 24, elect to exercise any one or more of the following:
a)forfeit the Deposit;
b)sue the Buyer for damages for default;
c)resell the Property.
In this case, the first defendant as seller has purported to act under clause 24.2(d). That subclause requires the seller to give 'Notice' to the buyer of the termination of the contract. Clause 21.1 deals with 'Requirements for Notice'. It reads as follows:
21.1 Requirements for Notice
A notice to be given under the Contract must be:
(a) In writing; and
(b)In the English language; and
(c) Signed by the Party giving it or that Party's Representative.
This clause only specifies in very general terms what must be contained in any 'notice' - whether that notice is, or purports to be, a notice of default or a notice of termination. On the face of it at least, the notice of 28 February 2022 complied with the requirement of clause 21.1 - it was in writing, it was in the English language and it was signed by the party giving the notice. It specified the default which was alleged to have given rise to the right to terminate. It must have been clear to the plaintiff it was the 2021 Contract which was being terminated. I say this for two reasons. First, the 2019 Contract had been terminated and there could be no suggestion of any misunderstanding on this issue. So when the plaintiff read the notice of termination, the immediate response would be the intent was to terminate the 2021 Contract and a mistake had been made in the notice of termination and the reference was to the 2019 Contract. This leads to the second point. Nowhere in Mr Fiore's affidavit is there a suggestion that he was confused about the intent of the notice of termination. The plaintiff had long been in default under the 2021 Contract and had been put on notice by the first defendant that termination of a contract was possible based upon the default. There is no suggestion of any injustice being visited upon the plaintiff as a consequence of the defendant's errors in the notice of termination.
On that basis, I am satisfied the notice of termination dated 28 February 2022 was effective and brought to an end the 2021 Contract. I am not satisfied there is a serious question to be tried on this issue.
That then leads to the question of whether the notice of termination of 28 February 2022 was ineffective because it was based on a 'stale' notice of default. The notice of default relied upon in the termination notice of 28 February 2021 was dated 31 August 2021. Thus a period of almost exactly six months had passed between the issue of the default notice and the notice of termination. Without going through the evidence, I would accept during that six month period, settlement was arranged on a number of occasions but, of course, settlement did not proceed. It is the plaintiff's position the notice of default was 'stale' and could not ground a notice of termination. Nothing in the joint conditions supports that submission. I have set out the sequence above. A default notice must be served on a buyer before the contract can be terminated. Under clause 23.2 the default notice must specify a time within which the default is to be rectified. If the default is not rectified within that time then the right to issue a notice of termination arises. There is no temporal limitation in the joint conditions on the time within which the notice of termination is to be given. It would have been open to the parties to specify such a time - for instance, there might have been included as a special condition a provision that if a notice of termination is not issued within six months of the failure to comply with a default notice then the right to terminate is lost. There was no such condition.
During the course of his submissions, I put to counsel for the first defendant that it was possible an estoppel might arise after the issue of a default notice, which would make the issue of a notice of termination unconscionable. If there had been a representation by the seller perhaps to the effect a notice of termination would not be issued if the buyer paid land tax on the property and the buyer did pay the land tax the requirements for estoppel, being a representation and detrimental reliance upon that representation, would be satisfied. But that was not this case. No estoppel, based upon the conduct of the parties between the issue of the default notice and the issue of the notice of termination, was alleged.
In support of his submission, counsel for the plaintiff relied upon the decision of Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] 128 FCR 1, in particular at [356] to [364]. With respect, the Marconi Systems case generally and the paragraphs to which counsel referred do not, in my view, support his submission. In this section of what is a very long judgment, his Honour was dealing with when it can be said a contract is affirmed by election. He set out the basic principle in the following paragraph:
A right of election arises when a state of affairs comes into existence which enables a person to exercise alternative and inconsistent rights against another, for example, the right to terminate a contract for breach or repudiation and the right to insist on performance of the contract: Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 655. When 'confronted' with such a choice that person is required to elect which of the mutually exclusive courses of action he or she wishes to take: Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 41; Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India [1990] 1 Lloyds L Rep 391 at 398. [356]
This is not a case of election. And indeed, that was not the basis upon which counsel put his submission. Election arises when a party is in the position of having to choose one of two inconsistent courses. For instance, in this contract if the joint conditions were differently worded if a buyer failed to rectify a default as required by a notice of default, the contract could have specified the vendor could either choose to proceed with the contract or terminate the contract. In other words, the vendor could have been contractually bound to choose one or other of those alternatives. But that is not the way this contract is worded. On a failure to comply with a default notice, the seller has the right, but not the obligation, to terminate the contract. The mere flux of time does not erode the seller's position because there is no temporal limitation in the contract itself. In those circumstances, the notice of default has not gone 'stale' and the first defendant was entitled to rely on the August 2021 notice of default to terminate the contract. There is no serious question to be tried on this issue.
That really disposes of the plaintiff's claim. However, I should mention two other matters briefly. First, I can see no reason why the first defendant could not terminate the contract after the plaintiff had issued its notice of default. There is nothing in the terms of the joint conditions which prevent a seller relying on a purchaser's failure to comply with a default notice even if that default notice was issued after the buyer had issued its own default notice. The position would not have been any different had the buyer tendered the deposit and provided to the vendor proof it was ready, willing and able to settle at the vendor's convenience. That is because a failure to comply with a notice of default provides the seller with a right to terminate the contract and a subsequent compliance by the buyer with the default notice is of no consequence. Accordingly, even if the notice of termination of 28 February 2022 was not effective, the subsequent notice of termination was effective. Again, I see no serious question to be tried on this issue.
The final point has to do with the ability of the plaintiff to settle the sale. It was the first defendant's position the plaintiff was never able, even if it was ready and willing, to settle this transaction. When that argument was put by counsel for the plaintiff in his written submissions the plaintiff filed a further affidavit of Mr Fiore sworn 20 April 2022. The affidavit has as part of attachment JF19 a terms sheet from a commercial lender INVESTOR HQ. It is the only document which gives any indication the plaintiff may have been able to settle this transaction. However, it is in its terms entirely unsatisfactory. Without going through the limitations in detail, one of the provisions specifies the 'maximum LVR (loan to valuation ratio)' as 75%. The total loan amount is said to be $18 million. That means for the loan to proceed the plaintiff would need to have satisfied the lender the property had a value of around $24 million. There is no evidence at all that is the case. I would accept the first defendant's submission that there is no evidence the plaintiff was able to settle, either consistent with its default notice or otherwise. Whether this inability to settle is considered as part of the serious question to be tried or whether it goes to the balance of convenience is not a question which needs to be answered. Either way it stands against the granting of an extension of the caveat.
It is worthwhile, in conclusion, to stand back and look at what has occurred in this case. The plaintiff (and its predecessor) have made cash offers for a very valuable property when they did not have the available funds to make good their bargain. They were given numerous opportunities to rectify the position but did not do so either with respect to the 2019 Contract or the 2021 Contract. Now they come to the court seeking an extension of a caveat to protect rights they allegedly have which they have never been able to exercise in the past. Given the grant of injunctions these days are ubiquitous, and it may not be correct to say injunctions are strictly a form of equitable relief, particularly when a caveat is involved. It is nonetheless reasonable to expect an applicant to come to the court with clean hands. This plaintiff has repeatedly defaulted on its contractual obligations. It has done so without explanation and without just cause. To now extend a caveat which would effectively prevent the first defendant dealing with its own property is unreasonable. The balance of convenience favours the first defendant.
The plaintiff's application will be dismissed. I will hear the parties as to the form of orders and as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Associate
26 APRIL 2022