Fraser v Viccars
[1998] VSC 165
•11 December 1998
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION
Not Restricted
No. 4029 of 1996
MARSDON HOWARD FRASER and Plaintiffs LINDA BARBARA FRASER v JOHN LESLIE VICCARS and ORS Defendants
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JUDGE: Mandie, J. WHERE HELD: Melbourne DATE OF HEARING: 8-11, 14-18, 22-25 September 1998 DATE OF JUDGMENT: 11 December 1998 MODE OF CITATION: Fraser v Viccars MEDIA NEUTRAL CITATION: [1998] VSC 165
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CONTRACTS - vendor and purchaser - whether misrepresentations induced purchasers to enter terms contract for sale of land - terms contract - non-compliance with s. 6 Sale of Land Act 1962 (Vic) where land subject to mortgage not relating only to land sold - whether contract attracted provisions of s.6(4) Sale of Land Act.
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APPEARANCES: Counsel Solicitors For the Plaintiff Mr G.A. Hardy Birch Ross & Barlow For the First Defendant In person For the Second Defendant In person For the Third Defendant Mr R. Phillips Macpherson & Kelly
HIS HONOUR:
In this proceeding the plaintiffs seek to establish that they have effectively rescinded or avoided a terms contract for the sale of land under which they had agreed to purchase a farm property at Hunters Road, Woodleigh Vale in South Gippsland (“Lot 2”). In brief, the grounds of rescission or avoidance relied upon are misrepresentations by the vendor and non-compliance with the Sale of Land Act 1962. In addition, the plaintiffs claim damages in deceit. The fraudulent misrepresentations alleged to have been made to the plaintiffs, as pleaded, are that “the land comprised an operating dairy farm”, that the farm was a “cow to the acre” property, that the land had “a good superphosphate history” and that there were “a few weeds down the back”.
In or about October 1987 the first defendant (“Mr Viccars”) purchased the land comprised in Certificate of Title Vol. 6097 Fol. 379, containing some 152 acres, being part of Crown Allotment 29 Parish of Jumbunna County of Mornington. Mr Viccars became registered as proprietor of the land on 4 December 1987. A mortgage to Commonwealth Development Bank of Australia (“the Mortgagee”) was registered on 11 December 1987. On 8 December 1989 Mr Viccars became registered as proprietor of an adjoining area of land purchased from N.W. and L.J. Goodwin. A mortgage to the Mortgagee was registered on 14 September 1990 (No. R2451N - “the 1990 Mortgage”). As a result of a plan of consolidation of these two pieces of land, a new Certificate of Title issued on 1 November 1990, Vol. 9986 Folio 020, showing Mr Viccars as the registered proprietor of the combined area, being those parts of Crown Allotments 29 and 29A shown on the map annexed to the title. The 1990 Mortgage was registered on this title as an encumbrance. Later, that land was in turn re- subdivided by a two-lot Plan of Subdivision under which a smaller two hectare allotment (Lot 1) was created leaving the balance of the land (83.08 ha) in Lot 2. Two new titles issued to Mr Viccars on 22 January 1992. Lot 2 was comprised in Certificate of Title Vol. 10052 Fol. 569 and Lot 1 in Certificate of Title Volume 10052 Folio 568 - the 1990 mortgage was registered as an encumbrance on both titles.
Since about 1987, Mr Viccars and the second defendant, Heather Jeanne Sneddon, had been known in the area as “Mr and Mrs Viccars” (apparently they had been living together as husband and wife for some years). They separated in 1993 and she married a Mr John Knorr in 1994 - it will be convenient to refer to her throughout this judgment as “Mrs Knorr”. During most of the period from about 1987 to May 1993, Mr Viccars and Mrs Knorr operated Lot 2 as a dairy farm.
On 7 October 1991 a charge in favour of the Department of Conservation and Environment was registered on the title to Lot 2. (The Department has gone through a number of name changes in the time covered by this proceeding and, for convenience, I will simply refer to it, and to its Director-General, as “the Department”.) The charge was expressed to arise and was noted on title as arising under s.20 of the Vermin and Noxious Weeds Act 1958 (an Act since repealed). This charge had arisen in the following way. In January 1989 and again in December 1989, the Department gave notices to Mr Viccars as owner and occupier of Lot 2, under s.13 of the Vermin and Noxious Weeds Act, requiring him to destroy and suppress noxious weeds growing on the property, namely “ragwort”, and to keep the land free of weeds for six months after the service of the notice. In addition, shortly after giving each of those notices the Department issued an “authority to enter” under the Act authorising an officer to enter Lot 2 in order, in effect, to deal with the ragwort problem. The Department entered the land in 1990 and sprayed the ragwort at the agreed cost of $1500 for the labour, chemicals and equipment.
On 29 October 1990, after some earlier communications concerning non-payment of the sum of $1500, Mrs Knorr wrote to the Department as follows:
“Further to our telephone conversation on 25/10/90, I would like to reiterate
the following facts.
We settled for the property in question in late October 1989. The first week in November we received a visit from staff at Wonthaggi and John [Viccars] implemented a spraying program over the ensuing months. On 24th December we received a notice, and John still kept spraying as much as he possibly could with a dairy herd and a beef herd to run. However, as we now realize it was impossible to reverse the neglect of both the previous owner and the department for not forcing him to comply with spraying and controlling ragwort for the previous ten years.
Therefore, the department said that it was impossible for one man to do the work in the time stipulated, they were going to “force entry”.
...
After a meeting on the property we agreed to $1500.00 but I told the officers concerned we could not possibly pay in 30 days.
Financially things are even worse at this stage, as no doubt you realize and we are not able to pay now as was are struggling to even keep going.
The rural scene certainly has taken a battering with lower milk prices, and higher costs. We received $20,000 less in income in the last financial year.
We will pay, as we have never reneged on a debt and never will, however we are unable to at this stage.
I can offer you $100 per month, more as we can afford it, and must state unequivocally that under no circumstances do we wish to have the debt registered against the title.
If the method of payment is not acceptable, and the debt is registered against the title, we shall have no alternative but to take the matter further, regarding the harassment beginning one week after buying the block.
I regret that all of this unpleasantness has occurred and hope that with hind- sight it never does again... P.S. we had no idea the ‘pretty’ flowers were such a dreadful weed, when we bought the block they were invisible.”
In January 1991, Mr Viccars was served with a further notice to destroy and suppress ragwort by the Department and Mrs Knorr signed a receipt for the notice.
By letter dated 28 May 1991 the Department replied to Mrs Knorr’s October 1990 letter as follows:
“I refer to your correspondence of 29 October 1990. I apologize for the delay in replying, however I understand that further discussion on the issues addressed in your correspondence have been occurring with local Departmental staff.
The debt of $1,500 still remains for the work previously undertaken. At this stage, I have no alternative but to seek payment of that amount within 30 days of the above date. If payment is not received in that time, the Department will have the debt registered against the title of the property.
You may undertake to repay the debt at your suggested rate of $100 per month until the debt is fully repaid. When repayment has been completed the Department will arrange the discharge of the charge against the Certificate of Title. Any costs associated with registration and discharge are to be met by you and Mr Viccars. The monthly payment agreement must be made with me within 30 days of the above date.
If either the payment of $1,500 or an agreement to pay the registered debt on a monthly basis is not made within the 30 days, the debt will incur interest from that date at the present rate of 15.0%, calculated daily.
I am pleased to hear from local staff that you have been successfully undertaking a ragwort control program under their guidance, and making some progress with your weed problem.”
On 19 January 1993 the Department hand-delivered to Mrs Knorr a further notice addressed to Mr Viccars requiring the destruction and suppression of ragwort found growing on Lot 2, such work to be completed by 2 February 1993 and requiring the land to be kept free of the weeds for six months after service of the notice. Due to poor health, Mr Viccars stopped dairy operations in May 1993 and at about that time obtained employment in Melbourne and took up residence in the metropolitan area.
In or about mid-September 1993 the first plaintiff (“Mr Fraser”) learned by chance that Lot 2 was for sale and had a conversation (“the first conversation”) with Mrs Knorr outside the farm house on Lot 2 in which she was by that time living alone. Mrs Knorr told Mr Fraser, in answer to his enquiry, that Lot 2 was for sale for the sum of $395,000. Mr Fraser testified that he asked Mrs Knorr if the dairy shed was operational and that she replied that it was fully operational and had a milk licence. She added that they had been milking but that they had ceased milking “some time prior” or some months before. Mr Fraser further swore that she told him that the property consisted of 205 acres and would carry a cow to the acre. Mr Fraser testified that at that time she also said to him that there were a “few weeds down the back”. Mr Fraser further testified that at that time Mrs Knorr said to him that the property had a good fertiliser history and had been fertilised each year for the previous eight years.
At that stage, Mr Fraser lived in Langwarrin and was self-employed as the owner- driver of a truck and carrying on a cartage business. He was also running beef cattle on a nearby farm property (“the turn-out block”) which he was purchasing for some $240,000 under a terms contract entered into in about September 1992. Mr Fraser had always had ambitions to become a dairy farmer as he told Mrs Knorr. He returned home, discussed his plans with his wife and did some computer spreadsheet calculations and projections in relation to a proposed dairy farming business on Lot 2.
He based his projections on half a cow to the acre, he testified, rather than a cow to the acre, to give him “plenty of land up [his] sleeve for production”, his plan being to have more feed for fewer cows and thus to have higher milk productivity per cow - namely 240 kg of butterfat per cow per annum, as against the Victorian average of 180 kg. Mr Fraser concluded that with a relatively small herd for the farm he would make “quite a respectable income”.
Mr Fraser again visited Lot 2 in early October 1993 although he did not make a detailed inspection of the land or its improvements. He observed that the property was undulating, the more accessible area extending from the road and the farm house (“the northern area”) - this area had reasonably good pasture although fairly short (about five inches high), and appeared to have been heavily grazed. Broadly speaking, the land ascended from the northern area to the brow of a hill and then sloped away more steeply to the south (“the southern slopes” or “down the back”). Mr Fraser observed from the brow of the hill that the southern slopes had long rank pasture (about 18 inches high) and some blackberries. On the top of the hill Mr Fraser observed a couple of ragwort “rosettes” (ragwort in its initial stages of growth).
According to Mr Fraser’s evidence (in examination-in-chief), Mr Fraser said to Mrs Knorr, in some conversation with her, that there were a couple of ragwort rosettes on the hill to which she replied that there were “a few weeds down the back”. This conversation, Mr Fraser said, occurred shortly after his inspection in early October 1993 and after having decided to make an offer to buy Lot 2 during a meeting at the farmhouse between himself, Mrs Fraser, Mr Viccars and Mrs Knorr one Saturday night in early October 1993 (“the Saturday meeting”). At the Saturday meeting, the Frasers offered to buy Lot 2 for $395,000 on a deposit of $100,000 and the balance on unspecified “vendor terms” and this offer was accepted. Mrs Knorr then said to Mr Fraser, apparently in the presence of Mr Viccars “to do all dealings with her”. She suggested that the Frasers “get [their] cows and get in there as quick as possible”. (In the first conversation, Mrs Knorr had said to Mr Fraser that Mr Viccars was rarely there and that the money which had bought Lot 2 had been hers.)
I note that although Mr Fraser said in examination-in-chief that the statement about “a few weeds down the back” was made by Mrs Knorr at the Saturday meeting, in cross-examination Mr Fraser testified that Mrs Knorr had made that statement in the first conversation. He was however unable to say what, if anything, he had said in the first conversation which prompted Mrs Knorr to make such a statement on that occasion. Further, Mr Fraser vacillated in his evidence as to whether his visit to the property and sighting of the rosettes of ragwort was before or after agreeing on the price at the Saturday meeting. Ultimately, as I understood it, his evidence was that his visit to Lot 2 and sighting of the rosettes was on the previous Tuesday. I also note that in cross-examination Mr Fraser contradicted another part of his evidence- in-chief when he swore that the representations by Mrs Knorr about a “good fertiliser history” were made at the Saturday meeting (and not in the first conversation) in response to a question he had asked as to what “sort of amounts of fertiliser had been put on”. He later said that he could not recollect in which conversation this representation had been made. However, in an affidavit sworn in November 1996 in this proceeding (“the Fraser affidavit”), which was put in evidence by the first defendant, Mr Fraser had sworn that it was in early October 1993 that Mrs Knorr said to him that the land had a good superphosphate history over the last three years and had been superphosphated every year.
The parties agreed at the Saturday meeting that the “paperwork” would be done later, so no contract or contract note was signed immediately. The financial details of the terms contract were not agreed at the Saturday meeting and there was no evidence of a firm agreement, and certainly not a binding agreement, until exchange of contracts on 17 January 1994. The evidence does not disclose how the financial terms were negotiated but I would infer that it was done through the solicitors for the parties.
In or about late October 1993, Mr Fraser arranged to buy a dairy herd consisting of 92 cows. On 7 - 8 November 1993, with the consent of Mr Viccars and Mrs Knorr, the Frasers moved into a caravan on Lot 2 (pending Mrs Knorr vacating the house which occurred in early December) and they also moved their new herd onto Lot 2.
Mr Fraser found that the dairy plant and equipment did not work in a number of respects which required immediate repairs at a cost of some $1250. The dairy was made operational from 8 November 1993.
On or about 22 November 1993, at the request of Mr Fraser, representative soil samples were taken by Mr Fletcher, a field officer employed by an agricultural fertiliser and chemicals supplier, from the northern area of Lot 2 and sent off for analysis. A report from Pivot Agricultural Laboratory Services Pty Ltd dated 21 December 1993 (“the Pivot report”) found that the area sampled was low and deficient in phosphorus and marginal for potassium. The Pivot report recommended that the pasture be topdressed with specified fertiliser and trace elements “as soon as possible” and recommended annual further applications “for the next couple of years”. Mr Fraser testified that he received the Pivot report in late December 1993 or early January 1994 and “quickly looked at it and put it away in the bottom of a filing cabinet”. He said that he put it away because “he did not need to decipher it until a later day” and “I put fertiliser on in autumn and spring, not in summer”. Mr Fraser said that he did not read the Pivot report until March or April 1994 nor, upon receipt, did he appreciate or note the recommendations contained in it but rather he “put it in a cupboard” after “quickly looking” at it.
By late November - early December 1993, Mr Fraser said that he became aware for the first time that ragwort was present on the southern slopes of Lot 2 “in a reasonable amount”. He said that he had not previously inspected this area due to its relative inaccessibility and the ragwort was, before flowering, not readily visible in the long pasture. Some of the ragwort plants which he saw were two feet or more in height. Mr Fraser was concerned and shortly thereafter commenced spraying the ragwort on the southern slopes.
Further, in late 1993, an officer from the Department’s Wonthaggi office, one Mark Hayes, paid a number of visits to Lot 2 and inspected the southern slopes in company with Mr Fraser.
Mr Hayes said that he made two or more inspections of Lot 2 in spring - summer 1993. He met Mr Fraser on the first of these inspections, which I would infer was in early November 1993. He introduced himself to Mr Fraser upon arrival at the property. Mr Hayes said that Lot 2 was heavily infested with ragwort on the southern slopes at the time of this first inspection. The ragwort was at the stage of “rosettes and cabbages” (prior to flowering) and was clearly visible. Mr Hayes told Mr Fraser that the property had had a problem with ragwort for a number of years in the past and that notices had been served on the previous owner in the past. Mr Hayes asked Mr Fraser whether he was aware that there was a weed problem on the property and Mr Fraser indicated that he was. At all relevant times Mr Fraser knew that ragwort was a noxious weed which ought to be destroyed, he knew what ragwort looked like and he was familiar with the various stages it went through before flowering.
According to Mr Hayes, by early to middle December 1993 (prior to 21 December 1993) Lot 2 was heavily infested with flowering ragwort. There were large numbers of flowering plants on the southern slopes, covering probably 50 percent of the total area of Lot 2. Mr Hayes observed Lot 2 in this condition on an inspection at that time and he was accompanied by Mr Fraser during the inspection.
I accept the evidence of Mr Hayes as summarised above.
Mr Fraser himself said in evidence that the ragwort plants ranged in height from six inches to three feet prior to Christmas 1993. On or shortly prior to Christmas Eve, the Frasers were served with a notice from the Department signed by Mr Hayes dated 21 December 1993 whereby the Department required them to destroy and suppress the noxious weeds, ragwort, on Lot 2 by 5 January 1994. Mr Fraser knew at the time of receiving the notice that the Department had the power to forcibly enter and do the work itself at the owner’s expense. Mr Fraser admitted, as was obvious, that he knew that there was a ragwort “problem” on Lot 2 before he signed the contract and I am satisfied that he also knew it had been a problem for a number of years.
Mr Fraser’s awareness of the presence of ragwort on Lot 2 is further evidenced by his purchases of weedicides and other materials used in the spraying of ragwort in late November 1993 and early December 1993. Mr Fraser gave evidence that he and his wife spent many hours spraying ragwort on Lot 2 in December 1993 and January 1994 and that they were assisted by various relatives and a friend Derek Keith Button. A chart prepared by Mr Fraser and explained by him showed that Mr Button spent a total of 40 hours spraying ragwort from 21 to 24 January 1994.
Mr Button gave evidence that his spraying work was carried out in late January 1994 and that he spent four days, approximately 12 hours per day, spraying ragwort. I am satisfied, on the basis of Mr Fraser’s records, that the spraying by Mr Button was from 21 to 24 January 1994. Mr Button gave evidence that, at the time of the spraying, the ragwort infected about 50 percent of the property and was in flower and ranged in height from waist high to chest high.
Mr Viccars and the Frasers had each instructed solicitors (the Frasers had done so in October 1993) and on or about 17 January 1994 the Frasers attended their solicitors’ office. Mr Fraser read the proposed contract and he and his wife both signed it. Shortly thereafter signed contracts were exchanged between solicitors. The deposit was paid. The contract price was $395,000 payable by a deposit of $39,500 on the signing thereof, an instalment of $60,500 on 28 January 1994 and the residue of $295,000 on 29 November 1995. The contract made provision as to payment of interest. The contract provided for vacant possession to be given upon acceptance of title and payment of the deposit and instalment totalling $100,000. It will be necessary to later refer to other provisions of this contract. Annexed to the contract was a copy of a vendor’s statement pursuant to s.32 of the Sale of Land Act. The s.32 Statement referred to and contained a copy of the Department’s registered charge. Mr Fraser noticed the information concerning the charge which (he said) he believed at the time “was a charge that was put on there by a government department and had to be paid out of the purchase moneys before the thing could be settled”.
On or about 28 January 1994, the Frasers paid the instalment of $60,500 subject to adjustments which were made as at 7 November 1993.
The breakdown of the de facto relationship between Mr Viccars and Mrs Knorr led to a property dispute. Mrs Knorr instituted proceedings against Mr Viccars in this Court by writ dated 20 May 1994 seeking relief under Part IX of the Property Law Act 1958 and claiming, inter alia, a 4/5th beneficial interest in Lot 2. The proceeding was settled in early August 1994. As part of the settlement, Mr Viccars agreed to transfer to Mrs Knorr his interest in Lot 2 and to assign to her the benefit of the contract of sale with the plaintiffs. In the meantime, she had married John Knorr on 26 June 1994.
In about mid-August 1994, Mrs Knorr called on the plaintiffs at their farmhouse on Lot 2 and produced to them a Deed of Assignment. The Deed was headed “Assignment of Vendors Rights under Terms Contract with Consent of the Purchasers”. Mrs Knorr asked the plaintiffs to sign and they did so under seal next to the words “signed sealed and delivered .... in the presence of”. A witness also signed. I am satisfied that the Frasers understood what they were signing. (This finding has no relevance having regard to my decision on other matters but might otherwise have been relevant to arguments put by the third defendant.) The Deed, dated 19 August 1994, (“the first Deed of Assignment”) was made between Mr Viccars, Mrs Knorr and the plaintiffs. In its recitals, it referred to the terms contract dated 17 January 1994 (of which a copy was annexed), to a settlement agreement between Mr Viccars and Mrs Knorr made on 5 August 1994 in relation to the Supreme Court proceeding between them and to the principal sum of $295,000 due to Mr Viccars by the plaintiffs on 29 November 1995 with half-yearly interest payments of $13,275 due on 29 November 1994, 29 May 1995 and 29 November 1995. By paragraph 1 of the first Deed of Assignment, Mr Viccars assigned his interest in the terms contract and in Lot 2 to Mrs Knorr. By paragraph 2 Mrs Knorr covenanted to perform and observe the terms contract. By paragraph 3 Mr Viccars warranted that the terms contract was a valid and subsisting contract capable of being performed and completed and that he was not in default thereunder. By paragraph 4 the plaintiffs consented to the assignment, covenanted with Mrs Knorr to perform and observe the terms contract and released Mr Viccars from his contractual obligations thereunder.
In or about early September 1994 Mrs Knorr negotiated to sell her interest in the terms contract to the third defendant, St. Margaret’s Endowment Fund Limited (“St. Margaret’s”). By letter faxed and dated 28 September 1994 St. Margaret’s solicitors (Macpherson & Kelly) advised the plaintiffs’ solicitors (Birch Ross & Barlow) as follows:
“We advise that we act on behalf of St Margarets Endowment Fund Ltd.
We confirm that you act on behalf of Marsdon Howard Fraser and Linda Barbara Fraser as purchasers pursuant to a contract of sale dated the 17th January, 1994 with John Viccars as Vendor.
We confirm that pursuant to a Deed of Settlement in relation to Supreme Court proceeding No.6060 of 1994, John Viccars agreed to assign his rights as Vendor under the Contract of Sale to his former wife Heather Jeanne Sneddon. A Deed of Assignment dated the 19th August, 1994 was entered into with the consent of your client.
We advise that our client has now agreed to purchase the terms contract and take an assignment of Heather Sneddon's rights as the now Vendor. Settlement of this transaction is due to take place by 30 September, 1994. At settlement the Commonwealth Bank will be paid out and the title released. We will hold the title at our office until your client is entitled to possession. We also advise that we hold a transfer of land stamped as non-dutiable, transferring the property from John Viccars to Heather Sneddon and have had a further transfer signed by Heather Sneddon transferring the property to your client together with the relevant Stamps Act Chattels declaration. These will all be held by us in escrow until settlement.
We understand that previous interest payments were paid directly to the Commonwealth Bank. As advised this mortgage is to be discharged. As part of the terms of the Assignment, all future interest payments are to be directed to our office and we therefore seek your consent to same. We confirm that the next payment is due on 29 November, 1994...”
By letter of the same date to Macpherson & Kelly, Birch Ross & Barlow acknowledged receipt of their fax, sought copies of relevant documents and further stated:
“Pending the documents being in order, we will get our Clients' formal
consent for future interest payments to be directed to your office.
Please note our Clients' legal costs at $100.00 in respect of this matter. Please confirm that such costs will be paid to us at or immediately after settlement is effected on the 30th September next.
Finally, we will require a Titles Office dealing number in respect of the
Discharge of the Commonwealth Bank Mortgage.”By further letter of the same date, Macpherson & Kelly supplied copies of relevant documents and agreed to pay costs as requested and sought confirmation that:
“(a) Interest is payable at the rate of 9% per annum on the balance of monies owing being $295,000.00. The interest payments are $13,275.00 payable on the 29th days of November, 1994, May 1995 and November, 1995 respectively. (b) There is $295,000.00 owing under the Contract which is due to be repaid on the 29th day of November, 1995. (c) All future interest payments will be forwarded to Macpherson & Kelley Solicitors. Please have your client make the cheques payable to our firm.”
By a Deed made 30 September 1994 between Mrs Knorr and St. Margaret’s, St. Margaret’s agreed to pay to Mrs Knorr the sum of $267,000 and Mrs Knorr agreed to execute and deliver various documents including a Deed of Assignment of the terms contract and a mortgage over Lot 1 as further security for the plaintiffs. Mrs Knorr was, in September 1994, not only prepared to risk the plaintiffs’ due performance of the terms contract relating to Lot 2 but to grant a first mortgage over Lot 1 as security. Mrs Knorr further covenanted that the terms contract was valid and subsisting and agreed to indemnify St. Margaret’s against all actions and claims arising out of the terms contract. Annexed to the Deed were copies of relevant documents including the terms contract, and the first Deed of Assignment. By a Deed of Assignment of the same date, Mrs Knorr assigned her rights under the terms contract to St. Margaret’s.
St. Margaret’s paid the agreed sum, the transaction between Mrs Knorr and St. Margaret’s was completed, the Mortgagee was paid out and the 1990 Mortgage was discharged. The plaintiff’s solicitors gave the confirmation requested by letter dated 3 October 1994 to Macpherson & Kelly.
As agreed, the plaintiffs paid to Macpherson & Kelly the interest due under the terms contract on 29 November 1994. However, by letter dated 23 May 1995, shortly before the next interest payment was due the plaintiffs wrote directly to Macpherson & Kelly as follows:
“Interest of $13275 is due to the end of May but due to severe cash flow problems, caused by the unusually dry year, which we did not address early enough we are unable to pay this interest at the moment. Our production has picked up dramatically and we have leased extra cows to avoid this problem occurring again unfortunately this action should have been taken 6 to 8 months earlier. We will definitely be able to pay the interest by November but if cows calve on time and the year is just average we will be able to pay a lot earlier. If acceptable to you people we would like to pay the interest by November but retain the option to pay it earlier as the money becomes available. We are also aware because of the late payment we would be liable to extra interest and some additional costs. Please consider the above offer and let us know as soon as possible.”
The plaintiffs failed to pay the interest due on 29 May 1995. On 9 June 1995 Macpherson & Kelly wrote to the plaintiffs’ solicitors, referring to an earlier telephone conversation, and confirmed in substance that the issue of a rescission notice would be delayed if a number of events occurred - reference was made to the provision of further security, to the sale of the turn-out block and to the provision of monies for a payout or the rectification of the default by the second week of July. Further telephone conversations and correspondence followed between the solicitors and by letter dated 18 July 1995 the plaintiffs’ solicitors advised that the sale of the turn-out block was being negotiated and that “should the turn-out block be sold then after paying out the vendor of their property your client will be repaid in full from the balance of proceeds of that sale and through refinancing negotiated with this office”. The solicitors went on to add that “[a]s the calving season has only just commenced, milk production from the Fraser’s property will not be sufficient at this time to cover their interest commitments but they should be in a position by September to cover these. The motor vehicle owned by the Frasers has been placed on the market and they are confident of an early sale of that vehicle at which time they believe that at least half the current outstanding interest instalment could be paid to you”.
On or about 1 September 1995 St. Margaret’s caused a notice of default and rescission to be served on the plaintiffs and their solicitors. On 14 September 1995 the plaintiffs’ solicitors advised Macpherson & Kelly by fax that the plaintiffs would auction both Lot 2 and the turnout block in order to avoid enforcement of rescission. This was acceded to and the plaintiffs’ solicitors advised Macpherson & Kelly by fax on 24 October 1995 that the turn-out block had been sold at auction. In their fax, they asked Macpherson & Kelly to “confirm the amounts outstanding to your client pursuant to the terms Contract of Sale” and said that they hoped to be able “to address most, if not all, of the outstanding interest” when the deposit was released.
On 23 November 1995, the plaintiffs’ solicitors wrote to Macpherson & Kelly advising that settlement of the sale of the turn-out block had taken place on the previous day. They advised that Lot 2 had been passed in at auction and that no bids were received. They requested an extension of the terms contract on a basis including that interest arrears be paid and future interest payments be made monthly direct from the plaintiffs’ account with the butter factory (except in non- productive months).
The plaintiffs’ solicitors wrote to Macpherson & Kelly by letter dated 30 November 1995 stating:
“We refer to recent correspondence and conversations relative to this matter and confirm that you have rejected the offer contained in our letter of 23rd November and now propose to issue a Notice of Rescission which will be served on our clients.
Our clients will object to the Notice of Rescission and will not be vacating the property unless and until there is an Order of the Court requiring them to do so.
We advise that in the event you obtain possession of the property and re-sell it and a loss is occasioned thereby, our clients will rely upon the offer contained in our letter of 23rd November as a defence to any claim made against them for any such loss.
We have been instructed to re-confirm for you the offer maintained in our letter of 23rd November but note that the offer must lapse if a Notice of Rescission or any other proceedings are issued against our clients in respect to the Contract of Sale dated 17th January 1994 and entered into with John Leslie Viccars.”
The response from Macpherson & Kelly was the service of a Notice of Default and Rescission dated 30 November 1995.
After service upon them of the Notice of Rescission, the plaintiffs obtained further legal advice, including counsel’s advice, as a result of which a notice was prepared and served dated 13 December 1995 (“the plaintiff’s Notice”). The plaintiff’s Notice read as follows, omitting formal parts:
“WHEREAS:
1. By the above described Contract, the Vendor did sell on terms (as defined in the Sale of Land Act 1962) to the Purchasers the land hereinbefore described as the property.
2. The property was at all times material subject to an Instrument of Mortgage No. R2451N to Commonwealth Development Bank of Australia.
3. The Mortgage did not relate only to the property in that both on the date of the Contract and on the date that possession was taken under the Contract and for considerable time thereafter, the Mortgage related to the property and in addition thereto Lot 1 on Plan of Subdivision No. 303260K and being the whole of the land more particularly described in Certificate of Title Volume 10052 Folio 568.
4. The Contract by reason of the aforesaid was a terms Contract entered into in breach of s.6 of the Sale of Land Act 1962.
5. Further, the Contract did not provide that the consideration for the sale of the property shall be satisfied, to the extent of any Mortgage money owing at the date upon which the Purchasers are entitled to possession by the Purchasers assuming as from that date the obligations of the Mortgage or under the Mortgage.
6. To the extent that the Contract failed to provide the matters referred to in the last preceding paragraph, the Contract was a terms Contract entered into in contravention of the provisions of s.6 of the Sale of Land Act 1962.
7. By reason of each of the matters aforesaid the Contract is a terms Contract entered into in contravention as aforesaid and is voidable by the Purchasers at any time before the completion of the Contract.
8. The Contract has not been completed by settlement or otherwise.
9. Further, the Contract was a terms Contract whereby the Purchasers were obliged to make two or more payments to the Vendor after the execution of the Contract and before the Purchasers were entitled to a Transfer of the land.
10. The Vendor was obliged to provide to the Purchasers the information set out in Schedule 2 of the Sale of Land Act 1962.
11. In breach of the matters aforesaid, the Vendor failed to provide the whole of the information required to be provided and set out in Schedule 2 of the Sale of Land Act 1962.
12. By reason aforesaid and by reason of s.14 of the Sale of Land Act 1962, the Contract was a terms Contract which was entered into in contravention of the provisions of the Sale of Land Act 1962 and was and is avoidable by the Purchasers at any time before completion of the Contract.
13. Further, at or prior to the time the Purchasers entered into the Contract, the Vendor represented to the Purchasers that:
(a) the property comprised an operational dairy farm; (b) the property was a good carrying country and would carry ‘one cow to the acre’; (c) the property had a good superphosphate history; (d) there were a few weeds down the back; (the representations).
14. Relying upon the representations and induced thereby, the Purchasers entered into the Contract.
15. The representations were untrue in that:-
(a)
the property did not comprise an operational dairy farm - the property had not been milked and milk had not been supplied to milk companies or co-operatives for many months;
(b)
the property was not good carrying country and certainly not of the sort represented;
(c)
the property was heavily infested with ragwort and Notices from the Department of Conservation were outstanding. (Emphases added)
16. Further in breach of s.32 of the Sale of Land Act and in breach of his requirements at law, the Vendor failed to disclose to the Purchasers prior to, at the time of entering into the Contract or in Answers to Requisitions properly delivered by the Solicitors for the Purchasers, the existence of the Notices which affected the property or the existence of the ragwart (sic) infestation which affected the property thereby, by his silence, misrepresenting the property and the characteristics of the property (the non-disclosures).
17. By reason of the misrepresentations and the non-disclosures, the Purchasers have suffered loss and damage.
18. In making the representations, the Vendor effected a fundamental breach of the Contract such as entitles the Purchasers to avoid the Contract.
NOW TAKE NOTICE that for each of the reasons aforesaid and upon the
grounds aforesaid, the Purchasers HEREBY AVOID the Contract made between the Purchasers and the Vendor and dated 17th January 1994 and demand repayment of all monies paid thereunder.”
Apart from reliance upon the Sale of Land Act for avoidance of the Contract, it can be seen that, for the very first time, four distinct misrepresentations are alleged to have been made by the vendor and to have induced the plaintiffs to enter into the contract.
The writ herein was filed on 5 January 1996. The Frasers vacated Lot 2 in or about May 1996 and Lot 2 was sold by St. Margaret’s by contract of sale dated 31 October 1996. A caveat lodged by the Frasers was withdrawn by them pursuant to “Interim Terms of Settlement” dated 20 December 1996 between the Frasers and St. Margaret’s and, pursuant to those terms, St. Margaret’s paid the sum of $125,000 into an account to be held pending the determination of this proceeding and applied subject to those terms.
In my opinion the plaintiffs have failed to establish any right to rescind the terms contract for misrepresentation. I will deal with each alleged representation in turn.
The dairy representation
I am not satisfied that it was represented to Mr Fraser by Mrs Knorr that “the land comprised an operating (or operational) dairy farm”. I am satisfied that Mrs Knorr informed Mr Fraser in substance that they had been operating a dairy farm on Lot 2 and that it was operational until they ceased milking some months earlier. In any event, the representation would have been in substance true. I do not regard the alleged representation as reasonably conveying that if Mr Fraser switched on the machinery in the milking shed it would be in perfect working order, after not having been operated for some months. Nor do I accept that Mr Fraser understood any representation made to him in that way. Mrs Knorr testified that she specifically told Mr Fraser that some items (rubberware, inflations) would need to be replaced but it is unnecessary to make any finding as to this. Furthermore, the only particular of alleged falsity of the representation which was relied upon was the fact that repairs costing some $1,250 were required to make the dairy operational on 8 November 1993. This so-called falsity was known to Mr Fraser over two months prior to the entry into the terms contract and played no part in inducing him to enter into it. Mr Fraser testified that at all times after the Saturday meeting he considered himself morally bound to enter the contract. I do not accept that evidence. Having seen and heard him give evidence, I consider that had Mr Fraser believed prior to 17 January 1994 that he had been defrauded or misled by this or any of the other alleged representations he would not have signed the contract nor would he have continued to have amicable contacts with Mrs Knorr, as he did, both before the contract was entered into and for a considerable time thereafter.
The ragwort representation
I am satisfied that in early October 1993, after Mr Fraser had seen a couple of ragwort rosettes on Lot 2, he was told by Mrs Knorr that there were “a few weeds down the back”. I am satisfied that the statement was false in that there were still many small ragwort plants (certainly more than a few) on the southern slopes. I am also satisfied that Mrs Knorr knew, or at least must have suspected, that her statement was false to that extent and that she appreciated that it was misleading having regard to the probability known to her that Mr Viccars’ efforts over past years to eradicate the problem were not likely to have been successful and that growth and flowering was again likely to happen in the summer.
However, I am further satisfied that prior to January 17 1994 when contracts were signed and exchanged, Mr Fraser was fully apprised of the true situation having regard to what he was told by Mr Hayes, the spraying activities prior to that date and what he was able to see and did see with his own eyes. In short, he knew that there was a very large ragwort problem “down the back”. I find therefore that he was not induced, and could not have been induced, by the ragwort representation to enter the terms contract. Having regard to his lack of overt reaction of any kind upon learning the extent and history of the ragwort problem, it is hard to accept that he ever treated the statement by Mrs Knorr (that there were a few weeds down the back) with any real degree of seriousness or as anything more than sales talk. I do not think that Mr Fraser was a babe in the wood or ignorant of farming issues.
The fertiliser representation
I am not satisfied that Mrs Knorr represented to Mr Fraser that the land had a good superphosphate history or that she made any representation to him along those lines. I found his evidence as to this unsatisfactory. Further I find that Mr Fraser did not rely upon any such representation in entering the contract. I do not accept Mr Fraser’s evidence that he put away the Pivot report without reading it. I found his evidence on this to be evasive and lacking in credibility. I am unable to accept that, having commissioned a soil analysis, he did not read the report when he received it. I am satisfied that, when giving his evidence, Mr Fraser was aware of the adverse significance for his case if he admitted that he knew, prior to entering the contract, that the northern area of Lot 2 was low and deficient in phosphorous and marginal for potassium. I consider that he did know and I am not satisfied that Mr Fraser entered the contract under any belief as to the previous fertiliser or superphosphate history of Lot 2.
The carrying capacity representation
I am satisfied that it was probably represented to Mr Fraser by Mrs Knorr in the first conversation that the farm was a “cow to the acre” property. Mrs Knorr denied that she ever said that and testified that such a statement was not within her area of expertise. Mr Viccars gave evidence that he told Mr Fraser that he was not sure what the carrying capacity of the property was and that it would be trial and error as to how many cows he could run. I found the evidence of both Mrs Knorr and Mr Viccars on this issue unpersuasive and Mr Fraser’s evidence had the ring of truth.
I find that, at the time, Mr Fraser understood and was intended by Mrs Knorr to understand her statement to mean that Lot 2 “could carry” one milking cow to each acre of land (that is, 205 milking cows). Whether Mr Fraser understood the carrying capacity representation to mean that Lot 2 would “carry” 205 cows for the purpose of conducting a “viable” dairy farm business, or for the purpose of achieving milk production which was average for Victoria (or average for South Gippsland) or for the purpose of some other standard or yardstick was left somewhat unclear but I gather that Mr Fraser understood it to relate to Victorian average production (see transcript page 113).
Mr Fraser testified and I accept that his intention was to achieve above Victorian average production and that he made his projections and purchased the herd upon the basis of half a cow per acre so that he might achieve higher production with fewer cows. Mr Fraser understood that the productive capacity of the cows depended, inter alia, on the continuing quality of the pasture and capacity of the soil. The present quality of the pasture was observable and observed by him. There were two factors (apart from future climatic conditions) which Mr Fraser knew (prior to entering the contract) might affect or degrade the quality of the pasture - the fertility of the soil and the presence of ragwort. Mr Fraser entered the terms contract knowing the contents of the Pivot report and aware of the ragwort problem but, I am satisfied, believing he could cope with both of these problems by respectively fertilising the soil and eradicating the ragwort. I am not satisfied that he entered the contract still believing that Lot 2 was a “cow to the acre” property. I find that he believed that he would be able to achieve his projections and cope with the soil deficiency and ragwort problems. I am not satisfied that the carrying capacity representation had any relevance to him by the time he and his wife entered the terms contract. I would add that I am not satisfied that the evidence shows that this representation was false, in any event.
Inducement
I have found that the plaintiffs were not induced by any misrepresentation (insofar as any was made) by or on behalf of the vendor to enter the terms contract (or pay the deposit) as alleged by paragraph 19 of the amended statement of claim. I have stated some general and some particular reasons for so finding. However, there are some additional general matters which have influenced me. The content of the plaintiffs’ letter dated 23 May 1995 (set out earlier above) and the subsequent tenor of the negotiations with Macpherson & Kelly are inconsistent with the conduct one would normally expect from an aggrieved purchaser who believed that he had been defrauded or misled and who was by then fully aware of the “true facts” and faced with the necessity to sell both of his farm properties. No complaint was made. Indeed, no mention of misrepresentation was made by the Frasers to their own solicitors prior to December 1995. I would further infer that it was only after the Notice of Default and Rescission dated 30 November 1995 that Mr Fraser, under legal advice, searched his memory for any statement which had been made to him which might sustain an allegation of an inducing misrepresentation. I do not accept Mr Fraser’s evidence that he believed he had been “ripped off” as early as February 1994.
This considerable delay in making any complaint or taking any action, which Mr Fraser unconvincingly explained as due to ignorance of his rights, should be contrasted with the relatively speedy action which the evidence shows that he took when he considered that he had been misled as to the nature and quality of the dairy herd which he had purchased. I am satisfied that Mr Fraser knew that he might be entitled to damages or a price adjustment if the nature or quality of what he purchased was misrepresented although he was unaware of any possible right to rescind a contract.
Sale of Land Act 1962
Section 6(1) of the Sale of Land Act 1962 provides that where land is subject to a mortgage the mortgagor shall not sell the land under a terms contract unless the mortgage relates only to that land.
In this case it is clear and it was not disputed by counsel for the plaintiffs and St. Margaret’s that the contract was a “terms contract” within the meaning of the Sale of Land Act (s.2(1)) because it fell under both of the alternative limbs of the definition. It was an executory contract under which the purchasers were obliged to make more than two payments to the vendor after the execution of the contract and before they were entitled to a transfer of the land, namely the instalment of $60,500 and the half-yearly interest payments payable on 29 May and November 1994 and 29 May 1995 (see General Condition 4(c) and Item 2 of the Schedule). Counsel for the plaintiffs and for St. Margaret’s accepted that interest payments were payments to the vendor within the meaning of the definition (compare Wacal Developments Pty Ltd v. Realty Developments Pty Ltd (1978) 140 CLR 503). It was also an executory contract under which the purchasers were entitled to possession of the land before they became entitled to a transfer.
It is also undeniable that at the time of the making of the terms contract the 1990 mortgage did not relate only to Lot 2 but also related to other land, namely, Lot 1. As a result, unless the contract took the benefit of s. 6(4) of the Sale of Land Act, the contract was entered into in contravention of s. 6(1) of the Act and was voidable by the plaintiffs “at any time before the completion of the contract” and the vendor was also guilty of an offence against the Act (see s. 6(3)). Section 6(4) of the Sale of Land Act provides:
“(4) The provisions of this section shall not apply to the sale of land under
a terms contract where the contract provides that -
(a)
any mortgage affecting the land sold is to be discharged as to that land before the purchaser becomes or upon the purchaser becoming entitled to possession or to the receipt of the rents and profits under the contract; and
(b)
the deposit and all other moneys payable under the contract (other than any money payable in excess of the amount required to so discharge the mortgage) are to be paid to a duly qualified legal practitioner or a person who is a licensed estate agent to be applied by him in or towards so discharging the mortgage -
but where the mortgage is not discharged as to that land within ninety days of the making of the contract and the purchaser is not in default under the contract the contract shall be voidable by the purchaser at any time before the mortgage is so discharged and the purchaser shall be entitled to recover all moneys paid under the contract.”
General Condition 4 of the terms contract appears to contain provisions of the kind required by s. 6(4) so as to exclude the application of s.6 to the contract. General Condition 4 provided:
“Terms Contracts
4. If this is a ‘terms contract’ as defined in section 2(1) of the Sale of Land Act 1962, then -
(a) the vendor must arrange the discharge of any mortgage affecting the land by the settlement date (b) all money payable under the contract must be paid to a duly qualified legal practitioner or a licensed estate agent to be applied towards discharging the mortgage (c) the purchaser must pay interest to the vendor from the settlement date upon the balance outstanding at the rate, on the days, and with the adjustments set out in Item 2 of the Schedule (d) the vendor must apply instalments under this contract first to pay interest and then to reduce the balance owing.”
However, other provisions of the contract point in a different direction or suggest a contrary intention leading to a real constructional problem. The contract contains particulars of the 1990 mortgage in Item 1 of the Schedule under the heading “Sale of Land Act 1962 - Schedule 1 - Particulars of Mortgage No. R245IN - Particulars to be supplied when land sold subject to mortgage...” This is a reference to the requirements of s.6(2) of the Act. Paragraph (i) of these particulars states: “The Mortgagee has consented to the purchasers assuming the Mortgagor’s obligations under the Mortgage”.
Further, special Condition 5 of the terms contract provides:
“5. The purchaser acknowledges the information set out in Item 1 of the Schedule hereto and understands that Commonwealth Development Bank of Australia as the Mortgagee requires:-
(a) Loan No.2 to be repaid in full out of the deposit and instalment payable hereunder; (b) Loan No.1 to be slightly reduced by the balance of such deposit and instalment following payment of legal fees, rate adjustments, and the amount (if any) required to satisfy Charge No. R579832E; and (c) The half-yearly interest payments of $13,275.00 to be paid to it to further reduce Loan No.1 and to cover its interest payments.”
There is no provision of the contract whereby the purchasers expressly assume the liabilities of the vendor under the 1990 Mortgage, despite what might be inferred from paragraph (i) of the particulars of the mortgage (and General Conditions 1.1 and 1.2). This may be because the 1990 Mortgage was an “all monies” mortgage and also related to other land. The relevant question however is not whether it was “intended” that the purchasers assume liability for the mortgage. The question, rather, is whether General Condition 4 is overridden by any other provision of the contract, as the plaintiffs submitted that it was. In that regard, as counsel for the plaintiffs pointed out, General Condition 10 gives priority to special conditions over general conditions “in case of a conflict”.
Special Condition 5 is at first blush in conflict or inconsistent with General Condition 4 because it does not appear to contemplate the discharge of the 1990 Mortgage upon the purchasers becoming entitled to possession - instead “Loan No.1” is to be “slightly reduced” upon payment of the deposit and instalment and the half-yearly interest payments are to be paid to the Mortgagee “to further reduce Loan No.1 and to cover its interest payments”.
In my view, however, if it is open to give to such a contract a reasonable construction which does not prejudice the purchaser and does not place the vendor in breach of s.6 of the Sale of Land Act and as having been liable to a pecuniary penalty, that construction should be preferred. It should be presumed, if such a reasonable construction is available, that the vendor did not intend to contravene the Act.
General Condition 4((a) and (b)) expressly provides that if the contract is a terms contract as defined in s.2(1) of the Sale of Land Act then the vendor must arrange the discharge of any mortgage affecting the land by the settlement date and that all money payable under the contract must be paid to a duly qualified legal practitioner or a licensed estate agent. As I have said, s.6(4) of the Act is in terms satisfied. In addition, General Condition 4(c) also provides that if the contract is such a terms contract, the purchasers must pay interest to the vendor on the balance outstanding at the rate “set out in Item 2 of the Schedule”. Item 2 of the Schedule makes provision for “Interest 9% p.a. with half yearly rests and payable the 29th days of May and November throughout the term hereof”, thus specifically recognising the existence and applicability of General Condition 4.
Special Condition 5 does not impose any contrary obligations, either upon vendor or purchasers, but speaks in terms of the purchasers “acknowledging” certain information as to the mortgage and “understanding” that the Mortgagee has certain requirements as to how the deposit, instalment and interest should be applied. This acknowledgement of information and understanding as to requirements is not inevitably or necessarily inconsistent with the vendor’s obligation under General Condition 4 to discharge the mortgage at settlement or the purchasers’ obligation thereunder to pay all money due under the contract to a legal practitioner or estate agent.
As already noted, paragraph (i) of the particulars of mortgage in Item 1 of the Schedule speaks of the Mortgagee consenting to the purchasers assuming the mortgagor’s obligations under the mortgage but nowhere does the contract expressly so provide (note the conditional “if” of Condition 1.2). The contract does not disclose an intent that the price be satisfied to the extent of any mortgage money arising (cf. General Condition 1.2(b)) but rather the making of payments to the vendor (or his agent) whether of deposit, instalment and residue, or of interest (see too Special Condition 6).
Although Special Condition 5 contemplates that the mortgage may not be discharged at settlement by referring to the mortgagee’s requirements for the reduction, and not the repayment, of Loan No. 1 in the manner referred to in sub-paragraphs (b) and (c) thereof, it does not in my view override or qualify the vendor’s obligations expressly contained in General Condition 4(a).
I conclude that the contract does, upon a proper construction, contain provisions effective to satisfy s. 6(4)(a) and (b) of the Sale of Land Act. Accordingly, the contract was voidable by the plaintiffs from the outset, but only if the mortgage was not discharged within 90 days of the making of the contract and then at any time before the mortgage was discharged (s. 6(4)). In fact, the 1990 Mortgage was wholly discharged before the plaintiffs purported to avoid the contract and so the avoidance was ineffective.
Counsel for St. Margaret’s said that if, contrary to the above construction of the contract, the contract was entered into in contravention of s. 6(1) of the Act and was voidable at any time before completion, reliance was placed upon the proviso contained in s. 14(1) of the Sale of Land Act. Section 14(1) provides:
“14. Certain terms contracts to be voidable by purchaser
(1)
Except where otherwise expressly provided any terms contract which is entered into in contravention of any of the provisions of this Act shall be voidable by the purchaser at any time before completion of the contract and any person who has paid any money under such agreement shall be entitled to recover the same: Provided that a terms contract shall not be voidable by the purchaser if a court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if all the relevant provisions of the Act had
been complied with.”
It was common ground that s. 14(1) was applicable and that the proviso was available to St Margaret’s (but only if its requirements were made out). In any event, I would follow what was decided by Hedigan J in Australia Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd [1994] 2 VR 463, 487 (at lines 19-24).
However, I would not have been satisfied that “the vendor has acted... reasonably...” within the meaning of the proviso because there was no evidence before the court as to what instructions Mr Viccars gave to his solicitors and what steps his solicitors took in relation to compliance with the Sale of Land Act. I would have been of the view that the onus lying upon the party seeking to obtain the benefit of the proviso had not been discharged. It is unnecessary to deal with other submissions which were put as to whether the vendor acted honestly or reasonably.
Other issues
The plaintiffs argued that there was a “fundamental breach” of the terms contract because Lot 2 was unsuitable for use as a dairy farm. It is sufficient to say that in my opinion that argument has no basis in law or in fact.
Paragraph 16 of the amended statement of claim was not relied on.
Paragraphs 20 to 24 of the amended statement of claim (together with following paragraphs) pleaded causes of action based upon false or misleading statements contained in answers to requisitions and in the vendor’s statement given pursuant to s. 32 of the Sale of Land Act. However, plaintiff’s counsel did not in final submissions rely upon these matters as supporting independent causes of action in deceit or as giving rise to a right to rescind for misrepresentation but as going to the questions of “fundamental breach of contract” and also whether the vendor acted honestly and reasonably for the purposes of s. 14(1) of the Sale Land Act. I do not think that those matters (even if established) support a case of fundamental breach of contract and otherwise it is unnecessary to say any more about them.
I would add that the plaintiffs relied, in various ways, upon Mr Viccars’ failure to disclose to them the fact of the past service upon him of, and his alleged outstanding non-compliance with, sundry notices under s.13 of the Vermin and Noxious Weeds Act 1958. In my opinion, the effect of s. 36 of the Vermin and Noxious Weeds Act is such that there were no outstanding obligations and therefore there was no reason to disclose those notices. Section 36 provided:
“36. (1)
Every notice under this Act to the owner or occupier of any land shall if due service thereof has once been made be binding on him for a period of six months from the date of the service.
(2) Proceedings for any penalty for non-compliance with the requirements of such notice may be taken at any time or times during such period of six months.”
Further, as I have already mentioned, Mr Hayes informed Mr Fraser in November 1993 that such notices had been served in the past upon the previous owner. The Fraser affidavit expressly deposed as to these matters:
“30. Subsequent to our taking possession of the property we were visited by Mark Hayes from the Department of Conservation and Natural Resources who informed us that notices had been served under the Vermin and Noxious Weeds Act 1958 which had not been complied with. ... 32. Hayes told me and I verily believe that his Department had been endeavouring to have Viccars eradicate the noxious weeds, namely ragwort, from the property for many years, so much so that in 1990 certain works had been done upon the property by his Department at its own expense but which had been sought by the Department to be recovered from Viccars.”
Finally, St Margaret’s argued that if the plaintiffs would otherwise have been entitled to rescind or avoid the terms contract, they had waived their rights (or elected not to exercise them), alternatively they were estopped from exercising their rights. Having regard to my conclusion that the plaintiffs were not entitled to rescind or avoid the terms contract either for misrepresentation or under the Sale of Land Act, it is unnecessary to consider those arguments.
Damages
The plaintiffs claimed against Mr Viccars and Mrs Knorr damages for breach of contract and for deceit. In my opinion, there was no breach of contract by Mr Viccars. As far as deceit is concerned, I have not found that there was any “dairy representation” or any “fertiliser representation”. As regards the “ragwort representation”, the plaintiffs claimed the costs of their ragwort eradication measures. The amount claimed was $42,464 (which included, so it was alleged, 3121.5 hours labour at $12 per hour = $37,458). As I understand it, the only submission was that the plaintiffs were induced by the ragwort representation to enter the terms contract and thereafter suffered this consequential loss as a result. I have rejected the contention that the plaintiffs were so induced and, accordingly, the claim fails. I would add that the expenditure prior to entering the contract was a relatively small amount which was not claimed separately. As regards the “carrying capacity representation”, there was a claim for $137,213 for “lost milk receipts” which in my view was not proved and, further, was put incorrectly on a promissory basis. In any event, this claim also fails because the plaintiffs did not show inducement , reliance or any other mode of causation of loss by the representation.
Counterclaim
The plaintiffs having failed to establish their case, the counterclaim by St. Margaret’s was, with one exception, not disputed and the following amounts were agreed:
(a) damages $60,393 (b) mesne profits $ 4,601 $64,994
However, the claim under s. 118 of the Transfer of Land Act, which was disputed, fails because, in my opinion, the plaintiffs had reasonable cause to lodge the caveat claiming a lien, having regard to the arguments available under s. 6 of the Sale of Land Act.
Orders
There will be judgment for the defendants on the plaintiffs’ claim and judgment on the counterclaim for the third defendant against the plaintiffs for $64,994 plus its costs of the proceeding and the counterclaim. I will hear the parties as to any other matters of interest or costs.
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