Grant v Harlgate Pty Ltd
[2012] VSC 464
•9 October 2012
| Do Not Send for Reporting | ||
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. S CI 2012 5272
| ANDREA LOUISE GRANT | Plaintiff |
| v | |
| HARLGATE PTY LTD (ACN 007 258 997) trading as C+ Weber Estate Agents VERVE HOMES (AUST) PTY LTD (receivers and managers appointed) (in liquidation) (ACN 139 572 071) | Defendants |
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JUDGE: | BEACH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8 October 2012 | |
DATE OF JUDGMENT: | 9 October 2012 | |
CASE MAY BE CITED AS: | Grant v Harlgate Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 464 | |
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SALE OF LAND – Contract – Vendor and purchaser – Deposit – Agent – Recovery of deposit from agent – Sale of Land Act 1962, ss 23, 24, 26, 27 and 28 – Estate Agents Act 1980, s 59.
CORPORATIONS – Liquidation – Liquidator of vendor disclaims contract of sale under s 568(1) of the Corporations Act 2001 – Effect of disclaimer – Corporations Act 2001, ss 568, 568A and 568D.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T.J. Scotter | Burke & Associates Lawyers Pty Ltd |
| For the First Defendant | Mr M.J. Hoyne | Best Hooper |
| For the Second Defendant | No appearance |
HIS HONOUR:
Introduction
In April 2012, Andrea Grant, the plaintiff, and Verve Homes (Aust) Pty Ltd, the second defendant, entered into a contract of sale of 7 Parslow Street, Malvern. The second defendant entered into the contract as vendor, and the plaintiff as purchaser. The contract price was $2.8 and a deposit of $160,000 was paid by the plaintiff at or about the time the contract was entered into. Under the contract, settlement was due on 3 September 2012.
On 30 April 2012, the second defendant was placed in liquidation and Peter Robert Vince and Kylie Marie Wright were appointed as its liquidators. On 23 August 2012, the liquidators wrote to the plaintiff’s solicitors giving notice “disclaiming the contract of sale … on the basis that … [it was considered to be an] onerous contract”.
Following the giving of this notice, there were various communications between the parties. These communications culminated in correspondence sent by the plaintiff’s solicitors, which correspondence referred to various previous matters, stated that the plaintiff was entitled to and had rescinded the contract of sale, and stated that the plaintiff sought the immediate repayment of the deposit which had been paid to the first defendant as an agent for the vendor.
Settlement of the contract of sale has never taken place. In this proceeding, the plaintiff seeks the return of the deposit from the first defendant, together with interest; alternatively, damages and interest. The proceeding is brought pursuant to s 49(1) of the Property Law Act 1958.[1] The plaintiff seeks that the Court determine her claim for compensation pursuant to s 49(1) and/or the answers to the following questions:
(a)Has the disclaimer of the contract of sale by the liquidators of the vendor amounted to a breach and determination of the contract of sale by the vendor, which has been accepted by the plaintiff?
(b)If the answer to question (a) is “yes”, then whether the plaintiff is now entitled to have her deposit and any accrued interest returned to her by the first defendant (the vendor’s real estate agent and stakeholder)?
(c)Has the first defendant, in May 2012, released the deposit in breach of the requirements of s 24 of the Sale of Land Act 1962?
(d)If the answer to question (c) is “yes”, is the first defendant liable to compensate the plaintiff for the loss of the deposit?
[1]Section 49(1) provides:
“A vendor or purchaser of any interest in land, or their representatives respectively, may apply to the Court, in respect of any requisitions or objections or any claim for compensation, or any other question arising out of or connected with the contract (not being a question affecting the existence or validity of the contract), and the Court may make such order upon the application as to the Court may appear just, and may order how and by whom all or any of the costs of and incident to the application are to be borne and paid.”
While the originating motion was originally only issued by the plaintiff against the first defendant, on 20 September 2012 Dixon J gave leave to the plaintiff to join the second defendant (vendor) as a necessary and proper party to this proceeding. Notwithstanding the joinder, the second defendant took no part in this proceeding. The plaintiff’s claim for the return of her deposit from the first defendant and other relief was resisted at trial by the first defendant alone.
The background facts in more detail
The plaintiff and her husband have five children. In April 2012, they were in the market to buy a larger home. Having inspected 7 Parslow Street, Malvern on a number of occasions, the plaintiff signed the contract of sale to which I have already referred on 19 April 2012. On 21 April 2012, the vendor executed the contract.
Initially, the plaintiff drew a cheque for the deposit made payable to the trust account of RT Edgar & Co, an agent for the vendor. However, the plaintiff was then told by Mr Mark Wridgway of RT Edgar’s that the cheque should be redrawn and made payable to C+ Weber, the first defendant and a conjunctional agent with RT Edgar & Co. The plaintiff complied with this request, and the deposit of $160,000 was paid to the first defendant.
At the same time as she signed the contract of sale, the plaintiff entered into a licence agreement with the vendor, by which she was given the right to occupy the property pending settlement. The licence agreement required the plaintiff to pay a fee of $6,250 per calendar month, commencing upon her occupation of the premises on 11 May 2012.
As I have said above, on 30 April 2012, Mr Vince and Ms Wright were appointed liquidators of the vendor. This was pursuant to a creditors voluntary winding up.
Between April and August 2012, a number of issues arose concerning the property, its condition and the terms of the contract of sale. Communications passed between the parties about various matters in respect of which they were in dispute
By letter dated 23 August 2012, one of the liquidators of the vendor, Ms Wright, wrote to the solicitors for the plaintiff in the following terms:
“I hereby give notice in accordance with s 568A[2] of the Corporations Act 2001 disclaiming the contract of sale and licence agreement on the basis that I now consider the contracts to be onerous contracts.
A formal notice to this effect is attached for your attention.”
[2]Section 568(1) of the Corporations Act relevantly provides:
“Subject to this section, a liquidator of a company may at any time, on the company’s behalf, by signed writing disclaim property of the company that consists of:
…
(f) a contract;
… .”
Section 568A(1) relevantly provides:
“As soon as practicable after disclaiming property, a liquidator must:
(a) lodge a written notice of the disclaimer; and
(b) give written notice of the disclaimer to each person who appears to the liquidator to have, or to claim to have, an interest in the property;
… .”
The letter enclosed a notice headed “Notice of Disclaimer of Onerous Property”. The substance of the notice was as follows:
“1.I, Kylie Maree Wright of Vince & Associates, the Liquidator of the company, for the purposes of paragraph (scil section) 568A give notice that I disclaim the contracts described in the schedule.
2.The contracts are contracts of the company and consist of:
- contract of sale dated 21 April 2012 for 7 Parslow Street, Malvern, Victoria, 3144; and
- licence agreement dated 19 April 2012 allowing the licensors to occupy 7 Parslow Street, Malvern pursuant to the agreement”
On 3 September 2012, the plaintiff’s solicitors wrote to the liquidators and to Best Hooper. At that time, Best Hooper were acting for a caveator, Mr Clynton Roberts, who was also the second mortgagee of the property. Mr Roberts, in addition to being a second mortgagee in respect of the property, was at all relevant times the sole director, secretary and shareholder of the first defendant. The letters referred to a number of matters that had been raised in previous correspondence, including the disclaimer of the contract pursuant to s 568 of the Corporations Act. Specifically, the plaintiff’s solicitor’s letters:
(a)stated that the plaintiff rescinded the contract of sale;
(b)sought the immediate repayment of the deposit; and
(c)sought an assurance that the deposit was still held by the first defendant in accordance with the requirements of the Sale of Land Act, and that it would not be released without the written consent of the liquidators of the vendor and the purchaser or pursuant to an order of the Court.
On 4 September 2012, the solicitor for the plaintiff was told that the deposit had been released by the first defendant. In fact it would appear that on 16 May 2012, the deposit was released as follows:
(a)$75,183.90 to the first mortgagee, Bank of Queensland;
(b)$53,293.10 to the first defendant, on account of commission and advertising expenses; and
(c)$31,523 to RT Edgar on account of commission and advertising expenses.
Despite hearsay assertions to the contrary in an affidavit filed on behalf of the first defendant, the deposit was released without the plaintiff being advised that it was proposed to release the deposit, and without the plaintiff’s consent. No provision of the Sale of Land Act 1962 permitted the first defendant to release the deposit at the time he made the payments referred to in the previous paragraph. In fact, the release of the deposit was contrary to the provisions of the Sale of Land Act.[3]
[3]Cf Sale of Land Act 1962, ss 23, 24, 26, 27 and 28. See further, s 59 of the Estate Agents Act 1980.
By letter dated 5 September 2012, addressed to the plaintiff’s solicitors, Best Hooper attempted to outline the position of their client, Mr Roberts (the sole director, secretary and shareholder of the first defendant). In relation to the release of the deposit, Best Hooper said:
“Our client now appreciates the error, and confirms his obligation to indemnify your client in relation to the deposit, if of course your client establishes that it (scil she) is entitled to the deposit.”
Perhaps presciently, the letter went on:
“Your client is obviously at liberty to report our client’s conduct to the relevant authority …”
On 6 September 2012, Best Hooper wrote to the plaintiff’s solicitors advising them, amongst other things, that their client did not hold the sum of $53,293.10 (the amount released to the first defendant on account of commission and advertising expenses) as a stakeholder.[4]
[4]Cf s 59 of the Estate Agents Act 1980.
On 7 September 2012, the liquidators for the vendor sent an email to the plaintiff’s solicitors in the following terms:
“I refer to your recent correspondence regarding 7 Parslow Street, Malvern.
I note your advice that your client, the purchaser, has now rescinded the contract of sale and seeks the return of the deposit paid.
As you will note, the liquidators disclaimed any interest in the contract and therefore, we are unable to direct the real estate agent to return the deposit.
The liquidators will abide any orders of the court, with respect to the return of the funds.”
On 10 September 2012, the solicitors for the Bank of Queensland (“the first mortgagee”) advised that they would hold the sum of $75,183.90 on trust “to await agreement, order of the court or payment into court”.[5] On 11 September 2012, the solicitors for RT Edgar advised the plaintiff’s solicitors that RT Edgar was holding in its trust account the sum of $31,523.
[5]See paragraph 31(a) of the plaintiff’s affidavit sworn 17 September 2012. But cf Exhibit AJG-19 to that affidavit.
On 19 September 2012, receivers and managers of the second defendant were appointed.
The history of the proceeding
This proceeding was commenced by way of originating motion, on the basis that there was no relevant factual dispute. The plaintiff filed and served an affidavit in support of her application for relief against the first defendant.[6]
[6]Plaintiff’s affidavit sworn 17 September 2012.
The matter came on before Dixon J in the Practice Court on 20 September 2012. On that day, the first defendant relied upon an outline of submissions – the substance of which was designed to persuade the Court that:
(a)the issues in dispute were not likely to involve short points of law (and therefore the originating process used by the plaintiff was not appropriate);
(b)the relevant parties were not all before the Court (and therefore the Court should not deal with the matter);
(c)the issues between the parties had not been properly identified (again, designed to persuade the Court not to deal with the matter);
(d)there were likely to be disputed questions of fact (and again, therefore the matter should be pushed off for a hearing on a subsequent date);
(e)the plaintiff’s submissions raised a number of issues about the operation of the Property Law Act 1958, the Sale of Land Act 1962, the Estate Agents Act 1980 and the Corporations Act 2001, which the first defendant’s counsel had not had sufficient time to consider; and
(f)the plaintiff’s assertion that there was any urgency in relation to the resolution of this proceeding was overstated.
On 25 September 2012, the first defendant filed and served an affidavit of Mr Roberts, purporting to answer the plaintiff’s original affidavit. A hallmark of Mr Roberts’ affidavit is the amount of irrelevant and inadmissible material in it. For reasons which will become apparent, nothing more need be said about this affidavit at this stage - other than that the plaintiff took the trouble to obtain further affidavits from some of the people referred to in Mr Roberts’ affidavit for the purpose of answering and refuting the hearsay propositions to which he deposed.
The trial of this proceeding
Last Friday, the solicitors for the first defendant notified the Court that they would make application for leave to cease acting for the first defendant on the morning of trial. Notwithstanding this notification, the solicitors and counsel for the first defendant appeared at trial. The foreshadowed application was not made, and the first defendant’s solicitors and counsel acted for the first defendant in the defence of the plaintiff’s claim. However, instead of contesting all of the issues that the first defendant’s materials suggested might have been in issue between the parties, counsel for the first defendant (at the outset of the trial) said that “[t]he only point that would be in dispute … [was] the question of the legal effect of the disclaimer by the liquidator”.
As had previously been foreshadowed, the second defendant did not appear: it was content to abide the order of the Court.
In support of her claim, plaintiff’s counsel read the plaintiff’s affidavit sworn 17 September 2012 and affidavits of Marcus Timothy Ridgway and Michael Peter Ebeling.[7] The affidavits of Mr Ridgway and Mr Ebeling were designed to counter the hearsay statements in the affidavit of Mr Roberts, to the effect that either of them had told Mr Roberts that the deposit could be released or that the plaintiff had consented to such a course. The first defendant did not seek to cross-examine the plaintiff, Mr Ridgway, or Mr Ebeling.
[7]Both sworn 3 October 2012.
In defence of the plaintiff’s claim, the first defendant relied upon the affidavit of Mr Roberts sworn 24 September 2012 and an affidavit of a solicitor from Best Hooper, Mr Matthew David Francke.[8] The plaintiff did not seek to cross-examine Mr Roberts or Mr Francke. Thus, the trial proceeded solely on the basis of the admissible parts of the various affidavits, and the documents tendered.
[8]Sworn 19 September 2012.
Counsel for the plaintiff took a number of objections in relation to both Mr Roberts’ affidavit and Mr Francke’s affidavit. In the end, so far as Mr Roberts’ affidavit was concerned, the defendant sought only to rely upon paragraphs 1 to 18, 30 to 33 and 35 to 42.
While counsel for the first defendant conceded the force of the plaintiff’s objection to paragraph 3 of Mr Francke’s affidavit, there was a dispute about the admissibility of paragraph 5 on the basis of hearsay. Paragraphs 4 to 6 of Mr Francke’s affidavit are in the following terms:
“4. I then wrote to Ms Wright [liquidator] at 1:42pm, as follows:
Dear Ms Wright,
As discussed earlier, my client would like the settlement to proceed and is prepared to indemnify the Liquidators in relation to the costs of same. My proposed correspondence to the Purchaser’s solicitors is attached. If you agree to same, please sign where indicated and return the letter to me today.
Settlement is scheduled for Monday, so I would be grateful for your urgent reply.
If you wish to discuss, please telephone me on the number below.
5. At 2:49pm, Ms Wright responded as follows
Hi Matthew
Please find attached a signed copy of the letter
Regards
6. A copy of the signed letter and the above email correspondence is now produced and shown to me and marked MDF-01. The letter, as co-signed by the Liquidator, was then forwarded to the plaintiff’s solicitors.”
The letter sent to the plaintiff’s solicitors (and which Mr Francke contends was signed by the liquidator) was dated 31 August 2012, and provided as follows:
“We act for the second mortgagee, Mr Roberts. However, we write this letter with the consent of the Liquidators, and as their agent in relation to the conveyancing transaction, for the reasons set out below.
We understand that your clients have a number of concerns in relation to the transaction. Insofar as the sale of the property is concerned, our client has now agreed to indemnify the Liquidators in relation to the costs of the transaction, and accordingly the Liquidators have consented to proceeding with the settlement, and have provided us with the relevant signed Transfer of Land, to act at (sic) their agent at settlement.
For your information, after payment of the usual conveyancing and agent’s fees, the proceeds of sale will be distributed to the first mortgagee, with the balance being received by our client.
We note that settlement is due on Monday, 3 September 2012.
Please send us a notice of adjustments immediately and without delay.
If your clients fail to settle on Monday as required, notice of rescission will issue immediately and without delay and the licence agreement will be terminated without further notice.
Please acknowledge receipt of this letter.”
On the following Monday (3 September 2012), the plaintiff’s solicitors wrote to the liquidators and to Best Hooper in terms to which I have already referred. In the letter to the liquidators, the plaintiff’s solicitors went on:
“The Best Hooper correspondence [of Friday 31 August 2012] suggests that it has been despatched with your consent. However, Best Hooper do not claim to be acting for you and so far as we are aware Sevdalis & Associates continues to act for the vendor.
The threat in the penultimate paragraph of the Best Hooper correspondence is misconceived and provocative given that you have disclaimed an interest in the Contract of Sale and the Licence Agreement.
Relying upon the matters detailed in earlier correspondence and further matters that have come to light, our client as purchaser hereby rescinds the contract of sale as she is entitled to do and requires immediate repayment of the deposit.”
At no stage has either the second defendant, or the liquidators, or the subsequently appointed receivers and managers, ever contested the plaintiff’s assertion that she was, and is, entitled to rescind the contract of sale.
In any event, the plaintiff objected to paragraph 5 of Mr Francke’s affidavit. It was submitted that this paragraph contained a hearsay assertion that the liquidators consented to the completion and settlement of the contract of sale – notwithstanding that they had previously disclaimed the contract “on the company’s behalf”.[9] Neither of the liquidators swore an affidavit or were called to give evidence. Whatever may have been the relevance of the representation the first defendant sought to rely upon from Mr Francke’s affidavit, it was (and is) clearly hearsay. Counsel for the first defendant did not seek to make the alleged representation of the liquidator admissible pursuant to any exception to the hearsay rule.[10] Further, he did not even seek to prove, by some admissible means, the alleged signature of the liquidator. Accordingly, any representation of the liquidator contained in Mr Francke’s affidavit was, and is, inadmissible.
[9]To borrow from the words of s 568(1) of the Corporations Act.
[10]See generally ss 59 and 60 of the Evidence Act 2008.
However, even if the representation referred to in Mr Francke’s affidavit was not hearsay, the substance and effect of it was very much in issue. The liquidator was asked to sign the proposed letter to the plaintiff’s solicitors if she “agree[d] to same”. The first question to be asked is to what the liquidator’s signature might have signified agreement. The possibilities include an agreement to the mere sending of the letter. However, even if a signature by the liquidator could be construed as a consent by the liquidators to a proposal that settlement be completed on the basis that Mr Roberts indemnify the liquidators in relation to the costs “of same”, the next possibility that exists is that the liquidators were only consenting to the continuance of an arrangement that was consensual between vendor and purchaser – rather than consenting to an arrangement whereby Mr Roberts would, on behalf of the vendor, enter into, or continue, what by then was an ongoing dispute between the parties.
In this regard, it is to be noted that while (and perhaps for obvious reasons involving the wrongful release, by Mr Roberts’ company, of the deposit back in May 2012) Mr Roberts may have wanted the settlement to proceed, the letter sent by his solicitors said nothing as to how the disputes that otherwise existed between the plaintiff and the vendor at the time of the liquidators’ disclaimer might be resolved.
In my view it is at least as likely as not that any signature by the liquidator (as sought to be proved on behalf of the first defendant) signified no more than consent to an arrangement that would not be contentious between the parties. So much might be inferred from the liquidator’s email of 7 September wherein the liquidators say they will abide the order of the court. No step taken by the liquidators after 30 August has given any indication other than that the liquidators want nothing more to do with the contract of sale.
Further, while one cannot speculate, the reference in the 31 August letter to a notice of rescission being issued if settlement did not proceed on the following Monday, may have signified no more to the liquidators than that if there was no agreement between the plaintiff and Mr Roberts to Mr Roberts’ proposal, then the contract of sale would be immediately brought to an end, and the licence agreement terminated.
The resolution of this proceeding
In support of the plaintiff’s case, counsel for the plaintiff relied upon Re Willmott Forests Limited.[11] In that case, Warren CJ and Sifris AJA dealt with the consequences of a disclaimer under s 568 of the Corporations Act. Their Honours said:[12]
[11][2012] VSCA 202.
[12]Ibid, [23]-[37].
“[23] The consequences of any disclaimer, so far as it affects the company and other parties, is set out in s 568D of the Act.
[24] Under s 568D of the Act the disclaimer –
(a)terminates the company’s ‘rights, interests, liabilities and property’ in the disclaimed property; and
(b)only affects another person’s property if it is necessary ‘to release the company and its property from liability’.
[25] By disclaiming the contract, WFL no longer has any contractual rights or liabilities under the contract. It is no longer required to perform its part of the contractual bargain. It does not have to provide the lessee with possession and quiet enjoyment. It follows that the lessee, as the other contracting party, loses its rights and is no longer required to fulfil its obligations. This is because the rights and duties of WFL as lessor and the lessee are reciprocal and interdependent. However, there is a qualification to the extent to which the other parties’ interests or property is affected. It is only affected to the extent necessary to release the company [WFL] from liability.
[26] It is clear from the words used that third party rights and interests can be affected and indeed they may affect the most innocent of parties. The remedy is provided in s 568D(2). This section provides for such person ‘to be a creditor of the company to the extent of any loss suffered by the person because of the disclaimer and may prove such a loss as a debt in the winding up’. Accordingly, the Growers can prove for the amount they have been deprived of because of non-performance of the contract by WFL.[13] Further, ss 568B and 568E provide a further remedy to parties aggrieved by any disclaimer. They can apply to the Court to set aside the disclaimer. They need to establish that the prejudice they will suffer is ‘grossly out of proportion’ to the prejudice to the company’s creditors.[14] These factual matters were not before the trial judge or this court.
[13]Re Richardson Meat Industries Ltd (1989) 15 ACCR 343. See also Christopher Moran Holdings Ltd v Bairstow and Anor [2000] 2 AC 172, 180 where Lord Hobhouse referred to a similar section as ‘…a statutory right to compensation directly analogous to a right to claim damages for a statutory fault. It’s character is compensatory.’
[14]SS 568B(3) and 568E(5).
…
[30] [Counsel] for WFL, submitted that the liability was an ongoing liability to perform which could be terminated in relation to such future performance. He relied on Rothwells Ltd (in liquidation) and Others v Spedley Securities Ltd (in liquidation) & Anor.[15]
[31] In Rothwells, Hodgson J held that a disclaimer cannot terminate obligations which have accrued in the past. At page 422 his Honour said:
‘I accept Mr Bathurst’s submission that contractual rights can be property, and that there are, in this case, contractual rights such as the absolute right to receive $895,915, which can be characterised as property. However, it seems to me that obligations which have already accrued in the past are not liabilities which can be terminated. Liabilities which can be terminated could be such things as an obligation to arise in the future to pay money or transfer property or provide goods or services, and they could be restrictions on or inroads into the use or enjoyment of property. Where an obligation has arisen but the time for performance has not arrived, or where the obligation is subject to conditions which are not yet performed, then it may be, as Mr Bathurst submits, that that is a liability which can be terminated. In some cases, however, a question of degree may arise whether in substance this is a fully accrued obligation which cannot be terminated, or in substance an obligation in relation to the future which can be.’
…
[37] The context of the word ‘liability’ in s 568D(1) suggests that it should be given the widest possible meaning and include the obligation to provide possession and quiet enjoyment. The section is specifically designed to enable a liquidator ‘to cease performing obligations … [and] to achieve a release of the company in liquidation from its obligations’.[16] If WFL is to be relieved of its obligation to provide quiet enjoyment, clearly and in context a liability, the interest of the lessee so far as tenure is concerned is directly related to and underpins such liability. The tenure must go. It is necessary to affect the Growers rights (tenure) in order to release WFL from its liability (possession and quiet enjoyment). The cases where rights have been preserved usually involve claims against third parties unrelated to any liability of the company in liquidation.[17]”[18]
[15](1990) 20 NSWLR 417 (‘Rothwells’).
[16]Sims v TXU Electricity [2005] NSWCA 12, [20] (Spigelman CJ).
[17]Hindcastle is such a case, as is Sandtara Pty Ltd v Abigroup Ltd (1996) 19 ACSR 578.
[18]Footnotes in original. See further, the concurring judgment of Redlich JA.
In answer to the plaintiff’s case, the first defendant relied upon cases such as Dekala Pty Ltd (in liquidation) v Perth Land & Leisure Limited[19] for the proposition that a disclaimer filed by a liquidator in respect of an unprofitable contract relating to the acquisition of land does not divest the purchaser under that contract of any equitable interest that he, she or it may have had in the subject land at the time of the disclaimer.[20] That proposition may be accepted. However, the authorities relied upon by the first defendant are of no assistance to it. The liquidators disclaimed the contract of sale on behalf of the company. Shortly thereafter, the plaintiff accepted that the contract was at an end. Neither the plaintiff nor the vendor seek to assert the existence and enforceability against each other of any right said to exist at the time of the disclaimer.
[19](1989) 17 NSWLR 664.
[20]See further, In re Bastable [1901] 2 KB 518; Re Clark; ex parte Kahlefeldt (1985) 13 FCR 106, 111; Sheahan as trustee of the bankrupt estate of Cooper v Cooper [1999] FCA 766, [42]; and GE Commercial Corporation (Australia) Pty Ltd v Nichols as trustee of bankrupt estate of Lymn [2012] NSWSC 562, [13].
In what can only, at best, be described as a curious step, the solicitors for the sole director and shareholder of the agent of the vendor (Mr Roberts) sought the “consent” of the liquidators to the completion of the contract and settlement. This step was taken in circumstances where Mr Robert’s company (the first defendant), to whom the deposit was paid, had already released the deposit without lawful authority. Without Mr Roberts taking this step (and assuming his company, the first defendant, had retained the deposit as it was required to do), it is likely that the deposit would have been (as it should have been) returned to the plaintiff – no party to the contract of sale seeking to complete or settle the contract.
Finally, notwithstanding the assertion by the solicitors for Mr Roberts that, if settlement did not occur on 3 September 2012, “notice of rescission [would] issue immediately and without delay”, there is no evidence of any such notice of rescission having been prepared or sent (presumably because the only party with standing to take such a step was the vendor, a party that appears to have no interest in completing and settling the contract of sale). As I put to counsel for the first defendant in argument, no one is pursuing the plaintiff saying that she wrongly rescinded the contract of sale, and no one is seeking specific performance of it.
The present position is the liquidators have, on behalf of the vendor, disclaimed the contract of sale. The date for settlement has passed, and neither party to the contract of sale seeks its completion or settlement. The deposit was paid to the first defendant as a stakeholder, pending payment to the vendor, or otherwise, in accordance with the provisions of the Sale of Land Act. Circumstances entitling the vendor to payment of the deposit have never arisen. The plaintiff is entitled to the return of the deposit, together with interest. Alternatively, she is entitled to damages equivalent to the amount of the deposit and interest. It is no answer to the plaintiff’s claim that at the time of disclaimer, either or both of the parties to the contract may have had some pre-existing interest or right. What is clear from the evidence is that on and from 23 August 2012, the vendor has not sought to complete the contract (and has been prepared to treat the contract as being at an end); and that from 3 September 2012, the plaintiff has been content to accept this position.
Further, it is now tolerably clear (receivers and managers having subsequently been appointed on 19 September) that, without any default on the part of the plaintiff, the contract of sale will not be completed. The contact was terminated on 3 September 2012, if not on 23 August. In the circumstances, the plaintiff is entitled to judgment for the amount of the deposit, together with interest.
Conclusion
There will be judgment for the plaintiff in the sum of $160,000 against the first defendant, together with interest. I will hear submissions as to the quantum of interest and any question of costs.
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