Hauff v Miller
[2012] QDC 199
•19 July 2012
DISTRICT COURT OF QUEENSLAND
CITATION:
Hauff & Anor v Miller [2012] QDC 199
PARTIES:
TREVOR GEORGE HAUFF
(First Plaintiff)IRENE CHRISTINE HAUFF
(Second Plaintiff)
v
ANNE MARIE MILLER
(Defendant)FILE NO/S:
234 of 2010
DIVISION:
Civil
PROCEEDING:
Claim
ORIGINATING COURT:
District Court, Cairns
DELIVERED ON:
19 July 2012
DELIVERED AT:
Cairns
HEARING DATE:
21-22 June 2012
JUDGE:
Everson DCJ
ORDER:
(1) I declare that:
(1) the plaintiffs are entitled to the deposit of $10,000.00 held by the Agent pursuant to Clause 2.4(1)(c) and 2.4(2) of the Terms of Contract in the Contract for Sale of Real Property made the 3rd September 2010 between the plaintiffs as Seller and the defendant as Buyer of the property described as Unit 5, at 14A-16 Andrews Close Port Douglas and being Lot 5 on SP168547; and
(2) the defendant is in default of the Contract of Sale of Chattels and the plaintiffs are entitled to and have properly terminated the Contract for the sale of Chattels and are entitled to the deposit of $3000.00 pursuant to Clause 3 of the Contract for the Sale of Chattels.
(2) I order payment of the monies paid into court on 13 January, 2011 together with interest thereon to the plaintiffs.
CATCHWORDS:
VENDOR AND PURCHASER- CONTRACT FOR SALE OF LAND- contract conditional on purchaser obtaining loan- finance clause with specified finance institution – right of purchaser to terminate.
Foran v Wright (1989) 88 ALR 413
Zieme v Gregory [1963] VR 214
COUNSEL:
Mr Sheridan for the plaintiffs
Mr Ryall for the defendant
SOLICITORS:
Trevor Hauff Lawyers for the plaintiffs
Robert Palethorpe for the defendant
Introduction
This is a dispute concerning a contract for the purchase of a building unit at Port Douglas, which did not proceed to completion.
The plaintiffs are the owners of a residential unit namely Unit 5 at 14A-16 Andrews Close, Port Douglas, being Lot 5 in the Community Titles Scheme known as Solana by the Beach (“the property”). By a standard REIQ contract dated 3 September 2010, the defendant contracted to purchase the property for the sum of $575,000.00 (“the building contract”). The building contract was subject to finance in the amount of $400,000.00 from the nominated financier ING Bank with the finance date being 10 September 2010. The property was furnished and a further contract also dated 3 September 2010 was entered into between the plaintiffs and the defendant for the purchase of the chattels in the property for the sum of $30,000.00 (“the chattels contract”).
The deposit payable pursuant to the building contract was $10,000.00 and the deposit payable pursuant to the chattels contract was $3,000.00.
On 13 January 2011 the agent paid the $10,000.00 deposit pursuant to the building contract into court.
In this proceeding the plaintiffs seek the following relief:
(1) A declaration that the defendant is in default of the building contract and that the plaintiffs have properly terminated the building contract pursuant to clause 9.1 thereof.
(2) A declaration that the plaintiffs are entitled to the remedies, at their election, contained in clauses 9.3, 9.4, 9.5 and 9.6 of the building contract.
(3) A declaration that the plaintiffs are entitled to the deposit of $10,000.00 pursuant to clauses 2.4(1)(c) and 2.4(2) of the building contract and paid into court.
(4) A declaration that the defendant is in default of the chattels contract and that the plaintiffs are entitled to and have properly terminated the chattels contract and is entitled to the deposit of $3,000.00 pursuant to clause 3 thereof.
Relevant Terms of the Building Contract
Relevantly, the building contract stated:
“2.4 Entitlement to Deposit and Interest
(1) The party entitled to receive the Deposit is:
(a) if this contract settles, the Seller;
(b) if this contract is terminated without default by the Buyer, the Buyer; and
(c) if this contract is terminated owing to the Buyer’s default, the Seller.
(2) The interest on the Deposit must be paid to the person who is entitled to the Deposit.
...
3.1 This contract is conditional on the Buyer obtaining approval of a loan for the Finance Amount form the Financier by the Finance Date on terms satisfactory to the Buyer. The Buyer must take all reasonable steps to obtain approval.
3.2 The Buyer must give notice to the Seller that:
(a) approval has not been obtained by the Finance Date and the contract is terminated; or
(b) The finance condition has been either satisfied or waived by the Buyer.
3.3 The Seller may terminate this contract by notice to the Buyer if notice is not given under clause 3.2 by 5pm on the Finance Date. This is the Seller’s only remedy for the Buyer’s failure to give notice.
3.4 The Seller’s right under clause 3.3 is subject to the Buyer’s continuing right to terminate this contract under clause 3.2(1) or waive the benefit of this clause 3 by giving written notice to the Seller of the waiver.
…
9.1 Seller May Affirm or Terminate
If the Buyer fails to comply with any provision of this contract, the Seller may affirm or terminate this contract.
…
If Seller Terminates9.3
If the Seller terminates this contract under clause 9.1, it may do all or any of the following:
(1) resume possession of the Property;
(2) keep the Deposit and interest earned on its investment;
(3) sue the Buyer for damages; and
(4) resell the Property.
9.4 Resale
(1) The Seller may recover from the Buyer as liquidated damages:
(a) any deficiency in price on a resale; and
(b) its expenses connected to this contract, any repossession, any failed attempt to resell, and the resale;
provided the resale settles within 2 years of termination of this contract.
(2) Any profit on a resale belongs to the Seller.
9.5 Seller’s Damages
The Seller may claim damages for any loss it suffers as a result of the Buyer’s default, including its legal costs on a solicitor and own client basis.
Interest on Late Payments9.6
(1) Without affecting the Seller’s other rights, if any money payable by the Buyer under this contract is not paid when due, the Buyer must pay the Seller at settlement interest on that money calculated at the Default Interest Rate from the due date for payment until payment is made.
(2) The Seller may recover that interest from the Buyer as liquidated damages.
(3) Any judgment for money payable under this contract will bear interest from the date of judgment to the date of payment and the provisions of this clause 9.6 apply to calculation of that interest.”
Relevantly the chattels contract stated:
“A deposit of $3,000.00 shall be payable on the signing hereof and shall be forfeited if the sale is not completed by the payment of the balance of this Purchase Price on the Settlement Date.”
The Conduct of the Defendant
On entering into the contract the defendant had previously negotiated a loan facility with ING Bank, obtaining pre-approval for $200,000.00.[1] The contracts were signed on a Friday and that evening the defendant contacted her mortgage broker, Ms Fisk to seek that ING Bank “reactive the loan”.[2] When Ms Fisk contacted ING Bank on Monday 6 September 2010, she was informed by email from ING that “this has been archived in our system due to no action since May 2010, we will require a brand new loan application to be submitted in order for the deal to proceed.”[3] Ms Fisk was of the view that it would not be possible to obtain a suitable loan from ING Bank by the Finance Date in the building contract. The defendant then decided, on the advice of Ms Fisk, to seek finance from a different financier, the The Rock Building Society Limited (“The Rock”). There is no evidence that the plaintiffs were advised of this decision.
[1] T1-18 lines 30-31
[2] T1-19 lines 10-20
[3] Ex 1 P79
The defendant initially sought an extension of the finance date to 15 September 2010 and this was readily agreed to by the plaintiffs.[4] Subsequently, a further extension of the finance date was sought to 20 September 2010. On this occasion the plaintiffs were only prepared to extend the finance date to 17 September 2010.[5] In each instance time was to remain of the essence. By 17 September 2010 finance had still not been obtained from The Rock and the defendant’s solicitors wrote to the plaintiffs’ solicitors in the following terms: -
“Our client has not been able to obtain finance approval. Accordingly, the contract is now at an end. Please authorise the agent to refund the deposit to our client in full.”[6]
[4] Ex 1 P23
[5] Ex 1 P26
[6] Ex 1 P27
It appears to be common ground that this purported termination referred to both the building contract and the chattels contract.
The Response of the Plaintiffs
After taking issue with the purported termination of the contracts the plaintiffs’ solicitors wrote to the defendant’s solicitors on 22 September 2010 alleging that she was in breach of clause 3.1 of the building contract because she did not take all reasonable steps to obtain approval form the nominated financier, ING Bank. It was alleged by the plaintiffs that this amounted to a repudiation of the building contract. The plaintiffs’ solicitors went on to state that their clients “therefore acknowledges your client’s repudiation as notice that she will not complete the contract on the settlement date.” Thereafter, the plaintiffs purported to terminate the building contract pursuant to clause 9.1.
Discussion
It is readily conceded by the defendant that her conduct in attempting to obtain finance from The Rock does not assist her in her argument that she was not in breach of clause 3.1.[7] Rather, it is submitted that there was insufficient time to obtain an approval from ING Bank by the nominated finance date of 10 September 2010 and that when the defendant realised that she would have to lodge a fresh application for finance it was impossible for her to obtain finance within the nominated timeframe of four business days. It is therefore submitted that no step untaken by her would have achieved finance as contemplated by the building contract.
[7] T1-81 lines 1-10
It is established law that the defendant bears the onus of establishing that she had taken all reasonable steps to obtain finance from ING Bank in order to invoke the benefit of clause 3.1 of the building contract.[8] The difficulty for the defendant is that no evidence was called from ING Bank as to her prospects of obtaining finance by 5:00 p.m. on Friday, 17 September 2010, the extended Finance Date. In the circumstances and particularly having regard to the fact that she made no application for finance to this financier as contemplated by clause 3.1 at all, I am not satisfied that the defendant has discharged the onus of proving that she took all reasonable steps to obtain finance approval from the nominated financier, ING Bank.
[8]Zieme v Gregory [1963 VR223]
It is further submitted by the defendant that the purported termination by the defendant on 17 September 2010 was ineffective and the response of the plaintiffs should be categorized as abandonment of the contract. In this regard it is submitted that clause 3 of the building contract was for the benefit of the defendant alone and that she was not in breach of the building contract if she did not obtain finance in terms contemplated by it. It is submitted that the plaintiffs needed to demonstrate that they were ready, willing and able to perform the building contract by attending at the date nominated for settlement ready to settle. Whilst I accept the former proposition, applying the approach taken by the High Court in Foran v Wright[9], I am of the view that the plaintiffs were entitled to consider the contracts at an end as the notice in writing from the defendant’s solicitors dated 17 September 2010 clearly amounted to a repudiation of both contracts. In the circumstances, it was not necessary for the plaintiffs to present at settlement, there being absolutely no evidence before me that they were not ready, willing and able to complete the contracts, but for the defendant’s repudiation of them.
[9] (1989) 88 ALR 413
Appropriate Remedies
The relief sought pursuant to clause 9 of the building contract is couched in terms of the defendant “failing to comply with any provision of this contract.” It could be argued that in not taking all reasonable steps to obtain approval of a loan from the nominated financier by the extended finance date the defendant failed to comply with a provision of the building contract, however this provision was entirely for her benefit and clause 3.3 makes it clear that it is not intended that non-compliance in this regard is within the contemplation of clause 9. Clause 3 was for the benefit of the defendant alone and she was not in breach of the building contract in failing to obtain finance pursuant to clause 3. In repudiating the building contract by purporting to rely on clause 3 when she was not entitled to, her conduct falls outside of what is contemplated in clause 9.1. In the circumstances, the plaintiffs clearly have remedies at common law, but the remedies specified in clause 9 of the building contract are not open to them.
I therefore decline to make the first two declarations sought.
The remaining declarations are unaffected by the wording of clause 9 of the building contract and in the circumstances it is appropriate to make the remaining declarations together with an order for the payment out of the monies paid into court to the plaintiffs.
Declarations and Orders
I declare that:
(1) the plaintiffs are entitled to the deposit of $10,000.00 held by the Agent pursuant to Clause 2.4(1)(c) and 2.4(2) of the Terms of Contract in the Contract for Sale of Real Property made the 3rd September 2010 between the plaintiffs as Seller and the defendant as Buyer of the property described as Unit 5, at 14A-16 Andrews Close Port Douglas and being Lot 5 on SP168547; and
(2) the defendant is in default of the Contract of Sale of Chattels and the plaintiffs are entitled to and have properly terminated the Contract for the sale of Chattels and are entitled to the deposit of $3000.00 pursuant to Clause 3 of the Contract for the Sale of Chattels.
I order payment of the monies paid into court on 13 January, 2011 together with interest thereon to the plaintiffs.
0