Kennedy v Dodds

[2009] WADC 72

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   KENNEDY & ANOR -v- DODDS & ORS [2009] WADC 72

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   13 MAY 2009

DELIVERED          :   11 JUNE 2009

FILE NO/S:   CIV 249 of 2009

BETWEEN:   GILLIAN KENNEDY

DONNCHA KENNEDY
Plaintiffs

AND

SUZANNE DODDS
TIMOTHY DODDS
First Defendants

ALAN RANCE
REBECCA RANCE
Second Defendants

Catchwords:

Practice and procedure - Western Australia - Summary judgment – Finance clause - 2002 REIWA contract for sale of land

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiffs:     Mr Solomon

First Defendants            :     Mr D A Lenhoff

Second Defendants        :     TBA

Solicitors:

Plaintiffs:     Solomon Brothers

First Defendants            :     Holborn Lenhoff Massey

Second Defendants        :     TBA

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

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Fay v Sheridan [1999] WASCA 61

1. DEPUTY REGISTRAR HEWITT:  In this matter the plaintiffs brought a chamber summons for summary judgment on 6 March 2009 and it is that summons which came before me on 13 May 2009 for determination.

2. The basis of the plaintiffs' claim has as its genesis a contract for the sale of a property to the first defendants.  It is alleged that the contract had a subject to finance provision requiring the defendant to make application for finance, that they failed to make that application and as a consequence breached the contract and are liable to either common law damages or liquidated damages calculated according to the general conditions applicable to the contract.  In so far as the second defendants are parties they are real estate agents holding the deposit paid by the defendants when entering the contract.  The argument has gravitated down to one issue.  The allegation by the plaintiffs relied upon to support the summary judgment application concerns par 1 of the contract for sale which is brought into play by completion of the finance clause on the previous page.  That finance clause nominates the ANZ Bank as a lender, the latest time for approval of finance to be 21 April 2008 and the amount of the loan $667,500.  It is signed by the purchasers.

3. The relevant terms relied upon by the plaintiffs to support the application are to be found in par 1.1(a) which provides:

   "The buyer must:

   1.Immediately after the contract date make an application for finance approval to the lender using, if required by the lender, the property as security; and

   2.Use all best endeavours in good faith to obtain finance approval."

4. Elsewhere in the clause a definition of finance approval is contained but for the purposes of the present application it is sufficient to say that an indication that finance will be made available on the terms sought is a finance approval.

5. The real basis of controversy between the parties concerns the actions taken by the buyers following the entry of the contract.  In summary, what happened was the defendants approached one Jason Christopher Blackburn who is a mortgage broker with a view to obtaining the finance necessary for the completion of the purchase contract they had entered into.

6. The mortgage broker took details from the defendants concerning their financial situation and after analysing that information concluded, on the basis of his previous dealings with the ANZ Bank, that the bank would not be prepared to loan the monies to the defendants to allow their purchase to proceed.

7. There elsewhere appears information contained in the form of a letter written from the defendants to the plaintiffs, information to suggest that they were advised that the proposed application for a loan was hopeless and furthermore to make such an application and have it refused would damage their prospects of obtaining finance on other occasions.

8. After that brief summary I now return to an analysis of the relevant clause of the contract between these two parties and in particular focus on the definition term.  That portion of the clause contains the following definition:

   "Lender means:

   (a)The lender or mortgage broker nominated in the Schedule; or

   (b)If the buyer makes a finance application to, or if no lender is nominated in the Schedule then, any bank, building society, credit union or other institution which makes loans and in each case is carrying on business in Western Australia or a mortgage broker carrying on business in Western Australia."

9. The contention advanced by the plaintiffs is that the provision contained in par 1.1(a) to make an application to the lender must mean the lender nominated in the subject to finance clause namely, the ANZ Bank.  The plaintiffs have gone to argue that it is common ground that no such application was made hence the clause has been breached and as a consequence the plaintiffs was entitled to act, as it did, by terminating the contract, re‑selling the property and suing for damages.

10. The finance clause contained in this contract appears to be an innovation introduced by a revision of the standard REIWA contract in 2002.  Although the first defendants rely on the case of Fay v Sheridan [1999] WASCA 61 that case revolved around the interpretation of a previous version of the clause which in my view is materially different to that in the present case. It is therefore unhelpful. No other decision seems to offer guidance as to the correct interpretation of the clause. The power to grant summary judgment should only be exercised when it is clear there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87.

11. I have difficulty accepting that the interpretation contended by the plaintiffs is unarguable.  The definition of the lender to my mind clearly includes the prospect that a mortgage broker can be a lender within the meaning of the clause.  Furthermore, I interpret par (b) of the definition of lender to mean that a purchaser need not apply to the lender nominated in the subject to finance clause but may satisfy the requirements for making an application for finance by approaching any bank, building society, credit union or other institution which makes loans carrying on business in Western Australia or a mortgage broker carrying on business in Western Australia.

12. It is my conclusion that the contention advanced by the first defendants that their actions in approaching Mr Blackburn, a mortgage broker, with a view to arranging the finance for the completion of the purchase arguably satisfied their obligations under the terms of par 1.1(a).  In doing so I am mindful of the argument advanced by the plaintiffs that a lender must be limited to some person actually in possession of or having access to funds which can be made available by way of loan.  In my view such an argument is very much weakened by the definition of lender contained in par (b) of the definition clause since the only qualification placed upon a mortgage broker being a lender within the meaning of this contract is simply that mortgage broker carry on business in Western Australia.

13. Although a great deal of other material was canvassed in the course of argument before me, in my view the application simply boils down to the simple point which I have decided and there is no need to further canvass other issues raised in argument or any advantage in giving my views on those matters since they were not central to the plaintiffs' application and do not add anything to the understanding of the decision that I have reached.