Kotsifas v Parente
[2016] VSC 833
•23 November 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CIVIL LIST
S CI 2015 05808
| JOHN KOTSIFAS and ANGELA LOUISE MCCOOK | Plaintiffs |
| v | |
| CATERINA MARIANA PARENTE and PHILLIP PARENTE | Defendants |
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JUDGE: | Efthim AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 August 2016 |
DATE OF JUDGMENT: | 23 November 2016 |
CASE MAY BE CITED AS: | Kotsifas v Parente |
MEDIUM NEUTRAL CITATION: | [2016] VSC 833 |
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CONTRACT – Whether rescission notice valid – Relevant reasonable person is a reasonable reader in the position of the purchaser – Reasonable person would have no doubts regarding the meaning of notice – Whether letter was a repudiation of contract for the sale of land – Contract only repudiated when party demonstrates an intention not to be bound by it – Relief against forfeiture – Property Law Act 1958 (Vic), section 49(2)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J Levine | Darroll Nelson |
| For the Defendant | Mr D P Lloyd | Slater & Gordon Limited |
HIS HONOUR:
On 19 September 2014, the plaintiffs, John Kotsifas and Angela Louise McCook, entered into a contract to purchase a property situated at 24 Salisbury Street, Balwyn, Victoria from the first defendant, Caterina Mary Parente.
The property was sold for $2,475,000.00 and the plaintiffs paid a deposit of $247,500.00. Settlement was scheduled to take place on 19 September 2015. The settlement date was extended by mutual agreement to occur on 28 September 2015.
Pursuant to special condition 30 of the contract, the plaintiffs consented to the land being transferred from the first defendant to her husband, Phillip Parente, the second defendant, prior to settlement. The transfer occurred on 8 December 2014. It was not until 29 September 2015 that the plaintiffs became aware of the transfer. Settlement did not take place on 28 September 2015 and on 29 September 2015 the defendants’ solicitors forwarded to the plaintiffs the following letter containing a rescission notice:
I refer to the above matter and previous correspondence with you.
I confirm receipt of your letter dated 24 September 2015 which we received on 28 September 2015 in which you enclose a Transfer of Land and Nomination Form.
I note that in accordance with Special Condition 31 of the Contract, the Vendor transferred the Property to her husband, Phillip Parente on or around December 2014. A recent title Search of the Property is attached for your information.
I note the Form 6A Statutory Declaration was not attached despite your letter suggesting it was. Kindly provide us with a copy of the Statutory Declaration.
I also note that the Nomination Form has not been dated. Please confirm the date of Nomination.
To avoid any unnecessary delays, I will hand amend the Transfer of Land to reflect the current transferor as Phillip Parente not Caterina Mariana Parente.
In the meantime, as settlement did not proceed on 28 September 2015, I am instructed to serve the attached Rescission Notice requiring the Purchaser to settle within a 14 day period.
Notwithstanding the above, your letter suggests that settlement can be arranged for “some time after 1 October 2015”.
Settlement has been tentatively booked for Monday 5 October 2015 at SAI Global, Level 20 535 Bourke Street Melbourne for 12.30pm. Please confirm this time is suitable.
Kindly forward a Statement of Adjustments to my office for review and I shall advise you of the payout figures.
Please also provide us with confirmation, pursuant to Special Condition 29 that the council and water rates and land tax have been paid by the Purchaser during the Licence Period by the due date.
The rescission notice reads as follows:
Under the provisions of the said Contract of Sale you agreed inter alia to settle this matter and pay the balance of purchase money on 19 September 2015.
On or around 18 August 2015, the Purchaser requested a variation of the settlement date, namely that Settlement be delayed until 21 December 2015. In consideration of the above requested, the Vendor offered the following proposal to the Purchaser:
1.The licence fee be increased from $1,000 (plus GST) to $1,500 (plus GST);
2.The licence fees for the extended settlement period be paid upfront and on your clients’ acceptance of the terms (the Upfront Fees);
3.Penalty interest was to be payable from 20 September 2015 until 21 December 2015 at the rate of $823.87 per day, to be adjusted at settlement;
4.Legal costs incurred by the Vendor in respect of the delayed settlement was to be borne by the Purchaser; and
5.The Purchaser provide written confirmation from their builder that the property under renovation will be completed by December and that finance will be available to complete settlement on the extended settlement date.
The Purchaser agreed to the above terms, save for the payment of the Upfront Fees, on or about 18 August 2015.
On 19 August 2015 the Purchaser was advised that the terms were non-negotiable and that the Purchaser must pay the licence fees up front and on acceptable of the terms, and by no later than 20 September 2015.
On 7 September 2015 the Purchaser again advised that the fees must be paid up front and prior to 19 September and that failure to do so would result in settlement taking place on Monday 21 September 2015.
On 18 September 2015, the Purchaser requested an extension to the payment of the upfront fees to 30 September 2015 which was rejected by the Vendor on the same day insisting that unless by 12pm on Monday 21 September 2015, the upfront fees are paid:
·the terms of the offer to extend the settlement date to 21 December 2015 will be withdrawn;
·time will become of the essence; and
·the Purchaser will be provided with a further 7 days to settle, making settlement the 28th of September 2015.
The Purchaser did not pay the upfront fees on 21 September 2015 and the offer to extend the settlement date to 21 December 2015 was withdrawn. The Vendor asserted that time was again of the essence and required settlement to take place on 28 September 2015.
You have failed to settle and to make payment of the balance of purchase price on 28 September 2015 or at all and are in default under the said Contract of Sale at the date hereof in the sum of $2,227,500.00.
Was the rescission notice valid?
In Androvitsaneas v Members First Broker Network Pty Ltd,[1] the way in which a validity notice is to be read was considered by the Court of Appeal. Redlich, Priest JJA and Macaulay AJA said:
[1][2013] VSCA 212 [40]-[41].
However he further contends that the notice of termination still required proper particulars and that it would be extraordinary if a notice could be given without proper particularity. We reject that submission. In U108 Pty Ltd v Sing Fan,[2] Hargrave J summarised the relevant legal principles to be applied in determining whether or not a rescission notice is valid:
[2][2010] VSC 12.
The relevant legal principles to be applied in determining whether or not a rescission notice is valid are not in doubt. The relevant authorities were reviewed by Campbell J in Robinson v Becata Pty Ltd.[3] I respectfully adopt his Honour’s analysis. In summary, a rescission notice served under general conditions 5 and 6(2) of Table A must, in relation to its essential features as required by those conditions, be clear and unambiguous. In determining whether or not a rescission notice is relevantly clear and unambiguous, the court applies an objective approach. In Catley v Watson,[4] Brooking J (as he then was) expressed the applicable standard of objective reasonableness in the following terms:[5]
[3][2004] NSWSC 310 [30]–[35].
[4](1981) V ConvR 54-003.
[5]Ibid 62.
A notice is not unequivocal, in the sense in which such notices are required to be unequivocal in relation to their essential contents, if a reasonable person, having considered the notice as a whole, fairly and properly, might entertain a doubt as to its meaning in relation to some essential matter, even though he would form in his mind a preference for one view, rather than the other of what the notice was intended to convey. It must be possible to say that, after the appropriate consideration, any doubts that may have arisen would be quieted and the purchaser would not be left in any uncertainty as to the meaning of the notice.
This statement by Brooking J has been applied in a number of Victorian cases, and further consideration has been given to the attributes of the “reasonable person” for these purposes. In Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd,[6] Ormiston JA said that the relevant reasonable person was “a reasonable reader in the position of the purchaser.”[7] This approach was endorsed by Winneke P (with whom Charles and Eames JJA agreed) in Greydae Pty Ltd v Malilane Pty Ltd.[8] A reasonable reader in the position of the purchaser must be taken as one who knows the terms of the contract of sale, including general conditions 5 and 6 of Table A, and who is aware of the surrounding circumstances relating to the default.[9]
[6](1998) V ConvR 54-575.
[7]Ibid.
[8][2003] VSCA 27 [31].
[9]Ibid.
A reasonable person is not to be treated as a stranger to the agreement or to the circumstances which have given rise to the notice.[10] Andrews knew both the terms of the CR Deed and the surrounding circumstances relating to the alleged default. He knew the reasons for termination, given the numerous communications between the parties about his conduct.
[10]Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd [1998] V Conv R 54-575, 66–901; Greydae Pty Ltd v Malilane Pty Ltd [2003] VSCA 27, [31] (Winneke P).
Here I accept that when viewed objectively, a reasonable person would have no doubts regarding the meaning of the notice. It was valid.
Was the first defendant able to give the rescission notice?
An issue has arisen as to whether the first defendant had the ability to give the rescission notice. Special condition 30 of the contract provided that the purchasers would consent to the transfer of the property into the name of the second defendant at the vendor’s expense.
General clause 10.1 of the contract provides:
At settlement:
a) the purchaser must pay the balance; and
b) the vendor must:
i. do all things necessary to enable the purchaser to become the registered proprietor of the land.
The first defendant has deposed that on 1 October 2015 she provided her solicitors, Slater & Gordon Limited, an instrument of transfer executed by the second defendant as transferor and registered proprietor of the land in preparation for settlement. The first defendant was therefore able to effect settlement and comply with her obligation under the contract.
The letter of 12 October 2015
On 12 October 2015, 13 days after the rescission notice was sent (not 14 days as required), the defendants’ solicitors forwarded the following letter to the plaintiffs:
Dear Mr Kotsifas
I refer to the above matter and previous correspondence with you.
Pursuant to the Rescission Notice served on your office on 29 September 2015, the Contract of Sale (the Contract) has now come to an end and the deposit monies are now forfeited to the Vendor in accordance with the terms of the Contract.
The Vendor reserves it [sic] rights under the Contract as set out in General Condition 28 and Special Condition 12 of the Contract.
We also hereby give you notice that the Licence Agreement has now been terminated pursuant to Clause 3 of that Agreement and the purchasers are required to vacate the property by close of business, Monday 19 October 2015.
The plaintiffs submit that this letter was repudiatory of the contract. A contract will be repudiated only when a party demonstrates an intention not to be bound by it. In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd,[11] Gleeson CJ, Gummow, Heydon and Crennon JJ said:
The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[12] (In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract. Nor are we concerned with questions of inability as distinct from unwillingness.) Secondly, it may refer to any breach of contract which justifies termination by the other party.[13] It will be necessary to return to the matter of classifying such breaches. Campbell J said this was the sense in which he would use the word “repudiation” in his reasons. There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements.[14] This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.
[11](2007) 233 CLR 115, [44] (‘Koompahtoo’).
[12]Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 659.
[13]See J Carter, Breach of Contract, 2nd ed, Law Book Co, Sydney, 1991, p 217.
[14]For example, Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 304–5 (Luna Park); Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 .
The letter of 12 October 2015 was received by the plaintiffs one day before the expiry of the 14 days within which the plaintiffs had to remedy the default. The letter was served by facsimile on 12 October 2015. A facsimile transmission report was produced to the Court by the plaintiffs which clearly showed that the letter was served on 12 October 2015. The plaintiffs concede that there was an error in the calculation of time and the letter was simply written a day or two too early by the defendants’ solicitors.
The defendants submit that a genuine but erroneous action by a party to a contract is not repudiatory, but may become so where a positon is taken and persisted with. They refer to GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd,[15] where Finn J referred to the principles governing the repudiation of a contract.
A party will have repudiated a contract if, by words or conduct, it evinces an intention no longer to be bound by it or if that party shows it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way: Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625–626; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623.
The party’s conduct is to be judged objectively by reference to the effect it would be reasonably calculated to have upon a reasonable person: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd, at 658; Satellite Estate Pty Ltd v Jaquet (1968) 71 SR (NSW) 126 at 150.
A party that acts on a genuine but erroneous view of its obligations under the contract will not for that reason alone have repudiated it. That party may still be willing to perform the contract according to its tenor; to recognise its heresy; or to accept an authoritative exposition of the contract: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 431–432; Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277. But persistence in an untenable construction will ordinarily be regarded as repudiatory: Summers v The Commonwealth (1918) 25 CLR 144 at 152; and see Chitty on Contracts, Vol 1, para 25–018 (28th ed).
[15](2003) 128 FCR 1 [889]-[891] (‘GEC Marconi Systems’).
The defendants submit that it is patent from the face of the letter of 12 October 2015 that there was a mistake in the calculation of time. The defendants also submit that if their solicitors persisted in the position taken on 12 October 2015, there would have been a repudiation of the contract. Here there was just one letter and their conduct could not be said to be persistent.
The defendants rely on two English cases to support their submissions. Eminence Property Development Ltd v Kevin Christopher Heaney[16] concerned whether a vendor of land who served a notice to complete making the time for completion of the essence of the sale contract, and then, mistakenly, treated the contract as at an end prior to the expiry of the notice, was thereby itself in repudiatory breach of the contract entitling the purchaser to terminate the contract. The vendor’s solicitors intended to serve a notice of rescission after the expiry to complete. They miscalculated the period of the notice to complete and mistakenly sent a rescission letter two days prior to when the period of notice was due.
[16][2010] EWCA Civ 1168 (‘Eminence’).
Lord Justice Etherton described the test that concerns repudiatory conduct as follows:[17]
So far as concerns repudiatory conduct, the legal test is simply stated, or as Lord Wilberforce put it, “perspicuous”. It is whether, looking at all the circumstances objectively, that is from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract.
Secondly, whether or not there has been a repudiatory breach is highly fact sensitive. That is why comparison with other cases is of limited value. The innocent and obvious mistake of Mr Jones in the present case has no comparison whatever with, for example, the cynical and manipulative conduct of the ship owners in The Nanfri.
Thirdly, all the circumstances must be taken into account insofar as they bear on an objective assessment of the intention of the contract breaker. This means that motive, while irrelevant if relied upon solely to show the subjective intention of the contract breaker, may be relevant if it is something or it reflects something of which the innocent party was, or a reasonable person in his or her position would have been aware and throws light on the way the alleged repudiatory act would be viewed by such a reasonable person. So, Lord Wilberforce in Woodar (at p. 281D) expressed himself in qualified terms on motive, not by saying it will always be irrelevant, but that is not, of itself, decisive.
Fourthly, although the test is simply stated, its application of the facts of a particular case may not always be easy to apply, as is well illustrated by the division of view among the members of the Appellate Committee in Woodar itself.
[17]Ibid [61]-[64].
The second English case relied upon by the defendants is Oates & Anor v Hooper & Anor.[18] In that case, a purchaser did not comply with the terms of the contract and the vendors served a notice to complete which gave the purchaser 10 working days to complete. One day before the time referred to in the notice to complete expired, the purchaser was sent a notice of rescission. It was premature to send the notice of rescission. The vendors were found not to be in repudiatory breach of the contract.
[18][2010] EWCA Civ 1346 [27] (‘Oates’).
Lord Justice Thomas referred to and adopted the test that Etherton LJ referred to in Eminence. His Honour said:[19]
It was obvious that the sellers intended to perform the contract by invoking the contractual machinery to terminate it but had simply made two mistakes in interpreting its provision.
The position can be tested by asking the question whether, if the error had been pointed out, the sellers would have refused to perform the contract by conveying the house to the buyer if he was in turn willing and able to pay the balance of the price.
If the error had been pointed out it is clear, unlike the position in other cases, that the sellers would not have stuck to their position that they were entitled to give the notice at that time. They had genuinely made a mistake.
On the objective evidence, it is clear that the sellers would in those circumstances have been willing to perform the contract if the buyer was willing, ready and able to perform.
[19]Ibid [27].
The plaintiffs state that in Oates, as well as in Eminence, the vendors were willing to perform the contract once they realised that a mistake had been made. Here, there was no willingness by the defendants to settle and it was only approximately six weeks after the letter was sent that the defendants conceded that there was an incorrect interpretation.
The defendants submit that the English authorities permit the vendors to rescind, even though they were not willing to complete the contract of sale. The plaintiffs submit that these cases permit a vendor to take advantage of his or her own mistake which is contrary to binding authority in Australia. That is the only distinguishing feature referred to by the plaintiffs, but in my view that makes no difference. The issue before this Court is what effect the defendants’ conduct, objectively judged, would be reasonably calculated to have on a reasonable person.
The defendants also submit the English cases, while not referring to the High Court, do not clash with the law as referred to in Koompahtoo.
In my view, the two English cases are not in conflict with what has been said by the High Court. Koompahtoo preceded these two cases. The English decisions are also not in conflict with GEC Marconi Systems, which has been referred to previously.
Here, a reasonable person in the position of the purchasers would not say there has been a repudiation of the contract. Had the vendors persisted with the untenable construction then the letter would have been repudiatory. They only wrote the one letter. The plaintiffs responded to this letter but they did not raise the error.
Relief from forfeiture
The plaintiffs submit that if the defendants terminated the contract of sale then the plaintiffs can apply to this Court for relief against forfeiture of its interest as a purchaser in the contract of sale.
The relevant statutory provision relating to relief from forfeiture is s 49(2) of the Property Law Act 1958 (Vic). The New South Wales Court of Appeal considered the operation of s 55(2A) of the Conveyancing Act 1919 (NSW) which does not materially differ from s 49(2) of the Property Law Act 1958 (Vic).
The law regarding statutory relief against forfeiture of deposits is summarised in On Equity:[20]
[20]Peter W. Young, Clyde Croft and Megan Louise Smith, On Equity (Thomson Reuters/Lawbook Co, 2009) at [5.1050].
The principles to be applied are set out in Havyn Pty Ltd v Webster.[21] Santow JA, with whom Tobias JA and Brownie AJA agreed, noted that there were no limiting words to confine the court’s discretion (at [144]), and propounded the following guidelines:
1.The statutory provision should not be treated as “filling the gap in the general law’s jurisdiction to relieve against penalties and forfeiture” and the court should not confine the jurisdiction by analogy to those doctrines (at [138]).
2.The court must not approach the return of deposits under the provision in a manner which weakens the proper functions of a deposit, which is to provide a sanction so that purchasers treat the making and completing of contracts with due seriousness (at [155]).
3.The jurisdiction is not dependent on establishing exceptional or special circumstances, but the concept of exceptional or special circumstances is not irrelevant (at [149] and [150]).
4.A purchaser must do more than show that the vendor has, by the forfeiture, reaped a windfall (at [155]).
[21](2005) 12 BPR 22,837
The plaintiffs, in support of their submissions, also refer to Aussie Invest Corporation Pty Ltd v Pulcesia Pty Ltd,[22] where Dodds‑Streeton J said:
Although each case will turn on its own facts, a vendor’s obstruction of the purchaser’s performance, whether by an unreasonable or unfair refusal to afford an opportunity to tender it within the time stipulated or other relevant conduct, would usually render it unconscientious to insist on termination of the contract in reliance on the purchaser’s breach. Such conduct would exemplify substantial causation of, or contribution to, the purchaser’s breach which, as Tanwar established, may justify equitable relief.
[22](2005) 13 VR 168 at 204, [291].
Pursuant to clause 10.1(b) of the contract, the vendor at settlement must do all things necessary to enable the purchaser to become the registered proprietor of the land. There is also an implied term for a vendor to cooperate in every contract and not to obstruct the other party from achieving the objectives of the contract.[23]
[23]See Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 and Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126.
The first plaintiff, in his affidavit sworn 11 November 2015, deposes that prior to 19 September 2015 when the contract was due to be settled, he requested the vendor’s consent that settlement of the contract be extended until 19 December 2015. The second defendant agreed on the proviso that the rental be increased from $1,100.00 to $1,500.00 per week and that the rental for the three month period be paid up front. That did not occur and the second defendant instructed his lawyers to issue a rescission notice.
The first plaintiff attempted to find finance to settle the property. He requested vendor finance, which was rejected. The request for vendor finance was made because there were complications in finding finance and there was a shortfall of approximately $180,000.00. He deposes that he subsequently found the shortfall and advised that he was able to settle in full. In his affidavit he does not depose as to when that would occur. The only response he received was that he was told to vacate the property within 48 hours.
In his affidavit sworn 24 November 2015, the first plaintiff deposes that every lender that was considering the loan application had concerns regarding how the vendor on the contract would be able to settle, given the property was transferred to the second defendant and there was no Deed of Assignment provided by the second defendant and the registered proprietor (the first defendant). He says that when he requested this Deed of Assignment to be provided by the defendants' solicitors, his request was refused.
In the correspondence exhibited before the Court, it was not until 13 October 2015 that there was any reference to the Deed of Assignment. The letter sent by the plaintiffs’ solicitors to the defendants’ solicitors states:
We refer to your letter dated 12 October 2015.
We wish to advise the following that the Rescission Notice that you served upon us is defective. The Vendor pursuant to the Contract and our consent is Phillip Parente not Caterina Parente.
In addition, you have not provided our office with a Deed of Assignment of the Property from Caterina Parente to Phillip Parente. As you are aware, assuming all else is equal and settlement did proceed we cannot produce a Contract in the name of Caterina Parente and the Transfer of Land and Title Particulars in the name of Phillip Parente without some document corresponding and giving effect to the consent and Transfer.
Accordingly, the Rescission Notice served upon our office is invalid and the Contract is not at an end.
The first plaintiff was cross‑examined on his affidavits. When being cross‑examined about the letter regarding the Deed of Assignment, he said:
Just bear with me and listen carefully to the question. Do you agree with me when I say in this letter there is no mention of the deed of assignment of the contract being required by your lender? It's a yes or no answer to that one?---Not necessarily, Your Honour.
Well tell me where it says it?---No, it doesn't say that but we have a telephone conversation with your instructing solicitor and she refused to provide that. She wasn't (indistinct). I asked for a deed of assignment. I didn't make that up, my lender asked for it. The letter might not specifically state it but I am asked for a deed of assignment and there is an exhibit in the court book which the lender had sent me an email requesting that deed of assignment. The letter itself does not specifically state it, that's correct but that was communicated to the solicitor Slate & Gordon. The letter itself does not specifically state it. It came from that request. But it wasn't something I made up.
There were further questions put in cross‑examination, but in re‑examination the first plaintiff said:
<RE-EXAMINED BY MR LEVINE:
Thank you, Your Honour. You mentioned in your cross-examination that there were telephone conversations between yourself and the defendant's solicitor in October 2015. What was the substance of what was said in those telephone conversations?---It was around - if I can find the - Your Honour if you bear with me.
It will be around 102 I think of the court book?---I'll find the actual letter and I'll tell you an approximate date. The - it was around about 7 October when I received the email from legal counsel for the first mortgagee, RMBL who - they actually called me and said we're going to need - where's the deed of assignment between Caterina Parente, the wife, to the husband, Phillip Parente. I said they - I haven't got one. They said well we need that, you better ring them up and request that. So I did and I also at the same time wrote an email to them requesting that. When you rang up the solicitor what was said in that conversation and who did you speak to?---I believe it was Diana Young, the solicitor who had the care and conduct of the file on behalf of the defendants.
What did you say to her? What was the substance of the conversation?---I told - I informed her that I received a phone call from Elena Grayson, legal counsel for the first mortgagee and I stated to her that I was requested - that they required a deed of assignment because they could not attend settlement or go to settlement or go any further with the first mortgage until they got that deed of assignment to valid the transfer from the wife to the husband.
What was her response?---Told me that they're not going to provide one and they refused to provide one and that it wasn't required and they will not provide one at all. You were asked a lot of questions about your financial capacity to settle. Where were you going to get the money to settle for contract of sale?---The first mortgagee, RMBL, was going to provide the majority of funds, which was about 1,790,000 in total, about 185-190. Then there was $100,000 caveat loan and that caveat loan would increase if we needed any further funds from another - the broker who actually worked with Robert Lane. Then there was a second mortgage of about 385 from solicitors funds.
Who was the solicitor or where were the funds to be sourced from?---They were - Robert Lane informed me they had the funds and then later on I found out that the funds were from Trumble Szanto.
When were these arrangements made?---Round about the - at the time of - 7th or 10 October.
What documents did you need in respect of facilitating these funds? What documents did the lenders require you to sign, first the RMBL, what did they want you to sign?---They wanted - well there was a discussion with RMBL, their legal counsel in respect to the charge if I could that would be removed and I said I'm not too sure, I can find out. So he then recommended that it may be better if we - and they won't hinder if we set up a new company completely and that would alleviate any issues regarding the charge, which I then instructed my accountant to prepare a new company. They also told me to ring the solicitors for the defendants to confirm that it was their requirement that they have that deed of assignment which I did. And also there was - I telephoned Robert Lane, the broker who was arranging the - and arranging the other funding to say that you know make sure we're ready for settlement and he said yes, I've got everything under control. We can settle within three days if required.
What requirements did Robert Lane require for the second mortgage?---He just said that they were going to prepare - he didn't have any documents, he didn't require any documents for solicitor funds. So the documents were just going to be prepared and could be prepared and executed within 24 hours and they were all ready to settle within 48 hours.
The defendants submit that the Deed of Assignment, as sought by the plaintiffs, was not necessary because, for the purposes of the plaintiffs becoming the registered proprietors of the property, a transfer of land executed by the second plaintiff as existing registered proprietor was sufficient. The transfer of land showed consideration – as this was a transfer between husband and wife, it attracts no stamp duty; a love and affection transfer.
Here, there is an implied duty for the defendants to do all things necessary at settlement to allow completion of the contract. While the financier asked for the Deed of Assignment, it was not required at law. There is no evidence before the Court that the financier would have insisted on this requirement if it was put to the financier that at law the Deed of Assignment was not required. The defendants had a signed transfer available. They were willing and able to attend settlement. There was no legal requirement, nor was it necessary, to provide a Deed of Assignment.
The plaintiffs elected to not proceed with a claim for specific performance and request that their deposit be refunded. They are unsuccessful for the reasons expressed above.
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