Lakeland Plaza Pty Ltd v PNL Nominees Pty Ltd
[2017] VCC 1124
•17 August 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-17-01330
| LAKELAND PLAZA PTY LTD | Plaintiff |
| v | |
| PNL NOMINEES PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 August 2017 | |
DATE OF RULING: | 17 August 2017 | |
CASE MAY BE CITED AS: | Lakeland Plaza Pty Ltd v PNL Nominees Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1124 | |
REASONS FOR RULING
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Subject:SUMMARY JUDGMENT; COSTS
Legislation Cited: A New Tax System (Goods and Services Tax) Act 1999 (Cth); Civil Procedure Act2010 (Vic); Property Law Act 1958 (Vic)
Cases Cited:J&A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (No 4) [2015] FCA 218; Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd [1992] WASC
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Segal | Madgwicks Lawyers |
| For the Defendant | Mr W Rimmer | Lily Ong Business Lawyers and Migration Consultants |
HIS HONOUR:
Introduction
1 This matter is an application for summary judgment by the defendant. By summons dated 9 June 2017, the defendant seeks summary judgment against the plaintiff pursuant to section 63 of the Civil Procedure Act2010 (Vic).
2 I have concluded that, even if the defendant is correct as to its substantive allegations, pursuant to the discretion I have under section 64 of the Civil Procedure Act 2010 (Vic), the matter ought not be disposed of summarily because I do not regard it as being in the interests of justice that it should do so. The dispute is of such a nature that only a full hearing on the merits is appropriate.
Background
3 The plaintiff was the purchaser and the defendant was the vendor under a contract of sale dated 9 November 2016. The contract related to the property at 231 Victoria Street, Abbotsford. Under the contract, the purchase price was $3.2 million and $320,000 was paid as a deposit. The particulars of sale within the contract said that the sale was ‘plus GST’. As a result of that term of the contract, general condition 13 was enlivened.
4 General condition 13.3 states that if the purchaser is liable to pay GST, the purchaser is not required to make payment until provided with a tax invoice unless the margin scheme applies.
5 It was accepted by both parties that the purchaser was liable in this case to pay GST, that the margin scheme did not apply, and that the vendor was therefore required to give the purchaser a tax invoice at settlement. Settlement of the contract was due by 9 March 2017, the contract having been made on 9 November 2016. The plaintiff failed to settle and the vendor issued a Notice of Rescission on 9 March 2017.
6 I note that the vendor in the contract was described as PNL Nominees Pty Ltd with an Australian Company Number (‘ACN’). As will become apparent, part of the dispute in the case relates to the question of whether or not it should have been explicit in the contract that the vendor was selling as the trustee of a trust or whether it was sufficient simply to have the vendor described as it was.
7 On 2 March 2017 the plaintiff requested that the defendant provide its tax invoice for approval prior to settlement. The plaintiff did not receive an immediate response to this request.
8 On 8 March 2017 the plaintiff again requested the tax invoice for approval prior to settlement, which was due the following day. The plaintiff said it wanted to confirm its contents before preparing the cheques for settlement.
9 On the same day, the defendant provided a tax invoice to the plaintiff. The tax invoice was provided in the name of PNL Nominees Pty Ltd with a particular Australian Business Number (‘ABN’). It is not disputed between the parties that the tax invoice supplied was defective, because the ABN provided by the defendant and used in that invoice had been cancelled in about February 2011.
10 Later that same day, the plaintiff informed the defendant about this difficulty and asked for a valid tax invoice. The defendant then provided a further tax invoice to the plaintiff. This time, the tax invoice was provided in the name of PNL Nominees Pty Ltd as Trustee for the PNL Unit Trust and an ABN different from that in the original invoice was used.
11 After receipt of that new invoice (‘the trustee invoice’), the plaintiff’s solicitors advised the defendant’s solicitors by email on the morning of 9 March 2017 that the purchaser’s financier was not ready for settlement that day, and settlement would have to be postponed. The plaintiff’s solicitor advised that she would be in touch with the defendant’s solicitors when she had further instructions from the financier as to when they would be ready to advance funds to the plaintiff.
12 Later that same day, the defendant’s solicitors sent two emails. The first email asked when the plaintiff might be ready to settle and whether there was any indication about the issues which were affecting the matter. The second email consisted of a Notice of Rescission dated 9 March 2017, which referred explicitly on its face to the vendor as being PNL Nominees Pty Ltd as Trustee for the PNL Unit Trust.
13 The plaintiff attaches some significance to the fact that this description of the vendor in the Notice of Rescission was different from the description as it appeared in the contract, where the vendor was simply described as PNL Nominees Pty Ltd.
14 It appears possible (but in an application such as this, where the evidence is not as complete as it will be at trial, one cannot be definitive) that there might have been confusion in the defendant’s camp as to the capacity in which the defendant was holding the subject property. I say this on the basis of some correspondence passing between the defendant and the State Revenue Office where it appeared to the State Revenue Office that the defendant held the property as trustee rather than in its own capacity.
15 Subsequently, in January 2017, there were some dealings between the solicitors and the State Revenue Office about the matter and some clarification was apparently sought from the defendant regarding the capacity in which it was holding the property.
16 On 5 April 2017, the plaintiff’s financier provided a letter in which it confirmed that the facility which it proposed to make available to the plaintiff for the acquisition of the property assumed that the plaintiff would obtain a GST refund associated with the acquisition. The letter said if the GST refund associated with the acquisition could not be obtained, then the financier would not be in a position to assist with the finance for the acquisition. The letter continued, “You have advised that the vendor is not registered for GST purposes”. I interpolate here that that is a matter of dispute between the parties because the defendant says that it, as trustee, was registered for GST. That certainly looks to be the case.
17 The letter then continues, “Further, you’ve advised that the vendor is seeking to rely on a tax invoice which suggests that it could relate to a different entity or a trust”. The parties accepted that this was a factually accurate proposition insofar as it intimated that the vendor was seeking to rely on a tax invoice which suggested that the property was owned for, or on behalf of, a trust. The financier then said that such tax invoice would not be sufficient for its purposes.
18 The parties have been critical of each other in terms of the conduct which followed in the aftermath of the events of 9 March 2017 when the settlement failed.
19 The defendant says that on or after that date, the plaintiff could have sought to negotiate with it in order to obtain a clearer understanding of the defendant’s position and capacity. But the plaintiff made no request for information or documents.
20 The plaintiff, for its part, says the defendant ought not to have rescinded the contract on the day of settlement. The plaintiff contended that the defendant acted in a heavy-handed manner to immediately put the continuation of the contract at risk where it was the conduct of the defendant vendor which had brought about a major difficulty for the plaintiff.
21 The plaintiff, at the time, faced a potentially serious consequence in settling the contract on the appointed day. The consequence concerned whether or not the plaintiff was entitled to obtain an input tax credit. This made a difference of over $300,000 to the purchase price of the property. I readily accept that that is a substantial matter which creates serious consequences for the party affected. From the discussion which took place during the hearing, it seems to me that both parties accepted that this was a case in which the liability for GST rested upon the plaintiff if the transaction were to proceed to completion.
22 So, in the context where a false or inadequate invoice was initially provided and then another invoice was provided the day before settlement, the plaintiff was in a difficult situation because the differences in the invoices alarmed the financier. It was not willing to lend money to the plaintiff to settle the purchase of the property.
23 A dispute has arisen now about whether the defendant’s Notice of Rescission was validly served on the basis that the plaintiff’s allegation that the tax invoice given before settlement was invalid.
24 If the invoice relied upon was not valid, then the defendant was in breach of general condition 13.3 and the purchaser was relieved of the obligation to tender the purchase price.
Application for summary judgment
25 The defendant seeks summary judgment on the basis that the plaintiff has no real prospect of succeeding in its claims that:
(a) it was not required to make payment of the balance of the purchase price and to settle the contract because it had not been provided with a valid tax invoice, as specified in general condition 13.3;
(b) the defendant had no proper basis for serving the Notice of Rescission on 9 March 2017; and
(c) the defendant terminated the contract wrongfully and had thereby repudiated the contract by its conduct.
26 The defendant’s case is that the trustee invoice was valid and that the plaintiff was in default by failing to tender the settlement monies. Thus, the defendant says that the Notice of Rescission was valid and effective to bring the contract to an end.
27 The defendant relied both on parts of the tax legislation, in particular, section 29.70 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), and also on the expert evidence of an independent tax lawyer, Mr George Kolliou. There is a dispute in the expert evidence between Mr Kolliou and a solicitor for the plaintiff, Mr Anthony May.
28 Unlike Mr Kolliou, Mr May is a solicitor at the firm acting for the plaintiff. However, in an application of this nature, I do not know that the absence of independence is a sufficient basis to ignore his evidence and the difference of opinion.
29 As to the substance of the disagreement, and bearing in mind that the plaintiff seeks to adduce further evidence possibly with respect to Mr Kolliou and, it appears, definitely with respect to Mr Whatman, the court has no ability to make any sort of definitive rulings.
30 Mr Davis, again another solicitor at the firm acting on behalf of the plaintiff, put forward some purportedly expert evidence with respect to property matters. The defendant has challenged Mr Davis’ evidence on various grounds, including Mr Davis’ evidence relating to what might be “the usual practice” as opposed to what is strictly “necessary” as a matter of law, whether that be under any tax law or common law.
31 With respect to the first part of the defendant’s case, namely, that the trustee invoice was sufficient for the purposes, complied with the legislation, and enlivened the obligation of the plaintiff to settle on 9 March 2017, it may be that the defendant is right and that the invoice does have the effect for which the defendant contends. However, given the overall context, even if the defendant is right on those matters, it seems to me that this factor alone does not determine the ultimate outcome of the application.
32 The second issue relates to the return of the deposit under section 49 of the Property Law Act 1958 (Vic). This probably only becomes relevant if it is determined that the trustee invoice was valid and the contract has been effectively terminated.
33 The defendant says that, having regard to the evidence disclosed to date, there is no real prospect of the plaintiff succeeding in its claim. This is put on the basis that the defendant did nothing to bring about the plaintiff’s default under the contract. Secondly, it says that, at all times, the plaintiff and its financier relied either on the plaintiff’s advice and view of the matter or the financier’s view of the matter with respect to the contract and the tax invoice. It was as a result of their individual or collective actions that the settlement did not complete.
34 Thirdly, it was put that there was no evidence of the defendant acting unconscionably in the transaction.
35 Finally, it was put that the plaintiff is itself a trustee of the unit trust and is advised by a firm of experienced commercial solicitors.
Conclusion
36 In my view, the plaintiff could contend that, viewed from one perspective, the defendant did do something, or in some way contributed, to bring about the plaintiff’s default under the contract. I say this because the initial tax invoice provided related to an ABN which no longer existed and had not existed for approximately six years. Then, the day before settlement was due, the defendant provided another tax invoice, which related to a vendor who held the property on trust. This was a fact which was not apparent from the contract.
37 Whether or not a reference to the vendor acting in the capacity of a trustee is a requirement of either the law or normal conveyancing practice, is something which will probably need to be determined at trial. In my view, it is not completely fanciful to say the defendant made some contribution to the problem. For the same reason, it seems to me that it is not correct to say, or imply at least, that the plaintiff and the financier relied only upon the plaintiff’s own advice or the financier’s own advice and view of the situation. Their conduct and reaction was affected also by the behaviour of the defendant.
38 It seems to me that, having regard to the facts I have just outlined with respect to the first point, it can fairly be said that the plaintiff has an arguable point to make with respect to the possible contribution by the defendant.
39 In those circumstances and, even if the defendant were correct, in my opinion the better exercise of the court’s discretion is to require the matter to go to a full hearing. It seems to me that it is the sort of issue which could have broader ramifications for the practice of conveyancing in this State and is not something which should simply be determined on a summary application without the benefit of full evidence and submissions.
40 For that reason, in my view, it is not in the interests of justice to deal with the matter in a summary way because there is a risk of acting unfairly towards one party or another when the full facts and submissions are not the subject of proper consideration by the parties and the court.
Costs
41 The parties also made submissions regarding the costs order to be made with respect to this application.
42 While the plaintiff made oral submissions in court towards the end of the hearing, the defendant sent written submissions into the court for its consideration.
43 The plaintiff argued that, contrary to the usual order for costs in the cause, it should recover the costs of defending this application on an indemnity basis. The reasons for this request were as follows.
44 First, the plaintiff argued that, if a costs order were not made in its favour, this would act as a general incentive to make applications for summary judgment where there is little or no prospect that such an application might succeed. The plaintiff’s argument was therefore one based on a general disincentive, or concern that such applications might be made lightly or frivolously without the deterrent of a costs order against the unsuccessful party.
45 Secondly, the plaintiff argued that it had gone to great expense in defending this application for summary judgment and it should be compensated when the application failed.
46 The defendant argued that the court should adopt the usual costs order following an unsuccessful application for summary judgment. Such an order would be that the costs of this interlocutory hearing would be ‘in the cause’. Thus the successful party at trial would recover its costs of the application.
47 The defendant submitted that, only in exceptional circumstances should the usual rule be departed from, such as where the applicant should have known before the summary judgment application that it was certain to fail,[1] or where it is otherwise impossible for the judge hearing the application to disentangle the costs of that application from another related application.[2]
[1]See Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd [1992] WASC per Ipp, Pidgeon and Owen JJ; J&A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (No 4) [2015] FCA 218, [8] per Pagone J.
[2]See J&A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (No 4) [2015] FCA 218, [10] per Paone J.
48 The defendant argued that no such circumstances were present in the instant case, and that ‘the only additional costs and inconvenience caused to the plaintiff by the defendant’s application … are the usual ones of having to respond to the application’, and as such, there were no grounds for departing from the usual order for costs in the cause.
49 I prefer the defendant’s submissions on costs and see no sufficient basis to depart from the course commonly adopted.
50 Accordingly, I order that:
(a) The defendant’s application by summons filed 9 June 2017 be dismissed.
(b) Costs in the cause.
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