Launer v Carbon Black Lab Pty Ltd
[2014] VSC 671
•6 November 2014
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE | Not Restricted |
COMMERCIAL COURT
PRACTICE COURT
S CI 2014 5765
| DARRYL LAUNER | Plaintiff |
| v | |
| CARBON BLACK LAB PTY LTD (ACN 140 192 730) | Defendant |
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JUDGE: | DIGBY J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 November 2014 | |
DATE OF JUDGMENT: | 6 November 2014 | |
CASE MAY BE CITED AS: | Launer v Carbon Black Lab Pty Ltd | |
MEDIUM NEUTRAL CITATION | [2014] VSC 671 | |
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REAL PROPERTY – Caveat – Application to remove caveat under Transfer of Land Act 1958, s 90(3) – Caveat protected defendant’s interest as purchaser of land – Defendant said to have breached essential term of contract of sale of land by failing to settle purchase – Where plaintiff entered into contract to sell property to third party after purporting to rescind contract with defendant – Piroshenko v Grojsman (2010) 27 VR 489, considered – Whether balance of convenience favoured removal of caveat - Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, considered.
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| Appearances | Solicitors | |
| For the Plaintiff | Mr M J Kenny, Solicitor | Kalus Kenny Intelex |
| For the Defendant | Mr J Kohn of Counsel | Noble Lawyers |
HIS HONOUR:
By Motion and Summons dated 28 October 2014, the plaintiff makes a pressing application in the Practice Court for orders to remove Caveat AK492485P (the Caveat) recorded on Certificate of Title Volume 10294, Folio 536, which land is referred to in the materials as Lot 136K.
The plaintiff also applies for orders dispensing with the requirement of Orders 5.03(1) and 8.02 of the Supreme Court (Civil Procedure Rules) 2005, and for the Court’s leave to commence the proceeding nunc pro tunc by Originating Motion in Form C. There has been no opposition by the defendant to such orders. I will make the orders sought in relation to the dispensation and leave sought by the plaintiff.
The materials relied on by the parties in this application are set out in paragraphs 1 and 2 of the defendant's Outline of Submissions dated 5 November 2014 with the addition of the affidavit of Mr Falzon, sworn 5 November 2014, and the affidavit of Mr Phillpott sworn 6 November 2014.
The plaintiff seeks the removal of the Caveat pursuant to s.90(3) of the Transfer of Land Act 1958.
The interest claimed by the defendant in support of the Caveat (Exhibit “FF-5” to the Falzon affidavit sworn 28 October 2014) is set out in the Caveat as follows: “As purchaser pursuant to a Contract of Sale dated 17 July 2013 from Darryl Launer as Vendor”. I shall refer to the Contract of Sale dated 17 July 2013 (Exhibit “FF-4” to the Falzon affidavit, 28 October 2014) as “the Contract of Sale”.
The defendant submits that its caveatable interest is clearly supported by the said Contract of Sale and the question here is whether in the circumstances the defendant is entitled to maintain the Caveat or whether circumstances have changed such that the defendant is now not entitled to maintain its Caveat.
Lot 136K is located in Stawell in Victoria. On that land there is a stockpile of a very large number of used vehicle tyres in the order of six to eight million in number. Indeed the defendant's estimate puts the number of used vehicle tyres at an even larger number.
The cost of the removal of such a vast number of vehicle tyres is likely to be very considerable.
The Contract of Sale between the plaintiff as Vendor and the defendant as Purchaser, provided by the Particulars of Sale and Special Condition 7, that the vast stockpile of used vehicle tyres to which I have referred, would be sold to the defendant together with Lot 136K.
At the time the parties entered into the Contract of Sale, the defendant Purchaser considered that it may be able to obtain compensation from the State Government of Victoria or the Environment Protection Authority of Victoria (the EPA) for removing and processing the large stockpile of used vehicle tyres stored on Lot 136K. The Purchaser’s intention to seek such compensation from a Victorian State Government body or the EPA is reflected in Special Condition 5(a) of the Contract of Sale.
The Contract of Sale provided that if the Purchaser did not reach agreement with a State Government body, including the EPA, for compensation for the clearance of the tyres stored on Lot 136K within 90 days of the date of the Contract of Sale, the purchaser could terminate the Contract of Sale at its option (Special Condition 5(d)).
The Contract of Sale also provided for a total price of $548,000 and that the Purchaser would pay the purchase price by way of settlement within 90 days of 17 July 2013.
The deposit paid by the Purchaser under the Contract of Sale was only $2,000.
Special Condition 4 of the Contract of Sale enabled the Purchaser to seek an extension of time for settlement of the purchase of Lot 136K if more time was required to finalise arrangements with the EPA or another Victorian State Government body in respect of compensation to the Purchaser for the clearance of the tyres.
The parties also agreed that the Vendor was to act reasonably in relation to any application by the Purchaser for additional time to settle (Special Condition 4).
Special Condition 5 reflects the Purchaser’s intention to seek compensation from the Victorian Government for clearing the stockpile of tyres from Lot 136K.
Special Condition 5(b) requires the Purchaser to do all necessary things to procure agreement in respect of compensation for the clearance of the stockpile of tyres in a timely manner and within the term of the Contract of Sale, that is before the 90 day date for settlement under the Contract of Sale expired.
Special Condition 6 of the Contract of Sale, upon which the defendant principally relies, provides that the vendor is obliged to ensure that there are no notices, including notices from the EPA, affecting the land and that it is the Vendor’s responsibility to remove any such notice prior to settlement.
Special Condition 6 also provides that at its absolute discretion the Purchaser may terminate the Contract of Sale and obtain a full refund of any deposit, and any other monies paid to the Vendor, if there are relevant notices issued or proposed to be issued in respect of the land.
Here, although the Purchaser has by the Contract of Sale agreed:
(i) to purchase the land and also purchase the vast quantity of used tyres stored on the land;
(ii) that the purchase of the land is subject to the Purchaser obtaining third party compensation payable to it for the clearance of the millions of tyres stored on the land;
(iii) that the Purchaser is able to seek an extension of the time within which it must settle the purchase;
(iv) that the Purchaser is entitled to terminate the Contract of Sale and have its $2,000 deposit refunded if it cannot agree the compensation payable to it by the Victorian State Government to clear the tyres;
(v) that the Purchaser is entitled to terminate the Contract of Sale and have its $2,000 deposit refunded to it if there are any notices from relevant authorities issued, or proposed to be issued in relation to the land, which the vendor has not arranged to have removed,
the Purchaser refuses to settle the purchase of the land until the plaintiff/Vendor removes the many millions of used vehicle tyres which the Purchaser has agreed to purchase and which, under the Contract of Sale, the Purchaser intended to remove and process for compensation payable to it by a third party.
The Purchaser maintains that the removal of notices “pre-condition“ in Special Condition 6 of the Contract of Sale has not been satisfied by the vendor and therefore the time for settlement of the Contract of Sale is yet to arise.
Fifteen months have passed since the Contract of Sale was signed in July 2013; twelve months have passed since the initially contemplated date for settlement under the Contract of Sale; no contractual application has been made by the Purchaser for additional time within which to settle under Special Condition 4 and two months have now passed since the Vendor issued a Notice of Default dated 5 September 2014, under Clause 27 of the Contract of Sale.
The Vendor has sought to bring the Contract of Sale to an end by Notice of Default dated 5 September 2014.
The Vendor has entered into a subsequent Contract of Sale dated 4 September 2014 (Exhibit “FF-29”) pursuant to which Lot 136K has been sold for $340,000. This subsequent Contract of Sale was varied and confirmed on 14 October 2014, by the execution of a Deed of that date (Exhibit “FF-30”).
Under the subsequent Contract of Sale the plaintiff as Vendor and the subsequent purchaser Used Tyres Recycling Corporation Pty Ltd had agreed to settle the subsequent purchase on 31 October 2014 (Exhibit “FF-31”).
In my view the initial purchaser, Carbon Black Lab Pty Ltd, appears to be seeking to emasculate the Contract of Sale it entered into and distort the parties’ intent by asserting that it is entitled, under Special Condition 6, to refuse to settle the sale transaction until, in effect, the plaintiff removes all the subject tyres. The defendant Purchaser is seeking to bring this about by requiring the plaintiff to effect the removal of the EPA Notice of 1 October 2010, issued pursuant to s 62A of the Environment Protection Act 1970, prior to settlement by the Purchaser.
The plaintiff asserts that the EPA’s Notice of 1 October 2010 (Exhibit “FF-14”) is no longer in effect in relation to Lot 136K (Falzon affidavit, 28 October 2014, [31]–[42]; Exhibit “FF-21”). This is disputed by the defendant which says that only by Notice of Revocation issued by the EPA under s 60B of the Act can the 1 October 2010 Notice be effectively removed. In my view the parties’ respective positions on this issue, including the precise status of the relevant land under the Environment Protection Act 1970 cannot be resolved on this interlocutory application.
In this application the plaintiff asserts that:
(i) The defendant’s insistence that the plaintiff remove all the tyres stored on Lot 136K, to satisfy the EPA Notice of 1 October 2010, is nonsense because the defendant contracted for the tyres to be sold to it with the land and further because the terms of the Contract of Sale render it a breach of the contract for the plaintiff to remove the six to eight million stored tyres.
The plaintiff says that it is “false” for the defendant to claim that it requires the plaintiff to comply with the EPA’s Notice, if in force;
(ii) The plaintiff says that the uncontroverted evidence is that the defendant only wished to purchase Lot 136K to acquire the tyres located on that land (Falzon affidavit, 28 October 2014, Exhibit “FF-22” and Special Condition 7).
The gist of the plaintiff’s contention in this regard is that, in the circumstances, it is clear that the defendant is adopting an unreasonable position and doing so mala fide in an attempt to bring commercial pressure to bear on the plaintiff, including so that the defendant has as much time as it likes to procure compensation for itself from the Victorian State Government in relation to its proposed clearance of the stockpile of tyres from Lot 136K (Falzon affidavit, 28 October 2014 [43]–[46]).
(iii) The defendant does not dispute that the tyres were included in the sale of Lot 136K, nor does the defendant dispute the conversation between Mr Dunn of the defendant and Mr Falzon on 16 October 2014 (Falzon affidavit, 28 October 2014, [26]), nor does the defendant dispute what is said by the defendant in its letter to Mr Falzon dated 9 May 2014 (Exhibit “FF-22”), nor does the defendant dispute Mr Falzon’s account of the meeting of 1 September 2014 (Falzon affidavit, 28 October 2014, [46]).
(iv) The defendant has neither put forward any evidence that it took steps within 90 days from the date of the Contract of Sale to enter into the agreement contemplated in Special Condition 5(a) nor that it sought an extension of time to settle the purchase of Lot 136K, pursuant to Special Condition 4.
(v) The relevant land is not now the subject of any EPA Notice, and in particular the EPA Notice of 1 October 2010 no longer applies to Lot 136K.
(vi) The Contract of Sale was terminated after the defendant failed to comply with a Default Notice dated 5 September 2014, which the plaintiff's solicitors served on the defendant.
That Default Notice issued, it appears under General Condition 27 of the Contract of Sale, specified that the defendant had failed to pay the balance due under the Contract of Sale, namely the sum of $548,000 by the due date, and gave the purchaser notice that if its default was not remedied within 14 days after service of that Notice, the Contract would be rescinded pursuant to General Condition 28 of the Contract of Sale.
(vii) That on the proper construction of the Contract of Sale the parties did not intend Special Condition 6 to oblige the Vendor to remove the stockpile of tyres on Lot 136K before settlement and further the more specific provisions in Special Conditions 5 and 7 should prevail over Special Condition 6, which is general in its terms.
(viii) If Special Condition 6 is to be characterised as a specific obligation then it is so inconsistent with Special Conditions 5 and 7 that were it to be applied as the defendant argues, it would make the Contract of Sale antithetical to a core purpose of the bargain and unworkable. The core purpose of the bargain was the defendant’s acquisition of many millions of used tyres and the land they were stored on.
(ix) If Special Condition 6 operates as argued for by the defendant, the defendant’s remedy is in any event in damages because the plaintiff says that he does not intend to remove the vast stockpile of used tyres and therefore it is unlikely a Court would in the circumstances order specific performance.
(x) As a result of what the plaintiff says has been its contractual termination of the Contract of Sale or alternatively by reason of the plaintiff’s last preceding submission, the Contract of Sale is, in any event, at an end and therefore the Caveat should be removed.
After service of the plaintiff’s Notice of Default, the defendant's solicitors asserted in a letter dated 15 September 2014, that the time for settlement under the Contract of Sale had not arrived as a result of the plaintiff not complying with Special Condition 6 of the contract. The defendant asserted in its letter of 15 September 2014 that the Contract of Sale required the plaintiff to ensure that there were no notices, including EPA notices, affecting the property at the time of settlement. That letter also asserts that, until such time as all such notices were removed, there was no date for settlement and therefore no effective Notice of Default could be issued to the Purchaser/defendant.
I am satisfied that the evidence, including the evidence of Exhibit “FF-22” to Mr Falzon’s affidavit of 28 October 2014, appears to establish that the defendant, at all times, desired and intended that the purchase of the property would be a purchase which included the acquisition of the tyres located on the property, the subject of the Contract of Sale.
Indeed I am satisfied that prima facie the evidence establishes that the defendant purchased Lot 136K so as to acquire the large stockpile of used types on that land because it wanted to have those tyres processed and anticipated that, directly or indirectly, it would receive compensation from the Victorian Government for the clearance and processing of the used tyres which it had purchased.
It is also prima facie evident from Mr Dunn’s letter of 9 May 2014 (Exhibit “FF-22” and paragraph [44] of Mr Falzon's affidavit of 28 October 2014) that GDT, a company of which Mr Dunn was CEO and director, was going to build a tyre processing plant near Lot 136K, to process the used tyres which the defendant had purchased on Lot 136K.
Mr Dunn, who is also a director of the defendant, states that GDT was waiting for an announcement from the Minister for the Environment in relation to the financial assistance it required in order to process the tyres from the subject property. In the defendant’s letter of 9 May 2014, it confirmed that GDT intended to build a plant on neighbouring land and process the tyres which are on the subject land.
I am also satisfied, on the evidence available at this interlocutory stage of the proceedings, that there does not appear to be any communication or other evidence that the defendant took any steps within the 90 days allowed by the Contract of Sale to enter into an agreement of the type referred to in Special Condition 5(a) with a Victorian State Government body or the EPA.
Nor does there appear to be any evidence that the defendant sought an extension of time under Special Condition 4, within which to settle the Contract of Sale, as a result of delays or other problems that the defendant was having progressing, or closing out, a relevant compensation agreement with the Victorian Government or with the EPA.
Nor does it appear from the evidence before the Court at this interlocutory stage of the proceedings, that the defendant availed itself of the contractual entitlement it had under clauses 5(d) and 6 to terminate the Contract of Sale, because it had not been able to agree to terms of compensation with the Victorian Government in respect of the removal of the stockpile of used tyres from the subject land before settlement of that contract was due and/or because there were relevant notices effecting the land or proposed to be issued.
The evidence also established that the plaintiff has now entered into a subsequent Contract of Sale with respect of the subject land, and that the settlement of that Contract of Sale is overdue because the Caveat in dispute has prevented settlement. The settlement of that subsequent Contract of Sale continues to be impeded by the existence of the defendant’s Caveat.
The defendant in its submissions agrees with a number of facts in relation to the matters that I have summarised to this point. The defendant agrees that at all relevant times prior to 17 July 2013, the plaintiff owned Lot 136K, and that a company called Zackary Pty Ltd, owned and controlled by Mr Falzon, owned the adjoining land at Lot 136H. The defendant also agrees that on 17 July 2013 the defendant entered into the Contract of Sale with the plaintiff for Lot 136K, and also a Contract of Sale with Zackary Pty Ltd for Lot 136H. The defendant notes that the Zackary contract has settled, with the defendant nominating another company as ultimate purchaser.
The parties also accept that in an application of this nature the Court undertakes a two-step process, which requires the identification of a prima facie case in support of the caveat sought to be preserved and thereafter the consideration of the balance of convenience to arrive at a decision as to whether in the circumstances the subject caveat should remain or be removed.
Applications to remove a caveat are treated analogously with an application for an interlocutory injunction. Her Honour the Chief Justice in Piroshenko v Grojsman[1], referred to the tests which are applicable in deciding an application under s 90(3) of the Transfer of Land Act 1958.
[1][2010] 27 VR 489 at 491.
Consistent with her Honour's observations in Piroshenko v Grojsman, in CFHW Pty Ltd v Burness & Ors[2] this Court held that in relation to the first limb of the Court’s consideration the exercise is to ascertain whether the party seeking to support a Caveat is able to establish a prima facie case in that regard. A prima facie case, in this context, will be established if the plaintiff is able to show a sufficient likelihood of success, so as to justify, in the circumstances, the preservation of the status quo pending trial.
[2][2014] VSC 451.
The required level of likelihood of success is however informed by the interrelated strengths of the parties’ respective positions on the balance of convenience.
This interrelationship has been highlighted by the High Court in ABC v O’Neill[3], when it observed that the governing consideration is that the requisite strength of the probability of ultimate success which depends upon the nature of the rights asserted, and the practical consequences likely to flow from the interlocutory orders sought.
[3](2006) 227 CLR 57.
In this matter, the subject Caveat is founded on the equitable interest created by the Contract of Sale between the parties dated 17 July 2013. That, in isolation, is capable of establishing a prima facie case in support of the equitable interest asserted by the defendant in this instance. However, in my view in this matter, the defendant’s position is such that it has not demonstrated a sufficient likelihood of ultimate success to justify the retention of the Caveat.
This is because, to the extent that I am able to do so at this interlocutory stage of the proceeding where the Court is not in a position to make final findings of fact, or to finally declare the proper construction of the terms of the Contract of Sale in issue, the plaintiff’s arguments in relation to Special Conditions 4 to 7, and in relation to the termination of the Contract of Sale, in my view enjoy a much higher likelihood of success than the defendant's contention that the plaintiff was, by Special Condition 6, in effect required to remove the millions of tyres from Lot 136K, prior to settlement and the defendant’s contention that the operation of Special Condition 6 means in the circumstances that there is no obligation upon the defendant to settle the Contract of Sale, because arguably there is an EPA Notice which remains applicable to Lot 136K.
In my view, the plaintiff's arguments that the parties intended, as reflected in Special Conditions 4, 5, and 7 of the Contract of Sale, that the defendant purchased and was entitled to all the tyres on the subject property from the date of the Contract of Sale, ultimately enjoys a high likelihood of success.
The Particulars of Sale, at page 3 “Goods Sold With the Land“ and Special Condition 7, as well as Special Conditions 4 and 5, appear to sufficiently reflect the intention of the parties that the defendant acquire the stockpile of used tyres and the purchase of Lot 136K to effect that acquisition. These provisions also appear to reflect the parties’ intent, and the defendant’s obligations, in relation to the timely conclusion by the defendant of an agreement by which it would obtain compensation from some arm of the Victorian State Government in relation to the clearance and processing of the used tyres.
Further, the parties clearly intended that if the defendant could not procure the agreement it required for compensation from the Victorian Government within the contract period under the Contract of Sale, the defendant was entitled to walk away from the purchase of Lot 136K and have its $2,000 deposit returned by the plaintiff.
Further, the parties by Special Condition 3 addressed certain matters related to the purchase of adjacent land at Lot 136H on which it was intended the used tyres would be processed.
It would appear that the parties did not intend, or stipulate, that the plaintiff was to remove the stockpile of used tyres prior to settlement, indeed for reasons I have stated in relation to the operation of Special Conditions 4, 5, and 7, such an interpretation, even taking into account the terms of Special Condition 6, is antithetical to the position which the defendant sought to agree under the Contract of Sale and is contradictory and repugnant, it would appear, to the other terms of the Special Conditions to which I have referred.
Accordingly, I consider that at trial it is unlikely that the defendant will succeed in establishing it was entitled to refuse to settle the Contract of Sale because a Notice requiring the removal of the used tyres had been issued by the EPA prior to the parties entering into the Contract of Sale and the plaintiff was obliged to have such Notice removed prior to settlement.
The Contract of Sale appears to contemplate that the EPA’s requirements would be resolved and agreed specifically in relation to the stored tyres (Special Conditions 5(a) and 4). It therefore appears to be most unlikely that such a resolution and agreement as contemplated by Special Conditions 4 and 5(a), (b) and (d), which was to be progressed and concluded by the defendant, would not also result in the EPA withdrawing or otherwise resolving any extant Notice which the EPA had issued concerning the same tyres stored on the land.
Special Condition 6, therefore, appears anomalous and inconsistent with and repugnant to the scheme of the Contract of Sale as a whole, and in particular the scheme of the Special Conditions of the Contract of Sale, for the reasons I have earlier mentioned when discussing the likely operation of the relevant contract provisions.
Therefore, the parties were in my view most unlikely to have intended that Special Condition 6 was to operate in the way the defendant argues.
Furthermore, the defendants continued assertion of what is likely to be a wrongful construction of the Contract of Sale, in my view, assessed as best I am able to do at this interlocutory stage, likely constitutes a continuing breach of the Contract of Sale from the time the defendant insisted that it was not obliged to settle because the plaintiff was first obliged to remove all the stockpile of tyres on Lot 136K so as to effect the removal of the EPA Notice which the defendant asserted was effecting that property.
Further, in my view, given the likely proper construction of the Contract of Sale, in particular Special Conditions 4 to 7, the plaintiff's assertion that he determined the Contract of Sale by Notice of Default served on 5 September 2014 (Exhibits “FF-24” and “FF-25”), also enjoys a reasonable likelihood of success.
The plaintiffs’ Notice of Default dated 5 September 2014 relied upon the defendant’s non-payment of the balance of the contract sum. At the time of that Notice the 90 days stipulated in the Particulars of Sale had passed by more than 10 months.
On 1 September 2014 Mr Falzon stated face to face to Mr Dunn of the defendant that “he had to settle the Contract of Sale” (Falzon affidavit [46]).
The plaintiff however appears by Exhibit “FF-11” to have set time at large under the Contract of Sale by generally extending the time within which settlement was required by the defendant.
However, I consider that it is likely that the service of the plaintiff's Notice of Default of 5 September 2014 refixed the due date by which the defendant was required to settle the contract sum, as within 14 days of the service of that Notice.
In response to the Vendor’s Notice of Default, the defendant’s lawyers communicated by letter dated 15 September 2014 that the defendant relied upon Special Condition 6 of the Contract of Sale and asserted that the defendant was not obliged to settle the Contract of Sale because an EPA Notice remained in force over the property. It follows, on my view, of the likely proper construction of the Contract of Sale, in particular Special Condition 6, that the defendant’s letter did not adequately respond to the plaintiff’s Notice of Default dated 5 September 2014.
I consider that given the likely proper construction of the Contract of Sale to which I have earlier referred, the defendant’s letter of 15 September 2014 asserted a wrongful construction of the Contract of Sale and was therefore an ineffective response to the plaintiff’s Notice of Default and did not in any event cure the defendant’s default in relation to the non-payment of the balance of the contract sum.
Furthermore, as I have earlier observed, because the plaintiff has made it clear, including by its written submissions, that it is unwilling to remove the used tyres and because a Court would be unlikely to order specific performance of the Contract of Sale, if it is in fact still on foot, the Contract in reality is at an end because the defendant says, in effect, that the plaintiff must remove the stockpile of used tyres and thereby satisfy the 1 October 2010 EPA Notice. Either for this reason, or alternatively as the plaintiff argues because it effectively determined the Contract, the Contract of Sale will not be performed and the defendant’s remedy, if any, will be in damages.
Further, I note that the plaintiff has submitted that it is willing to return the defendants $2000 deposit in the event that the Caveat is removed.
I also regard the prima facie case required to be demonstrated by the defendant to be relevantly affected by the balance of convenience which, for reasons I will explain, I also regard as being weighted heavily in favour of the plaintiff.
Accordingly, in deciding this application it is appropriate, because of the strength of the interrelated balance of convenience in favour of the plaintiff to which I shall come, to require the defendant to establish a relatively high likelihood of success in relation to its prima facie case. However, for the reasons that I have already expressed, I consider the defendant has fallen short of establishing a prima facie case with sufficient likelihood of success, in the circumstances, to support the retention of the Caveat.
In relation to the balance of convenience, I note the submissions of the defendant, that it is willing, ready, and able to settle the Contract of Sale when the time arises. However, I observe that the Contract of Sale which the defendant seeks to complete and enforce is not the Contract of Sale which at trial the Court is likely to uphold. This is because the Contract the defendant says it is ready and willing to complete, is one under which the defendant wrongly asserts that the plaintiff is required to remove the millions of tyres before settlement.
Not only, in my view, is it ultimately unlikely that the defendant will be entitled to performance of the Contract of Sale on the terms it believes are enforceable, but, in my view, it is also unlikely that a court would enforce specific performance of the Contract of Sale in any event for the reasons I have already explained.
The defendant also points out, in relation to the balance of convenience, that the plaintiff is entitled to receive the sum of $548,000 upon settlement of the subject disputed Contract, some $208,000 more than the contract price under the subsequent Contract of Sale for Lot 136K.
In my view, little, if anything, turns on the difference in contract sums payable to the plaintiff under the subject and the subsequent Contract of Sale.
The defendant also argues that the balance of convenience is in its favour because “no other contracts of sale exist such that the Launer Contract provides a detriment to Launer“. This submission is, I consider, in substance that no Contract of Sale was effectively entered into subsequent to the subject Contract of Sale and therefore holding the plaintiff to the subject Contract of Sale would not prejudice the plaintiff.
I do not consider the defendant’s last mentioned argument to be sound because it presumes that the subject Contract of Sale has not been terminated by the plaintiff and also presumes the defendant’s interpretation of that Contract is correct. For reasons I have stated I consider it likely that the Contract of Sale has been effectively brought to an end by the plaintiff and that its terms are likely to be construed as contended for by the plaintiff.
I also consider that it is likely that the plaintiff’s subsequent Contract of Sale dated 4 September 2014, which was varied and confirmed by Deed on 14 October 2014, is an effective contract and therefore if the plaintiff’s ability to settle that subsequent contract and obtain payment for his land is frustrated by the existence of the Caveat, the plaintiff is thereby prejudiced.
The plaintiff is also prejudiced by being prevented from dealing with his fee simple interest because of the Caveat. The evidence is that under the plaintiff’s subsequent Contract of Sale, settlement was due on 31 October 2014. The plaintiff is therefore being currently held out of the proceeds of its sale of Lot 136K under the subsequent Contract of Sale and is thereby prejudiced.
Furthermore, the defendant will in my view be unlikely to be able to obtain a transfer of Lot 136K, for the reasons I have stated, because the plaintiff has terminated that contract and because the defendant is seeking to enforce a contract different to the bargain which the parties agreed.
Further, as I have earlier explained, because the plaintiff does not intend to remove the millions of used tyres on Lot 136K, the Contract of Sale will not be performed as the defendant requires and it is unlikely, in these circumstances, that a Court will require specific performance.
Accordingly, it is likely that, at best, the defendant might recover damages at the end of the day.
In my view, the balance of convenience decisively favours the removal of the Caveat, because the existence of the Caveat is prejudicing the plaintiff in preventing it from dealing freely with the fee simple in Lot 136K as a registered proprietor should be able to do.
The existence of the Caveat is also currently prejudicing the plaintiff by preventing him from doing anything with the land that can be brought to conclusion, and putting him in a position where he can receive no payment for the land. Specifically the plaintiff is being prevented from settling the subsequent sale of Lot 136K which was agreed to be settled by 31 October 2014 and is thereby preventing the plaintiff from receiving the sale price of $340,000 under the subsequent Contract of Sale.
Further, a factor also weighing the balance of convenience in favour of the plaintiff is the fact that the defendant has paid only $2,000 deposit in respect of the Contract of Sale. Therefore, very little of the defendant’s money is secured by the Caveat, and the defendant has, unaffected by the removal of the Caveat, such rights as it may have, to pursue the plaintiff for damages. The plaintiff has also, in open Court, offered to repay the defendant’s $2,000 deposit on removal of the Caveat.
In evaluating the balance of convenience, I have taken into account the Victorian Court of Appeal's statements about the proper approach to evaluating the balance of convenience in Bradto Pty Ltd v State of Victoria.[4]
[4](2006) 15 VR 65
I consider that there is a higher of risk of prejudice, as between the parties, and injustice, if I were to refuse the plaintiff's application to remove the Caveat because of the likely prejudice accruing to the plaintiff in relation to the plaintiff being unable to deal with his land, and obtain the benefit of the subsequent Contract of Sale.
The countervailing position is that, in my view, in the circumstances there is a lesser risk of prejudice, as between the parties, and a lesser risk of injustice, in not acceding to the defendant's arguments and retaining the Caveat, because of the factors that I have identified relating to the likelihood that the defendant will not succeed on its construction of the Contract of Sale and will not obtain an order for specific performance and because the defendant retains the right to pursue whatever entitlements it might have, ultimately, to damages.
Further, the risk to the defendant is lessened because the Contract of Sale, in any event, was one which secured only a $2,000 deposit.
For these reasons, if I am in error in refusing to maintain the Caveat, I consider that course will result in a lower level of risk of prejudice as between the defendant and the plaintiff. Here the balance of convenience does not justify the continuation of the Caveat.
I will record in Other Matters that the defendant will arrange to deliver to the plaintiff’s solicitors its proposed form of withdrawal of caveat in registrable form for the withdrawal of the caveat registered in dealing number AK492485P over the property described in Certificate of Title Volume 10294 Folio 536.
I make the following Orders:
1. The requirements of Rules 5.03(1) and 8.02 of the Supreme Court (General Civil Procedure) Rules 2005 are dispensed with and the Plaintiff has leave for having commenced the proceeding by Originating Motion in Form C.
2. The caveat registered in dealing number AK492485P over the property described in Certificate of Title Volume 10294 Folio 536 be removed.
3. There be a stay on these orders until 4.00pm on Friday, 14 November 2014.
4. The Defendant pay the Plaintiff’s costs of and incidental to the Summons and Originating Motion both dated 28 October 2014 on the standard basis.
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