Matthews v Knight
[2017] VCC 1537
•27 October 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
EXPEDITED LIST
Case No. CI-17-04989
| JOHN SIDNEY MATTHEWS | Plaintiff |
| v | |
| MICHAEL SCOTT KNIGHT and REGISTRAR OF TITLES FOR VICTORIA | Defendants |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 October 2017 | |
DATE OF JUDGMENT: | 27 October 2017 | |
CASE MAY BE CITED AS: | Matthews v Knight & Anor | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1537 | |
REASONS FOR JUDGMENT
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Catchwords: Caveat – Lodged by purchaser in respect of alleged “agreements” – Contracts of sale delivered to the purchaser – Purchaser’s solicitors lodged caveats and proposed a deed of variation of the contracts – Default by purchaser in paying the balance of deposits by the date specified in the contracts – Whether the contacts constituted “offers” which remained open for acceptance – Whether the “offers” were revoked or lapsed – Whether the “offers” were subsequently accepted by the purchaser resulting in enforceable contracts which could be protected by the lodgement of a later caveat – All caveats ordered to be removed – Section 90(3) Transfer of Land Act 1950 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr J McKay | Hoban Lawyers |
| For the first defendant For the second defendant | Mr M Knight in person No appearance |
HIS HONOUR:
1 John Matthews is the executor of the estate of a family member. As part of his responsibilities, he was required to sell three residential properties at Lancefield (“the Lancefield properties”). Michael Knight wished to purchase the Lancefield properties. In August and September 2017, Mr Knight had negotiations with Mr Matthews and his real estate agent in relation to the proposed purchase.
2 Mr Knight states that on 6 October 2017 he entered into a contract of sale for the purchase of the Lancefield properties. On 13 October 2017, he personally lodged a caveat claiming “absolutely” a “freehold estate” in the Lancefield properties on the grounds of an agreement dated 6 October 2017 with Mr Matthews.
3 In an originating motion in proceeding CI-17-04950 issued on 20 October 2017, Mr Knight sought specific performance of the contract dated 6 October 2017 and other relief including damages of $589, 265. I have deferred further consideration of that proceeding, and the summons filed by Mr Knight on 20 October seeking final relief, until I have determined the application by Mr Matthews in the present proceeding.
4 Mr Matthews commenced the present proceedings by originating motion filed 24 October 2017. By the motion, and a summons also filed on 24 October, Mr Matthews seeks the removal of the caveat lodged by Mr Knight on 13 October 2017 in respect of the Lancefield properties.
5 The issue for determination in this proceeding is whether Mr Knight has satisfied the onus upon him to demonstrate that he is entitled to an absolute freehold estate in the Lancefield properties pursuant to contracts of sale entered into by him with Mr Matthews on 6 October 2017.
6 I have concluded that Mr Matthew’s application should succeed and an order be made for the removal of caveats. I am not satisfied that the parties entered into contracts for the sale and purchase of the Lancefield properties on 6 October 2017 or that Mr Knight thereby acquired any interest in them.
Background facts
7 On about 29 August 2017, Mr Matthews’ real estate agent delivered to Mr Knight three contracts of sale each relating to one of the Lancefield properties. The contracts provided for a 10% deposit payable on 30 August 2017 and settlement on 30 October 2017. These contracts were exhibit “MK1” to Mr Knight’s affidavit sworn 23 October 2017 in proceeding C1-17-04950 which was received as evidence in opposition to Mr Matthews’ application in the present proceeding (“the first contracts”). It is likely, however that parts of a later version of the contracts were included in the exhibit (including the page with the date for payment of the balance of one of the deposits).
8 There is no argument in relation to the first contracts. Neither Mr Matthews nor Mr Knight allege that the first contracts had any operation, although in an email dated 6 October 2017, Mr Knight stated that on 30 August 2017 he had “executed a contract of sale for the properties” “by way of formal offer capable of acceptance by the Vendor”.
9 On 11 September 2017, Mr Knight had further discussions with Mr Matthews’ real estate agent. According to Mr Knight, the agent advised that if he “transferred $3,000 ($1,000 per contract) to the Estate Agents Trust Account, [the agent] would discuss the proposed contracts’ terms with the defendant [Mr Matthews] and advise the outcome of those discussions”. Mr Knight transferred the requested sum of $3,000 and it was receipted as a “partial deposit” in respect of the purchase of each of the Lancefield properties.
10 On 12 September 2017, the real estate agent sent three further contracts of sale to Mr Knight. The contracts are exhibit “MK5” to Mr Knight’s affidavit (“the second contracts”). Each contract contained the signature of Mr Matthews and the date “31/8/2017” and also included Mr Knight’s signature and the date “30/8/2017” on the first page. It is likely that the real estate agent re-used the first contracts, although substituting a revised page with a term providing for payment of a 10% deposit (“of which $1000.00 has been paid”) “by 15/09/17”.
11 The second contracts are of critical importance for the following reasons:
a. in the days that followed, both Mr Matthews’ solicitors (Hoban Lawyers) and Mr Knight’s solicitors (Russell Kennedy) acted as though there were concluded enforceable contracts between the parties for the sale and purchase of the Lancefield properties;
b. Russell Kennedy, on behalf of Mr Knight, lodged a caveat on about 15 September 2017 claiming a “freehold estate” “absolutely” on the basis of an agreement between Mr Knight and Mr Matthews dated 31 August 2017;
c. Russell Kennedy proposed, in a letter to Hoban Lawyers dated 20 September 2017, that Mr Knight and Mr Matthews enter into a “deed of variation” to amend each settlement date in the second contracts to 28 September 2017 and to amend the deposit amount payable under each contract from the 10% specified to “$1,000 which has already been paid”;
d. Russell Kennedy’s proposal to vary the “existing contracts” was rejected by Hoban Lawyers on behalf of Mr Matthews on 22 September 2017;
e. Mr Knight did not pay the balance of the 10% deposits due on 15 September 2017 pursuant to the second contracts;
f. Hoban Lawyers issued three rescission notices on 22 September 2017 stating that the second contracts would be rescinded unless the default ( the payment of the balance of the deposits) was remedied within 14 days. This was not done.
12 On 6 October 2017, Mr Knight advised Hoban Lawyers and the real estate agent that he “attached by way of exchange the purchaser’s acceptance of the vendor’s counteroffer” for the Lancefield properties. The attachments were contracts in the same form as the second contracts except that Mr Knight had crossed out the date “30/8/2017” beside his signature on the front sheet of each contract and had inserted the date “06/10/17”. These documents are exhibit “MK7” to Mr Knight’s affidavit (“the third contracts”). Also, on each of the third contracts, beside the term for “payment” on the third page of the document, Mr Knight had signed his name with the date “6/10/2017”.
13 In his email attaching the third contract, Mr Knight purported to recite the history of the transaction as follows:
“1. On 30th August 2017, the Purchaser by way of formal offer capable of acceptance by the Vendor executed a Contract of Sale for the properties.
2. On 11th September 2017, after a verbal agreement with the Vendor’s Estate Agent, I transferred an initial deposit of $1,000 per contract to the Estate Agents Trust Account. The agreement at that time was the Vendor would consider varying the proposed contract and the Vendor’s Agent would advise me of the outcome of those discussions.
3. On 12 September 2017, I received via email from the Vendor’s Estate Agent, a counter offer whereby the deposit details had been altered in the proposed contracts of sale for the Properties to the extent the Vendor acknowledged the payment of an initial deposit of $1,000 per contract and proposed payment of the balance of deposit by 15 September 2017.
4. Enclosed herewith is the Purchaser’s acceptance of those terms. We note, as at today’s date, we have not received a withdrawal of counter-offer from the Vendor’s or your offices.
5. We note the date required for payment of the deposit has passed. We respectfully suggest the Vendor make time of the essence by nominating a date by which the deposits are to be paid.
6. We advise, subject to your advice on a date for payment, the Purchaser is making arrangements for the transfer of the deposits to the estate Agent’s Trust Account and we assume they will advise you of their receipt. We suggest Friday 13th October 2017 as the date for payment of the balance of the deposits.
Default Notices
7. In order to minimise legal costs in this matter and avert the requirement to engage with the courts, we request you advise us by 5.00pm on Friday 6th October 2017 that your reliance on the Default and Rescission notices [is] unfounded as the notices were issued prior to the contract formation being the 6th October 2017.
Settlement
8. We note the settlement date agreed between the parties is 30th October 2017 and we advise the Purchaser is ready, willing and able to effect settlement prior to this date by mutual agreement as to a suitable date, time and place”.
14 Both in proceeding CI-17-04950, and in opposition to Mr Matthews’ application for the removal of the caveat, Mr Knight maintained that:
a. the second contracts were never concluded enforceable agreements as the formalities required by section 53 of the Property Law Act 1958 were not complied with;
b. the second contracts were essentially “offers” by Mr Matthews to enter into binding contracts in the form of the second contracts, if Mr Knight chose to accept the offers;
c. the caveats lodged by Russell Kennedy on 15 September 2017 and the rescission notices served upon him by Hoban Lawyers on 22 September 2017 were ineffective as the second contracts were not binding concluded agreements;
d. the offers, constituted by the delivery of the second contracts to him on 12 September 2017, were unaffected by:
i.Mr Knight’s failure to pay the balance of the deposits due on 15 September 2017;
ii.the proposal by Russel Kennedy in its letter dated 20 September 2017 for a “deed of variation”;
iii.the service of the rescission notices on 22 September 2017, and Mr Knight’s failure to comply with them;
iv.the “suggestion”, in his email dated 6 October 2017, that Mr Matthews “ make time of the essence by nominating a date by which the deposits are to be paid”, the date in the contracts for payment of 15 September 2017 having passed;
e. the offers, constituted by the second contracts, were accepted by Mr Knight by his email dated 6 October 2017.
15. Neither party wishes to enforce the second contracts, as such:
a.Mr Knight says that they were ineffective. Accordingly, he does not oppose the removal of the caveats dated 15 September 2017 lodged by Russell Kennedy;
b.Mr Matthews’ counsel Mr McKay submitted that, if the second contracts had any operation, they were rescinded by the notices served by Hoban Lawyers.
16.In relation to the third contracts, which Mr Knight says are binding on Mr Matthews, Mr McKay made the following submissions:
a.if the second contracts were offers by Mr Matthews, the offers were revoked or had lapsed by reason of:
i.the inconsistent offer made by Russell Kennedy on 20 September 2017 to vary the contracts to reduce the deposits payable to $1,000 and to alter the settlement dates;
ii.by implication from the following matters:
A.both the solicitors for Mr Knight and the solicitors for Mr Matthews had after 12 September acted on the assumption that the second contracts were binding and enforceable (including in the case of Russell Kennedy, by lodging a caveat and proposing a deed of variation);
B.Mr Knight had the opportunity to comply with the second contracts by paying the balance of deposits by the specified dates in the second contracts (15 September 2017) or by remedying that default within the period of 14 days allowed by the notices of rescission served on 22 September 2017 by Hoban Lawyers.
These matters were entirely inconsistent with an assumption by a reasonable person in the position of Mr Knight that, if the second contracts constituted offers, that such offers remained open for acceptance on 6 October 2017;
b.in his purported acceptance of the offer constituted by the delivery of the second contracts, Mr Knight on 6 October 2017 suggested that the balance of the deposits be paid on 13 October 2017 or on another date nominated by Mr Matthews. This was necessary because the date in the second contracts for the payment of the balance of the deposits had passed. In the circumstances, Mr Knight was not accepting the terms that had been offered. Further, Mr Matthews never accepted the alternative terms as to the payment of the balance of the deposits proposed by Mr Knight on 6 October 2017;
c.the second contracts were delivered to Mr Knight by Mr Matthews’ real estate agent with an email stating that the second contracts were provided “by way of exchange”. Both solicitors acted on this basis. It is unlikely that Russell Kennedy would have acted as they did (including lodging caveats and sending the letter dated 20 September 2017) without specific instructions from Mr Knight. The second contracts were not intended as “offers” and were not treated as such by the solicitors or, in all likelihood, by their clients including Mr Knight.
d.if there were any formal deficiencies in the execution of the second contracts, there were sufficient acts of part performance by Russel Kennedy, undoubtedly acting upon the instructions of Mr Knight, to ensure that the second contracts constituted binding enforceable agreements. These contracts were validly terminated as a result of the default by Mr Knight in failing to pay the balance of the deposits by the date specified in the second contracts and failing to remedy the default after the service of rescission notices.
Conclusions
I am not satisfied that there is a serious issued to be tried as to the question of whether binding and enforceable contracts of sale were entered into on 6 October 2017 in relation to the Lancefield properties. The balance of convenience does not favour the maintenance of the caveats. Mr Knight defaulted in his obligations to pay the balance of the deposits under the second contracts. Mr Matthews was entitled to seek to sell the Lancefield properties to other more reliable purchasers. There is apparently some urgency in this regard because of the expectations of the beneficiaries of the estate which Mr Matthews is administering.
I reject the submissions of Mr Knight. After the second contracts were delivered on 12 September 2017, his solicitors considered that he was the purchaser of the Lancefield properties. Mr Knight was, however, unable or unwilling to pay the balance of the 10% deposits. Deposits may be retained in the event of a later default in the settling of a contract and regardless of whether there is a loss on any resale.
Mr Knight in an opportunistic ploy on 6 October 2017, sought to manufacture contracts by the purported acceptance of what he considered extant offers constituted by the delivery of second contracts. This approach ignores entirely the conduct of Mr Knight and his solicitors after the delivery of the second contracts on 12 September 2017. In this regard, I accept each of the submissions of Mr McKay. There is no proper basis for the caveat lodged by Mr Knight on 13 October 2017, or the earlier caveats lodged by Russell Kennedy.
Orders
The second defendant, the Registrar of Titles for Victoria, has not appeared but has, in accordance with usual practice, indicated that the orders of the Court will be complied with.
Pursuant to section 90(3) of the Transfer of Land Act 1958, it is ordered that the second defendant remove the following caveats:
a.caveat numbered AQ251469G lodged in respect of Certificate of Title Volume 11656 Folio 485 and Volume 11656 Folio 488;
b.caveat numbered AQ251472T in respect of Certificate of Title Volume 724 Folio 704; and
c.caveat numbered AQ359626R lodged in respect of Certificate of Title Volume 11656 Folio 485, Volume 11656 Folio 488 and Volume 724 Folio 704.
I will hear further from the parties in relation to:
a.any other orders including in relation to costs of the proceeding; and
b.the originating motion and summons issued by Mr Knight in proceeding CI-17-04950.
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Certificate
I certify that these 8 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 27 October 2017.
Dated: 27 October 2017.
Zeinab Ali
Associate to His Honour Judge Anderson
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