Matthews v Tyndall

[2010] NSWDC 133

CITATION:	Matthews v Tyndall [2010] NSWDC 133
HEARING DATE(S):	13 May 2010-17 May 2010
JUDGMENT DATE:	19 May 2010
JURISDICTION:	District Court - Civil
JUDGMENT OF:	Sidis DCJ
DECISION:	On the plaintiff’s claim: Verdict and judgement for the plaintiffs on their claim in the sum of $79,038.82 comprising of the loan monies advanced in the sum of $66,500 and outstanding interest in the sum of $12,538.82. The defendant is to pay the plaintiffs’ costs on an indemnity basis. ------ On the cross-claim: The cross-claim is dismissed. The defendant is to pay the plaintiffs’ costs on an ordinary basis ------ The exhibits are returned in both matters.
CATCHWORDS:	SALE OF LAND - Moneys claimed on vendor finance - Terms of mortgage to secure finance - Allegations of misdescription and misrepresentation - Rights of objection to title provided for in contract and Conveyancing Act 1919 not exercised - Construction of contract
LEGISLATION CITED:	Conveyancing Act 1919 Conveyancing (Sale of Land) Regulation 2005 Fair Trading Act 1987 Uniform Civil Procedure Rules 2005
CASES CITED:	Jennings v Zihali-Kiss, Zilahi-Kiss and M K Tremaine & Co Pty Ltd (1972) 2 SASR 493 Jones v Dunkel (1959) 101 CLR 298 Latec Finance Limited v Knight (1969) 2NSWR 79
PARTIES:	John Joseph Matthews (First Plaintiff) June Eleanor Matthews (Second Plaintiff) John Balchin De Vere Tyndall (Defendant)
FILE NUMBER(S):	2009/00339210
COUNSEL:	Mr C Simpson (For the Plaintiffs)
SOLICITORS:	Somerville Laundry Lomax Solicitors (For the Plaintiffs) Defendant Self Represented

JUDGMENT

1 By contract of sale dated 13 February 2008 the plaintiffs John and June Matthews contracted to sell to the defendant, John De Vere Tyndall, their property at 90 General Stubbs Drive, Rosebank, also described as lot 10 in deposited plan 631753. The purchase price was $665,000 and a deposit of 5%, or $33,250, was paid on exchange of contracts.

2 On 2 March 2008 the defendant wrote to the plaintiffs’ solicitors in respect of vendor finance of $66,500 and a proposal to release to the vendors the 5% deposit paid on exchange of contracts in advance of completion.

3 The contract was completed on 12 March 2008. On settlement, the plaintiff’s advanced the defendant the sum of $66,500. The defendant granted a mortgage in respect of the loan. This was an unregistered mortgage but the transaction permitted the purchasers to notify their interest in the land by way of a caveat registered against the title.

4 In December 2008 the term of the loan was extended to 29 [sic] February 2009. The defendant made a part payment at that time of $2,000 on account of interest. A document effecting a variation of the mortgage was dated 23 December 2008.

5 On 28 February 2009 the defendant wrote to the plaintiffs’ solicitors raising a number of issues concerning the property and advising that he considered that he was entitled to compensation. In the circumstances he declined to repay the loan until the issues were resolved or mediated.

6 On 3 April 2009 the statement of claim was issued and on 28 May 2009 the defendant filed a defence and cross-claim. The pleadings were subsequently amended so that their claims were:

1. The plaintiffs claimed to recover $66,500, interest at 10% and their costs of enforcing their rights under the loan transaction in accordance with the provisions of the mortgage.

2. The defence claimed that the contract of sale was varied at the time the parties agreed to the loan transaction, that the vendors were in breach of the terms of the contract as varied and that their breach effected a repudiation of the contract which the defendant elected to treat as a fundamental breach entitling him to refuse to repay the loan.

3. Alternatively, the defendant claimed that he was entitled to sue for damages which he did by means of a cross-claim.

4. In the cross-claim the defendant claimed that there were false and misleading representations by the plaintiffs:
a) in failing to include a plan of an appurtenant right of way created on registration of dealing number A193020; and

b) in failing to disclose or attach documents creating a right of way burdening the land upon registration of dealing number AD616483.

5. It was claimed that the vendors represented that this right of way was appurtenant to the land.

7 The pleadings were unclear but it became apparent that the defendant was concerned that the plaintiffs represented that the appurtenant right of way extended from Whian Road, Eureka to the boundary of block 10 either by means of the appurtenant right of way A193020 or by the replacement of that right of way by the right of way created by dealing number AD616483.

8 He further pleaded that this was a negligent misrepresentation of fact and a term of the contract.

9 The defendant further pleaded that false and misleading replies to requisitions were provided by the plaintiffs through their conveyancing solicitor in response to requests from the defendant for particulars of the two rights of way. He relied in particular on the following extract from an email sent by the plaintiffs’ solicitor on 5 March 2008:

The documents that relate to A193920 (incorrectly stated for the right of way A193020) have been cancelled and are no longer relevant even though they are on the title still. The lots that are mentioned all no longer exist. The new right of carriageway was created to replace the previously cancelled right of appurnment.

10 The cross-claim alleged that there were the following untrue and false representations in this statement:

1. That documents and plans were cancelled.

2. That all the lots no longer existed.

3. That the new right of way replaced the previously cancelled right of way.

11 The cross-claim alleged that the failure to attach plans constituted a misrepresentation by silence.

12 The defendant claimed damages for breach of contract, breach of the Fair Trading Act 1987 and loss and damage suffered as a result of negligent misrepresentation. The damage claimed was the difference in value between the land with the right of way extending over adjoining land to Whian Road, Eureka and land without the benefit of that right of way.

13 He also claimed that there were defects in improvements on the land. Those parts of the claim were not pressed at the hearing.

14 In their defence the plaintiffs denied all of the defendant’s allegations. They asserted that the defendant’s claims merged on completion and that the defendant waived his right to bring claims for compensation or that he was estopped from bringing those claims.

15 It was immediately apparent that the defence to the plaintiffs’ claim could not succeed. I did not accept that the transaction relating to the loan of $66,500 was conditional upon the matters alleged by the defendant for the following reasons:

1. That part of the defendant’s letter of 2 March 2008, dealing with the loan, imposed none of the conditions that he alleged.

2. On a proper reading of that letter those conditions were attached to the proposed release of the deposit monies.

3. Even if they were intended to be attached to the loan transaction the conditions alleged were so imprecise as to be unenforceable.

4. The letter did not state that repayment of the loan was conditional upon performance of the alleged conditions.

16 The defendant claimed that the letter of 2 March 2003 contained his offer. There was no evidence of acceptance of the offer on the terms stipulated. To the contrary, the parties entered into a written agreement as envisaged by the defendant in his letter of 2 March 2008. The written agreement comprised the unregistered mortgage signed by the defendant in which none of the alleged conditions appeared. I regarded this document as setting out the terms of the agreement between the parties concerning the loan transaction.

17 This position was enforced by the terms of the document signed in December 2008 when the term of the loan was extended. There was no reference to these conditions in this document or in any other document created at this time.

18 Finally, there could have been no repudiation of the contract of sale since by the time the loan transaction was entered into the contract of sale had been completed. The defence therefore failed.

19 The cross-claim also faced a number of problems. The defendant was correct in asserting that the contract was deficient in failing to attach the plan accompanying the transfer creating the appurtenant right of way A193020 and in failing to refer at all to the right of way created by dealing AD616483. I accepted that the documents, including the plans, were instruments that were prescribed documents for the purposes of s 52A(2) of the Conveyancing Act 1919.

20 The defendant had rights under the Conveyancing Act and the contract in respect of this deficiency. The statutory remedy for failure to attach prescribed documents was that of recission of the contract provided for in regulation 19(1) of the Conveyancing (Sale of Land) Regulation 2005. The defendant did not exercise this right of recission.

21 Clause 6 of the contract for sale made provision for claims for compensation in the event of an error or misdescription in the contract. This clause however required that those claims be made before completion. The defendant did not exercise this right to claim compensation.

22 The procedure for making the claim was set out in clause 7 of the contract. This clause gave the vendors the right to rescind the contract if the compensation claimed exceeded 5% of the purchase price. By reason of the defendant’s failure to make his claim in accordance with the requirements of clause 6 of the contract for sale, the plaintiffs in this case lost that right.

23 I was referred to a number of decisions that confirmed that a purchaser has a right to claim compensation for an error or misdescription relating to the property which is the subject of the contract. I had no doubt that this was so. However, with the exception of one of those authorities, the claim for compensation was made in accordance with the contract prior to settlement.

24 The claim made in Jennings v Zihali-Kiss, Zilahi-Kiss and M K Tremaine & Co Pty Ltd (1972) 2 SASR 493 was allowed to be made after settlement on the basis that the defect fundamentally misdescribed the nature of the property involved. This could not be said to be the situation in the current case. The most that can be said of this contract was that it failed to disclose the right of way AD616483.

25 The defendant does not complain about the burdening effect upon the property of this right of way. His complaint was that it did not effect a right of way appurtenant to the property extending to Whian Road. It was never part of the vendor’s contractual obligation to deliver title to a right of way of that description. Thus the Jennings case did not assist the defendant.

26 As to the alleged misrepresentation, I accepted that the extract from the email of the plaintiffs’ solicitor was less than clear, particularly when taken in isolation from the correspondence that preceded it. I did not accept however that it was wrong.

27 It was apparent that the parcel of land to which right of way A193020 was originally appurtenant was subdivided so that title to that lot no longer existed. The reference to the new right of carriageway was clearly to that referred to in the letter from the plaintiffs’ solicitor dated 29 February 2008. With that letter the defendant was provided copies of documents creating this right of way and a copy of a title search on which it was described as a right of carriageway over a track in use affecting part of the land designated “A” in the plan registered with dealing AD616483. The transfer creating the right of way referred to an existing track. The plan accompanying the transfer referred to an existing track. Thus there was clear indication that a right of way was replaced by the new right of carriageway.

28 What was meant by the vendors’ solicitor by the term appurnment was not at all clear. However, I did not accept that the email conveyed the representation alleged, namely, that right of way A193020 was cancelled and replaced by right of way AD616483.

29 I pointed out to the defendant that even if he considered the email confusing or ambiguous, a cursory inspection of the documentation creating the right of way AD616483 would indicate that this was not what was intended to be conveyed. This right of way affected the north-western corner of the land. It burdened the land in favour of the adjoining lot 9.

30 The suggestion, contended for by the defendant, that he understood from these documents that the right of way extended through lot 9 towards the north and then in some way travelled south to traverse other allotments in the subdivision to the point where it reached Whian Road was, with respect, ludicrous. If he considered this to be the position there was no suggestion that he searched lot 9 to determine the ongoing route of the right of way or that he raised any further objection or requisition or sought clarification of the position prior to completion.

31 I was referred to the decision in Latec Finance Limited v Knight (1969) 2NSWR 79. In that case Jacobs J was influenced by the prompt action taken by the defendant to exercise a right to return the property which was the subject of the contract between the defendant and the plaintiff. It could not be said that action was prompt in this case.

32 On the defendant’s evidence he was confused and unsure of the position of the right of way but he said nothing prior to completion of his confusion to the plaintiffs or their solicitor. He raised no further requisition or objection and sought no clarification. He made no claim for compensation in respect of his continuing concerns after receipt of the email of 5 March 2008, prior to completion of the contract, or at the time of extension of the term of the mortgage.

33 I do not understand how he could expect the vendors’ solicitor to provide him with further clarification if he did not promptly, and certainly prior to settlement, make it known that he was not satisfied with the information provided. Even if the information provided by the plaintiffs’ solicitor was wrong, the correct position concerning the right of way A193020 was and always remained as stated in the contract. It was never represented that the right of way extended to the boundary of the land that was the subject of the contract, it was simply stated that it was a right of way appurtenant to the land. The result therefore was that I find that there was no false misleading or negligent representation.

34 There was a suggestion that I should draw some form of inference from the failure of the plaintiffs to call their conveyancing solicitor to explain what he intended to convey in his email of 5 March 2008. I consider that this was not a situation where the principles developed in Jones v Dunkel (1959) 101 CLR 298 applied. It was not clear what inference I was asked to draw from the absence of evidence from the solicitor. At most it would be that his evidence would not assist the plaintiffs but in what respect it was not clear.

35 As already noted, the contract was certainly deficient in failing to attach the prescribed documents but the solicitor’s evidence would not alter that fact. His words in the email were his words, what they conveyed was a matter of what they would convey to a reasonable person in the defendant’s position. In my view they would not have conveyed the understanding that the defendant contended he drew from them.

36 A further basis upon which the cross-claim failed was that there was no evidence of loss. The defendant argued that the representations entitled him effectively to walk away from the mortgage and to retain the whole of the monies that he borrowed from the plaintiffs. That proposition was clearly unsustainable and further it was not the compensation that he claimed in his cross-claim.

37 The defendant resisted the plaintiffs’ application for indemnity costs. That application was based on the provision of the mortgage agreement entered into between the parties in 2 March 2008 that provided as follows:

Failure by the mortgagor to repay this amount by 12 December 2008 will allow the mortgagee to seek satisfaction of the outstanding amount plus interest and costs associated with obtaining these funds from the mortgagor.

38 The defendant resisted the application for indemnity costs on the basis that the provision did not specifically provide for costs to be paid on that basis. However it does state that the mortgagee should have the right to costs associated with recovering the amount payable. In my view the provision can readily be interpreted as extending to actual or indemnity costs.

39 The defendant also resisted a costs order on the basis of an offer of compromise made by him that he considered to be as favourable to the plaintiffs as the judgment that I am about to enter against him. The offer was to pay the loan sum plus interest plus costs on a party and party basis. It was apparent that the offer is not as favourable than the order that I am about to make.

40 My attention was also drawn to paragraph 4 of the letter of offer it required the plaintiffs to agree to a release of the loan agreement, sign a discharge of the unregistered mortgage and execute and complete a withdrawal of the caveat on or before settlement. Fulfilling these conditions would leave the plaintiffs in a position where they would lose their rights of enforcement under the semi secured mortgage. In those circumstances I did not accept that the provisions of rule 42(15) of the Uniform Civil Procedure Rules applied.

41 As far as the costs of the cross-claim were concerned I am not satisfied that those costs extend to the recovery of the mortgage sum. Those costs were expended in defeating a claim for damages on the basis of misrepresentations.

42 The orders that I make are as follows:

1. On the plaintiffs’ claim:
a) Verdict and judgment for the plaintiffs in the sum of $79,038.82 comprising the monies advanced of $66,500 and outstanding interest of $12,538.82.

b) The defendant is to pay the plaintiffs’ costs on an indemnity basis.

c) The exhibits are returned.

2. On the cross-claim:
a) The cross-claim is dismissed.

b) The defendant is to pay the plaintiff’s costs on an ordinary basis.

c) The exhibits are returned.

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