McClaren Lodge Pty Ltd v Argondizzo
[2000] VSC 6
•18 January 2000
SUPREME COURT OF VICTORIA
PRACTICE COURT Do not Send for Reporting Not Restricted
No. 7778 of 1999
| McCLAREN LODGE PTY. LTD. AND ANOTHER | Plaintiffs |
| v. | |
| LIDIA ARGONDIZZO AND ANOTHER | Defendants |
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JUDGE: | BEACH, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 20 DECEMBER 1999 | |
DATE OF JUDGMENT: | 18 JANUARY 2000 | |
CASE MAY BE CITED AS: | McCLAREN LODGE PTY. LTD. & ANOR. v. ARGONDIZZO & ANOR. | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 6 | |
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CATCHWORDS: Vendor and Purchaser – Removal of caveat – Costs of proceedings – Faults on both sides – Each party bear own costs.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiffs | Mr. I. Percy | Holding Redlich |
| For the Defendants | Mr. R. Greenberger | A. Agrotis & Associates |
HIS HONOUR:
In 1995 a company called Fairfield Views Pty. Ltd. Owned a large allotment of land in Station Street, Fairfield, which it proposed to redevelop as a residential subdivision.
The subdivision was to proceed in three stages. In due course Stages 1 and 2 of the redevelopment were finalized.
In 1995 the first defendant Lidia Argondizzo agreed to purchase Lot 20. As I understand the situation the price the first defendant agreed to pay for Lot 20 was $50,000. That sum included the cost of building works to be carried out in respect of the unit to be built on Lot 20.
On 13 December 1995 the first defendant paid Fairfield Views a deposit of $1,000 in respect of her purchase of the allotment. However at that time she did not enter into a formal contract in relation to her purchase.
On 25 February 1998 the first defendant entered into a formal contract of sale whereby she agreed to purchase Lot 20 for the sum of $30,000 and a development agreement whereby she agreed to pay Fairfield Views the sum of $20,000 in respect of the unit to be built on the lot. That same day the first defendant paid a further deposit of $2,000 in respect of her purchase of Lot 20 and a deposit of $2,000 in respect of the development agreement.
The contract of sale contains the following special condition:
"8.The Purchaser shall not lodge in the Office of Titles for registration a Caveat pursuant to the Transfer of Land Act 1958 against the Parent Title or any part thereof prior to the approval of the Plan hereinbefore referred to. The Purchaser shall indemnify the Vendor against all loss suffered by the Vendor in consequence of any delay in the approval of any Plan which may occur in consequence of the lodging of any such Caveat."
By agreements entered into in about June and July 1998 the plaintiffs McClaren Lodge Pty. Ltd. And A. & J. Brady Pty. Ltd. Purchased the land from Fairfield and its interest in the development. A company associated with the plaintiffs named Brady Construction Pty. Ltd. Was then appointed by the plaintiffs to be the builder of the development.
In about mid-1998 the first defendant received a letter from the plaintiffs inviting her to attend an information night for purchasers of apartments in the development.
On 14 July 1998 the first defendant attended the meeting, met with representatives of the plaintiffs and had discussions with them concerning certain work to be done in respect of her unit.
At some unspecified time in 1998 the plaintiffs had the first defendant sign a subordination agreement which Brady Construction needed to provide to its financier Macquarie Bank Ltd.
Also during 1998 the first defendant received correspondence from the plaintiffs requesting her to confirm the colour scheme which she had chosen for her unit.
In October 1999 the first defendant learnt that the plaintiffs were marketing Lot 20 with a view to selling it at a higher price than the first defendant had agreed to pay.
At that stage the plaintiffs had not registered the plan of sub-division in respect of Stage 3 of the development.
Despite the provisions of special condition 8 in her contract of sale, the first defendant instructed her solicitors to lodge a caveat over the whole of the land forming Stage 3 of the development, claiming an equitable estate in fee simple pursuant to her contract.
On 15 November 1999 the plaintiffs' solicitors wrote the following letter to the first defendant's solicitors:
"As you are aware we act for McClaren Lodge Pty. Ltd. and A & J Brady Pty. Ltd.
We have been provided a copy of a caveat that has been lodged by your office on behalf of Lidia Argondizzo claiming an equitable interest in the land described in certificate of Title Volume 10449 Folio 067 which is lot S3 on plan of subdivision 414719Q and which is stage 3 of the development known as Fairfield Views.
Your client is not entitled to lodge a caveat against the property as:
(a)the contract of sale referred in the caveat does not exist and/or our clients have never entered into any such contract; and
(b)even if it can be established that the alleged contract of sale exists, that contract of sale would have been or was in a form that had as a standard term and condition a provision that your client was prohibited from and not entitled to lodge a caveat prior to the registration of the plan of subdivision.
Our clients are about to lodge stage 3 of the plan of subdivision at the Land Titles Office and your client's caveat will prevent and delay the registration of the plan of subdivision resulting in our clients incurring substantial losses and damages which our clients will be entitled to claim and recover from your client.
Therefore, our clients demand and require that you provide us with a withdrawal of caveat together with a cheque in the sum of $31.00 payable to the Land Titles Office by 5.00 p.m. On Tuesday 16 November 1999, otherwise legal proceedings will immediately thereafter be instituted for removal of the caveat.
This letter will be produced to the court on the issue of costs".
On the following day the plaintiffs lodged the plan of sub-division in respect of Stage 3 in the Office of Titles for registration.
The Registrar of Titles refused to register the plan because the first defendant had lodged a caveat over the whole of the land forming Stage 3 of the development.
The letter of 15 November 1999 was followed up by a further letter on 17 November:
"We refer to your telephone discussions with Mr Farinotti of this office today. We are instructed by our clients that they will not acknowledge that the contract referred to in the caveat exists. Would you please advise as to your client's instructions in relation to the alternative proposed by Mr Farinotti of this office as a matter of urgency."
There was then further correspondence passing from the plaintiffs' solicitors to the first defendant's solicitors and on 25 November the first defendant's solicitors wrote the following letter to them:
"We refer to previous correspondence in relation to the abovementioned matter and we are now instructed to advise that our client will not remove the Caveat unless the Vendors acknowledge that the Contract of Sale in relation to the abovementioned property is valid."
That letter produced a reply dated 26 November, the first paragraph of which reads:
"We refer to your letter dated 25 November 1999. Our clients maintain their position in respect of the alleged contract of sale in relation to the abovementioned property and in no way acknowledge that the contract of sale is valid."
On 30 November the plaintiffs' solicitors wrote again to the first defendant's solicitors. The letter contains the following paragraphs:
"Without in any way derogating from the matters that we have raised in previous correspondence and discussions, we are instructed to record in writing the proposal put to you by our Mr Farinotti on 17 December 1999. We do so because, in our view, your client's judgment regarding the withdrawal of the caveat presently lodged over the whole of the stage 3 land appears to be clouded by the issue of whether or not a valid contract to purchase the property exists.
On 17 November 1999, it was put to you that your client withdraw the caveat and re-lodge a separate caveat in relation to the particular property affected (namely Lot 20 Fairfield Views). The proposal was put to relieve the tension regarding Plan of Subdivision No.405967V and the impediment to registration of that Plan solely as a consequence of your client's caveat.
We are instructed to reiterate the proposal.
In doing so, our client does not resile from its position in relation to the validity of the contract of sale. It reserves its rights in that regard, however for the purposes of progressing the present dispute and in order for it not to end up in (inevitable) litigation, it will consent to your client withdrawing the present caveat (which affects all of the land in Plan of Subdivision No.405967V) and having a substitute caveat lodged which effects only Lot 20 and which will allow the Plan of Subdivision to be registered."
On 1 December 1999 the plaintiffs' solicitor had the following conversation with the first defendant's solicitor:
"At 11:35 am on 1 December 1999 Ms Agrotis telephoned me and told me that the first defendant would not remove the caveat in accordance with the plaintiffs' proposal unless my clients acknowledged the validity of the contract. During this conversation, I said to Ms Agrotis that I could not understand why the proposal contained in my letter of 30 November 1999 was unacceptable and did not afford protection to her client. Ms Agrotis said that one of her reasons for not accepting it was that the plaintiffs may have resold Lot 20 or, in the time it would take for her to relodge a replacement caveat over lot 20, the lot could be resold by the plaintiffs. I told Ms Agrotis that there was no merit in that argument given that the proposal put on behalf of the plaintiffs was in writing and could be relied upon. I said to her, in substance, as follows: 'Andriana, my clients have not sold the property and I undertake now that prior to you lodging a replacement caveat they will not resell. You have until 12 noon to accept'. She then said to me that her client was in possession of a copy of the agreement between the original developer and my clients acknowledging the validity of the contract. I said to her that if that was the case, then her client would have to explain why it was that she was in breach of the contract by lodging a caveat. In substance I said that no matter what view one took about the validity of the contract the first defendant simply did not have a caveatable interest in respect of all of the stage 3 land. Ms Agrotis did not disagree with this. No other reason was advanced by her then or has since been advanced by her as to why the proposal was not acceptable to her client. Now produced to me and marked with the letters 'TK-7' is a true copy of my file note of my conversation with Ms Agrotis, recorded by me immediately after my discussion with her together with an accurate typed transcript thereof."
On 2 December 1999 the plaintiffs' solicitors filed an originating motion in the court seeking an order that the caveat be removed.
On 7 December the first defendant's solicitors wrote the following letter to the plaintiffs' solicitors:
"In order to avoid the cost and inconvenience of litigation in relation to the removal of our client's caveat, our client has instructed us to make the following offer to settle Supreme Court proceeding no.7778 of 1999.
Our client agrees to provide your office forthwith with a withdrawal of the subject caveat conditional upon:
1.The vendors undertaking that they will not sell Lot 20 'Fairfield Views', 337 Station Street, Fairfield until the expiration of 7 clear days from the date on which the vendors notify this office in writing of the title particulars of Lot 20, subsequent to the registration of Plan of Subdivision 414719Q.
2.The proceeding be discontinued, or struck out by consent, on the basis that each party will bear its or her own costs.
3.Your clients will release my client and our firm from any liability arising from the lodgment of the subject caveat.
We would require your clients' agreement to these matters to be confirmed in writing.
We look forward to your response to the above."
The proposal was rejected by the plaintiffs.
On 9 December 1999 Master Wheeler referred the proceeding to the Practice Court for hearing on 13 December.
Late on the afternoon of 10 December the first defendant's solicitors telephoned the plaintiffs' solicitors and informed them that a withdrawal of caveat was being forwarded to them that afternoon together with a cheque for the appropriate lodging fee.
The withdrawal and cheque were received by the plaintiffs' solicitors at 5.15 p.m. That day.
When the matter came before me on 13 December the parties informed me that the only order now sought in the proceeding was an order concerning the costs of the proceeding.
As the plaintiffs' counsel informed me and counsel for the first defendant for the first time that the plaintiffs would now seek an order that the first defendant's solicitors personally pay the plaintiffs' costs of the proceeding, I adjourned the further hearing of the matter first to 20 December, then to 21 December, to enable the first defendant's solicitors to file any material they wished to in opposition to such an application.
On 21 December the plaintiffs' counsel informed me that the plaintiffs were not now seeking an order that the first defendant's solicitors pay the plaintiffs' costs of the proceeding, but would seek such an order against the first defendant.
The principal argument advanced by counsel for the plaintiffs in support of his application was that by virtue of the provisions of special condition 8 of the contract of sale the first defendant had no entitlement to lodge a caveat over the title to the whole of the land comprising Stage 3 of the development, at best an entitlement to lodge a caveat over Lot 20.
For the first defendant it was argued that once the plaintiffs challenged the existence of her contract of sale in relation to Lot 20, she was fully justified in lodging the caveat, and that as the plan of sub-division had not been lodged for registration at the time she lodged her caveat, she had no option but to lodge the caveat over the whole of the land in Stage 3 as at that time the whole of the land was contained in one Certificate of Title.
In reply counsel for the plaintiffs contended that the plaintiffs were justified in refusing to acknowledge the existence of the defendant's contract of sale because on p.2 of the contract which sets out the particulars of sale, the name of the purchaser has not been specified.
In my opinion the fact that there is that omission in the particulars of sale was no justification for the plaintiffs denying the existence of the first defendant's contract.
In the first place, page 1 of the contract is signed both by the first defendant and for and on behalf of Fairfield Views, the original vendor.
In the second place, bound up with the contract is the development agreement simultaneously entered into by the first defendant and Fairfield Views.
Finally, it is the undisputed fact that the first defendant has paid a $3,000 deposit in respect of her purchase of the unit.
And so on the one hand I consider that the plaintiffs had no justification for denying the existence of the first defendant's contract. On the other hand the first defendant lodged a caveat over the whole of the land in Stage 3 contrary to the provisions of special condition 8, rather than institute a separate proceeding (which she later did) seeking injunctive relief which would not have delayed registration of the plan of subdivision.
In that situation I ask who should pay the costs of the proceeding?
In my opinion each of the plaintiffs and the first defendant should bear their own costs of the proceeding and I so order.
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