McVeigh v Bell

[2001] VSC 291

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 6952 of 2001

TERRENCE BERNARD McVEIGH AND ANOTHER	Plaintiffs
V
ARTHUR JOHN BELL AND OTHERS	Defendants

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JUDGE:	BEACH, J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	8 AUGUST 2001
DATE OF JUDGMENT:	10 AUGUST
CASE MAY BE CITED AS:	McVEIGH & ANOR. v. BELL & ORS.
MEDIUM NEUTRAL CITATION:	[2001] VSC 291

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CATCHWORDS:      Sale of Land – Conditional upon purchasers obtaining finance by specified date – Purchasers terminating contract prior to date due to inability to obtain finance prior to the date – Acceptance of termination.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. V.A. Morfuni	Acquaro & Co.
For the Defendants	Mr. H.A. Aizen	Sica & Co.

HIS HONOUR:

1. The plaintiffs are the owners of the property situated at and known as 8 Redditch Crescent, Deer Park (the property.)

1. In May 2001 they decided to sell the property and engaged an agent Douglas Kay Pty Ltd (Douglas Kay) to market the property on their behalf.

1. In due course Douglas Kay introduced them to the first and second defendants, Arthur John Bell and Mary Josephine Debrincat (the defendants.)  After some negotiation the plaintiffs and the defendants entered into a contract of sale of the property for $188,000.  The contract is dated 29 May 2001.  It contains (inter alia) the following special condition:  

"This contract is subject to and conditional upon the purchasers obtaining a loan of $170,000 from St George Bank, such loan to be approved by 12 June 2001." 

1. There is no evidence that St George Bank approved a loan of $170,000 to the defendants by 12 June 2001.

1. On 8 June 2001 the defendants' then solicitors faxed the following letter to the plaintiffs' solicitor.

"Dear Sir,

Bell and Debrincat from McVeigh

8 Redditch Crescent, Deer Park

We advise that our clients have been unable to obtain formal loan approval to date.

Therefore, we request an extension of the finance provision until Tuesday 19th of June, 2001.

Kindly advise via return facsimile if your clients are agreeable to such extension.

In the event that such extension of time is not granted, then this letter is notice of confirmation that our clients regretfully withdraw from the purchase."

1. On 13 June 2001 the plaintiffs' solicitors faxed the following letter to the defendants' solicitors:

"Re:  McVEIGH to BELL & DEBRINCAT

Ppty:  8 Redditch Crescent, Deer Park

We refer to the above and your facsimile dated 8th June, 2001.

Please note the Vendor will not grant an extension of the finance date, therefore we require confirmation that this Contract is at an end."

1. On that same day the plaintiffs informed Douglas Kay that the defendants could not obtain finance and that the contract was at an end.  Douglas Kay immediately placed the property on the market again.

1. Later on 13 June Douglas Kay brought two interested purchasers to the property.  It would appear that the agent conducted a "mini auction" between them at the property.  At all events, Douglas Kay informed the plaintiffs that one of the interested purchasers was prepared to enter an unconditional contract to purchase the property for $200,200.  Not surprisingly the plaintiffs agreed.

1. Later again that same day the plaintiffs entered into a contract of sale whereby they sold the property to Huong Mai Thi Nguyen and Ha Thuy Thi Nguyen for the sum of $200,200.  The contract provides for settlement of the sale on 13 August 2001.

1. Later yet again that same day the plaintiffs entered into a contract with G & B Vella Homes Pty Ltd to purchase a property at Altona Meadows for $220,000.  Pursuant to the terms of that contract, settlement of the purchase is to occur on 12 August 2001.  As 12 August is a Sunday, settlement of the purchase will not occur until 13 August which, of course, is the same day upon which settlement of the sale of the Deer Park property is to occur.

1. The only other aspect of the dealings between the parties up to 13 June I wish to refer to at this stage is that before the plaintiffs' solicitors faxed the letter of 13 June to the defendants' solicitors refusing  the extension sought by the defendants and asking the defendants' solicitors to confirm that the contract was at an end, that same day the plaintiffs' solicitors faxed the plaintiffs answers to the defendants' requisitions on title to the defendants' solicitors.  Much was made of that fact by counsel for the defendants during the course of his submissions.  I shall make further reference to that aspect in due course.

1. On 14 June 2001 St George Bank Ltd faxed the following letter to Peninsula Property Finance, a company which had apparently been consulted by the defendants with a view to obtaining finance for them:

"Andrew

Please be advised that a loan of $172,500 has been approved subject to 1/ Confirmation that Metway Bank has been discharged at settlement.  Formal Loan Documentation will issue shortly."

1. Later on 14 June the defendants' then solicitors faxed the following letter to the plaintiffs' solicitors:  

"Dear Sir,

Bell and Debrincat from McVeigh
8 Redditch Crescent, Deer Park

We refer to previous correspondence and confirm that our clients finance application has been approved and accordingly the Contract is now unconditional."

1. Later again that same day the plaintiffs' solicitors faxed the following letter to the defendants' solicitors:

"Re:  McVEIGH to BELL & DEBRINCAT

Ppty:  8 Redditch Crescent, Deer Park

We refer to the above and confirm that the Contract is at an end as the Special condition overides General Condition 3(c).

We have today instructed the selling agent to refund all monies to the purchaser.

Should you have any queries, please do not hesitate to contact our office."

1. On 18 June 2001 the defendants caused their solicitor to lodge a caveat against the title to the Deer Park property.

1. The caveat claims an estate in fee simple in respect of the property on the following ground:  

"As purchasers pursuant to the contract of sale dated 29 May 2001 between Terrence Bernard McVeigh and Marion McFarlane McVeigh as vendors and the caveators."

1. On 25 July 2001 the defendants tendered the balance of purchase money to the plaintiffs' solicitors.  Not surprisingly the tender was refused.

1. On 31 July last the plaintiffs filed an originating motion in the court whereby they seek an order pursuant to s.90(3) of the Transfer of Land Act 1958 for removal of the caveat.  For obvious reasons the matter has a degree of urgency about it.  If the caveat is not removed the plaintiffs will be unable to effect settlement of the sale of the Deer Park property on 13 August and the first plaintiff has sworn that in that situation he and his wife will not be in a financial position to settle the purchase of the Altona Meadows property.

1. Having considered the evidence placed before me in this matter and the submissions of counsel, I have arrived at the following conclusions:  

1.In my opinion, it is strongly arguable that the contract between the plaintiffs and the defendants came to an end on 8 June 2001.  It was on that day that the defendants sought an extension of the finance provision from 12 June to 19 June.  By its letter of 8 June the defendants issued an ultimatum to the plaintiffs in these terms: 

"Kindly advise via return facsimile if your clients are agreeable to such extension.  In the event that such extension is not granted, then this letter is notice of confirmation that our clients regretfully withdraw from the purchase."  (The emphasis is mine.)

In other words, if you the vendors do not, by return facsimile, agree to an extension, then the contract is at an end.  And perhaps, more to the point, at no stage thereafter prior to 13 June did the defendants resile from that position.

It was argued on behalf of the defendants that the fact that the plaintiffs' solicitors chose to answer the requisitions on title on 13 June, demonstrated that at that time the parties considered that the contract was still on foot.  In my opinion, there was no objective act on the part of the defendants between 8 June and 13 June which demonstrated to the plaintiffs that the defendants considered that the contract was still on foot.  Indeed, their silence in relation to the matter gave every reason to the plaintiffs to conclude that the contract had been terminated by the defendants on 8 June in accordance with the terms of the defendants' solicitors letter of that date.

In any event, in my opinion, the defendants' election to terminate the contract of 8 June was irrevocable.  In that regard see Newbon v. CML (1935) 52 C.L.R. 723; Tropical Traders Ltd v. Goonan (1964) 111 C.L.R. 41 and Sargent v. A.S.L. (1974) 131 C.L.R. 634.

2.If my conclusion that the contract was terminated on 8 June 2000 is subsequently found to be erroneous, nevertheless I consider that the balance of convenience in this case is such as to justify the grant to the plaintiffs of the relief they seek.  I say that for the following reasons: 

(a)the property has now been sold to third parties.  Clearly their rights would be significantly affected in the event the caveat was to remain in place.  Further, they would themselves have a right to institute proceedings against the plaintiffs if the plaintiffs were unable to fulfil their contractual obligations to them seeking to recover any damage they have suffered as a consequence of losing their bargain;

(b)if the plaintiffs are unable to effect a settlement of the sale of the property to the Nguyens on 13 August, they will be unable to proceed with their purchase of the property from G & B Vella Homes Pty Ltd thereby lose the deposit they have paid in respect of the property.  They will also leave themselves open to an action for damages at the suit of G & B Vella Homes Pty Ltd;

(c)the confusion (if any) which has arisen in relation to the sale of the property to the defendants has, in my view, been brought about solely by the actions of the defendants, not those of the plaintiffs.  If the defendants were continuing to negotiate for a loan from St George Bank after 8 June with a view to being able to proceed with the purchase, as it is now clear they were, why were the plaintiffs and/or their solicitors not informed of that fact?  Had they been so informed prior to 13 June it may well be that the plaintiffs would not have resold the property that day and entered into the contract to purchase the Altona Meadows property.

1. If it is held subsequently that the contract between the plaintiffs and the defendants is still on foot, then, in my opinion, damages would be an adequate remedy for the defendants and the defendants should be confined to that remedy.

1. The following are the orders of the court: 

1.The Registrar of Titles is ordered pursuant to s.90(3) of the Transfer of Land Act 1958 to remove caveat number X545042J from the land in Certificate of Title Volume 10107 Folio 831. In the event that the said caveat has not been recorded, the Registrar of Titles is ordered not to record the said caveat, to reject he the said caveat and to return the said caveat to the lodging party;

2.The first and second defendants are ordered to pay the plaintiffs' costs of the proceeding including any reserved costs.

MR MORFUNI:  Your Honour, because settlement is due on Monday, would Your Honour contemplate ordering an expedition of the order in case - - -

HIS HONOUR:  Yes, if the order is prepared forthwith and brought to me I will authenticate it during the course of the morning.

MR MORFUNI:  I will advise my instructing solicitors.

HIS HONOUR:  Very good.

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