NAB v Andrejic
[2011] VSC 430
•15 August 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
No. 3932 of 2011
| NATIONAL AUSTRALIA BANK LIMITED | Plaintiff |
| v | |
| ZLATKO ANDREJIC & ANOR | Defendants |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 August 2011 | |
DATE OF JUDGMENT: | 15 August 2011 | |
CASE MAY BE CITED AS: | NAB v Andrejic & Anor | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 430 | |
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CAVEATS – Application for removal – Whether rescission notice invalid – Held: notice valid – Caveat removed – U108 Pty Ltd v Sing Fan & Ors [2010] VSC 12, applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Biviano | Thomsons Lawyers |
| For the First Defendant | Mr H de Kock | Davis Zucco Lawyers |
HIS HONOUR:
The plaintiff sold three properties to the first defendant. The contract provided for settlement on 29 April 2011. The sale remains uncompleted. The plaintiff applies for the removal of a caveat lodged by the first defendant to protect his interests under the contract of sale.
The first defendant was not in a position to settle on the due date. His solicitors wrote to the plaintiff's solicitors seeking an extension of time. That extension of time was granted on certain conditions, specified in an email letter sent on 2 May 2011. Materially, the letter stated that the plaintiff agreed to an extension of the settlement date to 6 May 2011 on condition that:
(1) the extension was without prejudice to the plaintiff’s rights;
(2) penalty interest would be paid at the rate specified in the contract of sale from the contracted date, 29 April 2011;
(3) time would remain of the essence;
(4) the plaintiff may serve a notice of rescission if the first defendant’s default was not remedied by the extended date; and
(5) the plaintiff reserved all rights and remedies available to it pursuant to the contract of sale.
Settlement did not take place on the extended date of 6 May 2011.
In the late afternoon of the previous day, 5 May 2011, the first defendant's solicitors sought a further extension of time for settlement until 13 May. In the letter seeking an extension, it was stated that the first defendant would be ready for settlement on Friday 13 May.
The request for a further extension until Friday 13 May was refused. Instead, by rescission notice served 9 May 2011, the plaintiff required that settlement take place within 14 days of service of that notice.
The requested date for a further extension fell in the early part of the 14 day period specified in the rescission notice. According to the letter sent 5 May from the first defendant's solicitors, the first defendant asserted he was ready to settle by that date. He was not.
The rescission notice is in a standard form. Materially it states that the first defendant was in default under the contract of sale because he failed to pay the residue of purchase money and adjusted apportionable outgoings on the due date. The due date was specified as 6 May 2011, being the extended date agreed, and not 29 April 2011 as specified in the contract of sale.
The notice required the default to be remedied within 14 days of the service of the notice, that is a period running from the service of the notice and not from the due date, whether that be 29 April or 6 May. Further, in accordance with the 2 May email letter specifying conditions upon the agreed extension to 6 May 2011, the rescission notice claimed interest at the rate specified in the contract of sale from 29 April 2011.
In response to the rescission notice, the first defendant's solicitors sought a further extension of time. That was refused. The first defendant's solicitors then contended in correspondence that the rescission notice was defective because it specified 6 May 2011 as the due date, rather than 29 April 2011 as specified in the contract of sale. That contention was rejected by the plaintiff's solicitors. They insisted on settlement within the 14 day period following service of the rescission notice.
At this time the first defendant still had an opportunity to settle the contract of sale up to and including 24 or 25 May. As noted above, it was contended in earlier correspondence that he could settle by 13 May, and his request for a further extension was to that date only.
The first defendant did not settle the contract within the 14 day period, or offer to do so. It is clear that he was unable or unwilling to tender the balance of the purchase price during that time.
The plaintiff then contended that the contract had been rescinded. The first defendant lodged a caveat in support of his contention that the contract had not been validly rescinded. The plaintiff has since resold the property and that resale is being held up by the caveat.
The first defendant contends that the contract of sale has not been validly rescinded because the rescission notice was invalid. The sole ground relied upon is that the due date for payment of the balance of the price is wrongly stated. It was submitted that the due date remained 29 April 2011, and that the extension to allow settlement on 6 May 2011 was no more than a period of grace given by the plaintiff to the first defendant. Whether or not that be so, having regard to the conditions of the agreed extension, I am nevertheless of the strong view that the rescission notice was valid.
In U108 Pty Ltd v Sing Fan & Ors,[1] I summarised the relevant legal principles to be applied in determining whether or not a rescission notice is valid:
The relevant legal principles to be applied in determining whether or not a rescission notice is valid are not in doubt. The relevant authorities were reviewed by Campbell J in Robinson v Becata Pty Ltd.[2] I respectfully adopt his Honour’s analysis. In summary, a rescission notice served under general conditions 5 and 6(2) of Table A must, in relation to its essential features as required by those conditions, be clear and unambiguous. In determining whether or not a rescission notice is relevantly clear and unambiguous, the Court applies an objective approach. In Catley v Watson,[3] Brooking J (as he then was) expressed the applicable standard of objective reasonableness in the following terms:
A notice is not unequivocal, in the sense in which such notices are required to be unequivocal in relation to their essential contents, if a reasonable person, having considered the notice as a whole, fairly and properly, might entertain a doubt as to its meaning in relation to some essential matter, even though he would form in his mind a preference for one view, rather than the other of what the notice was intended to convey. It must be possible to say that, after the appropriate consideration, any doubts that may have arisen would be quieted and the purchaser would not be left in any uncertainty as to the meaning of the notice.[4]
This statement by Brooking J has been applied in a number of Victorian cases, and further consideration has been given to the attributes of the ‘reasonable person’ for these purposes. In Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd,[5] Ormiston JA said that the relevant reasonable person was ‘a reasonable reader in the position of the purchaser’.[6] This approach was endorsed by Winneke P (with whom Charles and Eames JJA agreed) in Greydae Pty Ltd v Malilane Pty Ltd.[7] A reasonable reader in the position of the purchaser must be taken as one who knows the terms of the contract of sale, including general conditions 5 and 6 of Table A, and who is aware of the surrounding circumstances relating to the default.[8]
[1][2010] VSC 12, [43]-[44].
[2][2004] NSWSC 310, [30]-[35].
[3](1981) V ConvR 54-003.
[4]Ibid, 62,115.
[5](1998) V ConvR 54-575.
[6]Ibid, 66,902.
[7][2003] VSCA 27, [31].
[8]Ibid.
That summary of the legal position was relied upon by the first defendant in support of his submission that the rescission notice was invalid. I do not accept those submissions.
In this case, having requested and been granted an extension to 6 May 2011 on specified conditions, the first defendant can have been left in no doubt as to what was required. The rescission notice required him to complete the purchase within 14 days of the service of the notice, to pay interest from the original settlement date (29 April 2011) and the specified legal costs. He was not required to do anything by reference to the extended due date. The reference to that date as the due date was relevant only to the fact of default in completing the contract on that day, a matter about which there was no doubt.
In the context of the specified conditions, which expressly reserved the plaintiff's rights to serve a rescission notice if the sale was not settled on the extended due date of 6 May, it is not possible to say that a reasonable reader in the position of the first defendant would be left in any doubt as to the meaning of the notice; and in particular as to what was required in order to avoid rescission.
Accordingly, as the first defendant failed to complete the contract within the 14 day period allowed by the rescission notice, the contract was validly rescinded at the expiration of that period. The caveat must be removed.
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