Nineteenth Jandina Pty Ltd v Hijim Pty Ltd
[2004] VSC 298
•19 August 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 5902 of 2004
| NINETEENTH JANDINA PTY LTD (ACN 068 878 106) AND ALBERT NISMAN | Plaintiffs |
| v | |
| HIJIM PTY LTD | Defendant |
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JUDGE: | OSBORN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 17 AUGUST 2004 | |
DATE OF JUDGMENT: | 19 AUGUST 2004 | |
CASE MAY BE CITED AS: | NINETEENTH JANDINA PTY LTD & ANOR v HIJIM PTY LTD | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 298 | 1st Revision: 3 September 2004 |
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Application pursuant to s.90(3) of Transfer of Land Act 1958 – Removal of caveat – Contract of Sale – No mutual mistake – No serious question to be tried.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P. Riordan SC with Ms C. Harris | Dandanis & Associates |
| For the Defendant | Mr A. Aizen | Harvey Bruce & Co |
HIS HONOUR:
By originating motion and summons the plaintiffs seek the removal of a caveat affecting the title to land situated at 123 Ormond Esplanade, Elwood and being the land described in Certificate of Title volume 4532 folio 288 ("the property").
The application is made pursuant to s.90(3) of the Transfer of Land Act 1958 which provides:
"Any person who is adversely affected by any such caveat may bring proceedings in the Court against the caveator for the removal of the caveat and the Court may make such order as the Court thinks fit."
The first plaintiff is the registered proprietor of the property and the trustee of a discretionary trust under which the nominated principal beneficiary is the second plaintiff. The property has been transferred by the first plaintiff to the second plaintiff but the transfer has not been registered.
On 16 August 2003 the plaintiffs as vendor and the defendant as purchaser entered into a contract for the sale of the property which included the following terms:
(a) the purchase price was $1,400,000;
(b)the deposit was $70,000 payable on 22 September 2003 (of which $50,000 had been paid);
(c)the balance of $1,330,000 was payable on settlement set for 26 March 2004;
(d)the contract incorporated the General Conditions of Sale other than GC3, contained in the Contract of Sale of Real Estate, described under the Estate Agents (Contracts) Regulations 1997. The Contract of Sale of Real Estate under those Regulations is prescribed in Form 2 of the Schedule. Clause 9.1 provides as follows:
"The General Conditions in Table A of the Seventh Schedule of the Transfer of Land Act 1958 apply if the land is under the operation of that Act."
The contract also contained special conditions including a condition that:
"The vendor will give an occupation licence agreement to the purchaser for the 4 months prior to settlement at no additional cost."
Clauses 5 and 6 of Table A provide what is to occur in the event of default.
"5.Time shall be of the essence of this contract. However, if either party defaults under this contract the offended party shall not be entitled to exercise any of his rights arising out of the default other than his right to sue for money then owing until he has served the offender with a written notice specifying the default and his intention to exercise his rights unless the default is remedied and the proper legal costs occasioned by the default and any interest demanded are all paid within fourteen days of service of the notice and the offender fails to comply with the notice.
6.(1) Where the default has been made by the purchaser and is not remedied all monies unpaid under this contract shall become immediately payable and recoverable at the option of the vendor.
(2) If the notice also states that unless the default is remedied the contract will be rescinded pursuant to this condition then if the default is not so remedied the contract shall thereupon be rescinded.
(3)) Where the contract is so rescinded and the notice is given by –
(a)the purchaser, he shall be repaid any money together with any interest and costs payable under this contract and these shall be a charge on the land until payment;
(b)the vendor, then an amount equal to one tenth of the price ("the security") shall be forfeited to the vendor as his absolute property and he may recover possession of the land and at his option may within one year of the date of rescission either–
i.retain the land and sue for damages for breach of contract; or
iiresell the land in such manner as he sees fit and recover any deficiency in the price on the re-sale and any resulting expenses by way of liquidated damages.
In addition to the security the vendor may retain any part of the price paid to him pending the determination of damages and may apply that money in satisfaction or part satisfaction of those damages."
The defendant paid the sum of $50,000 by way of deposit pursuant to the contract but failed to pay the balance of $20,000 due by way of deposit.
By letter dated 18 December 2003 to the defendant's solicitors, the plaintiffs' solicitors demanded payment of the balance of the deposit.
By letter dated 19 December 2003 to the plaintiffs' solicitors, the defendant's solicitors stated that the Contract of Sale was entered into by mistake but offered to pay the further sum of $20,000 by 31 January 2004. Insofar as it is relevant that letter stated:
"We are instructed that when our developer client originally made his offer, it was predicated upon a $50,000.00 deposit, as he has done with several other properties bought in the area through Mr Tappin's personal work. The Contract Note was rewritten and our client only checked the addition of the relevant special condition on the back when he had to sign again. He believes that the 10% deposit was an oversight by Mr Tappin's office in line with normal resodential (sic) contracts.
Our client had advised Mr Tappin about the mistake and had been assured it would be attended to. This was obviously not done. This in turn obviously creates an embarrassing position for Mr tappin (sic), if not also for other parties.
From a strictly legal viewpoint, our client is not obliged to increase the deposit already paid.
However, our client wishes to remain on good terms with all the parties, both for now and for the future and considers it in everybody's best interests not to take an adversarial position just yet. Accordingly, and notwithstanding any legalities involved and his accident, on a purely without prejudice basis, he will increase the deposit by the $20,000.00 (which was probably expected from the beginning by your client upon receiving the final version) by next month. Taking into account his condition and the bank's workload from now, he is prepared to pay $20,000.00 by next month, at the latest by 31st January 2004, to be practical knowing banks.
We suggest this is the most practical way of resolving this."
This proposal was accepted by the plaintiffs' solicitors by letter dated 14 January 2004. Mr Aizen objected to the receipt of the defendant's solicitors' letter of 19 December 2003 in evidence on the basis that it was without prejudice. It is clear, however, that the offer which was expressed to be made without prejudice was accepted and hence may be adduced in evidence.
In any event the $20,000.00 was not paid by the date promised.
By letter dated 2 February 2004 to the defendant's solicitors, the plaintiffs' solicitors stated that if the balance of the deposit monies were not received by 3 February 2004 they would issue a rescission notice.
On 3 February 2004 the solicitors for the defendant responded by letter which stated in part:
"… please find enclosed a copy of a cheque for $20,000.00 provided by our client made payable to trust account.
Prior to forwarding the money to you, our client has instructed us that we are to do so when the problems of the occupation of the premises as well as the previous matter raised by your office as to the owner of the premises have been clarified.
As set out in our facsimile of 19th December, 2003, our client's agreement to provide the extra $20,000.00 was made as a goodwill gesture without standing on, and without prejudice to, its legal rights, but at the same time the contents of our facsimile made it quite clear that the matter of occupation of the property had to be finalised.
Our client has instructed us that Mr Tappin, the Vendor's real estate agent, advised our client that full occupation would be given. That is why Mr Tappin wrote 'occupation licence agreement' explicitly in Special Condition 5 of the Contract. Mr Tappin was your client's agent and, as such, our client is entitled to rely upon his representations and your client is bound by them."
On 12 February 2004 the defendant lodged a caveat executed by Juliet Sandra Rosen. The caveat claimed an equitable estate in fee simple in the property by virtue of a "Contract of Sale Note dated 16 August 2003 from the registered proprietor as vendor and the caveator as purchaser."
Between 12 February 2004 and 11 March 2004 there was correspondence between the solicitors with respect to the terms of the licence agreement and a variety of other matters.
On 12 March 2004 a Notice of Default and Rescission was served on the defendant which required the payment of the balance of the deposit money within 14 days.
The defendant did not pay the balance of the deposit monies within the time stipulated or at all.
On 26 March 2004 the contract was due for settlement. The defendant did not tender the balance of the purchase price and on 19 March 2004 the defendant was served with a further Notice of Default and Rescission with respect to failure to settle on the settlement date. The defendant has continued to fail to pay the balance of the settlement money due.
On 31 March 2004 the plaintiffs filed an application pursuant to s.89A of the Transfer of Land Act 1958. Thereafter the defendant instituted proceedings by way of writ seeking to substantiate the caveat. The statement of claim annexed to the writ alleges, "the date of settlement of the purchase of the land under the contract was a period of not less than four months after the delivery to Hijim of an occupation licence agreement from the vendor (as the case may be) enabling Hijim to occupy the land."
It further alleges that the rescission notices served on behalf of the plaintiffs under the contract were defective, ineffective, null and void and did not operate to determine the contract. It particularises no basis for these allegations.
The fact that proceedings by a caveator are on foot to enforce the interest which the caveat has been lodged to protect, is not a bar to the exercise of the Court's discretion under s.90(3). In Martyn v Glennan[1] Waddell J approved the statement of Holland J in Kerabee Park Pty Ltd v Daley[2] made with respect to analogous New South Wales provisions in force prior to 1976.
"Those words were apt to enable the court to consider whether the particular circumstances placed before the court justified the caveator in insisting upon maintaining the caveat on the title, whether or not the caveator had been justified in lodging the caveat, and keeping it there, until asked to remove it. I see nothing in the section to preclude the proprietor of a registered interest, who is proposing to embark upon a particular dealing which the caveat would prohibit, and which was detrimentally affected by its presence on the title, approaching the court for an order that the caveat be removed, unless the caveator could show grounds on which the court would, at the suit of the caveator restrain the dealing."
[1][1979] 2 NSWLR 234 at 238
[2][1978] 2 NSWLR 222 at 229
After canvassing further authority Waddell J stated in the context of an application for removal of caveat made at the time of existing proceedings:
"In the light of these expressions of opinion, it seems to me that the appropriate principle to apply in the present case is to inquire whether the defendants would, in all the circumstances, be entitled to an interim injunction and, if not, to order that the caveat be withdrawn."
The primary contention of the plaintiffs in the current proceedings is that the contract was rescinded by reason of the failure by the defendant to pay the deposit following the Notice of Rescission dated 12 March 2004. Mr Aizen who appeared for the defendant contended that the plaintiffs could not succeed on this primary contention in the present application because:
(a)the liability of the defendant to pay the balance of the deposit was contested and turned on disputed questions of fact; and
(b)the Notice of Rescission was defective.
Reference was also made in argument to the alleged failure of the plaintiffs to provide occupation by way of licence pursuant to the terms of the Contract of Sale. Whether a breach of the contract occurred in this respect or not, however, it is plain:
(a)that the obligation to pay the deposit accrued prior to any obligation to grant occupation;
(b)the contract cannot be construed as making payment of the deposit conditional upon a grant of occupation; and
(c)the breach of a term granting a mere licence founds a claim in damages.
I return then to Mr Aizen's arguments concerning the deposit. The first argument is founded upon the evidence of Leon Rosen who deposes by affidavit:
"4.I negotiated the deposit on the sale of the property situate at and known as Lot 123 Ormond Esplanade, Elwood ('the land'). Mr Tappin of Rand Corporation Pty Ltd acted as agent of the vendor(s) on the sale of the land.
5.I had discussions with Mr Tappin and he drew up an REIV Contract Note with a deposit payable of $50,000.00. The Contract Note which is exhibited and marked 'AN6' to Nisman's affidavit is the final Contract Note prepared by an employee of Rand Corporation Pty Ltd. It was redrawn because the second page had additional conditions added on the instructions of the Vendor. I did not look at the first page which I did not believe was changed as I was concentrating on the additional conditions enumerated on page 2, which is on the reverse of the first page. I agree with paragraph 10 of Nisman's affidavit save that the deposit payable thereunder was $50,000 and not $70,000, and there was an additional special condition 4 not mentioned in that paragraph.
6.The reason I know this is that a number of properties in the immediate vicinity of the land were purchased at approximately the same time with the same real estate agent and each was purchased with a similar deposit payable, namely the sum of $50,000. The $50,000 which was the deposit was, in fact, paid."
It can be seen that Mr Rosen's affidavit firstly purports to give indirect evidence as to the contents of a prior Contract Note. That evidence is rebutted by the terms of the prior Contract Note which is produced by a subsequent affidavit filed on behalf of the plaintiffs. The prior Contract Note shows quite clearly that it initially provided for a deposit of $60,000 payable with respect to a lower purchase price, which was then altered to $70,000 payable with respect to the ultimately agreed price. There is no further affidavit from Mr Rosen which purports to reconcile his evidence with the facts of the matter.
Further, and equally fundamentally, the affidavit deposes to a belief as to an alleged unilateral mistake. The defendant's solicitors' letter of 19 December 2003 expressly acknowledges that the probable expectation of the plaintiffs upon receiving the final version of the contract was that the deposit payable was, as the contract itself states, $70,000.
No rectification of the contract has been sought in the proceeding sought by the defendant to uphold the caveat. Indeed the statement of claim in that proceeding expressly alleges that the deposit payable pursuant to the Contract of Sale upon which the caveat is founded was $70,000.
There is in my view simply no credible evidence of mutual mistake or of any other basis upon which the contract might be rectified.
Moreover, any claim for rectification would face a further insuperable obstacle having regard to the defendant's solicitors' letter of 19 December 2003. By that letter the defendant agreed to pay the balance of the deposit by 31 January 2004. The plaintiffs agreed to this arrangement and postponed further demand for payment. It is apparent that any claim for rectification would necessarily be met with defences of laches acquiescence and delay.
In the circumstances I have formed the view that the defendant's case as to the amount of the deposit is absolutely hopeless and does not raise a seriously arguable question.
Mr Aizen then submitted that the rescission notice relied on was invalid because it identified both plaintiffs as vendor when only the first plaintiff was the registered proprietor. The notice cites as vendor the same parties as the contract itself and describes them in precisely the same words as the contract itself.
The contract required both the first plaintiff as registered proprietor and the second plaintiff "as beneficial owner" to effect the sale of the property to the defendant.
Conversely, and critically, it required the defendant to pay the deposit to the named vendors.
I do not accept that a Contract of Sale of land cannot give rise to an obligation to pay monies to a party other than the registered proprietor. Indeed, to suggest otherwise would give rise to a nonsensical limitation upon the parties' ability to contract.
Accordingly, the second basis of Mr Aizen's answer to the plaintiffs' primary contention also fails.
In the circumstances the plaintiffs are entitled to relief sought by summons. It is apparent that they are confronted by serious commercial difficulties with respect to dealings with their bank unless the caveat is removed. The caveator has failed to satisfy the Court that its claim for interest in the property raises a serious question to be tried. There will be orders as to the substance of the matter in the form sought by Mr Riordan of senior counsel who appeared with Ms Harris for the plaintiffs.
I will hear counsel as to the question of costs.
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