O'Toole v Kent - [2015] VSC 470

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

S CI 2015 02007

BETWEEN

KERRI LOUISE O’TOOLE	Plaintiff
v
MICHELLE ESTERHUYSE KENT and ASHLEY KENT	Defendants

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JUDGE:	Mukhtar AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	24 August 2015
DATE OF JUDGMENT:	4 September 2015
CASE MAY BE CITED AS:	O’Toole v Kent
MEDIUM NEUTRAL CITATION:	[2015] VSC 470

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SALE OF LAND ― Contract not expressed to be subject to finance ― Pre-contractual disclosure by purchaser of a dependence on funds overseas ― No negotiation or agreement of a protective condition ― Execution of contract by purchaser with knowledge of any such condition ― Default ― Assertion of implied term of being subject to finance ― Failure to file defence ― Default judgment ― No basis for an implied term or rectification or cognate defences ― Judgment not set aside

PRACTICE AND PROCEDURE ― Application to set aside default judgment ― Discretionary approach ― Requirement to show defence on merits ― No real factual controversy ― Demonstration of legal unsustainability ― No real question for trial

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr C Button with Ms C Van Proctor of counsel	Arnold Bloch Liebler
For the Defendants	Mr R Watson-Jones, solicitor	Snowton Saje

HIS HONOUR:

On 24 June 2015, the plaintiff obtained a judgment in default of defence against both defendants for $380,000 plus interest of $5,981. In addition there was another judgment against the second defendant for $39,959.25 plus interest of $628.95. He was his wife’s guarantor under a contract for the sale of land.

The judgment was based on a statement of claim which, avoiding all the details for present purposes, alleged that the first defendant Michelle Kent as purchaser defaulted under a contract for the sale of a luxury property at 1 Pembroke Place in Portsea in failing to complete or settle the purchase under the contract. The purchase price was $3,800,000. The contract was signed by her on 5 February 2015 and signed by the vendor on 9 February 2015. Completion of the contract was due on 19 February 2015. Thus, it was a 14 day contract. It was not expressed to be subject to finance. The contract states that Messrs Makin and Kinsey were acting as her solicitors. But correspondence for the Kents was coming from a conveyancing firm, First Choice Conveyancing.

She could not complete on the agreed date. The conveyancer sought an extension to 6 March 2015, saying that “funds should be cleared within the next few days”. The vendor agreed to extend the settlement date to 27 February 2015 in consideration for which the purchaser’s husband, the second defendant Ashley Kent, on 23 February 2013, gave the vendor a guarantee and indemnity for the performance of his wife’s obligations under the contract. Under that guarantee, he also agreed that if she did not complete the contract on the extended date, he would pay interest from the original completion date, the vendor’s costs of re-scheduling the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 470
Decision Date: 4 September 2015

CaseChat Overview and Summary

The dispute in O'Toole v Kent involved the sale of land. The purchaser, Kent, defaulted in the proceedings, leading to a default judgment being entered against them. O'Toole, the vendor, sought to set aside the default judgment. The case was heard in the Supreme Court of Victoria.

The central issue was whether the sale of land was subject to the purchaser obtaining finance, despite the contract not explicitly stating so. Kent had disclosed to O'Toole prior to the contract that they relied on overseas funds, yet no protective condition was negotiated or agreed upon. The court had to determine if the reliance on overseas funds could imply a condition that the sale was subject to finance. Additionally, Kent's failure to file a defence necessitated an examination of the legal unsustainability of the judgment.

The court found that there was no real factual controversy and that Kent had not demonstrated a real question for trial. The court held that there was no basis for implying a term of finance into the contract or for seeking rectification or similar defences. The pre-contractual disclosure by Kent did not equate to an agreement of a condition subject to finance. The failure to file a defence did not justify setting aside the default judgment. The court concluded that the default judgment was legally sustainable and refused to set it aside.

The Supreme Court of Victoria upheld the default judgment against Kent, affirming that the contract's terms were not subject to finance and that Kent's failure to defend the proceedings was not grounds for setting aside the judgment.

Orders