Owenlaw Mortgage Managers Ltd v Baird
[2007] VSC 521
•13 December 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5753 of 2005
| OWENLAW MORTGAGE MANAGERS LTD | Plaintiff |
| v | |
| DAVID BAIRD | Defendant |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 November, 3 and 5 December 2007 | |
DATE OF JUDGMENT: | 13 December 2007 | |
CASE MAY BE CITED AS: | Owenlaw Mortgage Managers Ltd v Baird | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 521 | |
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Sale of land – Vendor and purchaser – Deposit – Not paid – Vendor rescinds for purchaser’s repudiation – Whether vendor made agreement or representations that affected right to recover unpaid deposit.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N P Jones | Owenlaw Legal Pty Ltd |
| The defendant appeared in person |
HIS HONOUR:
This is a claim for the amount of an unpaid deposit under a contract for the sale of a commercial property at 2 - 6 Murphy Street, South Yarra. The plaintiff, Owenlaw Mortgage Managers Ltd (“Owenlaw”), was the vendor under the contract. Owenlaw sold the property as mortgagee in possession. The contract of sale was in writing and entered into on 24 February 2005 following a public auction of the property held that day. The property was knocked down to David Baird, the defendant, who was duly named as the purchaser in the contract. The contract provided for a purchase price of $4,562,000 payable as to $400,000 by way of deposit payable on signing and the balance 45 days from the day of sale or earlier by mutual agreement. At the time of signing the contract the defendant provided a cheque payable to the plaintiff’s agent, Biggin & Scott, for $400,000 and drawn on the account of M K River Pty Ltd (“M K River”). Later that day, Biggin & Scott deposited the cheque with its banker, the National Australia Bank with a request for a special clearance. The cheque was dishonoured on presentation. On 25 February the bank advised Biggin & Scott that the cheque had been dishonoured. Later on 25 February, following receipt of that advice, the plaintiff sent a notice of rescission by post to the defendant and his solicitor Radebe & Associates at their respective addresses stated in the contract. The notice required that the default in paying the deposit, and requiring also the payment of interest and costs, be remedied within two days of service of the notice; the notice was given in accordance with the provisions of the contract and is taken as received on Monday 28 February 2005. The default not having been rectified, indeed no amount at all having been paid, the contract was rescinded upon the expiry of the period of two days. Subsequently, on 8 March 2005, the plaintiff re-sold the property to another party for the same price of $4,562,000. It is in those circumstances, briefly described, that the case arises.
The proceeding was commenced by writ filed on 28 April 2005. In the statement of claim endorsed on the writ the plaintiff, relying upon the contract having been rescinded by the operation of the notice of rescission, claimed the sum of $456,200 as an amount forfeited to it in accordance with the contract, and further or in the alternative damages. The amount claimed of $456,200 was greater than the agreed deposit of $400,000. It was sought under condition 6 of Table A which was incorporated in the contract. Table A was incorporated with some amendments, one of which was to substitute for the period of 14 days in condition 5 a period of two days. It was thus that the plaintiff’s notice of rescission required the defendant to remedy his default in paying the deposit within two days of service of the notice. But of particular relevance is condition 6 which stated the consequences for the purchaser of not remedying the default. Relevantly condition 6 provides as follows:
“(2)If the notice also states [as it did in this case] 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)…
(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
(ii)resell 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.”
During the trial I asked counsel for the plaintiff whether condition 6(3) operated to impose a penalty by reason of the fact that it provided for the forfeiture of an amount greater than the agreed deposit. The point was not raised in the defence and counterclaim but the defendant appeared in person and I considered it appropriate to raise the point. After doing so counsel for the plaintiff sought leave, following the conclusion of evidence, to file an amended statement of claim the effect of which was to plead an alternative claim for the recovery of the agreed deposit of $400,000. The alternative claim in damages was retained, the loss being particularised as the unpaid deposit of $400,000 and interest on that sum at the higher rate of 17 percent payable on demand under the contract. That higher rate is provided for in condition 4 of Table A which provides for such payment during the period of default. I gave leave for the amendment, it seeming not to affect the substance of the range of relief that was apparent on the statement of claim as it stood and having regard to the duty of the Court to determine all matters in issue which, as I stated to counsel, included giving consideration to the possibility that condition 6(3) operated to impose a penalty, and in the circumstance that there was no prejudice to the defendant. It was not necessary for the defence and counterclaim to be amended, it being treated as a pleading to the amended statement of claim.
Ultimately in his final address counsel for the plaintiff abandoned the claim for $456,200 based on the right of forfeiture of one tenth of the purchase price contained in condition 6(3). Accordingly the plaintiff’s claim is limited to the claim for the agreed deposit of $400,000. There is also of course the matter of interest. If reliance on condition 6(3) had not been abandoned it would have been necessary to consider whether condition 6(3) operated to impose a penalty in the circumstances of the present case; as to the law on the issue whether a deposit or forfeited sum may constitute a penalty see Workers Trust and Merchant Bank Ltd v Dojap Investments Ltd[1]. But, the claim for $456,200 having been abandoned, I do not have to do so. As to the claim for the unpaid deposit, the relevant law as to the vendor’s right of recovery is stated in Bot v Ristevski[2]. There it was held, clarifying the position in this State, that a vendor who discharged a contract of sale of real estate by accepting the purchaser’s repudiation of the contract, can recover from the purchaser a deposit that should have been paid before the contract was discharged. The right to recover the deposit had accrued prior to rescission, and enured thereafter. The claim lay in debt. At the same time a vendor such as the plaintiff may have a claim for damages otherwise suffered, in which case the unpaid deposit may be included as part of an overall claim; see Berry v Mahony[3]; Socratous v Koo[4].
[1][1993] AC 573.
[2][1981] VR 120.
[3][1933] VLR 314.
[4](1993) 6 BPR 13, 226 at 13, 227-8 per McLelland CJ in Eq.
In a defence and counterclaim filed on 5 August 2005 by Radebe & Associates a number of matters were admitted and the following points were made.
(a)The contract of sale was admitted but with an allegation that the contract was partly oral. The oral part was particularised as contained in a conversation between an employee of Biggin & Scott and the defendant “shortly before the defendant executed the contract”, the substance of which was that the defendant would pay a deposit of five percent of the purchase price only and that the balance of the purchase price would be payable in 45 days instead of 60 days.
(b)The terms of the contract were admitted save that a five percent deposit only was payable on the signing of the contract.
(c)It was alleged (in para 8) that the defendant drew a cheque on the account of M K River for $400,000 and handed it to the agent “prior” to the agreement on a five percent deposit and the execution of the contract. It is alleged that the agent neglected to return the cheque to be varied to the amount of the five percent deposit and that the defendant neglected to demand the return of the cheque for that purpose.
(d)It was admitted that the cheque was dishonoured but it was denied that the dishonour constituted a breach of the contract. It was alleged that the defendant was at all times ready, willing and able to pay the five percent deposit.
(e)Service of the notice of rescission was admitted. It was alleged that the notice constituted a repudiation of the contract by the plaintiff.
(f)It was then alleged (in para 11) that on or about 28 February 2005 the defendant elected to affirm the contract by offering to tender a new cheque in the correct amount of the five percent deposit as payment of that deposit. It was then alleged (in para 12) that the plaintiff refused the offer, which refusal constituted a second repudiation of the contract by the plaintiff. In particulars it is stated that the offer and refusal were oral and contained in a conversation between Wally Edwards on behalf of the defendant and an employee of the agent, the substance of which was as alleged.
(g)As to the resale of the property by the plaintiff on 8 March 2005, this was alleged to constitute a third repudiation of the contract by the plaintiff which the defendant had accepted or accepted by the defence.
(h)The defence then went on to plead an estoppel against the plaintiff. This was based (in para 20) on an allegation that shortly before the defendant executed the contract the plaintiff’s agent represented to the defendant that it would accept payment of a deposit of five percent if payment of the balance of the purchase price was made within 45 days. It was then alleged that relying upon that representation and induced thereby the defendant assumed that the proposed contract would be or was amended to require payment of the five percent deposit only and that the plaintiff would not rely upon any requirement in the contract for payment of a greater deposit. Relying upon those assumptions the defendant agreed to pay the balance of purchase price within 45 days and executed the contract. In those circumstances it was alleged (in para 24) that the plaintiff was estopped from resiling from the assumptions and insisting upon payment of a deposit greater than five percent. Further or alternatively, it was unconscionable for the plaintiff to demand payment of a deposit greater than five percent and to refuse to accept the defendant’s offer to tender a replacement cheque in payment of the five percent deposit, whereby the contract was void and of no effect. Alternatively, the written term of the contract requiring a deposit greater than five percent was void and of no effect. Further, by reason of these matters the defendant was entitled to relief against the forfeiture claimed by the plaintiff; as to that I interpolate that that was a reference to the claim to forfeit $456,200 pursuant to condition 6(3).
(i)The pleading included a counterclaim for damages suffered by reason of the plaintiff’s repudiations of the contract. It was further alleged that the representation of the plaintiff’s agent as to the deposit constituted conduct in contravention of s 51AA and s 52 of the Trade Practices Act 1974 by reason of which the defendant had suffered loss and damage. The relief sought in the counterclaim included a declaration that the plaintiff had engaged in unconscionable conduct and conduct in contravention of s 51AA and s 52 of the Trade Practices Act, relief from forfeiture, an order pursuant to s 87 of the Trade Practices Act or otherwise that the contract was void ab initio and unenforceable, alternatively an order pursuant to s 87 or otherwise that any term in the contract requiring payment of a deposit greater than five percent was void ab initio and of no effect, damages, interest and costs.
As to the counterclaim for loss and damage, in particulars filed on 9 March 2006 it was stated that the defendant had suffered the loss of the opportunity to develop the property and loss of the profits of such development, and that further particulars would be provided prior to the trial upon the filing of expert evidence. No such particulars were ever filed. Then, during the hearing the defendant informed me that he did not rely on the counterclaim. Consistently with that the defendant gave no evidence, and called no witness, to support his alleged loss and damage. Quite simply, the counterclaim was abandoned.
The plaintiff filed a reply and defence to counterclaim. In essence the reply alleged that the contract was solely in writing, denied there was an oral term that a five percent deposit only was payable on the signing of the contract and the alleged discussion prior to the execution of the contract, and denied the offer and refusal alleged to have taken place on or about 28 February 2005. The reply alleged that there was a discussion between the defendant and David Owen of the plaintiff shortly before the contract was signed in which the defendant suggested that if the plaintiff accepted a deposit of $400,000 instead of 10 percent of the purchase price the defendant would agree to a reduced settlement period of 45 days instead of 60 days, and that the plaintiff agreed to that suggestion. The reply denied that a deposit of five percent was discussed or agreed. It was further alleged that the defendant was bound by the written terms and, alternatively, that the oral agreement alleged by the defendant did not comply with the provisions of the Instrument Act 1958 and the Property Law Act 1958 requiring writing. I do not overlook, but do not find it necessary to refer to, various other allegations in the reply.
On 24 August 2007, Radebe & Associates filed a notice of having ceased to act for the defendant as from 30 July 2007. Since then the defendant has not had a solicitor on the record. He appeared for himself at the trial, although – as was apparent including by the preparation of a final written submission – with the assistance of Walter Percival Edwards who has had long experience in practice as a solicitor.
Evidence in the case was given by the following persons:
(a)For the plaintiff by David Ormond Owen who is a solicitor and a director of the plaintiff. He drew the contract of sale, was present at the auction and in the room in which the discussions occurred with the defendant following the auction and the contract was signed, and conducted the conveyancing transaction. The other witness for the plaintiff was Robert Stephen Anderson, a real estate agent and a principal of Biggin & Scott who handled the sale for the plaintiff and who was present at the auction and at the discussion with the defendant subsequent to the property being knocked down to him, and when the contract was signed.
(b)For the defendant evidence was given by the defendant himself; Walter Percival Edwards who is presently a disability support pensioner but who before that “was a solicitor admitted to practice since 1973 until early this year” and whose practice is being wound down under receivership of the Law Institute; and Kathleen Murphy who was a member of a syndicate which lent money under mortgage to the former owner of the subject property with a view to its development and whose security had ranked second behind that of the plaintiff.
During the hearing reference was made to two other cases in this Court. They are proceeding 5970 of 2005 between Owenlaw as plaintiff and M K River as defendant, and proceeding 6080 of 2005 in which the parties are Owenlaw as plaintiff, Baird is the first defendant and the Registrar of Titles is the second defendant. The former proceeding was brought under the Instruments Act by Owenlaw as payee of the deposit cheque against M K River as drawer for the amount of the cheque plus interest. That proceeding has been listed for trial on 5 February 2008. It was several times stated by the defendant that a Master had ordered that proceeding 5970 of 2005 be heard with the present proceeding, but a search of the file does not disclose any such order. The latter proceeding (6080 of 2005) was commenced by originating motion filed on 17 May 2005 for the removal of a caveat lodged by Radebe & Associates for the defendant as caveator in which he claimed an estate in fee simple in the property pursuant to a contract of sale dated 28 February 2005. The originating motion also sought damages or compensation pursuant to s 118 of the Transfer of Land Act 1958. While on 20 May 2005 Hollingworth J ordered that the caveat be removed the claim for damages or compensation remained. Thus Hollingworth J further ordered that proceeding 6080 of 2005 be heard together with the present proceeding. During the trial counsel for the plaintiff intimated that it was not desired to continue with proceeding 6080 of 2005 and with his concurrence and with no opposition from the defendant I ordered that it be dismissed and that there be no order for costs.
I turn then to the facts. In the course of the following discussion I will at times state the facts as I find them to be but also refer to the evidence of witnesses and make findings thereon at a later stage.
I have mentioned that Owenlaw sold the property as mortgagee in possession. The mortgage, which was dated 16 July 2004 and registered on title as a first mortgage, was granted as part of the security for a facility agreement dated 16 July 2004 between Owenlaw as lender and Matarol Pty Ltd (“Matarol”) as borrower whereby Owenlaw agreed to lend Matarol a principal sum being the greater of $3,780,000 and the amount being 70 percent of the value of the property on the termination date which was stated to be the period selected by Matarol from the following options, namely three months, four months, five months or six months. It seems obvious that the period selected was a period of time from the date of advance. Owen said in evidence that Owenlaw advanced an amount which was two thirds of the valuation and which he recalled as $3,760,000. Matarol failed to repay the loan, apparently due in November 2004, and Owenlaw by its solicitors served notices under the Transfer of Land Act 1958 which gave it power to sell the property for which purpose it engaged Biggin & Scott and an auction was ultimately appointed for 24 February 2005.
The auction contract was prepared by Owen and was available for perusal by interested persons at the auction. The particulars of sale included details of the vendor and its estate agent and solicitor, the property, that no chattels were sold with the property, and left blank the name of the purchaser’s solicitor, the name of the purchaser and the details of price. As to price, the particulars had a blank for insertion of the amount, underneath which was a blank for the amount of the deposit but as to which it stated “10 percent on the signing hereof” and, under that a blank for insertion of the amount of the balance. The balance was stated to be payable “Sixty days from the day of sale or earlier by mutual agreement”. As to the day of sale, there was provision for the actual day to be inserted with February 2005 typed in. There was then the usual provision as to the settlement date being the date on which vacant possession or receipt of the rents and profits of the property and chattels must be provided. This then was the form of the contract that was available at the auction and which the auctioneer had when he conducted the auction.
The auctioneer was Frank Nagle also a director of Biggin & Scott. At the commencement of the auction, which was conducted immediately outside the subject property, Nagle stated the terms of sale as being a 10 percent deposit with the balance payable 60 days from the day of sale. These terms had also been advertised as the terms of sale.
Nagle conducted the auction and knocked the property down to the defendant on a winning bid made by him of $4,562,000.
On the property being knocked down to the defendant he was invited to enter the property and did so to a room in which there was a table. Present in addition to the defendant were Nagle, Anderson, Owen and an employee of Biggin & Scott. After some discussion the contract, in three parts, was signed. At this point it is necessary to refer to the evidence of Owen, Anderson and Baird as to what was said and occurred, and to that I now turn.
Commencing with Owen, when the parties entered the room Baird spoke to the agents. Owen was to the side but could hear the conversation. Baird requested that the purchaser shown in the contract be M K River rather than himself. Owen asked Baird if he was a director of that company because the contract required that if a company bought the property the contract had to be signed by a director who also was to sign a personal guarantee annexed to the contract. On Baird advising that he was not a director Owen told him that the property could not be sold to the company as there was no-one who could sign the contract. Owen said that the property could be sold to Baird personally adding the words “and/or nominee” after his name, and that if after the auction he found the director of M K River he could nominate that company which company could then have a director sign the contract and the personal guarantee. Owen said that Baird made several phone calls on his mobile phone and that he moved outside the building to make the calls. Baird stated that he would sign the contract in his own name with the addition of the words “and/or nominee”. Baird then told Owen that he only had a cheque for $400,000 and asked if he would accept that for the deposit. As an incentive for Owen to agree Baird offered to pay the balance of the purchase money in 45 days rather than 60 days. Owen agreed to that proposal and asked the agents to complete the contracts to record that agreement, which they did. Owen said that initially Baird conveyed his requests to Anderson who conveyed them to Owen who then spoke directly to Baird. Owen said that the particulars of sale in the contract were then completed including the insertion of the name of the purchaser’s solicitor, Radebe & Associates with their address, the name of the purchaser with his address and the addition of the words “and/or nominee”, the inclusion of the price including the deposit of $400,000, and the alteration of the period for payment of the balance of purchase price from 60 to 45 days. The contract was then initialled and signed by Baird and himself. In particular, I interpolate, Baird initialled his name as purchaser, the property address, the section stating the price and the day of the sale. Finally Baird gave Biggin & Scott the cheque drawn by M K River for $400,000 as the deposit. Owen said that he instructed Biggin & Scott to pay the cheque into their bank account that day and request a special clearance on it.
Owen said that on the following day, Friday 25 February, Anderson informed him that he had been advised by the National Australia Bank that the cheque had been dishonoured. Owen then prepared a notice of rescission and posted it to Baird and his solicitor as referred to earlier. Having been posted on Friday the 25th it was deemed received on the next working day being Monday 28 February.
On the expiration of the period of two days stated in the notice of rescission and the deposit not having been paid, Owen asked Biggin & Scott to contact the under bidders to attempt to find a buyer of the property at the same price and terms. The under bidders were not prepared to do so but later a third party did agree to buy at the stated price and they became the purchasers under a contract entered into on 8 March 2005. Under that contract the deposit was 10 percent with the balance payable in 60 days.
I now refer to Owen’s evidence in cross-examination. As to whether Baird wrote out the cheque, Owen understood that the cheque was already written out and was presented to the estate agent. When pressed as to this, Owen said that he did not know whether the handwriting on the cheque was that of Baird or not. He said that he could hear the conversation between Baird and the agents, and that one of the agents turned to him and asked whether he would agree to the deposit being reduced from 10 percent to $400,000 and to the term of the contract being altered from 60 days to 45 days for payment of the residue. He denied that Baird put to the agent or to himself a request that they accept a five percent deposit with a 45 day settlement. Owen observed that Baird offered a reduction of the period of settlement as an incentive to accept the lower deposit. Owen said that at that stage he knew nothing about M K River. He denied that he reacted when he heard that name. He may have asked if Edwards was connected with that company as Edwards acted for Matarol. He was concerned to deal with someone that was an arm’s length buyer and not connected with the borrower. He denied that he had said that the cheque was going straight to the bank by courier and did not recall Baird berating him about such a comment. Nor did he recall Baird discussing with him what would happen if he banked the cheque by courier. Indeed, if Baird had said that the cheque would bounce if it went to the bank by courier he would not have accepted the cheque and would have asked the agent to go out and find the under bidder.
Owen said that he was not aware of a conversation between Edwards and the estate agent about “the five percent that was offered”. Finally in cross-examination it was put to Owen that $5,000 from M K River was paid to the estate agent shortly after the rescission notice and that it was banked; Owen had no recollection of that.
In re-examination Owen said that after the auction he did a company search of M K River and found that Edwards was the director of the company. He then, either on the afternoon of the 24th or the morning of the 25th of February, telephoned Edwards to ask if he was the purchaser behind M K River, asking him to confirm that he was the person that ultimately would be nominated as the substitute purchaser. Edwards did not give that confirmation.
I now refer to the evidence of Anderson. He was an experienced estate agent having been licensed as such since 1980 and a principal of Biggin & Scott since 1985. At the auction he stood next to the auctioneer, and pencilled for him. He had handled all the marketing for the selling campaign, and was the person in control of the sale. He confirmed that the terms of the auction were read out by the auctioneer including the deposit being of 10 percent and the balance being payable in 60 days. The contracts were also on display before the auction.
Anderson described the discussions in the building immediately after the property was knocked down to the defendant as follows. Baird said that he had a cheque for only $400,000, not the full 10 percent deposit, and asked whether that would be enough, and Anderson referred the request to Owen. There was also discussion as to who was to be named in the contract as purchaser, as to which Owen asked Baird if he was a director of M K River and he said that he was not. Baird asked a number of times to leave the room to make phone calls and he kept coming in and out. It was agreed that the contract be in his name as purchaser. Baird had brought to Anderson’s attention as they walked into the building that the deposit was not 10 percent. Baird said that he could not give a 10 percent deposit and asked if $400,000 would be acceptable. As to whether Owen agreed to that, there were discussions on the name and about the settlement and Baird suggested that he could do an earlier settlement of 45 days and asked if the $400,000 deposit would be acceptable then. Owen agreed to those terms. Owen was part of these discussions. Baird signed the contract in Anderson’s presence. After the contract was signed Anderson did not remember any further discussions with Baird that day. He did have conversations with him subsequently. He could not recall if he walked out of the building with Baird, he thought he walked out with Owen but was not sure. Owen instructed him to put a special clearance on the $400,000 cheque that day. A receipt was written for the cheque and it was presented to the bank that day.
Anderson said that on the morning of the following day (Friday 25 February) Baird contacted him with a request to send brochures of the property to a post office box in Canberra, which Anderson duly did that day. Later on that Friday the bank advised that the deposit cheque had been dishonoured, which advice he immediately passed to Owen. He attempted to contact Baird but without success.
Anderson said that on the following Monday, 28 February, Baird contacted him. Anderson told Baird that the cheque had not cleared, and Baird said that he would sort it out and get back to him later that day. Baird said that he was getting an amount of something around $150,000 from some Sydney doctors and that he would make contact with Anderson later in the day, but he did not do so. Anderson tried to ring Baird later that day on a number of occasions, but with no response. Anderson tried to ring Baird on four or five occasions on the next day, Tuesday, but with no response. He had had no contact with Baird since then.
Anderson continued that under instruction from Owen, following the expiration of the notice of rescission Biggin & Scott put the property back to the losing bidders, ultimately selling the property to another party.
I now refer to Anderson’s evidence in cross-examination. While he did not recall Baird’s exact words in asking him (Anderson) if he would accept another term of payment, he recalled the conversation about the cheque “that you presented to us when you walked down the hallway, which was pre-written out for $400,000”. Anderson did not recall that the cheque was blank, nor that Baird filled it out in front of him. He recalled that when they were in the room in the building there was some banter as he (Anderson) had reminded Baird that they went to school together. He recalled the discussion about the amount that the cheque was written out for, or that Baird was able to write it out for, but did not remember Baird offering a five percent deposit with a 45 day settlement. Anything that Baird put would have been referred to Owen, but Anderson did not recall offering Owen a five percent deposit. He did not recall Owen asking who the cheque was drawn on. He remembered seeing the cheque in Baird’s hand and it had M K River written on it. He recalled that he wrote M K River on one of the contracts, which Baird must have advised him to do. He recalled Owen asking Baird if he was a director of the company that was to go into the contract. He did not recall Owen indicating how the cheque would go to the bank and how fast it would go to the bank. He remembered a lot of raised voices but did not recall Baird berating Owen about his intention to do something with the cheque. He recalled that Baird did not want to sign the contract under M K River and saying that he wanted more time, that Baird went out, and was given more time, and came back. He did not recall Owen saying that the cheque was going straight to the bank by courier. Nor did he recall Baird saying that if he took the cheque by courier it would not clear. Anderson recalled a lot of consternation in the room, there were some disagreements in the room. Anderson said that special clearances were rare in his office. He received instructions for a special clearance after they had left the room. He did not recall a conversation while they were in the room about the special clearance.
Then, as to whether Edwards had called him on the day subsequent to the auction and discussed that the cheque should have been for five percent and that the cheque was then ready, Anderson said he did not recall that and it was the first time he had heard that. Anderson said that nobody else in the office had authority in the matter as he ran the whole campaign. As to Nagle, he was the auctioneer and had not spoken to him about it. He thought that if Edwards had spoken to Nagle, Nagle would have referred that to him.
When they left the building after the contract was signed, Anderson did not remember whether they stood in front of the building as a group, he believed he would have walked out with Owen, he did not recall a conversation outside the building in which Baird reminded him that the cheque should not be put in the bank by special clearance.
In re-examination Anderson said that he did not recall a discussion about a five percent deposit. Nor did he remember Baird putting that to him. If that had occurred and been approved by the vendor he would have amended the contract accordingly. Anderson further said that if Baird had said something to the effect that if the cheque was banked by courier it would not be honoured he would have referred that to the vendor and asked the vendor what he wanted to do in that situation; as an agent he would have advised not to accept it. He believed that did not occur in this case but there was consternation in the room.
I turn now to the evidence of the defendant’s witnesses, who gave evidence in the following order – Murphy, Edwards and Baird. That was of course an advantage to Baird as he heard their evidence before he gave evidence.
Murphy said that a group of her syndicate, including herself, went to the auction of the property. It is apparent from her evidence that they had a lively interest in the property achieving a maximum sale price. They needed to bid the price up so that the plaintiff got his money back; I interpolate that if that happened the syndicate would be next in line to receive the net sale proceeds. The syndicate, she explained, was a group of people who had advanced money to develop the property. The group’s spokesman bid the property up to about $3.4M. After the sale they went to a nearby coffee shop during which time it was disclosed through a telephone call to Michael Kyriackou that Kyriackou had used the successful bidder as his agent. I interpolate that Kyriackou was employed in Edwards’ practice first as a clerk then as practice manager.
Murphy said that on the way back to her car after coffee she was going past the building (at 2 - 6 Murphy Street) and saw Baird, the estate agent and Owen (she thought) coming out of the building. She stopped and listened because she was interested in what they were saying. She heard Baird say “Make sure you don’t bank the cheque, it will bounce. Don’t bank it today it’ll bounce”, and continued to her car. She had never seen Baird before the auction. She said she was a teacher and had very good hearing, that she listened and could hear those words.
In cross-examination Murphy was asked as to the actual words she could remember being used in the statements that she overhead. Whether the word “bounce” or the word “clear” was used, she said it was something to that effect but could not remember every word. She did not hear for how long the cheque was to be held. She was on the footpath and had to go back to her car quickly as it was parked illegally. Baird was talking to the people who had been running the auction. There were two or three people coming out of the building, standing there talking. It was loud enough for her to hear.
Murphy was cross-examined as to the correctness of an affidavit she had sworn on 17 July 2005 in proceeding 5970 of 2005. The affidavit is endorsed as filed on behalf of W P Edwards on behalf of the defendant and in support of an application to set aside a judgment which had been entered in default in that proceeding. In paragraph 6 of that affidavit she deposed that:
“I was standing in the vicinity of Baird whilst he was having discussions with an agent from Biggin & Scott (‘the agent’) after bidding had closed. I heard Baird say to the agent that he could not hand over his deposit cheque because there were insufficient funds in the account. I heard the agent say to Baird that they needed the cheque. Baird agreed to give the cheque to the agent on the condition that the cheque was not to be presented until notice had been given that sufficient funds had cleared into the account. I then saw the agent take the cheque from Baird.”
Murphy was cross-examined as to differences between that deposition and her oral evidence in chief before me. The differences are obvious including as to handing over the cheque and in particular as to agreeing to give the cheque on a condition and then seeing the agent take the cheque from Baird. Murphy explained that the wording was not as clear as her memory “because that was typed out for me to sign when I came in and I didn’t completely worry about that”. However, it turned out, and it is apparent from the jurat, that in fact Murphy swore the affidavit before a sergeant of police at the Box Hill Police Station, evidently having been given it and taking it there for that purpose. Murphy sought to explain that the affidavit had been written by Kyriackou, that she had not read it carefully, and had signed it on presentation. She said that she did not agree with all of the affidavit but signed it because “it was very close to, it’s 90 percent – 95 percent close to what I wanted … “. The slight change should have been that instead of referring to not handing over the cheque to say “do not bank the cheque”. She also said it was probably incorrect that she saw the agent take the cheque from Baird. She did see the agent hand a document to Baird which she presumed was a cheque. Murphy was asked how far she was from the group when the conversation occurred, and she indicated by her answer a distance in the order of three metres.
Murphy said that out of the net proceeds of the sale effected by the plaintiff her syndicate was paid a third or so of the amount owing to it. She said she had lost everything because of Kyriackou, not just the investment in the Murphy Street property. She explained that the syndicate was disadvantaged because there were actually two syndicates, one being for Matarol and another that went in later, they wanting to develop the property for a profit, but the opportunity was denied by the plaintiff not allowing Matarol more time to obtain re-finance.
I turn then to the evidence of Edwards. He referred to himself as being a solicitor admitted to practice since 1973 “until early this year”, that he practised from a suite at 1 Queens Road, Melbourne and that he employed Michael Kyriackou initially as a law clerk and subsequently as the practice manager. In the course of his practice Edwards acted for Matarol in relation to the subject property, the business coming to Kyriackou for the purpose of a re-finance which did not proceed when the plaintiff appointed a mortgagee sale at the end of January 2005. That sale was postponed as a result of Matarol commencing litigation over it. Kyriackou had the conduct of the re-finance matter for Matarol, with Edwards having an overview of the matter. Edwards said that he recalled that on 24 February Kyriackou told him that “the finance was coming through”, that he had no knowledge of who Kyriackou had engaged to act as agent in relation to the property and that he remained in that position until approximately 2.15 in the afternoon when Owen rang and congratulated him on the purchase of the Murphy Street property. Edwards explained that Kyriackou had a company called M K River of which Edwards was the director, but Kyriackou owned and controlled the company and operated it without consulting him (Edwards). Edwards said that he had knowledge that Kyriackou intended to bid at the auction to get the property back for and on behalf of the Matarol interest but he had no knowledge as to who he had engaged to do that. Edwards said that he knew at the time there was $200,000 in round figures endorsed to the M K River bank account a week before the auction. To his knowledge Kyriackou “issued a cheque to the agent who was retained to bid at the property and that money was used as part of the – or the whole of that deposit money”.
Edwards said that in the week following the auction he rang Biggin & Scott and spoke to a person whose name he could not recall. The conversation “related to a holding deposit of $5,000 which was paid over to Biggin & Scott by bank cheque”. It was a holding deposit in the purchase of the Murphy Street property. Having said this I asked Edwards to recount the conversation to his best present recollection, following which Edwards gave the following evidence. His recollection was that on 25 February 2005 the bank had indicated there were insufficient funds in the M K River account to satisfy the deposit cheque that Baird had tendered. Edwards believed that he was contacted by the bank on that matter and that he referred it to Kyriackou who had knowledge and control of the funds of the company. On the Monday or Tuesday Edwards understood that the agent was making contact with the under bidder to see if the under bidder at the auction was interested in purchasing the property. That under bidder indicated that they were still interested and in that context the cheque for $5,000 was drawn as a holding deposit until the under bidder and who he represented could be contacted to complete the contract. The cheque was drawn against the M K River account by Kyriackou or the members of staff of the office that went down to arrange for it. Kyriackou communicated that to him and it was in response to that that he (Edwards) spoke to the agents to make sure that that was an acceptable procedure with them.
Edwards said that he was not “specifically” aware of the cheque for $400,000 provided the previous week until after the auction; he had no knowledge of that until Owen telephoned him on the day of the auction to congratulate him on the purchase of the property. After that Edwards spoke to Kyriackou who said that he had matters under control. On the following day Edwards had calls from the bank to tell him that the deposit cheque would bounce. At that point he referred the call to Kyriackou because he was in control of the finances of the company. He was not aware of what Kyriackou said to the bank but by the Monday or Tuesday he was aware that the vendor had approached the under bidder at the auction to see if the under bidder was interested in buying the property. He did not become aware that the under bidder was a person known to Kyriackou until some time later. As to why he rang the agent and talked about a $5,000 cheque, Edwards said that as he understood it the under bidder was representing New South Wales interests which Kyriackou had teed up, so he had arranged for the under bidder to see if the agent was interested in accepting a holding deposit until the contracts could be signed with the New South Wales purchasers. They were “new” purchasers. He (Edwards) rang the agent to sound them out on this, whether they would accept a $5,000 holding deposit which he understood they would and then they proceeded on that basis. What happened next was that Kyriackou had discussions with the New South Wales people and on 5 March they came down to Melbourne and by the following Monday or Tuesday they entered into a contract to purchase the property. Edwards said that following the auction he had no dealings with Baird in connection with the sale.
Continuing in his evidence in chief Edwards referred to a page from the statement of account of M K River with the Westpac Bank which recorded a credit balance on 24 February 2005 of $294,252.95. Edwards said that Kyriackou was a signatory to the account.
Edwards said that in his conversation with the estate agent he recalled no discussion alluding to the first sale. The discussion, he said, was in respect purely as to a holding deposit on the approach made to the under bidder from the auction. The only contact he had with Owen was when Owen called him on 24 February and congratulated him on purchasing the property.
In cross-examination Edwards was directed to two affidavits sworn by him on 13 and 26 July 2005 in proceeding 5970 of 2005 in support of the application to set aside the judgment entered in default. In particular he was cross-examined as to the correctness or otherwise of various statements in the affidavits. As to the affidavit sworn on 13 July 2005, Edwards agreed that the statement that Baird had transferred $200,000 into the bank account of M K River Pty Ltd was incorrect. Edwards said in explanation that he had not read the affidavit when he swore it. He proffered an explanation for not doing so concluding that he relied on an assurance that it was true and correct. He said that he read the affidavit a few days later and knew that there were errors in it. He believed that in the subsequent affidavit sworn on 26 July 2005 he did not address all the matters that were incorrect. Among other erroneous statements was the statement that he had provided Baird with the cheque for $400,000 written out to the plaintiff on the condition that he immediately thereafter transfer a further $200,000 into M K River’s bank account; as to this Edwards said that he did not provide Baird with the cheque and did not make any conditions. He did not know that a cheque had been provided to Baird.
As to why in his second affidavit sworn 26 July he had not taken the opportunity to correct the incorrect matters in his first affidavit, Edwards said that he did not do so because it did not appear to be all that significant in terms of what he put his mind to which was the fact that there was money in the bank account. Then in paragraph 7 of the affidavit of 26 July Edwards stated that on about 28 February 2005 he had discussions with Biggin & Scott in which he offered to tender to them a cheque for the correct amount of five percent of the deposit as he was aware that the original cheque taken from Baird had the amount of $400,000 written upon it. He then stated (in para 8) that as indicated in his first affidavit he was advised by Baird after the auction that he (Baird) had negotiated for a five percent deposit. Edwards conceded that he had not referred to that in his first affidavit. I interpolate further that his statements in paras 7 and 8 of that affidavit are inconsistent with his evidence before me.
Edwards was then taken to two affidavits sworn by Baird on 26 and 28 July 2005 in proceeding 5970 of 2005 in support of the application to set aside the default judgment. In the affidavits sworn on 26 July Baird had stated that Walter Edwards provided him with “an open cheque which I [Baird] completed in all details” because he [Baird] had already deposited sufficient funds into M K River’s bank account to cover a five percent deposit. As to this Edwards said that he “never gave any cheque to Mr Baird”. As to whether Baird had deposited sufficient funds to cover a five percent deposit, Edwards said that on his evidence that was not the case but that he did not know what Baird did or did not do as he had no contact with him. Edwards said that he knew Kyriackou was arranging monies from various people.
Finally, Edwards said that he did not sign the cheque for $400,000 and did not personally provide it to Baird.
I refer now to the evidence of the defendant. He commenced by describing how through a friend he attended at Edwards’ office and came to know Kyriackou who he assumed was a solicitor. Kyriackou asked him if he would assist in attending an auction of a property, stating that there had been a dispute over the property and that he needed someone to attend for him as, if he attended, he would be recognised, and to be the successful bidder on behalf of Kyriackou. (The property was the property at 2 - 6 Murphy Street.) Some days before the auction, on about 21 February, Kyriackou called up the Westpac bank account on the internet and showed Baird there was about $290,000 in the account. They had a discussion about the 10 percent deposit that would be required on the property. Baird said that he enquired whether “we might be able to have a strategy of offering five percent and that was agreed to”. Baird said that he “actually indicated that I thought that that was the best way to handle this and I attended the auction on the day, with the knowledge that there was only enough money in the account, having been shown it on the computer, … to cover a five percent deposit.” Baird said that he went to the auction during which he was on the phone to Kyriackou who indicated to him that more funds were coming from interstate, and he wanted to listen to the auction. Baird did not make a bid until the auction went to the second hammer call and ultimately was the successful bidder. He was ushered inside the building to a room where there was a table. One of the agents recognised they had been to school together and there was some discussion about that. At that point Baird said that he implemented his strategy. The agents had mentioned a figure of some $400,000 as being the deposit. At that point Baird asked the agent if he would accept a cheque for five percent of the deposit with a lesser time to settlement, 45 days. The auctioneer turned to a gentleman standing in the corner to whom he had not been introduced and said they would check with the mortgagee and they turned to the man in the corner, who was Owen, who agreed to the proposed terms. Baird said that he thought “fantastic” because he had “already written out a cheque for a figure. I don’t know where – I don’t know where the $400,000 came from because the 10% should have been more than that, but they agreed to that and they got me to hand back the contract which had been passed between the three of us.” Baird said that he and the agents, or one of the agents, was signing, that they were indicating where to sign and they made the adjustment to a 45 day settlement, but in hindsight he now saw that they did not write the five percent in anywhere. He explained this was the first auction he had ever been to and the first time he had ever bid for a property and just assumed that wherever they pointed on the contract was where he had to sign and that they would deal with what occurred. In hindsight, Baird said, he made the error of not requesting the cheque back and altering the amount to some $210,000 or whatever the five percent figure should have been.
Baird said that at some point Owen became aware of the drawer’s name on the cheque and said that the cheque was going straight to the bank by courier or by express or special clearance and Baird “had a go at him over that”. There was consternation about it between Baird and Owen. According to him, Baird said that was a pretty appalling way to behave and indicated that the cheque should not be sent to a bank with a special clearance requirement because the total funds would not be there at that time. He “had some knowledge on the day that the cheque may not go through if it was for the full amount” and he left the room on a couple of occasions as he could not get a telephone signal in the room to speak to Kyriackou to ask who the directors of the company were and to verify that the five percent was there. Kyriackou indicated that the funds were not fully there at the time. Baird said that he left the building a number of times to call Kyriackou, and came back in “and that was basically the end of the auction and we stepped outside … and that’s when I indicated once again that the cheque should not go to the bank for special clearance by courier. And the cheque shouldn’t be banked until it was checked with us.” There were, he said, words to that effect. He did not know the exact words. He did not recall them anymore but the thrust of what he said was that they needed to check before the cheque was banked because he could not get a proper answer from Kyriackou with the telephone signal the way it was.
Baird said that he had no further involvement with the matter until he received a telephone call from Kyriackou advising there was a problem and a rescission notice had been issued. Kyriackou was handling the matter and asked Baird to come in and make a statement about what occurred on the day. He did not recall making such a statement. He has not had the conduct of the matter. He explained that Kyriackou and not himself was the author of his affidavits, Exhibits J, M and N. He said that he had not been served with and had no knowledge of, the writ in the present proceeding. As to that I interpolate that in his affidavit sworn in the present proceeding on 29 July 2005 (Exhibit J) Baird referred to the writ having been served upon him and to having instructed Radebe & Associates to act on his behalf and defend the proceeding. I further interpolate as to this that Baird placed responsibility for his affidavits on Kyriackou, saying that on many occasions he (Baird) had arguments with him about them, that Kyriackou would change them, and that “they appeared at all times to be a reasonable reflection of what happened”. I further interpolate as to his affidavits that they were all witnessed by Edwards.
Continuing with his evidence‑in‑chief, Baird said that he was with Edwards when he (Edwards) rang the agent and “specifically said to the agent that the five percent cheque was available, the funds were in the account, and the agent said no to that, and that was a barrier because what should have occurred is that it probably should have been offered to Mr Owen but the agent said, no, no, we’ve been told we can’t accept that so that was basically the end of the matter and the effect of the rescission notice was, given that the rescission notice was left in place and any objection to it was ignored, no person was nominated as the purchaser of the property. There was no point nominating. There was no opportunity to nominate anyone because the rescission notice appeared to be in place. Everyone appeared to be adhering to it and that was the end of the matter so I was never asked to nominate anyone. I never nominated anyone because the whole thing had come to an end and Mr Kyriackou would always say to me, everything will be allright.” I interpolate as to this evidence that it does not accord with Edwards’ account of his conversation with the agent where he addressed a cheque for $5,000 as a holding deposit for a contract with a new purchaser.
I now refer to evidence of the defendant in cross‑examination. At the outset he was questioned as to the statement in his affidavit sworn on 29 July 2005 (Exhibit J) that the writ had been served on him, in light of his statements before me that he had not been served with the writ. He was then asked about the events at the auction. He said Kyriackou handed him the cheque for $400,000 in the office two hours before the auction. The cheque had been signed but was otherwise blank. Baird said that “it was my position to try and win the auction and then fill out the cheque as instructed by the agent.” He himself did not provide any funds to the account of M K River, and did not know who had provided funds to that account. As to this evidence he was referred to his affidavit sworn on 26 July 2005 (Exhibit M) in which he stated that Edwards “provided me with the cheque because I had already deposited sufficient funds into the defendant’s bank account to cover a 5% deposit”. Baird said that the affidavit should have said that he was aware that the five percent was in the account. As to whether Edwards or Kyriackou handed him the cheque, all he knew was that he went into the office without a cheque and came out of the office with a cheque, exactly which of Edwards or Kyriackou might have given it to him he did not recall. He believed it was Kyriackou because Edwards did not handle “any of this”. Further, the affidavit was wrong in saying that he had deposited funds to the M K River bank account. Kyriackou drew the affidavit, it was “badly worded”. Baird was then questioned about his affidavit sworn on 29 July 2005 (Exhibit N). In particular he was questioned about statements in paragraphs 2, 3 and 4 which in several respects made statements he did not agree with.
Baird said that at the auction he had a strategy to offer only five percent because that was all that was in the bank. He said the strategy was to offer five percent with a lesser term of settlement because there was only five percent in the bank. He heard the auctioneer say that the terms were for a 10% deposit, that was a standard announcement at the beginning of every auction, but it does not have to be adhered to. It was, Baird said, common knowledge that most auctions in Australia are based on a 10% deposit, but a vendor can change the terms and they often are changed when people need a bit more time to get finance. It was his strategy to make a new offer when everyone had left and the vendor had only him to deal with. He did not ask for the terms to be varied before the auction commenced, that was not part of the strategy.
Then as to what happened in the room following the auction, his intention was to have a bit of a chat with everyone and then make the move he intended to make. As to the cheque, he filled in the figures on the cheque. He could not say at what point he filled out the cheque but it was prior to implementing his strategy. He could not recall how it came about that he handed over a cheque for $400,000 because it was not 10% in any event. Baird said that “it was erroneously done and it was done before I made the offer that was part of the strategy. The cheque had already been filled out when I requested fresh terms … I actually filled it out probably between the time that we’d gone into the room and I’d gone out again and made one or two phone calls to verify if further funds had arrived.” He said as to the amount of $400,000 that he wrote that in error. He was entering and leaving the building trying to find out if further funding had arrived so he could know which way to go with “the strategy because the strategy hadn’t been applied at that point”. He said that there was no discussion about the sum of $400,000 being a deposit, with Anderson or Owen. The only discussion where Owen became involved was where he asked that they accept a five percent deposit with the balance in 45 days. He believed that he did not discuss with Anderson offering a deposit of $400,000. When asked if he had a discussion with anyone on the part of the vendor about offering a $400,000 deposit he said “I don’t remember the timeframe of whether the – what I wrote on the cheque happened before a phone call I made or whether it happened after a phone call I made or whether it happened before the second phone call I made or whether it happened after the second phone call I made. I don’t know the time frame of walking in and walking out of the building twice and making two calls for further instructions.” He did not discuss the $400,000 deposit amount with Owen, Anderson, or anyone else. As to where he got the figure of $400,000 from, he did not recall. He denied that the figure of $400,000 was put to Owen. The only question put to Owen by the agent was whether he would accept a 5% deposit with a 45 day settlement period. That was the only question he (Baird) asked to be put to Owen “because that was the strategy”. He denied that $400,000 was agreed as the deposit. He knew that $400,000 was not five percent. Five per cent was what he knew was in the bank account, that was why he kept leaving the building to see if more money had arrived and the answer was that none had, “so the strategy was put in place.” Baird said that the figures were put on the contract before the question was put to Owen. The changes to the contract where the 60 days was crossed out were made after the figure was put on the contract. As to whether the cheque for $400,000 was written before or after the discussion about a five percent deposit, Baird said that he had no idea at what point he wrote $400,000, he did know that it was written before he implemented a strategy. There would have been a discussion about $400,000 with the two agents; Owen was not a party to any discussion until he (Baird) implemented a strategy and asked as to a five percent deposit.
Baird said that his address stated in the particulars of sale had been provided to him by Kyriackou on the phone to be entered on the contract. Baird had never been to that address. Likewise with the name and address of the purchaser’s solicitor. Baird said that he signed and initialled the contract before he raised the issue of five percent. He did not recall the amount of deposit and the balance of purchase price on the document when he signed it, saying that he was handed a document with a biro and the agent said we need an initial here and there, that he did not read any of the content and initialled where indicated and it was handed on to the other chap to sign. The change from 60 to 45 days was done following the agreement by Owen to accept a new term and a lesser payment period. Baird said that he handed over the cheque for $400,000 before he asked the agent for new terms. As to this evidence Baird’s attention was directed to his affidavit sworn on 26 July (Exhibit M) in which (in para 8) he said that before he executed the contract the agent confirmed the plaintiff was prepared to accept a five percent deposit on a 45 day settlement.
Finally, Baird said that when the contract was put in front of him he asked as to the name of the purchaser and that Owen asked if he was a director of M K River which Baird said he was not, and that Owen indicated it could be in Baird’s name and/or nominee. He disputed Owen’s evidence that he (Baird) had said he had a cheque for only $400,000 to offer as a deposit. There was no discussion about $400,00 being accepted because he did not offer it. The discussion that was accepted was the offer of a five percent deposit with a faster settlement period. Baird said that his recall of the “strategy in this auction is absolutely total.” It was the only auction that he had been to.
It is convenient at this point to record my finding that I prefer the evidence of Owen and Anderson to that of Murphy, Edwards and Baird. Owen and Anderson impressed me as honest witnesses who gave evidence from their best recollection. Anderson had no financial interest in the outcome as Biggin & Scott received a commission on the sale (and on the re-sale). As to the plaintiff, it had re-sold the property for the same price and, although it has incurred the costs of the re-sale and there may have been some head of loss or expense, the present claim is simply for the unpaid deposit with interest. The right to the unpaid deposit simply turns on the facts and these are unequivocally clear in establishing the right. Furthermore the evidence of Owen and Anderson accords, and is consistent, with the terms of the contract of sale as executed by the parties.
As against this, the evidence of the defendant and his witnesses was affected by false and unreliable evidence, a significant internal inconsistency as between Edwards and Baird, and improbability. Further, each of them had a grievance against Kyriackou who had caused each of them loss. Murphy had lost, or was at risk of losing, everything not just by reason of having advanced funds in relation to the Murphy Street property, but also relating to her home which Kyriackou used as security. It seemed to me that her sense of grievance was played out against the plaintiff who she considered had acted prematurely in moving to sell the property and leading, as it seemed (actually or perceived by her) to her financial disadvantage.
Edwards too had a deep grievance against Kyriackou and in his evidence, and other statements in Court when Baird asked him to speak, sought to establish that Kyriackou’s actions had caused him substantial loss if not brought his legal practice down. The effect, it seemed, was that Kyriackou had taken advantage of Baird, Murphy and Edwards, and perhaps he had. An instance was the position of Edwards as the director of M K River notwithstanding that it was Kyriackou’s company and controlled by Kyriackou. Exactly why Edwards allowed himself to be placed in that position was not clear to my understanding. Moreover not only have I not heard Kyriackou but the present case does not raise for determination the numerous issues that Edwards said he had asserted against Kyriackou, nor, for that matter, the issues with Murphy and Baird.
Baird, like Murphy and Edwards, regarded himself as a victim of Kyriackou. In attending the auction and signing the contract he, as he said, acted as agent for Kyriackou, and has been left high and dry. If the plaintiff succeeds he will have a judgment which he cannot pay. It may well be, of course, that Baird did act as agent only at Kyriackou’s request but, even assuming that to be the case, he took a risk in doing so in terms of undertaking a liability for the purchase price. Undertaking that commitment may seem surprising, and not to have been completely explained or understandable, in terms of the relationship between Baird and Kyriackou, but that is Baird’s case. Moreover it is not to be overlooked that in acting as he did he led the plaintiff into a contract which he (Baird) knew he could not perform. On his case he had insufficient, if not reckless, regard to his fellow contracting party, if not his own position.
Overall then the defendant and his witnesses presented themselves as victims of Kyriackou. There was a substantial element of Murphy and Edwards’ evidence, and their role in giving evidence, of pushing a cause perhaps hoping for a judicial comment critical of Kyriackou, and which in some way may – at least in their perception – help themselves in their difficulties. Perhaps it was considered that their evidence would lean the Court to accept Baird’s evidence on contentious matters. I cannot speculate as to such matters. My task, to which I confine myself, is to determine the issues on the pleadings in the present case and to do so in light of the relevant facts as I find them to be.
Finally, the credit of Murphy, Edwards and Baird is severely affected by the errors in their affidavits, Exhibits G, J, K, L, M & N. I have sufficiently referred to these matters; they could be picked over in detail but it is not necessary to say more. It is not a sufficient answer, particularly in the case of Edwards, that Kyriackou drafted the affidavits, assuming that to have been the case. The affidavits contained much that was false and must have misled the Court in deciding whether to set aside the judgment entered in default.
There were two central issues of fact on the pleadings. First, whether “shortly before the defendant executed the contract”, Baird and an employee of Biggin & Scott agreed on a deposit of five percent with the balance payable in 45 days. Secondly, whether on 28 February Edwards affirmed the contract by offering to the agent to tender a new cheque for and as payment of the five percent deposit, which the agent refused.
To these there may be added a third issue, namely whether, as Murphy said, a discussion as to not banking the $400,000 cheque occurred outside the building.
I can say at once that I find adversely to the defendant on each issue.
As to the first issue I accept the evidence of Owen and Anderson that Baird did not request, and they did not agree to, a five percent deposit. I reject Baird’s evidence to the contrary. Baird’s evidence is contradicted by the written terms for a $400,000 deposit and the cheque for that amount provided by him as and in payment of the deposit. I accept it as axiomatic that if Owen had agreed to a five percent deposit the figure for deposit in the particulars of sale would have been written or amended accordingly. Owen and Anderson impressed me as experienced men who would have been scrupulous to ensure that the agreed terms were accurately reflected in the written contract.
A further evidentiary issue appropriate to mention at this point concerns whether Baird said that the cheque would bounce if it went to the bank by courier. I reject Baird’s evidence as to this. I find that he did not make such a statement. I further accept the likelihood, if he had so stated, that in that situation Owen would not have accepted the cheque and would have asked the agent to go out to the under bidder.
The second issue is not established because Edwards did not swear up to it. Edwards had only the one conversation with an agent following the auction and that concerned $5,000 as a holding deposit on a new contract with a new buyer. That is what he said he rang the agent about. In other words he did not offer to tender a new cheque for and as payment of a five percent deposit under the contract Baird signed. Furthermore, the $5,000 was paid to Biggin & Scott, and not refused.
That leaves the matter of the conversation that Murphy said she overheard on the footpath. The kindest thing I may say about this evidence is that she misapprehended the purport of what she heard. However, I do not accept that a conversation occurred as she stated. As to the likelihood of the conversation having occurred, and Owen accepting that situation, I simply refer to the above discussion.
It follows from the above that the matters raised by way of defence, including the alleged estoppel, must fail.
It remains to mention that in his final address (written for him by Edwards) Baird submitted that by its actions – in accepting the cheque, amending the contract to “and/or nominee”, presenting the cheque and Owen ringing Edwards on the sale – the plaintiff accepted M K River as the nominated purchaser. If the submission was meant to be that there had been a nomination under the contract, or by which the plaintiff was otherwise bound, I reject it. The submission is without substance. There was never a nomination in accordance with the contract. Even if there had been, under the contract Baird would have remained liable for payment. It is sufficient to add that none of the other points submitted by Baird constitute a defence to the claim. Nor could they raise an estoppel if that is the underlying contention.
In my view nothing is established that could affect the plaintiff’s right to recover the unpaid deposit and accordingly there will be judgment for that amount. I will hear counsel as to interest and costs.
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