Pagnozzi v Reid - [2000] WADC 159

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: PAGNOZZI -v- REID & ORS [2000] WADC 159

CORAM: YEATS DCJ

HEARD: 23 MAY 2000

DELIVERED : Delivered Extemporaneously on 23 MAY 2000 typed from tape and edited by Trial Judge.

FILE NO/S: CIV 2532 of 1995

BETWEEN: ENZO COSIMO PAGNOZZI
Plaintiff
AND
KAREN JOAN REID
REID DEVELOPMENT PTY LTD
AW & KJ REID PTY LTD
First Defendants
ANTHONY WILLIAM REID
Second Defendant

Catchwords:

Contract - Preliminary issue to be determined - Whether plaintiff's action based on the pleadings can succeed - Plaintiff's claim dismissed - Turns on own facts

Legislation:

Nil

Result:

Plaintiff's claim dismissed

Representation:

Counsel:

Plaintiff:     Mr T Mijatovic
First Defendants           :     Mr G A Rabe
Second Defendant         :     Mr G A Rabe

Solicitors:

Plaintiff:     E & S Legal Group
First Defendants           :     Stables Scott
Second Defendant         :     Stables Scott

Case(s) referred to in judgment(s):

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337

Case(s) also cited:

Nil

YEATS DCJ: On the trial of the plaintiff's action for breach of contract and negligent misrepresentation, the defendants raised a preliminary issue for the court's determination. Based on the pleadings, the defendants claim the plaintiff's action cannot succeed and ask the court to dismiss it. In its substituted statement of claim the plaintiff's action relies on a deed of 4 March 1992 made between the plaintiff and the defendants.
Paragraph 25 of the substituted statement of claim is in these terms:
"The Deed contained the following express items:
(a)Mrs Reid, Reid Developments and Reid & Pagnozzi P/L would assume responsibility for making all payments which the plaintiff and his wife were liable to make to the CBA under the terms of the CBA Advance.
(b)Mrs Reid, Reid Developments and Reid & Pagnozzi P/L each indemnified the plaintiff in respect of his liability to the CBA under the terms of the CBA Advance and the provisions of the CBA Mortgage.
(c)Reid Developments owned the Brandon Street properties.
(d)Reid Developments would sell the Brandon Street properties and pay the proceeds of sale to the plaintiff in partial satisfaction of the obligation pleaded in sub‑paragraph (a) hereof.
(e)Mr Reid indemnified the plaintiff against all loss, costs and expenses suffered or incurred by the plaintiff by reason of any breach or non‑performance by Mrs Reid of her obligations to the plaintiff under the Deed, including the obligation pleaded in sub‑paragraph (a) hereof.
(f)In the event that Mrs Reid defaulted in the payment of any moneys payable by Mrs Reid to the plaintiff under the terms of the Deed, including the obligation pleaded in sub‑paragraph (a) hereof, Mr Reid would pay those moneys to the plaintiff on demand."
That pleading relied on cl 2B of the deed which is in these terms:
"The Purchaser the Agent and the Trustee shall assume the responsibility for making the repayments on a loan of FORTY NINE THOUSAND EIGHT HUNDRED AND EIGHT DOLLARS ($49,808.00) WHICH THE Vendor has on his home situated at 31 Mettam Street Trigg in favour of the Commonwealth Bank and shall further indemnify the Vendor against any default penalty imposed by the Bank due to the non payment thereof. The purchaser the Agent and the Trustee shall arrange for the discharge of the said sum from the proceeds of sale of a property owned by Reid Developments Pty Ltd at Lots 1 and 2 Brandon Street South Perth as soon as the said property is sold and for the better securing of this agreement and in consideration thereof the Trustee appoints the Vendor as agent to sell the said property on normal REIWA rate of commission."
I note for the purpose of my judgment that the Purchaser, the Agent and the Trustee referred to in the deed are in fact the defendants; the Vendor is the plaintiff.
In par 37 of the substituted statement of claim, the plaintiff alleges breach of the deed in these terms:
"In breach of the Deed, none of Mrs Reid, Reid Developments or Reid & Pagnozzi P/L have made any repayments to the plaintiff in respect of the plaintiff's liability to the CBA under the terms of the CBA Advance and the CBA Mortgage since 24 January 1993."
In its proposed agreed facts prepared for the purposes of the trial the plaintiff has admitted:
"Challenge Bank refinanced the loan the subject of the agreement on or about 28 April 1992 and discharged the debt owed to the Commonwealth Bank as lender."
The defendants submit that, as a result of the discharge of the Commonwealth Bank loan, cl 2B no longer imposes any obligations on the defendants under the deed; as a consequence the defendants submit the plaintiff's allegation of breach of the implied term of the Deed in par 37 cannot succeed.
The plaintiff submits that it relies on an oral agreement made between the parties in about August 1990 as pleaded in par 12 of the statement of claim. The plaintiff submits that the defendants' obligations under the oral agreement continued despite the obligations of the parties pursuant to the agreement being subsumed into the deed of 4 March 1992. The plaintiff submits that the underlying debt referred to in recital E of the deed and cl 2B of the deed was always to be paid by the defendants. The plaintiff submits that refinancing the debt did not alter that obligation.
I accept the defendants' submission and I do not accept the plaintiff's submissions. The plaintiff could have sued for breach of the oral agreement but he did not do so. He has only sued for breach of the deed. Once the loan referred to in the deed was discharged as part of refinancing the defendants were no longer subject to the obligations under cl 2B of the deed.
The plaintiff also submitted that it has a claim for unjust enrichment. That may well have been so but he has not claimed unjust enrichment. To seek to amend his claim now would be time barred.
The plaintiff also submitted that cl 2B of the deed is ambiguous and suggested that the words "a loan" as referred to in the clause means any loan owed by the plaintiff whether it be to the Commonwealth Bank or to the Challenge Bank. The plaintiff suggested there should be a term implied in cl 2B to that effect.
There are two problems with this submission. In the first place, the plaintiff has not pleaded any implied term. In the second place, a term of the nature suggested by the plaintiff could not be implied because it would be in conflict with the express terms of cl 2B. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Mason J, as he then was, said at p347:
"The conditions necessary to ground the implication of a term were summarized by the majority in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council: '(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.' "
In this case cl 2B, in my opinion, is definite in its terms. The defendants assume the responsibility for making the repayments on a loan of $49,808 which the plaintiff has on his home situated at 31 Mettam Street in favour of the Commonwealth Bank. The deed refers to an existing loan in the terms of that loan that would be known at the time of the making of the deed. The particular loan is thus specified in the deed.
I accept the defendants' submission that no commercial contract would be made on the basis that the defendants assumed responsibility for any loan on any terms. To imply such a term into this deed could never, as a matter of law, be done.
In par 35 of the substituted statement of claim the plaintiff alleges breach of an implied term:
"… Reid Developments would deal with the $35,000 obtained from Mr F Marciano … in the same manner as Reid Developments would have been obliged to deal with that money under the terms of the Deed, … if it had derived from a sale of the Brandon Street properties."
This alleged breach relies on the terms of the second sentence of cl 2B imposing an obligation on the defendants to:
"… Arrange for the discharge of the said sum from the proceeds of sale of a property owned by Reid Developments Pty Ltd at Lots 1 and 2 Brandon Street, South Perth."
This alleged breach suffers from the same fatal flaw as that alleged in par 37. Once the plaintiff discharged the Commonwealth Bank loan in April 1992 the defendants were under no further obligation. The said sum referred to in the deed had already been discharged.
The allegations of negligent misrepresentation pleaded in par 46 of the substituted statement of claim allege false representations that Reid Developments owned the Brand Street properties and that those properties could be sold and the proceeds dealt with to discharge the said sum referred to in cl 2B. No details of loss and damage have been provided to the court but it is appreciated that the said sum was discharged by the plaintiff in April 1992 and that thereafter the defendants were under no obligation under the deed in relation to any said sum. There does not seem to me to be any basis on which the court could sensibly assess damages. If there was a finding of negligent misrepresentation it would result in no more than nominal damages.
I do note, however, that in its substituted statement of claim the plaintiff has also claimed a declaration that each of the defendants are obliged to keep the plaintiff harmless in respect of the plaintiff's liability to the Commonwealth Bank of Australia under the terms of the Commonwealth Bank of Australia advance and the Commonwealth Bank of Australia mortgage.
The declaration in the terms that it is sought in the substituted statement of claim falls in the same way as have the allegations of breach of the deed; a declaration that the defendants are obliged in terms of a loan that no longer exists is a nonsense. The plaintiff no longer has any liability and has not had any since the loan with discharge to the Commonwealth Bank. Therefore the subject matter of the declaration no longer exists and no declaration could be made.
For these reasons the plaintiff's claim is dismissed.