Pei and Wang v Yuan
[2018] VCC 651
•16 May 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-17-04743
| Sichao Pei and Zhennan Wang | Plaintiffs |
| v | |
| Xinxia Yuan | Defendant |
---
JUDGE: | His Honour Judge Woodward | |
WHERE HELD: | Melbourne | |
HOW MADE: | Summons dated 23 February 2018 | |
DATE OF RULING: | 16 May 2018 | |
CASE MAY BE CITED AS: | Pei and Wang v Yuan | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 651 | |
RULING ON SUMMARY JUDGMENT APPLICATION
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A Muller | Robinson Gill Lawyers |
| For the Defendant | Mr B Gillies | Ma & Company |
HIS HONOUR:
Background and order
1 The plaintiffs apply for summary judgment against the defendant in a proceeding to recover $257,400; the unpaid portion of a 10% deposit payable under an August 2017 contract for the purchase of a property in Balwyn (“contract”). The contract has been rescinded for failure to pay the balance of the deposit. The plaintiffs say that the full deposit is payable under a clause of the contract providing that, if the contract ends by default of the purchaser, the deposit is forfeited to the plaintiffs as the plaintiffs’ absolute property.
2 In my view, although there appear to be some obstacles in the way of the defendant successfully defending the proceeding at trial, the defendant’s defence cannot fairly be described as having no real prospects of success. Similarly, I am not satisfied that the defendant’s defence should be struck out on any of the grounds in r23.03 of the County Court Civil Procedure Rules 2008 (Vic) (“the Rules”), although I note that counsel for the defendant conceded in submissions that the defence requires some refinement.
3 Accordingly, I will order that the plaintiffs’ summons dated 23 February 2018 is dismissed. My tentative view is that costs should be costs in the cause. I will invite the parties to make submissions in writing on costs should they consider a different order on costs is appropriate and will deal with the issue on the papers. I will also invite the parties to seek orders on the papers for the remaining interlocutory steps in the proceeding.
Test
4 Part 4.4 of the Civil Procedure Act 2010 (Vic) (“CPA”) provides for an application for summary judgment by the plaintiff (s61) and the defendant (s62). Section 63(1) is as follows:
Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
Section 64 provides that a court may order that a civil proceeding proceed to trial despite there being no real prospect of success in certain circumstances. Order 22 of the Rules has now been updated to reflect the provisions of Part 4.4 of the CPA.
5 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158 (recently applied in Feldman v Frontlink Pty Ltd [2014] VSCA 27 at [24] and Mandie v Memart [2016] VSCA 4 at [44]-[48]), the Court of Appeal distilled the test to be applied when determining whether to give summary judgment pursuant to s63.
6 At [35], Warren CJ and Nettle JA stated as follows:[1]
[1] Neave JA also agreed with this approach at [36]
“Upon the present state of authority:
a.the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
b.the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
c.it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
d.at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.”
Issues
7 It is not in dispute that:
· the plaintiffs and defendant executed a contract for the sale of the Balwyn property;
· the written terms of the contract required payment of a $258,000 deposit of which the defendant paid $600;
· the defendant did not pay the balance of the deposit by 21 August 2017, or at all;
· on 31 August 2017, the plaintiffs served a default notice;
· the defendant did not comply with the notice; and
· the contract is at an end.
8 In her affidavit in opposition to the application affirmed on 27 April 2018, the defendant deposed that she and her husband were at an open house property in Balwyn on 19 August 2017 where they met Elsa Li, a real estate agent apparently employed by Jellis Craig, who could speak Mandarin. The defendant told Ms Li that she and her husband could not read or write in English. Ms Li told the defendant about an auction of another house in Balwyn later that day. The defendant said to Ms Li that she and her husband did not have permanent residency in Australia and asked if that would be a problem. Ms Li said it would be all right. The defendant and her husband later attended the auction, arriving about 10 minutes before it was due to begin. They again met Ms Li. The defendant’s husband put in the only and last bid at the auction, and the property was passed in. The defendant and her husband were invited to speak to the agent.
9 The defendant further deposed that during the negotiations that followed, Ms Li did most of the talking, but another agent (Mr Chen) also spoke. Her evidence was that:
· “they” (presumably Ms Li and Mr Chen) said that “the Foreign Investment Review Board approval could be obtained after the contract of sale was signed and that the sale would be conditional upon FIRB approval”; and
· “Elsa Li told us there was a three day cooling off period after the signing of the contract and that I could seek legal advice to review the contract after it was signed”.
The defendant in her defence and counterclaim alleges in substance that the statements by Ms Li and Mr Chen about (1) FIRB approval, (2) the cooling off period and (3) seeking legal advice were each representations on which she relied in signing the contract.
10 The defendant said that the cooling off period was important because she did not understand English and she wished her lawyer friends to read the contract and explain it to her and that was the reason she did not agree to pay $10,000 for the deposit, but agreed only to a holding deposit of $600. She said she would not have signed the contract if it was to be immediately binding. The defendant sought advice from her solicitors Ma & Company within three days of signing the contract. On 21 August 2017, Ma & Company wrote to the plaintiffs’ conveyancers asserting that the plaintiffs’ agent Jellis Craig knew that the defendant had not obtained any FIRB approval and that it was illegal for her to enter into any unconditional contract at a property auction. The letter sought the return of the defendant’s $600 deposit. The letter makes no reference to any alleged cooling off period.
11 The defendant relies on the matters in her affidavit summarised above in support of three discrete defences, namely:
· by reason of the representation about FIRB approval, the plaintiffs are estopped from asserting that the contract is not conditional on obtaining FIRB approval;
· the signature of the defendant to the contract was obtained in circumstances in which she did not understand the document she was signing and it is therefore “not heard deed” (non est factum); and
· the conduct of the plaintiffs was misleading or deceptive in contravention of the Australian Consumer Law, unconscionable and in breach of s12 of the Sale of Land Act 1962 (Vic).
The defendant also alleges that the contract did not contain the notice required by s31(6) of the Sale of Land Act 1962 (Vic) (relating to the cooling-off period).
12 The plaintiffs submit that the defences relying on the alleged misrepresentations (estoppel and misleading and deceptive conduct) are hopeless, submitting in substance that:
· the representations involved giving legal advice;
· the plaintiffs did not authorise the agents to make the representations;
· thus the agents did not have actual authority to make the representations;
· it ought not be said that the agents had implied actual authority or ostensible authority to give legal advice; and
· the assertions of reliance should not be accepted.
In relation to the assertion that there was no actual authority, the solicitor for the plaintiffs has deposed that “my client (sic) instructs me and I believe that they did not authorise the agents” to make the representations.
13 There are a number of difficulties with these submissions when considered in the context of the Court of Appeal’s admonition that the power to terminate proceedings summarily should be exercised with caution. First, it cannot be doubted that Jellis Craig and its staff were in fact the plaintiffs’ agents in relation to the sale. Real estate agents routinely summarise for prospective purchasers the key provisions of the contract of sale, including during the pre-auction pitch. And the presence of Mandarin speaking agency staff might suggest that the plaintiffs and their agents were anticipating the need to assist prospective purchasers from China with little or no English language skills. Thus, while statements about the terms of a contract might on one view be in the nature of legal advice, it does not follow that it was not within an agent’s authority to articulate or even explain those terms, particularly where a prospective purchaser needs the terms translated from English.
14 Second, against that background, it is impossible to exclude the possibility (indeed, probability) that the scope of the agent’s actual authority on this sale extended to telling a prospective purchaser what terms the contract contained. This is particularly so in the case of a prospective purchaser who could not read the contract for themselves. In my view, any such authority would extend at least to an alleged assertion to the effect that any sale would be conditional on FIRB approval and that there was a three day cooling off period included in the contract. I accept that the question of whether an agent had authority to give advice about the operation of the Foreign Acquisitions and Takeovers Act 1975 (Cth) is more problematic for the defendant, but this is only one of the representations on which the defendant relies.
15 Third, the evidence that no authority was given to make the particular express representations alleged, is of limited utility. Among other things, it does not exclude the possibility that the agents had been given more broadly expressed actual or implied authority to market the property that might encompass the making of representations to this effect. One (perhaps extreme) example I suggested during submissions was an instruction to the agents to “do whatever it takes” to get a sale at auction. It would be necessary to have a far more comprehensive account of what passed between the plaintiffs and their agents (both in writing and orally) in the lead up to the auction before it would be possible to reach a concluded view about the nature and extent of the plaintiffs’ agents’ actual or implied authority.
16 Fourth, the plaintiffs’ reliance on the decision of the High Court in Petersen v Moloney (1951) 84 CLR 91 (at p94-5) is misplaced. It essentially stands for the proposition that the designation of “agent” in respect of the sale of property does not necessarily create any authority to do anything which will affect the legal position of the principal. So much may be accepted. However, it also confirms that an employer principal will be responsible for misrepresentations made by the agent and that:
“He [the agent] may, of course, be given any express authority which the employer thinks fit to give him, and estoppels may arise, but the law does not imply from the mere fact of employment to find a purchaser a general authority to do on behalf of the employer anything which may be incidental to the effecting of a sale” (at 95).
17 Thus, whether or not the misrepresentations alleged fell within the ambit of Jellis Craig’s actual or implied (or, arguably, ostensible) authority will depend on the totality of the evidence discussed above, concerning their engagement and discussions with the plaintiffs. In the meantime, I am unable to find that a defence based on the alleged misrepresentations and the plaintiffs’ putative responsibility for them, is bound to fail.
18 Fifth, I accept the plaintiffs’ submission to the effect that the defendant’s bid at auction, apparently made before any of the operative alleged misrepresentations were made, tells against the defendant on the issue of reliance. But the bid was in fact not accepted and negotiations with the defendant then commenced, at the conclusion of which she agreed to lift the purchase price by $5,000. If the evidence establishes that the alleged misrepresentations were made during those negotiations, it is open to find that the defendant relied on them in ultimately deciding to sign the contract, notwithstanding the earlier bid. She deposed that she would not have signed the contract if it was to be immediately binding. Thus, once again, I cannot safely conclude that the defendant is bound to fail on the issue of reliance.
19 Turning finally to the non est factum defence, the plaintiff relies on the decision of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [57] in support of the submission that: “When a party executes a document which they intend to have some legal effect, but they do not take the trouble to understand the document before signing, the defence of non est factum is not engaged”. The particular passage referenced by the plaintiffs is as follows:
“The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.”
20 However, this passage is preceded by a discussion of matters that may give rise to a vitiating element. Notably for present purposes, the court held at [54]:
“There are circumstances in which it is material to ask whether a person who has signed a document was given reasonable notice of what was in it. Cases where misrepresentation is alleged, or where mistake is claimed, provide examples. No-one suggests that the fact that a document has been signed is for all purposes conclusive as to its legal effect. At the same time, where a person has signed a document, which is intended to affect legal relations, and there is no question of misrepresentation, duress, mistakes, or any other vitiating element, the fact that the person has signed a document without reading it does not put the other party in the position of having to show that due notice was given of its terms.”
21 And at [57]:
“If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of the signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents.”
22 In my view, the claims of misrepresentation in this case do make it “material to know” if the defendant was given sufficient notice of the contents of the contract. Further, the defendant relied on the decision of the High Court in Petelin v Cullen (1975) 132 CLR 355 at [12] for the proposition that a defence of non est factum is established if the defendant can show that she signed the document in the belief that it was “radically different” from what it was in fact and that her failure to read it was not due to carelessness on her part. She submitted that a contract for the sale of land that was conditional on FIRB approval and subject to a three day cooling off period, was “radically different” to the contract she signed. In my view, assuming for present purposes that the alleged misrepresentations were made, there is some force in this submission.
23 Although other potential defences were raised and argued and there was also debate about the defendant’s entitlement to rely on the compensation provisions of the Australian Consumer Law, my findings above are sufficient to dispose of the application. I therefore propose to make orders as foreshadowed above.
- - -
Certificate
I certify that these 10 pages are a true copy of the ruling of His Honour Judge Woodward delivered on 16 May 2018.
Dated:16 May 2018
Simone Karmis
Associate to His Honour Judge Woodward
0
6
0