Piva v Sportiva Macchina International Pty Ltd
[2006] VSC 321
•18 September 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
F5951
No. 5464 of 2006
| ROMANO PIVA | Plaintiff |
| v | |
| SPORTIVA MACCHINA INTERNATIONAL PTY LTD (ACN 085 209 801) and MARANELLO MOTORSPORT PTY LTD | First Defendant Second Defendant |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 21, 22, 23 and 29 August 2006 | |
DATE OF JUDGMENT: | 18 September 2006 | |
CASE MAY BE CITED AS: | Piva v Sportiva Macchina | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 321 | |
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Contract – whether concluded contract for sale and purchase of motor vehicle – whether contract subject to finance – content of obligation upon purchaser under a contract “subject to finance” – whether purchaser acted reasonably in endeavouring to obtain finance.
Contract – tender – purchaser of car repudiates contract – vendor tenders car – whether tender in conformity with the contract – whether non-conforming tender defeats recovery by vendor.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Wilson QC and Mr L Simpson | Piva Commercial Lawyers |
| For the Defendants | Mr S Horgan | Clayton Utz |
HIS HONOUR:
Introduction
Mr Romano Piva is a solicitor and an avid car enthusiast. This enthusiasm is better described as an obsession. In his own words, Mr Piva is a “petrol head”.
Sportiva Macchina International Pty Ltd (“Sportiva”) is an importer and seller of rare and very expensive racing cars. Sportiva is owned and controlled by Mr Tony Raftis. Mr Raftis is retired from the day-to-day management of the Sportiva business. Sportiva has engaged Maranello Motorsport Pty Ltd, a company owned and controlled by Mr Mark Coffey, to sell cars on its behalf for a commission.
In December 2004 Mr Piva purchased a 360 Challenge Ferrari racing car from Sportiva for $200,000. In July 2005 Mr Piva traded in the 360 Challenge and purchased a 360 NGT Ferrari racing car from Sportiva for $488,000. Mr Piva financed the acquisition of the 360 NGT with a loan of $450,000 from Adelaide Bank. In November 2005 Mr Piva had dealings with Sportiva with a view to trading in the 360 NGT and purchasing a 333 SP Ferrari racing car (“the car”) for $1,378,000. Mr Coffey represented Sportiva in each of these transactions and dealings. Mr Raftis had no contact with Mr Piva at all.
Sportiva alleges that the dealings concerning the car constituted an unconditional contract under which Mr Piva agreed to purchase the car. Mr Piva alleges that there was no concluded contract or, if there was, it was subject to him obtaining finance for $580,000 to enable him to purchase the car. As Mr Piva did not obtain the finance, he contends that he was not obliged to complete any contract with Sportiva. If any contract was subject to finance, which Sportiva denies, Sportiva alleges that Mr Piva failed to act reasonably in seeking to obtain finance, so that Mr Piva was not excused from completing the contract because he failed to obtain finance. Mr Piva also alleges that he is not in breach of any contract because Sportiva’s tender of the car to him did not conform with any contract and that Sportiva is in any event estopped from suing him for damages.
Mr Piva did not complete the purchase of the car by the required date or at all. Since then, Sportiva has sold the car for less than $1,378,000 and sues Mr Piva for damages for breach of contract. Sportiva’s claim is made by way of counterclaim in the proceeding, Mr Piva having commenced the proceeding seeking return of the 360 NGT which was to be the trade-in on the car.
Factual Narrative
On 27 October 2005, Mr Coffey informed Mr Piva that the car was available for purchase. Mr Piva responded “Wow. That’s my dream car. I’ve had a model of that car in my study for the last 10 years.”
There is a dispute as to whether Mr Piva then said words to the effect of “Mark, it’s out of my ballpark. I couldn’t do it.” It is unnecessary to resolve this dispute. Whether or not Mr Piva said this, he agreed to meet Mr Coffey and inspect the car.
On or soon after 1 November 2005, Mr Piva met Mr Coffey and inspected the car. He was very impressed.
On Saturday 5 November 2005, Mr Piva drove his wife’s Ferrari (a road car) to Sportiva’s premises to have the oil and water checked in preparation for a trip to a Sportiva track day to be held on Monday 7 November 2005 at the Phillip Island race track. He met Mr Coffey, they had a cup of coffee and discussed the possibility of Mr Piva purchasing the car. Mr Coffey said the price was $US850,000 and calculated that the Australian dollar equivalent was $1,378,800. After some discussion about the price and whether Mr Piva could afford it, Mr Piva said words to the effect:
“Look, the only way I can offer the $1,378,800 asking price is on the basis that I can transfer the lease on the 360 NGT for $480,000 to the 333 SP and pay the balance at a later date which would have to be agreed.”
Mr Coffey responded with words to the effect that he thought that deal could be done, and then wrote on a yellow “post it” note:
“AUD 1,378,000.00
Less 360 GT 480,000.00
898,800.00“
and handed the post-it note to Mr Piva.
Mr Piva then said that he would “talk to Pratty” about purchasing the car. “Pratty” was a reference to Mr Michael Pratt, Mr Piva’s finance broker who had arranged the finance on the 360 Challenge and the 360 NGT.
On 7 November 2005, Mr Piva spoke with Mr Pratt on the telephone. He said that he was thinking about buying the car for $1,378,800, but “only” wanted a hire purchase agreement on the car for $480,000. In Mr Piva’s words, “this was just transferring the present hire purchase on the 360 NGT to the 333 SP.” Mr Pratt told Mr Piva that he did not see any problems with obtaining such financing because “there was such a huge deposit”, but that he would have to make an application to the Adelaide Bank (which was the existing financier for the 360 NGT) for its approval.
I note that in his conversation with Mr Coffey on 5 November, Mr Piva referred to a transfer of “the lease” for $480,000 on the 360 NGT. In his conversation with Mr Pratt, Mr Piva referred to transferring the “hire purchase” for $480,000 on the 360 NGT. In fact, Mr Piva’s finance from the Adelaide Bank on the 360 NGT was by loan for $450,000 and chattel mortgage. It appears Mr Piva interchangeably used references to lease, hire purchase or “HP” when referring to the existing finance on the 360 NGT and his proposed finance for the car. I find that nothing turns on the terminology used by Mr Piva. His references to lease, hire purchase or “HP” are to be taken as references to finance on the relevant car referred to by him. They were so understood by Mr Coffey.
Mr Piva attended the Sportiva track day at Phillip Island on Monday 7 November 2005. Mr Coffey had arranged for a professional racing driver, Allan Simonson, to drive the car on the race track to demonstrate it to those in attendance. There was some discussion between Mr Piva and Mr Coffey about the ability of Mr Piva to drive such a sophisticated racing car. Mr Coffey assured Mr Piva that he had the ability to drive the car.
As a result of viewing the car in operation at Phillip Island, Mr Piva’s level of interest in purchasing the car increased. He sat down and thought about how he might be able to purchase it. He placed the post-it note given to him by Mr Coffey on a pre-printed file note page from his solicitor’s practice and wrote out underneath what he described as his “wish list”. Mr Piva’s wish list is in the following terms:
“333 SP = $1,378,800.00
Less – 360 GT $480,000.00
$898,800.00
÷ one day with Allan Simonson to learn to drive!
Two sets of OZ wheels
÷ and
New Rubber for the Oz wheels!
(1) Lease of 333 SP at transfer lease $ 480,000.00
(2) Balance on Monday the 3rd April 2006 = $ 898,800.00
$1,378,800.00
(3) 12 month free parking!”
After preparing his wish list Mr Piva telephoned Mr Coffey to discuss purchasing the car. Mr Piva has consulted his telephone records and identified the specific time of this telephone conversation as 1.41 pm on 9 November 2005. I accept that this is when the telephone conversation commenced.
Mr Piva gave elaborate evidence about his recollection of the content of this telephone conversation. His evidence was laden with obvious reconstruction, embellished with legal jargon and infected by advocacy of his case. For example, Mr Piva initially said that he told Mr Coffey that any “invitation to treat” which he might make with reference to the car would be “subject to finance”. Later, Mr Piva readily acknowledged that these words were not in fact used by him in his conversation with Mr Coffey.
When he first entered the witness box, Mr Piva repeatedly said that he used the words “invitation to treat” in his telephone conversation with Mr Coffey on 9 November 2005. Subsequently, having had the opportunity to confer overnight with his counsel, he retracted this expression. His explanation for giving this false evidence in respect of the use of the term “invitation to treat” was wholly unconvincing. When asked why he had used this phrase, instead of referring to a “proposal”, he said:
“Because this has been playing on my mind. Lately I have been reading a lot of contract books and I keep referring to the terminology, invitation to treat, I’m sorry, I just took upon that terminology when I really meant proposal.”
I reject this explanation. Mr Piva is a solicitor. He was asked, on his oath, to recount the conversation with Mr Coffey on 9 November 2005 to the best of his recollection. He did not do so.
I find that the content of the telephone conversation between Mr Piva and Mr Coffey at 1.41 pm on 9 November 2005 was, relevantly, in accordance with the version of the conversation which was put by Mr Piva’s counsel to Mr Coffey in cross-examination and accepted by Mr Coffey. Relevantly, the conversation included the following components:
(1)Mr Piva telephoned Mr Coffey and said that he wanted to purchase the car at the asking price, less a trade-in allowance for the 360 NGT of $480,000.
(2)Mr Piva said that he would have the financing on the 360 NGT transferred over to the car and would pay the balance of $898,800 on 3 April 2006.
(3)Mr Coffey replied by saying words to the effect that he felt “an extra $100,000 by way of cash deposit” would be necessary to conclude a deal.
(4)Mr Piva responded that the only way he could pay the extra $100,000 was to increase the amount of finance which he intended to obtain from $480,000 to $580,000.
Further, I accept the evidence of Mr Piva, given in chief and confirmed in cross-examination, that the 9 November conversation concluded with Mr Coffey asking Mr Piva to put a proposal for the purchase of the car in writing, fax it to him and he would put the proposal to Mr Raftis for consideration.
Mr Piva then prepared a handwritten facsimile containing the terms upon which he was prepared to purchase the car. Mr Piva described this handwritten facsimile as containing “what I considered the terms were to be for my offer”.
The 9 November facsimile from Mr Piva to Mr Coffey is in the following terms:
“Attention: Mark Coffey
SPORTIVA MACCHINA International
57-61 Balmain Street,
Richmond.
Date: 9th November 2005.
Matter: Purchase of Ferrari 333 SP. Chassis 0031
from SPORTIVA MACCHINA International
Purchaser: ROMANO PIVA
Purchase price - $1,379,800.00
Trade in on 360 NGT - $480,000.00
Less further funds (by HP) - $100,000.00
$798,800.00
*H.P on 333 SP at $580,000
Michael Pratt
Haven’t confirmed yet. (wait your agreement on terms).
The balance of $798,800.00 to be paid either overseas in Euro’s [sic] or in Australian dollars on Monday the 3rd day of April 2006.
Condition.
(1)Alan Simonson tutor’s [sic] me on how to drive the 333 SP.
(2)Two sets of OZ wheels and Rubber.
Mark, if we have agreement on the above, I will immediately get Michael Pratt to do documents for $580,000.00. At this stage, I have only said 1 HP for $480,000. I will try to speak to him upon your confirmation of the above.”
Mr Piva signed the 9 November facsimile in three places.
There was no pleading or submission made on behalf of Mr Piva that the terms of the 9 November facsimile are uncertain for obscurity or incomplete as to any essential term.
Mr Piva sent the 9 November facsimile to Mr Coffey at 2.06pm. Later on the same day, Mr Coffey and Mr Piva spoke on the telephone. Mr Coffey’s evidence was that he told Mr Piva that he had received his facsimile, discussed it with Mr Raftis and that they accepted his proposal to buy the car. He then congratulated Mr Piva. Mr Piva said that he would contact Mr Pratt about the finance.
Mr Raftis also gave evidence about this telephone conversation. He confirmed that he spoke with Mr Coffey about the facsimile from Mr Piva and agreed to accept the offer contained in it. He then overheard part of the telephone conversation between Mr Coffey and Mr Piva, in which Mr Coffey said words to the effect that they had received his facsimile, spoken about it and that it was acceptable.
Mr Piva denies that this conversation occurred. He says that he telephoned Mr Coffey later that day to discuss free garaging for the car for a 12 month period. This had been referred to in his “wish list” but he had omitted to include this condition in the facsimile.
I accept the evidence of Mr Coffey that he telephoned Mr Piva and accepted the offer contained in the facsimile. It accords with the probabilities. The obvious purpose of Mr Coffey dealing with Mr Piva about the car was to elicit an offer from him to buy it. Mr Piva agrees that Mr Coffey asked him to put a proposal in writing for consideration by Mr Coffey and Mr Raftis. That is what Mr Piva did. In these circumstances, it is highly unlikely that Mr Coffey would not have responded to the offer, either by accepting it, rejecting it or making a counter-offer. I find that Mr Coffey orally accepted the offer contained in the facsimile. In making this finding, I have also taken into account the corroborative evidence given by Mr Raftis. Although this evidence was criticised by Mr Piva’s counsel, on the basis that Mr Raftis initially gave the impression that he was present throughout the relevant telephone conversation and later said that he was only present during part of it, I am not prepared to accept the submission that Mr Raftis concocted his evidence.
My finding that Mr Coffey orally accepted the offer necessarily involves a rejection of Mr Piva’s firm denial that any such conversation occurred. As can be seen, my finding is principally based upon the probabilities. However, there are a number of factors affecting the credibility of Mr Piva as a witness which I have also taken into account. I have already referred to the unsatisfactory way in which Mr Piva gave evidence about his conversation with Mr Coffey at 1.41 pm on 9 November. There are other aspects of Mr Piva’s evidence and conduct which reflect poorly upon his general credibility as a witness. These are mentioned elsewhere in this judgment.
In the week commencing Monday 14 November 2005, Mr Coffey made arrangements for the car to be transported to Adelaide for the purpose of being shown and demonstrated at a car rally to be held between 16 and 20 November. Mr Coffey said that he telephoned Mr Piva on 10 November and obtained his consent to sending the car to Adelaide for this purpose. Mr Piva denies that this conversation occurred and I am inclined to accept Mr Piva’s evidence on this issue. However, it is unnecessary to resolve this dispute. As I have said, I accept Mr Coffey’s evidence that he telephoned Mr Piva and accepted the offer contained in the 9 November facsimile. Further, as appears hereafter, the conduct of the parties after 9 November 2005 justifies an inference that the offer contained in the 9 November facsimile was accepted by Sportiva. Accordingly, it is unnecessary to resolve this factual issue. Its only relevance was to the issue of whether a contract existed.
On Friday 18 November 2005, Mr Piva emailed Mr Coffey and said he had changed his mind and did not want to purchase the car. In his reply, Mr Coffey stated that he had taken the car off the market for two weeks “based on our agreement” and asked Mr Piva to call him to discuss the matter. Mr Piva did not challenge Mr Coffey’s assertion that an agreement existed.
The following day, Saturday 19 November, Mr Piva visited the Sportiva showroom in Richmond and spoke with Mr Coffey. Mr Piva confirmed that he did not wish to purchase the car. Mr Piva says that he noticed that the car was not present at the Sportiva premises and mentioned this. It was only then that Mr Coffey informed him that the car had been taken to Adelaide. There was a collateral credit issue raised in respect of this conversation. Although he initially said that this conversation occurred on Saturday 19 November 2005, soon after the 18 November email in which Mr Piva said that he did not wish to purchase the car, Mr Coffey reconstructed that it could not have been on Saturday 19 November, because he was in Adelaide at that time for the car rally. However, despite numerous invitations and opportunities to do so, Mr Coffey was unable to produce any evidence of his attending the car rally — such as an account from his hotel or airline documents.
Next, Mr Piva changed his mind again. On 22 November 2005 he spoke with Mr Coffey on the telephone. He told him that he would proceed and purchase the car in accordance with the terms stated in the 9 November facsimile, with the exception that he wanted to change the date for payment of the balance of the purchase price from 3 April to 9 May 2006. Following this telephone conversation Mr Piva emailed Mr Coffey and stated:
“I refer to our conversation this morning and confirm that all items regarding the sale are as per my Fax’s [sic] of the 9th November 2005, with exemption [sic] to the fact that the balance of funds being $798,800 will be paid either in Euro’s [sic] or AUD on the 9th May 2006.”
It appears that the request by Mr Piva for an extension of the date for payment of the balance of the purchase price was accepted by Mr Coffey. Mr Coffey does not recall how he responded to Mr Piva’s oral request. Mr Coffey raised no objection to the statement by Mr Piva in his 22 November email about the extended date. Mr Coffey appeared to accept in evidence that the date had been changed. I find that the contract was varied accordingly.
Following Mr Piva’s confirmation on 22 November 2005 that he would proceed with the contract and purchase the car, he instructed Mr Pratt to apply for finance of $580,000 on the car.
Mr Pratt’s efforts to obtain finance for Mr Piva were almost solely focused upon Adelaide Bank, which was the existing financier for the 360 NGT. On 22 or 23 November 2005, Mr Pratt telephoned Peter Siokos, who is the head of equipment financing at the Adelaide Bank, and explained the proposed financing to him. Mr Siokos responded to Mr Pratt’s enquiry by stating that the Adelaide Bank would not be interested in financing a vehicle “of that type”. As appears hereafter, Mr Pratt did not accept this initial rejection, and prepared a written application for finance from Adelaide Bank.
Next, on 23 November 2005, Mr Piva instructed his insurance broker Mike Mier to insure the car. By email dated 23 November, Mr Piva stated:
“Mike, I have just sold the Ferrari 360 N-GT so I want it taken off the policy. In turn I have brought [sic] Ferrari 333 SP serial number 032 from Mark Coffey, I need a certificate of currency showing the insured amount as $1,378,000.00 on the same terms and conditions as the previous policy and showing the ‘Adelaide Bank Ltd’ as the interested party. I would be pleased, if that policy could start as soon as possible.”
Although Mr Piva discovered other documents and emails concerning his dealings with Mr Mier to insure the car at this time, he did not make discovery of this email. It was obtained by Sportiva on subpoena. It was put to Mr Piva in cross-examination that he deliberately withheld this email from discovery because of a concern that it contained an admission that he had contracted to purchase the car. Mr Piva denied this. However, he did not explain his failure to discover this email.
The deliberate failure to discover a relevant document is a serious allegation to make against any litigant. When the litigant is a solicitor, who is acting as his own solicitor in the litigation, the allegation is of increased gravity, and this must be taken into account in reaching a finding.[1] Having considered all of the evidence, and the hesitant and at times evasive demeanour of Mr Piva in giving his evidence on this issue,[2] I regretfully find that Mr Piva deliberately withheld discovery of his email to Mr Mier. In making this finding, I have had particular regard to the false evidence given by Mr Piva concerning his conversation with Mr Coffey on 9 November 2005. The use by Mr Piva of the words “invitation to treat” in this evidence, and his explanation for using that phrase, demonstrates his heavy focus upon conducting his case before the Court on the basis that no agreement ever came into existence. This case was put in letters of demand written by Mr Piva prior to the issue of proceedings and was pleaded by him. The issue was obviously firmly in Mr Piva’s mind at the time he gave discovery in the proceeding. This finding seriously undermines Mr Piva’s credibility as a witness.
[1]Briginshaw v Briginshaw (1930) 60 CLR 336.
[2]Transcript 330-3.
On 24 November 2005, Mr Pratt submitted a written application to Adelaide Bank for finance to Mr Piva of $580,000 on the car. The written application falsely stated that the purchase price of the car was $1,000,000 and not $1,378,800. As a result, the application gave a false impression of the amount of cash being paid by Mr Piva towards purchase of the car. Instead of $798,800, it was represented that Mr Piva’s cash contribution would be $420,000. Neither Mr Piva nor Mr Pratt could explain why these false statements were made in the finance application.
Mr Siokos said that he and other Adelaide Bank officers gave scant attention to this written application because “effectively the transaction was declined as soon as we saw the first page”. Shortly after receiving the written application, Mr Siokos telephoned Mr Pratt and told him that Adelaide Bank would not provide finance to Mr Piva. Mr Siokos gave Mr Pratt a number of reasons for declining to provide finance:
(1)The size of the transaction was in excess of normal limits for motor vehicle finance.
(2)The type of vehicle. Mr Siokos said that Adelaide Bank did not wish to finance a racing car which did not have “a deep secondary market if we were forced to sell it”.
(3)The fact that this was the third racing car purchased by Mr Piva within a period of 12 months.
(4)Concern about Mr Piva’s cash flows and ability to pay for the vehicle. These concerns were based upon a number of factors, including the fact that Mr Piva had no equity in the 360 NGT, as the amount owing on the existing finance was probably more than its value; Mr Piva had not provided up-dated financial statements with the written application; one or two payments on the existing finance had been initially dishonoured; and Mr Siokos believed that the size of the deposit[3] indicated that the purchase price for the car may have been greater than its value. In cross-examination, Mr Siokos said that his concern that the price of the car may have been inflated may have been increased if he had known the true price of the car.
(5)In the above circumstances, Mr Siokos was keen to seize an opportunity to “exit from the transaction and connection in entirety”. Mr Siokos explained that he was of the view that Adelaide Bank had probably gone further than it should have in financing the 360 NGT and, with the added concerns arising from this further application for finance on the car, he was keen for Mr Piva to go elsewhere to obtain his finance on racing cars. In the hope that the existing facility on the 360 NGT could be paid out by another financier, Mr Siokos agreed to substantially discount the penalties which would normally apply to an early payout of a finance facility.
[3]A reference to Mr Piva’s cash contribution of $420,000, as falsely stated in the finance application.
Mr Pratt did not initially accept the decision of Adelaide Bank to reject Mr Piva’s finance application. Mr Siokos said that Mr Pratt “pursued the matter fairly ferociously” and that there were a number of discussions which became “quite animated”. However, Mr Siokos steadfastly maintained his refusal of finance and described his attitude as “not negotiable”.
Mr Pratt informed Mr Piva that he had been unsuccessful in obtaining finance from Adelaide Bank. Mr Piva asked him to try and obtain finance from other financiers. Subsequently, at an unspecified time in December 2005, Mr Pratt made two telephone enquiries seeking finance from other banks. He spoke with a representative of each of St George Bank and BankWest. The only evidence as to the content of these telephone conversations was in Mr Pratt’s witness statement, to the following effect:
“In the conversations I had with the other banks, I explained the type of car that Mr Piva wanted to finance and the amount sought. Both banks said that they would excuse themselves from this transaction.”
In these cases, Mr Pratt simply accepted the verbal refusals, without making any formal written application for finance.
The evidence of oral approaches to St George Bank and BankWest does not indicate whether they were informed of the true purchase price of the car, or were misled in the same way as Mr Pratt misled Adelaide Bank.
There was no evidence of Mr Pratt making any further efforts on behalf of Mr Piva to obtain finance. I find that he did not do so. Further, I find that his efforts to obtain finance ceased by in or about mid-December 2005 at latest.
During December 2005, there was frequent contact between Mr Coffey and Mr Piva concerning the time by which finance would be available to fund the first instalment of $580,000 due under the contract. By email dated 6 December 2005, Mr Coffey asked Mr Piva “As discussed are we on track for settlement with Pratt tomorrow?” Mr Piva replied “Mark, just spoke to Michael and he said he is nearly there, I will monitor it.”
In cross-examination, Mr Piva admitted that his statement that Mr Pratt had told him the finance “is nearly there” was false. His only justification was that he desperately wanted to buy the car and that he was hoping he could obtain finance. In fact, at this time, Mr Pratt had already been refused finance by Adelaide Bank, and perhaps also by St George Bank and BankWest or one of them.
Further emails between Mr Piva and Mr Coffey concerning the time at which finance would be available were exchanged during November. By 15 December, Mr Piva wrote to Mr Coffey (copy to Mr Pratt) that:
“the finance will be some days away and with Christmas it could even be in January. If you have someone else who wishes to buy the 333Sp, please do not hesitate to make a deal. Please convey my apology to all parties concerned … .”
By email dated 16 December 2005, Mr Piva expressly said what he had implied in his email the day before — that he had changed his mind again and no longer wished to purchase the car:
“I spoke to Michael Pratt last night and it is clear to me that the finance will not be through next week. I have given the whole thing serious thought and do not wish to drag this issue on any further and wish to leave for holidays knowing this issue is at an end. Therefore, i [sic] no longer wish to purchase the 333SP and will retain the 360 N-Gt for 2006. I will now advise Mike Mier to cancel the insurance policy on the 333sp, and reinstate the policy on the 360 N-GT.”
Mr Coffey responded on the same day:
“... it’s too late for ‘I no longer want to purchase the 333 SP’. You have a contract that is now 36 days old with Sportiva. Let’s meet and discuss.”
Mr Piva did not challenge Mr Coffey’s assertion that “you have a contract”. He spoke with Mr Coffey and changed his mind again. On 19 December, he emailed Mr Mier and reinstated insurance on the car.
By email dated 20 December 2005 Mr Piva said to Mr Coffey:
“I just got the news from Michael Pratt that he is not too far off completing the payment of the $580,000 … the balance of funds will be paid in accordance with my email to you on the 22nd November 2005, namely the 9th May 2006.”
Once again, Mr Piva admitted in cross-examination that this email contained a lie. Mr Pratt had not just told him that he was “not too far off completing the payment of the $580,000.” In fact, by this time, Mr Pratt had told him that he could not obtain finance. Mr Piva’s only explanation for this lie was illuminating. He said that he desperately wanted to buy the car and was hoping that Mr Pratt might find some way of obtaining finance. He said “it looks terrible, I’m a petrol head, and … I really wanted the car.”
By lying to Mr Coffey about the impending availability of finance, I infer that Mr Piva was seeking to preserve his options whilst he considered, over the Christmas/New Year vacation period, whether or not he wished to proceed and purchase the car. He deliberately set out to mislead Mr Coffey as to the likelihood of him obtaining finance, so as to ensure that the car would not be sold whilst he considered his position over the holiday period. He was successful in this endeavour, as evidenced by Mr Coffey’s email response: “Okay I’m standing by for the Pratt call. I’m working through the break.”
There was no further contact between Mr Piva and Mr Coffey until 16 January 2006.
Mr Pratt gave evidence that he recalled speaking with Mr Coffey in December 2005 and telling him that he had been unable to obtain finance for Mr Piva. Mr Coffey denied this, and said that a conversation to this effect occurred in mid-January 2006. I accept the evidence of Mr Coffey and reject that of Mr Pratt. Mr Pratt’s evidence was extremely general and vague on many matters, and was given in a careless and offhand manner. He clearly has a poor recollection of events and the times at which they occurred. Further, the 20 December email from Mr Piva to Mr Coffey, and Mr Coffey’s response that he was “standing by for the Pratt call”, indicate that Mr Coffey was unaware that Mr Pratt had been unable to obtain finance for Mr Piva at this time.
I find that, by Christmas 2005 at latest, Mr Pratt’s efforts to obtain finance had been exhausted. To the extent that Mr Piva’s evidence implies that he asked Mr Pratt to continue trying to obtain finance over the Christmas/New Year vacation, I reject it. Mr Pratt’s own evidence was that he had exhausted all inquiries prior to Christmas 2005, and this accords with the probabilities.
Mr Piva returned to work on Monday 9 January 2006. By this time, he had decided that he would not, or could not, purchase the car. On returning to work, Mr Piva did two things. First, he sent an email to the Maserati Club of Australia cancelling his registration to drive the car in a members practice day on Friday that week.[4] Second, he sent an email to Mr Mier cancelling the insurance on the car and reinstating the insurance on the 360 NGT. In this email, Mr Piva gave a reason for changing his insurance arrangements:
“Mike. I just got back today and my finance broker, Michael Pratt has confirmed that I cannot finance the purchase of this car as it is not a derivative of a production car, therefore they will not finance it.”
[4]How Mr Piva ever believed that he could have raced the car before paying the balance of the purchase price was not explained.
Having taken care of his own interests, Mr Piva was cavalier with those of Sportiva. He made no effort to inform Mr Coffey that he had decided not to, or could not, purchase the car. When Mr Coffey returned to work on Monday 16 January 2006, he sent an email to Mr Piva that afternoon in which he referred to Mr Piva’s email of 20 December 2005 (which falsely stated that finance was “not too far off”) and enquired as to when the $580,000 would be paid. It was only upon receipt of this email that Mr Piva told Mr Coffey that he could not obtain finance for the car. This was shabby conduct by Mr Piva. No explanation was offered for why he saw fit to inform his insurer that he could not obtain finance on the car, but not Mr Coffey.
In his 16 January email to Mr Coffey, Mr Piva said that Mr Pratt had been unable to obtain finance for the purchase of the car “as it is not a derivative of a production car, therefore they will not finance it”. This was disingenuous on Mr Piva’s part. Although Mr Siokos said he had been informed that the car was not derivative of a production car, he did not tell Mr Pratt that this was the reason for him refusing to provide finance to Mr Piva for the car. The type of car presented a problem to Adelaide Bank because it was a racing car which did not have a ready secondary market in the event that it needed to be sold. I can see nothing in the evidence of Mr Siokos to the effect that he refused finance because the car was not derivative of a production car. If this factored into his thinking, it was certainly not a principal reason.
Mr Coffey’s response to Mr Piva’s statement that he could not obtain finance was threefold. First, he questioned the stated reason why Mr Piva had been unable to obtain finance. Second, he suggested that Mr Piva may be able to obtain finance from another finance broker, who he identified by name, “who seems to do a lot of race cars these days”. Third, he inquired of Mr Piva as to whether he had made any alternative arrangements to seek finance.
Neither Mr Piva, nor Mr Pratt on his behalf, made any further efforts to obtain finance for the first instalment of the $580,000 due under the contract. Neither of them made any approach to the alternative finance broker referred to by Mr Coffey, who apparently had experience in providing finance for racing cars. Mr Piva did not at any time approach any other insurance broker.
From this time, Mr Piva adopted the position that any agreement by him to purchase the car was at an end and that he was entitled to ownership and possession of the 360 NGT. In an exchange of emails on 6 February 2006, Mr Piva sought possession of the 360 NGT so that he could drive it at a race day; Mr Coffey responded that the 360 NGT was on the market for sale “as per the agreement”; Mr Piva stated “as previously advised I am not proceeding with the purchase of the 333 SP”; and Mr Coffey bluntly replied “we expect the agreement to purchase the 333 SP to be honoured.”
By this time the dispute had crystallised. Mr Piva then commenced writing letters of demand on his firm’s letterhead. In those letters, he demanded possession of the 360 NGT and wrongly asserted that it was owned by one of his companies. In a letter of demand dated 1 March 2006, Mr Piva asserted that no agreement existed for the purchase by him of the car.
On 30 March 2006, this proceeding was commenced by Mr Piva seeking return of the 360 NGT and injunctive relief restraining its sale by Sportiva. In response, Sportiva offered undertakings that it would not sell the 360 NGT and filed a counterclaim seeking specific performance of Mr Piva’s agreement to purchase the car.
By letter dated 3 April 2006, Sportiva’s solicitors purported to tender the car to Mr Piva, in the following terms:
“We are instructed by Sportiva Macchina International Pty Ltd to tender, and to hereby tender, delivery under a contract of sale made on 9 November 2005 of the Ferrari 333SP against payment of purchase price agreed less $480,000 (being the value of the trade-in).”
This tender was met with silence by Mr Piva. In particular he did not complain that the tender was too soon or that it did not include one or more extra sets of wheels and tyres.
No further tender was made by Sportiva. The varied date for completion of the contract (9 May 2006) passed.
In July 2006, Sportiva sold the car to an overseas purchaser for a lesser sum than the purchase price which Mr Piva agreed to pay. As a result, Sportiva offered to return the 360 NGT to Mr Piva and amended its counterclaim to seek damages for loss of bargain.
Issue 1: Was there a concluded contract?
Mr Piva’s first contention is that he did not agree to buy the car on any terms. He relies upon two arguments. First, that his proposal to buy the car was not an offer but a mere invitation to treat. Second, that any offer to purchase the car was not accepted by Sportiva. I reject each of these arguments.
Mr Piva sent the 9 November facsimile to Mr Coffey at 2.06 pm. This was only 25 minutes after the commencement of the telephone conversation between him and Mr Coffey. At the time of sending the facsimile, Mr Piva telephoned Mr Coffey to alert him to the fact that he was sending it. The conduct of Mr Piva on 9 November objectively demonstrates a very strong desire to purchase the car. In a period of just 25 minutes, he spoke with Mr Coffey on the telephone as set out above, considered the request for an extra $100,000 cash deposit and determined to offer to pay it, prepared the 9 November facsimile, telephoned Mr Coffey to make sure that he knew the facsimile had been sent and in fact sent the facsimile.
I find that Mr Piva intended to create legal relations by sending the 9 November facsimile containing his proposal to purchase the car to Mr Coffey. The objective facts demonstrate that Mr Piva was extremely keen, if not desperate, to purchase the car and that Sportiva wanted to sell it to him. Viewed in this context, the objective purpose of the 9 November facsimile was to communicate Mr Piva’s offer to purchase the car to Sportiva. In reaching this finding, it is unnecessary to take account of Mr Piva’s own view that the 9 November facsimile constituted the terms of his offer to purchase the car. That is obvious from the objective facts, the content of the 9 November conversation and the terms of the 9 November facsimile.
It is next necessary to consider whether the offer contained in the 9 November facsimile was accepted by Sportiva. For the reasons appearing above, I accept Mr Coffey’s evidence of oral acceptance.
Further and in any event, the objective conduct of the parties after 9 November 2005 justifies an inference that the offer contained in the 9 November facsimile was accepted by Sportiva, and the parties thereafter proceeded on the basis that a binding contract existed.[5] In reaching this conclusion, I have taken into account a number of factors, including but not limited to those considered below.
[5]See, for example, Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523.
First, the content of extensive email correspondence between Mr Piva and Mr Coffey in November and December, and the fact that Mr Piva did not challenge Mr Coffey’s email assertions that an agreement existed.
Second, following Mr Piva’s confirmation of the contract in his 22 November 2005 email, he instructed Mr Pratt to apply for finance of $580,000 on the car. Mr Pratt’s written application for finance is dated 24 November.
Third, on 23 November Mr Piva informed his insurance broker Mike Mier that he had sold the 360 NGT and purchased the car. He instructed Mr Mier to remove the 360 NGT from the existing insurance policy and insure the car for $1,378,000.
Issue 2: Was the contract subject to finance?
The next question which I must decide is whether the contract arising from acceptance of the offer contained in the 9 November facsimile was subject to a condition that Mr Piva was only required to purchase the car if he could obtain finance for $580,000 to enable him to purchase the car. Mr Piva contends that his obligation to purchase was subject to such a condition. Sportiva denies this, and contends that Mr Piva was unconditionally bound to purchase the car by paying the purchase price in two instalments. First, an instalment, which the parties loosely referred to as a “deposit”, of $580,000 to be satisfied by trading in the 360 NGT at an agreed value of $480,000 and paying the additional sum of $100,000. It is implicit in this that the chattel mortgage to Adelaide Bank over the 360 NGT was to be discharged to provide clear title to Sportiva. There was no time fixed in the 9 November facsimile for the payment of this instalment. Second, by paying the balance of $798,800 on 3 April 2006; later extended to 9 May 2006.
The issue is whether the obligation of Mr Piva to pay the first instalment of $580,000 was conditional upon Mr Piva first obtaining finance for that amount. This requires the Court to construe the words of the 9 November facsimile as a reasonable person in the position of the parties would understand them to mean.[6]
[6]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].
Sportiva’s counsel submitted that the references in the 9 November facsimile to Mr Piva providing the $100,000 “by HP” and to him obtaining:
“HP on 333 SP at $580,000.00
Michael Pratt
Haven’t confirmed yet. (wait your agreement on terms).
…
At this stage, I have only said 1 HP for $480,000.00”
were not intended to have any contractual effect. It was submitted that these words were included for information purposes only; to inform Sportiva where the money to pay out the existing finance on the 360 NGT was coming from and to pay the extra $100,000 component of the first instalment. Accordingly, the words have no contractual meaning and can be ignored as they form no part of the contract between the parties.
I reject these submissions on behalf of Sportiva. When the relevant words of the 9 November facsimile are read in the context of the document as a whole, and in the light of the objective facts known to both Mr Piva and Mr Coffey, a reasonable person in their position would have understood that Mr Piva was offering to buy the car if he obtained finance for the first instalment of $580,000 on the car. I am of this view for the following reasons.
First, Mr Piva told Mr Coffey in the telephone conversation before he sent the 9 November facsimile that he could only pay the extra $100,000 by increasing the proposed finance on the car from $480,000 to $580,000.
Second, Mr Piva unambiguously stated in the 9 November facsimile that he had not yet confirmed that he could get finance for $580,000 on the car.
Third, Mr Piva unambiguously stated in the 9 November facsimile that he would only instruct Mr Pratt to seek finance for $580,000 on the car once Mr Coffey agreed to the terms stated in the facsimile. The reference to Mr Piva immediately instructing Mr Pratt “to do documents for $580,000” should be understood as Mr Piva stating that, upon acceptance by Sportiva of the terms contained in the facsimile, he would instruct Mr Pratt to make a written application for $580,000 finance on the car.
Fourth, it is important to note that the role of the court in construing a commercial agreement is to proceed in a common sense and non-technical way and give the agreement a commercially sensible construction.[7] Further, the court should strive to give effect, wherever possible, to all of the words used in the agreement “so as to render them all harmonious with one another.”[8] It is only if words in an agreement are so obscure that they can be given no meaning that they can be ignored, as submitted on behalf of Sportiva. I note again that no pleading or submission was put by either party that any contract arising from acceptance of the offer contained in the 9 November facsimile was void for uncertainty or failure to agree upon an essential term.
[7]Hillas & Co Ltd v Arcos Ltd [1932] All ER 494 at 499, 503-4; Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109-10; Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32 at 67; MLW Technology Pty Ltd v May [2005] VSCA 29 at [76]-[81]; Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 770-1.
[8]ABC v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109.
Issue 3: Was Mr Piva excused from performing the contract because he did not obtain finance?
Where a purchaser’s obligation to complete a contract of sale is conditional upon finance being obtained by the purchaser, the purchaser is not obliged to complete the sale unless the condition is fulfilled or waived by the purchaser.[9] However, the vendor’s rights under such a contract do not depend upon “the will or whim of the purchaser irrespective of what his conduct might be.”[10] Implied into the contract is a requirement that the purchaser will take all reasonable steps to obtain the stipulated finance.[11] This requirement has two aspects. Having regard to all of the circumstances of a particular case, the purchaser must act reasonably (1) in endeavouring to obtain finance; and (2) in deciding whether to accept or reject any proposals for finance.[12] It is only the first of these aspects which is relevant in this case, as no offer of finance was made to Mr Piva.
[9]Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 543 per Gibbs CJ; 552-3 per Mason J (dissenting in the result); 556-7 per Wilson J; 565 per Brennan J.
[10]Zieme v Gregory [1963] VR 214 at 223.
[11]Zieme v Gregory [1963] VR 214 at 223; Meehan v Jones (1982) 149 CLR 571 at 588 per Mason J; 598 per Wilson J (Gibbs CJ and Murphy J contra). Given that there is no majority view in the High Court, the decision of the Full Court in Zieme v Gregory continues to bind a single judge in Victoria.
[12]Zieme v Gregory [1963] VR 214 at 223; Meehan v Jones (1982) 149 CLR 571 at 588, 591. It is not necessary for the determination of this case to consider whether the obligation on a purchaser is to act both reasonably and honestly, in respect of one or both aspects.
Before considering whether Mr Piva complied with his obligation to act reasonably in endeavouring to obtain finance, it is necessary to consider the duration of Mr Piva’s obligation. In circumstances where the contract does not stipulate any time for the payment of the first instalment of $580,000 which was to be funded by the finance, when was Mr Piva (assuming he had acted reasonably in seeking finance but without success) entitled to say “I have not obtained finance, the deal is off.”?
During what period was Mr Piva obliged to seek finance?
This question is complicated by the fact that in the conversations between Mr Piva and Mr Coffey on 5 November and 9 November 2005 it was clearly evident that the parties intended that “the balance” of the purchase price would be paid after the first instalment of the purchase price. This is also evident from the 9 November facsimile, which provides that “the balance” of the purchase price will be paid on 3 April 2006.
Mr Piva’s counsel submitted that the Court should determine what, in all the circumstances, was a reasonable time by which the first instalment of the purchase price was to paid by Mr Piva.
Sportiva’s counsel submitted that the time for payment of the first instalment of $580,000, and thus the time for Mr Piva to obtain finance, was the same time as that fixed for completion of the contract by the payment of the balance of the purchase price. This was initially on 3 April 2006, and later extended to 9 May 2006.
Sportiva’s contention was based upon the statement by Lord Jenkins in Aberfoyle Plantations Ltd v Khaw Bian Cheng[13] that:
“But, subject to this overriding consideration, their Lordships would adopt, as warranted by authority and manifestly reasonable in themselves, the following general principles: (i) Where a condition or contract of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date; (ii) where a condition or contract of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time; (iii) where a condition or contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles.”[14] (Emphasis added.)
[13][1960] AC 115.
[14][1960] AC 115 at 124-5.
This passage from Aberfoyle v Cheng was cited in full by both Mason and Wilson JJ in Perri v Coolangatta.[15] Further, this statement by Lord Jenkins was expressly approved by Ormiston J speaking for the Appeal Division of this Court in Australian Mutual Provident Society v Landsa Ltd.[16]
[15](1982) 149 CLR 537 at 549 per Mason J; 558 per Wilson J.
[16][1997] 1 VR 564 at 573-4.
Sportiva’s contention was that general principle (i) as stated by Lord Jenkins is applicable to this case. I reject this submission on behalf of Sportiva. The general principles stated by Lord Jenkins in Aberfoyle v Cheng were subject to an overriding consideration, referred to in the following terms:
“Within what period of time did the agreement... require the condition... to be performed? The answer to that question must plainly depend upon the true construction of the agreement, or in other words, upon the intention of the parties as expressed in, or to be implied from, the language they have used.”[17]
[17][1960] AC 115 at 124.
In this case, the parties obviously intended that the first instalment of $580,000 would be paid prior to completion of the contract, and that Mr Piva would have until this time to obtain his finance for that payment. In these circumstances, general principle (i) stated by Lord Jenkins in Aberfoyle v Cheng is not applicable. It would be inconsistent with the intention of the parties for me to apply this general principle.
Where a condition in a contract imposes an obligation on a party to do an act, but does not specify the time for the act to be performed, the Court will imply a reasonable time for the party to perform the act.[18] Accordingly, the time by which the first instalment of the purchase price was to be paid by Mr Piva, and the period during which Mr Piva was required to make reasonable endeavours to obtain finance for that payment, is to be fixed by reference to what is reasonable in all the circumstances.
[18]Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 at 13; Perri v Coolangatta (1982) 149 CLR 537; AMP v Landsa [1997] 1 VR 564 at 572.
Mr Piva’s counsel submitted that a reasonable time for him to obtain finance for the first instalment expired at Christmas 2005 without Mr Piva having obtained the specified finance. I reject this submission, for the following reasons.
First, the submission that a reasonable time expired at Christmas 2005 was, in substantial part, based upon the dealings between Mr Piva and Mr Coffey in the period between the making of the contract and Christmas 2005. I cannot take this conduct into account. The subsequent conduct of the parties to a contract is irrelevant to the interpretation of its terms.[19] In determining what is a reasonable time, I am engaged in a process of interpreting the terms of the contract, either express or implied.
[19]FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343 at 350-1.
In any event, the subsequent conduct relied upon by Mr Piva is equivocal. It is only natural that Sportiva would seek to obtain payment of the initial instalment of $580,000 as soon as it could, especially where Mr Piva had changed his mind more than once and was demonstrating symptoms of buyer’s remorse. The false deadline which the approach of Christmas imposes upon commercial and other dealings is notorious. I gain no assistance in fixing a reasonable time from the fact that Sportiva was seeking, and Mr Piva was trying to obtain finance for, payment of the first instalment of $580,000 before Christmas 2005.
Second, Mr Piva’s counsel relied upon past experience. It was submitted that the time taken for Mr Piva to obtain finance to enable him to purchase the 360 Challenge and the 360 NGT was relevant, and showed that finance was obtained quickly once applied for. Reliance was placed upon the fact that finance for the 360 Challenge was obtained from Adelaide Bank within 14 days of Mr Piva’s agreement to purchase that car, and formal documents were executed and finance actually advanced only two days later, on 24 December 2004. This showed that finance could be obtained quickly, even in the pre-Christmas period.
It was submitted that the finance for the 360 NGT was obtained in an even shorter time. The formal written application for finance was made to Adelaide Bank on 20 July 2005 and was approved by 29 July 2005. However, this submission ignores the fact that the agreement for the sale and purchase of the 360 NGT was made on 14 April 2005, three-and-a-half months prior to finance being obtained. This delay in obtaining finance was explained by Mr Piva in a witness statement adopted by him in evidence. Mr Piva swore that the finance on the 360 NGT “took several months to come through”. This was in circumstances where Mr Piva was dealing with the same financier who had financed the 360 Challenge and the finance had proceeded in the same manner as he intended for the finance of the car. The finance on the 360 Challenge was, in Mr Piva’s words, “transferred across to the 360 NGT and further finance obtained” for the balance.
In these circumstances, it was to be expected that a substantial delay may be experienced by Mr Piva in obtaining finance on the car. The amount financed on the 360 NGT was $450,000. That finance had taken three-and-a-half months to obtain. Mr Piva was seeking to increase the amount financed from $450,000 to $580,000, in respect of a highly specialised racing car. The size of the transaction and past experience indicated that obtaining finance would be no mere formality. The “transfer” of the existing finance of $450,000 could not be assumed. Any lender would need to consider the circumstances then prevailing, including the current financial position of Mr Piva; his ability to service a debt of $580,000; the fact that the car is a racing car which Mr Coffey described as “a specialised toy”; and other relevant matters ordinarily taken into account by a financier for such a large amount on the security of a motor vehicle, however valuable. All these matters must have been in the contemplation of Mr Piva and Mr Coffey on 9 November 2005. Mr Piva is a solicitor who advises large corporations on commercial matters relating to pathology clinics. He regularly sought finance for himself and his companies.[20] Mr Coffey is an experienced dealer in expensive motor vehicles.
[20]Mr Pratt said he had obtained finance for Mr Piva and his companies on approximately 35 occasions since 1980, mostly for the acquisition of cars or office equipment.
Further, in considering a reasonable time, I take into account the desperation of Mr Piva to purchase the car as at 9 November 2005 and the strong desire of Sportiva to sell it to him, for what on any view was a favourable purchase price yielding it a substantial profit.
In all the circumstances, I conclude that the parties should be taken to have intended that Mr Piva should have the same time to obtain finance for the initial instalment of $580,000 as it took to obtain finance on the 360 NGT. In fixing this as a reasonable time, I have taken into account the interruption caused to ordinary commercial activities over the Christmas period, of about two weeks.
I find that a reasonable time for Mr Piva to obtain finance for and pay the first instalment of $580,000 expired on 23 February 2006.
Did Mr Piva make reasonable efforts to obtain finance?
It is next necessary to consider whether, during the period 9 November 2005 to 23 February 2006, Mr Piva complied with his obligation to act honestly and reasonably in seeking finance for the initial instalment of $580,000. In my view, he did not. Although Mr Piva acted reasonably in his initial attempt to obtain finance, it was unreasonable for him to cease making any effort to obtain finance when he did.
I find that Mr Piva ceased all efforts to obtain finance at or prior to Christmas 2005. By mid-December 2005, Mr Pratt’s application for finance to Adelaide Bank, and his informal inquiries to BankWest and St George Bank had been refused. There is no evidence of any other attempt by Mr Piva himself, or Mr Pratt on his behalf, to seek finance. Mr Piva admitted that his statement to Mr Coffey in an email on 20 December 2005 that he “just got the news from Michael Pratt that he is not too far off completing the payment of $580,000” was a lie. At the time, Mr Pratt had told him that he could not obtain finance. There was no evidence of any efforts to obtain finance after Christmas 2005.
In Zieme v Gregory[21] a contract for the sale of land was conditional upon the purchaser obtaining finance on or before a fixed date for completion. Prior to entering into the contract, the purchaser had made considerable efforts to obtain the stipulated amount of finance from a number of banks and life assurance societies. He also asked his solicitor if he could obtain finance, but without success. However, prior to entering into the contract of sale, the purchaser had made an application to a finance company and was apparently sufficiently confident of obtaining finance that he was prepared to enter into the conditional contract. Eighteen days before the date for completion, the finance company offered to provide the finance. However, the purchaser was not happy with the terms of the offer and rejected it because the interest rate was too high. The trial judge decided that the purchaser gave genuine consideration to this offer. The purchaser took no further steps to obtain finance. He instructed his solicitors that he would not be proceeding with the contract. Twelve days before the date fixed for completion, his solicitors informed the vendor’s solicitors that the purchaser would not proceed with the contract.
[21][1963] VR 214.
The trial judge, Hudson J, stated the issue in the following terms:
“… the question still remains whether the [purchaser] made reasonable endeavours to obtain the loan so as to be entitled to succeed in the contention that the special condition was never fulfilled.”[22]
[22][1963] VR 214 at 218.
Hudson J decided this issue against the purchaser. He held that, by ceasing to make any attempt to obtain finance at the time when he determined to reject the finance company’s offer, the purchaser had failed to act reasonably in seeking finance during the 18 days before settlement. Hudson J concluded:
“I fail to see how it can be said that the [purchaser] made all reasonable efforts when he made no effort whatever.”[23]
[23][1963] VR 214 at 218.
Hudson J then considered whether the purchaser could rely upon the finance condition to escape liability if he established that no efforts on his part would have been successful in obtaining the stipulated finance.[24] Hudson J said that if such evidence had been adduced, it may possibly have provided the purchaser with an entitlement to avoid the contract for non-fulfilment of the finance condition. However, Hudson J found that the evidence adduced by the purchaser fell short of establishing that no loan could have been obtained if reasonable efforts were made and concluded that the purchaser was not entitled to avoid the contract of sale for non-fulfilment of the finance condition.
[24][1963] VR 214 at 218-9.
The matter went on appeal to the Full Court. The appeal was dismissed. The Full Court held that the onus was upon the purchaser to establish that he had taken all reasonable steps to obtain the stipulated finance at or before settlement but that nevertheless he had not obtained it.[25] The finding of Hudson J that the purchaser had not used reasonable endeavours to obtain finance during the period up to the date for completion was upheld.
[25][1963] VR 214 at 223.
The Full Court also upheld the findings of Hudson J rejecting the contention that the purchaser could not have obtained finance, even if he had made reasonable efforts to do so up to the time fixed for completion of the contract. The Full Court refused to draw the inference from the evidence that it was impossible for the purchaser, in the circumstances operating at the relevant time, to obtain the stipulated finance.[26]
[26][1963] VR 214 at 223-4.
In this case, Mr Piva ceased his efforts to obtain finance by no later than 9 January 2006 when he returned from vacation. This was six weeks before the expiry of a reasonable time for him to obtain finance for and pay the first instalment of $580,000, on 23 February 2006. In these circumstances, I find that Mr Piva did not act reasonably in endeavouring to obtain the required finance.
The question remains as to whether Mr Piva has established that any further efforts made by him to obtain finance would have been useless, because it was impossible for him to do so.
Mr Piva’s counsel submitted that the evidence established that Mr Piva could not have obtained finance from any source, even if he had continued to endeavour to do so after 9 January 2006. I reject this submission.
The onus was upon Mr Piva to establish that it was useless for him to continue seeking finance, because it was impossible for him to obtain finance in all of the circumstances.[27] Mr Piva called no expert evidence to satisfy this onus. Instead, reliance was placed upon inferences to be drawn from the responses by banks to the efforts made by Mr Pratt to obtain finance for Mr Piva.
[27]Zieme v Gregory [1963] VR 214 at 223-4; Brauer & Co (Great Britain) Ltd v James Clark (Brush Materials) Ltd [1952] 2 All ER 497 at 501.
The only efforts which Mr Piva made to obtain finance were through Mr Pratt. Mr Pratt’s efforts to obtain finance for Mr Piva were focussed upon Adelaide Bank. Mr Pratt also had one telephone conversation with an officer of each of BankWest and St George Bank in which he gave some explanation of the proposed financing and was immediately informed that the transaction would not be financed. There was no evidence of the positions of these officers within the respective banks, and neither of them was called to give evidence.
The evidence concerning Mr Pratt’s endeavours to obtain finance from Adelaide Bank establishes that Adelaide Bank, through Mr Siokos, was not willing to provide the finance sought for a number of reasons. Although most of these reasons were directly related to the proposed transaction concerning finance of the car, Mr Siokos was also influenced by the fact that he felt Adelaide Bank had probably gone further than it should have in financing the 360 NGT. Mr Siokos is an equipment financier, and I gained the distinct impression from his evidence that he was uncomfortable in recommending that Adelaide Bank provide finance for such a large amount over a racing car. Mr Siokos accepted that he did not know the identity of other financiers who would or may be prepared to provide finance on racing cars. Apart from his dealings with Mr Piva, financing racing cars was outside his experience.
The evidence of Mr Pratt’s approaches to St George Bank and BankWest was scant. Against a background of these banks having had some unspecified prior dealings with Mr Piva, they were informed that Mr Piva was seeking finance, presumably for $580,000, in respect of a Ferrari racing car. On the basis of this information, these banks declined the transaction. There was no other evidence as to the content of these telephone conversations.
I am not persuaded that the evidence concerning Mr Pratt’s efforts to obtain finance provides a sound basis for inferring that Mr Piva could not have obtained finance from any alternative financier. After all, Adelaide Bank had previously provided finance of $450,000 to Mr Piva to enable him to purchase the 360 NGT for $488,000. In these circumstances, I am not prepared to infer, on the basis of incomplete anecdotal evidence, that Mr Piva could not have obtained finance of $580,000 on a car which he was purchasing for the sum of $1,378,000. There was no evidence that the price of the car had been artificially inflated and it was no part of Mr Piva’s case that this was so.
Mr Pratt said that, in his experience, there was a limited number of banks and financial institutions who might be willing to provide finance in respect of racing cars. Of the banks and financial institutions that he dealt with, he considered that only three or perhaps four might have been interested in providing finance for racing cars. When Mr Pratt’s efforts to obtain finance were exhausted, Mr Piva did not seek to utilise the services of any other finance broker. In particular, Mr Piva did not take up the suggestion of Mr Coffey on 16 January 2006 to see if the other finance broker who Mr Coffey said “seems to do a lot of race cars these days” could assist him to obtain finance.
Mr Piva’s counsel criticised Sportiva for not calling this finance broker, or any other evidence, for the purpose of establishing that Mr Piva could have obtained finance. It was submitted on behalf of Mr Piva that the failure by Sportiva to call evidence on this issue was a matter which I should take into account in determining whether to draw the inference that it would have been useless for Mr Piva to continue seeking finance after Mr Pratt had exhausted all of his contacts.[28] Although I accept that the failure by a party who does not bear an evidentiary onus on an issue to call any evidence on that issue may be relevant in determining whether an inference should be drawn from the established facts relevant to that issue, this does not assist Mr Piva’s case. Even taking the lack of evidence from Sportiva into account, I am not prepared to infer that it was useless for Mr Piva to continue seeking finance after 9 January 2006. Although the evidence of Mr Siokos demonstrates that Mr Piva may have had difficulties in obtaining finance, it is another thing altogether to infer that no other financier would have provided finance on acceptable terms. This is especially so in circumstances where the evidence established that Mr Piva had, albeit after a delay of three–and-a-half months, been able to obtain finance for over 90 per cent of the value of the 360 NGT.
[28]Reliance was placed upon Weissensteiner v R (1993) 178 CLR 217.
Issue 4: Has Sportiva lost its rights by a non-conforming tender?
Sportiva’s counsel contend that the tender of the car by Sportiva on 3 April 2006 did not conform with the contract, for two reasons. First, the tender was on the wrong date. The date for completion of the contract had been extended to 9 May 2006 by agreement. Second, Sportiva did not state in its tender that the tender included any extra wheels or tyres.
As appears above, I accept that the contract was varied to extend the completion date from 3 April to 9 May 2006.
As to the issue of extra wheels and tyres, Mr Piva’s counsel submitted that I should find that the contract included two extra sets of wheels and tyres for the car. Sportiva’s counsel submitted that only one extra set of wheels and tyres was included in the contract. As the tender did not expressly include any extra wheels or tyres, it may not be necessary to resolve this dispute.
However, if it is necessary to do so, I am of the view that the contract included only one extra set of wheels and tyres. In his “wish list”, Mr Piva did not use the word “extra”. He referred only to “two sets of OZ wheels” and “new rubber for the Oz wheels”. In the 9 November facsimile, Mr Piva referred simply to “two sets of OZ wheels and Rubber”.
In oral evidence, Mr Piva said that, in the telephone conversation on 9 November 2005 prior to him sending the 9 November facsimile, he explained to Mr Coffey that he was prepared to use the existing wheels and tyres for transporting the car, but he wanted “two new sets of wheels and tyres”. I do not accept this evidence. As I have said, Mr Piva’s evidence concerning this conversation was unsatisfactory in many respects. I do not accept it unless it is consistent with that of Mr Coffey. Mr Coffey denied Mr Piva’s evidence on this issue.
Further, Mr Piva’s evidence in this respect is not in accordance with the probabilities. If Mr Piva had carefully explained that he wanted two new sets of wheels and tyres, in addition to the wheels and tyres already on the car, it is likely that he would have written that down in the 9 November facsimile, which was written by him immediately after the telephone conversation. All that was required was the insertion of one word, “new” or “extra”, before the words “two sets of OZ wheels and Rubber”. The fact that Mr Piva did not insert either word indicates that he was not insisting upon two extra sets of wheels and tyres.
Mr Piva’s counsel submitted that, by tendering the car without any extra wheels and tyres on 3 April 2006, Sportiva demonstrated that it was not willing to perform the contract and was thereby disentitled from relying upon Mr Piva’s failure to complete the contract on 9 May 2006. Reliance was placed upon Bowes v Chaleyer.[29] I reject this submission, for the following reasons.
[29](1923) 32 CLR 159.
In Bowes v Chaleyer, the vendor contracted to supply silk to be sourced in Europe. The contract provided that the silk would be shipped in two instalments. Half was to be shipped “as soon as possible”. The other half was to be shipped “two months later”. In breach of the shipment term, the vendor shipped the silk in three instalments commencing seven months after the contract date. As a result of the vendor’s failure to ship on time, he had incapacitated himself from supplying the silk to the purchaser at the time contemplated by the agreement. The purchaser repudiated the contract prior to the time when the first instalment of silk would have arrived if it had been shipped on time. The vendor did not accept this repudiation and, upon its arrival, sought to tender the silk which had been shipped late. Upon the tender being rejected, on the spurious ground that the contract had been cancelled, the vendor sold the silk at a loss and sued for damages. The vendor’s action failed.
The majority[30] decided that the vendor’s breach of the shipping condition did not disentitle him from treating the purchaser’s false allegation of cancellation as a repudiation and, if he had done so, that he could have successfully sued the purchaser for damages. However, as the vendor had not accepted the repudiation but had proceeded to tender the silk when it finally arrived, the purchaser was justified in refusing the tender.
[30]Knox CJ, Higgins and Starke JJ; Isaacs and Rich JJ dissenting.
The facts of Bowes v Chaleyer are distinguishable from this case. There is no evidence that Sportiva took any action which rendered it incapable of performing its obligations under the contract. The mere fact that Sportiva tendered the car earlier than the varied completion date, without expressly tendering any extra wheels or tyres, does not mean that Sportiva was unable or unwilling to complete the contract in accordance with its terms. It simply made a mistake in its tender, in circumstances where the varied completion date arose from conduct subsequent to the making of the contract. That mistake brought forth no response from Mr Piva, notwithstanding that he had issued proceedings only days earlier. The only effect of the mistaken tender is that Mr Piva was not in breach of contract for failing to complete the contract at that time.
In my view, the issue is covered by the decision of the High Court in Foran v Wight.[31] Where a purchaser under a contract of sale unambiguously informs the vendor that the contract will not be completed on the due date, and the vendor does not accept this repudiation by terminating the contract prior to the completion date, the vendor is not required to tender performance of the contract on the completion date. In a later action for damages for breach of contract, the vendor need prove only that, at the date of repudiation: (1) it had not decided against performing the contract; and (2) it was not incapacitated from performing the contract on the completion date.[32]
[31](1989) 168 CLR 385.
[32]Foran v Wight (1989) 168 CLR 385 at 427 per Brennan J; at 433 per Deane J; at 442, 453-4 per Dawson J.
In this case, by 6 February 2006 at latest, Mr Piva unambiguously said that he would not perform the contract and thereby repudiated it. Indeed, it has been his position throughout that no contract ever came into existence. At this time, Sportiva had not decided against performing its part of the bargain. Nor was it incapacitated from doing so.
Finally on this issue, I note that it was no part of Mr Piva’s case that he would have completed the contract if Sportiva had tendered the car to him on or after 9 May 2006, even if the tender expressly included two extra sets of wheels and tyres. Mr Piva did not at any time after 9 January 2006, at latest, intend to complete the contract. He has at all times maintained the position that there was no contract in existence. Further, he frankly acknowledged that he could not complete the contract because he did not have the finance he needed. Any tender by Sportiva in these circumstances would have been futile.
Issue 5: Is Sportiva estopped from suing for damages?
Mr Piva also pleaded that Sportiva ought be estopped from changing its election to seek specific performance of the contract and suing him for damages. In his defence to counterclaim, Mr Piva alleges that Sportiva is estopped from pursuing a damages case against him in circumstances where it elected to affirm the contract by suing for specific performance; held him out of possession of the 360 NGT in the knowledge that he was incurring finance payments on that vehicle; and reversed its election by selling the car without prior notice to him. Mr Piva’s counsel made no written or oral submissions in support of this pleaded case in final submissions. I take the issue as having been abandoned. However, if that is not so, I am in any event of the view that no such estoppel has been established.
Given Mr Piva’s continued denial that any contract existed, and his consequent continuing repudiation of the contract, there was no point in Sportiva giving Mr Piva a notice to complete the contract before accepting his repudiation. In these circumstances, it cannot be contended by Mr Piva that he relied upon any representation by Sportiva that the contract would not be terminated by reason of his continuing repudiation of, and failure to comply with his obligations under, the contract. When Sportiva accepted Mr Piva’s repudiation by selling the car to an alternative purchaser, it promptly offered to return the 360 NGT to him. In these circumstances, no estoppel arises.[33]
[33]Ciavarella v Balmer (1983) 153 CLR 438 at 447-50.
Conclusion
There will be judgment for Sportiva on its counterclaim for breach of contract. I will hear the parties as to the form of orders and as to costs.
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