Rise Home Loans Pty Ltd v Dickinson
[2009] VSC 555
•30 November 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 8284 of 2009
BETWEEN
| RISE HOME LOANS PTY LTD (ACN 102 670 904) | Plaintiff |
| and | |
| JOHN THURSTON DICKINSON and MEGAN MILICA DICKINSON | Defendants |
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JUDGE: | MUKHTAR AsJ |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 27 October 2009 |
DATE OF JUDGMENT: | 30 November 2009 |
CASE MAY BE CITED AS: | Rise Home Loans v Dickinson |
MEDIUM NEUTRAL CITATION | [2009] VSC 555 |
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CONTRACT − Sale of land − Novation − Nomination clause − Named purchaser makes nomination of substitute purchaser −Allegations of tortious and contractual wrongdoing against vendors − Whether nominee can sue − Legal effect of nomination.
DAMAGES − Breach of contract − Tort − Causation − Alleged misdescription of land − Adverse possession claim − Purchaser’s own knowledge of discrepancy between fencing and title boundary − Vendor’s summary judgment application − Sustainability of purchaser’s claim
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G D Bloch | Zaitman Lawyers |
| For the Defendants | Mr T J Scotter | Hogan Dodds & Moore |
HIS HONOUR:
This case concerns a contract for the sale of residential land. There are two applications before the Court. First in time is a summons filed by the defendants on 1 October 2009 who, as vendors, are seeking summary judgment under rule 23.01 (for not disclosing a cause of action) and rule 23.03 (a good defence on the merits), or alternatively, a strike-out of the statement of claim under rule 23.02. The plaintiff then made a cross application by summons filed 22 October 2009 to allow the joinder of Evgeni Skliar as an additional plaintiff.
The plaintiff contends that the joinder will, with other considerations, overcome the attack made by the defendants. The defendants contend that the joinder will serve no utility because the case cannot succeed anyway. There was substantial argument which raised issues concerning the proper construction of a nomination clause in contract for the sale of land; the law of novation in contract; and causation and reliance.
The starting point, naturally, is the statement of claim in its existing form. It is
inelaborate. The plaintiff (“Rise Home Loans”) alleges that by a contract of sale of real estate made between itself and the defendants dated 19 August 2006, it agreed to buy and the defendants agreed to sell the land at 5 Canberra Close, Beaumaris. It alleges that prior to entering into the contract the defendants made these representations −
“3.1that there was no discrepancy between the title boundaries of the land and the boundaries of the property as occupied by them;
3.2that no other person could maintain any claim to any part of the land; and
3.3that they could convey to the Plaintiff the whole of the land free from any claim by any other person to any part thereof.”
It is alleged those representations were made by the vendors or are “reasonably to be inferred” in their answers to requisitions on title number 3. The requisitions formed part of the contract of sale documentation. The statement of claim goes on to allege that the representations were made by the defendants “wilfully intending” that the plaintiff should rely on their truth and accuracy; and the defendants had a duty to the plaintiff to take reasonable care in making the representations. The plaintiff alleges that it then relied upon the truth of the representations in making the contract.
Rise Home Loans further alleges that the representations were “false inaccurate and untrue and/or were known by the Defendants to be false inaccurate and untrue”. These are the particulars of that allegation under paragraph 7 −
“Part of the land (along the rear boundary of the land) has been acquired by Alma Dorothy Chambers by adverse possession and the Plaintiff’s title thereto has been extinguished. The Plaintiff therefore purchased from the Defendants land to which the Defendants were not entitled and/or which was subject to such acquisition and extinguishment and the Plaintiff has been deprived of same despite having paid valuable consideration therefore. That the falsity of the representations was known to the Defendants when they were made is reasonably to be inferred from an affidavit sworn by the first Defendant in support of an application by the said Chambers to acquire the said part of the land and filed in proceeding No CI-08-02780 issued out of the County Court of Victoria at Melbourne a copy of which may be inspected at the Plaintiff’s solicitors’ offices by appointment.”
These particulars could have elaborated on the facts much more. There is no evidence adduced in these current applications about the County Court proceedings to better understand those circumstantial facts. However, I shall expose later the important objective facts adduced by the defendants to understand the dealing and, more importantly, the contract itself and the state of knowledge of Rise Home Loans about the title boundaries and the location of the fencing.
The plaintiff alleges deceit, as well as a negligent misstatement. To allege deceit is to allege fraud. The elements of the modern tort of deceit were considered by the High Court in Magill v Magill.[1] The tort has generally had a close connection with a contractual situation, usually in cases of pre-contractual misrepresentation. Thus, it is not surprising to find the second cause of action in this case is pleaded in contract, again based on the answers to requisitions. It is alleged that it was a term of the contract that the defendants would convey to the plaintiff the whole of the land free from any claim by any other person and, in breach of such a term, the defendants conveyed the land, but not the whole of it, because it was lessened by the segment over which the neighbour has adverse possession.
[1](2006) 226 CLR 551 at 567, 587, 597 and 609.
The plaintiff claims it has lost $9,800 being the value of the land acquired by adverse possession. It also claims these other losses:
“Legal costs of proceeding No. CI-08-02780 (thrown away
to date and continuing) $31,618.36
Cost of redrawing building plans necessitated by the said
acquisition of land $ 1,850.00
Losses occasioned by the delay in redevelopment caused by
the said County Court proceeding $1,500.00”
As I have said, the defendant adduced evidence, as it is entitled to do on these applications[2]. This evidence was not disputed and is as follows. First of all, the contract was put into evidence.[3] The contract is a standard form as published by the Law Institute of Victoria and the Real Estate Institute of Victoria Ltd. It shows that Rise Home Loans is certainly not the named purchaser. It identifies the purchaser as “Evgeni Skliar & Or Nominee”. The price was $1,382,500 and a five per cent deposit of $69,125 was payable on signing.
[2]See Rule 23.04.
[3]The contract is exhibit DAT-1 to the affidavit of D A Tunnock, sworn 1 October 2009.
Clause 5 of the General Conditions states:
“If the contract says that the property is sold to a named purchaser “and/or nominee” (or similar words), the named purchaser may, at least 14 days before settlement date, nominate a substitute or additional purchaser, but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract.”[4]
[4]14 days was enlarged to 21 days under Special Condition 13.
Clause 8 of the vendor’s statement given under s 32 of the Sale of Land Act, says that the purchaser is deemed to have duly delivered requisitions and objections in the form currently published by the Law Institute of Victoria. Requisition number 3 asked “Is the vendor aware of any discrepancy between occupation and title? If so, particulars must be supplied.” The answer given was “Not to the Vendors’ knowledge”.
The following facts are critical. The contract was dated 19 August 2006 and was signed after a public auction that day. Completion was due on 15 December 2006. Not long after signing the contract, a plan of survey for the property dated 1 September 2006 was obtained by Skliar or the plaintiff.[5] Apart from the street frontage, it shows the paling fence around the property is not aligned with the title boundary. More pertinently, it shows that on the western boundary the rear fence is inside that boundary and is marked with the words “recent palings” as distinct from the words “old palings” on the other boundaries. The plan is not to scale but I am told the fence is inside the boundary by about 30 centimetres.
[5]See exhibit DAT 2.
Thus, the defendants say after the alleged representations were made, but before completion of the contract, the plaintiff knew the true state of the relevant boundary and settled the purchase of the property despite being under no obligation to do so in full knowledge of the correct title boundaries of the land.[6] The plaintiff does not dispute that it knew of the misdescription prior to settlement.[7]
[6]See the defence at para 9.
[7]See the letter which is exhibit DAT 8, at para 7.
The next relevant event occurred on or about 5 December 2006. On that day, the lawyers acting for the named purchaser, Skliar, said in a letter to the defendants’ conveyancing lawyers[8] −
[8]See exhibit DAT 3.
“We refer to your telephone conversation with the writer today and confirm that we act for the Purchaser, Evgeni Skliar.
We advise that the Purchaser has nominated a subsequent Purchaser being Rise Home Loans Pty Ltd.
Please find enclosed Transfer of Land for the attention of the Vendor as well as a copy SRO Form 6A for your information and records.”
The instrument of transfer named Rise Home Loans as transferee. The Form 6A is a statutory declaration that must be completed under the Duties Act if the vendor is to transfer the property not to the person with whom the vendor made the contract, and that includes a person by nomination. Part 4 of the form identifies Rise Home Loans as transferee.
Evgeni (or Eugene) Skliar is the sole director and secretary of Rise Home Loans.[9] The company is a trustee of the Skliar Family Trust of which Evgeni Skliar is a specific beneficiary.[10]
[9]See exhibit ZL 3 to the affidavit of C Harkin sworn 23 October 2009..
[10]See affidavit of C Harkin sworn 23 October 2009.
Completion of the contract occurred on 15 December 2006. Rise Home Loans paid the balance of the purchase price at completion and mortgaged the land to obtain those funds.[11] The transfer to the plaintiff was registered on 1 February 2007.[12] The land was subsequently subdivided by the plaintiff into four separate lots under a plan of subdivision which was made on 9 November 2007.[13] It appears from the title search that the plan was registered and the original certificate of title for the property was cancelled on 16 January 2008.
[11]See affidavit of C Harkin para 3.
[12]Exhibit DAT 4.
[13]Exhibit DAT 6.
The statement of claim does not say much about the County Court proceedings. In argument, the proceedings were said to have been commenced in 2008 and I see reference in the particulars to the proceeding number CI-08-02780. The defence in this proceeding says
“The reason for the plaintiff [Rise Home Loans] incurring costs in the proceedings issued in the County Court of Victoria was the plaintiff’s own unreasonable decision to issue the proceedings for which the defendants are not responsible.”
I gather that Rise Home Loans, seeking to develop the land, brought an action in trespass over the “slither” of land against the neighbour on the western boundary, which was resisted by the neighbour Alma Chambers claiming she obtained title to that area by adverse possession. That would mean the factual question of the historical location of the fence line was an issue.
The statement of claim alleges, in particular, that the first defendant in these proceedings, John Dickinson, swore an affidavit giving evidence about the construction of the “new palings” fence being along the same line as it had previously been constructed. I take it such evidence would have supported the neighbour’s case that the fence line remained as it was for the relevant statutory period.
John Dickenson obviously knew where the fence line was but so did Evgeni Skliar; and the plan told him it diverged from the title boundary. The requisition asked if there was a discrepancy between occupation and title. There is no allegation, and there is no evidence, that the defendants sold this land to Skliar knowing of the facts giving rise to an adverse possession claim or knowing there was a prospective adverse possession claim by the neighbouring owner on the western side.
The nomination clause
The first issue concerns the construction and effect of the nomination clause. The defendants contend that the plaintiff was not at law a party to the contract of sale of land. That is, the exercise of rights by Skliar under the nomination clause does not create a novation under which the plaintiff can sue or be sued. They say the plaintiff’s case is materially identical to the claim dismissed by Judd J in 438 Little Bourke Street Pty Ltd v Lonsdale Street Café Pty Ltd.[14] That case did indeed concern the very same General Condition 5 as is present in this case, and the question for determination was stated precisely to be: Does a nomination, authorised under the contract, cause the additional purchaser to become a party or in the case of a substitute purchaser, a party in lieu of the purchaser?[15] His Honour held that the nominee does not become a party to the contract and gave summary judgment to the vendor.
[14][2009] VSC 133.
[15]See [2009] VSC 133 at [34].
In so holding, his Honour observed that the contractual power for the named purchaser to “nominate a substitute or additional purchaser” is qualified by the words “but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract.” His Honour held that those words reveal an intention of the contracting parties that there be no change in the identity of the parties to the contract or their respective obligations.
His Honour applied the exposition of the law by Nettle J in Commissioner of State Revenue v Politis[16] that the effect of most nomination clauses is no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser’s nominee. In that case it was said−
[16][2004] VSC 126, 11.
“Plainly, however, under most nomination clauses the nominee would not acquire any rights as against the vendor, let alone the rights of the purchaser; for most nomination clauses constitute no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser’s nominee….But the nominee does not acquire any rights as against the vendor, because the nominee is not privy to the contract. And for the same reason, the nominee has no standing in equity to obtain an order for specific performance of the contract. He must sue in the name of the purchaser or join the purchaser as a defendant. Therefore, such if any interest as the nominee may have in the land is one which derives from the purchaser, and relevantly the most that can be said is that the nominee may acquire an interest in the land equivalent to that which the purchaser had or would have had under the contract of sale.”
Before then, in Salter & Ors v Gilbertson & Ors[17] Phillips JA in the Court of Appeal said plainly −
[17][2003] VSCA 1, 17.
“As has been pointed out often enough, although it must be so if the contract so demands, it is a strong thing to regard the words “or nominee” as authorising [the named purchaser], unilaterally and in his or her own absolute discretion, to nominate a purchaser to stand in the place of [the named purchaser], with all the attendant consequences for [the seller]. For such a construction “compelling language” is required . . . “
To my mind, this is an illumination of the meaning of novation in contract. It is a new agreement made in place of the original agreement. Faithful to the objective theory of contract, there must be a demonstrated intention by the parties that some new contract with consideration is substituted for the previous contract, the consideration usually being the discharge of the old contract.[18]
The ordinary rule is clear, but Mr Bloch of counsel who appeared for the plaintiff sought to distinguish the decision in 428 Little Bourke Street. Mr Scotter of counsel for the defendants said the case was indistinguishable on this issue as well as on the other issues of reliance and causation.
First, it was submitted by the plaintiff that the facts of the present case were distinguishable because in 428 Little Collins Street, there was a nomination form signed by the named purchaser which said −
“As the property is expressed as sold to the purchaser “and/or Nominee” (or words of like effect) then pursuant to the conditions of the contract the purchaser nominates the Nominee as substitute purchaser to take a transfer or conveyance in lieu of the purchaser.” .
25. Judd J said that if there was any doubt about the effect of General Condition 5 they were removed by the words of the nomination form “substitute purchaser to take a transfer or conveyance in lieu of the purchaser”. Mr Bloch submitted that no such nomination form was used in this case, and the most that was said in the letter of 5 December 2006 was that “the purchaser has nominated a subsequent purchaser being Rise Home Loans Pty Ltd”.
[18]See generally Cheshire v Fifoot’s Law of Contract (9th Aust ed) at 374-376, and Olsson v Dyson (1970) 120 CLR 365 at 388-389.
Allied with that submission, evidence was adduced that, before signing the contract, Skliar told the vendor’s real estate agent that he wanted the words “and/or Nominee” put after the reference to the word “Purchaser” in the contract “as he was in the process of incorporating a trustee for his family trust and that he would procure the trustee to complete the purchase of the property.”[19] (Yet, the ASIC company search shows the plaintiff was registered on 30 October 2002,[20] and the deed of trust establishing the Skliar Family Trust was dated 7 November 2005.[21]) It was submitted that the conversation and the letter showed that plaintiff should not be regarded as a person who was only to take a transfer or conveyance.
[19]See para 6 of the affidavit of C Harkin sworn on 23 October 2009.
[20]Exhibit ZL 3.
[21]Exhibit ZL 2.
I reject that submission. That is, for summary judgment purposes I regard it as unsustainable. The conversation, exiguous as it is, does no more than explain the handwritten insertion of the words “and/or nominee” in the Particulars of Sale which then is referable to General Condition 5 and from there, the ordinary legal rule about the effect of a nomination clause comes into play. That conversation does not demonstrate an intention, let alone a mutual agreement, that a new purchaser could be introduced in place of Mr Skliar as named purchaser so as to amount to a novation. It is the same for the letter of 5 December 2006.
I do not regard the nomination form used in the 428 Little Collins Street case as somehow especially attracting or informing the ordinary legal rule or confining that case to its own facts. In my respectful opinion, Judd J was doing no more than saying the nomination form in that case exemplified the ordinary rule, not that there was room for doubt about the ordinary rule.
Secondly, counsel focussed on the words “a substitute or additional purchaser” appearing in General Condition 5. He submitted that Judd J erred by not perceiving that the qualifying words in the nomination clause were capable of more than one construction. He submitted that it was open to contend that the word “substitute”, if given its usual or ordinary meaning, suggests an intention on the part of the contracting parties that there may be a future nomination of a party to take the place of the original purchaser. Likewise, he submitted that words “additional” suggests an intention by both parties that there may be a future nomination of a party to stand alongside the original purchaser. Counsel also submitted that the qualifying words in General Condition 5 which stated that the original purchaser would “remain personally liable for the due performance of all the purchaser’s obligations under this contract”, were akin to words of suretyship.
For this second submission, reliance was placed on the decision of Finkelstein J in Avzur Hotels Pty Ltd v Ivanhoe Entertainment Pty Ltd.[22] That case concerned a nominee’s standing to sue for breach of warranties in a contract for the sale of a business. As I comprehend that case, it avows the ordinary rule that when a purchaser is described as “A or his nominee”, A is treated as having the power to nominate the person to whom the property purchase is to be transferred but the nominee does not become a party to the contract, much less a party with the rights and obligations of the purchaser.[23] His Honour did acknowledge that a contract may permit the purchaser to nominate a person that will stand in his place as the purchaser but, of course, under a novated contract. On the documents peculiar to the transaction in that case, the Court decided that it was “clear” that the nominee was intended to be a substitute purchaser with all rights and obligations attached to that position.[24]
[22](2009) 257 ALR 498.
[23](2009) 257 ALR 498 at [9].
[24](2009) 257 ALR 498 at [13]
In my view, the decision in Avzur Hotels is faithful to the principle applied in 428 Little Bourke Street. It is but an instance where a nomination clause together with other clauses truly and “clearly” revealed an intention to substitute a purchaser as the contracting party. Otherwise, the ordinary rule, which has been recognised by this Court as having a sound authoritative basis, has been pronounced in terms that dispose of the ambiguity that counsel now says inheres in the language of the nomination clause. Accordingly, I regard the second submission as unsustainable.
Thirdly, counsel submitted that there was a significant procedural distinction to be made. In 428 Little Bourke Street, the vendor’s application for summary judgment against the nominee purchaser was not met with the reciprocal application by the nominee for joinder of the original purchaser as a plaintiff, as has happened here. That is true. But I do not think that alters the analysis. The question for determination was the legal effect of the nomination clause. The possible joinder of the named purchaser does not change the legal analysis. Indeed, it conforms to it because it is recognition that the nominee purchaser does not have standing to sue unless the action is brought in the name of the original purchaser.
Fourthly, an argument was put that there was a novation by industry standard or custom. Over objection, this written submission was made (footnotes omitted):
“10. …Wikramanayake SC, the editor of Voumard The Sale of Land, suggested 23 years ago that in order to bind a vendor and a nominee purchaser, provision should be made in the original contract of sale that the vendor execute a substitute contract with the person nominated.In 2008, Wikramanayake SC conceded that the legal profession had not adopted that practice.It is strongly arguable that the legal profession has not done so because it has become usual conveyancing practice, despite historical black letter contract law, that a nomination, if acquiesced to by the vendor (as has occurred in this case), does render the nominee a party to the contract and/or amount to a novation, especially where the nominee has actually performed part or all of the contract, for example, by paying the balance of the purchase price (as has also occurred in this case – the Plaintiff did not simply take a conveyance of the property, it settled the purchase).
11.The vast majority of lawyers and conveyancing clerks, whether they act for the vendor or the purchaser, do indeed regard a nominated purchaser as a party to the contract (although this is anecdotal as there are no statistics, some support is given by Wikramanayake’s concession above). Even more importantly, parties so nominated regard themselves as becoming privy to the contract as do vendors.”
I regard this submission as untenable. Even acknowledging this renowned work, the Court can only act in accordance with legal principle and not anecdotes or mere assertions about other people’s beliefs or assumptions. Further, I see no basis for a possible argument that such a term is to be implied on the basis of custom usage. A term may be implied in a contract as a matter of mercantile usage or professional practice: see Hawkins v Clayton [25] and Byrne v Australian Airline Ltd [26]. However, the custom is a question of fact and there must be evidence that it is so well known and acquiesced that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract: see Con–Stan Industries v Norwich Winterthur Insurance[27] and Byrne v Australian Airline Ltd[28]. There is no basis for alleging that at the time of making the contract, Skliar and the estate agent were knowingly proceeding on the basis of this professional practice, assuming that it exists.
[25](1988) 164 CLR 539 at 573.
[26](1995) 185 CLR 410 at 440.
[27](1985) 160 CLR 226 at 236-7.
[28](1995) 185 CLR 410 at 440.
Finally, it was submitted that there could be an implied novation but the facts concerning the implied novation could only become clear after discovery of the defendants’ own conveyancing file. It was submitted that, at the very least, the Court should permit the plaintiff to obtain the conveyancing file by discovery before ruling on the point adversely to the plaintiff.
This was dealt with by the defendants making the conveyancing file available to the plaintiff at the hearing of these applications. The Court acceded to a request that after the conclusion of submissions the parties should, by consent, produce to the Court any documents from the conveyancing file on which they would seek to rely. For convenience, attached to this judgment is a schedule of the documents that I have examined. The defendants’ primary submission was that none of these documents assist the Court in interpreting the contract and should not be relied upon.
The plaintiff relies upon two documents. First, there is the letter of 5 December 2006 to which reference has already been made. Secondly, it relies upon a letter dated 20 December 2006 from the defendants’ conveyancing solicitors to the City of Bayside which enclosed a Goods Statement for Residential Land. Part V of that document asks the notice giver to attach the original or a complete copy of the Contract of Sale. The form gives the name of the vendors, the names of the defendants and it identifies the purchasers in the contract to be Rise Home Loans.
I think it is unconvincing and forensically dubious to seize upon incidental references in a conveyancing file to the name “Rise Home Loans” after a nomination has occurred, so as to then infer a mutual intention that there was a novation. There are more documents in the conveyancing file tendered by the defendants which refer to “Skliar” as the purchaser. I think the reference to Rise Home Loans to local authorities is explicable as identifying the transferee for rating and regulatory purposes. In my view, none of the conveyancing documents advance the case for Rise Home Loans.
To close on this topic then, it can be accepted that 428 Little Bourke Street was not purporting to utter an edict concerning the construction of General Condition 5 in every case. Its worth lies in both the fact that it was exactly the same nomination clause as in this case and that it was also a summary judgment case. The plaintiff must overcome the ordinary rule and demonstrate by clear language elsewhere in the transaction documents, or objectively otherwise, that all parties intended that there be a new and different purchaser to stand legally in place of the named purchaser. This has simply not been shown. For the same reason, the fact that the plaintiff paid the balance of the purchase price and arranged for the mortgage does not bespeak a novation. The Court is concerned only with legal relations between the named purchaser and the vendors. Any arrangements as between named purchaser and nominee purchaser, unless referable to a novated agreement, do not of themselves establish a novation.
The joinder application
Evgeni Skliar consents to being joined as a plaintiff to these proceedings. Does that solve the problem and overcome the defendants’ application?
If joined, the plaintiff proposes to amend its statement of claim to allege the contract was made between Skliar and the defendants. It then alleges “further and in the alternative” there was a novation of that contract on about 5 December 2006.[29] These are the particulars of the novation agreement:
“The novation agreement was partly in writing and partly to be implied. Insofar as it was in writing, it was contained in a written notice of nomination which may be inspected at the Plaintiff’s solicitors’ offices by appointment. Insofar as the novation agreement was to be implied, it was to be implied by usual conveyancing practice which recognises that a nominated purchaser succeeds to the rights and obligations of the purchaser and by the vendors’ acquiescence or agreement to the nomination particulars of which will be provided after discovery.”
[29]See exhibit CH 2.
The formulation of the existing claims in tort and contract are largely unmodified but are expressed in the plural, with the loss and damage said to have been suffered by both plaintiffs. The representations made by inference from the requisitions on title are alleged to have been made to both plaintiffs. Paragraph 6 of the proposed pleading alleges: “Relying upon the truth of the representations and induced thereby the second Plaintiff entered into the contract of sale and the first Plaintiff agreed to be nominated as purchaser as aforesaid.”
The particulars of the novation do not contain new facts. For reasons already given, I view the case for a novation as unsustainable. Both plaintiffs allege they have suffered the same loss and damage, yet the evidence is that Rise Home Loans completed the purchase and became registered proprietor; and the losses as particularised were suffered not by Skliar but by Rise Home Loans as the person who paid for and developed the property and brought the County Court proceedings.
This analysis, I think, answers Mr Bloch’s earnest submission that there was a striking injustice or an absurdity if people in the position of the defendants could escape (allegedly) deceitful conduct and not be answerable for it because Rise Home Loans was only a nominee and Skliar did not himself experience the losses suffered by Rise Home Loans.
I do not think this is so. First of all, just because the first defendant has sworn an affidavit that the fence line remained the same, does not therefore falsify, or make negligent, the answer to the requisition on title. He has stated a physical fact. It is not alleged he had knowledge that someone else had title by adverse possession. Secondly, the submission overlooks the causation question. There is no injustice or absurdity if an important pre-contractual representation is made which the recipient soon discovers is untrue yet nevertheless proceeds, not under compulsion but by choice, to complete the contract. Skliar obtained a Plan of Survey and it was plain to see that the rear boundary fence was inside the title boundaries of the purchased property. That means, to follow the language of requisition number 3, Skliar was aware of a discrepancy between occupation and title.
The defendants contend the facts fall squarely within the legal determination of causation made in 428 Little Bourke Street. In that case, the misrepresentation concerned the true lettable area of the property. There was no doubt in that case that by the time the plaintiff paid the cost and took the conveyance it was aware of the true lettable area of the property, yet it proceeded to completion.[30] That claim was brought under s 52 of the Trade Practices Act for damages under s 82 of that Act but the underlying legal conception was the same as emerges here. That is, there has to be some connection between the wrongful conduct (the misrepresentation) and the loss.
[30]See [47].
In 428 Little Bourke Street, the issue for determination was expressed as follows: does the nomination of the plaintiff in the absence of any contractual obligation enable it to claim damages for having paid more than it contends the property is worth? A similar situation arises here. Rise Home Loans was the nominated party. It paid for and completed the sale. It is developing the land. It brought the proceedings in the County Court and incurred expenses for which it claims damages. If there was a novation, then it is the contracting party who may bring an action for breach of contract, or in tort, and have to prove causation. If there was not a novation, then the question is whether Skliar, as the contracting party, can bring an action for the losses which it appears Rise Home Loans has suffered, not him. In both cases, Skliar and Rise Home Loans knew the situation about the fencing and the title boundary.
I think it helps to appreciate the reasoning in 428 Little Bourke Street when Judd J came to expose the difference between a volunteer and a non-volunteer nominee. If a nominee makes an informed decision to pay for the property and take a transfer knowing the true state of the boundaries then it suffers no loss. If a nominee is acting in an involuntary way, that is, caused by its directors or shareholders to become the nominee and complete the purchase in a situation where those obtaining the nomination know the true facts and instil them into the nominated company, then any loss to the nominated company is caused by the nomination, not by the representations.
Although there is an attraction to expeditious finality in modern litigation, great caution has to be exercised unless it is clear the case is hopeless: see Webster v Lampard.[31] But I find myself unable to distinguish 428 Little Bourke Street and if I had to consider how a single Judge at trial would view the matter, I would presume to say that on these confined facts there is no basis to view the decision in 428 Little Bourke Street as erroneous and decline to follow it. Therefore, as there are no operative facts in dispute, there is no barrier to a Court summarily deciding legal questions, more so if substantial argument has taken place.
[31](1993) 177 CLR 598 602-3.
Although put on various heads under the Rules, in my view this is not an application to be decided under Rule 23.02, the purpose of which is to secure compliance with the rules of pleading. It therefore has to come under either 23.01 (that the case is bad in law) or under 23.03 (that there is a good defence on the merits). In my view, the latter is applicable.
Accordingly, I would grant the defendant’s application by summons filed 1 October 2009 and order that there be judgment for the defendants. Consequentially, I would dismiss the plaintiff’s summons filed 22 October 2009. I will hear counsel on the question of costs.
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SCHEDULE
DOCUMENTS FROM DEFENDANTS’ CONVEYANCING FILE
PART A –TENDERED BY THE PLAINTIFF
Letter dated 20 December 2006, from Carol Tunnock to South East Water with headline “Dickinson to Rise Home Loans Pty Ltd”.
Letter dated 20 December 2006, from Carol Tunnock to City of Bayside with headline “Dickinson to Rise Home Loans Pty Ltd”.
State Revenue Office printed form entitled “Goods Statement for Residential Land”.
Letter dated 5 December 2006, from Anthony Peterson & Co Pty Ltd, Lawyers, to Ms Carol Tunnock.
PART B – TENDERED BY THE DEFENDANTS
Letter dated 20 December 2006, from Carol Tunnock to the defendants with headline “Sale to Skliar”.
Document entitled “Statement of Monies… Dickinson from Skliar … “.
Printed form: “Notice of Disposition of an Interest in Land”.
Printed form: “Transactions Treated as Sub-Sales of Land … Statutory Declaration”.
Document entitled “Settlement Instructions” with hand written insertions.
Document entitled “Anthony Peterson & Co … Statement of Adjustments … Skliar Purchase from Dickinson …”.
Letter dated 15 December 2006, from Carol Tunnock to Hocking Stuart (BSM) Pty Ltd with headline “Dickinson to Skliar”.
Letter dated 13 December 2006, from Carol Tunnock to Anthony Peterson & Co Pty Ltd with headline “Dickinson to Skliar”.
Facsimile transmission dated 11 December 2006, from Anthony Peterson & Co Pty Ltd to Carol Tunnock with subject headline “Skliar Purchase from Dickinson” together with draft statement of adjustments.
Letter dated 7 December 2006, from Carol Tunnock to defendants with headline “Sale to Skliar”.
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