SERVAC Nominees Pty Ltd T/as trustee for P and G Versace Family Trust v DALEMOSS Pty Ltd

[2000] WADC 37

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   SERVAC NOMINEES PTY LTD T/AS TRUSTEE FOR P & G VERSACE FAMILY TRUST -v- DALEMOSS PTY LTD & ANOR [2000] WADC 37

CORAM:   GROVES DCJ

HEARD:   7 FEBRUARY 2000

DELIVERED          :   10 FEBRUARY 2000

FILE NO/S:   CIV 3602 of 1997

BETWEEN:   SERVAC NOMINEES PTY LTD T/AS TRUSTEE FOR P & G VERSACE FAMILY TRUST

Plaintiff

AND

DALEMOSS PTY LTD
First Defendant

CAPITAL WEST FINANCE PTY LTD
Second Defendant

Catchwords:

Practice and Procedure - Summary judgment - Application by second defendant - Turns on own facts.

Legislation:

Nil

Result:

1. The Second Defendant's appeal on application for summary judgment be dismissed.

2. The Second Defendant's appeal on costs of the application for summary judgment be allowed.

Representation:

Counsel:

Plaintiff:     Mr M N Solomon

First Defendant             :     Ms J A Thornton

Second Defendant         :     Mr M C Hotchkin

Solicitors:

Plaintiff:     Gadens Lawyers

First Defendant             :     Freehill Hollingdale & Page

Second Defendant         :     Hotchkin Hanly

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

Dey v Victorian Railways Commissioners (1949) 78 CLR 62

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21

Hazart Pty Ltd v Rademaker (1993) 11 WAR 26

Hunt v Knabe (No 2) (1992) 8 WAR 96

Whitehall Holdings Pty Ltd v Ravi Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 920347; 19 June 1992

Case(s) also cited:

Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332

Connor v Pukerau Store Ltd [1981] 1 NZLR 384

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd, unreported; FCt SCt of WA; Library No 970739; 23 December 1997

Di Lione v Turco [1982] Qd R 224

Erley Pty Ltd v Gunzburg Nominees Pty Ltd [1998] WASTA 75

Katz v Jones [1967] NZLR 861

Meehan v Jones (1982) 149 CLR 571

Theseus Exploration NL v Foyster (1972) 126 CLR 507

1. GROVES DCJ:  The second defendant made application for summary judgment pursuant to O16, r1 of the Rules of the Supreme Court.  On 28 October 1999 the learned Deputy Registrar ordered:

   "1.The second defendant's application for summary judgment be dismissed.

   2.The second defendant pay the plaintiff's costs of the application for summary judgment in any event."

2. The second defendant now appeals against both of those orders.  As this is an appeal from a Deputy Registrar it is a hearing de novo; Hunt v Knabe (No 2) (1992) 8 WAR 96; Hazart Pty Ltd v Rademaker (1993) 11 WAR 26. Each party to the appeal relies on evidence which was before the Deputy Registrar in affidavit form.

3. The facts are common ground and insofar as they are relevant to this application they are as follows.

4. By a contract dated 12 October 1994 the plaintiff contracted to purchase a property at Wembley for $245,000.  The contract was the standard form REIWA Contract for Sale of Land by Offer and Acceptance.  The contract was subject to the plaintiff obtaining finance through Capital West Finance (the second defendant) on or before 14 days from acceptance, in the sum of $125,000.  The contract states:

   "CONDITIONS

   1. (1.1)This contract is conditional upon the undermentioned Lender(s), or any other Lender(s) acceptable to the purchaser approving on or before the latest date for approval the granting to the Purchaser of a Loan(s) of an amount not less than the amount(s) specified below ("the Loan").

   (1.2)The Purchaser shall;

   (a)use the Purchaser's best endeavours to obtain the Loan; and

   (b)at any time before or within seven (7) days after the latest date for approval upon demand in writing by the Vendor or the Vendor's agent provide to the Vendor evidence in writing of the making of and date of a bona fide application for the Loan by the purchaser stating the name of the Lender(s).

   (1.3)If by the latest date for approval the application for the Loan is approved the purchaser shall immediately notify the Vendor or the Vendor's agent in writing of that approval."

5. By facsimile dated 26 October 1994 the second defendant notified the Vendor's agent:

   "We confirm as licensed finance brokers acting on behalf of Servac Nominees Pty Ltd for the purchase of the abovementioned property, finance approval.

   Funds will be provided on clear title being provided at settlement.  Please confirm settlement date in due course.

   Thanking you for your assistance."

6. This advice constituted the requisite notice as prescribed by Condition (1.3).

7. The plaintiff's finance however had been approved subject to various conditions including the need to obtain a valuation satisfactory to the lender of the funds.  The first defendant provided a valuation dated 16 November 1994 which was satisfactory to the lender.  Settlement on purchase of the property took place on 14 December 1994.  Soon after settlement problems in relation to the property arose including the failure by one of the tenants to pay rent.  The plaintiff subsequently received advice that the property was over‑priced and that the valuation given on the property by the first defendant was too high.  The plaintiff brought proceedings against the first defendant alleging that the first defendant had negligently over‑valued the property.  The valuation was in fact received by the plaintiff some time after the notice was given to the vendor of finance approval.  The first defendant says that the contract had become unconditional as to finance when notice was given to the vendor.  Aware of the first defendant's contention the plaintiff joined the second defendant as a party to the action and claims that if the contract had become unconditional (as the first defendant contends) the second defendant is liable to it for loss and damage arising from it being denied the opportunity to avoid the contract following the second defendant's notice to the vendor.

Issue raised on summary judgment application

1. The issue raised by the second defendant on the summary judgment application involves the proper construction of the contractual conditions referred to above.  The second defendant contends that the contract did not become unconditional upon the second defendant's notice to the vendor of the loan approval.  The nub of that argument is put on the basis that Condition 1.1 provides that the contract is conditional upon the specified lender approving before the latest date for approval the granting to the purchaser of a loan in the specified amount.  Condition 1.2 (a) then provides that the purchaser shall use its best endeavours to obtain the loan.  Thus it is said that Condition 1.2 is therefore in broader terms than Condition 1.1 in that the purchaser is only required to obtain approval for the granting of a loan by the date specified in Condition 1.1, whereas it is required to use its best endeavours to obtain the loan in Condition 1.2 (a).  The latter obligation it is argued requires the purchaser to obtain the loan, not merely approval for the grant of it.

2. As between the lender and the purchaser approval for the loan was granted on the basis that certain conditions were complied with and in this case relevantly that a satisfactory valuation of the property be provided to the lender.  The second defendant contends that if the valuation had not been acceptable to the lender, the lender would give notice to the purchaser that its agreement to provide the loan was terminated and the purchaser would then be entitled to inform the vendor that despite its best endeavours to obtain the loan it had been unable to do so and that the contract was therefore at an end.

3. The second defendant asserts that its argument as to the proper construction of those conditions is unimpeachable.

The plaintiff's response

1. The plaintiff opposed the application for summary judgment.  To preserve its claim in the alternative against the second defendant the plaintiff adopted the first defendant's argument as raised in its defence that by the time the valuation had been obtained the contract was unconditional.  That is, if upon a proper construction of the conditions the contract became unconditional when the second defendant gave notice to the vendor of finance approval, then the plaintiff may have a good claim against the second defendant for having advised the vendor that finance was approved without conditions, when in fact there were conditions to be fulfilled.

Principles on summary judgment application

1. Order 16, r1 enables a defendant to apply to the Court for summary judgment, which may be ordered if the Court is "satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily".  (See Seaman Civil Procedure in Western Australia at p4967).

2. Summary judgment is generally only granted in cases where it is clear that there is no serious question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. A case must be very clear indeed to justify the summary intervention of the Court to prevent a plaintiff submitting his case for trial in the ordinary way, and once it appears that there is a real question, whether of fact or law and that the rights of the parties depend upon it, it is not competent for the Court to dismiss the action as frivolous or vexatious and an abuse of process: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.

Conclusions

1. In disposing of this application it is not necessary to determine what is in fact the proper interpretation of the conditions.  The conditions which in common parlance are known as the "subject to finance" provisions are contained in the standard form REIWA contract and are in wide and common use in the property industry.  The interpretation of those conditions for which the second defendant contends would have wide ramifications in the property industry if they are to be accepted.  Indeed the second defendant's contention appears to be inconsistent with evidence put forward by it in support of the application.  In the affidavit of Michael Stuart Hall, a Director of the second defendant, who has worked as a finance broker in Western Australia for approximately 16 years, at para 22 he states:

   "Further, in my experience Condition 1 of REIWA's standard form Contract of Sale of Land by Offer and Acceptance will be regarded by purchasers, vendors and their respective agents as having been satisfied when a purchaser obtains conditional finance approval."

2. On that evidence alone there is scope for a court not to uphold the second defendant's contentions.

3. The issue raised on this application in my view involves an important question for the property industry generally.  Whilst it may not be a difficult or complex matter of interpretation the issue is not one which should simply be determined on a summary judgment application.  It will require evidence to be adduced in the context of a trial and therefore it warrants a hearing.  I am not of the view that the second defendant's argument on this issue is unimpeachable.  Accordingly I decline to deal with the issue summarily.

Costs on application before Deputy Registrar

1. On the costs of the application the Deputy Registrar ordered that the second defendant pay the plaintiff's costs of the application for summary judgment in any event.  The second defendant appeals against that order.

2. If the application for summary judgment is dismissed the most usual order is that the costs be costs in the cause so that the party who is successful at trial recovers them: Whitehall Holdings Pty Ltd v Ravi Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 920347; 19 June 1992.  It has been held that when the application is dismissed costs should be in the cause except in the exceptional case in which the application should never have been made: Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21 at 23.

3. I would not accept the proposition that the second defendant's application "should never have been made".  It cannot be said that the issue is frivolous or without any prospect of success.  I am of the view that the appropriate order would have been that the costs of the application be costs in the cause.  In the end result those costs will fall upon the unsuccessful party as between the plaintiff and the second defendant.

4. Therefore I would allow the appeal only insofar as the order for costs is concerned.