Shaw v Yarranova Pty Ltd
[2005] VSC 94
•5 April 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 9046 of 2003
| JOHN RASHLEIGH SHAW | Plaintiff |
| v | |
| YARRANOVA PTY LTD & ANOTHER | Defendants |
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JUDGE: | Hollingworth J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 June, 4 November 2004 | |
DATE OF RULING: | 5 April 2005 | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 94 | |
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Real property – removal of caveat – nature of application to remove caveat under s.90(3) of the Transfer of Land Act 1958 – whether application can be made by summons on interlocutory basis
Practice and procedure – summary judgment – requirement of affidavit in support
Real property – contract of sale – application to remove caveat – dispute as to purchaser’s obligation to pay balance of purchase price –- whether vendor prevented from seeking payment of balance of purchase price by s.42 of the Domestic Building Contracts Act
Domestic Building Contracts Act 1995 – sections 42, 132
Supreme Court (General Civil Procedure) Rules 1996 – rule 22.03(1)
Transfer of Land Act 1958 - section 90(3)
Black Creek Deer Farm Pty Ltd v Australia & New Zealand Banking Group Ltd (Supreme Court of Victoria, unreported, 31/7/95 per Beach J) followed
Carlton & United Breweries Ltd v Long [1958] VR 539 followed
Elliott v Pound (1889) 15 VLR 356 followed
Hongkong & Macao Glass Manufacturing Co Ltd v Gritton (1886) 12 VLR 128 followed
Martyn v Glennan [1979] 2 NSWLR 234 considered
Mirvac (Docklands) Pty Ltd v Philp [2004] VSC 301 followed
Muntz v Elkington (1891) 17 VLR 23 followed
Seifert v Two Point Pty Ltd [2001] VSC 394 considered
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G D Bloch | Gadens Lawyers |
| For the Defendants | Mr A Kelly | Arnold Bloch Leibler |
HER HONOUR:
Introduction
This case concerns an apartment built as part of the development of the Docklands area in Melbourne. The plaintiff (“the purchaser”) says that he is not obliged to complete the purchase of the apartment, which he bought "off the plan", because it has not been properly constructed. The defendant vendors dispute that assertion and say that the sale contract has been validly brought to an end because the purchaser has wrongfully refused to complete the purchase. In the application before me, the defendants seek the removal of a caveat placed by the purchaser.
By a contract dated 12 April 2000 ("the contract"), the purchaser agreed to buy from the first defendant ("Yarranova") for $665,500 certain property including an apartment in a tower known as The Boyd tower, New Quay, Docklands ("the property")[1]. When construction was completed, the apartment would be situated on the 10th floor and known as apartment 1002. The purchaser paid the deposit of $66,550 by way of bank guarantee on 10 May 2000.
[1]The property is described as part of the land comprised in certificate of title volume 10269 folio 532, including an apartment (Lot 1002), car parking space (CPT464) and a storage area (ST166).
By a deed dated 13 December 2000, Yarranova assigned its interest in a number of contracts, including the contract, to the second defendant ("NewQuay"). Written notice of the assignment was given to the purchaser by letter dated 15 February 2002. In these reasons, I use the term "the vendor" to refer to Yarranova, NewQuay, or both of them, as appropriate.
The balance of the purchase price under the contract was payable within 14 days after written notification by the vendor's solicitors to the purchaser or his solicitors of the later to occur of:
(a) Registration of the relevant plan of subdivision;
(b) The issue of an occupancy permit under regulation 9.5 of the Building Regulations 1994;
(c) Completion of the Works, being the works described in the plans and specifications.
The contract contained provisions to the effect that time was of the essence in relation to completion of the contract.
It is not disputed that, on 28 June 2002, the relevant plan of subdivision was duly registered and NewQuay became the registered proprietor of the property. On 15 July 2002, an occupancy permit[2] was issued by the building surveyor in respect of the part of The Boyd Tower which included the property. On 16 July 2002, the project manager, Bovis Lend Lease Pty Limited, gave notice to NewQuay that the Works were complete.
[2]Occupancy Permit No 1320/100702/0.
By letter dated 24 July 2002, the vendor's solicitors gave notice to the purchaser's then solicitors, McCluskys, of the registration of the plan of subdivision, the issue of a certificate of title for the property, the issue of an occupancy permit and completion of the Works. They enclosed a copy of each of the relevant documents.
Under the contract, the settlement date was to be the date upon which vacant possession of the property was provided, namely, upon acceptance of title and payment of the purchase price. The vendor's solicitors nominated 7 August 2002 (which was later changed to 8 August) as the date for settlement.
On 8 August 2002, the purchaser's solicitors advised the vendor's solicitors that the settlement was cancelled, as the purchaser had inspected the apartment on 6 August 2002 and formed the opinion that it did not comply with the regulations, principally because the window in the master bedroom was not able to be opened. The purchaser also refused to complete on the basis that he expected the vendor to provide the TV monitor for the audio visual intercom system. He also raised a query about sprinkler protection in some parts of the car park. The vendor responded by supplying to the purchaser a copy of an expert's opinion which supported the vendor's assertion that all relevant regulations had been complied with.
On 9 August 2002, the vendor extended the settlement date from 8 to 12 August 2002. Once again, settlement did not occur on the re-scheduled date. The purchaser's solicitors advised the vendor's solicitors that settlement would not occur until the bedroom window and TV monitor issues had been rectified.
In late August 2002, the vendor's solicitors served a notice of default and notice of rescission on the purchaser ("the first notice"). By letter dated 5 September 2002, the purchaser's new solicitors, Middletons, requested that the first notice be withdrawn. The vendor did not take any steps pursuant to the first notice.
Between approximately August 2002 and July 2003, numerous meetings and communications occurred between the parties or their solicitors with a view to resolving the purchaser's complaints in relation to the property. During this period, additional matters of concern in relation to the finish of the property were raised and further works were undertaken to address some of those matters. Of the more than one dozen issues which were raised by the purchaser, most have apparently been resolved.
In the meantime, on 10 September 2002, NewQuay called upon the bank guarantee for the deposit.
The purchaser pleads that, in about December 2002, the contract was varied by agreement to include the following terms ("the additional terms"):
(a) The vendor would install by 1 March 2003 windows in three of the bedrooms to satisfy the minimum required natural ventilation specified in the Building Code of Australia (“BCA”) with an aggregate opening size not less than 5% of the floor area of the relevant room;
(b) The vendor would provide written advice from structural engineers that the aluminium handrail on the balcony was as durable as the steel handrail specified in the contract specifications.
The purchaser alleges that the vendor did not comply with either of those additional terms by 1 March 2003 or at all. The vendor admits that it agreed to, and says that it subsequently did, undertake certain additional works, but otherwise denies the alleged variation.
In or about late May 2003, the vendor advised the purchaser that an openable window and intercom system had been installed and further repairs would be completed within the next fortnight.
On 15 August 2003, the vendor's solicitors notified the purchaser that all outstanding matters had now been completed and settlement of the contract was due to occur on 29 August 2003. Once again, settlement did not occur on the nominated date.
By a document entitled "notice of default and notice of rescission" dated 29 September 2003 ("the second notice"), the vendor gave notice that the purchaser had failed to pay the balance of the settlement moneys which fell due on 29 August 2003. The second notice stated that unless that default was remedied within 14 days, the contract would be rescinded. On 15 October 2003, the vendor's solicitors informed the purchaser's solicitors that the 14 day period fixed by the second notice had expired, the contract was accordingly rescinded and the deposit forfeited.
In the meantime, on 10 October 2003, the purchaser lodged caveat no. AC395659S ("the caveat") on the title to the property, claiming an interest in fee simple under the contract. The purchaser has refused to remove the caveat.
On 24 October 2003, the vendor’s solicitors lodged an application with the Registrar of Titles for the removal of the caveat.
By a writ issued on 1 December 2003, the purchaser claims:
(a) The vendor has failed or refused to perform the contract by, amongst other things, not completing the Works in accordance with the contract, the regulations and the BCA and not completing the Works within a reasonable time. In particular, it is said that the window openings in the 3 bedrooms are less than 5% of the total room areas and are therefore in breach of the relevant requirements;
(b) The vendor has engaged in misleading and deceptive conduct (the additional terms are also pleaded as representations);
(c) The contract is a "major domestic building contract" and the vendor is the "builder" within the meaning of the Domestic Building Contracts Act 1995 (“DBC Act”). Accordingly, the vendor had no right to rescind, because s.42 of that Act prevents the builder from demanding final payment under the contract until the works have been satisfactorily completed;
(d) The vendor has acted unconscionably and the purchaser is entitled to relief from forfeiture of the contract.
The purchaser seeks declarations that the purported rescission is invalid and the deposit has not been forfeited, an order for specific performance of the contract, relief from forfeiture and damages. In relation to the claim for specific performance, the purchaser pleads that he is and has always been ready and willing to perform the contract.
Initially, the vendor filed only a defence. By an amended defence and counterclaim dated 26 February 2004, the vendor denies any breach of the contract (including the additional terms), denies that the contract is a major domestic building contract, and asserts that the deposit has been forfeited and the contract validly rescinded. The vendor also asserts that the statement of claim does not disclose a valid cause of action in respect of the misrepresentation and unconscionability claims.
As to the caveat, the vendor says that:
(a) As at the date of lodgement of the caveat, 10 October 2003, the purchaser did not have sufficient estate or interest in the property capable of supporting the interest alleged by the caveat;
(b) Upon rescission of the contract on 14 October, the purchaser had no estate or interest in the property;
(c) Accordingly, the purchaser has no right to lodge or maintain the caveat.
The vendor says that by reason of the wrongful lodgement and maintenance of the caveat, it has suffered loss and damage in the form of holding costs and loss of opportunity to sell the property. The vendor seeks an order for the removal of the caveat under s.90(3) of the Transfer of Land Act 1958 ("TLA"), and compensation pursuant to s.118 of the TLA.
On 31 March 2004, notwithstanding the purported rescission, the vendor's solicitors made an open offer to the purchaser to complete the contract and nominated 23 April 2004 as the date for settlement. By fax dated 5 April 2004, the purchaser's solicitors, Gadens, said that the purchaser remained "ready, willing and able to complete his obligations under the Contract of Sale subject to a reservation of all rights as a consequence of your client's default."
Much heated correspondence has passed between the parties and their solicitors, in which each has, amongst other things, accused the other side of not acting in good faith. It is not necessary for the purposes of this application for me to resolve any such dispute. Nor is it possible for me to resolve it at this stage of the proceeding and on the material currently before me. The fact of the matter is that the contract has still not been completed, and the parties continue to maintain their respective positions. They have reached the point of "stalemate".
The nature of the current application
By a summons dated 3 June 2004, the vendor seeks an order under s.90(3) of the TLA for the removal of the caveat. Initially, the summons was supported only by the affidavit of Craig Trembath, sworn on 1 June 2004. The purchaser relied upon the affidavits of the purchaser and his solicitor, Lionel Jerrold Appelboom, both sworn on 15 June 2004 and the affidavit of a building surveyor, Paul Raptopoulos, sworn on 22 June 2004. A further affidavit of Mr Trembath was subsequently filed in the circumstances discussed below.
Section 90(3) of the TLA is in the following terms:
"Any person who is adversely affected by any such caveat may bring proceedings in the Court against the caveator for the removal of the caveat and the Court may make such order as the Court thinks fit."
There is no dispute that the vendor is a person who is adversely affected by the caveat.
The vendor brought this application for removal of the caveat by summons in the current proceeding. The summons was made returnable in the Practice Court. The summons was not returnable at the same time as an originating motion or writ seeking the removal of the caveat.
Counsel for the purchaser, Mr Bloch, submitted that the vendor was not entitled to adopt such a procedure, and that I ought to treat this as an application by the vendor for summary judgment on the counterclaim. Counsel for the vendor, Mr Kelly, submitted that the procedure used was appropriate. I agree with the purchaser’s contention in relation to this issue, for the following reasons.
An order for the removal of a caveat is a final order for the purposes of s. 90(3) of the TLA. The section permits “proceedings … for the removal of the caveat” to be brought. Such proceedings are commonly brought by originating motion and summons, both of which are made returnable in the first instance before a Master. A proceeding may be commenced by originating motion where it is unlikely that there will be any substantial dispute of fact and for that reason it is appropriate that there be no pleadings or discovery.[3] If the Master considers it appropriate to do so, orders are made pursuant to rule 45.05, dispensing with the appearance requirements of rules 5.03(1) and 8.02 and authorising the proceeding to be commenced in accordance with Form 5C. In such a case, the Master would then either order that the proceeding be determined in the Practice Court or placed in the list of cases awaiting trial. The fact that, in such a case, an application to remove a caveat may be dealt with expeditiously in the Practice Court does not detract from the fact that the court is being asked to make a final order.
[3]Rule 4.06.
On the other hand, if it appears that there may be a substantial dispute of fact, the Master may decide to order, pursuant to rule 4.07, that the matter continue as if commenced by writ. Alternatively, a party seeking the removal of a caveat in a matter involving a substantial factual dispute may choose to commence a proceeding by writ.
In the present case, the purchaser commenced proceedings first. Part of the final relief sought by the vendor in the counterclaim includes orders removing the caveat.
Counsel did not refer me to, and I have been unable to find, any case in which a court has removed a caveat on an application brought by only summons in an existing proceeding.
Counsel for the vendor sought to rely upon the decision of Waddell J in Martyn v Glennan.[4] That case involved an application for the removal of a caveat made after the caveator had commenced proceedings to enforce his claim. Although there was a summons involved, it is clear from reading the decision that a separate proceeding was commenced seeking the removal of the caveat and the order made was the final relief sought in the separate proceeding.
[4][1979] 2 NSWLR 234.
Rather than simply dismissing the application outright on the basis that final relief under s.90(3) cannot be sought by summons alone, I was prepared to treat the vendor’s application as an application for summary judgment under rule 22.08, in relation to that part of the counterclaim which seeks the removal of the caveat.[5] In order to succeed on such an application, the vendor must establish that the purchaser has no defence to that part of the counterclaim.
[5]This was a route which the purchaser’s counsel had suggested was open to the court.
I note in passing that a summary judgment application ought ordinarily to be made before a Master, not a Judge, and that when such an application is brought before a Judge it ought to be simply dismissed.[6] However, this point was not raised by counsel for the purchaser, and I thought it appropriate in the circumstances that I deal with the application.
[6]Practice Note No 2 of 1988 [1988] VR 240.
More substantively, Mr Bloch correctly pointed out in his submissions that one of the requirements for a summary judgment application is that the supporting affidavit must include a statement “that in the belief of the deponent there is no defence to that claim or part, or no defence except as to the amount claimed.”[7] Courts have consistently, and over a long period of time, required parties to comply strictly with that requirement.[8] Here, the initial supporting affidavit contained no such statement. Ordinarily, that omission would be fatal to such an application. However, a failure to comply with rule 22.03(1) is an irregularity which can be cured by filing a further affidavit which complies with the rule.[9]
[7]Rule 22.03(1).
[8]See for example Muntz v Elkington (1891) 17 VLR 23; Elliott v Pound (1889) 15 VLR 356; Hongkong & Macao Glass Manufacturing Co Ltd v Gritton (1886) 12 VLR 128.
[9]Carlton v United Breweries Ltd v Long [1958] VR 539 per Smith J; Black Creek Deer Farm Pty Ltd v Australia & New Zealand Banking Group Ltd (Supreme Court of Victoria, unreported, 31/7/95 per Beach J).
When I came to consider my decision in relation to this matter – regrettably, some months after the hearing – I concluded that there was merit in the purchaser’s submissions as to the form of the application. As it seemed to me that the omission of the relevant statement from the vendor’s affidavit materials may have been due to inadvertence, in circumstances where both counsel had focussed on the merits of the application and not the form, I provided the parties with draft reasons for decision. In those draft reasons I indicated that the application was misconceived in so far as it sought the final removal of the caveat by summons and that, in so far as it was an application for summary judgment, it was doomed to fail due to the lack of compliance with rule 22.03(1).
Thereafter, counsel for the vendor filed further material, effectively seeking leave to re-open their case and cure the omission by filing further affidavit material. That application was opposed. Having heard argument and considered the relevant authorities on the matter, on 4 November 2004 I granted the vendor such leave. The vendor now relies also on the affidavit of Craig Trembath sworn on 26 October 2004, which deposes that in Mr Trembath’s belief the purchaser has no defence to that part of the vendor’s counterclaim which is for the removal of the caveat.
I turn then to consider the application on the merits.
General principles
It is a well-established principle that summary judgment should only be given in the clearest of cases. The power to order it must be exercised “with exceptional caution and should never be exercised unless it is clear that there is no real question to be tried.”[10] Once it appears that there is a real question to be determined, whether of fact or law, and the rights of the parties depend on it, then the matter should not be disposed of summarily.[11]
[10]Webster v Lampard [1993] 67 ALJR 886.
[11]Dey v Victorian Railway Commissioner (1949) 78 CLR 162.
Is there a real question of fact or law to be determined on the vendor’s claim for the removal of the caveat?
Counsel for the vendor, Mr Kelly, conveniently set out the relevant principles applicable to an application under s.90(3) in the following terms:
(a) The court must first consider whether there is a serious question to be tried - that is, whether the caveator has a caveatable interest in the land.
(b) The caveat must be removed if there is no arguable basis for it.
(c) If a serious question is established (that is, there is a proper basis for the existence of the caveat), the court must then consider the question of the balance of convenience between the parties.
(d) The onus is upon the caveator to establish both that (1) there is a serious question to be tried, and (2) if so, on the balance of convenience that it is better to maintain the status quo until the trial of any relevant proceedings.
(e) The discretion to be exercised by the court is a wide and general one.
(f) To meet the justice of the case, the court may impose terms upon which to allow the caveat to subsist until any trial.
(g) The principles to be applied in a case where a caveator has commenced proceedings to enforce his claim are the same as those applicable when the caveator has not commenced proceedings.
Further, on an application for removal of a caveat, the court should not make a final determination of any disputed fact.[12]
[12]Seifert v Two Point Pty Ltd [2001] VSC 394.
As the application before me seeks summary judgment, the vendor can only succeed on this application if they can establish that there is no real question of fact or law to be tried as to:
(a) Whether the purchaser has a caveatable interest in the property; and
(b) Whether the balance of convenience favours maintaining the status quo until the trial of the substantive dispute between the parties.
On an application for summary judgment, the applicant must show a clear case for judgment on the basis that any contest of fact will be determined adversely to it.
Caveatable interest
Can it be said that there is no real question to be tried as to whether the purchaser has a caveatable interest in the property? More particularly, is there a serious question as to whether the contract has been rescinded?
The purchaser says that he has not defaulted by refusing to settle the contract, so the vendor’s purported rescission is ineffective and the contract remains on foot, because:
(a) As a matter of contract, he is not yet obliged to settle the purchase of the property. This is because, although it is conceded that the first and arguably the second conditions have been satisfied, the third condition has not occurred; namely, the Works have not been duly completed notwithstanding that an erroneous and incorrect notice of completion of the Works was given; and/or
(b) As a matter of statute, he is not yet obliged to settle the purchase of the property because of the provisions of s.42 of the DBC Act, which prohibit the vendor from demanding final payment until after the Works have been completed.
The purchaser says that he is not obliged to complete the contract because of alleged defects relating to the bedroom windows, the bathroom exhaust fan and the balcony handrail ("the alleged defects"). The purchaser relies upon the affidavit and report of its building surveyor, Paul Raptopoulos, who has formed the opinion that the net openable area of the windows does not comply with the BCA and indeed is substantially less than the requirements of the BCA. The purchaser says that this is not simply a minor or technical issue, but goes to the adequacy or otherwise of the ventilation in an apartment which is not air-conditioned.
The vendor disputes the existence of the alleged defects and relies upon a report from a building expert, Philip Chun & Associates, to the effect that the property complies with the BCA.
Whether or not the alleged defects in fact exist is a matter for determination at trial. No doubt expert evidence will need to be called, before this factual dispute can be resolved. Counsel for the vendor rightly conceded that I must assume for the purposes of this application that the alleged defects do in fact exist.
The vendor relies upon the fact that time is of the essence in relation to completion of the contract, as well as the authorities for the proposition that the substantive obligation of a purchaser is to seek out his vendor and tender the balance of the purchase price. Of course, those matters are only relevant if in fact the purchaser is obliged to complete.
The vendor’s written and oral submissions deal primarily with the contractual position. Without expressing a concluded view, it seems that there is much force in Mr Kelly’s submissions that the alleged defects, if they exist, are defects in quality and not defects in title such as might permit the purchaser to refuse to complete the contract. That is so both as a matter of general law, and by virtue of the express terms of the contract.[13] If that is correct, then the purchaser’s remedy would be in damages, and he would not be entitled to specific performance.
[13] Especially clauses 17.3 and 42.
However, the purchaser says that the contract is regulated by the DBC Act and that s.42 of that Act prohibits the vendor from demanding final payment until at least the works have been completed in accordance with the contractual plans and specifications. For the reasons which follow, in my opinion it cannot be said that there is no real or serious question to be tried in relation to the DBC Act.
Section 42 provides:
“When work is to be considered to have been completed
A builder must not demand final payment under a major domestic building contract until –
(a) the work carried out under the contract has been completed in accordance with the plans and specifications set out in the contract; and
(b) the building owner is given either –
(i) a copy of the occupancy permit under the Building Act 1993, if the building permit for the work carried out under the contract requires the issue of an occupancy permit; or
(ii) in any other case, a copy of the certificate of final inspection.”
Section 3 of the DBC Act provides the relevant definitions. A “domestic building contract” is a contract to carry out, or to arrange or manage the carrying out of, domestic building work, other than a contract between a builder and a sub-contractor. A “major domestic building contract” is one in which the contract price for the building work is more than $5,000. For the purposes of the DBC Act, a “builder” includes a person who “manages or arranges the carrying out of domestic building work” or intends to do the same.
The purchaser relies upon the decision in Philp v Mirvac (Docklands) Pty Ltd.[14] At VCAT, Deputy President Cremean found that a contract of sale of a unit sold “off the plan”, in a similar residential development in the Docklands area, was a “domestic building contract” and the first defendant was a “builder” under the DBC Act, even though it had arranged for another company to actually carry out the works. Those findings were upheld in this court by Byrne J in Mirvac (Docklands) Pty Ltd v Philp.[15]
[14][2004] VCAT 367.
[15][2004] VSC 301.
Byrne J noted that the points raised before him as to the application of the DBC Act had been raised in a number of other proceedings brought in this court by other purchasers, which had been stood over pending the determination of that proceeding. His Honour also noted that Parliament had intervened by passing the Domestic Building Contracts (Amendment) Act 2004 removing from the definition of “domestic building contract” contracts of sale “off the plan”.[16] However, the amending legislation does not affect a contract, such as this one, which is the subject of a proceeding commenced before 16 March 2004.
[16]At [16].
The vendor disputes that the DBC Act applies, and relies upon special condition 18.2 of the contract, which provides as follows:
“The purchaser admits that this contract is not a Major Domestic Building Contract for the purposes of the Domestic Building Contracts Act 1995 (“the Act”) and that the building contract referred to in special condition 18.1 [being the contract which the vendor will enter into with a builder] is the Major Domestic Building Contract for the purposes of the Act.”
However, special condition 18.3 clearly acknowledges that a court or tribunal may find or deem the contract to be a major domestic building contract, notwithstanding special condition 18.2.[17]
[17]Special condition 18.3 provides as follows:
“Notwithstanding special condition 18.2, if this contract is found or deemed by the Domestic Building Tribunal or by a court having competent jurisdiction to be a Major Domestic Building Contract the purchaser agrees and acknowledges that it shall join with the vendor to vary the terms of this contract so that the contract complies with the Act and the purchaser shall not be entitled to claim any compensation for any alleged non-compliance with the Act. Any such variation shall not constitute a defect in the vendor’s title and the purchaser shall not be entitled to delay settlement or rescind this contract as a result of any such variation.”
There is also a real question as to the extent to which the contract could limit the statutory rights under s.42, by reason of s.132 of the DBC Act, which is in the following terms:
“Contracting out of this Act prohibited
(1) Subject to any contrary intention set out in this Act—
(a) any term in a domestic building contract that is contrary to this Act, or that purports to annul, vary or exclude any provision of this Act, is void; and
(b) any term of any other agreement that seeks to exclude, modify or restrict any right conferred by this Act in relation to a domestic building contract is void.
(2) However, the parties to a domestic building contract may include terms in the contract that impose greater or more onerous obligations on a builder than are imposed by this Act.”
Applying the same reasoning as Byrne J, the contract appears to be a “major domestic building contract” and the vendor “the builder”, for the purposes of s.42 of the DBC Act, the vendor’s apparent “admission” in clause 18.2 notwithstanding. Assuming, as I must for the purposes of this application, the existence of the alleged defects, it cannot be said that there is not a serious question to be tried as to the vendor’s compliance with s.42 of the DBC Act.
Balance of convenience
Does the balance of convenience so clearly favour the removal of the caveat that the issue ought be resolved summarily rather than at trial? In my opinion, the vendor has not established that that is the case.
A common theme running through a number of the authorities to which I was taken is that courts are required to act in a commercially realistic manner when considering where the balance of convenience lies. Where the balance lies will obviously vary from case to case.
If the caveat remains in place until trial, the vendor will be prevented in the interim from selling the property to another person, who might be willing to purchase it notwithstanding any alleged defects. There is no evidence before me that the vendor’s capacity to re-sell the property would be impaired if it is not able to sell the property before the trial of this proceeding. There is also no evidence as to whether the vendor would be able to sell the property in the current market for more, less or the same as the purchase price under the contract. If at trial it is found that the purchaser has wrongfully maintained the caveat, and the vendor has suffered financially as a result, compensation under s.118 of the TLA may be ordered. There is no evidence that the purchaser would be unable to meet an award of compensation; indeed, in so far as there is evidence in relation to this issue, it appears that he is a person of some means.
On the other hand, if the caveat is removed now, the vendor will be free to re-sell the property before the trial. If that occurs, the purchaser would be left with a remedy in damages only. If at trial the purchaser succeeds in proving the existence of the alleged defects and in relation to the DBC Act, then the contract is still on foot and has not been rescinded. There is evidence that the purchaser intends to live in the property, meaning that damages may not be an adequate remedy.[18] The evidence does not disclose whether there are similar apartments which the purchaser could buy in this or neighbouring apartment buildings. Given that this is a summary judgment application, the vendor applicant bears the onus of establishing amongst other things, that damages would be an adequate remedy.
[18]Unlike the situation in Byrne v St George Bank Ltd (unreported, Court of Appeal, 15 February 1996, BC9600378), where the property the subject of the caveat was only an investment property, with no special value to the caveator.
As mentioned earlier, the vendor first scheduled settlement for August 2002. The parties then spent approximately twelve months working on narrowing the number of disputed items. After it was clear that they could be narrowed no further, the purchaser, not the vendor, was the first party to commence legal proceedings in relation to the disputed matters. The application to remove the caveat was not filed and served by the vendor until some 8 months after the caveat was placed. Interlocutory steps have now been substantially completed, as has a mediation. It is likely that the matter will shortly be set down for trial.
There has been considerable heat in the solicitors’ correspondence, each asserting that the other party is to blame for the current situation and is acting unreasonably. I am not in a position on an application such as this one to judge the reasonableness or bona fides of the parties’ respective positions. The trial judge will be in a much better position than I am to determine those matters, as well as the disputed issues of fact and law to which I have briefly referred.
Given that this is an application for summary judgment, in my opinion the vendor has not established that the balance of convenience so clearly favour the removal of the caveat that the issue ought be resolved summarily rather than at trial.
Conclusion
I propose to order that the defendants’ summons dated 3 June 2004 be dismissed with costs.
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