Valiant Bay Holdings Pty Ltd v CASKOVIC
[2010] WADC 111
•29 JULY 2010
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: VALIANT BAY HOLDINGS PTY LTD -v- CASKOVIC & ANOR [2010] WADC 111
CORAM: WISBEY DCJ
HEARD: 4 JUNE 2010
DELIVERED : 29 JULY 2010
FILE NO/S: CIV 341 of 2010
BETWEEN: VALIANT BAY HOLDINGS PTY LTD (ACN 009 415 392)
Plaintiff
AND
BESLAGA CASKOVIC
SEVKA CASKOVIC
DefendantsMARIA PAPALIA
First Third PartyANSA ENTERPRISES PTY LTD (ACN 128 202 399)
Second Third Party
Catchwords:
Contract - Sale of land - Subject to finance clause - Whether contract became unconditional - Whether plaintiff entitled to summary judgment
Legislation:
Nil
Result:
Applications for summary judgment dismissed
Representation:
Counsel:
Plaintiff: Haydn Robinson
Defendants: A J Arister
First Third Party : No appearance
Second Third Party : No appearance
Solicitors:
Plaintiff: Haydn Robinson
Defendants: Lynn & Brown Lawyers
First Third Party : Not applicable
Second Third Party : Not applicable
Case(s) referred to in judgment(s):
Nil
WISBEY DCJ: By contract dated 15 February 2009 the plaintiff agreed to sell to the defendants for the sum of $955,000 the property situated at and known as 97 Clifton Crescent, Mount Lawley, more particularly described as Lot 14 on Plan 47049 and being the whole of the land comprised in Certificate of Title Vol 2635 Folio 799. The contract was subject to the defendants obtaining finance from Westpac within 10 days of the date of the contract – that is, by 26 February 2009. By reason of the application of Condition 1.9 the amount of finance required was the total purchase price. The contract stipulated that settlement would occur within 21 days of the approval of finance. The plaintiff nominated Ascot Settlements, and the defendants MP Settlements, as their respective conveyancing representatives. The plaintiff's selling agent was Acton, Mount Lawley (the agent).
Following the signing of the contract the defendants arranged for a finance broker, ANSA Financial Solutions (the broker), to obtain finance to enable settlement to occur.
As a result of the brokers' representation, Westpac approved a loan of $811,750 on 17 April 2009. It appears from the papers that of that sum $11,072.27 was for mortgage insurance, leaving a balance of $800,677.73 available to put towards to the amount required for the purchase. Westpac advised that the approved loan application was conditional upon the execution of certain acceptance documents by the defendants.
By facsimile dated 29 April 2009 ANZ approved a loan of $413,952.44 of which $6,052.44 was allocated to mortgage insurance, leaving an available balance of $407,900. It was the case, however, that the ANZ loan was a refinancing, and as the defendants were already indebted to it in the sum of $286,331.27 and were charged a search fee of $26.25, the result was that there was a balance of $121,542.48 available to put towards the amount required for the purchase.
As a result of the Westpac and ANZ approvals, the defendants as at 29 April 2009 had available to them $922,220.51, so that excluding stamp duty, finance commission, charges and settlement fees, they required a further $32,779.49 to effect settlement. Notwithstanding, it appears from the papers that on 30 April 2009 MP Settlement Services sent a facsimile to the agent indicating, inter alia:
"Please note that the buyer has today informed our office they were waiting for formal approval from ANZ Bank to make up the balance of their loan. The approval has come through today (copy to follow) therefore mortgage documents still need to be prepared, signed and executed by the buyer.
Kindly note our client will require a settlement extension to 21 May 2009 to allow sufficient time for both banks involved, Westpac and ANZ, to process the files for settlement.
Kindly advise this office by return fax on 94439188 if the seller will allow the settlement extension."
The broker however continued efforts to obtain sufficient funds from other lenders, including Suncorp‑Metway Limited, but without success.
By facsimile dated 28 May 2009 the broker advised MP Settlements and the agent that the defendants required further time to obtain finance, as unless another lender could be identified, the transaction could not proceed. It sought an extension for finance until 19 June.
On 4 June 2009 the broker sent a facsimile to the agent advising that it had exhausted all avenues, and that the defendants were unable to proceed with the purchase.
The plaintiff contends that the facsimile dated 30 April 2009 from MP Settlement Services to the agent (supra) rendered the contract unconditional. It contends that the defendants, by the broker's facsimile of 4 June 2009, repudiated the contract, which repudiation it accepted, and resold the property. The plaintiff then commenced these proceedings seeking damages for breach of contract.
The defendants assert that they were legally entitled to, and terminated the contract when they were unable to obtain finance. They have issued a third party notice against the first third party (a principal of the broker) and the second third party (the broker) on the basis that if the MP Settlement Services facsimile dated 30 April 2009 advising the agent that they had obtained finance, rendered the contract unconditional, the third parties were negligent in so doing.
On 23 April 2010 the defendants issued a summons seeking summary judgment, and the plaintiff responded with a summons dated 3 May 2010 seeking similar relief. The defendants have withdrawn their application for summary judgment, and the plaintiff's application remains for consideration.
The issue for determination is whether it can be said on the material before the Court, and a proper interpretation of the contract, that it became unconditional; for if it did, it would follow that the defendants by their conduct, repudiated it. The answer must lie in the subject to finance clause.
It is clear that the defendants were unable to borrow $955,000 on or before 26 February 2009 being the requisite date ("latest time") or at all.
The relevant chronology is as follows:
| Date | Event |
| 15/02/09 | Contract date |
| 26/02/09 | Latest time for finance |
| 13/03/09 | Commonwealth Bank declines loan application |
| 17/04/09 | Westpac approves loan of $811,750.00 |
| 23/04/09 | MP Settlements sends letter to Ascot Settlements confirming it acts for purchasers |
| 29/04/09 | ANZ approves loan of $413,952.44 |
| 30/04/09 | MP Settlements advises agent that finance available |
| 22/05/09 | Ascot Settlements sends letter to MP Settlements claiming penalty interest |
| 28/05/09 | Broker advises MP Settlements and agent that further time required for finance |
| 31/05/09 | Defendants make offer for another property |
| 01/06/09 | Westpac sends letter to broker declining loan |
| 04/06/09 | Suncorp‑Metway Ltd sends letter to defendants declining loan |
| 04/06/09 | Broker advises agent that defendants have exhausted all avenues of finance |
| 18/06/09 | Plaintiff's solicitors write to defendants terminating contract |
| 22/06/09 | Broker writes to plaintiffs' solicitors |
The contract relevantly provides:
"1.1…
(c)The Buyer must immediately give to the Seller or Seller Agent:
(1)an Approval Notice if the Buyer obtains Finance Approval; or
(2)a Non Approval Notice if Finance Approval is rejected at any time while the Contract is in force and effect.
1.2No Finance Approval by the Latest Time: Non Approval Notice Given
This Contract will come to an end without further action by either Party if on or before the Latest Time:
(a)written Finance Approval has not been obtained; and
(b)the Buyer gives a Non Approval Notice to the Seller or Seller Agent.
1.3No Finance Approval by the Latest Time: No Notice Given
If by the Latest Time:
(a)the Buyer has not given an Approval Notice to the Seller or Seller Agent; and
(b)the Buyer has not given a Non Approval Notice to the Seller or Seller Agent;
then this Contract will be in full force and effect unless and until either the Seller gives written Notice of termination to the Buyer or the Buyer terminates this Contract by giving a Non Approval Notice to the Seller or Seller Agent.
1.4Finance Approval Notice Given
If by the Latest Time or if clause 1.5 applies, before the Contract is terminated:
(a)written Finance Approval has been obtained; and
(b)the Buyer has given an Approval Notice to the Seller or Seller Agent;
Then this Clause 1 is satisfied and this Contract is in full force and effect.
1.5Notice Not Given by Latest Time: Seller's Right to Terminate
If by the Latest Time the Buyer has not given an Approval Notice or a Non Approval Notice to the Seller or Seller Agent then at any time until an Approval Notice is given, the Seller may terminate this Contract by written Notice to the Buyer."
Condition 1.6 provides that if requested in writing by the seller or the seller's agent, the buyer must provide information concerning the progress of the buyer's finance application; and if the buyer does not provide such information the seller or the seller's agent is authorised to approach the lender to obtain such information.
Condition 1.8 provides that the buyer can waive the subject to finance requirement by giving written notice to the seller or seller's agent at any time before the latest time, or if cl 1.5 applies, before the contract is terminated.
Condition 1.9 contains the following definitions:
"Approval notice means a notice in writing given by the buyer or the lender to the seller or seller's agent to the effect that finance approval has been obtained.
Non‑approval notice means a notice in writing given by the buyer or the lender to the seller or seller's agent to the effect that finance approval has been rejected or has not been obtained."
It is abundantly clear that unless the buyer gives a written notice waiving the subject to finance provision, at the expiration of the latest time the contract remains in full force and effect unless and until:
(i)Financial approval is not obtained, and the buyer gives a non‑approval notice to the seller or seller agent; or
(ii)The seller terminates the contract.
The plaintiff alleges that the MP Settlements' facsimile of 30 April 2009 constituted an approval notice, and that is admitted by the defendants in par 2 of the defence. It is the position, however, that under the terms of the contract it did not become unconditional unless written financial approval had also been obtained. On the material before me it cannot be said that condition had been fulfilled, although much will depend upon the precise nature of the finance applications made by the defendants.
On the assumption that the contract was still conditional as at 4 June 2009, the facsimile from the broker to the agent would clearly amount to a non‑approval notice as it was a communication sent by the defendant's representative to the plaintiff's agent advising that the defendants had been unsuccessful in their endeavours to secure finance.
In my view the factual and legal issues required to be resolved cannot be appropriately addressed other than at trial. There is also the third party issue to be determined. In those circumstances there will be unconditional leave to defend.
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