Willis v Crosland (No 2)

[2021] VCC 39

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CI-20-01733

ANNE WILLIS	Plaintiff
v
VANESSA LOUISE CROSLAND	Defendant

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JUDGE:	HIS HONOUR JUDGE MACNAMARA
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	4 February 2021
CASE MAY BE CITED AS:	Willis v Crosland (No 2)
MEDIUM NEUTRAL CITATION:	[2021] VCC 39

REASONS FOR JUDGMENT
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Subject:Application to re-open

Catchwords:              Proceeding by purchaser to recover deposit paid on abortive sale of real estate; whether plaintiff purchaser `in default’ at time of giving notice of rescission; whether “default” in GC21 includes an anticipatory breach; whether decision for defendant should be re-opened based on misapprehension; misapprehension of counsel’s submission not material; issue of practicality of electronic payment of part of deposit after business hours properly before the Court; issue of lack of evidence on point raised in closing submissions; no application to re-open plaintiff’s case until after publication of Court’s reasons for decision; application dismissed.

Legislation Cited:      Civil Procedure Act 2010

Cases Cited:Spotlight Pty Ltd v NCON Australia (2012) 46 VR 1; Ezra Abrahams Pty Ltd v Milburn [2017] VSCA 355; Di Stasio Pty Ltd v R & K Services Pty Ltd [2018] VSCA 340; Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471; De L v Director-General NSW Department of Community Services (No 2) (1997) 190 CLR 207; New South Wales Bar Association v Smith (1992) 176 CLR 256, 265; Southern Cross Assurance Co Limited v Australian Provincial Assurance Association Limited (1935) 53 CLR 618; Berry v CCL Secure Pty Ltd [2020] HCA 27; Aussie Invest Corporation Pty Ltd v Pulcesia [2005] VSC 362; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; Chatham v Coral Park Pre-Training and Breaking Pty Ltd [2020] VSC 814; Foran v Wight (1989) 165 CLR 384; Australian National Airlines Commission v Robinson [1977] VR 87, 91; AU Future Health Pty Ltd v Echmoho (Hong Kong) Limited [2017] VSCA 380

Judgment:                  Application dismissed.  Costs reserved.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr. M. Sharpe	DST Legal
For the Defendant	Ms. G.M. Douglas	Ferdinand Zito & Associates

HIS HONOUR:

Background

1On 11 December 2020, I published reasons for decision in which I dismissed a claim by the plaintiff, Ms Willis, for the return of a deposit paid by her in the sum of $185,000 relative to an abortive purchase of a residential property at Bullengarook from the defendant, Ms Crosland. 

2The facts of the dispute into which vendor and purchaser fell exhibited the customary complexity that attends such conveyancing disputes.  The point upon which I determined the matter against the plaintiff purchaser was that her entitlement lawfully to discharge the contract as at a material date, namely 18 December 2019, depended upon proof, in accordance with clause GC21 of the relevant Contract of Sale, that she, as purchaser, was not in default of her obligations at the relevant time, that she was, at that time, “ready, willing and able to perform”.  I concluded that there was no evidence which established that between 7.51pm on that day (after the hours of business of the vendor defendant’s agents) and midnight, it would have been possible to pay the outstanding balance of the deposit (see [62]).

3Upon publication of my reasons, counsel for the plaintiff, Dr M Sharpe, immediately sought to re-open my determination.  Since no order or judgment had been authenticated, and therefore no judgment had been perfected, the rules of functus officio would not create an absolute bar to this process.

4I directed that the application be made by Summons, with any necessary supporting affidavit.  It proved impossible to find a date in the court calendar on which both counsel were available within a reasonable time.  Hence, the parties were agreed that the plaintiff’s application to re-open now made by Summons dated 17 December 2020 should be determined “on the papers”.  Counsel have filed written contentions and the plaintiff’s solicitor, Ms Tannock, swore an affidavit dated 15 December 2020 in support of the Summons.

5For the purposes of this determination, I incorporate by reference the background material in my principal reasons, along with the relevant findings of fact.

Plaintiff’s contentions

6Dr Sharpe said that “the overriding principle that guides the Court’s discretion is ‘whether, taken as a whole, the justice of the case favours the grant of leave to re-open’.”  (Plaintiff’s Re-opening Submissions, [11]) She referred to Spotlight Pty Ltd v NCON Australia (2012) 46 VR 1 [26]; Ezra Abrahams Pty Ltd v Milburn [2017] VSCA 355 [45]; and Di Stasio Pty Ltd v R & K Services Pty Ltd [2018] VSCA 340 [71]. She said that the authorities recognised four categories where it may be appropriate to allow a re-opening, the first where fresh evidence becomes known and available, the second where there had been inadvertent error, the third where there had been a mistaken apprehension of the facts and finally, where there had been a mistaken apprehension of the law. The authorities, she said, however, found that these categories were not closed.

7She said there would be a greater inclination to allow a re-opening where matters were omitted due to inadvertence, but there would be a disinclination to allow an application to re-open where the relevant gap in evidence was the result of a deliberate tactical decision, though this consideration was “not decisive” but remains “an important factor”.  She referred to Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471, 475-6 per Clarke JA.

8According to Dr Sharpe, the question of when the application to re-open was made was “also another important consideration in determining whether to allow the application”.  She conceded that where reasons for decision had been published it would require exceptional circumstances (Spotlight, [17]-[18]; Di Stasio, [59]). (Re-Opening Submissions, [14]) 

9She described the circumstances in which the Court of Appeal upheld a decision after trial to allow the plaintiff to amend its pleadings and lead further evidence, where the court was persuaded that this led to a “just result”. (Ibid, [19])  She referred to the decisions of the High Court of Australia in De L v Director-General NSW Department of Community Services (No 2) (1997) 190 CLR 207 and New South Wales Bar Association v Smith (1992) 176 CLR 256, 265.

10Dr Sharpe said that these statements of principle must now be seen in light of the provisions in the Civil Procedure Act 2010, requiring courts to advance the “overarching purpose”, as defined in that statute. She noted a power in s49 of the Act for the court to give any direction or make any order calculated to advance the overarching purpose. She said that making the orders sought in the Summons would be in accordance with the court’s power under that section.

11She said that the second sentence of paragraph [48] of the principal reasons misstated her contentions as to the effect, for the purposes of GC21.2(c), on the relevant sale of an anticipatory breach.  She referred to the transcript at 155-156.  In particular, page 156, lines 3-17.  She said it was wrong to regard an anticipatory breach as a “default” for the purposes of the relevant clause.  She referred to the joint judgment of Rich, Dixon, Evatt and McTiernan JJ in Southern Cross Assurance Co Limited v Australian Provincial Assurance Association Limited (1935) 53 CLR 618, 636. She said:

“It is submitted that consistent with an ordinary understanding of the noun ‘default’, a purchaser would only be unable to exercise his or her unilateral right to terminate pursuant to GC21 if the purchaser had failed to perform an obligation when it fell due (and not whether the purchaser failed to demonstrate that he or she was ready, willing or able to perform the obligation.” (Re-Opening Submissions, [33])

12She referred to an article in the Law Institute Journal by Murray McCutcheon AM and David P Lloyd “What’s New and Improved Part 2”, Law Institute Journal, 1 February 2018, where the learned commentator dealt with the introduction of GC21 into the September 2017 edition of the Standard Law Institute of Victoria Contract.  She continued, “In other words, the default must be a real, and unremedied, failure to perform an obligation”. (Ibid, [35])

13In any event, said Dr Sharpe, it would be wrong to “construe the term ‘default’ in GC21.2(c) as including acts that would amount to a repudiation for 3 further reasons”. (Ibid, [36])  She said that if this were to be done, the right to terminate would be utterly disabled or disarmed.  She said it would be difficult for a purchaser to prove at any time that he, she or it was “ready, willing and able” to perform the contract.  She continued:

“Such proof is likely to be difficult, or even impossible, in circumstances where, thanks to a building report in which major building defects have been identified, a purchaser is unlikely to be willing to perform the contract”. (Ibid, [38])

14She said that this was the situation in the present case.  She referred to exchanges between me and defendant’s counsel, Ms Douglas, at transcript 140, line 10 to transcript 141, line 12.

15Secondly, she said that the construction adopted by the court:

“…jarrs with the concept of a contingent condition in contract law. The formation of the Contract is contingent on GC21. It is not legally possible to repudiate a contract until it is unconditional.” (Ibid, [40])

16Finally, she said that the construction adopted by the court was “inconsistent with how the parties themselves objectively understood and performed the Contract”. (Ibid, [41])  She referred to email exchanges between the parties.

17Next, Dr Sharpe said that the principal reasons were wrong in their conclusion that her client bore the burden of proving that she was capable of paying the balance of the deposit as at 7.51pm on 18 December 2019.  She said that this conclusion overlooked the operation of Rule 13.12(1) of the Court’s Rules which provides:

“`Except as provided in paragraph (3), every allegation of fact in any pleading shall be taken to be admitted unless it is denied specifically or by necessary implication or is stated to be not admitted in the pleading of the opposite party, or unless a joinder of issue under Rule 13.13 operates as a denial of it, and a general denial of the allegations, or a general statement that they are not admitted, shall not be sufficient.’”

18She referred to the purpose of pleadings as being to identify the issues in dispute.  She referred to Berry v CCL Secure Pty Ltd [2020] HCA 27 [72] per Gageler and Edelman JJ.

19She said that at paragraph 9(b) of the defendant’s Defence Ms Crosland pleaded:

“as at the time of service of the Purported Notice on 18 December 2019 at 7:51pm, the Deposit was overdue under the Contract as the remaining Deposit amount of $186,500 had not been paid to the vendor’s licensed estate agent by the close of business on 18 December 2019;”

20She said, therefore, the defendant should be taken as having admitted that it was possible for the plaintiff to have paid the deposit at any time until midnight on 18 December 2019.

21According to Dr Sharpe, in opening submissions, counsel for the defendant did not rely on repudiation as amounting to a default for the purposes of GC21.2(c). (Defendant’s Opening Submissions, [36])  This issue, she said, was first raised by Ms Douglas in her oral submissions. (T78, L8-115)  She said the defendant should be confined to the pleadings.  She referred to the submissions which she, Dr Sharpe, had made at the end of the trial. (T146, L14-15)

22If all this were wrong, she said that the evidence as to the ability to make a payment of the outstanding balance of the deposit prior to midnight on 18 December 2019 could easily be adduced and could be seen in the same light as the supplementary evidence which the Court of Appeal said was rightly allowed in Di Stasio.  She summarised the evidence which she said could be given if leave were granted to adduce it on a re-opening.  She said the relief sought by the plaintiff should be granted and would entail no injustice to the defendant.

Conclusions

23First, I accept Dr Sharpe’s contention that I misstated the position which she adopted at trial on behalf of the plaintiff.  The final sentence at paragraph 48 of the principal reasons will be revised, so that it reads “Dr Sharpe contended that an anticipatory breach by way of repudiation would not constitute a default for the purposes of GC21.2(c)”.  So much is made clear by reference to pages 155-156 of the transcript.  I have summarised Dr Sharpe’s contentions in this respect in their most recent formulation above.

24I turn next to the question of whether, upon the pleadings, the issue as to the plaintiff’s ability to pay the balance of the deposit between 7.51pm and midnight on 18 December 2019 was an issue before the court, as my principal reasons supposed, or not as Dr Sharpe now contends.

25In paragraph 9 of the Statement of Claim, it is said on behalf of the plaintiff:

“As at 18 December 2019:

(a)   payment of the Deposit was not overdue under the Varied Contract; and

(b)   Willis was not in default of the Varied Contract.”

Paragraph 9 of the Defence begins with a generalised denial, “…the defendant denies the matters set out [in paragraph 9 of the Statement of Claim].”  It continues with a repetition of other allegations in the Defence at paragraph (b), and relied upon by Dr Sharpe, and states:

“As at the time of service of the Purported Notice on 18 December 2019 at 7.51pm, the Deposit was overdue under the Contract as the remaining Deposit amount of $186,500 had not been paid to the vendor’s licensed estate agent by the close of business on 18 December 2019.”

26In the context of the opening general denial of paragraph 9 of the Statement of Claim, I reject the contention put by Dr Sharpe that this paragraph constitutes an admission on the part of the defendant.  An anticipatory breach is available as a ground to enable the innocent party to take action or make an election as from the time of its occurrence.  It typically consists of a statement of unwillingness to perform or evidence of final disablement from performance as at the stated later date.  The quoted passage from the defence is in accordance with these principles.  Further, this matter was taken up in closing submissions.  Ms Douglas, on behalf of the defendant, referred to the decision of Dodds-Streeton J in Aussie Invest Corporation Pty Ltd v Pulcesia [2005] VSC 362, dealing with the practical issues associated with the making of late evening payments under contracts of this sort. (T130, L22-27)

27I summarised what I took to be the defendant’s position on this point as follows: “And your contention primarily on those matters is that the purchaser was in default?” Ms Douglas said “yes”. (Ibid, L5-7)  Discussion along those lines continued for some time and is recorded over a number of pages of transcript.  I commented upon the lack of evidence on this point and queried whether I would be in a position to take judicial notice of the time taken to effect electronic funds transfers. (T134)  This debate continued in the transcript to page 143.

28In the course of Dr Sharpe’s closing submissions, I asked her:

“What do you say to Ms Douglas' contention that as a matter of practicality that performance couldn't be achieved because there is a necessary delay of at least 24 hours or a business day in the process of electronic funds transfer? She said with the offices of the agent closed, it would, as a matter of practicality, have been impossible to use any of the other payment options between 7.51 pm and 12 midnight; what do you say to that?” (T154, L10-18)

29Dr Sharpe made two observations.  First, she agreed with me that it was not apparent that I could take judicial notice of what time delays might be involved.  She also said that it would be wrong to draw any inferences, as Ms Douglas had invited me to do, by reference to the timing of other payments that could be derived from the evidence in the court. (Ibid, L19-31)  She continued by referring to her own experiences, speaking of transactions which she had undertaken during the COVID-19 pandemic lockdown.  She said, “I made many, many purchases, some of them regrettable and amongst the more regrettable ones I learned is that my transfer of funds was unfortunately immediate”. (T155, L5-8)  Dr Sharpe said that her client could have taken a number of steps to effect payment, but there was no default “until the stroke of midnight”. (T155, L28-30)

30It will be seen that this is the point at which I misstated Dr Sharpe’s position on these matters in paragraphs 48 of my reasons.

31Ms Douglas contends, however, that the position adopted by Dr Sharpe was erroneous and therefore, correcting the record properly to record what her contention was, should not alter the outcome of the proceeding.

32It will be recalled that Dr Sharpe contended and contends that the word “default” in GC21 of the relevant contract does not extend to anticipatory breaches, such as might occur when a party is found to be finally disabled from performing an obligation, as would for instance be the case if a finding were made that it was impossible to make payment by the stipulated deadline.

33I agree with Ms Douglas that there is nothing inherent in the word “default”, which ought to exclude from its ambit the concept of an anticipatory breach.  Nor do I find anything in the passage quoted and relied upon by Dr Sharpe from the Law Institute Journal which supports Dr Sharpe’s contention on that point.  The learned authors certainly exclude from the concept of “default” in the relevant clause defaults which have been remedied and are no longer extant.  Nor do I agree that a contract cannot be repudiated if it is “conditional”.  That contention is an overgeneralisation.  No doubt it is true in the instance of a contract which is the subject of a condition precedent to formation.  I do not think it necessary to express a view as to whether it is correct relative to a contract which is conditional as to performance only.  Here, the conditionality, if that is a correct way of looking at GC21, is not either of those characters.  It is the exercise of the power under this clause which is conditional – not the entire contract or its entire performance.

34As to Dr Sharpe’s third contention based on the parties’ mode of performance of the contract, it has been authoritatively determined that actions taken by the parties in performance of a written contract after its formation cannot affect the proper construction of that written contract:  Agricultural and Rural Finance Pty Limited v Gardiner (2008) 238 CLR 570, 582 [35] per Gummow, Hayne and Kiefel JJ.

35It follows that, having removed the misstatement of Dr Sharpe’s contentions as to the meaning of the word “default” in paragraph GC21, I nevertheless reject that contention.

36As Ms Douglas observed, Daly AsJ stated in Chatham v Coral Park Pre-Training and Breaking Pty Ltd [2020] VSC 814 [212], “the authorities provide that, when the question of whether a party is ready, willing and able to fulfil their obligations under a contract is put in issue in a proceeding, the parties in the position of the purchasers in this proceeding bear the onus in this regard”. Her Honour referred to Foran v Wight (1989) 165 CLR 384, 393, 406 per Mason CJ; Australian National Airlines Commission v Robinson [1977] VR 87, 91; and AU Future Health Pty Ltd v Echmoho (Hong Kong) Limited [2017] VSCA 380. In Echmoho, Robson AJA, with whom Wheelan and Ashley JJA concurred, said at [75]:

“The authorities confirm that a plaintiff who is not ready, willing and able to perform the contract itself should not be compensated for loss of the benefit of the contract.”

37For the reasons above, I believe the issue as to whether it was possible, as a matter of practicality, for the outstanding balance of the deposit to be paid by the purchaser between 7.51pm and midnight on 8 December 2019 was a matter which arose for decision in the proceeding and the burden of proof on that matter lay with the plaintiff, Ms Willis.

38I accept that there was a misapprehension on my part of the position taken by Dr Sharpe on behalf of the plaintiff as to the true construction of clause GC21.  Nevertheless, since I have rejected, for the reasons explained above, Dr Sharpe’s contention on that point, the misapprehension was immaterial.  As such, it cannot be a ground for re-opening the determination already made.

39I am not persuaded that I was under any misapprehension as to where the burden of proof lay on the crucial issue.  The authorities relied on by Ms Douglas fortify me in the position which I took.

40The absence of evidence as to the timing and practicality of after hours electronic funds transfers was raised and debated at some length in the course of closing submissions.  Dr Sharpe was correct in contending that this could not be a matter for judicial notice.  Whilst she made assertions from the Bar table based upon her own personal experience, she can scarcely have expected me to treat these matters as evidence, much less as the basis for taking judicial notice.  Dr Sharpe, it seems to me, elected to rely upon her contention that there was no “default” until non-payment of the balance of the deposit as at midnight.  This was a forensic decision.  I agree that the fact that a deficiency in evidence is the result of a forensic decision by counsel seeking to re-open is not a conclusive ground to reject the re-opening application, yet it is a matter of great significance.  Ultimately, as Dr Sharpe observed, what should weigh on an application such as this are the interests of justice.  These interests, of course, extend not only to the substantive merits of the dispute before the Court, but also a concern to avoid subverting  the principle of finality.

41Dr Sharpe correctly observed that the Court of Appeal was moved to approve the extreme steps which I took in allowing a re-opening and amendment of pleadings in Di Stasio because justice demanded it.  Failure to allow a re-opening would have led the builder to be left unremunerated for work which it had completed and which was not the subject of criticism as to any defects.  In the present instance, the plaintiff’s pleaded case was that the short payment of deposit by her was the result of inadvertence. (Statement of Claim, paragraph 7(b))  At trial, the plaintiff did not give evidence and the alleged “inadvertence” remained unverified.  In commencing her closing submissions, Ms Douglas, counsel for the defendant vendor, said:

“We would begin by simply saying that we consider this to be a rather unfortunate case in which the purchaser has engaged in a negotiation tactic to attempt to reduce the agreed purchase price and that tactic has effectively backfired.  The purchaser sought to reduce the purchase price and terminate the contract on the last day possible, on the basis of building reports …” (T126, L27-T127, L3)

42In the absence of evidence from the vendor to the contrary, I consider that Ms Douglas’s interpretation of events is reasonable.  In Idi StasioI trial counsel swore an affidavit to the effect that he was acting under a misapprehension.  There is no equivalent evidence here.  This is not an instance, as was Di Stasio, where the interests of justice cry out for the remedy of re-opening.

43The summons should be dismissed.  Costs are reserved.