The plaintiff commenced these proceedings under s 66G of The Conveyancing Act 1919 (NSW) for sale of co-owned property.
That case did not come on for hearing because there was a mediation. The outcome of the mediation was that the parties entered into a Deed of Settlement. That Deed dated 4 September 2013 is in evidence before me.
Essentially, the Deed provided that the plaintiff would buy out the other co-owners' interests in the subject property for $645,000.
The Deed contained, amongst others, the following clauses, 2.2 requiring a deposit of 5% which was paid.
Clauses 2.4 and 2.6 I should set out in full:
2.4 upon presentation of a signed transfer and the Certificate of Title the plaintiff will provide bank cheques for the balance of the settlement sum made payable to the defendants or their nominees in equal proportions to their ownership of the property.
2.6 the defendants must not present the signed transfer any earlier than eight weeks from the date of this Deed".
The other provisions in the Deed which are relevant to the present problem are 7.4 noting correspondence sent by post was taken to have been received three days after posting.
8.7 the warranties, undertakings and indemnities in this Deed do not merge on completion and instead survive until performed in full.
8.8 the parties must do all things necessary and ancillary to give effect to this Deed, including signing such documents and forms as required by law.
8.9 this Deed constitutes the entire agreement of the parties about its subject matter and supersedes all previous agreements, understandings and negotiations on that subject matter.
8.12 this Deed is governed by the law in force in the Australian Capital Territory and each party submits to the exclusive jurisdiction of the Courts of that place.
I should have also set out 2.10:
Subject to the completion of the sale:
(1) the parties consent to the proceedings being dismissed with no orders as to costs.
(2) the parties will release one another from any and all claims in any way arising or associated with the proceedings and the dispute whatsoever.
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It can be seen that there is some tension between clause 2.10 and clause 8.7.
Clause 2.6 uses the word "must" and tells the defendants that they must not produce the signed transfer any earlier than eight weeks from the date of this Deed.
When one has an expression "from the date" one starts counting from the next day which means that 31 October was the first day on which the transfer and Certificate of Title were to be presented.
Shortly before 30 October the defendants' solicitors were insisting that there be a completion on 30 October. They protested that the plaintiff had not provided a transfer so that they could have it signed and be ready for completion.
On 31 October the defendants' solicitors wrote via e-mail a letter which included the following:
In accordance with clause 2.4 of the Deed of Settlement dated 4 September 2013...we wish to present the executed transfer and Certificate of Title in respect of the land... A copy of these documents is enclosed. Please indicate a time today which is convenient to you for the presentation of the original of the attached documents.
The response to this from the plaintiff was that the client's bank required that there be a contract for sale and that they expected to be able to issue a copy of the draft contract early in the following week.
On 22 November 2013 the defendants' solicitors indicated they had executed the contract of sale and the additional clauses were agreed. The letter forecast settlement on 27 November. However, the plaintiff said that this would not be possible and it would seem that it was only about 18 December that the final contract was ready to be signed.
The defendants' solicitors had been agitating for instant completion since the end of October.
On 18 December they sent to their city agents the current Notice of Motion and affidavit. Although that was filed on 23 December it was not actually served until mid-January.
The contracts were signed and the conveyance was completed on 31 January 2014, though I have few details as to what happened then.
The Notice of Motion purports to be under s 73 of the Civil Procedure Act 2005 (NSW). Section 73 empowers the Court to exercise jurisdiction to determine any question in dispute between the parties to proceedings as to whether and on what terms the proceedings have been compromised or settled between them and may make such orders as it considers appropriate to give effect to any such determination.
It is extremely doubtful whether section 73 extends to the present dispute. There is no doubt in the present case the terms on which the parties settled the matter. There is some dispute as to the construction of that settlement and that would be within section 73, but what the defendants want in this case is common law damages for breach of contract and that, I very much doubt, is within section 73, though there does not appear to be any authorities one way or the other on that particular point. As everyone is here to determine the question of construction I will say nothing more about it except I do not wish it to be thought that I am holding that there is such a jurisdiction where there is no consent.
Mr Hyde, who appeared with Mr Kanagaratnam for the plaintiff, pointed out laws requiring that disputes be dealt with in the ACT but that is only a point which goes to whether a motion could have been made to permanently stay these proceedings or dismiss them. When both parties are here and debating there is no problem with the Court exercising jurisdiction.
Then we go back to the terms of settlement.
Mr Moujalli, who appears for the defendants, points to the word "will" in clause 2.4. He says that "upon presentation of a signed transfer the plaintiff will provide" et cetera et cetera et cetera. He reads that completely literally. It cannot be so read in my view for a number of reasons and I put aside the fact that it does not appear that a transfer in registrable form and the original Certificate of Title ever were presented. I put that aside because, as the defendants indicated, by sending the photocopies that they could do it and no protests were made. It was not a matter which the parties thought was particularly important but, strictly speaking, the triggering event did not take place.
The reasons why it could not mean what Mr Moujalli would put is, first of all, read literally the defendants could at any time on or after 31 October without any prior notice have presented a signed transfer and Certificate of Title to the plaintiff without any notice at all and demanded an immediate bank cheque. That just could not be commercially the proper construction because people would know with a bank cheque for some $600,000 that one does not carry it around in one's pocket and there would need to be some notice given and time given to prepare it.
In any event, "signed transfer" must mean transfer in registrable form and the transfer that was presented was not stamped even though it was, of course, the plaintiff's obligation to have it stamped.
The other reason is that clause 2.6 does not say that time is of the essence from 31 October at all. Not only does it not use the words "and in this respect time is of the essence" as one would expect, and in view of clause 8.9 as there is an entire agreement one does not read it in when it is not said.
Now why is the peculiar expression "any earlier than eight weeks" used?
Mr Moujalli says it was to give the plaintiff eight weeks to get their finance together. That is a possibility but it does not say that the defendants may after eight weeks present the transfer. There is a prohibition against the defendants doing it any earlier than eight weeks and in saying that it won't happen earlier than eight weeks does not make time of the essence for the expiry of eight weeks. Again there is the significance that clause 2.6 uses the word "must" and this tells against reading the word "will" in 2.4 as meaning "must".
Then one takes into account section 13 of the Conveyancing Act.
Before 1919 the situation was that one construed in a Common Law court a condition of the contract when it talks about doing something on day X, that if the matter is not done by day X there is a breach of contract.
In Equity such clauses were always construed unless the words "time of the essence" were used or implied that the date was a date which had to be complied with or complied with within a reasonable time thereafter.
Section 13 says that one approaches clauses now the same way at law as one once did in Equity.
Accordingly, there would not be any breach even at law until there was a reasonable time elapsed after the triggering event in 2.4.
Now, when was that reasonable time?
The authorities say that one has got to look at all the things that had to happen. One does, of course, take account of the time between the date of the Deed of Settlement and 31 October, but one also knows that as some of the authorities have said conveyancing of land is not the same as selling a pound of butter and that when there is a large amount of money to be obtained and title to land is to be obtained, which usually requires searches and other enquiries, that things do not happen overnight.
The correspondence that is set out in the affidavits by the solicitors concerned on both sides show what was happening. The defendants' solicitor was continually pressing for completion, but she also seems to have complied with the requests made by the purchaser's solicitors, presumably under clause 8.8, to get together the contract for sale knowing that unless the National Bank did release moneys to the plaintiff it was idle to threaten completion because there would be no money to complete. In due course the matter was completed.
Clause 2.10 says that subject to that completion the parties consent to the proceedings being dismissed with no orders as to costs.
Now, that has to be read in tension with 8.7 which says that there is no merger, but it does seem to me that despite the tension that if there is completion and there is no reservation of any rights then that is the end of the matter.
The Notice of Motion originally asked for specific performance. That was rather odd seeing that all the negotiations immediately before its issue pointed to the fact that the defendants had to enter into a contract of sale which they had agreed to do and that the draft was in their court.
The next step towards completion on the time the Notice of Motion was filed was in the defendants' court. The defendants' solicitor had closed her office down for ten days so nothing was going to happen to at least 6 January.
Had the matter proceeded to specific performance it may be that the Court would have ordered that some interest be paid, but it is quite unlikely.
Mr Moujalli says that there is a breach of contract and that damages flow and the damages are the loss of the money that should have been paid on 30 October plus extra legal fees.
There are various answers to that. First of all, I rejected the construction which required completion on 30 October or even 31 October.
I reject Mr Moujalli's submission that a reasonable time for settlement on the construction I have adopted would have expired a week or so after 31 October. What required to be done to complete the purchase as explained in the correspondence does not seem to me to be at all unreasonable.
Accordingly, I find that the defendants have failed to prove breach. Even if they had proved breach there is no evidence of any loss.
Mr Moujalli says, and he refers me to the decision of Brereton J in Hexiva Pty Ltd v Lederer (No. 2) [2007] NSWSC 49, that I can presume that when a person has not received money that he or she has suffered loss and that section 56 of the Civil Procedure Act requiring the Court to deal with matters without undue delay or excessive technicality means that I should presume that there is such a loss.
I do not read section 56 as dispensing a party seeking damages from proving their damages. It does mean that there may be some informal method of proof such as one might accept an estate agent's speaking valuation rather than a formal valuer, but it does not dispense with the requirement of giving evidence.
There is no evidence presented as to any loss. We do not know whether any of the defendants was operating on an overdraft or is a millionaire with thousands of dollars in the bank. We do not know. We are not told anything. We could have been told because all these defendants have instructed their solicitor to pursue this matter. The only material provided was a statement by the solicitor which I rejected as not being admissible.
Accordingly, the Notice of Motion must fail.
It must be dismissed with costs.
After I gave my reasons, Mr Hyde asked for indemnity costs and tendered a letter from his solicitors to the defendants' solicitors of 1 November which made an offer and it asked for a reply by 4.00pm on Wednesday 6 November.
That was only three business days and Mr Moujalli says that that was too short a period of time to be reasonable. In fact, there does not appear to have been any response to that offer at all.
Normally I think three business days would have been too short but I agree with Mr Hyde's submission that when one looks at the letters that were pouring forth between the solicitors between 30 October and 1 November there was some clear indication that the parties were all ready to finalise the matter and to instruct the solicitors to finalise or do something and that in those circumstance three days is probably sufficient.
The offer was better than what was obtained.
[2]
ORDERS
The defendants' notice of motion dated 23 December 2013 is to be dismissed.
The defendants are to pay the plaintiff's costs of the notice of motion dated 23 December 2013 on an indemnity basis.
The proceedings are otherwise dismissed with no other order as to costs.
[3]
Amendments
04 June 2015 - Cover sheet: (1) Decision - Notice of motion dismissed. The plaintiff's costs to be paid by the defendants on an indemnity basis.
(2) Parties - Second defendant added
Orders: [54] The defendants' notice of motion dated 23 December 2013 is to be dismissed.
[55] The defendants are to pay the plaintiff's costs of the notice of motion dated 23 December 2013 on an indemnity basis.
[56] The proceedings are otherwise dismissed with no other order as to costs.
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Decision last updated: 04 June 2015