First Plaintiff v Defendants

PRACTICE AND PROCEDURE - Execution of instrument by order of Court under s 22 of the Supreme Court Act 1986 (Vic) - Circumstances where appropriate to order.

1 In this proceeding, the plaintiffs (Giovanna and Nina) seek the determination of the question whether the first defendant (Roberto) is bound to complete a Contract of Sale (Contract) between the plaintiffs and Roberto, as vendors, and the second and third defendants as purchasers (Purchasers) for the sale of land at 16 Halsey Road, Reservoir, Victoria (Land).[1] If so, the plaintiffs seek consequential orders requiring Roberto to authorise the vendors' solicitors to effect the completion, or settlement, of the sale using the electronic conveyancing system established pursuant to the Electronic Conveyancing National Law (Vic) (ECNL).[2] The application is made under s 49 of the Property Law Act 1958 (Vic) (PLA).

2 Nina is the mother of Giovanna and Roberto. Giovanna and Roberto hold one of two equal undivided shares in the Land as joint proprietors, they being the legal personal representatives of Gino Luigi Ventura, deceased. Nina holds the other of the two equal undivided shares in the Land as sole proprietor. As between Giovanna and Roberto, on the one part, and Nina on the other, they hold their respective shares as tenants in common.

3 On 17 February 2018, Giovanna, Nina and Roberto, as vendors, entered into the Contract with the Purchasers to sell the Land for the sum of $765,000.00 payable by deposit of $76,500.00 with the balance of $688,500.00 due at settlement on 20 March 2018. All three vendors signed the contract. Giovanna, who made the principal affidavit in support of the application, deposed that she knows Roberto's signature and was present when he signed the contract. She recognises his signature on the first page of the contract.[3]

4 Settlement did not take place as anticipated, because Roberto refused to provide the solicitor acting on behalf of the vendors with a Client Authorisation Form, which permits the solicitor to sign the Transfer of Land (in accordance with the electronic conveyancing regime now in place in Victoria), a photo identification and a signed Duties Form (the necessary steps). Both Giovanna and Nina attended to these necessary steps before 16 March 2018.

5 In attempts to have Roberto do the same, a member of the staff of MDM Lawyers, who act for the vendors under the Contract, spoke to him on 2 March 2018, at which time Roberto denied that the Land had been sold and terminated the call. On 13 March 2018, Mr Mirabelli, of MDM Lawyers, spoke to Roberto by telephone. During the conversation Roberto agreed to attend the offices of MDM Lawyers on 15 March 2018 at 2.30pm to complete the necessary steps. He did not do so. On 16 March 2018 Mr Mirabelli wrote to Roberto requesting that he complete the necessary steps. Roberto failed to do so.

6 Then Giovanna made application for the appointment of an administrator for the financial affairs of Roberto pursuant to the Guardianship and Administration Act 1986 (Vic). The application was heard by the Victorian Civil and Administrative Tribunal in May 2018, but the Tribunal declined to order the appointment of an administrator and, in doing so, relied upon evidence given by a General Practitioner consulted by Roberto.

7 In order to prevent the sale being terminated by the Purchasers for the vendors' breach, the Purchasers have been let into possession of the Land pursuant to a licence agreement pending completion of the Contract.[4] The clear implication from the facts is that the Purchasers are ready, willing and able to complete the purchase of the Land and the only matter standing in the way of that completion is the refusal of Roberto to provide the vendors' solicitors the requisite authority to do so.

8 In these circumstances, Giovanna and Nina approached the Court seeking the determination of the question whether, and a declaration that, Roberto is bound to complete the Contract and also consequential orders requiring Roberto to execute the documents necessary to effect a transfer of the Land to the Purchasers. In particular, the plaintiffs seek an order that Roberto execute a Client Authorisation Form appointing Anthony Mirabelli, solicitor of MDM Lawyers, level 1, 268 Keilor Road, Essendon North 3041, to be his representative for the purposes of the conveyancing transaction embodied in the Contract. Such a Client Authorisation Form, within the meaning of the ECNL, is prescribed in Schedule 4 to the Participation Rules determined by the Registrar of Titles pursuant to s 23 of the ECNL.[5] If Roberto does not execute the Client Authorisation Form, the plaintiffs seek an order pursuant to s 22(1) of the Supreme Court Act 1986 (Vic) that the Client Authorisation Form be executed by the Prothonotary.

9 When the application came on for hearing on 28 August 2018, there was no appearance for Roberto nor for the Purchasers, for whose benefit the application is partly made.[6]

10 It is submitted on behalf of the plaintiffs that Roberto is under an obligation to them to join with them to complete the Contract on one or other of two bases:

(a) pursuant to the terms and conditions of the Contract itself; or

(b) pursuant to a collateral contract between the plaintiffs and Roberto which arose when they executed the Contract.

11 Whichever approach is taken, it is submitted that the Court should make the same order, namely that Roberto (or the Prothonotary if Roberto fails to do so) take steps to effect the transfer of the Land, namely, by giving the plaintiffs legal representative in the conveyancing matter, MDM Lawyers, authority to take all necessary steps to perform the Contract. In this case an electronic conveyancing transaction is proposed and to that end the Client Authorisation Form is required to enable the solicitor to complete the transaction.

12 The Client Authorisation Form given pursuant to the Participation Rules would then authorise MDM Lawyers:

(a) to digitally sign registry instruments or other documents, including the Transfer of Land;

(b) to present registry instruments or other documents for lodgement electronically;

(c) to authorise or complete any associated financial transaction.[7]

13 Under the ECNL an associated financial transaction means a transaction of a financial nature that is associated with a conveyancing transaction.[8] The examples given in the ECNL include the payment of any tax, duty (for example, stamp duty), fee or charge payable in respect of a conveyancing transaction. This would give MDM Lawyers the authority to complete the Duties Form required to complete the Contract.[9]

14 The basis for orders against Roberto requiring him to perform his obligations under the Contract derive from terms of the Contract pursuant to which all vendors, including Roberto, agree to sell the Land to the Purchasers for the price and on the terms set out in the Contract.[10] Those terms include a provision that at settlement the vendor must do all things necessary to enable the purchaser to become the registered proprietor of the land.[11]

15 The plaintiffs submit that a common sense reading of the Contract is that these terms of the Contract extend to require each vendor as co-owners of the Land to perform the Contract, and that the terms are not merely for the benefit of the Purchasers. Alternatively, it is implicit in the terms that they are promises to both the Purchasers and each other co-owner.[12] The basis for the implication of such a term is that the implication is reasonable and equitable, is necessary to give business efficacy to the Contract (so that no term will be implied if the contract is effective without it), is so obvious as to 'go without saying', is capable of clear expression and does not contradict any express term of the Contract.[13]

16 In my view the implication of the term is justified. All of the conditions for the implication of the term are satisfied. I would add, however, that there is a further principle applicable in the current circumstances. It is an unexceptional proposition of law that a contract of this kind, for the sale of land, brings with it an implied obligation on each party to do all that is reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick:[14]

As a general rule...where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there be no express words to that effect.

17 In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd[15] Mason J observed:

It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith C.J. said in Butt v M'Donald:

"It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract."

It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.

18 Although all of the cases for the implication of terms in a contract of sale of land, or in the application of these principles, concern disputes as between the contracting parties on each side of the transaction, there seems to me to be no valid reason why they should not be applicable as between co-owners of land who are vendors under such a contract. It would make a nonsense of the contract that one vendor, as a contracting party having voluntarily entered into the contract, could frustrate the completion of the contract by the simple expedient of refusing to lend his assistance to that completion process.

Applications to the Court by vendor and purchaser

A vendor or purchaser of any interest in land, or their representatives respectively, may apply to the Court, in respect of any requisitions or objections, or any claim for compensation, or any other question arising out of or connected with the contract (not being a question affecting the existence or validity of the contract), and the Court may make such order upon the application as to the Court may appear just, and may order how and by whom all or any of the costs of and incident to the application are to be borne and paid.

20 The object of s 49 of the PLA is to enable a party to obtain a decision of the Court upon some point arising under a contract of sale of land in a summary way instead of being compelled to institute a suit for specific performance.[16] The words of exception in parenthesis in the section, 'not being a question affecting the existence or validity of the contract', refer to that existence or validity at its inception.[17] Moreover, the words of exception do not prevent the Court determining the validity of a notice of rescission and thus whether the contract is enforceable, or has ceased to exist or be binding.[18]

21 In Ten Boundary Street South Melbourne Pty Ltd v Ivanhoe Project Pty Ltd,[19] Riordan J derived from the decision of Kaye J in NGL Properties Pty Ltd v Harlington Pty Ltd,[20] the following principles about the scope of the Court's jurisdiction, and the consequential relief available, under s 49(1) of the PLA:

(a) The Court may determine any short point of law or construction arising on the abstract, contract or requisitions;

(b) However, this procedure is not intended to enable the Court to summarily resolve disputed questions of fact; and cannot be used to determine claims for specific performance or rescission;

(c) The section empowers the Court to make such order as appears just, which enables the Court to give relief which is the ordinary consequence of the decision of the point submitted to it. However, such an application cannot be treated as a claim for damages.

22 It is a mistake, however, to treat the authorities dealing with the 'jurisdiction' to hear and determine matters under this section as if the Court otherwise had none. Subject to the Constitution Act 1975 (Vic), the Supreme Court has jurisdiction in or in relation to Victoria, its dependencies and adjacent areas in all cases and is the superior court of Victoria with unlimited jurisdiction: s 85(1). The exercise of that jurisdiction turns on personal service of the originating process on the defendant,[21] which has undoubtedly been validly effected in this case. The context in which the vendor and purchaser summons was introduced included the distinction between a matter that had to be dealt with in Court and a matter that could be dealt with in Chambers, and the use of a summary procedure dependent on proof of matters by evidence on affidavit. The distinction between Court and Chambers was abolished in 1986. Neither of these procedural issues is determinative of the power of the Court. The introduction of the Civil Procedure Act 2010 (Vic), with its extensive powers over the management of proceedings in the interest of the just, efficient, timely and cost effective resolution of disputes, makes the restrictions under this section that derive from earlier times less material today.

23 The application is made by Originating Motion in Form 5C pursuant to s 49 of the PLA. Form 5C is prescribed by r 45.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules) and for the procedure to be available the Court must dispense with the requirements of rr 5.03(1) and 8.02 of the Rules.[22] This is a special procedure applicable where the Court dispenses with the operation of those rules and is a matter of the exercise of the Court's discretion. Without limiting that discretion, the procedure is available where the case is urgent, to save time and expense and where the defendant consents.[23] However, the power of the Court to allow the special procedure to be used is not limited to those three circumstances.

24 Here the circumstances are special. Roberto's inaction, his refusal to co-operate to effect completion of the Contract, have held up the settlement of the sale for 5 months. The Purchasers have been let into possession of the Land and they have not sought to enforce the completion of the Contract by an action for specific performance, leaving it to the plaintiffs, who may be seen to be responsible, to see to it that their co-owner abides by the terms of the Contract. The use of the special procedure will, undoubtedly, save time and expense. For these reasons I propose to authorise the use of the special procedure in this case.[24]

25 The question raised by the plaintiff, although novel in the sense that neither Counsel nor the Court has found direct authority on it, is one that truly 'goes without saying', in that it is obvious that one of three co-owners who are vendors must be taken to promise the others to co-operate in authorising completion of the Contract. It is also reasonable and equitable, is necessary to give business efficacy to the Contract, is capable of clear expression and does not contradict any express term of the Contract.

26 Harking back to the observations, referred to above, of Mason J in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd,[25] it is also the case that an implied promise by Roberto to co-operate with the plaintiffs in authorising completion of the Contract is fundamental to the Contract. It cannot be completed without that co-operation. It is thus fundamental that each vendor agrees to do all that is necessary to be done on their part for the carrying out of completion of the Contract 'though there be no express words to that effect'.[26]

27 Moreover, the question is one that arises out of the Contract within the meaning of s 49 of the PLA. The orders that are sought compelling Roberto to execute a Client Authorisation Form, although akin to an order for specific performance, do not go so far as a decree of that kind. They are orders which fall within the words of s 49 that empower the Court to 'make such order upon the application as to the Court may appear just, and may order how and by whom all or any of the costs of and incident to the application are to be borne and paid'.

28 It is in these circumstances unnecessary to consider the alternative question raised by the plaintiffs of the co-vendors being bound by a collateral contract.

29 The plaintiffs sought orders that would require the Prothonotary to execute a Client Authorisation Form in the event that Roberto failed or refused to do so. The power to so order is found in s 22 of the Supreme Court Act 1986 (Vic), which provides:

(1) If a person fails or refuses to comply with a judgment directing that person to execute a document or indorse a negotiable instrument, the Court may, on such terms and conditions as it considers just, order that the document be executed or that the instrument be indorsed by a person nominated by the Court.

(2) A document or instrument executed and indorsed under subsection (1) operates and is for all purposes available as if it had been executed or indorsed by the person originally directed to do so.

30 By s 3 of the Supreme Court Act 1986 (Vic), a 'judgment' includes an order of the Court. The text of the section makes it clear that to engage the power there must first be an entitlement to execution of the document by way of judgment or order.[27] The power is independent of the power of the Court to obtain compliance with an order of the Court by committal and sequestration under r 66.05 of the Rules.[28]

31 There is good reason to authorise the use of this power should Roberto fail or refuse to comply with the order of the Court. His attitude to the plaintiffs is one of animosity. I will not recount the evidence of that animosity exhibited to the affidavit of Giovanna.[29] Suffice it to say, it appears vituperative and irrational. There is every reason to think he will not comply with the order of the Court.

32 In relation to the Costs of the proceeding, the plaintiffs submitted that rather than order the costs to be taxed and assessed, I should fix them and authorise the plaintiffs to deduct them from Roberto's share of the proceeds of the sale of the Land. The process of the Court in the taxation of the costs in this case, given the failure of Roberto to co-operate in the completion of the Contract or to participate in this proceeding, would seem an unnecessary waste of both the parties' and the Court's resources. This is a case where, in the exercise of the Court's undoubted discretion as to costs,[30] I consider it appropriate to fix the costs. The plaintiffs solicitor and Counsel have estimated the costs from the commencement in the modest sum of $15,500.00. I consider that to be an appropriate figure. I am not persuaded, however, that I have the power to order that these costs be deducted from the proceeds of the sale of the Land due to Roberto.

33 For the reasons set out above I will make orders and declarations as follows:

(a) Order pursuant to sub-rule 45.02 of the Rules that:

(i) the requirements of rr 5.03(1) and 8.02 are dispensed with; and

(ii) the plaintiffs have leave to commence their proceeding by originating motion in Form 5C.

(b) Declare that the first defendant is bound to co-operate with the plaintiffs in authorising completion of the Contract of Sale of Real Estate entered into on 17 February 2018 for the sale of the land known as 16 Halsey Street, Reservoir, being the land more particularly described in Certificate of Title Volume 8149 Folio 731, and made between the plaintiffs and the first defendant, as vendors, and the second and third defendant, as purchasers;

(c) Order that the first defendant must, within seven days after the day of service of this order on the first defendant, execute a Client Authorisation Form - within the meaning of the ECNL and in the form of Schedule 4 to the Participation Rules determined by the Registrar of Titles and published on 27 April 2017 - appointing Anthony Mirabelli, solicitor of MDM Lawyers, Level 1, 268 Keilor Road, Essendon North 3041 to be his Representative for the purposes of the conveyancing transaction embodied in the Contract of Sale of Real Estate (Client Authorisation Form);

(d) Order that if the first defendant does not comply with the preceding order within seven days after the day of service of this order on the first defendant, the Client Authorisation Form shall be executed by the Prothonotary of the Supreme Court of Victoria, pursuant to sub-section 22(1) of the Supreme Court Act 1986 (Vic);

(e) Order pursuant to sub-rule 63.28(c) of the Rules, the first defendant shall pay the plaintiffs' costs fixed in the amount of $15,500.00;

(f) Reserve liberty to the plaintiffs to apply as to the further working out of this order and, in particular, as to any further steps required to complete the Contract.

[1] The land more particularly described in Certificate of Title Volume 8149 Folio 731.

[2] The National Law was adopted in Victoria pursuant to the Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic).

[3] Affidavit of Giovanna Ventura made 31 July 2018 [8], exhibit GV-2 (Giovanna Ventura affidavit).

[4] Giovanna Ventura affidavit made 31 July 2018 [23].

[5] Version 4, published on 27 April 2017.

[6] There were affidavits proving personal service on each of the defendants.

[7] A document referred to in the Giovanna Ventura affidavit as one of the necessary steps [14(c)].

[8] ECNL cl 3, definition of 'associated financial transaction'.

[9] This is mentioned in the Affidavit of Giovanna Ventura. MDM Lawyers is the firm appointed under the Contract as the common legal representative of the vendors in the conveyancing matter.

[10] The initial words in Part 1 of the Contract.

[11] Clause 10.1(b)(i) of the General Conditions, being the Form 2 prescribed by the Estate Agents (Contracts) Regulations 2008.

[12] See BP Refinery (Westernport) v Shire of Hastings (1977) 180 CLR 266.

[14] (1881) 6 App Cas 251, 263.

[15] [1979] HCA 51; (1979) 144 CLR 596, 607 (citation omitted).

[16] Re Hargreaves & Thompson's Contract (1886) 32 Ch D 454, 459;

[17] Re Sneesby & Ades & Bowes' Contract [1919] ArgusLawRp 66; [1919] VLR 497, 504 (Cussen J); Nowak v Linton [1960] WAR 2, 3 (Virtue J); Putt v Perfect Builders Pty Ltd [2013] VSC 442 [21], fn 3.

[18] Re Jackson and Woodburn's Contract (1887) 37 Ch D 44; Re Stone & Saville's Contract [1962] 1 WLR 460, affirmed [1963] 1 WLR 163; Drayton v Graham [1923] ArgusLawRp 64; [1923] VLR 549, 552.

[19] [2016] VSC 755 [3].

[20] [1979] VicRp 11; [1979] VR 92, 100.

[21] Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310, 323-4.

[22] Rule 5.03(1) requires an originating motion naming a defendant to be indorsed with a statement to the effect that if the defendant does not file an appearance within the time stated in the originating motion, the plaintiff may obtain judgment against the defendant without further notice. The time to be stated for appearance is that specified in r 8.04: r 5.03(2). Rule 8.02 provides, in substance that a defendant shall not take any step in the proceeding unless they have first filed an appearance.

[24] This proceeding was referred to Associate Justice Derham for hearing and determination by order of Macaulay J made pursuant to r 77.05 of the Rules.

[25] [1979] HCA 51; (1979) 144 CLR 596, 607.

[26] Mackay v Dick (1881) 6 App Cas 251, 263.

[27] Australia and New Zealand Banking Group Ltd v Australian Securities and Investments Commission (2014) 106 ACSR 440 [20].

[28] Leach v Leach [1965] VicRp 77; [1965] VR 599, 604-5.

[29] Giovanna Venture affidavit [18], exhibit GV-4, attachment 1; Affidavit of Anthony Mirabelli made 28 August 2018 [6].

[30] Supreme Court Act 1986 (Vic), s 24.