Peppe v Jydonnet Pty Ltd [2007] NSWSC 547 | Case summary

2265/07 - PEPPE v JYDONNET PTY LTD JUDGMENT 1 HIS HONOUR: The plaintiffs by their amended summons seek a declaration that Benito Peppe was the highest bidder at the auction of 583-583A Dean Street, Albury held on 15 March 2007, and an order that proper contracts be signed to give effect to that fact. 2 By notice of motion filed on 11 May 2007 the plaintiffs sought an order that caveat AD034764 be extended until further order or, in the alternative, an injunction preventing the first defendant from dealing with the property at 583-583A Dean Street, Albury until these proceedings are finalised. 3 The caveat in question claims an equitable interest in fee simple as purchaser by virtue of a contract for sale pursuant to auction conducted on 15 March 2007 on behalf of the registered proprietor as vendor. The caveator is shown as Ivan Peppe. 4 The matter I have to determine is whether any order in favour of the plaintiffs should be made on that notice of motion. So far as the caveat is concerned, the application is made under s 74K of the Real Property Act 1900 and the issue is whether the caveator's claim has or may have substance. 5 The injunction claim is dealt with under the ordinary principles of equity and requires that the plaintiffs demonstrate an arguable case and that the balance of convenience favours the grant rather than the refusal of the injunction and that damages are not a sufficient remedy. 6 The background facts are that Ivan Peppe owns a property at 587-591 Dean Street, Albury which adjoins the subject property. On hearing that the subject property was up for auction the Peppes, namely, Ivan and his wife Paula, his father Benito and his mother Maria, agreed that they would seek to purchase the property at auction and that it would be bought for the Peppe Family Superannuation Fund and that Benito Peppe would do the bidding on behalf of the foursome. 7 The Superannuation Fund would appear to be one where the four members of the Peppe family were the trustees and it was unincorporated. As trustees, presumably they would be buying as joint tenants. 8 The auction was conducted at the Albury Club on 15 March 2007. The auctioneer was a Mr Kloppenborg. He was attended by two employees of L J Colquhoun & Sons, a real estate agent practising in Albury which is the second defendant in these proceedings, the auctioneer being the third defendant. The first defendant is the registered proprietor of the subject property. 9 According to Mr Ivan Peppe's affidavit, there were a number of bidders at the auction. Mr Benito Peppe bid from time to time and made a bid of $1.395 million. A Mr Paull then bid $1.4 million and Mr Benito Peppe then bid $1.405 million. Mr Ivan Peppe's affidavit then said: "I watched Kloppenborg look towards Paull, who was still sitting with his head down and with his mobile phone held up to his ear. Paull did not look up towards Kloppenborg. He remained silent and shook his head. Kloppenborg then said words to the following effect: 'Are we all done... all finished... if there are no more bids... going once... going twice... sold'."

Mr Ivan Peppe says: "As Kloppenborg said 'sold' he clapped his hands together and looked towards my father and me." 10 However, after the auction the auctioneer did not sign any contract with the Peppes. It would seem that the auctioneer's assistant had made a note that Mr Benito Peppe had bid $1.395 million and then Mr Paull had bid $1.405 million. Mr Ivan Peppe says that he tried to remind the auctioneer and his assistants that there was a $1.4 million bid and Mr Kloppenborg initially replied, "Yeah, there was, I do remember a 1.4 bid being made" but then he was escorted outside by the Colquhoun agents and no further "admissions" were made by him. 11 The contract was then signed, according to Mr Ivan Peppe, in secret and it is said that that must have meant that Mr Kloppenborg had made a decision that Mr Paull was the highest bidder. It is rather odd that if that was so, that there is nothing to contradict Mr Ivan Peppe's affidavit and Mr Kloppenborg, even though he is the third defendant represented by separate counsel, did not file any evidence. 12 However, taking the facts as they are put forward by Mr Ivan Peppe, Mr Pritchard, who appears for the first defendant, says that there are five very good reasons why the plaintiffs cannot succeed. One, the caveat is by Mr Ivan Peppe and he was not the bidder. Two, there can be no interlocutory injunction for the same reason. Three, there was no note or memorandum of the alleged contract sufficient to satisfy s 54A of the Conveyancing Act 1919. Four, the plaintiffs were involved in an illegal transaction contravening s 83 of the Property, Stock and Business Agents Act 2002. Five, the auctioneer had made a decision as to who was the highest bidder and the auctioneer's decision was final. 13 1. The first defence to my mind must be right, the bidder was Benito Peppe. It may be that he was one of four joint tenants but he, because he never gave any indication that he was bidding on behalf of anybody else, would be the successful bidder if his allegations of fact were correct. However, that does not affect the question as to whether an injunction should be given. 14 2. The idea was, according to Mr Ivan Peppe's evidence, that the four members of the Peppe family would buy as trustees of the Superannuation Fund and as joint tenants. Between joint tenants there are the "four unities" and one of those unities means that each one of the four joint tenants has the full fee simple. Accordingly, when one joint tenant dies the interest of the others remain exactly the same even though they are no longer susceptible to jus accrescendi in respect of the now deceased co-owner ; see Megarry & Wade, The Law of Real Property, 6th ed, 9-003. 15 Mr Pritchard says that whilst that rule may apply once you become joint tenants, it does not apply in a situation where you are seeking to purchase as joint tenants. I can understand the distinction but, with great respect, I do not consider it to be correct. It seems to me that if you are to buy as joint tenants with others, you are intending to buy the whole fee simple and accordingly, you are intending to buy on your own behalf. 16 Accordingly, it does not seem to me, although I will come back to this point under defence 4, that this is an answer to the plaintiffs' claim for injunction. 17 3. This is the vital point to my mind. It is clear on the authorities that s 54A applies to sales by auction and that if there is nothing more than a person who buys at auction and is the highest bidder, but cannot show any note or memorandum in writing which complies with the statute, then that person cannot succeed in proceedings for specific performance. 18 This was decided by many judges over the ages, the more recent decisions being McConville v Australian Telecommunications Commission (1991) NSW ConvR 55-602 (McLelland J); Boulas v Angelopoulos (1991) 5 BPR 11,477 (NSWCA) and Wright v Madden [1992] 1 Qd R 343, a decision of the Queensland Court of Appeal. 19 The way in which Mr Sheldon, who appeared for the plaintiffs with Mr Macfarlane, puts the answer to that is that reg 18 of the Property, Stock and Business Agents Regulation 2003 must have the effect of modifying that general principle because otherwise the regulation would have no operation at all and would make public auction a solemn farce which was just the thing that the regulation was designed to avoid. 20 Regulation 18 is headed "Conditions of Sale by Auction" and it says, inter alia: "(1)(c) The highest bidder is the purchaser, subject to any reserve price … . (h) As soon as practicable after the fall of the hammer the purchaser is to sign the agreement (if any) for sale." 21 Mr Sheldon makes various submissions, but one is that by statute the highest bidder is the purchaser, on his facts he is the highest bidder, therefore he is the purchaser, therefore he has the right and is the only person with the right to sign the agreement for sale; if one were to say that compliance with the Statute of Frauds was necessary that would make the procedure a farce. 22 Mr Sheldon says that this point was not argued before either McLelland J or the New South Wales Court of Appeal in the cases to which I have referred. However, a similar argument was put to me in the case of Seivewright v Brennan (2005) 12 BPR 22,979. The argument certainly was put in that case, but the present point was not directly decided. In that case the decision was that the plaintiff was not the highest bidder. However, in the course of the judgment I said that reg 18 should not be construed as changing the whole law of auctions. 23 Despite Mr Sheldon's clear and forceful argument it seems to me that that decision was correct; the purpose of the regulation was to regulate the way in which auctions were conducted. I pointed out in Seivewright's case, whilst the legislative mandate to the Governor to make regulations was fairly wide in ambit, it is very hard to see how that was intended to affect the contractual relations between the vendor and the prospective purchaser. All it really did is to deal with the procedure at the auction. 24 It may be, as Mr Sheldon says, that if people are going to disobey the procedure set down in reg 18 there is no effective sanction other than perhaps an action against the licence of the auctioneer and that, consequently, it cannot affect the purpose for which it was made. However, it does not seem to me that is sufficient reason for overruling the decisions of the Court of Appeal and McLelland J on the basis that they were made per incuriam. 25 The next attack is that the plaintiffs can rely on some collateral contracts. A collateral contract between the plaintiff and the vendor that the vendor would sign a contract was dealt with by McLelland J in the paragraph beginning "secondly" and rejected on the basis that that also would be unenforceable under s 54A of the Conveyancing Act. 26 It was then put that there was a collateral contract between the plaintiffs and the auctioneer, that the auctioneer would cause the vendor to sign or sign on behalf of the vendor. The answer to that is that the vendor cannot be forced to sign and that the court could not now compel the auctioneer to sign because the authority to sign on behalf of the vendor would have expired a short time after the auction and certainly would have expired by now; see Mews v Carr (1856) 1 H & N 484; 156 ER 1292 and Wright v Madden supra. 27 There is then put that there is in fact a memorandum which complies with s 54A and that is that the auctioneer has completed the front page of the contract with the Paull interests by setting out the property, the price and the promises, and that reg 18 enables one to read in the name of the plaintiff as the purchaser. 28 The note or memorandum must contain what I have called the 4Ps, an expression which was used by lecturers at the Sydney University Law School when I studied law, and summarised what Knox CJ said in Niesmann v Collingridge (1921) 29 CLR 177 at 182, namely, that the memorandum must contain "(1) names of the Parties; (2) sufficient description of the Property; (3) the amount of the purchase money" (Price); "and (4) the terms of payment" (Promises). 29 The 4Ps must be there, not just three, and in the instant case I do not consider one can read in the name of the purchaser by reference to reg 18. Accordingly, in my view, the case must fail because there is no note or memorandum under s 54A of the Conveyancing Act. 30 4. The argument under s 83 of the Property, Stock and Business Agents Act was interesting but I do not need to decide it. The section requires that the actual successful bidder at a sale by auction of any land must supply to the auctioneer, within a prescribed time, (a) the bidder's name if the bidder bid on his or her own behalf; or (b) the name of the person on whose behalf the bidder bid if the bidder bid on behalf of another person. It is said that in the present case Mr Benito Peppe did not notify the auctioneer that he was bidding on behalf of the other three. 31 I tend to think that the rule about joint tenancies, that when one joint tenant is bidding on behalf of himself and a co-tenant the bidder is bidding on his own behalf, would cover the present case. However, I do not have to decide the point and I would prefer not to at this stage. 32 5. Again, I do not have to decide this point, which is good for two reasons. First, I do not think there is evidence before me to find that the auctioneer did make a decision as to who was the highest bidder or, if he purported to make a decision, that the decision was a valid decision. Secondly, I would wish to hear further argument as to whether the auctioneer's decision is only as to whether a disputed bid has been made or not, or whether the auctioneer has a wider discretion to act as an arbitrator to decide the validity of the auction process generally and, if so, whether the auctioneer means to accord natural justice. 33 However, because the defence numbered 3 is made out, I can give no relief on the notice of motion which must be dismissed with costs. 34 I order under section 74MA of the Real Property Act that unless the court otherwise orders the caveat be removed by 4 pm on 28 May 2007. 35 I make orders 1, 2, 3 and 7 in the short minutes of order for the ongoing prosecution of the proceedings. I dismiss the notice of motion for expedition. Costs of that motion are costs in the cause. I stand the matter over to the Registrar's list on 16 July 2007 at 9.30 am.

Peppe v Jydonnet Pty Ltd

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