Plaintiff v Defendants

Supreme Court of Victoria|2011-05-27|Before: DIXON J

PRACTICE AND PROCEDURE - Summary dismissal of proceeding - "no real prospect of success" Civil Procedure Act 2010, ss 7, 8, 9, 63, 64 - Supreme Court (General Civil Procedure) Rules 2005, r 23.01(1)(a).

REAL PROPERTY - Application to remove caveat - Proceeding commenced by the plaintiff to substantiate claim as caveators - Purchaser's lien following avoidance of contract - Whether caveatable interest shown - Transfer of Land Act 1958, s 90(3).

SALE OF LAND - Whether terms contract created - Whether cash contract became a terms contract on negotiated variation following purchaser's default - Further deposit required - Contingent liability on purchaser to make a further payment to vendor following rezoning and possibly prior to settlement - Property subject to mortgage - Mortgage not discharged within 90 days - Whether contract voidable - Whether contract avoided prior to service by vendor of Notice of default and rescission upon failure of purchaser to settle - Whether purchaser entitled to recover all moneys payable under the contract - Sale of Land Act 1962, s 29A, 29O.

1 Large scale property development for new housing is a significant commercial activity. For those who engage in it, certainty in the legal structure for their dealings is essential. Indeed it is essential in all property dealings. This proceeding concerns 8.1 hectares of land at Lecky Road, Officer, which was formerly farming land. It is now zoned for commercial and high density residential uses. The property forms part of a larger allotment of land, comprising five contiguous parcels of land totalling approximately 49.2 hectares. The land is readily accessible from the Princes freeway.

2 The proceeding arises out of a failed contract for the sale of that property which had, broadly speaking, remained extant from December 2008 until the beginning of this year. The parties agree that the contract is now at an end. The first defendant ("Portbury"), as vendor, alleges that it validly terminated the contract for the failure of the plaintiff ("Ottedin") to settle the contract on the due date. Consequently, Portbury asserts a present entitlement to retain all of the monies paid under the contract and to resell the property. Ottedin contends that it avoided the contract by exercising rights under s 29O(2) of the Sale of Land Act 1962. Ottedin contends its consequent entitlement to recover all money paid under the contract grounds an equitable lien over the land supporting its caveat.

3 The second defendant is Nodco Pty Ltd, the incorporated practice of Portbury's solicitors. I need not explain the claims which had been made against Nodco.

4 The application is made by the defendants on summons filed 8 May 2011. In substance, the defendants seek summary judgment, and Portbury seeks an order that the caveat be removed.

5 When the summons was called on, the pleadings had not closed. The defendants had not filed defences. The court was informed that the plaintiff was discontinuing the proceeding against Nodco, pursuant to r 25.02(2)(a) of the Supreme Court (General Civil Procedure) Rules 2005 ("the Rules"). The court was provided with a proposed amended statement of claim, to be filed and served pursuant to r 36.03(a) depending on the outcome of the defendants' summons.

6 In these circumstances, Nodco no longer presses for any relief pursuant to the summons. Portbury's application is dealt with on the basis of the proposed amended pleading. I say nothing about the costs of Nodco associated with the discontinuance and amendment which will, presumably, follow in accordance with the Rules.

7 In moving for summary dismissal, a party may rely on r 23.01 of the Rules, s 63 of the Civil Procedure Act 2010, and/or the court's inherent jurisdiction.

8 By civil procedure reform introduced by the Act, the operative effect of the principles governing applications for summary dismissal is now less stringent. The policy background to the reform is identified in the Victorian Law Reform Commission's Civil Justice Review Report (March 2008) and in the explanatory memorandum to the Civil Procedure Bill 2010. The reform is part of a wider trend towards relaxation of summary dismissal rules in the interests of the proper administration of justice. This is evident in s 31A(2) and (3) of the Federal Court of Australia Act 1976 (Cth), r 292 of the Uniform Civil Procedure Rules 1999 (Qld) and the test now applicable under r 24.2 of the Civil Procedure Rules in the United Kingdom.

9 The new test is evident in the plain language of Part 4.4 of the Civil Procedure Act 2010. Section 62 permits a defendant in a civil proceeding to apply to the court for summary judgment on the ground that a plaintiff's claim or part of that claim has no real prospect of success. Section 63 provides:

Summary judgment if no real prospect of success

(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

(2) A court may give summary judgment in any civil proceeding under subsection (1) -

(a) on the application of a plaintiff in a civil proceeding;

(b) on the application of a defendant in a civil proceeding;

(c) on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.

It will be recalled that in explaining the test used prior to the Act, a variety of expressions describing that test could be found in the cases.[1] The expression now identified by Parliament is in plain language: "no real prospect of success".

10 This expression follows a British precedent, originating in the well known Access to Justice report of Lord Woolf in 1996.[2] The precise expression used in the English Rules, "no real prospect of succeeding on the claim or issue", was described by Lord Woolf MR in Swain v Hillman[3] as a phrase speaking for itself, not requiring further amplification. The critical qualifying word "real" directs the court to "the need to see whether there is a realistic, as opposed to a fanciful, prospect of success".

11 In two other respects, the provisions of the Act ought be borne in mind when exercising the discretion to summarily dismiss. First, the court must seek to give effect to the overarching purpose of the Act and the Rules in exercising, or interpreting, the statutory power to summarily dismiss.[4] This overarching purpose is "to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute".[5] The court is directed to further the overarching purpose by having regard to the objects and matters articulated in s 9 of the Act. The manner in which the court will consider these objects and matters will depend on the nature and circumstances of the application before it. On this application, I bear in mind the following objects (s 9(1)):

(a) the just determination of the civil proceeding;

(c) the efficient conduct of the business of the court;

(d) the efficient use of judicial and administrative resources;

(f) the timely determination of the civil proceeding; and

(g) dealing with a civil proceeding in a manner proportionate to -

(i) the complexity or importance of the issues in dispute; and

(ii) the amount in dispute:

and I have regard to the following matters (s 9(2)):

(f) any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;

(g) the public importance of the issues in dispute, and the desirability of a judicial determination of those issues; and

(h) the extent to which the parties have had the benefit of legal advice and representation.

12 Second, the discretionary nature of the power to summarily dismiss is exercisable having regard to s 64 of the Act. That section provides:

Court may allow a matter to proceed to trial

Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because -

(a) it is not in the interests of justice to do so; or

(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.

The section affirms the court's broad discretion, exercised judicially, whether to summarily dismiss a proceeding or a claim, which was the basis upon which the previous test was applied. The circumstances in which the court might consider the dispute to be of such a nature that only a full hearing on the merits is appropriate is equally wide in its compass and plainly to be considered in the circumstances of each case.

13 In this context, I recall that the Court of Appeal in State of Victoria & Ors v Richards,[6] when affirming the decision of the primary judge to permit allegations to go to trial, recently referred with approval to the observations of Kirby P (as he then was) in Wickstead & Ors v Browne.[7] The appeal was against a refusal to strike out the cause of action alleged by a plaintiff in negligence against individual police officers and the State of Victoria, and contended to be untenable. The Court of Appeal affirmed the importance, in the interests of justice when considering the viability of a cause of action, of allowing the assumption that the pleaded facts are correct to give way to findings of fact made at a trial. The President's observations in Wickstead were:

Common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principle. That is why leave is usually required for an appeal from interlocutory orders. Appellate courts, including this Court, will usually require evidence to be adduced and a trial concluded before considering the application of the law to that evidence. Out of the detail of the evidence ultimately proved, affecting the relationship of the respondent and the appellant, may arise a finding of a duty of care which the common law of negligence would uphold.

14 In Spencer v Commonwealth of Australia[8] the High Court considered s 31A of the Federal Court of Australia Act 1976. The section is in similar, although not identical, terms to s 63 of the Act. Section 31A(3) refers to "no reasonable prospect of", rather than "no real prospect of". An order for summary dismissal made by the primary judge and affirmed by the Full Court was overturned. The court noted that the case, as pleaded, left open the possibility of invalidity of the Commonwealth laws by reason of s 51(xxxi) of the Constitution (acquisition of property other than on just terms).

15 French CJ and Gummow J noted that the exercise of powers to summarily terminate proceedings must always be attended with caution. What is required is a practical judgment by the court as to whether the plaintiff has more than a "fanciful" prospect of success. Their Honours, in a joint judgment, stated:

[22] In the Federal Court and in the Court of Appeal of Queensland, the criterion of a "reasonable prospect" of success has been understood in analogous statutory settings to mean a "real" rather than "fanciful" prospect_. White Industries Aust Ltd v Federal Commissioner of Taxation_ [2007] FCA 511; (2007) 160 FCR 298 at 312 [59] and cases there reviewed; Deputy Commissioner of Taxation v Salcedo [2005] QCA 227; [2005] 2 Qd R 232 at 235 per Williams JA. This exegesis adds little to the words of s 31A. The section authorises summary disposition of proceedings on a variety of bases under its general rubric. It will apply to the case in which the pleadings disclose no reasonable cause of action and their deficiency is incurable. It will include the case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment. It will include the class of case in the longstanding category of cases which are "frivolous or vexatious or an abuse of process". The application of s 31A is not, in terms, limited to those categories.

[25] ... That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.

[26] Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope[9] is relevant. The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact.

16 In contemplating whether a full hearing on the merits is appropriate, I consider that the provisions of the Act enhance, rather than derogate from, the observation of Barwick CJ. In the context of the former test, that argument, perhaps even of an extensive kind, may be necessary to demonstrate that the plaintiff's case has no real prospect of success.[10]

17 In the context of applications to strike out pleadings alleging the existence of a duty of care owed to plaintiffs, applications requiring the application of Part 4.4 of the Act have been determined by other judges in the trial division of this court. Each of Osborn J in Wheelahan & Anor v City of Casey & Ors (No.3)[11] and J Forest J in Matthews v SPI Electricity Pty Ltd[12] reasoned to the like conclusions as I have here expressed.

18 In summary I consider the principles which now apply, in the context of this application, to be:

(1) If a proceeding or defence, or any particular claim, cause of action or ground of defence ("claim") is hopeless, untenable, bound to fail, or could not possibly succeed, then it ought be summarily dismissed. In other words, a claim which ought be dismissed under the old test will be dismissed under s 63.

(2) Section 63, however, is less stringent. It does not direct an inquiry into whether a certain and concluded determination could be made that the proceeding, or a claim, would necessarily fail. What is required is a practical judgment by the court as to whether a claim has more than a "fanciful" prospect of success.

(3) The court's discretion whether to exercise the power of summary dismissal is very wide. Section 64 of the Act expresses that the power is based in a consideration of the interests of justice. The Act provides direction in Part 2.1.[13] The discretion is to be exercised to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute between the parties. The court's powers in furthering the overarching purpose are facilitated by having regard to the objects and matters set out in s 9 of the Act.

(4) The court may be satisfied, on an interlocutory application, that there is no real prospect of success in a civil proceeding but nevertheless consider the dispute to be of such a nature that only a full hearing on the merits is appropriate. Whether a full hearing on the merits is appropriate is a relevant discretionary consideration in the circumstances of each proceeding.

(5) The power to order summary dismissal is to be exercised with great care, as a trial upon evidence of issues raised is the well-settled approach to the determination of litigation. When proceeding on a summary application to assess the prospect of success, a judge ought to feel confident that an assessment can properly be made of whether the overarching purpose is facilitated on dismissal of the impugned claims.

(6) That argument directed to the issues relevant on the application, perhaps even extensive submissions, may be necessary to demonstrate that the case of the plaintiff has no real prospect of success is not ordinarily a relevant consideration.

19 I now turn to the relevant circumstances in the present proceeding.

20 The facts giving rise to the dispute between the parties are deposed to in two affidavits filed on behalf of the defendants: an affidavit sworn 9 May 2011 of Robert Milfen Portbury, who is the sole director of Portbury, and an affidavit sworn 10 May 2011 of Francis James Lynch, who is Portbury's solicitor. Ottedin relied upon the affidavit of Peter Gigliotti, sworn 12 May 2011. Mr Gigliotti is Ottedin's solicitor.

21 It is clear from these affidavits, and it was confirmed by counsel, that there is no relevant factual dispute. The issues arose in written communications between the solicitors in the course of events between entry into the contract and settlement/termination. It was not suggested that discovery was necessary or that oral evidence would be called or contested at a trial. The circumstances did not appear to demonstrate the degree of complexity which was described by Lord Hope of Craighead[14] as "unlikely to be capable of being resolved in that way without conducting a mini trial on the documents without discovery and without oral evidence". I can state the facts on which this application may be resolved.

22 On 18 December 2008, Ottedin, and/or nominee, contracted to purchase property at 20 Lecky Road, Officer for $6.5M. The transaction was by a standard cash sale contract, requiring a deposit of $325,000 on the day of sale with the residue payable at settlement, due on 18 December 2009 when the purchaser would become entitled to transfer, and vacant possession, of the property. At all material times a register search statement showed the property to be encumbered by a mortgage to the National Australia Bank Ltd ("NAB"). On 23 December 2008, Ottedin lodged a caveat, the ground of the claim was as purchaser by the contract of sale.

23 On 27 March 2009, Ottedin nominated Goldcare Developments Pty Ltd ("Goldcare") as substitute purchaser under the contract.[15] The purchaser was unable to settle the contract on 18 December 2009. Discussions between the parties in renegotiation of the transaction ensued.

24 On 18 December 2009, Portbury's solicitors put two options to Ottedin's solicitors to enable the transaction to continue. In the course of these negotiations the parties readily agreed that:

(a) the sale would continue;

(b) the settlement date would be varied to 18 December 2010;

(c) the purchase price would not be altered; and

(d) the deposit payable was to be varied to $1.325M by the payment of a further sum of $1M.

Other matters took a little longer to resolve. During these negotiations the plaintiff's solicitors stated:

Our client is mindful of the provisions of the Duties Act in respect of double Stamp Duty and we would suggest that the arrangement foreshadowed herein would be appropriate as not to infringe the Duties Act by being a variation to the existing contract and not a cancellation and renegotiation of another contract. If there is to only be effectively a deposit and a final payment made then the existing Contract can be varied, with the variations not to create a terms Contract.

As matters developed, the intention of the plaintiff to vary the existing contract, without creating a terms contract or infringing the Duties Act, is significant. A few days later the parties agreed to reinstate the transaction on the basis that Ottedin agreed to early release of the deposit, and varied and additional terms were added into the contract of sale.

25 On 23 December 2009, Portbury, Ottedin and Goldcare entered into a deed of variation of contract. The deed provided for a variation to the particulars of sale, in respect of payment and settlement, and for the insertion of two special conditions. In all other respects the terms of the contract continued to apply and to be of full force and effect. The operative terms of the deed of variation were as follows:

The Payment and Settlement Particulars of Sale will be deleted and the following particulars will be inserted:

Deposit $1,325,000.00 ($325,000 due on the Day of Sale and the balance of the Deposit due by no later than 31 January 2010)

Interim Payment $3,675,000.00 payable the earlier of 150 days after rezoning (defined as the day of the Gazetting of the Cardinia Employment Structure Rezoning Plan) or settlement

Balance $1,500,000.00 payable at settlement

The following Special Condition will be inserted into the Contract:

Special Condition 1

The Parties agree that any and all liability for payment of the Growth Areas Infrastructure Contribution payable as a result of this Contract or due after settlement will be met by the Purchaser and/or Nominee.

Special Condition 2

2.1 The Purchaser and Nominee agree and acknowledge that the Interim Payment will be released to the Vendor's mortgagee to pay down the mortgage relating to Mortgage No.AF558272M.

2.2 The Vendor agrees and acknowledges that upon release of the balance of the Deposit and the Interim Payment they will only be paid to their mortgagee to pay down their mortgage and they have instructed their solicitor accordingly.

26 The release of the deposit as part of the renegotiated transaction was achieved by another path. A s 27 statement had earlier, on 9 July 2009, been submitted to Ottedin. The s 27 statement informed Ottedin that the amount secured by Portbury's NAB mortgage was, as at 9 July 2009, $5,199,879 and that an amount of $5,108,302 plus interest and costs was then required to discharge the mortgage. On 23 December 2009, Ottedin provided its notice of satisfaction with the particulars of mortgages and caveats affecting the property revealed in the July 2009 s 27 statement. The obligations assumed by Special Condition 2, set out above, are to be understood in this context.

27 The deed of variation also provided for an interim payment of $3.675M, payable on the earlier of 150 days after re-zoning or settlement. In the event that the contingent obligation to make the interim payment did not eventuate, the residue due at settlement of the contract, as varied, was $5.175M. The contract specifically contemplated that the mortgage encumbering the property was to be paid down by all payments made under the contract and discharged at settlement.

28 On 2 February 2010, a bank cheque for $1M was provided by Ottedin's solicitor to Portbury. The cheque was deposited directly with NAB in reduction of Portbury's mortgage. Thus the deposit payable under the varied contract was satisfied.

29 On 17 November 2010, Ottedin's solicitors sought from Portbury a further extension, of three months, of the settlement date, explaining that the purchaser's ability to fund the project had been constrained by the time taken to obtain re-zoning of the property. On 25 November 2010, Portbury refused that request for two stated reasons: an additional 12 months from the original settlement date had been afforded to the purchaser to secure funding and NAB would not approve any extension of its facility to Portbury beyond 18 December 2010.

30 On 14 December 2010, Ottedin's solicitors submitted a statement of adjustments and settlement statement. The settlement statement recorded $1.325M as the deposit paid and $5,182,768.19 as the adjusted balance due to Portbury. When submitting the statement of adjustments, Ottedin's solicitors confirmed that settlement of the contract was due to take place on 20 December 2010.

31 On 15 December 2010, Ottedin's solicitors informed Portbury's solicitors of "major complications with our client's finance". Inquiries had revealed a notice pursuant to s 201UB of the Planning and Environment Act 1987 encumbering the relevant title and a Growth Areas Infrastructure Contribution amount of $652,000 due to the State Revenue Office. An extension of time for settlement, without penalty, was sought until 21 January 2011. That request was rejected by Portbury. It insisted on settlement pursuant to the terms of the varied contract.

32 By email at 3.32 pm on 16 December 2010, Portbury's solicitors confirmed settlement for Monday 20 December 2010 at 2.00 pm at NAB, and that the whole of the amount of $5,175,290.90, identified as payable on Portbury's direction in the settlement statement, was to paid to NAB.

33 On 20 December 2010 at 12.02 pm, Ottedin's solicitors informed Portbury's solicitors by email that Ottedin was not in a position to effect settlement at 2.00 pm that day. Ottedin once again requested an extension of the settlement date to enable it to finalise its financial arrangements, nominating 17 January 2011 and asserting that Ottedin's lender had requirements which could be satisfied by that time. Then, at 3.18 pm that day, Ottedin's solicitors, by facsimile transmission, asserted that Portbury was not in a position to provide clear title. The notice pursuant to s 201UB of the Planning and Environment Act 1987 remained on title. Portbury's solicitors responded immediately, reminding Ottedin's solicitors that pursuant to the contract, responsibility for any notice imposing liability on the property that was issued or made on or after the day of sale, 19 December 2008, was the responsibility of the purchaser. Apparently, Ottedin and its solicitors have accepted this reminder, as the assertion of an inability on the part of Portbury to make title has not been raised again.

34 It is clear that Ottedin was now in default under the terms of the contract of sale, having failed to pay the adjusted balance of the purchase price to the vendor at the appointed time and place for settlement pursuant to the terms of the contract. Under the particulars of sale as varied, settlement was due on 18 December 2010, a Saturday. Time was, accordingly, by cl 16.2, extended to the next business day, 20 December 2010. By cl 10.1 the purchaser's obligation at settlement was to pay the balance of the purchase price. I pause to observe that at this time, notwithstanding the references to encumbrances on the title, a matter to which the purchaser's solicitor presumably had turned his mind, Ottedin took no issue with the continued presence of the NAB mortgage on title nor was there any assertion that the contract of sale as varied was a terms contract.

35 On 12 January 2011, Portbury offered to settle on 17 January 2011 at 3.30 pm at NAB, subject to Ottedin paying interest calculated at $53,167.80 and the vendor's legal costs incurred for rearranging settlement. This offer was available until 3.00 pm that day. Failing acceptance, a notice of rescission on the basis of the purchaser's failure to settle on 20 December 2010 was foreshadowed. Ottedin accepted the offer.

36 On 17 January 2011 at 3.30 pm, Portbury's solicitors attended at NAB to settle the transaction. Settlement did not occur as no representative of Ottedin attended. Approximately one to one-and-a-half hours after the appointed time for settlement, Portbury's solicitors received a letter from Ottedin's solicitors, by both email and fax, which said (omitting formal parts):

The subject contract of sale between the parties is dated 19 December 2008. Its terms were varied by a deed of variation dated 23 December 2009.

Section 29A of the Sale of Land Act 1962 ("SLA") defines a terms contract as one where the purchaser is obliged to make two or more payments to the vendor after the execution of the contract, apart from an (initial) deposit and final payment on completion.

Here, the contract as varied obliges the purchaser to pay $325,000 on the day of sale; the balance of the deposit amount to $1,000,000 by 31 January 2010; and a further payment (described as an "interim payment") of $3,675,000 on the earlier of 150 days after re-zoning of the land and the date of settlement.

As a consequence, the contract became a terms contract for the purposes of the SLA.

General condition 23.1(a) of the contract provides that where the contract is a terms contract under the SLA any mortgage affecting the land sold is to be discharged before the purchaser becomes entitled to possession, in compliance with section 29O(1) of the SLA.

According to section 29O(2) of the SLA, if the mortgage is not discharged within 90 days after the contract the purchaser is entitled to avoid the contract at any time before the mortgage is discharged. We note that when the contract was entered into the property was encumbered by mortgage no AF558272M to National Australia Bank Limited and that such mortgage remains on title today.

Our client is entitled by section 29O(2) of the SLA to avoid the contract now, and hereby does so.

Pursuant to 29O(2)(b) of the SLA our client is further entitled to be repaid all money paid under the contract so far. Please arrange for the money to be refunded to us within the next seven days.

This was the first occasion that any issue was raised by Ottedin or its solicitors about the continued existence of the NAB mortgage over the title to the property, notwithstanding their knowledge of the mortgage. It was also the first occasion upon which it was suggested that Ottedin was entitled, by s 29O(2) of the Sale of Land Act 1962 to avoid the contract.

37 The question now raised, that the contract was a terms contract, warrants reference to cl 23 of the contract, a clause which applies if the contract is a terms contract. Clause 23.2 imposes obligations "while any money remained owing". Each of the obligations upon the purchaser under this clause are postulated on the purchaser being in possession of the property prior to settlement. This had not been the fact and obviously there could be no evidence before me that any of these obligations on the purchaser, such as maintaining insurance policies against nominated risks and providing evidence of the same to the vendor, had been discharged.

38 On 7 March 2011, the caveat was withdrawn and another caveat was lodged by Ottedin, claiming an equitable interest by way of lien and noting the grounds of claim to be "to secure repayment of the deposit paid by the caveator under a contact of sale of the land between the registered proprietor as vendor and the caveator as purchaser dated 19 December 2008 which was terminated by the caveator on or about 17 January 2011 together with interest on the deposit from the date of termination of the contract and together with the caveator's costs of enforcing the lien".

39 By notice of default and rescission dated 31 March 2011, with which Ottedin did not comply, Portbury, so it contends, validly rescinded the contract. The default specified was that the purchaser has failed to pay to the vendor the balance due under the contract by the due date (17 January 2011). Subsequently, Portbury's agent has issued an information memorandum offering a larger parcel of land, which includes the property the subject of this proceeding, for sale by tender. That process is continuing.

40 In submissions three issues were raised: Was the contract a terms contract? If so, was the purchaser able to avoid it under s 29O? If so, had the purchaser waived that right?

41 For the defendant, Mr Cawthorn SC (who appeared with Mr Klempfner in support of the application) contended there was no real prospect of success for Ottedin on the question whether the contract was a terms contract. The issues in the proceeding could be resolved by statutory interpretation. The contract was plainly a cash contract and there being neither the asserted basis, nor any other basis, for Ottedin to avoid it, the purchaser was in default as alleged in the notice of default and rescission. As that default was not remedied, the contract was validly rescinded by Portbury.

42 The following matters of fact were, he submitted, not in dispute:

(a) Ottedin never became entitled to possession or the receipt of rents and profits. The contract provided that vacant possession would pass on settlement. The contract, as varied, was never settled.

(b) All payments made under the contract by Ottedin were characterised by it as payments of deposit. Ottedin paid $325,000 as a deposit on entry into the contract on 19 December, 2008. Ottedin paid $1M as a further deposit on entry into the deed of variation contract on 23 December 2009. These amounts were characterised as deposit paid by the transactional documents. The combined sum of $1.325M was characterised by Ottedin as a deposit by the agreed statement of adjustments and settlement statement.

(c) The further payment contemplated by Special Condition 2 added by the deed of variation, $3,675,000 payable the earlier of 150 days after rezoning or settlement, was not paid and was to be paid, according to the agreed statement of adjustments and settlement statement, at settlement.

These matters were not disputed by Ottedin and were established by the affidavits.

43 Mr Cawthorn submitted that with Ottedin having no entitlement to possession prior to settlement, each payment made by it to Portbury before settlement was, by definition, deposit. They were so characterised by s 29A(1) of the Act. As the language of s 29A, introduced by a recent statutory amendment, is central to the dispute in the proceeding, I set it out:

29A What is a terms contract?

(1) For the purposes of this Act a contract is a terms contract if it is an executory contract for the sale and purchase of any land under which the purchaser is -

(a) obliged to make 2 or more payments (other than a deposit or final payment) to the vendor after the execution of the contract and before the purchaser is entitled to a conveyance or transfer of the land; or

(b) entitled to possession or occupation of the land before the purchaser becomes entitled to a conveyance or transfer of the land.

(2) In subsection (1) -

deposit means a payment made to the vendor or to a person on behalf of the vendor before the purchaser becomes entitled to possession or to the receipt of rents and profits under the contract;

final payment means a payment on the making of which the purchaser becomes entitled to a conveyance or transfer of the land.

44 Mr Cawthorn drew attention to the change to the definition of a terms contract. By the repealed s 2 of the Act, a terms contract meant an executory contract ... under which the purchaser is (a) obliged to make two or more payments to the vendor after the execution of the contract and before becoming entitled to a conveyance or transfer of the land, or (b) entitled to possession or occupation of the land before becoming entitled to a conveyance or transfer of the land. Thus any payments made by the purchaser on or before the execution of the contract (deposit) or upon becoming entitled to a conveyance or transfer (final payment) were not payments taken into account in determining whether the contract was on terms. Mr Cawthorn contended the statutory amendments effected a material change.

45 Now, the terms "deposit" and "final payment" are defined in s 29A(2), and have a wider meaning. The unambiguously plain meaning of the statutory definitions supports the characterisation agreed by the parties in both the deed of variation and the statement of adjustments and settlement statement. The deposit paid in December 2008, required by the original particulars of sale, and the balance of deposit paid in February 2010, required by the deed of variation, are each obligations to pay deposit as that term is defined in s 29A(2). Thus, there could only be one payment, other than a deposit or final payment, identifiable as a payment which the purchaser is obliged to make after execution of the contract and before becoming entitled to transfer. However, that payment, the interim payment required by the deed of variation, is defined by the plain language of s 29A(2) to be either deposit or final payment depending on the fall of the stated contingency. Its contingent status is irrelevant; whether characterised as an obligation to pay or a payment to be made, it is not a payment to which s 29A(1)(a) refers to characterise the contract.

46 Accordingly, Mr Cawthorn submitted, the contract cannot be a terms contract and Division 4 of Part 1 of the Act had no application to the contract. A right to avoid the contract could not arise under s 29O of the Act.

47 Mr Lloyd, who appeared for the plaintiff, disputed this construction of the Act. Referring back to the old law, Mr Lloyd submitted that prior to the recent amendments, the Act defined a terms contract to exist in two situations which he described as the multiple payments situation and the early possession situation. He urged me to reject the interpretation of s 29A advanced for Portbury because, as he put it, one simple consequence follows. Section 29A(1)(a) has no work to do at all in the definition of a terms contract. If Parliament had intended that multiple payment contracts are no longer to be regulated as terms contracts, it would firstly be turning the clock back to pre-1962 and secondly, subparagraph (a) would not be needed. The Act could simply define a terms contract as any contract under which the purchaser is entitled to possession or occupation before completion (subparagraph (b)) but as subparagraph (a) must have been intended to have effect, but had none, the suggested interpretation was erroneous.

48 Mr Lloyd submitted that the definition of deposit in s 29A(2) should be read as if it concluded with added words, such as "and on or before execution of the contract", just like the Act used to say. In support of this submission, I was taken to WorkCover Authority v Wilson,[16] a decision of the Court of Appeal. The issue in that appeal was quite different. It concerned the proper interpretation of s 104B of the Accident Compensation Act 1985. Winneke P observed that the difficulties of interpretation of s 104B led to differences of judicial opinion, to be seen in the respective judgments of Callaway JA and Nettle JA in that appeal, commenting that each of those opinions had much to recommend it, notwithstanding that each requires some violence to be done to the language of the section.

49 Mr Lloyd contended, in a generic submission, that the following statement of principle was relevant to consideration of s 29A of the Act. Callaway JA stated:

In those circumstances, the Court should read in the words that are necessary to make sense of sub-s.(9). In his dissenting but influential judgment in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 422-423, McHugh JA referred to the three conditions which Lord Diplock had said, in Jones v Wrotham Park Settled Estates [1980] AC 74 at 105-106, must be satisfied before words could be read into a statute. First, the court must know the mischief with which the Act was dealing. Secondly, the court must be satisfied that, by inadvertence, Parliament has overlooked an eventuality which must be dealt with if the purpose of the Act is to be achieved. Thirdly, the court must be able to state with certainty what words Parliament would have used to overcome the omission if its attention had been drawn to the defect.

50 To determine whether these three conditions could be met to permit words to be read into s 29A of the Act would, Mr Lloyd submitted, require a hearing on the merits. There can no longer be a terms contract created by multiple payments after execution but before possession and that was, Mr Lloyd submitted, a matter of significant public importance for the court. However, Mr Lloyd did not go further to demonstrate a real argument that Parliament has overlooked an eventuality which must be dealt with if the purpose of the Act is to be achieved, based on the mischief with which the Act is dealing, enabling the inadvertently omitted words to be stated with certainty. Mr Lloyd submitted that the need for a trial is sufficiently demonstrated, for present purposes, on the face of s 29A. His submission was that the definition of deposit makes no sense at all, particularly when compared to the repealed definition.

51 The difficulties for this contention lay both in the fact of the characterisation of the payments by the parties and the plain words of the statute. In order to sustain an argument that the contract was a terms contract, it was necessary to identify an obligation to make two or more payments after the execution of the contract, other than a deposit or a final payment. Mr Lloyd contended that the purchaser was obliged to make four payments - the first payment of $325,000 was the deposit, with the balance of $1.5M payable at settlement being the final payment. As such, these payments are ignored. The key payment obligations are the second and third payments, respectively, of $1M due by no later than 31 January 2010 and the interim payment of $3,675,000 after rezoning. Mr Lloyd contended these two payments, not being payment obligations on or before the execution of the contract, defined the contract as a terms contract in s 29A(1)(a) if the definition of deposit in subsection (2) was read with additional words beyond those chosen by Parliament.

Was the right to avoid under s 29O otherwise available?

52 Mr Cawthorn further submitted, as subsidiary matters, that I should consider there was no real prospect of success for Ottedin in contending that the contract was a terms contract, as:

(a) The right to avoid the contract under s 29O(2) was only available to a purchaser who was not in default under the contract. Ottedin was in default under the terms of the contract when it purported to avoid it.

(b) The right to avoid the contract under s 29O(2) was waived by Ottedin.

53 Avoidance of the contract was based on s 29O(2) of the Act. That section provides:

(2) If a terms contract provides for the matters in subsection (1) and the mortgage is not discharged within 90 days of the making of the contract and the purchaser is not in default under the contract -

(a) the contract is voidable by the purchaser at any time before the mortgage is discharged; and

(b) if the contract is avoided, the purchaser is entitled to recover all money paid under the contract.

54 On the first of these subsidiary contentions, Mr Cawthorn submitted the following matters of fact were not in dispute:

(a) Settlement of the contract was fixed for 3:30 pm at NAB on 17 January 2011, and there was no legal or procedural impediment to completion.

(b) Settlement was at a time and place properly appointed under the terms of the contract.

(c) At settlement, the purchaser was obliged, by clause 10.1 of the contract, to pay the balance of the purchase price, which had been adjusted as agreed.

(d) At 3:30 pm on 17 January 2011, no representative of the purchaser attended at the appointed settlement and no right to not attend was reserved or notified prior to settlement.

(e) On and from 3:30 pm on 17 January 2011, the purchaser was in default and has remained in default.

(f) Ottedin's first attempt to avoid the contract under s 29O(2) was made one to one-and-a-half hours after it had defaulted on settlement of the contract.

These matters were not disputed by Ottedin and were established by affidavit. However, Mr Lloyd submitted that Ottedin was able to avoid the contract during the period prior to its termination. The contract provided that a party is not entitled to exercise rights arising from the other party's default, with some exceptions not here relevant, until the other party is served and fails to comply with a written default notice.[17]

55 On the second of his subsidiary contentions, Mr Cawthorn submitted the following matters of fact were undisputed, established on the affidavits:

(a) It was acknowledged by Ottedin on 23 December 2009, by its notice of satisfaction with the particulars of mortgages and caveats affecting the property, that the NAB mortgage had not been, and would not be, discharged within 90 days of the contract as varied.

(b) Ottedin was aware, as the letter from its solicitor on 17 November 2010 reveals, that the interim payment required under Special Condition 2, added by the deed of variation, would not be made prior to settlement.

(c) Ottedin was aware from each of the preceding facts that such interim payment would not have discharged the NAB mortgage in any event.

(d) The parties contemplated at all times after the deed of variation that the NAB mortgage was to be discharged at settlement.

(e) Ottedin knew the material facts giving rise to its asserted right to avoid the contract from about 23 March 2010 (90 days after the deed of variation).

56 Also not in issue as matters of fact is Ottedin's conduct in the following respects, which I shall refer to as the waiver conduct. Ottedin:

(i) did not do any of the things required of it if the contract was a terms contract;[18]

(ii) sought to extend the time in which to settle the contract on 17 November, 15 December and 20 December 2010;

(iii) on 14 December 2010, submitted and agreed the statement of adjustments and settlement statement, and agreed to the appointed settlement on 20 December 2010;

(iv) on 15 December and 20 December 2010, sought to postpone the settlement date of 20 December 2010;

(v) did not take issue with the continued presence of the NAB mortgage on title or assert that the contract of sale as varied was a terms contract when raising the issue of encumbrances on the title in support of a request to defer settlement;

(vi) on 12 January 2011, agreed to the appointed settlement on 17 January 2011; and

(vii) on 17 January 2011, failed to state or reserve its right to avoid the contract prior to or at settlement.

57 Relying on Sargent v ASL Developments Ltd,[19] Agricultural & Rural Finance Pty Ltd v Gardiner[20] and Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd,[21] Mr Cawthorn submitted that this waiver conduct was conduct which evinced an election to affirm the contract and was conduct which was inconsistent with Ottedin having retained or reserved the right to avoid the contract as it purported to do late on the afternoon of 17 January 2011.

58 To meet the allegation of waiver, Mr Lloyd relied on s 14 of the Act which provides that any agreement under which a person purports to waive any right the person may have under this Act to avoid a contract is void. Mr Lloyd did not identify any agreement or contractual term under which Ottedin had purported to waive any right it may have had under the Act to avoid the contract. He submitted that the Act, upon its proper interpretation, excludes reliance upon doctrines of election, waiver and estoppel to defeat the right of a purchaser to avoid the contract under s 29O relying, as authority for this submission, on Everest Project Developments Pty Ltd v Mendoza,[22] and Tudor Developments Pty Ltd v Makeig.[23]

59 Turning to the caveat, Mr Cawthorn contended it clearly must fall if the proceeding was summarily dismissed, there being no serious question for trial that Ottedin would have any lien for the deposit. In the event that the matter did proceed to trial, Mr Cawthorn submitted that the balance of convenience was not shown by Ottedin to be in favour of the caveat being retained. There was no issue that the contract had been terminated. Ottedin had no right to title to the property. The purpose of the caveat was to protect the lien. Portbury was prepared to give undertakings to ensure that its net assets do not reduce below $1.375M (allowing $50,000 for interest and costs) and, upon settlement of any sale of the property, to deposit $1.375M into the trust account of its solicitor to be disbursed in accordance with any order of the court in the proceeding or by agreement between the parties. The offer of such undertakings had been made earlier and was affirmed in court, adjusted for the increased deposit (from $325,000 to $1.325M) sought by the proposed amended statement of claim.

60 The evidence was, as I have noted above, that the property was currently being offered for sale as part of a larger parcel. There was, in Mr Cawthorn's submission, adequate security being offered in lieu of a caveat protecting an equitable lien and accordingly no prejudice to Ottedin. On the other hand, relying on Goldstraw v Goldstraw,[24] there was detriment to Portbury, relevant to balance of convenience considerations, through the potential for purchasers to be deterred in their consideration of the property, at a price acceptable to the vendor, by possible interference with the timely delivery of title at settlement and the prospect for dispute between competing claimants to interests in the property.

61 In relation to the caveat, Mr Lloyd submitted that I should not regard the balance of convenience as favouring its removal. If I was to do so, the proper approach to alleviating any inconvenience to Portbury in the resale of the property was to impose conditions in the manner recently undertaken by Robson J in Young v Young.[25] Specifically, Mr Lloyd suggested that I ought direct that Ottedin provide a withdrawal of caveat to be held in escrow pending any settlement but available to alleviate any concerns on the part of potential purchasers.

62 In my view there is no need for a trial to resolve this proceeding. The plaintiff's prospects of success are fanciful. A full hearing on the merits is not appropriate. The just, efficient, timely and cost effective resolution of the real issues in dispute between the parties can be facilitated by determining whether, on the undisputed facts, the contract of sale was avoided by Ottedin or rescinded by Portbury. The latter consequence will be the correct interpretation of events unless Ottedin had, prior to its failure to remedy the default specified under Portbury's notice of default and rescission, avoided the contract. Mr Lloyd did not contend otherwise and it is clear that if the contract had not been already avoided, Portbury was entitled under the contract to serve the notice. Ottedin was in default as particularised in the notice. The validity of the notice was not challenged and the default was not remedied, Ottedin contending that it was not in default as it had earlier validly avoided the contract.

63 I begin by recalling that Higgins J said in The Amalgamated Society of Engineers v The Adelaide Steam Ship Company Ltd & Ors:[26]

The fundamental rule of interpretation to which all others are subordinate, is that a statute is to be expounded according to the intent of the parliament that made it; and that intention has to be found by an examination of the language used in the statute as a whole. The question is, what does the language mean; and when we find what the language means, in its ordinary and natural sense, it is our duty to obey that meaning, even if we think the result to be inconvenient or impolitic or improbable. Words limiting the power are not to be read into the statute if it can be construed without a limitation.

64 The Act restricts the ability of a vendor to sell, under a terms contract, land subject to a mortgage. Statutory restrictions in such circumstances are longstanding, although Parliament reformed the statutory regime governing terms contracts by the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 (Vic). The amending Act substituted a new Division 4 of Part 1 of the Act, repealing the former ss 2(3)-7. The new regime commenced operation on 31 October 2008, prior to the contract of sale.

65 The structure of Division 4 of Part 1 of the Act can be noted. First, vendors are prohibited from selling land under a terms contract if the circumstances are as defined in subdivision 2 of Division 4. Those circumstances are not relevant in this proceeding. Next, subdivision 3 of Division 4 regulates the circumstances where a purchaser, under a terms contract, may call for a transfer on giving a mortgage back to the vendor. This subdivision of the Act is also not relevant in this proceeding.

66 Subdivision 4 of Division 4 provides restrictions on the sale of land by a terms contract where the land is subject to a mortgage. A terms contract is in the circumstances specified in s 29M voidable by the purchaser at any time before the completion of the contract. Further, the vendor is guilty of an offence and liable to a penalty. Where, however, the circumstances specified in s 29M(a)-(d) apply, the prohibition is relieved. Section 29O(1) provides that s 29M will not apply to a sale of land under a terms contract if the contract provides that the mortgage is to be discharged before the purchaser becomes entitled to possession, and that the deposit and all other money payable under the contract are to be paid to a legal practitioner, conveyancer or a licensed estate agent to be applied in or towards discharging the mortgage. It is clear that s 29M does not apply because the contract makes provision in the terms required by s 29O(1). The contract is not therefore of a type to which the right to avoid under s 29N for breach of the prohibition under s 29M arises. This distinction becomes relevant when considering a line of authority put to me by Mr Lloyd.

67 Mr Lloyd contends that s 29A(1)(a) has no work to do and that this is an unsatisfactory consequence. I disagree on both counts. The first matter of definition achieved by s 29A is that it makes clear that this contract is not a terms contract. Notwithstanding that Mr Lloyd identified four payment obligations, the section makes it clear that this contract is not a terms contract. It is not s 29A(1)(b) which does that definitional work. It follows that, if the subsection is working, there is no unsatisfactory consequence in the sense required for an issue of statutory interpretation. I suspect that Mr Lloyd really submits that the consequence is unsatisfactory for Ottedin. I cannot see that it is, in any relevant sense, an unsatisfactory consequence for the parties to this contract. I do not see that there can be, in the circumstances of this proceeding, any anomalous result produced from the plain literal reading of the section.

68 It is not a matter for this court whether the words used in s 29A(2) produce an unsatisfactory consequence in the general use of contracts involving two or more payments to a vendor between execution of the contract and becoming entitled to a transfer. On the one hand, in my view, there is no ambiguity or uncertainty in the definitions of deposit and final payment adopted by the Parliament. On the other hand, there is no relevant unsatisfactory consequence. I do not accept that the desperate ex post facto search for a ground to avoid a major commercial obligation, evident in the conduct of Ottedin and its solicitors, can be characterised as an unsatisfactory consequence of the statute.

69 In December 2009, a purchaser was in default under the terms of a major commercial contract in a transaction carefully documented and managed by solicitors. The vendor was presumably entitled to forfeit the deposit paid. The transaction was renegotiated as a result. The terms of the contract as varied reflected the commercial imperatives identified by the parties to the transaction. Ottedin then failed to perform its bargain a second time, another year later. It is unnecessary to make any finding as to why that was so, but the inferences open would seem to be that Ottedin's finance was no longer available or that Ottedin changed its mind about the commercial efficacy of the bargain it had made. It is relevant that the commercial consequences of the negotiated bargain, the entitlement to forfeit 10% of the deposit and retain the balance pending resale as a potential set-off against a loss, could be significantly delayed were the matter to proceed to trial.

70 Ottedin's argument that the contract is a terms contract is dependent upon a favourable characterisation of both the second and third payments. It is plain, in my view, that the deed of variation created a deposit for the transaction, effected by two payments. The purchaser initially defaulted on a very substantial transaction, having removed the vendor's property from the market for a year. A re-negotiating vendor is entitled to increase the deposit, as Portbury did, as assurance of the purchaser's willingness to commit a second time to that transaction. The vendor's property was kept out of the market for a long period of time. As the contract makes clear, in terms, the parties characterised the second payment of $1M in February 2010 as a deposit. Being a payment made to the vendor before the purchaser became entitled to possession, it is, equally, a deposit within the plain language of s 29A. I am in no doubt, from the ordinary and natural sense of the language of the Act, that Parliament intended the same characterisation of the second payment as did the parties. It is truly fanciful to contend that the second payment is not deposit.

71 There is an air of unreality about the third payment, as it was not made but fell into the residue - the final payment. It does not matter what view is taken of the consequences of the contingent obligation to make that interim payment. In the circumstances of this case, it was either an obligation to make a payment which is defined as deposit, or if the contingency failed, it became part of the final payment. Again, the characterisation of these payments by the contract is, in terms, clear and unambiguous. If the payment was a payment obligation prior to settlement, an interim payment, there was only one such payment and, like swallows and summer, one such payment does not a terms contract make. When Ottedin first considered that it could avoid the contract under s 29O, the payment was part of the final payment.

72 I do not consider that the circumstances of this contract will ever provide a basis for contemplation by a court whether there is any ambiguity or uncertainty in the type of contract Parliament intended to be prohibited, or regulated, by Division 4 of Part 1 of the Act. No occasion to imply words into that section, in order to arrive at a different meaning one capable of characterising the contract in this proceeding as a terms contract enabling the purchaser to avoid the contract in the circumstances I have described above, will ever arise in this proceeding. What the Act makes unambiguously clear in my view is that this contract is not a terms contract.

73 It may be that, in seeking to define the circumstances where terms contracts are to be prohibited or regulated, the definition of deposit might limit the effective work to be carried out by subparagraph (a). Whether s 29A(1)(a) is a subsection with no work to do is not an issue arising in this proceeding. Mr Lloyd submitted to me that the regulation of terms contracts by Parliament is a matter of consumer protection. Assuming that to be so, I see no imperative here for consumer protection considerations, whatever they might be, to found any contention that there is public importance in the issues in dispute supporting the desirability of a judicial determination of those issues.

74 There are many sections of Acts which might, upon a review of the statute books, be identified as having a limited "workload". That is not the concern of this court. There is, I consider, a material distinction between failing to afford meaning and effect to a word or a sentence in interpreting uncertain or ambiguous legislation, and failing to afford meaning and effect to a subsection because another subsection does the work, if that be the situation. The principle of statutory interpretation that all words must prima facie be given some meaning and effect cannot form a basis for a submission that legislative reform has deprived a party to a contract of a right which it may have enjoyed prior to that reform. This is, in substance, Mr Lloyd's submission.

75 In Project Blue Sky Inc v Australian Broadcasting Authority[27] the High Court explained that the duty of the court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have which, ordinarily, will correspond with the grammatical meaning of the provision. Here, there is no difficulty in undertaking that assessment. In my view, the just, efficient, timely and cost effective resolution of the issues in this proceeding, bearing in mind the consideration specified in s 9 of the Civil Procedure Act 2010, is to order that the proceeding be summarily dismissed. The plaintiff's contention that the contract was a terms contract is fanciful. I would go further. Had Part 4.4 of the Civil Procedure Act 2010 not been enacted, I would, applying the old law, find the contention that the contract was a terms contract to be hopeless, hopelessly untenable and bound to fail. I would add that as a major commercial transaction conducted between apparently experienced parties with the assistance of professional advisors, it is hardly surprising the evidence reveals that the parties had alluded to the risk of creating a terms contract. I reject the suggestion that the definition of deposit, which is unambiguously clear and workable in establishing that this contract is not a terms contract, should be rendered uncertain in the manner proposed by the plaintiff.

76 Having reached this conclusion, it is not necessary to consider the subsidiary arguments which were developed before me. Even if the prospect of success of such arguments is not considered to be fanciful, the arguments will not arise. In deference to the arguments put to me in respect of the subsidiary issues, I will briefly state my conclusions, assuming the contract is a terms contract.

77 I consider the right to avoid the contract was not open to Ottedin when it gave the Notice that avoided the contract as described above at [36]. A contract is voidable under s 29O where three matters are satisfied. One of those matters is that the purchaser is not in default. Here the purchaser was in default when it purported to avoid the contract as I have described above at [34] and [36]. On that basis, it was too late. Mr Lloyd's contention that the contract was yet to be terminated is no answer.

78 Had it been the only issue, I may have been inclined to allow the matter of waiver to go forward to a hearing on the merits. The principal contention against waiver was based by Mr Lloyd upon Everest Project Developments Pty Ltd v Mendoza.[28] The argument was relatively unformed before me but my view, on a summary basis, is that Mendoza concerns a materially different right to avoid to the right given by s 29O. In Mendoza, Hargrave J was considering other provisions in the Act, namely those prohibiting and regulating the sale of lots from an unregistered plan of subdivision. The relevant right to rescind a contract which fails to comply with ss 9AA or 9AB of the Act arises under s 9AE. That right may bear some analogy with the right to avoid, under s 29N, contracts entered into in contravention of s 29M, for it is in such circumstances that the statement of principle relied on by Mr Lloyd might be relevant. In the absence of careful argument, I can see no reason to disagree with the statement of principle which Hargrave J has expressed, but I see nothing in his Honour's reasons to suggest he would consider it applicable in the present circumstances.

79 I was also taken to Tudor Developments Pty Ltd v Makeig,[29] and I consider a like distinction arises in respect of this case. The New South Wales Court of Appeal was concerned with a different statutory context altogether. A statutory avoidance right is created by the Home Building Act 1989 (NSW) where a vendor developer fails to attach to a contract of sale a certificate of insurance. No certificate was attached and the purchaser rescinded prior to settlement in circumstances where it was likely the purchaser knew that insurance had actually been effected. After becoming aware of that fact, the purchaser affirmed the contract, although no certificate had been provided. The court was divided. Basten JA (Beasley JA agreeing) held that in the statutory context under consideration, which bears a closer resemblance to Part 1 rather than Part 4 of Division 1 of the Sale of Land Act, if an express agreement that purports to restrict or remove the rights of a purchaser is avoided by the act, it would be illogical to conclude that an estoppel could validly restrict the statutory power. Handley AJA dissented. When transposed to the statutory circumstances of this case, there is much to be drawn, I respectfully suggest, from the attractive reasoning of Handley AJA.

80 There was no difference between the members of the court as to the basic principle. Principles relating to estoppel do not apply universally to statutory prohibitions or rights to rescind or avoid contracts. Whether they can operate in a particular case will depend upon the construction of the particular statutory provision in its context, and informed by an understanding of its purpose.[30]

81 In Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd,[31] Hedigan J considered the applicability of the doctrine of election, waiver and estoppel in the context of the terms contract provisions as they stood prior to amendment, and held that relief from avoidability, on the basis of that doctrine, was available to a vendor under s 14(1) of the Act as it then stood. His Honour's reasoning, although based in the terms of repealed legislation, may not be inconsistent with that of Hargrave J in Mendoza because of issues of statutory purpose.

82 The better view might be that the analysis of Part 4 of Division 1 of the Act, if it became necessary, might warrant a trial on the merits. It may not be appropriate to carefully consider on a summary application all of the matters which arise on the interaction of the doctrine of estoppel and the statutory provisions. Following Tudor Developments, the issue in the context of Part 1 of Division 1 (sale of a lot from an unregistered plan) arose again before Bongiorno J (as he then was) in Clifford v Solid Investments Australia Pty Ltd.[32] Agreeing with the reasoning of Hargrave J in Mendoza, in respect of the right to rescind under s 9AE(1), Bongiorno J reached the like conclusion in respect of the right to rescind under s 9AE(2). On appeal,[33] the decision in Tudor Developments was before the court which held that no case of waiver or election was available on the facts and it was unnecessary to decide the point. Equally here, there being no right to avoid under s 29O, there is no case of waiver or election available on the facts and it is unnecessary to decide the point.

83 It follows then that the application of the first defendant will succeed. The plaintiff's proceeding will be dismissed and the caveat must be removed. There is no serious question to be tried that Ottedin has the caveatable interest asserted.

84 I will hear further from the parties as to the form of orders to be made and on the question of costs.

[1] I will not go through these cases. They are set out in [I 23.01.15] of Williams, Civil Procedure - Victoria.

[2] Woolf, Access to Justice: Final Report to the Lord Chancellor on the civil justice system in England and Wales (1996) at [32]-[34].

[9] Their Honours had earlier referred to the discussion of Lord Hope of Craighead about the scope of the inquiry on an application for summary disposition under the UK CPR in Three Rivers District Council v Bank of England (No.3) [2003] 2 AC 1, 260 at [94]-[95].

[10] General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125, 130.

[14] In Three Rivers District Council v Bank of England (No.3), op cit.

[15] Unless the context suggests otherwise, references to Ottedin include Goldcare.

[16] [2004] VSCA 161; (2004) 10 VR 298 at [26] (Callaway JA, with Winneke P agreeing).

[22] [2008] VSC 366 at [98]- [99]. See also the dissenting judgment of Boyle CJ in Astill v South Esplanade Developments Pty Ltd [2007] SASC 231; Clifford v Solid Investments Australia Pty Ltd [2009] VSC 223 at [22]- [25]; on appeal Solid Investments Australia Pty Ltd v Clifford [2010] VSCA 59 at [36].

[24] [2002] VSC 491 at [39] (Dodds-Streeton J).

[30] Ibid at [73] Basten JA and at [89] Handley AJA.

[33] Solid Investments Australia Pty Ltd v Clifford [2010] VSCA 59 at [36].

Consumer Credit (Victoria) and Other Acts Amendment Act 2008(Vic)

Court (General Civil Procedure) Rules 2005

Court of Australia Act 1976

Civil Procedure Rules 1999

Environment Act 1987

Compensation Act 1985

At a glance

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Judgment (159 paragraphs)

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Legislation Cited (10)

Cases Cited (10)