Plaintiff v Defendants

Plaintiff v Defendants - [2012] VSC 490 - VSC 2012 case summary — Zoe

[11]

(a) At the time Portbury purported to exercise the right to resell the Property it, or its agent Knight Frank was or ought to have been aware of the following matters:

(i) Portbury, alternatively, Portbury's financier, National Australia Bank, had received valuations for the Property well in excess of the resale price of $2.1m;

(ii) Portbury had mortgaged the Property to the National Australia Bank for well in excess of the resale price of $2.1m;

(iii) On 18 December 2008, Ottedin agreed to purchase the Property for $6.5 million, which although then zoned for agricultural purposes, was subject to a rezoning application to allow the Property to be developed for mixed residential and business purposes;

(iv) The relevant Council, Cardinia Council, were confident that the Property would be rezoned, and that upon its rezoning, a permit would be issued to develop the Property including a minimum of 150 apartments occupying 15,000 square metres for which Goldcare had plans for 300 apartments and with the balance of 66,000 square metres for multiple uses and were supportive of proposals to develop the Property more intensively;

(v) In December 2010, Goldcare engaged Knight Frank to on-sell the Property;

(vi) At that time Mr Kosta explained to Mr Leigh Morris of Knight Frank, the potential of the Property, and his confidence that a developer with access to finance could make a profit in the order of $21 million from the Property, and gave him a detailed explanation as to how he had arrived at his opinion;

(vii) In December 2010, Mr Kosta and Mr Morris approached potential purchasers, some of whom expressed an interest in purchasing the Property, and the executives of which, including a Mr Pelicano, expressed interested [sic] in purchasing the Property at a price of $6.5 million, but all of whom stated that they could not buy the Property in January 2011 as it would leave them insufficient time to do their due diligence, feasibility studies and/or to arrange finance;

(viii) On 15 December 2010 Goldcare received a valuation for the Property for $8.1m;

(ix) Portbury engaged Knight Frank to resell the Property;

(x) Portbury first attempted to resell the Property by tender closing 12 May 2011 "either in one line or separately" as part of an information memorandum relating to the Property and 4 other properties;

(xi) In or about May 2011, Mr Ottewell informed Mr Portbury, a director of Portbury, that he had a sworn valuation for the property in December 2010 for $8.1m;

(xii) On 29 June 2011, the Property was auctioned by Knight Frank, and was passed in. The only bids were one from Andrew Facey for $1.8m, and a vendor bid of $2.2m;

(xiii) On 29 June 2011, Mr Ottewell approached Sue Kelly, a representative of Portbury, and informed her that he was able to introduce to Portbury a buyer willing to pay far more than $2.2m for the Property and that he would need 3 days to organise the introduction;

(xiv) Sue Kelly informed Mr Ottewell that because of pressure by the National Australia Bank on Portbury it was forced to sell the Property within 24 hours, and that he should present his information about potential purchasers to the auctioneer, Ken Smirk of Knight Frank;

(xv) During the evening of 29 June 2011 or the morning of 30 June 2011 Mr Ottewell spoke to Ken Smirk the auctioneer and asked him to provide him with a copy of the s.32 statement for the Property. In his conversation, Mr Ottewell told Ken Smirk that he had a buyer willing to pay substantially more than $2.5m for the Property, and that this buyer had other large holdings locally;

(xvi) Mr Ottewell gave to Ken Smirk the details of the potential buyer, a Mr Khay Taing, including his mobile number and email address;

(xvii) On 30 June 2011, Ken Smirk sent Mr Ottewell an email attaching the s.32 vendor's statement for the Property;

(b) Ken Smirk failed to contact Mr Taing on 30 June 2011 or at all for the purpose of reselling the Property on behalf of Portbury;

(c) Portbury failed to make enquiries of any of the defendants about the existence of potential purchaser and as to the best way to market the Property at the time of or before reselling the Property;

(d) On 30 June 2011, Portbury resold the Property to Parklea for $2.1m plus GST (if any);

(e) On or about 30 June 2011, the Property was worth well in excess of the resale price.

(i) Goldcare was able to arrange conditional finance for the Property on 2 December 2010 in the sum of $5.8m notwithstanding that the sum of $1.325m had already paid under the Varied Contract of Sale;

(ii) Goldcare received an offer to purchase the Property from Assets Australia in March 2011 for $4.5 million;

(iii) Goldcare had received a valuation of the Property in December 2010 for $8.1 million;

(iv) The defendants otherwise refer to the matters contained in these particulars.

(f) Within a short time of Parklea Estates Pty Ltd purchasing the Property, Ken Smirk of Knight Frank commenced acting for Parklea Estates Pty Ltd in relation to its on-sale of the Property, and introduced its director, Andrew Facey to Mr Khay Taing, and within a short time thereafter, interests associated with Mr Taing made an offer to purchase the property for $3 million;

(g) Subsequently, Parklea Estates Pty Ltd sold the property to interests associated with Mr Taing for $6 million, including an allowance of $0.5m for civil works, making the effective purchase price $5.5 million;

(h) The sale from Parklea Estates Pty Ltd to interests associated with Mr Taing could have been achieved by Portbury on or about 30 June 2011 had it exercised reasonable endeavours or exercised commercial prudence;

(i) Portbury failed to adequately market the Property for the purposes of resale.

(i) A sale by tender of the Property along with 4 other properties was an inappropriate method to market and sell the Property, in all the circumstances, particularly given the short marketing period, and the limited information contained in the information memorandum about the Property and the confusion and/or dampened demand generated by Portbury marketing the Property along with 4 other properties;

(ii) A sale by auction was an inappropriate method to market and sell the Property, in all the circumstances, particularly given the short marketing period;

(iii) Further particulars will be provided after the plaintiff's discovery.

(j) Although the sale of the Property was not by a mortgagee, Portbury preferred the interests of the mortgagee, the National Australia Bank, and wilfully or recklessly disregarded those of the defendants by selling the Property with undue haste to satisfy the demands of the mortgagee for a sale of the Property by 30 June 2011.

[14]

10 It may be useful to record something of the course of dealings between the parties from the date of contract to the ultimate resale before turning to the competing claims for and against summary judgment. Portbury and Ottedin entered into the contract for the sale of the land at 20 Lecky Road, Officer in the State of Victoria on 18 December 2008. The deposit of $325,000 was paid on 18 December 2008 and Ottedin lodged a caveat to protect its interest as purchaser. The contract provided for the payment of a purchase price of $6,500,000 of which $325,000 was to be paid as deposit on the day of sale and the balance of $6,175,000 was to be paid at settlement, which was originally agreed to be twelve months later, namely on 18 December 2009. Mr Ottewell gave a guarantee and indemnity in support of that contract. The affidavit of Mr Lynch exhibited a copy of the Contract of Sale and a copy of a Guarantee and Indemnity as two separate exhibits. The defendants submitted that the separate tender of the two documents was not sufficient to prove the guarantee and indemnity as being that given in support of the Contract of Sale. The submission was based on the fact that the document tendered as the Guarantee and Indemnity was in generic language and did not (as a separate document) identify the subject matter of the guarantee unless it was attached to, and read as one with, the Contract of Sale as it had been in the original. It is, however, clear from Mr Lynch's affidavit that what was exhibited as Mr Ottewell's guarantee was the Guarantee and Indemnity given by him in respect of the Contract of Sale between Portbury and Ottedin as entered into. That is confirmed by an examination of the documents themselves and, if need be, from the obvious inferences to be drawn from them, including the same execution date, of 18 December 2008, appearing on both documents, and the evidence concerning them given by Mr Lynch. I am, therefore, not able to accept Ottedin's contention that the guarantees were not proven for the purposes of this application.

[27]

15 Ottedin also contended that the new guarantee was not proved in the proceeding before me because the Deed of Variation and the fresh Deed of Guarantee were exhibited as separate exhibits and that it was not possible to conclude that the Deed of Guarantee exhibited was part of the Deed of Variation or given in respect of that agreement. The basis of the contention was the same as that previously advanced in respect of the first guarantee and I reject it for the same reasons. It is clear from the evidence of Mr Lynch that the fresh Deed of Guarantee was given by the guarantors in respect of, and as one with, the Deed of Variation. Mr Lynch deposed to the fact that at 12.32pm on 23 December 2009 Ottedin's solicitors sent documents to Portbury's solicitors attaching, amongst other things, a Deed of Variation of Contract and a Deed of Guarantee. It is each of those documents to which the affidavit refers and then identifies as separate exhibits in the very statement in which Mr Lynch deposed to receipt of the executed documents. Amongst the documents also sent to Portbury was a statement given under s 27 of the Sale of Land Act 1962 (Vic) referring to Portbury's mortgage over the property and authorizing the release of the deposit by the vendor's solicitor. The amount secured by the mortgage over the land was shown as $5,199,879. The fresh Deed of Guarantee was shown as having been given by Mr Ottewell and Mr Kosta in consideration for the vendor selling the property to the purchaser and nominee for the price and upon the terms and conditions set out in the contract and the Deed of Variation. The document of Guarantee and Indemnity given by each of them included an obligation to guarantee the due and punctual payment, performance and observance by the purchaser of all of its liabilities and obligations to the vendor under the contract and Deed of Variation, present or future, actual or contingent. It also contained an acknowledgement by the guarantors that their obligations and liabilities were continuous, absolute, unconditional and irrevocable, and would not be affected by such matters as the act or omission of delays or the grant of any time or other concessions by the vendor. It was executed as a deed on 23 December 2009 by each of Mr Ottewell and Mr Kosta.

[45]

[...] Assuming the plaintiff's application is properly made, there will be judgment for the plaintiff unless the defendant shows cause against the application to the satisfaction of the court. The Rule provides that the defendant can show such cause "by affidavit or otherwise".
The defendant must satisfy the court that, in respect of the claim to which the application for judgment relates, a question ought to be tried, or there ought for some other reason to be a trial of that claim. The court, if so satisfied, will give the defendant leave to defend and the proceeding will continue to trial in the ordinary way. The court will normally require an affidavit by, or on behalf of, the defendant before it will be satisfied that the defendant is entitled to leave to defend. The standard of diligence required of the defendant in preparing a case in opposition to the application, especially if under pressure of time, is perhaps not as high as that required in preparing for trial.
None the less, the defendant is required to use reasonable diligence to put before the court, albeit in a summary form, all the evidence relied on in the defence. In that regard, it would generally be regarded as an injustice to the plaintiff to allow the defendant to introduce for the first time, on appeal, evidence which was readily available for the hearing of the application, but was not produced. An affidavit filed by the defendant may contain a statement of fact based on information and belief.
The authorities suggest that an affidavit in opposition to an application for summary judgment must provide sufficient particulars to enable the defence case to be properly understood. A bald denial that the defendant is indebted to the plaintiff will not suffice. The affidavit should, so far as practicable, deal specifically with the plaintiff's claim and the facts set out in the supporting affidavit to establish that claim. It should state clearly and concisely what the defence is, and identify the facts relied upon in support of that defence.
There is a helpful discussion in Williams as to the position where the defendant alleges fraud in answer to the claim for summary judgment. A mere statement that fraud has been committed is not sufficient. The affidavit must give particulars of the fraud alleged. If, at the time of the application for judgment, there is no basis for supposing that evidence of fraud exists, leave to defend will not be granted merely so that the defendant can use discovery in the hope of eliciting such evidence.[13]

[54]

29 The defendants are also entitled to resist the claim for summary judgment by relying upon the material filed by Portbury. Fancourt v Mercantile Credits Ltd[22] was a case in which a party to an application for summary judgment was held to have been able to rely upon opposing material[23] as well as the pleadings.[24] The plaintiff's material did not controvert the facts in the particulars to para 44 of the Amended Defence and Counterclaim, but it did contain evidence supporting the defendants' claim that the resale process may have been in breach of duties owed to them. The initial Contract of Sale between Portbury and Ottedin had been to sell the property for $6,500,000. The contract was varied a year later but the price was not reduced. A statement given by Portbury to Ottedin under s 27 of the Sale of Land Act 1962 (Vic) disclosed that a mortgagee had the property as security for $5,199,879. Ms Kelly exhibited the exclusive auction authority given by Portbury to Knight Frank to sell the property. It was dated 8 June 2011 and given in respect of the sale made that month after the failed auction. The exclusive auction authority contained an agent's estimate given under s 47A of the Estate Agents Act 1980 (Vic) of the selling price of the property. That section requires an agent to give an estimate of the amount which that person "believes, on the basis of his or her experience, skills and knowledge, that a willing but not anxious buyer would pay for the real estate, or in the case of a price range, the range within which that amount is likely to fall".[25] The estimate for the property given in the exclusive agent authority, and which was given in the same month as the actual sale of the property, was an estimate of between $5,500,000 and $6,000,000. The advertising schedules put in evidence through Ms Kelly revealed that the promotion for the property as a single lot was for a shorter period than had been the proposed sale of the five lots together. Different and potentially competing inferences may perhaps be drawn from the different marketing schedules, but one inference that may be made is that the marketing schedule for the property as a single lot was less than desirable for its sale, and that it had not been advertised as widely as might have been desirable.

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Judgment (127 paragraphs)

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Legislation Cited (6)

Cases Cited (14)