Plaintiff v First Defendant

2 The land in dispute is 2 Roy Street, Geelong, Victoria (the 'land'). It is more particularly described in Certificates of Title Volume 09653 Folio 097 ('Lot 61') and Volume 10662 Folio 531 ('Lot 62').[1] The plaintiff is the registered proprietor of the land. The first defendant caused caveats to be registered on both titles pertaining to the land.[2] The ground of claim stated on the caveats is: "Purchasers' contract with the following parties [registered proprietor] and date [9 September 2021]".

3 On 29 October 2021, the third party, that is, Scottish Chiefs Geelong Pty Ltd, caused further caveats to be registered on the titles.[3] The ground of claim is the same ground relied upon by the first defendant.

4 The plaintiff relies on the affidavit of Neil Slater affirmed on 25 November 2021 ('Slater 25 Nov 21 affidavit'). He deposes that he is authorised to make the affidavit on behalf of the plaintiff. The contract of sale is with the plaintiff as trustee for the Jack Slater Family Trust.

5 The first defendant relies on their affidavit affirmed 15 December 2021 ('Cetinkaya 15 Dec 21 affidavit').

6 The plaintiff and first defendant each provided written and oral submissions. It is unnecessary to reiterate them here. I analyse the key submissions below.

7 In August 2021, the land was listed for sale and the plaintiff appointed Marcus Falconer of Hodges Geelong to act as its agent to conduct the marketing and sale of the property by way of public auction.[4]

8 On 4 August 2021, the first defendant deposes that he contacted Mr Falconer, and requested information in relation to the land.[5]

9 The first defendant deposes that on 12 August 2021, Mr Falconer told him that the land would be open for inspection on 14 August 2021.[6]

10 The first defendant deposes that on 14 August 2021, he attended the inspection and spoke with Mr Falconer and asked him if he could purchase the property for $1.25 million on the basis that he could settle the purchase in 6 months.[7] The property was not sold to the first defendant at this time.[8]

11 On 6 September 2021, the first defendant received a text message from Mr Falconer stating that the property would be up for auction on 9 September 2021.[9]

12 On 9 September 2021, the first defendant attended the auction, the auction was conducted on an online platform, namely AuctionNow.[10]

13 Following the auction, at 1.16pm on 9 September 2021 the first defendant received an automated email from AuctionNow, which referred to the first defendant as 'Joe'. The email said that the property had sold for $1.25 million.[11]

14 The first defendant says the plaintiff sold the land to him for $1.25 million.[12] The plaintiff says the first defendant made the winning bid of $1.25 million.[13] It is not in dispute that the first defendant was the winning bidder.

15 The first defendant deposes that at 1.20pm on 9 September 2021, Mr Falconer spoke with the first defendant to congratulate him for buying the property and said that the contract of sale would be sent shortly.[14]

16 The first defendant deposes that he reminded Mr Falconer of a previous discussion regarding the settlement terms, namely to change the settlement date on the contract, that Mr Falconer would speak to the plaintiff and get him to agree to the settlement terms and that part-payment of the deposit would not be an issue so long as the balance was paid shortly thereafter.[15] The plaintiff disputes this.[16]

17 At 1.31pm and 2.55pm on 9 September 2021, the first defendant was sent an email that contained a link to the contract.[17] At 3.40pm the first defendant was sent a further email which said that the contract was void.[18]

18 The first defendant deposes that at 1.41pm on 9 September 2021, Mr Falconer rang him advising that the plaintiff had accepted the amendments to the contract and to make the amendment on the contract and get it back to him as soon as possible.[19] The plaintiff disputes this.[20]

19 At 2.07pm on 9 September 2021, Mr Falconer sent the first defendant a text message:

Good afternoon Bek, I hope this finds you well. Sorry to bother you, I urgently need to get this Contract signed for 2 Roy Street, Geelong. I am in the office on a worker permit until 2:30pm so need to get this wrapped up...[21]

20 At 2.21pm on 9 September 2021, the first defendant deposes that Mr Falconer called him and said he needed the contract returned as he had to leave the office. The first defendant told Mr Falconer that he was not at his office, he needed access to his computer and printer to make the agreed amendment and he would be at his office shortly upon which he would provide the amended contract.[22]

21 At 3.00pm on 9 September 2021, the first defendant sent a text message to Mr Falconer which said that he was restarting his computer. At 3.17pm, the first defendant deposes that he rang Mr Falconer and said he was having some issues with his printer and that he would provide a signed copy shortly. The first defendant deposes that Mr Falconer responded saying he had no issue with this.[23]

22 The first defendant deposes that he requested, via telephone, the trust account details so that part-payment of the deposit could be made. He says that Mr Falconer did not respond to him.[24]

23 The first defendant deposes that he contacted Mr Falconer's office, Hodges Geelong, at 3.29pm to directly ascertain their trust account details.[25]

24 The first defendant deposes that he arranged part-payment of the deposit, namely $12,500 by EFT at 3.38pm on 9 September 2021.[26]

25 At 3.58pm, the first defendant emailed a contract of sale to Mr Falconer's officer as follows:

Hi Sally,

Please see the attached as discussed with Marcus.

Please send me an executed copy.

Thank you in advance.

Bek Cetinkaya.[27]

26 The contract contained handwritten amendments. I shall refer to this as the 'amended contract'. The plaintiff deposes that the handwritten amendments had not been discussed, approved, or authorised by the plaintiff or Mr Falconer.[28]

27 The first defendant deposes that at 3.59pm, Mr Falconer rang the first defendant to advise that he had already sold the land to a third party.[29] The first defendant deposes that Mr Falconer did not advise him of any parallel discussions between Mr Falconer and the third party.[30]

28 On 9 September 2021, the first defendant caused caveats to be registered on the land titles.

29 On 10 September 2021, the first defendant by letter to Mr Falconer stated:

In our view, Mr Cetinkaya has purchased the Property. He won the auction. He has signed the contract and paid the deposit. We have written to the vendor's conveyancer and lodged a caveat over the Property to protect Mr Cetinkaya's rights. In due course, he intends to settle upon the purchase and become the registered proprietor of the Property.[31]

30 On 10 September 2021, Mann Legal, the plaintiff's then solicitor, responded by letter stating:

We confirm that our office holds a fully signed contract of sale date 9th September 2021 for the above property and out client has advised us that this was the only contract presented to him for signing. Our client has not sighted or received a contract of sale signed by your client.[32]

31 On 13 September 2021, the first defendant wrote to Mann Legal requesting the:

1. purported exchanged contract between the vendor and other purchaser;

2. the email that actually encloses the contract;

3. confirnation [sic] that [sic] deposit was paid; and

4. payment remittance confirming deposit was paid.[33]

32 At 5.07pm on 13 September 2021, Mann Legal responded to the first defendant, seeking further information about the contract between the plaintiff and the third party. The response follows:

I advise that the purchaser has consented to the copy contract of sale being attached subject to the details being redacted. Accordingly, I now attach/advise the following:-

1. Contract of sale dated 9th September 2021 redacted as required attached;

2. The email sending the contract to our office attached;

3. I confirm that the full 10% deposit has been paid and we have received evidence from the agent that this is the case.

Please arrange for the withdrawal of the caveat on the title.[34]

33 At 5.12pm on 13 September 2021, the first defendant replied as follows:

Thank you for your email.

Please provide me with the following:

1. information regarding the purchase price and terms of settlement;

2. copy of the remittance confirming when the deposit was paid; and

3. the actual email that encloses the unsigned contract to the Purchaser.[35]

34 On 15 September 2021, Mann Legal responded as follows:

... In response to your queries:-

1. I confirm my previous advice that the purchaser's representative has not consented to disclosing the details of sale. As previously advised we hold an unconditional contract signed by all parties on the 9th September 2021;

2. To provide the requested deposit remittance would disclose those details that I do not have consent to provide. However, I confirm that I have received a copy deposit receipt dated 9th September 2021 from the agent for deposit payment; and

3. The contract was collected and physically signed by the purchaser (not emailed). The agent has advised that this took place at 3:35pm and deposit transaction at 3.49m.

As per the email previously supplied the signed contracts were then emailed to our office at 4:04pm. A signed copy was also emailed to the purchaser's representative at the same time.

If you please arrange for the withdrawal of the caveat on title.[36]

35 On 14 October 2021 the first defendant issued a writ and statement of claim in the County Court of Victoria, naming the plaintiff and Mr Falconer as defendants.[37] On 3 December 2021, a defence was filed.

36 The applicable principles are not in dispute. I refer to the recent summary by the Court of Appeal in Lee v Yap:[38]

Section 90(3) of the Transfer of Land Act permits any person adversely affected by a caveat to 'bring proceedings in a court against the caveator for the removal of the caveat' and empowers the court dealing with such an application to 'make such order as the court sees fit'...

In Carbon Black, this Court held that when a court is considering an application under s 90(3), the court applies the two-stage test used for determining an application for an interlocutory injunction. The Court approved the following passage from Warren CJ's judgment in Piroshenko:

Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. In so far as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two-stage test used by the court when deciding whether to exercise its discretion to grant interlocutory injunctive relief. ... This two-stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Register of Titles until trial.

As to the second proposition contained in ground 1, in our view it proceeds on a mistaken understanding of the matters that can permissibly be considered by a court when dealing with an application to remove a caveat under s 90(3) of the Transfer of Land Act. The authorities make clear that, although the courts have adopted the two stage test, s 90(3) is drafted broadly, and enjoins the court to make such orders as it thinks fit. Thus the two-stage test can only inform the court in considering whether to exercise the discretion conferred on it in any particular case and, if it chooses to do so, what form that exercise should take. The two-stage test does not subsume or restrict the power conferred by the statute. Nor, in our view, when a court is considering the balance of convenience on an application for removal of a caveat, is the court confined as to the matters it may consider as going to the balance of convenience...[39]

37 In consideration of the balance of convenience, the Court of Appeal held:

In contrast, there is no real evidence that the caveators will suffer prejudice if the caveats are removed. While it is true that the beneficiaries of the resulting trusts will lose their beneficial interest in the Glen Iris property, they will obtain a beneficial interest in the net proceeds of sale. There was nothing to suggest that the property had any value other than monetary value to the caveators. They adduced no evidence that the property had any sentimental value, or that any of them wished to retain the property so as to live in it, for example. At its highest, they submitted that the removal of the caveats deprived them of the option that they (if they were found to be beneficiaries of a resulting trust over the property) would have to retain the property rather than selling it. However, while it cannot be said that they had always sought orders in the substantive proceeding that involved the sale of the property, we accept that the orders sought in the most recent statement of claim are predicated on the sale of the property, should it be found to be trust property. Counsel for the first and second respondents accepted as much before the judge, even though he also referred to the possibility that the beneficiaries might resolve to keep the property. That submission is inconsistent with the attitude of the caveators reflected in the correspondence between the parties, in which the caveators stated that they were willing to permit the Glen Iris property to be sold, so long as the proceeds of sale were protected.

In so far as it was said that the property will likely be worth more at the time of the resolution of the substantive proceeding, no evidence was adduced to support that claim. It would be speculative to conclude that that is so. As Ms Lee pointed out, it is possible that the property could be worth less at that time. In so far as the caveators say they should not have to be put in the position of seeking equitable compensation if the property would have been more valuable at the time of judgment in the substantive proceeding than at the time of the impugned sale, we do not consider that to be a significant prejudice. It is true that, if this scenario eventuates, it may involve some inconvenience in perhaps needing again to resort to litigation. But in truth their right to compensation, should events transpire in that manner, is protective of their interests; and, as Ms Lee submitted, the costs of such litigation as might be required could be dealt with by appropriate costs orders, which would fall to be made in light of the various proceedings already instituted.

While we do not agree with Ms Lee that the balance of convenience is 'all one way', we accept that the balance of convenience favours the removal of the caveats, so long as appropriate steps are taken to preserve the proceeds of sale to be dealt with in accordance with the resolution of the substantive proceeding. In that regard, Ms Lee's counsel proffered an undertaking that the proceeds of sale, net of usual sale expenses (which we understand to mean the selling agent's commission and the legal fees and other expenses associated with the sale), will be preserved in a solicitor's trust account, or if need be paid into court. We would order that the caveats be removed upon the giving of such an undertaking. We note that counsel made no mention of any deduction of moneys for the discharge of the mortgage, but that was plainly an aspect of the undertaking offered by Ms Lee in the correspondence between the parties; and while there was some debate about that, ultimately it seems that the caveators previously accepted that the mortgage could be discharged from the proceeds of sale. That was reflected in the facts agreed between the parties for the appeal. We can see no reason why such a deduction should not be allowed for. If the parties cannot agree that the net proceeds of sale be paid into a particular solicitor's trust account, they can be paid into court.[40]

38 In Chan v Liu, the Court of Appeal referred to the nature of an application to remove a caveat and the function of a caveat:[41]

Ordinarily, an application for the removal of a caveat, being in the nature of an application for an interlocutory injunction, is not an occasion for the final determination of disputed factual issues, or of the substantive claims which the caveat seeks to protect...

As a starting point, it is important to bear in mind the function of a caveat. Section 89(1) of the Transfer of Land Act provides (inter alia) that any person 'claiming an estate or interest in land' under any unregistered instrument or dealing (or otherwise) may lodge with the Registrar a caveat forbidding the registration of any instrument 'affecting such estate or interest'. Thus, essentially, the purpose of the lodgement of the second caveat, in this case, was to protect the right of the respondent to specific performance of the contract of sale of the property. So long as the caveat remained on the title, it prevented the applicants supervening that right, by selling the property to a third party.[42]

39 I adopt the following statement given recently by Osborne J in Wright v Insert Pty Ltd ('Wright'):[43]

It is also something of an oversimplification to characterise the critical question as whether the Purchaser has a prima facie case that it has an enforceable contract of sale; in fact, the Purchaser must establish that it has a prima facie case that it has an enforceable contract of sale in respect of which the Court will order specific performance.

Ordinarily, if a party can establish that it has a prima facie case that it has an enforceable contract for the sale of land, that will be enough for there to be a prima facie case for an order for specific performance, land being of a sufficiently unique character such as to make damages an inadequate remedy, even in the case of land purchased as part of the business of a property developer.[44]

40 This question must be answered on the basis of the material before me. For the following reasons, I have concluded that there is no serious question to be tried.

41 The first defendant says they have a prima facie case for an enforceable contract. This is the ground upon which their caveats rely. They say that their primary claim is in contract. In their County Court statement of claim, the first defendant defines the contract they rely upon as follows:

11 In the circumstances set out in paragraphs 6 to 9 above, on 9 September 2021 the Vendor as seller agreed to sell the Land to the Purchaser as buyer for a sale price of $1.25m (Contract of Sale).

Particulars

The Contract of Sale was party oral, partly in writing and partly to be implied. Insofar as it was oral, it was constituted by statements by Mr Falconer, for the Vendor:

(i) at the commencement of the auction to the effect that an auctioneer must not accept any bid or offer for a property that is made after the property has been knocked down to the successful bidder, unless the Vendor or successful bidder at the auction refuses to sign the contract of sale following the auction;

(ii) during the auction that the Land was "on the market";

(iii) at the end of the auction, that the Land had been sold to bidder number 6; and

(iv) shortly after 1:31pm the Purchaser told Falconer by telephone that he would sign and return the contract of sale once he had access to a printer.

Insofar as it was written, it was constituted by the following:

(v) at 1:31pm on 9 September 2021, Sally McKay from Hodges Geelong (for the Vendor) sent an email to the Purchaser with an unsigned copy of the Contract of Sale and a section 32 statement in respect of the Land; and

(vi) during the course of the afternoon on 9 September 2021 at 3:58pm the Purchaser sent by email a signed contract of sale [the amended contract] and remittance receipt for part-payment of the deposit ($12,500) in respect of the Land to Hodges Geelong.

Insofar as it was implied, it is to be implied from:

(vii) the Auction Rules;

(viii) the conduct of the auction by Falconer, for the Vendor, as set out in paragraphs 6 to 10 above; and

(ix) the Purchaser's conduct as referred to above and as follows:

(A) at 3:09pm, 3:22pm on two occasions, 3:25pm, 3:59pm and 4:02pm the Purchaser attempted to contact Mr Falconer by telephone, to no avail; and

(B) at 3:25pm the Purchaser sent a text message to Mr Falconer requesting the Vendor's agent's trust account details, and did not receive a response.

42 The first defendant evidently relies upon the amended contract together with the alleged representations made by Mr Falconer. The first defendant made two handwritten amendments to the contract of sale. His handwritten amendments on the amended contract are shown by the strike through text and italics below:

Payment

Price $1,250,000.00

Deposit $125,000.00 on acceptance of this offer payable by bank cheque of which $12,500 has been paid by EFT. Fee attached receipt.

Balance $1,125,000.00 payable at settlement

....

Settlement (general conditions 17 & 26.2)

is due on 11th October 2021 8th March 2022.

43 There is no evidence of an agreement to remove the date for the payment of deposit. Nor was it contended there was such an agreement. I reject the first defendant's submission that this amendment is a 'red herring' as the change was superfluous, and just a matter of clarity. This submission is at odds with the fact that the first defendant, a solicitor, made the amendments. Clearly they felt it was necessary to do so. The first defendant says that, pursuant to the AuctionNow rules, the deposit had to be paid 'as soon as practicable'. The first defendant says that as a consequence, there was no breach of the contractual framework. Schedule 3 of the Terms and Conditions of the AuctionNow platform is as follows:

SCHEDULE 3

POST AUCTION PROCEDURE

(BOTH LIVE AUCTIONS AND BUY NOW AUCTIONS)

The following procedure shall apply to a User who places a Successful Bid at a live auction or timed auction.

Note: terms used in this procedure will have the same meaning as the terms set out in the User Agreement entered into by the User on Registration of an Account.

1. The contract for purchase and sale of the Property will be sent to you electronically by the Vendor as soon as practicable after the close of the Auction.

2. The User must sign the contract for sale and purchase of the Property via the electronic software, docusign or in any other manner agreed to between the User and Agreement immediately after the Auction.

3. If the User for whatever reason does not or is unable to sign the contract for sale and purchase of the Property, the User irrevocably authorises and appoints; for online auctions the Auctioneer in AuctionNow; for live auctions Auctioneer; to sign the contract for sale and purchase of the Property on the Users [sic] behalf.

4. The deposit being 10% of the purchase price or such other amount agreed to in writing by the Vendor prior to the close of the auction, will need to be paid as directed by the Vendor or Vendors [sic] Agent as soon as practicable after the close of the Auction.

5. Once the contract has been exchanged and the deposit has been paid any further communication regarding the Property will take place directly between the User and the Vendor or Vendors [sic] agent. [45]

(underline added)

44 I accept that the AuctionNow terms provided that the payment needed to be made 'as soon as practicable' after the close of auction. However, this submission overlooks the importance of the written contract of sale. Once it was agreed, its terms would be binding upon the parties. The first defendant's handwritten amendment to remove the time that the deposit was due was made unilaterally.

45 As a comparison, the first defendant referred to the contract of sale signed with the third party which had the handwritten amount of deposit noted. However, the third party did not remove reference to the time upon which the deposit was due (namely, 'on acceptance of this offer'). The comparison is inapt.

46 As to the change in settlement date, even if there was an acceptance by Mr Falconer's earlier alleged representation, this representation was overtaken by the written contract of sale provided by the vendor and the agreement by the first defendant to the AuctionNow terms.

47 Item 11, Schedule 1 of the Terms and Conditions of the AuctionNow platform provides:

11. The User may upload approved amendments to the contract through the Site and such amendments must include written evidence from the vendor of their legal representative accepting such alterations to the contract. AuctionNow takes no responsibility for ensuring the proposed amendments have been approved by the vendor or their legal representative.[46]

48 There was no written evidence from the vendor or their legal representative accepting alterations to the contract of sale.

49 There is no evidence before me that the amended contract was accepted by the plaintiff. Without acceptance, the first defendant has not established a serious question to be tried in respect of an enforceable contract of sale in respect of which the Court will order specific performance.

50 The first defendant's County Court statement of claim pleads estoppel as an alternative basis upon which he says the contract of sale (as defined in that claim and outlined above) ought be enforceable. However, the submissions focused upon the ground upon which the caveats were registered, namely contract.

51 As a matter of completeness, I will address several other submissions made by the first defendant. He says that there is a factual dispute about the representations made by Mr Falconer and that there is no direct evidence from Mr Falconer. The first defendant says there are curiosities about the timing of the sale to the third party. They say the evidence given in the Slater 25 Nov 21 affidavit regarding the sale to the third party does not make sense. These factual disputes do not of themselves establish a serious question to be tried in circumstances where there is no serious question to be tried in respect of the legal basis, namely alleged breach of contract.

Does the balance of convenience favour maintenance of the caveat?

52 Even if the first defendant had established a serious question to be tried, the balance of convenience does not favour maintenance of the caveat. The first defendant says the balance of convenience favours maintenance of the caveat until determination of the County Court proceeding. He says that damages are an inadequate remedy. He seeks specific performance of the amended contract. However, I have found that there is no serious question to be tried in respect of an enforceable contract of sale in respect of which the Court will order specific performance.

53 The balance of convenience favours removal of the caveat. The County Court proceeding is in its infancy and there is no trial date on the horizon. There is an executed contract of sale between the plaintiff and the third party. The caveat interferes with that contract. I reject the first defendant's submission that I should draw an inference that the third party is prepared to wait until the outcome of the County Court proceeding because the settlement date of its contract of sale with the plaintiff has passed and it has made no application to enforce the contract of sale it has with the plaintiff. The settlement date was 8 November 2021. The third party's caveats on the land are consistent with it maintaining its rights. It may well have been awaiting the outcome of this application, which was made on 2 December 2021.

54 The plaintiff's application is allowed. Parties are requested to confer and provide orders consequential to this judgment.

[1] Exhibit "NS-1-4" to the Slater 25 Nov 21 affidavit.

[2] Caveat AU792252E on Lot 61 and Caveat AU792254A on Lot 62.

[3] Caveat AU966444C on Lot 61 and Caveat AU966474S on Lot 62.

[5] Cetinkaya 15 Dec 21 affidavit, [4].

[11] Exhibit page 70 to the Cetinkaya 15 Dec 21 affidavit.

[13] Slater 25 Nov 21 affidavit, [12].

[14] Cetinkaya 15 Dec 21 affidavit, [15].

[16] Slater 25 Nov 21 affidavit, [20].

[17] Exhibit page 70-76 to the Cetinkaya 15 Dec 21 affidavit.

[18] Exhibit page 77 to the Cetinkaya 15 Dec 21 affidavit.

[20] Slater 25 Nov 21 affidavit, [20].

[21] Exhibit page 80 to Cetinkaya 15 Dec 21 affidavit.

[26] Exhibit page 82 to the Cetinkaya 15 Dec 21 affidavit.

[27] Exhibit page 83 to the Cetinkaya 15 Dec 21 affidavit.

[28] Slater 25 Nov 21 affidavit, [17].

[29] Cetinkaya affidavit 15 Dec 21 affidavit, [29].

[31] Exhibit page 245 to the Cetinkaya 15 Dec 21 affidavit.

[32] Exhibit page 205 to the Cetinkaya 15 Dec 21 affidavit.

[33] Exhibit page 206 to the Cetinkaya 15 Dec 21 affidavit.

[34] Exhibit page 214-215 to the Cetinkaya 15 Dec 21 affidavit.

[35] Exhibit page 213 to the Cetinkaya 15 Dec 21 affidavit.

[36] Exhibit page 213 to the Cetinkaya 15 Dec 21 affidavit.

[37] Exhibit 'NS-156' to the Slater 25 Nov 21 affidavit.

[38] [2021] VSCA 297.

[39] Ibid, [78]-[79], [85] (citations omitted).

[40] Ibid, [107]-[109] (citations omitted).

[41] [2020] VSCA 28.

[42] Ibid, [63]-[64] (citations omitted).

[43] [2022] VSC 1.

[44] Ibid, [87], [89] (citation omitted).

[45] Exhibit "NS-5-14" to the Slater 15 Nov 21 affidavit, 12-13. Note: there is a similar clause to item 2 of Schedule 3 in cl 4.2(a) of the AuctionNow terms.