Create Group Pty Ltd v Frew & Anor [2008] QDC 226

1 [2008] QDC 226 DISTRICT COURT CIVIL JURISDICTION JUDGE ROBIN QC No 2623 of 2007 CREATE GROUP PTY LTD Plaintiff and SIMON FREW & ANOR Defendant BRISBANE ..DATE 25/07/2008 ORDER CATCHWORDS: Uniform Civil Procedure Rules r 293 r 304(2) - whether defendants should be granted summary judgment where plaintiff wished to discontinue and pursue an existing parallel Supreme Court claim - certain costs awarded to defendant on indemnity basis and two proceedings were running. -- 1 of 12 -- 2 ORDER 1 10 20 30 40 50 60 HIS HONOUR: This is an unusual proceeding in which the plaintiff has taken an assignment of the rights of a company called Piperland which was the vendor of separate lots in a new apartment building on the Sunshine Coast purchased "off the plan", one by each of the defendants, who are spouses. The involvement of the plaintiff, it would appear, was not wholly unexpected. It may have played some role in the marketing of the subject properties. The contracts in respect of the lots are dated late May or 1st of June 2007. They provide for the purchase price in each case of $725,000 which, in the pleadings, is agreed to be the purchase price. That, for practical purposes, soon ceased to be the situation, if it ever truly was the situation. The parties are entitled to accept propositions in pleadings, whether or not they represent the truth of things, if so advised. Although the defendants were perhaps somewhat coy in the pleadings about whether their signatures appeared on them, they accept the existence of, and have at no point contended that they were not bound by, so-called "vendor finance agreements", each dated 19th of June 2007. The second defendant's is typical and is in the terms following: "19 June 2007 Attention:Wei Keat Tang 62 Bertha St Wooloowin Q 4030 RE: Under the contract dated 1 June 2007, for the sale of apartment in the Aqua Vista development, at 64 Sixth Avenue, Maroochydore -- 2 of 12 -- 3 ORDER 1 10 20 30 40 50 60 (previously Lot 1 on RP 200324, County of Canning, Parish of Mooloolah, title reference 16727066), to Wei Keat Tang for the purchase price of $725,000, which includes the complete furniture, window dressings, and electrical package, and vendor finance. The developer, Piperland Maroochydore Pty Ltd, agrees to $123,500 offer a rebate of $149,700 at settlement (which includes vendor finance for a maximum of one year in the amount of $50,200) if settlement occurs within 10 business days $50,000 following the issue of titles. For clarity, the summary of calculations surrounding the sale agreement are as follows: Contract Price as requested $725,000 List Price (for calculations) $695,000 Less 10% discount of $69,500 discount $625,500 actual purchase price Vf of furniture $26,000 $ 23,700 Vf of Stamp duty $23,700 $ 50,200 vendor finance(Vf) $575,300 net at settlement $601,200 Ö $601,500 The Vendor Finance is to be secured by suitable property, and reflected in formal documentation. Yours faithfully, (signed) …………………………………………… -- 3 of 12 -- 4 ORDER 1 10 20 30 40 50 60 Gary Bell Director Piperland Maroochydore Pty Ltd ACN 11204567264 Signed in agreement …………………………………" Wei Keat Tang Completion occurred, essentially on the basis of the figures in the document set out on the 17th of July 2007. The defendants applied to the Court for summary judgment in their favour under rule 293. They seek other relief, including the dismissal of the proceeding as an abuse of process. That arises once the plaintiff commenced Supreme Court claim 3237 of 2008 on the 10th of April 2008. This brings in additional parties, being Malcolm Frew and Rosemary Frew as guarantors and 3 financial institutions, the Commonwealth Bank of Australia, First Mortgage Company Home Loans Proprietary Limited, and Perpetual Trustees Victoria Limited, whose interest, as I understand it, arises because they have existing interests in property in which the plaintiff wishes to have a security interest of its own recognised and regularised. The plaintiff's claims in the Supreme Court proceeding are somewhat wider, as for the District Court claim, but essentially, as for the District Court claims, they arise out of the vendor finance agreements. It contends that $50,000 is due from each of the defendants; indeed, as I understand things, that the 2 sums are aggregated on the basis of liability of both defendants for the whole. Additional modest -- 4 of 12 -- 5 ORDER 1 10 20 30 40 50 60 amounts are sought for legal costs and also interest is sought under s 47 of the Supreme Court Act 1995 from the 14th of September 2007, alternatively, from a later day. In the Supreme Court proceeding, the plaintiff asserts rather higher claims. What the defendants seek under rule 293 is the construction by the Court of the vendor finance agreements to the effect that all that is comprehended in such agreement is 2 separate sums of $13,560 each, representing the stamp duty ultimately paid on the relevant transfers. The submission is made that each agreement is clear in its effect. That exercise would require a conclusion that the reference to vendor finance for 1 year in the amount of $50,000 may be disregarded, the relevant figure to be taken from the document being that appearing below, of $23,700 for stamp duty. The next step in the argument is that that ought to be regarded as a provisional figure only, subject to alteration in light of whatever might turn out to be the actual amount of stamp duty eligible and paid. I am in considerable difficulty in construing the document in that way. It is obviously drafted somewhat inexpertly. The view is open and it has some appeal to me that the rebate referred to, rather than being a straight-out once-and-for-all reduction in the purchase price, contemplated indulgence of the purchaser to the extent of $50,000 not being required to be paid for 12 months. Another possibility is that the $23,700 in each agreement is the operative figure, the -- 5 of 12 -- 6 ORDER 1 10 20 30 40 50 60 document being in error in not reducing $50,200 were it first appeared to $23,700. Another explanation for a figure in the vicinity of $50,000 may be that that was roughly the aggregate of the stamp duty amount referred to and the amount of $26,000 referred to in respect of vendor finance of furniture, an arrangement which was not pursued in the end. The reduction of the agreed purchase price of $725,000 to the extent that the defendants say have happened is perhaps, on the face of it, something surprising in the absence of any explanation for it. A further circumstance which the Court notes is established by an affidavit which Mr Mills obtained leave to read and file today, which was sworn by Sarah Carter, is that the defendants and, indeed, the guarantors, it appears, may have indicated their willingness to execute security documents referring to the $100,000 amount. In the end, there was no execution of such documents. It may be determined that even if that indication that I mentioned contained in a facsimile of 10th of September 2007 on the letterhead of Debt Busters was provided to the plaintiff's director, there's nothing binding about it and the defendants were free to resile from any intimation in it about their future conduct. One of Mr Hackett's complaints in support of the defendants' application is that the claim in this Court was premature. It was certainly commenced long before the 14th of July 2008 which would appear to be the date for repayment of the vendor finance. The plaintiff's approach has been that when the -- 6 of 12 -- 7 ORDER 1 10 20 30 40 50 60 defendants filed to provide security it was in a position of being entitled to demand repayment in full immediately - indeed, it is part of Mr Hackett's submission that there may have been repudiation by the plaintiff which will preclude its obtaining relief in the Supreme Court. An application essentially similar to the defendants' present one came before Judge Griffin, who adjourned it, I am told to await the outcome of the plaintiff's application to have it transferred to the Supreme Court. Justice Martin has recently dealt with that application, dismissing it and expressing concern that the defendants were facing identical proceedings or proceedings seeking identical relief in both Courts. I'm told his Honour expressed the view that the plaintiff ought to discontinue in this Court. That's now what the plaintiff seeks to do by an application filed by leave today. The hearing before his Honour was on the 16th of July 2008. Unfortunately, no transcript is available and probably none ever will be. What the Court has to go on is Mr Smith's affidavit as to what transpired. Ultimately, I think this Court is relieved from having to embark on the difficult task of construing the document. I am unsure whether rule 293 is wide enough to entitle the defendants to seek declaratory relief. There's no aspect of that in the proceeding at the moment, still less any claim in a pleading by the defendants for that, although the defendants take the position that there's no occasion for them to pay anything whatever to the plaintiff, having regard to an -- 7 of 12 -- 25072008 D.1 T(1)18-19/MJF(BNE) M/T BRIS11 (Robin DCJ) 8 ORDER 1 10 20 30 40 50 60 entitlement to set off costs they may have been adjudicated entitled to, or be in a position to claim against the plaintiff. It seems to me an odd thing to give judgment against the plaintiff when on the defendants' own approach it is entitled to the amount of the stamp duty against each of them, albeit subject to set-off. ... HIS HONOUR: There are potentially embarrassing issues of comity when two courts are seized of the same controversies. One would expect that the District Court would yield to the Supreme Court in such circumstances. It's regrettable that a final determination of issues involving the present parties would be available much earlier in the District Court than in the Supreme Court. Now that the plaintiff has belatedly formally sought this Court's leave to discontinue under rule 304, in my opinion this Court's proper course is to accede to that application - rather than embark on the decision of any issues at all. Useful as a decision might be to the defendants, I don't think this Court ought to give the appearance of attempting to pre-empt what might happen in the Supreme Court. I'm concerned that this proceeding ought to be terminated one way or the other and, for that reason, propose to make an order that if the notice of discontinuance - which Mr Mills says he's ready, willing and able to file very quickly - does not eventuate, the proceeding should stand -- 8 of 12 -- 25072008 D.1 T(1)18-19/MJF(BNE) M/T BRIS11 (Robin DCJ) 9 ORDER 1 10 20 30 40 50 60 dismissed. I agree with Mr Hackett that once the Supreme Court matter was begun, its continuance became an abuse which the defendants shouldn't have to put up with. Rule 304 gives the Court some flexibility in respect of costs which I'm not persuaded should be taken advantage of here to relieve the plaintiff from the ordinary consequence that it should bear the costs. Mr Mills submits that his client's position is different from that of the litigant in Petavrakis v. Hirst & Co [2001] QSC 224. White J determined that that lady had no proper basis for proceeding in the Supreme Court in the light of the existence of a proceeding in the Family Court in which all the relief sought was available. It is accepted by Mr Hackett, I think, that relief is sought in the Supreme Court proceeding by the present plaintiff which could not have been obtained in the District Court. That affects the matter from the time when the Supreme Court proceeding commenced. Those observations are pertinent to the defendants' claim for indemnity costs, if I haven't indicated that sufficiently already. I think the defendants ought to have their costs now rather than their being reserved to see how things turn out in the other Court, as Mr Mills seeks. In the costs order that I make, I have taken into account that the defendants haven't persuaded the Court to grant all of the relief which they were after, so have had mixed success. They -- 9 of 12 -- 25072008 D.1 T(1)18-19/MJF(BNE) M/T BRIS11 (Robin DCJ) 10 ORDER 1 10 20 30 40 50 60 have got themselves quit of this proceeding or will shortly be in that position, I hope. The orders are as follows: leave to the plaintiff under rule 304 to discontinue the proceeding; notice of discontinuance to be filed on or before 31st of July 2008. If no notice of discontinuance is filed within that time, the proceeding shall as of 1st of August 2008 be dismissed. Order that the plaintiff pay the defendants' costs of and incidental to the proceeding, to be assessed on the standard basis until the commencement of proceeding 3237 of 2008 in the Supreme Court of Queensland; thereafter, on the indemnity basis, except that the costs of today's hearing on the 25th of July 2008 are to be assessed on the standard basis. The costs order includes reserve costs. Does that cover it all? MR MILLS: Sorry, your Honour----- HIS HONOUR: Yes. MR MILLS: That's what should - your Honour was saying - I do apologise if I misunderstood this - so the application with regard to summary dismissal under 2----- HIS HONOUR: Well, it doesn't succeed but partly because you gazumped it. In the end I didn't have to decide whether I was persuaded by it - in the end you gazumped him by your application. MR MILLS: Just with regard to those costs of that application, I was seeking clarification because I wasn't sure given that the orders sought for dismissal didn't succeed. HIS HONOUR: Well, they're not getting indemnity costs today and being restricted to standard costs of today is the costs aspect of whatever limitation there is on their success. -- 10 of 12 -- 25072008 D.1 T(1)18-19/MJF(BNE) M/T BRIS11 (Robin DCJ) 11 ORDER 1 10 20 30 40 50 60 MR MILLS: Clarification on that application, that was all I was after----- HIS HONOUR: Yes. In a way, it succeeded. If you just look to paragraphs 1 and 2 you'd say they failed - but they didn't fail on the others. MR MILLS: Thank you, your Honour, that was----- HIS HONOUR: Right. MR MILLS: -----that's suitable. Thank you. MR HACKETT: I should have, just out of academic interest, drawn your Honour's attention to the assignment because it occurred on allegedly on the 17th of July, the date of completion, and what was assigned is a principal debt of $100,000 and your Honour was taken to the Debt Buster's fax which didn’t occur until September. So even on their own case they have real difficulties with this assignment. HIS HONOUR: Yes, but I'd like this later part transcribed too. But July to September was taken up by Mr Mills or somebody trying to security documents signed. MR HACKETT: Yes. HIS HONOUR: Yes, so----- MR HACKETT: But these----- HIS HONOUR: So things were happening. MR HACKETT: The assignment precedes the taking up of security documents. HIS HONOUR: Yes, but----- MR HACKETT: They didn't seek security documents until after completion if the debt had already been assigned and apparently, according to this document, the debt was then $100,000. HIS HONOUR: Yes. MR HACKETT: A joint debt----- HIS HONOUR: Yes. MR HACKETT: -----of $100,000. HIS HONOUR: Yes, yes. But----- MR HACKETT: It's interesting----- HIS HONOUR: It is - well it will be interesting, although it's not that much money, so that's why I asked the question, -- 11 of 12 -- 25072008 D.1 T(1)18-19/MJF(BNE) M/T BRIS11 (Robin DCJ) 12 ORDER 1 10 20 30 40 50 60 "Is the same situation in respect of other purchases of units in the building?" MR HACKETT: I'm not aware of anything. ----- -- 12 of 12 --