Conroy v Vaughan [2000] QDC 435

[2000] QDC 435 IN THE DISTRICT COURT HELD AT BEENLEIGH QUEENSLAND Appeal No. 27 of 1999 BETWEEN: BADEN LINDSAY GORDON CONROY AND SHIRLEY ANN CONROY Appellants AND: ROGER VAUGHAN Respondent REASONS FOR JUDGMENT This is an appeal by Baden Lindsay Gordon Conroy and Shirley Ann Conroy (the Appellants) from a Judgment in the Magistrates Court at Beenleigh delivered on the 3rd March, 1999. The dispute between the parties is primarily over which of them is entitled to payments made under an instalment contract for the purchase of a house and land after termination of the contract. In order to understand the issues which arose for determination by the Stipendiary Magistrate, it is necessary to set out a brief chronology; (a) The appellants and respondent agreed to respectively to sell and purchase a home and land at 9 Casius Street Woodridge. The respondent signed the contract of sale on 8th May, 1996. -- 1 of 12 -- 2 (b) The contract provided; (I) For a purchase price of $65,000; (II) For settlement on 20th May, 1997; (III) For an initial deposit of $500; (IV) For monthly payments of $630 by way of part payment (deposit) until settlement; and (V) For the respondent to take up possession of the property on 24th May, 1996. (a) In November, 1996 the respondent told the appellants he was expecting funds from his father’s estate. The parties agreed the contract would be settled when the respondent received these funds. (b) On 6th October, 1997 the male appellant wrote to the respondent in the following terms; “I received this unpaid rate notice today, you were to pay it, please rectify it. The insurance for Casius Street runs out 10th of this month, so you will have to get your own insurance as it is now your responsibility now. I was refused finance last week because of Casius Street, there can be no more extensions, there is a bloke down the coast that loans bad debt people. You will have to get a bridging loan. I cannot carry this any longer.” -- 2 of 12 -- 3 (c) On 6th December, 1997, the appellants wrote to the respondent in the following terms; “The contract on 9 Casius Street, Woodridge expired on the 20th February, 1997. Therefore it is no longer valid. If you wish to proceed with purchase the price is the Commonwealth Banks payout of $59,500. If you no longer wish to purchase the property please vacate the premises within 7 days. Please leave it in the clean tidy condition it was when you entered on the 24th May, 1996.” (d) On 20th December, 1997 the Solicitor for the respondent wrote to the appellants in the following terms; “We have received instructions to act on behalf of Mr Roger Vaughan in his purchase from you of house premises at 9 Casius Street, Woodridge. We have cited a photocopy of the contract and note the completion date was the 20th February, 1997. We also note that special condition 1 obliged the purchaser to pay you by way of further deposit the sum of $630 per month. We understand from our client that you have been banking those payments and the last payment being made on the 5th December, 1997. We are further instructed that our client has been paying the rates on the property. -- 3 of 12 -- 4 Our client has handed us your letter of the 6th December, 1997 purporting to end the contract. As the contract is an instalment contract under the Property Law Act, your must give the purchaser at least thirty (30) days prior written notice if your intention is to end the contract. Our client has deposited the balance of purchase money into our Trust account and we called for settlement on the 19th December, 1997. We enclose the undermentioned documents which require your signatures; (1) Form 1 Transfer; (2) Form 24 Property Information sheets; (3) Letter of Direction; (4) Undertaking. Please note that your signatures on the Transfer have to be signed in the presence of a Justice of a the Peace or Solicitor. After you have signed the documents could you return then to us on our undertaking to use the transfer for no purpose other than stamping prior to settlement.” (a) By December, 1997 the respondents payments amounted to more than 10% of the purchase price ($14,360). Under the Property Law Act the contract is deemed to be an instalment contract. (b) On the 20th December, 1997 the respondents solicitor wrote to the appellant’s solicitor in the following terms; -- 4 of 12 -- 5 “We understand from Mr Conroy that you are now acting on behalf of the vendors in this transaction. Your clients are in possession of a letter we sent them on 10th December, 1997 a copy of which is attached. The writer will contact you to discuss the matter as we understand Mr Conroy is reluctant to settle the matter unless a payment of $59,500 is made at settlement.” (c) On 16th December, 1997 the appellants signed a transfer and subsequently returned it to the respondents solicitor. (d) On the 17th December, 1997 the appellant’s solicitor wrote to the respondent’s solicitor in the following terms; “We refer to the above matter and to instructions from our client. We hereby confirm our original advice that our client will not settle the matter unless he receives the sum of $59,000 on settlement. We are advising the Commonwealth Bank that the pay out is $58,650.33.” (e) On the 19th December, 1997 the respondent’s solicitor wrote to the appellant’s solicitor in the following terms; “We refer to the above transaction and specifically to the contract dated 8th May, 1996. Under the terms of that contract settlement was to take place on the 20th May, 1997. We understand from our client that extensions were agreed to and we note that the vendor has continued to receive payments from our client in the amount of $630 per month in accordance with special condition one of the contract. -- 5 of 12 -- 6 By letter dated 10th December, 1997 we called for settlement on the 19th December, 1997. Transfer Document and Form 24 were enclosed. We have calculated settlement figures in accordance with the contract and they are set out hereunder; Purchase price $65,000 Less deposit paid $ 500 $64,500 Less release fees on mortgage $ 87 $64,413 Less payments made by purchaser Under special condition 1 $12,600 $51,813 We have not made a rate adjustment as our client paid the last rates notice. We note your written advice to us on the 17th December, 1997 that the pay out to the Commonwealth Bank the first registered mortgagee was $58,650.33. Our client is ready and willing to settle today, however we note your verbal advice to us that your clients will not settle today unless they receive form the purchaser the sum of $59,000. We assume that is what is meant in the second paragraph of your letter the 17th December, 1997. If your clients have had a change of attitude, please let us know immediately so that we can attend settlement at the Commonwealth -- 6 of 12 -- 7 Bank, Stafford branch as advised by you on the 16th December, 1997. If settlement does not proceed today our client has instructed us to lodge a caveat over the property.” (f) On 19th December, 1997 the appellant’s solicitor wrote to the respondent’s solicitor in the following terms; “We refer to the above matter and to your without prejudice letter of even date. We confirm that the offer is unacceptable and our client requires the sum of $59,000 to be paid.” (g) On the 13th January, 1998 the solicitor for the respondent wrote to the solicitor for the appellants in the following terms; “We confirm the writers telephone conversation with you this morning that our client has elected to rescind the contract due to your clients breach of contract by not settling on the 19th December, 1998 and their repudiation of the contract by consistently maintaining through your prior to Christmas in a number of telephone conversations and your conversation with the writer on 12th January, 1998 that they would not settle the contract unless they received a payment of $59,000 at settlement. Their insistence is a clear repudiation of the contract as $59,000 was not due and payable under the terms of the contract. Our client claims a refund of $13,100 being the deposit sum that he has paid under the contract terms. Could you please let us know urgently if you have instructions to refund the $13,100.” -- 7 of 12 -- 8 The Stipendiary Magistrate found: (I) The respondent paid a total amount of $14,360 by way of monthly payments of $630; (II) The appellants repudiated the contract on the 6th December, 1997; (III) The appellants were in breach of the contract on 19th December, 1998 by refusing to complete the contract for the agreed consideration; (IV) The respondent accepted the appellants repudiation of the contract and rescinded it on the 13th January, 1998. All of these findings are challenged by the appellants. Mr Crowley QC, who appeared for the appellants, argued the informal notice to complete communicated in the solicitor’s letter of 10th December, 1997 was ineffective as insufficient time was allowed to the appellants to settle. On this view the respondent’s purported recision of the contract on the 13th of January, 1998 was itself a repudiation of the contract. Mr Curran, who appeared for the respondent, made it clear he relied on the appellant’s conduct in refusing to complete unless paid $59,000 on settlement, as well as their declaration in the letter of 6th December, 1997 that the contract was terminated as the relevant acts of repudiation by the appellants. In order to discuss these opposing submissions it is necessary to discuss the basic facts in greater detail. -- 8 of 12 -- 9 The appellants demanded a payment of $59,000 (or $59,500) on settlement because the mortgage debt was approaching $59,0001. The differential between the amount demanded ($59,000) and the amount payable under the contract was approximately $7,200. The letter of the 6th December, 1997 was written by the appellants personally and represents persuasive evidence they did not regard themselves bound by the existing contract and were instead demanding the payment of an increased purchase price if the respondent wanted to proceed with the contract. At that point the respondent had paid $14,360 in monthly payments and was in a position to settle the contract. The response to the appellant’s letter was in the circumstances a reasonable one. As I interpret the correspondence the problem with fixing the 19th December for settlement was not that insufficient time was allowed to the appellants before settlement2 but that they were not prepared to settle for less than a further payment of $59,000. This is evident from the subsequent correspondence and verbal communications between the two solicitors. In my respectful opinion the Stipendiary Magistrates general conclusion the appellants had repudiated the contract was correct. Any reasonable person considering the sequence of events from the 6th December, 1997 would conclude the appellants no longer intended to be bound by the 1 As at 17th December, 1997 it was apparently $58,650.33 (see the letter of 17th December, 1997 from the appellant’s solicitor). -- 9 of 12 -- 10 contract. At best for the appellants they refused to perform the contract unless the other party complied with the demand that the price be increased by a substantial sum3. In my opinion, the appellants refusal to complete amounted to a renunciation of the contract. Mr Crowley QC argued the demanded increase in price was not substantial and the respondent had other remedies under the Real Property Act. I am satisfied the additional funds demanded were substantial relative to the contract price. Mr Curran suggested that resort to the Real Property Act was not a practicable course open to the respondent given the existence of the bank mortgage over the property. Whether that is so or not, I am satisfied the Stipendiary Magistrate’s conclusion the respondent rescinded the contract by letter on 13th January, 1998 was a correct analysis of the situation. Special condition one (1) of the contract, provided for the payment of $630 each month by way of deposit. Special condition three (3) provided that “Should this matter not proceed to settlement for any reason whatsoever, all monies paid by way of deposit shall be forfeited to the vendor and not be refunded under any circumstances.” Under the general law, a purchaser is entitled to recover any purchase monies paid if the contract fails4. In a case where the parties by express agreement give the vendor the right to retain the instalments paid, equity 2 To both attend to the mechanics of the proposed conveyance and to obtain any additional funds necessary to pay out the mortgage at settlement. 3 An increase from $65,000 to $72,200 is in my opinion a substantial increase in the price. 4 McDonald V Dennys Lascelles 48 CLR 457 at 477, 478. -- 10 of 12 -- 11 will nonetheless relieve the purchaser from forfeiture of the instalments5. The appellants below did not rely on special clause 3 to prevent the return of the instalments to the respondent6. Mr Crowley QC, however, relied on the clause on appeal. In my view the clause has no application; (1) The appellants, having renounced the contract cannot rely on a clause in it to govern the rights of the parties to the instalments after termination of the contract. The clause could only came into effect after the contract failed to proceed to settlement. Before that time the appellants had repudiated the contract. (2) On equitable principles the special clause would be regarded as a forfeiture. Equity would relieve the respondent from forfeiture of the instalments in the circumstances of this case. Mr Crowley QC submitted the Stipendiary Magistrate had no equitable jurisdiction to relieve against forfeiture. Mr Curran took issue with this point, relying on S4 (c) of the Magistrates Court Act of 1921. I agree with Mr Curran’s submissions on this aspect of the case. There were no other substantial points argued in the appeal. The conclusions of credit and the several findings of fact reached by the Stipendiary Magistrate were undoubtedly open to him on the evidence. Mr Anders reasons for judgment seem to me to have been thoughtfully prepared and both logical and sensible. Although there may be some 5McDonald V Dennys Lascelles 48 CLR 457 at 478. -- 11 of 12 -- 12 technical difficulty in the declaration made concerning the $500 deposited with the stakeholder in fact the monies have since been paid to the solicitor for the respondent. In those circumstances it is unnecessary to interfere with the declaration made. I am satisfied in all the circumstances that the appeal should be dismissed. 6 See the Stipendiary Magistrate’s reasons for decision P9. -- 12 of 12 --