Divoca Pty Ltd's Caveat, Re [1990] QSC 283 [1991] 2 Qd R 121

0 d 0 IN THE SUPREME COURT OF QUEENSLAND CATCHWORDS: Counsel: O.S. 818 of 1990 IN THE MATTER of the "Real Property Act 1861-1986" -and- IN THE MATTER of a caveat lodged by DIVOCA PTY LTD -and- IN THE MATTER of an application by GOLDSHAR INVESTMENTS PTY LTD JUDGMENT - CONNOLLY J. Delivered this 28th day of August, 1990 J.S. Douglas Q.C. and P.J Favell for applicant R.N. Chesterman Q.C. and P.D.T. Applegarth for respondent Solicitors: Chambers McNab Tully and Wilson for respondent Feez Ruthning for applicant Hearing date: 20th August, 1990 -- 1 of 16 -- 0 0 C 0 IN THE SUPREME COURT OF QUEENSLAND o.s. 818 of 1990 IN THE MATTER of the "Real Property Act 1861-1986" -and- IN THE MATTER of a caveat lodged by DIVOCA PTY LTD -and- IN THE MATTER of an application by GOLDSHAR INVESTMENTS PTY LTD Judgment - Connolly J. Delivered this. 28th day of August, 1990 By a contract bearing date 29th June, 1989 Goldshar Investments Pty. Ltd. agreed to sell to Divoca Pty. Ltd. for $5,000,000.00 vacant land at Ernest on the Gold Coast at the corner of Napper Road and Arundel Road described as Lots 152 and 153 on Registered Plan No. 197653. A deposit of $500,000.00 was payable in two instalments and has been paid. The date for completion was Thursday, 28th June, 1990. contract time was of the essence. By cl. 23 of the The problem which has arisen in this case derives from the fact that as at the date of the contract R.P. 197653 had been superseded by a fresh R. P. 179566 as a consequence of the excision of a small parcel from Lot 153 on the former plan. It will be convenient to set out the history of the land owned by Goldshar in this locality at relevant times. Prior to August, 1988 Goldshar was the registered proprietor of the following laI?,d at the intersection of Napper and Arundel Roads: -- 2 of 16 -- IN THE SUPREME COURT OF QUEENSLAND CATCHWORDS: Counsel: Solicitors: O.S. 818 of 1990 IN THE MATTER of the "Real Property Act 1861-1986" -and- IN THE MATTER of a caveat lodged by DIVOCA PTY LTD -and- IN THE MATTER of an application by GOLDSHAR INVESTMENTS PTY LTD JUDGMENT - CONNOLLY J. Delivered this 28th day of August, 1990 J.S.~ Douglas Q.C. and P.J Favell for applicant R.N. Chesterman Q.C. and P.D.T. Applegarth for respondent Chambers McNab Tully and Wilson for respondent Feex Ruthning for applicant Hearing date: 20th August, 1990 0 0 0 0 -- 3 of 16 -- 0 0 ' l IN THE SUPREME COURT OF QUEENSLAND O.S. 818 of 1990 IN THE MATTER of the "Real Property Act 1861-1986" -and- IN THE MATTER of a caveat lodged by DIVOCA PTY LTD -and- IN THE MATTER of an application by GOLDSHAR INVESTMENTS PTY LTD Judgment - Connolly J. Delivered this 28th day of August, 1990 By a contract bearing date 29th June, 1989 Goldshar Investments Pty. Ltd. agreed to sell to Divoca Pty. Ltd. for $5,000,000.00 vacant land at Ernest on the Gold Coast at the corner of Napper Road and Arundel Road described as Lots 152 and 153 on Registered Plan No. 197653. A deposit of $500,000.00 was payable in two instalments and has been paid. The date for completion was Thursday, 28th June, 1990. contract time was of the essence. By cl. 23 of the The problem which has arisen in this case derives from the fact that as at the date of the contract R.P. 197653 had been superseded by a fresh R. P. 179566 as a consequence of the excision of a small parcel from Lot 153 on the former plan. It will be convenient to set out the history of the land owned by Goldshar in this locality at relevant 'times. Prior to·August, 1988 Goldshar was the registered proprietor ·of the following land at the intersection of Napper and Arundel Roads: -- 4 of 16 -- 2 Lot 152 on R.P. 197653 C/T Vol. 6743 Folio 248 Lot 153 on R~P. 197653 C/T Vol. 6743 Folio 249 5.147 ha. 7.991 ha. Lot 152 ,was subject to registered easement H491581 in favour of Gold Coast City Council for water supply purposes. In 1988 1207m2 at the east end of Lot 153 was acquired by Australian Telecommunications Commission. C/T Vol .. 6743 Folio 249 was cancelled. Lot 153 became Lots 153 and 154, the latter vested in Telecom, these two lots being designated on a new R.P. 'L 179566 which·, as I have already said, superseded R.P. 197653. Q The balance of Lot 153, which remains vested in Goldshar became: Lot 153 on R.P. 179566 C/T Vol. 7192 Folio 224 7.8703 ha. 0At 29th June, 1989 the only land in this location owned by Goldshar was " vacant land, being: Lot 152 on R.P. 197653 C/T Vol. 6743 Folio 248 5.147 ha. Lot 153 on R.P. 179566 C/T Vol. 7192 Folio 224 7.8703 ha. The description of the land sold as'Lots 152 and 153 on R.P. 197653 was an obvious error for, strictly speaking, it included Q what hcid become Lots 153 and 154 on R.P. 179566 and Lot 154 was not Goldshars to sell. · It is nowhere suggested in the material that Divoca believed that it was buying the 1207 m2 acquired by Telecom. The company's directors were well aware that it was buying vacant land for Mr. Huxley swears as much and he had seen the sub-station structure at the east corner. Mr. Milne, a consulting engineer engaged by Divoca, learnt the exact position in July 1989 when a survey was conducted and in fact he negotiated on behalf of Divoca with Telecom for a possible relocation of Telecom's installation. 0 -- 5 of 16 -- 3 All the material before me suggests that Divoca at all times treated the description of the land in the contract of sale as an error. Thus Mr. Huxley says that he learned by October, 1989 that the 1207 m2 had been sold to Telecom but there is no suggestion of any complaint by Divoca that it was not to get land it had contracted to buy._ In fact on 24th April, 1990 Divoca resold to Freestar Pty. Ltd. for $17,500,000.00 the whole of the land which had been in the possession of Goldshar on 29th June, Q 1989, namely Lot 152 on R.P. 197653 and Lot 153 on R.P. 179566. 0 On 22nd May, 1990 the soli_ci tors for Divoca forwarded to the solicitors for Goldshar - a deed of covenant relating to the rezoning of the subject land and which was executed by both parties by 14th June, 1990 at the latest which describes it as Lot 152 on R.P. 19~653 and Lot 153 on R.P. 179566. - . ,· ' . On 30th May, 1990 the solicitm::s for Divoca sent settlem.ent documents to the solicitors for Goldshar which were referable to the land which Goldshar had to sell on 29th June, 1989 save that in two of the documents the land the subject of Certificate of Title Vol. 7192 Folio 224 was described as Lot 154. On 1st June, 1990 Mr. Flannery, Goldshar's solicitor, telepho_ned the solicitor for Divoca and advised her of the incorrect description. He was advised by her that it was a typographical mistake_ and that Lot 153 was intended. It was agreed that Mr. Flannery should alter both documents by changing Lot 154 to Lot 153 and this change is apparent on the documents before me. The documents in question were returned duly executed by Mr. Flannery to the solicitors for Divoca on 14th June, 1990. -- 6 of 16 -- 4 Requisitions· on title had been sent by 'Divoca's solicitors on 14th July, 1989. On their face they referred to the land the subject of Certificates of Tit.le Vol. 6743 Folios 248 and 9 (Lots 152 and 153 6n R.P. 197653). They were never answered but there is no suggestion that anything turns on this. However a second set of requisitions on title was submitted on 30th May, 1990 and this set obviously relates to Goldshar's land and nb other thus: Vol. 7192 Folio 224 Lot 154 on R.P. 179566 Vol. 6743 Fo.lio 248 Lot 152 on R.P. 197653 The reference to Lot 154 seems to be the same error as was corrected in the transfer documents. This error was corrected to Lot 153 by the answer to the requisitions by· Goldshar' s solicitors. On 20th Junej 1990 Goldshar's solicitors advised Divoca'~ solicitors by fax transmission that it was of utmost importance 0 0 to Goldshar that. settlement occur on 28th June and that no extensio·n of settlement date would be granted. Shortly after the Q fax was· ·sent a solicitor telephoned on behalf of Di voca and sought an extens'ion bf the settlement date but the extension was refused. . By fax transmission on 27th June, 1990 Goldshar' s solicitors nominated 3.00 p.m. on 28th June, 1990 at the Gold Coast City ~ouncil Chambers as a time and place for settlement. The next day Divoca' s solicitors acknowledged that settlement was called for that day at 3.00 p.m. and continued: "We.note that your client will not be in a position to complete today in accordance with the terms of the contract for the following reasons: 1. Your client will be unable to provide us with a certificate of title in respect of lot 153 on registered plan no. 197653 as required by the 0 -- 7 of 16 -- u· b 5 contract being that land contained in certificate of title volume 6743 f6lio 249. ~ We note that such lands are now described as lots 153 and 154 on RP 179566 contained in certificates of title volume 7192 folios 224 and 225. We further note that the vendor is not the registered proprietor of lot 154. 2. Whilst the vendor has disclosed that there arenot any encumbrances in item L of the contract, there is in fact in respect of the land described as lot 152 on R.P. 197653 a registered easement no H491581 to the council of the City of the Gold Coast over easement B. We note that given your client's inability to convey title in accordance with the contract, your clientwill unquestionably be in default today. Accordingly, our client instructs us- that it considers that it is·under no obligation to tender the purchase moneys and accordingly has instructed us that it will not be· making arrangements with its financiers for provision of the funds." As part of the same transmission Divoca's solicitors r . , ., .. .., • r : , ,. •:....-. • \. 7. ,. , ,.-~ . . ., •.. ·- '.'" ·\ .. , """' ..,, , ,_,~, ,·,,_) reserved their-·c1ient:.· 1 ·s rights in the following terms: · · "Our client reserves its rights in respect of ·your: client's default. Without limiting the various courses of action · open to our client, our client reserves the right to· at a later time give a notice to complete in respect of lot 152 on RP 197653 and lot 153 on RP 179566 ( subject to the easement) and tobring an action for damages fo~ compertsation forth~' misdescription in respect of both the.easement and the vendor's inability to convey lot 154 on RP-'179566." The reference to the registered easement ·is to the fact that the form of contract which was executed on 29th June, 1989 ·•· makes provision for disclosure of encumbrances. This part of the contract was left blank but in fact Lot 152 was subject, as has been seen, to registered easement No. H491581. This £act was also well known to Divoca for· the transfer documents prepared by its solicitors and sent to Goldshar's solicitors qn -- 8 of 16 -- 6 30th May, 1990 set the ea·sement out referring to it by its real property number. On 28th June, 1990 Miss Innes, who was employed by Divoca's solicitors; attended at the Gold Coast City Council Chambers where she sighted C/T Vol. 6743 · Folio 248 (Lot 152 on R.P. .. ' 197653) and C/T Vol. 7192 Folio 224 (Lot 153 on R.P. 149566). She advised Mr. Flannery, Goldshar's solicitor,· that her instructions were to collect C/Ts Vol. 6743 Folios 248 and 249. It will be reCalled that the latter related to the former Lot .. 153 on R.P. 197653 and that it had been cancelled in 1988. She did not bring a cheque for settlement. It is clear that those who sent her were aware that what was demanded could not be produced, not only because it did not exist, but because it relat-ed/· iri.pa~t-'at le,a~t, to 1 1and which Goldsha:r did not own on 29£h-June, 1989. It is also ~lear that Divoca had no int~ntion of settling on 28th June, 1990. On 29th June, Goldshar' s solicitors, on ·instructions, terminated the contract for the failur~-~~ Divoc~ to 6omplete. On 6th July Divoca's solicitors _; . ;, ' : -, ,. ·, . ' ·_:- . ~ .. replied justifyin·g what had occurred on the same basis as before namely that Goldshar was unable to discharge its obligations in accordance with the terms of the contract and charging Goldshar with repudiation, affirming the contract and requiring· performance. Caveats were lodged by Divoca bn 19th July, f990 against Lot 152 on R.P. 197653 and Lot 153 on R.P. 179566 and on 6th August, 1990 Divoca·issued a writ for specific performance - and other· relief. ·on 7th August, 1990 Goldshar made this application for removal of the caveats and that is the proceeding which is presently before me. (\" D 0 -- 9 of 16 -- 1rr q 1 11 I II 7 . In the forefront of Goldshar' s submissions it is the proposition that Divoca was at all material times aware that land the subject of the contract of sale was erroneously described and that the purchaser was well aware that what it was buying_was lots 152 and 153 as they existed at the date of the contract, 29th June, 1989. that this was the position. There is, in my opinion, no doubt Not only did Divoca send transfer documents for the land Q the subject of C/Ts Vol. 6743 Folio 248 and Vol. 7192 Folio 224 and requisition in relation to the title to those parcels only, 0 0 but it received, under cover of Goldshar's solicitors' letter of 14th June, 1990 a settlement_ statement for the purpose of settlement on 28th June, 1990 to which no demur was made. The figure was $4,332,051.84 being. the purchase pr:i,ce of $5 million ,_ .,1 •. ,-< ~ ... , __ ,,_ ,..-, --·-··~ ''.·_;,,'t.,;;lt _,,,.,.,,;;, ____ ';:, "t less deposit payments, a deduction pursuant to special cond_! tion. 32 of the contract, .adjustments for rates, fire levy and land tax and a release fee. In this connection there was,_ in particular, no suggestion that any adjustment to the purc~ase price was called for by reason of Goldshar's ina~ility to convey Lot 154 or of the easement. Moreover Di voca accepted its responsibility, pursuant ... to special condition 31 of the contract, to enter into a deed in favour of Gold Coast City Council in terms satisfactory to the Council, to comply with the obligations of Goldshar under the Rezoning _Agreement between Goldshar and the Council. The rezoning agreement related to Lots 152 and 153 on R.P. 197653 and the deed executed by Divoca obliged it to fulfil Goldshar's obligations to the Council from completion of the purchase of -- 10 of 16 -- 8 "the Land" as defined in that deed viz. Lot 152 on R.P. 197653 .. and Lot 153 on R.P. 179566. That deed was sent, executed by Divoca, to Goldshar's solicitors for execution by Goldshar on 22nd May, 1990 with a request for prompt attention as "settlement of this matter is scheduled to take place on 28th June, 1990." This is not, as it seems to me, the occasion for examination of the law relating to acceptance of title. My conclusion depends upon the special facts of the case. It is indeed clear that what occurred is attributable to Divoca I s desire to minimise the cost of the funds it required for this 0 purchase. The company was proposing to borrow the moneys needed Q for settlement from Direct Acceptance Corporation Limited. Mr. Huxley's affidavit reveals that he thought that any extra time for settlement would be, as he puts it, a bonus as the default interest rate under the contract would be less than Di voca I s costs of funds. He says that this aspect of the transaction was discussed further with Mr. Lord of Direct Acceptance who confirmed that this would be so. The date for completion of the resale by Divoca to Freestar to which reference is made above is 31st July, 1991. It is apparent therefore that Divoca's directors had good reason for putting off as long as possible the settlement of this transaction. Being aware of the error in the contract of sale, they plainly perceived a means of deferring payment of the purchase price on the pretext that Goldshar was unable to make title. It will be noted however that at no time did they seek to be released from the contract. If this analysis be correct then Divoca was in default in failing to tender performance on 28th June, 1990. 0 0 -- 11 of 16 -- • ' ' C 9 Divoca however relied upon two additional grounds for its contention that the contract of sale had not been validly discharged. The first was that the deposit of $50,000 was more than ten per cent of the consideration on sale so that the ' contract became an instalment contract within the meaning of s. 71 of the Property Law Act so that it could not be rescinded save after compliance. with the procedure laid down by s. 7 2 thereof and, in particular, until the expiration of 30 days after service of notice in the statutory form on the purchaser. To explain this submission it should be understood that the word "deposit", for the purpose of these provisions, means a sum not exceeding ten per cent of the purchase price payable. The expression "instalment contract" is defined to mean an executory contract for the. sale of land in terms of which the purchaser is ' . . , .... :.~ bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor. If the two instalments constituting the $50,000 deposit under the contract are not to be regarded as deposit payments for the purposes of s. 71 and 72 then the contract would of course be caught by this definition. It is clear enough that Divoca's directors had formed the impression or perhaps been led to believe by a director of Goldshar that certain headworks for which security had been given to Gold Coast City Council had in fact been paid for. On learning that this was not so they would seem to have demanded that the price $167,928 be deducted from the purchase price. However the means adopted to deal with this situation was to add -- 12 of 16 -- ------------- -·-- ------~--------------------------------~. 10 a special condition 32 in the following terms to the contract:- "32. Subject to special condition 31 hereof and subject to the purchaser complying in all respects with its obligations pursuant to the terms thereof, the_vendor shall, on completion, pay to the purchaser the amount of $167,928." · " This provision cannot, in my opinion, be regarded as a reduction of the purchase price under the contract whatever its effect on and after completion may have been. One must be able • 'I .1 f . . to say of a contract whether it is or is not an · instalment Q contract, if not from its inception at least when the question of its proper character comes to be determ{ned. In this case 0 the question became a live one on 29th June, 1990 when Goldshar determined the contract out of hand. Time was then of the essence and Divoca had defaulted the previous day. It was thus , . not within the terms of special condition 32 for it had not complied in all respects with its obligations pursuant to the terms of the contract of sale. Moreover the sum of $167,928 is Q not, pursuant to special condition 32, deductible from the .. purchase price or otherwise payable to the purchaser until •. settlement. It follows, that in my judgment, the contract in question was not an instalment contract within the meaning of s. 71 . Finally Divoca sets up what may perhaps fairly be described a Leggione v. Hateley defence to the contention that it was in default on 28th June, 1990. The contention is that it was induced by an improbable sounding conversation on 18th June, · 1990 between Mr. Dunn, a real estate agent who had acted in connection with the purchase by Divoca, and Mr. Milne, Divoca's 0 -- 13 of 16 -- ~ 11 engineer, which was passed on to Mr. Huxley to believe that an extension of time could be asked for the asking. This is denied by Mr. Dunn. Of course on an application of this character I cannot resolve issues of disputed fact. It is also the fact that Mr. Lasky a director of Goldshar telephoned Mr. Huxley on 24th June, 1990 because of the request for an extension of time by Di voca' s solicitors, this being the response of Di voca' s solicitors to the fax transmission of 20th June, 1990 when Q Goldshar's solicitors advised that settlement must occur on 28th June. Mr. Huxley contends that Mr. Lasky told him that an ,I !I 0 II · extension could be or could probably be had on payment of default interest and "hurt money". Mr. Lasky denies this. l( Again I am in no position to resolve the issue between these two gentlemen. However, on the face of it Mr. Huxley' s version _.;, >i.,.•• • j, Sf,-~•• ', ... ~• : ,J'"'.<f 1::.;:i;;,.,•.:. < •w~• seems to me to be simply incredible. It is flatly inconsistent with the objective facts and, above all, it is obviously an C afterthought. Goldshar' s solicitors discharged the contract on 29th June. No reply was received until 6th July when Divoca's solicitors, without any reference to an engagement to extend time or to give favourable consideration to extending time, justified simply on the basis that Goldshar could not make title to Lot 154. This letter, be it noted, was written after instructions had been taken from Divoca. The natural response to Goldshar's solicitors' fax transmission of 27th June which insisted on settlement on 28th June was to draw attention to the arrangement said to have been made between Mr. Lasky and Mr. Huxley on 24th June. Nothing of the sort occurred. On the contrary, on 28th June, Divoca' s -- 14 of 16 -- 12 solicitors, after taking instructions, made no such suggestion. The same response would be expected to a claim to rescind on 29th June. It was not forthcoming. So far as the material before me goes it was not until Mr. Huxley and Mr. Milne swore their affidavits on 9th August, 1990 that the contention that time was to be extended emerged. It would seem likely that by ---,-, -.,----- .,. ( \ 8 "' ' . ' ' then they had become aware of the possibilities inherent in Leggione v. Hatelei. The story is simply incredible and in my judgment there is not a serious triable· issue on this question. 0 In Eng Mee Yong v. Letchumanan [1980] A.C. 331 Lord Diplock delivering the judgment of the Privy Council said at p. 341:- Q "Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound toaccept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be·. In making such order on the application as he 'may think just' Q the judge is vested with a discretion which he must exercise judicially. It is for him to determine inthe first instance whether statements contained in affidavits that are relied upon as raising a conflict of evidence upon a relevant fact have sufficient prima Q facie plausibility to merit further investigation as to their truth." It may be accepted that a caveat will be removed where the caveat fails to show on the evidence that there is a serious question to be tried which would justify leaving the caveat undisturbed: re Jorss' Caveat [1982] Qd.R. 458, a decision of the Full Court. This was the test formulated by the House of Lords in American Cynamid Co v. Ethicon Ltd. [1975] A.C. 396 to describe the case which must be made out by a party seeking an interlocutory injunction. Whether there is any valid -- 15 of 16 -- c, 'cl C', 13 distinction for present purposes between this test and the requirement as formulated in Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968) 118 C.L.R. 618 that the applicant make out a prima facie case, in the sense that there is a probability that, if the evidence remains as it is, the plaintiff will be entitled to relief, may be doubted. For my part, I cannot suppose that evidence which is inherently improbable raises, in that sense, a prima facie case. In the result therefore I find that the contract of sale was duly rescinded on 29th June for the favour of Di voca to tender completion on 28th June. Divoca supports its caveats by setting up its interest as purchaser under the contract of sale. As that contract has been duly discharged it has no interest in the land. There will be an order that Caveat No. K343716L against ·: .. r.:, •: _··•,~ ,,., .. ,.. ,- ; · ~ .; . •, ·.· .. · -- · · ,. ·• ~ , · { : ,_. . :. .'. :, -: , ·: .. _•:. 1,.J.-... ;- the land the subject of, ~/T Vol. 6743 Folio 248 and Caveat No. K343715N against the land the subject of C/T Vol. 7192 Folio 224 be removed. Tpe respondent must pay the costs of and incidental to the application to be taxed. -- 16 of 16 --