Supreme Court New South Wales Medium Neutral Citation: Lucas v Langlands [2013] NSWSC 1358 Hearing dates: 17 September 2013 Decision date: 18 September 2013 Jurisdiction: Common Law Before: Davies J Decision: 1. The Defendants' Notice of Motion filed 15 February 2013 is dismissed. 2. Orders 2, 3 and 4 of the Short Minutes of Order made 15 February 2013 are dismissed. 3. Judgment in favour of the Plaintiffs in the sum of $352,158.91. 4. The Defendants are to pay the Plaintiffs' costs of these proceedings in accordance with the deed of loan dated 8 February 2012, including the Plaintiffs' costs of the Notice of Motion filed 15 February 2013. 5. I stay execution of the writ until 4.00pm 16 October 2013. Catchwords: REAL PROPERTY - possession of land - application to stay writ of execution - settlement of stay application - agreement allowing mortgagor time to sell property or pay higher sum to mortgagee - settlement of sale aborted because Discharge of Mortgage not properly executed by Plaintiff - purchaser in any event not available to settle - whether Plaintiff repudiated agreement - effect of sale not settling Category: Principal judgment Parties: Andrew Arnold Lucas (Plaintiff) Graeme Frank Langlands (First Defendant) Australian Technology Systems Pty Ltd (Second Defendant) Representation: Counsel: A Fitzsimons (Plaintiff) P Pollock (Defendants ) Solicitors: Sullivans Solicitors (Plaintiff) Beazley Singleton Lawyers (First Defendant) File Number(s): 2012/274753 Judgment 1These proceedings were proceedings for the possession of land at xx xxxxxxx xxxxxx, Alexandria and for the payment of a specified sum due under a loan agreement. The loan agreement was by Deed of Loan dated 8 February 2012 for a loan of $160,000 for a three month period. It was repayable on 16 May 2012. Interest on the loan was at the rate of 96% reducible to 48%. The term of the loan and interest suggest that the lender was a lender of last resort. 2The loan was eventually secured by a registered second mortgage. There was default in repayment of the principal sum and a s 57 notice was not responded to. There was, however, the payment of the sum of $50,000 apparently for interest on 21 August 2012. 3Judgment was entered against the Defendants on 23 November 2012 for possession of the land. A writ of possession issued on 18 December 2012. A notice to vacate was received by the First Defendant on 9 January 2013 requiring vacant possession by 18 February 2013. 4On 15 February 2013 the First Defendant filed a Notice of Motion seeking a stay of the writ of possession. Short minutes of order were entered into on 15 February 2013 which provided as follows: On the First Defendant giving the usual undertaking as to damages order that: (1) the Plaintiffs and (2) the Sheriff of New South Wales be restrained from enforcing the writ of possession and notice to vacate dated 19 January 2013 until further order of the court. (3) On the First Defendant giving the usual undertaking as to damages, restrain the Plaintiffs from taking any steps or any further steps to enforce the order of the court made on 23 November 2012 until further order of the court. (4) Order that the judgment/order of the court dated 23 November 2012 be stayed until further order of the court pursuant to section 67 of the Civil Procedure Act 2005. 5The matter then came before me on 21 February 2013 as duty judge. It was adjourned. It was thereafter before Schmidt J on 12 March 2013 and subsequently before Button J on 26 March 2013. Button J was informed on that day that the matter had settled and the matter was stood over to the following day to enable the finalisation of the settlement. 6The settlement is enshrined in a letter written by Stacks (the Plaintiff's solicitors) to Beazley Singleton (the Defendants' solicitors) of 26 March 2013. The letter relevantly enclosed two forms of short minutes of order. One was called Agreed Short Minutes of Order and the other was called Default Short Minutes of Order. The Agreed Short Minutes of Order simply provided that, The Defendants ' Notice of Motion filed 15 February 2013 be dismissed. 7The Default Short Minutes of Order made the same provision but in addition provided as follows: (2) Orders 2, 3 and 4 of the Short Minutes of Order made on 15 February 2013 be dismissed. (3) Judgment in favour of the Plaintiffs in the sum of $352,158.91. (4) The Defendants pay the Plaintiffs' costs of these proceedings in accordance with the terms of the Deed of Loan dated 8 February 2012 including the Plaintiffs' costs of the Notice of Motion filed 15 February 2013." 8The letter of 26 March 2013 noted comments from the Defendants' solicitors that the Defendants might be required to sell the security property to raise the requisite funds to pay the Plaintiffs. The letter went on to say this: "We note your client's concerns that if he must cause the sale of his property, that process may not be finalised within the three month period provided in the parties' agreement. We confirm our clients will not proceed to file the Default Short Minutes of Order at the end of the three month period, if the following conditions are met prior to 26 June 2013: 1. The contract for sale is exchanged prior to 26 June 2013. 2. The contract for sale is an unconditional sale contract. 3. Your client must seek our client's approval before exchange of contracts. Our client will not unreasonably withhold its consent to contracts being exchanged. Our client's prior approval of the contract is required to ensure that the sale price is sufficient to make the payment to our client, and to also ensure that the contract is unconditional. 4. The contract must specify a standard period of completion, that is, between four to six weeks. We are instructed that if your client proposes to sell the security property and any of the above conditions are not met our client will proceed to file the Default Short Minutes of Order at the conclusion of the three month period and will recover the full amount owing to them in accordance with the terms of the Deed of Loan dated 8 February 2012." 9The letter then went on to confirm the arithmetic which provided for the payment within the three month period of the sum of $171,043.61. The letter then continued: "In full and final settlement of the proceedings and of the dispute between our respective clients we confirm the Plaintiffs and Defendants will settle the proceedings on the following terms: 1. Stand the proceedings over until 26 June 2013." 10The letter then went on to provide for the provision of the two forms of short minutes of order. There were provisions for the payment of the figure of $171,000 odd payable at two different times. It was then said that the Agreed Short Minutes of Order would be held in escrow pending the payment of those two sums. 11Paragraph 8 of the letter said this: Notwithstanding paragraphs 4 to 7, if in the event the First Defendant exchanges an unconditional contract for the sale of the mortgaged property (xx xxxxxxx xxxxxx, Alexandria, NSW), on or before 25 June 2013, which contract for sale has a completion date on or before 7 August 2013 then: a. The date of payment of the amounts referred to in paragraphs 4 and 5 will be extended to 14 August 2013, and interest will continue to accrue on the amount payable in paragraph 4 until the date of payment. b. Upon payment of the amounts referred to in paragraphs 4 and 5 on or before 14 August 2013 the Plaintiff will file the Agreed SMO. c. If payment of the amounts referred to in paragraphs 4 and 5 is not made on or before 14 August 2013 the Plaintiffs will be at liberty to file the Default SMO. 12Paragraph 9 provided that for paragraph 8 to have effect the First Defendant must seek the approval of the Plaintiffs of the contract for sale prior to its exchange. 13On 19 June 2013 the Defendants' solicitors wrote to the Plaintiff's solicitors informing them that the Defendants had arranged a sale of the subject property. They enclosed a contract of sale for the approval of the Plaintiffs' solicitors. 14After some intermediate correspondence on 24 June 2013 the Plaintiffs' solicitors wrote confirming that their clients provided consent for the Defendants to proceed with the exchange of contracts. The letter went on to say: In the event we do not receive copies of the signed contracts for sale on or by 25 June 2013 our client will be filing the Default Short Minutes of Order at the directions hearing on Wednesday 26 June 2013. 15The contract for sale was exchanged on 25 June 2013. The sale price was $895,000. Special Condition 37 provided for completion to take place on 29 July but it went on to provide that in the event the purchaser should not have completed the contract on or before that date the vendor was entitled to serve upon the purchaser a notice requiring the purchaser to complete the contract within a period of seven days or such longer period as the vendor in its discretion determined, that the vendor was entitled to make time for completion of the contract of the essence by so stipulating in the notice and that the purchaser acknowledged that the seven day period was reasonable. 16Settlement was organised for 29 July but there was a problem with the Defendants ' first mortgagee which meant that the settlement was not able to be completed on that day. Settlement was then reorganised for 14 August 2013. 17On 30 July the Plaintiffs' solicitor emailed the Defendants' solicitor saying this: Please see attached signed Discharge of Mortgage. Please advise whether acceptable and if so I will arrange to forward to our agent in readiness for settlement. 18On 13 August the Defendants' solicitor sent an email to the Plaintiff's solicitor referring to that email of 30 July. It went on to say this: Please confirm as a matter of urgency that the document to be handed over on settlement has in fact been executed on behalf of Ellangee Pty Limited and Sam Nominees (Aust) Pty Limited. Please forward a copy of the fully executed Discharge. 19On 14 August at 10.15 am the Plaintiff's solicitor emailed the Defendants ' solicitor attaching powers of attorney and a signed release. The email then said: We also note that the Discharge that is with our agents has not been signed on behalf of Sam Nominees. We will prepare a new page 4 of the discharge for Sam Nominees execution and will express post to our agents today. Settlement will therefore not be able to occur today. We have rebooked our agents for tomorrow at 3pm. 20That email was apparently opened by the Defendants ' solicitor at 10.45 am on 14 August. In an email of 20 August from the Defendants ' solicitor to the Plaintiff's solicitor he said this, "Literally minutes later [after opening the email at 10.45] I received a call from Mr Licardy" [the purchaser's solicitor] advising he was unable to locate his client and could not proceed to settlement that day." The email went on to say that on 15 August Mr Licardy rang to advise the Defendants ' solicitors that he had established the purchaser was overseas and Mr Licardy would revert when he had instructions. 21The evidence does not disclose what happened after that call from Mr Licardy on 15 August until an email chain commencing at 12.28 on 20 August. That first email was from the Plaintiff's solicitor to the Defendants' solicitor saying that the Plaintiff's solicitors had instructed their agents to attend settlement at 3 o'clock today, that is on 20 August. The Defendants' solicitor replied by advising that Mr Licardy had told him that morning, the 20th, that his client was overseas and would be returning on the 21st. 22In response the Plaintiff's solicitor sent this email: Please confirm settlement date and time as we need to take our clients' further instructions. We note that this matter is listed for tomorrow, Wednesday 21 August 2013, for further directions and that as payment has not been made to our clients on or before 14 August 2013 in accordance with the Agreed SMO (attached) our clients are at liberty to file the Default Short Minutes of Order tomorrow at the directions hearing. 23Mr Pollock replied by saying that he would speak to Mr Licardy the following day after the purchaser returned to seek a settlement date. He said, further, that he would strongly oppose the filing of the Default Short Minutes of Order in circumstances where the settlement did not happen on 14 August because of the Plaintiff's inability to provide a fully executed discharge of mortgage in registrable form. 24Emails then followed where the issue of who was at fault in relation to the settlement not occurring on 14 August was debated. 25A later email on that day from the Plaintiff's solicitor to the Defendants' solicitor said that the Plaintiffs had instructed them to agree to an adjournment of seven days when the matter was before the court the following day. 26A Notice to Complete was issued by the Defendants' solicitors on 26 August requiring completion by 16 September. The matter did not settle on that day because the Defendants submit they are not in a position to pay the higher sum contained in the Default Short Minutes of Order. Why a Notice to Complete was not issued earlier when Mr Licardy said his client would be back from overseas by 21 August, and with the shorter time for completion specified in Special Condition 37, was not made clear. 27When the matter came before me yesterday the Plaintiffs' solicitor sought to file the Default Short Minutes of Order which would require the payment of the higher sum. That was resisted by the Defendants' solicitor who said that it was the Plaintiff who had defaulted and caused the settlement not to take place on 14 August. 28The Plaintiff accepts that he could not insist on settlement on 14 August but says that thereafter he could. It is said that had the purchaser been available to settle on the 14th the Plaintiff would have to have accepted the next reasonable date on which the purchaser could settle. However, the Plaintiff says the purchaser was never available to settle, in that way the agreement for the extended payment date of 14 August was not complied with and the Plaintiff was entitled to file the Short Minutes of Order. 29The Defendant submitted that because of the Plaintiff's breach the whole agreement was at an end, with the result that the matter reverts to the position prior to the agreement. That would leave the parties in the position where there was a judgment with leave to issue a writ of possession. 30In my opinion the Plaintiff is right to accept that he could not insist on performance on 14 August. Although the purchaser was not available that fact was not known to either the Plaintiff or the Defendant until after the problem with the Discharge of Mortgage was notified. I do not accept that any blame can be said to attach to the Defendant's solicitor for not pointing out the problems concerning the signing of the Discharge of the Mortgage until 13 August. I do not see that it was any responsibility of his or his clients to see that the Discharge of Mortgage was properly executed. That responsibility always lay with the Plaintiff's solicitor and her client. 31However, once the Discharge of Mortgage was available the Plaintiff was entitled to insist on settlement. Further, the Defendants had an obligation to bring a settlement of the purchase about if they wanted to avoid the Default Short Minutes of Order being filed. 32The purchaser's unavailability cannot be an answer for the Defendants. The agreement was clear. The contract of sale had to be exchanged by 26 June and the settlement of any purchase had to be completed by 14 August if the extension period for the payment of the $171,043.61 was to be provided. If there had been no problem with the Discharge of Mortgage the Defendants would have been obliged to pay on 14 August or face the Default Short Minutes of Order. 33I do not consider that the Plaintiff's inability to enable performance of the contract of sale on 14 August amounted to a repudiation of the agreement. The email of 14 August made that clear. Settlement was being arranged, as far as the Plaintiff was concerned, for the following day. 34The problem in relation to the Discharge of Mortgage did not cause the purchaser to be unavailable. If it had caused the purchaser to be unavailable the Plaintiff accepted that it would have been obliged to wait until the purchaser was then available to settle before it could insist on the payment of the higher sum. 35Further, the Defendants never asserted that the Plaintiff's failure to provide a registrable Discharge of Mortgage was a repudiation of the agreement. In fact the contrary was demonstrated. The Defendants wanted to perform the agreement with the Plaintiff by completing the sale. They were unable to do so by virtue of the purchaser's absence. In that sense their inability to perform the terms of the agreement made in March amounted to a repudiation of the extended arrangement that was provided for in that agreement. The Plaintiff was so asserting in its email of 20 August where it said it was at liberty at that point to file the Short Minutes of Order. 36The present position is that there is no indication of when the matter might be able to settle. The Defendants take the view that they cannot settle even if the purchaser was available because the Plaintiff is insisting on the payment of the higher sum. The Defendants are unable to pay that amount even if the purchase goes through. 37In those circumstances in my opinion the Plaintiff is entitled to file the Default Short Minutes of Order. 38The orders therefore that I make in accordance with those Short Minutes of Order are these: 1. The Defendants' Notice of Motion filed 15 February 2013 is dismissed. 2. Orders 2, 3 and 4 of the Short Minutes of Order made 15 February 2013 are dismissed. 3. Judgment in favour of the Plaintiffs in the sum of $352,158.91. 4. The Defendants are to pay the Plaintiff's costs of these proceedings in accordance with the deed of loan dated 8 February 2012, including the Plaintiff's costs of the Notice of Motion filed 15 February 2013. 5. I stay execution of the writ until 4 pm on 16 October 2013. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 September 2013