Supreme Court New South Wales Medium Neutral Citation: Chan v Grimston (No 2) [2016] NSWSC 423 Hearing dates: 5 April 2016 Date of orders: 05 April 2016 Decision date: 05 April 2016 Jurisdiction: Equity - Duty List Before: Kunc J Decision: Application to vary order to withdraw caveat dismissed Catchwords: REAL PROPERTY – Torrens system – Caveats – Construction of contract for sale – No caveatable interest Cases Cited: Chan v Grimston [2016] NSWSC 367 Category: Procedural and other rulings Parties: Tai Huy Chan (Plaintiff) Camcuc Tran (Second plaintiff) Peter Grimston (First defendant) Lynette Joy Grimston (Second defendant) Representation: Solicitors: Le Vaccaro Lawyers (Plaintiffs) Marsdens Law Group (Defendants) Barristers: D. Brezniak (Plaintiffs) M. Bennett (Defendants) File Number(s): 2016/96255 Publication restriction: No EX TEMPORE Judgment 1. This matter first came before me in the Duty List on 29 and 30 March 2016. What happened on those days is set out in my judgment Chan v Grimston [2016] NSWSC 367 (the "first judgment"). These reasons should be read in conjunction with the first judgment and terms defined in the first judgment have the same meaning in these reasons. 2. The proceedings have returned before me today for the purpose set out in paragraph [23] of the first judgment. That purpose is for the plaintiffs to satisfy me that they had an interest in the subject property of the kind that would have justified an extension of the Caveat. Mr D Brezniak of Counsel, who appears today for the plaintiffs, informed me that, in accordance with the leave I granted on 30 March 2016, a further caveat in a form identical to the Caveat has been lodged with the LPI. The practical effect of the orders I made on the last occasion was that if the plaintiffs are unable to satisfy me that they would have been entitled to maintain the Caveat, then the order I made on the last occasion requiring the plaintiffs to withdraw that further caveat will stand. 3. Also in accordance with earlier directions which I made, the plaintiffs have filed a document which, confusingly, is entitled summons. Despite its title, it is the amended summons foreshadowed to me on the previous occasion. It seeks specific performance of the Contract. 4. The Court also has the advantage of an affidavit of the first plaintiff, Tai Huy Chan, affirmed 1 April 2016. That affidavit supplies and corrects the deficiencies referred to in paragraphs [8] and [9] of the first judgment. 5. The critical item, now supplied in Mr Chan's affidavit, is a document described as a sale note. That is a document of the vendors' agent. It is signed by the plaintiffs and dated 11 December 2015. Its terms include: 2. I/We have been advised by the Agent as to the existence of my cool-off rights under the Conveyancing Act and understand that I/We should contact my/our solicitor in this regard without delay. 3. I/We have been advised by the Agent that due to the property exceeding 2.5ha there is no statutory cooling off period. However, we agree that for the purposes of this agreement that there will be a 10 5 (Five) business day cooling off period commencing from the date of the sales contract and governed under the same terms of S66 of the Conveyancing Act and understand that I/We should contact my/our solicitor in regard without delay. 4. I/We have expressly authorised the Agent to attend to the exchange of contracts on my/our behalf. … SPECIAL CONDITION In relation to the ten per cent (10%) deposit payable in accordance with this contract:- $ 3325 will be payable on exchange and the balance of, $ will be payable on or before 5:00pm on the 10th fifth (5th) business day 1. A relevantly identical sale note, which is also in evidence, was executed by the defendant's vendors on 12 December 2015. It contains an identical special condition to that in the sale note executed by the plaintiffs and also contains this provision: I/we have expressed and authorised the Agent to attend to the exchange of contracts on my/our behalf. 1. Mr Chan's affidavit states: 10. On the 14 December 2015, my solicitor informed me by telephone that Vendors, through their Agent, requested for the Contract settlement date to be changed from 56 days to 90 days from the date of exchange. I consented to that request. Attached and marked 'Annexure D' is my solicitor's email to the Vendors' Agent on 14 December 2016, at about 10:51am, authorising the Agent to make the said change. That email failed to be delivered. Also attached and marked 'Annexure E' is my solicitor's letter by facsimile to the Vendors' Agent on 14 December 2016 authorising the Agent to make the said change. 11. On 14 December 2015 at about 3:54pm, the Vendor's Agent sent to my solicitor's office by facsimile a letter enclosing a Sales Advice, a front page of the Contract signed by the Vendors, and a Sale Note signed by the Vendors. Attached and marked 'Annexure F' are the faxed documents from the Vendor's Agent dated 14 December 2015. 1. The annexure referred to in paragraph 11 of Mr Chan's affidavit contains a letter dated 14 December 2015 sent by facsimile from the vendors' agent to the plaintiffs' solicitors which includes: We write to inform you that we have commenced a purchase on the above property. Enclosed you will find a copy of the sales advice, signed contract and sale note setting out all the information you should need. 1. There is also attached to it a sales advice dated 14 December 2015 and a copy of the counterpart of the Contract which has handwritten into it a completion date of "ninety days from exchange". That counterpart is dated 14 December 2015 and is signed by the vendors. 2. The final piece of relevant evidence from Mr Chan is that he was informed on or about 16 December 2015 that his solicitor had, that day, received the Contract in full along with the other material that had been sent by facsimile on 14 December 2015. 3. It is common ground between the parties that the validity of the defendants' termination of the Contract by the notice of termination which is set out in paragraph [6] of the first judgment turns upon whether the Contract was exchanged on 14 or 16 December 2015. The parties accept that if it was exchanged on 14 December then the defendants' termination was valid. If it was exchanged on 16 December, the parties accept that the notice of termination was premature. 4. Mr Brezniak's essential submission is that the exchange of the contracts did not occur until 16 December when the counterpart executed by the defendants was physically received by the plaintiffs' solicitor. That argument has so little prospect of success that, for the purposes of today, it does not satisfy the Court that there is a serious question to be tried that would warrant setting aside the Court's order that the fresh caveat be withdrawn tomorrow. 5. The reason for that conclusion is that the submission flies in the face of the agreement evidenced by the sale note, in particular that paragraph whereby the vendors and the purchasers have expressly authorised the agent to attend to the exchange of contracts on behalf of each of them. 6. It is axiomatic that parties are entitled to authorise an agent to attend to the exchange of a contract on their behalf. The most usual example of that will be when parties' solicitors attend to the exchange of contracts on their behalf. The Court is entitled to take into account its own knowledge of conveyancing practice. I put it to the parties whether it continues to be the practice in this State that "exchange" of contracts in a domestic conveyancing transaction involves the physical exchange of counterpart contracts. The parties agreed that was still the case. 7. Mr Chan's affidavit makes it clear what happened in this case. Each side authorised the vendors' agent to attend to the exchange of contracts on their behalf. There can be no dispute that as part of an exchange, the agent authorised to effect the exchange will normally insert the date of the exchange on the counterpart contracts to evidence the date of the contract which comes into existence by reason of the exchange. That practice must inform an understanding of what the parties authorised the vendors' agent to do when they authorised the agent "to attend to the exchange of contracts on my/our behalf". It is quite clear that in authorising the vendors' agent to attend to the exchange of contracts, that included an authorisation to the agent to date the contracts. 8. In the present case, it is clear from Mr Chan's affidavit and the documents annexed to it, that in accordance with the authority given to the vendor's agent by both parties, the vendors' agent effected the exchange on 14 December 2015. Prior to effecting that exchange, as might be expected, the vendors' agent obtained the consent of the plaintiffs to the change in the settlement date. Having done that, it seems to me there can be no serious question to be tried that the agent would have gone on, and did in fact go on, to exchange the counterpart contracts. 9. It would be completely contrary to the authority granted by the sale note and what the Court understands to be the still applicable conveyancing practice in relation to the exchange of contracts for the sale of land in this state to conclude that there was no exchange until the signed counterpart had been delivered to the purchasers' solicitors by mail two days later. 10. There is also a dispute between the parties as to the amount agreed for the deposit. That dispute is irrelevant to the resolution of the present issue. Whatever amount was agreed between the parties as to the deposit, there is no doubt that it had to be paid in accordance with the special condition set out in paragraph [5] above, on the tenth business day. This must be understood in the context of the sale note as the tenth business day of the cooling off period. It is common ground that if the contract was exchanged (as the Court has found must be the case) on 14 December 2015, that the deposit, whatever it was, was payable on 30 December 2015. 11. No attempt to pay any deposit was made until the next day. By that time the Contract had been terminated by the notice set out in paragraph [6] of the first judgment. 12. The plaintiffs' case for a caveatable interest depended upon there being a serious question to be tried that the Contract had not been validly terminated. On the contrary, the evidence shows the Contract was validly terminated. It follows that the Court will not vacate Order (2) of the orders set out in paragraph [24] of the first judgment. The plaintiffs must file a withdrawal of the further caveat in registrable form tomorrow. 13. The proceedings are stood over for further directions before the registrar on 20 April 2016 to enable the plaintiffs to consider their position. ********** 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: 13 April 2016