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Supreme Court of New South Wales |
Last Updated: 14 April 2011
"3.a) So long as any part of the sum of One Million Five Hundred and Fifty Thousand Dollars ($1,550,000.00) plus any further advances plus interest shall remain unpaid and notwithstanding that no demand for payment has been made, the Borrower will upon request of the Lender grant a mortgage over either the title to the land at Bower Street Manly NSW 2095 (Lot 3 SP 79141) (the "92 Land") OR Bower Street Manly NSW 2095 (Lot 27/DP 3806) (the "110 Land"). Such mortgage shall rank second in priority to the mortgage granted by the Borrower to any other primary banking or other lending institution and to contain such terms and conditions in accordance with annexure "A" hereto.
b)The Borrower shall obtain an updated market valuation for the 92 Land within thirty (30) days from the date hereof and shall provide same to the Lender.
c) The Lender shall notify the Borrower within fourteen (14) days of receiving the valuation referred to in clause 3(b) above which property he elects as security for the mortgage provided the property mortgaged must be the same property is elected pursuant to the Super Deed.
d) The Borrower shall do all things reasonable to procure a Deed of Priority from the relevant first mortgagee within 30 days of the Lender electing the security property pursuant to clause 3(c) above.
e) In the event that the Deed of Priority results in the available equity in the selected property being less than Two Million Two Hundred and Fifty Thousand Dollars ($2,250,000.00) the Lender may request the Borrower to refund such amount so that the loan amount does not exceed the available equity and the Borrower will refund such amount.
4.Nothing in this Deed shall prohibit the Borrower from granting to any other primary banking or other lending institution upon terms reasonably required by that Bank (or such other primary lending institution as the Borrower may choose), a mortgage over both the 92 Land and the 110 Land having priority to the mortgage granted to the Lender under this Deed."
"He said:I am concerned about the progress of the Manly project (also known as second Bower Street project) and my security and delays. I am uncomfortable with my position and I would like some additional security. I would be more comfortable and happy to wait if you will give me additional security over your property at Bower Street, Manly (the first Bower Street project). I have consulted a lawyer and have prepared an acknowledgement by you for this.
Mr Bianchino subsequently produced a letter dated 4 August 2010 (letter of 4 August 2010) and requested that I sign the letter.
I said:[I read the document] .. I can't give you a registered second mortgage over (second Bower Street) Manly at the moment because St George Bank have the first mortgage and there is some outstanding interest to be paid before they would consider consenting and providing a deed of priority.
He said:I really want you to sign this document I will then be able to 'relax about the situation' and then will wait until the Manly project is completed or refinancing comes through from 'Brockstar' [the financier] if there is a problem with Manly.
I said: I am a bit taken off guard by this Don. Can we think about it and maybe meet with the lawyer?
He said:[agitated] No, I want this done now. I want you to sign that document.
I said:I want to give you comfort and if it means we can continue to pursue the Manly project and our refinancing with you appeased, then I can give you a caveat over 92 Bower Street on the basis that it is removed as soon as we have secured financing the (second Bower Street) project.
He said: Yes, I am happy with that, will you sign the document.
I said: The document isn't really accurate and it mixes the loans, we should get a lawyer to re-draft it.
He said:[agitated] I really need you to sign that now, so I can put this to rest and I will speak to my lawyer.
I said: ok [I signed the document]."
"4th August 2010
Don Bianchino
12 Dobroyd Parade
DOBROYD POINT. NSW 2045
AND
Mr Bianchino + Associates Pty Ltd
Shop 11/25 Harvey Street
PYRMONT. NSW 2009
RE: 110 BOWER STREET, MANLY.
Despite the election made by you under clause 3 of the Deed of Loan between you and Savage Property Enterprises Pty Limited dated 7th April 2009 I hereby charge my interest in 92 Bower Street Manly with repayment to you of any and all monies owing to you under the 7th April 2009 Deed Of Loan and the Deed of Loan dated 5th March 2010 under which I owe you $400,000 plus interest at 10% per annum from 4th August 2010. Despite the foregoing I acknowledge that monies payable under the 5 March 2010 Deed of Loan remain payable to you on demand and I affirm that the 7th April 2009 Deed of Loan continues to operate in respect of moneys owing to you under that document.
Mathew Ronald Savage Signed ______________
39-41 Byng Street
Orange. NSW 2800"
"It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s. 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tred' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute, every statement in 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' not having 'sufficient prima-facie plausibility to merit further investigation as to (its) truth' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194).
But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Division 3 of Part 5.4 of the Corporations Law, and to the terms of Division 3:
"These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.'
In Re Morris Catering (Australia) Pty Limited (1993) to 11ACLC 919 at 922; (1993) 11 ACSR 601 at 605 Thomas J said:
'There is little doubt that Division 3 ... prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim".
It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another.
The essential task is relatively simply - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).'
Variation of the contract
(a)The agreement is inconsistent with the 4 August 2009 letter, being contemporaneous documentary evidence confirming that defendants' rights under the loan deeds;
(b)if the parties intended a fundamental abrogation of the defendants' rights (ie the ability to enforce the debt) then one would expect that to have been canvassed in the August letter;
(c)To the extent that the August letter is binding on the parties, it is that document which recorded the agreement. The conversations which preceded its execution (if accepted as being true) were in the nature of negotiations, not offer and acceptance. Apart from being inadmissible to prove any agreement recorded by the August letter, those negotiations have culminated in the agreement itself;
(d)The alleged verbal agreement is insufficiently clear to give rise to legal obligations and the parties did not intend to be contractually bound by what was said, only by what we signed;
(e)The alleged verbal agreement seeks to vary the parties' obligations under the deeds of loan. The deeds of loan grant mortgages to the respective defendants and therefore such deeds, and any variation of them, are required to be in writing and signed by the parties: ss 23C and 54A of the Conveyancing Act. The alleged oral variation is unenforceable.
(f)Finally, the August letter itself purports to create an interest in land, namely a mortgage over 92 Bower Street, Manly. To the extent that that interest was granted conditionally (ie on the basis that the deeds of loan could not be enforced until certain preconditions were met) then those requirements were part of an agreement to create an interest in land and were required to be in writing and signed by the parties. Again ss 23C and 54A of the Conveyancing Act apply.
43. In Stonham, Vendor and Purchaser it is said -
46. If the contract relates to matters partly within and partly outside the provisions of the Statute, and the consideration for the promise is an entire one, the contract is unenforceable unless the Statute is complied with. But, where the consideration and promise relating to the part of the contract, which is within the section, can be severed from the consideration and promise relating to that part not within the section, so that the promises are severable, and really two separate contracts, one within the section and one outside the section, the latter can be enforced, though not evidenced in writing.
[44] In Cheshire and Fifoot, The Law of Contract, 8th (Aust) ed at [16.47] it is said that if the promise is "implicated" in the whole agreement then it cannot be severed, and Carter and Harland, Contract Law in Australia, 4th ed says at [519] -
Where a contract contains several promises, some but not all of which are required to be evidenced by writing, the absence of a written note or memorandum renders the whole contract unenforceable unless the promises are severable ... In other words, the plaintiff must show that the promise being enforced is not one required to be evidenced in writing, and that the form of the contract is such that the consideration for this promise is separate from the consideration supporting the unenforceable promises.
[45] Severance does not assist the appellant, since it wishes to enforce the part of the contract within s 54A. The cases amply support that a contract partly within and partly outside s 54A is unenforceable in the absence of a written record. The Statute of Frauds or its various equivalents has been successfully pleaded, for example, as a defence to a claim under an agreement to pay arrears of rent and future rent when only the future rent was caught by the Statute (Thomas v Williams [1830] EngR 246; (1830) 10 B & C 664; 109 ER 597), to a claim under an agreement to sell bricks and plant in a brickyard and give up possession of the brickyard (Hodgson v Johnson [1858] EngR 818; (1858) EB & E 685; 120 ER 666) and to a claim under an agreement to sell the stock-in-trade, book debts and goodwill of a business and an interest in the premises in which it was carried on (Hawkesworth v Turner (1930) 46 TLR 389). In Horton v Jones [1935] HCA 7; (1935) 53 CLR 475 the deceased promised to make a will leaving his "fortune" to the plaintiff. The fortune was an interest under his father's will and an insurance policy. His father's estate included investments on mortgage of real estate. It was held that the contract was unenforceable, including as to the entire interest under the will and the insurance policy. Rich and Dixon JJ said (at 485) -
In the present case the inclusion of the policies of insurance was no more than part of the reward that the deceased promised she should have under his will. It may be treated, perhaps, as an addition to the share in his father's estate, but his promise was to make a will containing dispositions of these two pieces of property in consideration of her promise to look after him. Further, we think the contention that the promise in reference to the insurance moneys might be considered separable must also fail. If a contract, which is not evidenced by writing, contains more than one promise and, although one of the promises is of a description to which the Statute of Frauds applies, another or others are not, the whole contract is unenforceable except when the promises are not only themselves severable but may be referred to and supported by independent or divisible considerations or divisible parts of a consideration capable of distribution (cf Hodgson v Johnson). There is nothing to support an interpretation of the contract sued upon which would bring it within the exception.
[46] Horton v Jones was distinguished in Birmingham v Renfrew (1937) 57 CLR 666, in which s 54A was held not to apply because the deceased's agreement to leave his property to the plaintiffs was construed as an agreement to make a will to operate on whatever property the deceased had at his death. The deceased owned land at the time of the agreement, but not at the time of his death. No doubt was cast on the application of s 54A to a contract only partly dealing with the sale of land.
[47] A line of cases in which a contract only partly dealing with the sale of land has been caught by the Statute was traced by Tadgell J in Collin v Holden [1989] VicRp 48; (1989) VR 510 at 512-3. In the compromise of a dispute the defendant agreed to pay the plaintiff $10,000 and costs and the plaintiff agreed to transfer her interest in land to the defendant. Not surprisingly, it was held that the obligations to pay were "implicated" with the obligation to transfer the interest in land.
[48] These cases show that a contract remains a contract for the sale of land notwithstanding that it is concerned with other matters, perhaps extensively concerned with other matters. The appellant referred to Kilpatrick v Mackay [1878] VicLawRp 8; (1878) 4 VLR (E) 28 and De Nichols v Curlier (1900) 2 Ch 410 as cases supporting its submission. In Kilpatrick v Mackay the parties agreed to be partners in land speculation, and Molesworth J said (at 32) that "there are authorities that contracts for partnership in land speculation are not within the Act - amongst others: Dale v Hamilton". In Dale v Hamilton [1846] EngR 1212; (1846) 5 Hare 369; 67 ER 955 the reasoning, taken from Forster v Hale (1800) 5 Ves 308; 31 ER 604, was that any partnership land was by operation of law held on behalf of the partners, and the Statute was not attracted. In De Nichols v Curlier this reasoning was reluctantly applied to the holding of real estate as community property under French Law. Neither case was an alternative characterisation of an agreement which was in part a contract for the sale of land."
Estoppel
(a) Common law and equitable estoppel are separate categories, although they have many ideas in common;
(b) Common law estoppel operates upon a representation of existing fact, and when certain conditions are fulfilled, establishes a state of affairs by reference to which the legal relation between the parties is to be decided. This estoppel does not itself create a right against the party estopped. The right flows from the court's decision on the state of affairs established by the estoppel;
(c) Equitable estoppel operates upon representations or promises as to future conduct, including promises about legal relations. When certain conditions are fulfilled, this kind of estoppel is itself an equity, a source of legal obligation;
(d) Cases described as estoppel by encouragement, estoppel by acquiescence, proprietary estoppel and promissory estoppel are all species of equitable estoppel;
(e) For equitable estoppel to operate in circumstances such as those of the present case there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable;
(f) Equitable estoppel may lead to the plaintiff acquiring an estate or interest in land, that is, in the common metaphor, it may be a sword; and
(g) The remedy granted to satisfy the equity (which either is the estoppel or created by it) will be what is necessary to prevent detriment resulting from the unconscionable conduct."
"(a) The words or conduct relied upon by the defendant as giving rise to an estoppel must be clear and unambiguous;
(b) The conduct of the plaintiff (in this case Savage Property Enterprises Pty Limited) in relying on those words or that conduct must be reasonable; and
(c) The defendant (in this case Mr Bianchino and his company) must know or intend that the plaintiff will act or abstain from acting in reliance on those words or conduct.
10. Further, regard must be had to the relationship between the parties, their level of commercial sophistication and the inherent probabilities of their conduct. This is best summarised in the following statement by French CJ, Gummow, Heydon, Hayne and Kiefel JJ in John Alexander's Clubs Pty Limited v White City Tennis Club Limited [2010] HCA 19 at [101]:
"Judge Learned Hand said: "in commercial transactions it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves." And where interpretations, strained or otherwise, will not help, assistance to those persons by a strained application of equitable ideas does not promote justice either."
11. It is submitted that the estoppel argument put by the plaintiff in the present case requires a strained interpretation of equitable doctrines which does not reflect commercial reality."
"If the object of the principle of equitable estoppel in its application to promises were regarded as their enforcement rather than the prevention of detriment flowing from reliance on promises, the courts would be constrained to limit the application of the principles of equitable estoppel in order to avoid the investing of a non-contractual promise with the legal effect of a contractual promise. In Ajayi v R T Briscoe (Nigeria) Ltd [[1964] 3 All ER 556 at 559; [1964] 1 WLR 1326 at 1330], the Privy Council sought to qualify the enforceability of a non-contractual promise in this way:
The principle, which has been described as quasi estoppel and perhaps more aptly as promissory estoppel, is that when one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party. This equity is, however, subject to qualifications (1) that the other party has altered his position, (2) that the promisor can resile from his promise on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position, (3) the promise only becomes final and irrevocable if the promisee cannot resume his position.
The qualifications proposed bring the principle closer to a principle the object of which is to avoid detriment occasioned by non-fulfilment of the promise. But the better solution of the problem is reached by identifying the unconscionable conduct which gives rise to the equity as the leaving of another to suffer detriment occasioned by the conduct of the party against whom the equity is raised. Then the object of the principle can be seen to be the avoidance of that detriment and the satisfaction of the equity calls for the enforcement of a promise only as a means of avoiding the detriment and only to the extent necessary to achieve that object. So regarded, equitable estoppel does not elevate non-contractual promises to the level of contractual promises and the doctrine of consideration is not blown away by a side-wind. Equitable estoppel complements the tortious remedies of damages for negligent misstatement or fraud and enhances the remedies available to a party who acts or abstains from acting in reliance of what another induces him to believe."
The Trade Practices Act claim
1. The creditors statutory demand served by the plaintiff on the defendant of 12 October 2010 be set aside.
2. Defendant to pay the plaintiff's costs of the proceedings.
3. I vary the order I have made for costs to add the words "except in respect of the costs of the directions hearing held before me on 4 March 2011 in respect of which I order the plaintiff to pay the defendant's costs of the day."
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