The ruling published yesterday reveals that a court was not prepared to accept hat CBA’s failure to properly serve court papers on owner, Ian Morrisby and tenant Chloe Taylor, was a “mere irregularity”.

The bank obtained its judgment in January and in early April it started the action to remove the occupants.

The District Court in Brisbane ruled that the failure to serve documents with at least 10 days notice, when considered along side “other deficiencies” was enough to warrant dismissal of the bank’s application.

CBA had failed to serve another necessary party, Leanne Hicks – who maintained the Thurso Court property in lieu of rent – and who if not a tenant, was at least an “occupant” for whom “procedural fairness” must also be accorded.

Since Christmas 2012, Commonwealth Bank has filed more than 300 “recovery of possession of land” writs against its customers in the Brisbane, Maryborough, Hervey Bay, Beenleigh, Townsville, Ipswich,  Rockhampton and Maroochydore courts.

Commonwealth Bank of Australia v Morrisby [2013] QDC 107 Brisbane Horneman-Wren SC DCJ published 14/5/2013

Having fronted with only $1000 to hold the property, John and Julie McLeay agreed that a further $204k top up deposit would be paid within 7 days.

That deadline came and went as did other extended dates. The sellers – John and Virginia Willmott – called for settlement and when this inevitably did not occur, they terminated the contract.

Although the property re-sold for a modest loss of only $55,000, the Willmotts elected to sue for the entire unpaid deposit and commenced proceedings in the Southport District Court in February 2012.

Clause 2.3 (3) of the pro forma REIQ contract specifies that the seller can recover the unpaid deposit as a debt but this was resisted by the McLeays on the basis that such recovery “in addition to damages which might be claimed under clause 9″, would “confer an unfair windfall on the seller”.

With no decided cases on point, the judge at first instance sided with the McLeays and held that the issue was of sufficient complexity to warrant consideration in a trial setting.

The Willmotts promptly appealed and in April, three appeal judges ruled against the “unjust enrichment” proposition. They had no hesitation in declaring that the McLeays must front up with the unpaid the deposit plus the Willmotts’ costs of the legal proceedings.

The McLeays’ recent deposit victory is itself under appeal which is likely to be heard in the coming months.

Willmott & Anor v McLeay & Anor [2013] QCA 084 Brisbane Holmes and Fraser and White JJA 16/04/2013

OPPT proclaims itself to be comprised of ”every person on the planet, the planet itself and the Creator” and that its trustees  – “a group of very skilled individuals including legal professionals” - have resolved ”to terminate the entire [financial] system” and emancipate borrowers.

On 25 December 2012, by proclamation reminiscent of the Declaration of Independence itself and invoking some of its zeal, OPPT decreed the repatriation of US$3,500,000,000,000,000,000.00 (three quintillion, five hundred quadrillion) of private loans for borrowers, including in Australia and the universal “foreclosure on all corporations, banking systems, including corporations masquerading as government, worldwide”.

Apprised of those developments, Gary Moon emailed the Brisbane Supreme Court registry last month, two days before the scheduled hearing of his appeal, citing OPPT’s  manifesto which he contended “effectively cancels all contracts and eliminates all debt” including the balance that Secure Funding Pty Ltd of Melbourne claimed from he and his wife.

He then declared in the email communication – for the benefit of all “alleged Bailiffs, real estate agents and police departments”  - ”JUDGMENT IN MY FAVOUR”.

“In light of that email,” dead-panned the court in its ex tempore ruling, “it is not surprising that the appellants are not represented today, either by lawyers or in person”.

But confronted with a written outline of the Appellant’s argument and in the absence of a formal abandonment of the appeal, the appeal judges felt compelled to consider the borrowers” unconventional arguments.

The home owners had indeed raised constitutional grounds to claim that the trial judge lacked the necessary jurisdiction to adjudicate the dispute. Further, they asserted, he had failed to duly consider their unconscionable conduct argument and that of misrepresentation.

Finding that the “primary judge clearly had jurisdiction” the appeal court went on to say that as the contractual matters now raised were neither pleaded nor canvassed before the lower court, they were barred from consideration in the appeal.

The appeal was dismissed with costs and thus Secure has cleared the final hurdle  to be allowed to sell up the picturesque property on which the Moons has stopped making mortgage payments and paying the specified 36% p.a. interest in 2009.

The borrowers have however declared, being so empowered by OPPT, that “anyone attempting to enter the property will be under video surveillance, arrested, detained and subject to common law private prosecution”.

Moon & Anor v Secure Funding Pty Ltd & Ors [2013] QCA 086 Brisbane Margaret McMurdo P Fraser JA Daubney J, published 22/04/2013

The 6 November 2012 contract specified finance notification by “21 days from the contract date”. But it was the further stipulation for settlement “14 days from finance approval”, that created the doubt that brought the matter to litigation.

The buyer Habi Pty Ltd, sought summary judgment for recovery of its $80,000 deposit after it purportedly terminated the contract on the ground that the seller had “failed to settle”.

The term “finance approval” is not itself defined in the standard form residential land contract. And correspondence between the parties created confusion as to whether “finance approval” was the date of notification on 28 November or the actual date of approval, 23 November.

Simple arithmetic had settlement due on 7 December. But by extension of the confusion over finance, there was a corresponding misunderstanding over whether settlement was due then or on 11 December.

The court accepted that the confusion had been sufficient to justify the seller’s Mr & Ms Edilbi  in thinking that the due date was in fact 11 December by which date it had arranged a release of the mortgage and the charge over plant and equipment in favour of a former owner and was in all respects ready to settle.

But the seller further contended there was no longer any time-of-the-essence obligation to complete on that day and that settlement could just as efficaciously have occurred the following day. The buyer’s termination was thus – so its case ran – premature.

Implicit in the arguments was that the need to count days to measure the finance approval and settlement periods - rather than have the due dates clearly specified - was prone to error and made it likely that both the buyer and seller would seek the other’s confirmation of their own tentative date calculations.

Their communication regarding dates – in language such as “subject to your confirmation” and “we propose” -  was in many respects the antithesis of conduct evidencing that they always intended “time to be of the essence”.

In the end the court was of the view that the contest also involved issues of credit. The summary judgment application was dismissed and a trial of the time-is-of-the-essence contest, will proceed in the coming months.

Habi Pty Ltd v Global Group Enterprises Pty Ltd [2013] QDC 055 Brisbane Jones DCJ 27/03/2013

So when Sunshine Coast chartered accountants Complete Business Strategies agreed in October 2010 to a local competitors’ asking price of $1.3 million – valuing their business at one dollar for every dollar of annual income – it was on terms that the price paid was at risk if the business’ gross revenue did not total $2.6 million for the following two years.

The sellers stood to lose $1.00 from the purchase price “for every dollar of deficiency” – not just from the 20% of the purchase price retained by the buyer for two years conditional on the specified earnings being achieved – but also by claw back from the sum handed over at settlement.

The shortfall in billings turned out to be a substantial $1.03 mil. By strict application of the contract formula, the purchase price would have been brought down to just $270k notwithstanding CBS had – on the face of it – successfully acquired annual fees of $800k.

The seller and its principals - self represented at the trial – argued that the earn out claw back was so extreme, it was in truth an illegal penalty. The sale price could be reduced to nil for example, even if the business earned 50% of the target revenue. An unconscionable outcome, so ran their argument, as on the agreed valuation formula, the buyer should have paid $800k for that level of annual fees.

The court did not agree. It found there to be no penalty and nor was the arrangement unconscionable.

“In essence, the parties agreed that $1.3 million should be paid for assets which the vendor guaranteed would produce fees of $2.6 million over two years from the completion of the contract. They agreed that if the assets did not yield that turnover, then the amount to be ultimately paid for the practice should be reduced, dollar by dollar, to make up for the shortfall”.

After allowing for the retention amount of $260,000, the seller company was ordered to repay CBS a further $768,386 but no order was made as against the seller’s principals.

The buyer also sought damages against the principals by reason of alleged breaches of their covenant not to compete in the provision of accountancy services or taxation advice, “throughout Australia for 5 years”.

Having started a “wealth creation and life coaching” business – which did not of itself offend the non compete covenant – evidence was led to show tax advice being provided by the seller to a former client and also of advertisements for general accountancy work.

The court had to decide the reasonableness of the numerous geographic and time period qualifiers nominated in the contract as successively applicable restraints. With little discussion in the judgment, the court allowed as reasonable, the maximum geographical restriction contended for by the buyer of “throughout Australia”, solely on the basis that the client list schedule included a “not insignificant” number of people located across the country.

However the buyer’s argument that the restriction apply for the maximum five years was rejected with the court ordering that only two years was reasonable as such period would allow sufficient opportunity (two successive tax periods) for the buyer to create its own business relationship with the specified clients.

Neither the existence nor extent of any non-solicitation covenant as regards the scheduled clients - separate to the territorial/time based non compete clause - can be deduced from the judgment.

In any event – with many of the other competition complaints being rejected – the court held that the buyer had failed to prove any actual financial loss as a result of even the proven breaches on the seller company’s part.

Complete Business Strategies Pty Ltd v AFA Wealth Pty Ltd and Ors [2013] QSC 043 Brisbane Philip McMurdo J 1/03/2013

This practice was put to the test in a recently published Supreme Court decision concerning the sale of a $1.35 million Isle of Capri home on the Gold Coast.

The May 2012 contract was due to complete on 25 September at 3 PM at the offices of a settlement agent at Southport.

When buyer’s solicitors MBA arrived, their clerk was informed by the settlement officer that the release would not be available for a further 15 minutes . There had been some confusion over the location of settlement and the release was in the course of being repatriated to the settlement venue. The MBA clerk declined to wait any more than five minutes for it to arrive and notified the sellers’ representative there present, of those instructions.

Shortly afterwards, sellers’ solicitor Anthony Robinson called his MBA counterpart and asked that the clerk be returned to the settlement location, reminded him that the sellers had reserved their rights to settle at any time up to 5 PM and insisted on performance of the buyer’s obligation to settle before day’s end.

Robinson did not however appoint any new time for settlement, nor did he call for any tender of the purchase price: both points taken by the buyer to support its argument before the court.

The MBA clerk not having returned for settlement, the following day Robinson notified them that his client held the buyer in fundamental breach of contract and reserved the sellers’ rights.

MBA countered to the effect that the seller’s inability to provide the release at the appointed time was itself the a breach of its obligations under the contract, entitling the buyer to terminate.

Noting that clause 6.1 of the standard REIQ contract specifically provides that time is not of the essence with respect to any agreement between the parties on a time of day to settle, the court ruled that the seller’s “inability to settle at 3 PM did not give the buyer the right to rescind”.

Robinson was held to have lawfully terminated by reason of the buyer no-show later in the day and his client sellers could pull in the deposit of $135,000 which the agent, Lucy Cole Prestige Properties at Broadbeach, was ordered to disgorge to them.

The judgement does not refer to whether or not the agent recovered any part of the commission due, as may well have been the case under some versions of agent appointments.

McLeay & Anor v Caprice Property Holdings Pty Ltd [2012] QSC 365 Brisbane Martin J published 11/03/2013

In an email bulletin on behalf of the Queensland Law Society, solicitors were cautioned to request extensions for the time within which to comply with critical contract dates and to give advice to clients “of all options and risks of not being able to settle or take a necessary step that may be due”.

“Practitioners should not assume that storm or flood damage automatically overrides contractual rights or court timeframes”.

Real estate and other commercial contracts invariably invoke obligations upon a party to perform something by a specific date. Failure to perform such obligations within the required time can, for example, lead to the forfeiture of a deposit in the case of a residential house sale contract.

Law firms should counsel customers to ”think laterally”, the email bulletin states.

The circular also reminded solicitors that for residential transactions currently in train, unless the home has become uninhabitable and subject to insurance, the buyer must usually wear the damage. Only in the case of more serious pre-settlement damage does Property Law Act s 64 entitle the buyer to terminate .

Solicitors were also reminded of REIQ residential contract clause 6.2 that suspends time in the case of natural disasters, for the settlement of residential property purchases.

This provision, introduced in late 2011 upon reflection upon the practical difficulties posed to legal transactions the preceding summer, lets off a would be defaulting party if they are unable to front up for settlement with bank cheques in hand as “a consequence of a tsunami, flood, cyclone, earthquake, bushfire or other act of nature”.

However the suspension of time only applies if the buyer or seller has taken “reasonable steps to minimise the effects of the natural disaster on its ability to perform its settlement obligations” and the inability to attend is “solely as a consequence of” the natural disaster.

The clause does not excuse or extend other time-critical contract events like finance approval or building inspections.

Only time will tell whether the Australia Day weekend floods of 2013 produces any landmark legal interpretations of the phrases “reasonable steps to minimise” or ”solely as a consequence of”.

Will for example, power outages, be treated by a court as having occurred “solely as a consequence of” tropical storm Oswald ?

That was the claim of Fu-Mei Hutchins, who  in July 2007, tipped in her first $2 million to be part of a loan by the company’s Secure Mortgage Income Scheme (SMIS),for property developments on first mortgage security.

The projects referred to in the judgment were ”Altitude Tower”, to which she alleged the first investment related and the company’s “Albert St Investment“ property fund into which $1.27 million was paid in April 2008.

She was, she claims, persuaded to make both investments as a result of the representations of Securcorp director, Michael Robinson.

On maturity in January 2009, what the court described as the Altitude Tower investment was rolled over, purportedly with Fu-Mei’s consent and the company issued paper to raise additional funds to complete the project with priority being given to the new investors.

She agreed from mid-2009 to extend the time for repayment, on a month-to-month basis, induced by alleged representations that she would be paid at least one half of the original investment if she agreed.

In January 2010 Robinson told her that the Albert St investment was lost, followed by the same news for Altitude Tower in April 2011.

Fu-Mei commenced proceedings in 2011 against Securcorp and Robinson alleging misleading and deceptive conduct under s 52 of the Trade Practices Act and s 12DA of the Australian Securities and Investment Commission Act but, although referred to in the judgment, the pleading made no mention of the similar provisions of s1041E of the Corporations Act .

Her unsuccessful application in December was to join further directors as defendants which failed due to her imperfect and unparticularised Statement of Claim.

She also proposed allegations - not pleaded and in any event considered by the court to be too vague to be permissible – of breach of fiduciary duty, breach of contract and negligence.

All allegations are disputed by Robinson and Securcorp and unless disposed of sooner, the argument will proceed to a trial in due course.

Hutchins v Robinson & Ors [2012] QSC 411 Brisbane Philip McMurdo J 17/12/2012

The developer sought declarations that Gold Coast City Solicitors had failed to comply with section 365A (2A) (c) on 12 occasions because they did not “direct the attention” of the buyer to the cooling off provisions of the form 30C warning statement when distributing the buyers’ copies of the fully signed contracts.

The same allegation was made against Clements law firm in respect of two further contracts.

Coinciding with deteriorating market conditions, these 14 buyers – there were 30 apartments in all – gave notice in early 2009 of their intention to exploit the claimed deficiencies, by withdrawing from their contracts.

SDW engaged a third law firm, Holding Redlich who recruited counsel, to advise upon the validity of the withdrawal by the group of 14.

In their defence, the former firms countered that such advice was wrong and that the buyers were never entitled to withdraw.

To cover all bases, SDW decided Holding Redlich and its counsel must also be named as respondents: to meet the possibility of the court ruling the contracts valid and binding and the defence being upheld.

The court reasoned that the correspondence returning the contract booklets to the buyers’ solicitors – in that they made no reference to the warning statement whatsoever - could not be said to contain the (since repealed) PAMDA requirement of an  “attention directing” statement.

That the enclosing correspondence referred to the “contract of sale” – a reference to the bound booklet containing the contract and the warning statement – was not enough to achieve compliance, said the court.

In reaching this conclusion, the court also decided there was no reason to think that a solicitor – as opposed to a lay person – would understand a reference to the ‘contract of sale’ as being a reference to the booklet comprised of both the contract and the warning statement.

Appeals have been filed which will be heard in the coming months.

All of which demonstrates the senselessness of some PAMDA provisions. What purpose could be served by an “attention directing” statement when addressed to a solicitor rather than the buyer personally.  An enormous waste of resources, all for no benefit.

The industry awaits the promised further reform which was spoken of as being available for comment by the end of December, but which is still yet to be revealed.

SDW Projects Pty Ltd v Modi & Ors [2012] QSC 400 Brisbane Peter Lyons J published 20/12/2012

Ray White Main Beach had no signed PAMDA appointment pursuant to PAMDA s 133 either from the sellers themselves or the listing agent.

The listing agent, Miami’s Propcare Real Estate, had argued that its colleague was therefore barred by PAMDA s 140 from recovering its commission share.

With no authority on point and noting in particular that PAMDA had been poorly drafted as compared to comparable legislation in Victoria, the District Court in Brisbane held that PAMDA s 140 did not apply to conjunction arrangements.

It arrived at this conclusion in the absence of any specific PAMDA exemption, by deducing there was “no reason to interpret s 133 as applying to the formation of a conjunction agreement between two real estate agents” in the same way as it would not require licensed employee agents to hold an appointment from their employer  principal.

The court also ruled that the absence of a PAMDA appointment from the sellers “would only be relevant if [Ray White] was seeking to recover directly from the vendors”.

Neither was Ray White disentitled to its share because it had allegedly breached various code of conduct provisions, even though they were established by regulation under PAMDA s 154: “There is nothing to indicate that a breach of a provision of the code is a matter which can be raised in civil litigation”.

In further arguments raised by the self-represented Miami agent – that the conjunction agreement was invalid because the Ray White employee who signed it did not hold a PAMDA licence – was dismissed on the basis that he was not purporting to sign on his own behalf but for the licensee and had been duly authorised to do so.

Lack of particulars in the conjunction agreement as to the specific legal entity who was to be the ultimate buyer, made no difference. Neither was it relevant that the conjunction agent had already lined up the buyer prior to the time the agreement was entered into.

The District Court thus upheld the earlier ruling of the Southport Magistrates Court that Propcare of Miami must pay out $20,022.75 of the commission, to its Main Beach colleague.

Propcare Pty Ltd v Orchid Avenue Realty Pty Ltd [2012] QDC 361 Brisbane McGill SC DCJ, published 19/12/2012