Blog 58. Online Auction – No contract, no caveatable interest.

Maverick Signs Pty Ltd v Cetinkaya & Anor [2022] VSC 27, Ierodiaconou AsJ (4 February 2022) is a standard offer and acceptance case, interesting because arising from an online auction. The facts were –

  • The plaintiff appointed an agent, whose employee was Falconer, to sell its land. The first defendant (the caveator) deposed that on 14 August 2021 he asked Falconer if he could purchase the land for $1.25m. with a 6 month settlement.
  • On 9 September an auction using the online platform AuctionNow occurred.  The Terms and Conditions of the platform included:

In Schedule 1:

“11. The User may upload approved amendments to the contract through the Site and such amendments must include written evidence from the vendor of their legal representative accepting such alterations to the contract…”

In Schedule 3, that the following procedure applied to a User who placed a Successful Bid:

“1. The contract for purchase and sale of the Property will be sent to you electronically by the Vendor as soon as practicable after the close of the Auction.
2. The User must sign the contract for sale and purchase of the Property via the electronic software, docusign or in any other manner agreed to between the User and Agreement immediately after the Auction.

4. The deposit being 10% of the purchase price or such other amount agreed to in writing by the Vendor prior to the close of the auction, will need to be paid as directed by the Vendor or Vendors [sic] Agent as soon as practicable after the close of the Auction.

  • In a subsequent County Court proceeding the caveator pleaded that Falconer stated: at the commencement of the auction, in effect, that unless the vendor or bidder refused to sign the contract following the auction, the auctioneer must not accept any bid or offer made after the property had been knocked down to the successful bidder; during the auction, that the land was “on the market”; at the end of the auction, that the land had been sold to bidder number 6.
  • The caveator made the winning bid of $1.25m. At 1.16pm he received an automated email from AuctionNow stating that the property had sold for $1.25m.
  • The caveator deposed that at 1.20pm Falconer congratulated him on the purchase and said that the contract would be sent shortly. The caveator deposed, and the vendor disputed, that: he reminded Falconer of a previous discussion concerning changing the settlement date; Falconer said he would get the vendor to agree to the settlement terms and that part-payment of the deposit would not be an issue provided the balance was paid shortly thereafter.
  • At 1.31pm the caveator received an email from the agent with a link to an unsigned copy of the contract and a section 32 Statement.
  • The caveator deposed, and the vendor disputed, that at 1.41pm Falconer said that the vendor had accepted the amendments to the contract and to make the amendments on the contract and get it back to him as soon as possible.
  • The caveator deposed that at 2.21pm Falconer said to him that he needed the contract returned to which the caveator replied that he needed access to his computer and printer to make the agreed amendments and would be at his office shortly upon which he would provide the amended contract.
  • At 2.55pm the caveator received an email with a link to the contract.
  • At 3.00pm the caveator texted Falconer that he was restarting his computer.
  • The caveator deposed that at 3.17pm he rang Falconer saying that he was having issues with his printer and would provide a signed copy shortly, with Falconer replying that he had no issue with this.
  • The caveator deposed that he orally requested Falconer and then Falconer’s employer to provide trust account details to enable part-payment of the deposit, without response.
  • At 3.38pm the caveator paid $12,500, being part-payment of the deposit, by EFT.
  • At 3.40pm the caveator received an email which said that the contract was void.
  • Meanwhile the vendor had entered a contract of sale with a third party, the deposit being paid at 3:49pm.
  • At 3.58pm the caveator emailed the agent’s office, attaching a contract with a price of $1.25m., stating that the attachment was as discussed with Falconer and requesting an executed copy. The attachment contained handwritten amendments, which the vendor deposed were unauthorized: making the deposit not payable “on acceptance of this offer” but “payable by bank cheque of which $12,500 has been paid by EFT.  Fee (sic) attached receipt”; and altering settlement from 11 October 2021 to 8 March 2022.
  • The caveator caveated alleging the existence of a contract of sale and issued a County Court proceeding for specific performance. The vendor applied under the Transfer of Land Act s. 90(3) for removal of the caveat.

Ierodiaconou AsJ held –

  1. There was no serious question to be tried. There was no written evidence that vendor accepted alterations to the contract of sale.  The caveator was not assisted by the provision in the AuctionNow terms that payment of the deposit was required ‘as soon as practicable’ after the auction – this was subject to the subsequent written contract of sale.  And even if the change in settlement date had been accepted by Falconer’s earlier alleged representation, this representation was overtaken by the written contract of sale and the caveator’s agreement to the AuctionNow terms including Schedule 1 Item 11.  [40], [43], [44], [46]-[49].
  2. Even if the caveator had established a serious question to be tried, the balance of convenience was against him, there being an executed contract of sale between the vendor and the third party with which the caveat interfered. [53]

       Philip H. Barton

          Owen Dixon Chambers West

        Tuesday, June 21, 2022

Blog 57. Amendment of caveat – proprietary estoppel?

Goldberg v Campbell & Shaw and Anor [2022] VSC 24, Randall AsJ (3 February 2022) was the fourth round in the legal bout between Mr Mathers and Mr McColley or his estate.  The first two rounds were at VCAT under Part IV of the Property Law Act (ie co-ownership disputes).  The third round was Matthews AsJ’s decision in Goldberg v Campbell and Shaw & Anor [2021] VSC 647, the subject of Blog 51.  As that decision lies in the background of the decision of Randall AsJ it assists to summarise and supplement it, as follows –

  • Norman Mathers and Alexander McColley were registered proprietors as tenants in common in equal shares of a residential property.  Mathers deposed that they had on 29 March 2005 entered into a deed of arrangement whereby McColley could live there rent-free for life, or until he permanently vacated the property, on the proviso that he execute a will devising his share in the property to Mathers.
  • McColley lived there until August 2016.  He never made the contemplated will.
  • On 10 March 2017 Mathers caveated claiming a freehold estate on the grounds of an agreement with McColley dated 5 August 2016.
  • In the first VCAT decision, on 21 September 2017, the Tribunal found that Mathers had at that time no claim to a freehold estate in McColley’s moiety but also found that Mathers gained ‘a right to an equitable remedy against a threatened disposition of [McColley’s] half interest in the land which would put it out of his power to devise it by will’ under the deed and noted that ‘[p]recisely how the right should be classified is not clear’.
  • The second VCAT decision was dated 21 August 2019.  McColley died on 7 December 2019 leaving a will made in 2008.  Goldberg, who was his executor and beneficiary, obtained probate of this will.

Goldberg sought orders under s. 90(3) of the Transfer of Land Act for removal of the caveat and other relief.  Matthews AsJ ordered removal of the caveat but granted a stay pending any application to amend the caveat, holding –

  1. There was no evidence of an agreement dated 5 August 2016. In any event an application to amend the caveat by amending the date of the agreement to 29 March 2005 would not avail the caveator for various reasons.
  1. However, it was “highly likely that [Mathers] does have a prima facie case that he has a freehold estate in Mr McColley’s half-share of the Property on the grounds of a constructive trust arising from the doctrine of proprietary estoppel” (at [44]). McColley had made a promise as to the future acquisition of ownership of his moiety by Mathers on which Mathers had been induced to rely to his detriment.  This trust came into existence at the time of reliance: a credible argument existed that the constructive trust came into existence when McColley commenced living at the property rent‑free after entering into the deed, or possibly the trust came into existence when McColley made his will.
  1. The balance of convenience favoured maintenance of the caveat provided it was amended to assert this trust.

The caveator duly filed a summons under s. 90(3) to amend the grounds of claim in the caveat by substituting for ‘agreement with the following parties and date’ ‘constructive trust arising from the doctrine of proprietary estoppel’ or ‘implied, resulting or constructive trust’ or ‘estoppel’.  Despite Matthews AsJ’s use of the words “high likelihood” Randall AsJ refused to allow the amendment.

Randall AsJ held –

  1. The court had power to amend the grounds of claim in a caveat. [26]
  2. In determining the amendment application the court would consider four factors. The first was the nature of the amendment, ie whether to amend the interest claimed and not just the grounds of claim or the scope of the protection.  In favour of the caveator this application was only to amend the grounds. [30]
  3. The second factor was the circumstances in which the error was made. As to this:
    1. From the words quoted above in VCAT’s first decision it was clear that the Tribunal considered that the deed provided some kind of right to Mathers. It was accordingly reasonable for Mathers to understand that the deed was the basis of the caveatable interest, particularly as the court noted the caveator’s submission that a fine distinction existed between the deed being the source of the proprietary interest and the deed containing a promise of the proprietary interest by reason of a constructive trust arising from proprietary estoppel. [37]
    2. It was not unreasonable to infer that Mathers’ solicitors had advised him that he had a freehold estate in the property arising from the deed. By deposing that the solicitors had advised him to lodge a caveat Mathers had probably not waived privilege. [39]-[40]
    3. The circumstances of the error in the grounds of claim did not favour either party given that after the VCAT proceedings there was on the one side no application to remove, and on the other side no application to amend, the caveat. [38], [41]
  4. The third factor was the principle that the Court ‘should not readily act in a way which might encourage the belief that caveats could be imprecisely formulated and then “fixed up later”’. The amendment would simply clarify the basis of the freehold estate claimed in the caveat and the court again noted the matters set out in Holdings 3a and 3c.  The third factor accordingly did not defeat the caveator. [45]-[47], [115]
  5. The fourth factor was the overall merits of the claim for a caveatable interest as sought by the amendment, engaging the same considerations as on an application for the removal of a caveat in the terms sought. To establish proprietary estoppel Mathers had to establish the following elements ([90]), stating also the outcome:
      1. A representation by McColley that he would confer an interest in property on Mathers.
        This representation was made in the deed and the fact that it was subject to contingencies was irrelevant. [92], [94]
      2. Mathers reasonably believed or expected that he presently had, or in the future would acquire, an interest in the property.
        The representation being expressly in the deed, this element was established. [95]
      3. McColley knew or intended that Mathers defendant would hold that belief or expectation and would act or abstain from acting in reliance on it.
        Given that the deed was executed by both men this element was established. [96]
      4. That Mathers reasonably acted to his detriment and changed his position in reliance on his expectation or belief. As to this –
        1. Mathers carried the burden of proof. [97]
        2. In certain previous cases the representees had improved the property and rendered services to the representors. Mathers did neither but simply contended that he permitted McColley to live in the property rent-free alone, it being however highly unlikely that Mathers would if the representation had not been made have lived there, and that he refrained from applying for its sale and division of proceeds, there being however no evidence that he intended to exercise this right and indeed he had opposed it. [100], [109]
        3. Generally one co-owner was not required to pay rent to another co-owner for use and occupation of a property.  Exceptions to this were: actual ouster; constructive ouster; a claim by the occupant for contribution for improvements to the property; breakdown of relationship rendering cohabitation unreasonable or not practicably sensible. These exceptions were inapplicable.  The other exception was where there was a lease between the occupying and non-occupying co-owner.  However, the deed did not constitute a lease because it did not confer exclusive possession.  Accordingly the fact that Mathers did not claim rent was irrelevant because McColley was not liable to pay it anyway. [101]-[108]
        4. Mathers had not voluntarily contributed to the maintenance and upkeep of the whole of the property. He successfully claimed half those costs in the second VCAT proceeding. [110]

        Accordingly Mathers failed on this issue. [111]

      5. The detriment was such that it would be unconscionable for McColley’s estate to depart from his representation.
        By reason of (d) this element was not established. [111]

Accordingly Mathers had not established a prima facie case of proprietary estoppel to support the proposed amendment [112], [115].  It was unnecessary to consider whether there was a prima facie case of a constructive trust arising by reason of proprietary estoppel [112].

Comment: In [112] the court appears to draw a distinction between proprietary estoppel and constructive trust arising by reason of proprietary estoppel.  However, proprietary estoppel gives rise to a constructive trust – see Blog 54 and McNab v Graham [2017] VSCA 352. 

       Philip H. Barton

          Owen Dixon Chambers West

        Thursday, June 2, 2022