A buyer has escaped his November 2008 Royal Pines luxury villa contract amid confusion among their solicitors over which of the two named sellers was intended to be registered as owner of the lot at the date of settlement.
Mark Rolls paid a $50,000 deposit to purchase a duplex condominium from co-developers Linda Radford and Claudia Scupin. He had signed a contract on the same property two weeks earlier but the transaction was re-documented because of disclosure statement compliance concerns the first time round.
Settlement was scheduled for July 2009 subject of course to registration on the plan of subdivision in the meantime. As it happened, registration occurred only two weeks after the contract was signed and a straightforward settlement would – all things being equal – have been assured.
There was one complication which in the context of deteriorating economic conditions, conspired to create contractual havoc.
The sellers had agreed between themselves that Scupin keep one of the apartments as her residence and Radford take her share of the development profit by way the sale of the other – lot 41 – to Rolls. To achieve this, Scupin transferred her interest in lot 41 to Radford who did likewise in respect of the neighbouring villa.
This seemingly innocent manoeuvre, although alleged to have been notified by the sellers to the solicitors who prepared the contract; and by the seller’s estate agent to Rolls, was recited nowhere in the documents.
As settlement date approached, for reasons are not explained in the judgment – but possibly due to worsening market conditions as the looming credit crunch took hold in 2009 – Rolls refused to accept a conveyance from Radford solely.
Compliance with standard REIQ condition 7.3 (i) – requiring the vendors to be registered as owners as at the date of completion – was impossible he contended, entitling him to walk away from the deal.
He sued for return of the deposit and Radford cross-claimed in the supreme court for “rectification” on the basis that “the signed contract, by common mistake, failed to accurately express the true agreement”.
She argued the proposed “separation of title” had always been made clear to Rolls and that regardless, it was irrelevant that a second person was included in the contract reference schedule as a seller when her ability to convey free and clear title come settlement date was never in doubt.
Radford – who also sought damages for a re-sale loss of $120,000 – further asserted that Rolls must have known Scupin was out of the picture especially because he had signed up a tenancy agreement for the town house with her solely, pending completion and had several other conversations with her on the subject.
Rolls denied the conversations and despite the several exchanges by which Radford alleged he had acquiesced to the singular seller position, she appears not to have instructed her lawyers to assert such assent when they formulated their pre-settlement confirmation to their colleagues opposite.
In the end, the court held that the sellers had failed to establish that there had been a common mistake – the requisite pre-condition for “rectification” relief – but rather there had been a mere unilateral mistake, on Radford’s part solely, as to the contract’s effect .
Thus the buyer’s termination was last week upheld and the deposit ordered to be repaid – nearly three years after the due date for settlement.
That leaves a disappointed seller “very angry with her lawyers” and “intending to sue them” for a possible miscommunication in the handoff from the solicitor first instructed and her colleague who drafted the contract.
Given that there was no suggestion that the buyer was denied any legal benefit or protection resulting from only one of the named sellers being on the title at settlement date, the rescission may well be considered a text book example, of an “opportunistic termination”.