Supreme Court New South Wales

• Medium Neutral Citation: Arida v Arida & Ors [2013] NSWSC 1051
• Hearing dates: 26 July 2013
• Decision date: 30 July 2013
• Jurisdiction: Equity Division
• Before: White J

Decision

Parties to bring in short minutes of order in accordance with the reasons.

• Catchwords: CONTRACTS - general contractual principles - construction and interpretation of contracts - agreement required valuation of property as at a particular date be obtained - valuer made valuation as at a later date, then subsequently made valuation as at requested date - whether valuer's task was complete upon making first valuation - whether term can be implied into agreement that valuer entitled to make new valuation
• Cases Cited: Legal and General Life of Australia Limited v A Hudson Pty Limited (1985) 1 NSWLR 314; AGL Victoria Pty Limited v SPI Networks (Gas) Pty Limited [2006] VSCA 173; Jones v Sherwood Computer Services plc [1992] 2 All ER 170; Veba Oil Supply & Trading GmbH v Petrotrade Inc [2001] EWCA Civ 1832; [2002] 1 All ER 703; Mordue v Palmer (1870) LR 6 Ch App 22; Larking v Great Western (Nepean) Gravel Limited (1940) 64 CLR 221
• Category: Principal judgment
• Parties: Tony Arida (Plaintiff); Sid Arida (1st Defendant); Joseph Arida (2nd Defendant); George Arida (3rd Defendant); Wayne Wotton (4th Defendant)
• Representation: Counsel: M Jones SC with V McWilliam (Plaintiff); K P Smark SC with M J Stevens (1st to 3rd Defendants); Solicitors: Greenaway & Tohme Solicitors (Plaintiff); Somerset Ryckmans (Defendants)
• File Number(s): 2013/143977

Judgment

1 HIS HONOUR: The plaintiff and the first, second and third defendants are brothers. For over 20 years up to 2005 they carried on various businesses together in partnership. They also acquired 23 commercial and residential properties of which they were co-owners.

2 From about 2005 they have been in dispute. In 2010, the plaintiff commenced proceedings for the dissolution and winding-up of the partnership and the taking of accounts. In 2011, he brought proceedings for the appointment of trustees for sale to the properties.

3 On 1 October 2011, on the application of the plaintiff, the Court appointed trustees for sale of a property in Church Street, Parramatta. On 31 May 2012, the plaintiff exchanged contracts with the trustees to purchase that property. That sale is still to be completed.

4 On 21 August 2012, the plaintiff, the first to third defendants, and the trustees for sale of the Church Street property, entered into an agreement styled a Heads of Agreement that was intended finally to settle and dispose of the two sets of proceedings.

5 Under the Heads of Agreement, a valuer was to be appointed to value the remaining 22 properties. The agreement provides that within 28 days of the last valuation becoming available, the first, second and third defendants are to pay the plaintiff 25 per cent of the "Agreed Value" of the properties, being the value determined by the valuation less 25 per cent of certain costs and less 25 per cent of any debt owed by any of the parties to certain financial institutions as of 30 June 2005 that is secured over the properties. On payment the plaintiff is to transfer his interest in the properties to the first to third defendants. There are other terms which are not relevant to the present proceeding.

6 The Heads of Agreement provides:

"1 The parties agree to the following valuation regime over the properties listed in the First Schedule to the proposed Further Amended Statement of Claim except the property at 215-217 Church St Parramatta (Properties):

a. The parties will jointly request the President of the Australian Property Institute to nominate a valuer with appropriate expertise to value the properties nominated in Schedule 1 of the proposed Further Amended Statement of Claim.

...

c. The purpose of the valuation is to establish the fair market value of each Property as at the date of the signing of these Heads of Agreement, in its present state and subject to existing tenancies in the case of Properties which are commercial properties (Agreed Value)."

..."

7 On 12 October 2012, the president of the Australian Property Institute nominated four valuers to value the 22 properties. The first to third defendants asked that the valuers agree that their valuations could be relied on by an incoming lender. They did not agree.

8 Subsequently, the plaintiff and the first to third defendants agreed to the appointment of the fourth defendant, Mr Wotton, to value all 22 properties. He had agreed that his valuations could be relied on by the National Australia Bank for first mortgage security purposes.

9 A letter of instructions dated 23 November 2012 to Mr Wotton was sent by the plaintiff's solicitors, Greenaway & Tohme. Greenaway & Tohme provided Mr Wotton with a copy of the Heads of Agreement. They said:

"2. The terms of the Agreement included a provision for the nomination, by the President of the Australian Property Institute, of a valuer with appropriate expertise and credentials to value the properties referred to in Schedule B, as at the date of the agreement, ie; 21 August 2012;

3. The description of the general nature of the dispute and the details of the relevant parties is contained in Schedule C.

...

5. The parties had agreed to complete the valuations within 2 months of the date of the Heads of Agreement (ie: from 21 August 2012). However, the parties have agreed that this is not possible given the present delays experienced by the parties in such appointment, and is now to be the subject of a further agreement subject to your subsequent advice in that regard."

10 Schedule C included the following section:

"C. THE TASK

i. The nominated valuer is engaged to provide, within two (2) months of the date of appointment, a fair market value of each property in Schedule B:

a. as at 21 August 2012 (being the agreed date);

b. in its present state.

..."

11 Greenaway & Tohme asked Mr Wotton to provide a detailed list of his requirements to enable him to undertake the valuations, including his requirements for the provision of information and contact with him by the parties' representatives. Mr Wotton provided a letter setting out the basis on which he was prepared to undertake the engagement on 29 November 2012. He did not seek to modify the instructions as to the basis on which the valuations were to be made, that is, that the properties were to be valued as at 21 August 2012, and in their present state.

12 Mr Wotton provided a list of the documentation he would require. This list included copies of plans of improvements on each of the properties, but otherwise did not address the physical condition of the properties or changes to their condition. His letter included the following:

"13. Should I have questions in relation to the valuation process and the information provided to me, I will email both Solicitors and seek from them guidance and instructions. I will not speak with the respective parties to the dispute in order that I remain separate from the dispute and do not place myself in a position of being unduly influenced by either party. I do not mean to suggest that either party may endeavour to influence me, I would just like to ensure that I do not cause the impression that I have been subject to any influence. I consider the most appropriate way of ensuring this, is for me to deal with each parties [sic] solicitor.

14. My property valuation will be final and binding; I will not enter into any discussions or correspondence following the completion of the valuation assignment.

Timing of Property Valuations.

15. I will require 8 weeks following receipt of all relevant information, to inspect the properties and complete the valuation reports. Should information in respect to some of the properties be delayed [then] I may take slightly longer to complete the assignment. I will advise you should this situation arise."

13 Mr Wotton's letter was accepted by the parties. On 4 January 2013 Greenaway & Tohme wrote to Mr Wotton. They enclosed a schedule which included a brief description of each property and the plaintiff's understanding as to its current use. They advised that, in the absence of credible evidence to the contrary, Mr Wotton could rely on the enclosed document with regard to the relevant information he had previously sought.

14 Mr Wotton inspected the properties on 16, 18, 22 and 23 January 2013. He provided valuation reports for each property between 16 February and 10 April 2013.

15 On 30 April 2013, Mr Wotton advised the parties that the valuation reports had been completed, and that the parties should have hard copies of each report. He enquired about payment of his fees.

16 Mr Wotton was required to value each property as at 21 August 2012. However, each valuation report stated that the subject property had been valued as at the date of inspection, that is, as at the date in January 2013.

17 On 9 May 2013, the plaintiff filed his statement of claim seeking the following relief:

"1 A Declaration that in the events that have happened, each of the valuations prepared by Mr Wayne Wotton referred to in the Schedule hereto are not:

a. Valuations in accordance with the agreement entered into by the Plaintiff and the First, Second and Third Defendants on or about 21 August 2012 (Heads of Agreement); and

b. Valuations in accordance with the agreement entered into by on the one hand, the Plaintiff and the First to Third Defendants, and on the other, the Fourth Defendant, on or about 4 December 2012 (Wotton Retainer).

2 In the event that the Declaration in Prayer 1 is made, an Order in the nature of specific performance of the Heads of Agreement that the Plaintiff and the First, Second and Third Defendants, within 7 days of this order, jointly retain the valuer(s) nominated by the President of the Australian Property Institute on or about 12 October 2012, to perform the valuations of property required by the Heads of Agreement."

18 Some of the grounds raised in the statement of claim were not pressed at the hearing. But a ground that was pressed and was conceded was that the valuing of the properties as at the dates of inspection and not as at 21 August 2012 was a material departure from Mr Wotton's instructions. It is common ground that the plaintiff is not bound by the valuation reports delivered up to 10 April 2013.

19 On 9 May 2013, the first to third defendants solicitor, Mr Ryckmans of Somerset Ryckmans, wrote to Mr Wotton as follows:

"Wayne, my clients have today been served with court proceedings by Tony Arida who seeks orders and declarations that the valuations prepared by you do not conform to the Heads of Agreement which was supplied to you for the purposes of your retainer. I note you have been joined as a party to these proceedings.

Under the terms of your retainer your valuation reports were required to establish the fair market value for each property as at 21 August 2012 (being the date of the HOA) in its present state and subject to existing tenancies in the case of any properties which were commercial properties. Further, in respect of any tenant that was associated with a party to the proceedings (namely any of the Arida brothers) that property was to be valued taking into account a comparable commercial rental lease.

I have not reviewed closely your valuation reports but it does appear that you have not valued the properties as at 21 August 2012.

As a matter of urgency can you please prepare a further report and to state in that further report whether the valuations arrived at by you would change based on a valuation date of 21 August 2012 or whether you are satisfied that the values arrived at by you for each property remain unchanged."

20 On the same day, Mr Tohme for the plaintiff wrote to Mr Wotton as follows:

"We note that you have received correspondence by email unilaterally from Mr Ryckmans, the solicitor representing the First to Third Defendants.

We further note clause 14 of your retainer.

The email from Mr Ryckmans was sent to you without the consent, knowledge or acquiescence of Mr Tony Arida.

There is no joint instruction to you to undertake the further tasks requested in the email from Mr Ryckmans. Any further action taken at the request of Mr Ryckmans could only be by way of a separate retainer with the First to Third Defendants, and at their cost entirely."

21 Mr Wotton was served with the statement of claim on or about 9 May 2013. On 13 May 2013, he wrote to both parties' solicitors stating relevantly as follows:

"1. I refer to a letter dated 9 May 2013 from Mr M Ryckmans and also to a letter dated 9 May 2013 from Greenaway and Tohme together with a Statement of Claim.

2. I would like to respond to the letter from Mr M Ryckmans.

3. The valuations which I undertook [were] undertaken at the date on which I inspected each property. This was either 16 January 2013, 18 January 2013 or 22 January 2013.

4. I have noted that a letter dated 23 November 2012 from Greenaway and Tohme noted, at paragraph 3, a valuation date of 21 August 2012. However at paragraph 5 of that letter it was noted that a further agreement was required to be made subject to my advice.

5. I provided a retainer letter dated 29 November 2012 which sets out the terms of my acting as valuer. I note that both parties to the dispute accepted my terms.

6. The valuations which I have provided to the parties reflected the market value of each property at the date on which the properties were inspected by me.

7. If the valuations were to have been undertaken at 21 August 2012, there is a period of about 5 months between this date and the valuation date which I adopted.

8. The Sydney property market was substantially unchanged over the 5 month period from August 2012 to January 2013. Within my valuation reports in respect to the residential properties I included a comment as follows:

'The residential market within Sydney has been in a relatively subdued state over the past 12 months, although limited signs of an improvement were beginning to occur in the latter part of 2011. Prices have come under some pressure in select markets with indications that in some markets prices have fallen while in others prices have stabilised or shown smaller levels of increase.'

9. Within my valuation reports, in respect to the non-residential properties, I included a comment as follows:

'The property market within Sydney has suffered a significant downturn over 2008 and into 2009 following from the financial crisis which began in late 2007 and has continued into 2012 and 2013. The impact of this financial crisis has been felt across all property sectors.'

10. Within a number of the valuation reports I considered sales that occurred in 2011 and 2012. I have reviewed those sales and have formed the view that those sales would have been used by me in assessing a value for the property at 21 August 2012. Also, the sales indicate to me that there was nothing occurring in the Sydney property market, over the period from 21 August 2012 to 22 January 2013 which would have caused me to adopt a substantially different value to that which I adopted within my valuation reports.

11. I consider it reasonable that the valuations which I adopted for each property would be appropriate to adopt at 21 August 2012."

22 In response to a notice to produce issued to Mr Wotton by the plaintiff requiring the production of all correspondence between him and the first to third defendants or their solicitor after 9 May 2013, Mr Wotton advised that he had received a telephone call from Mr Ryckmans several days prior to 13 May 2013 advising him that he had not completed the valuation reports in accordance with the terms of the retainer in that he was required to undertake the property valuations as at 21 August 2012 and not at the date of his inspection of the properties. Mr Wotton wrote that Mr Ryckmans enquired of him whether it would be possible to undertake the valuations at 21 August 2012, rather than the date of inspection, and he indicated to Mr Ryckmans that he would be able to do so. He also stated that Mr Ryckmans had asked him to provide a letter summarising his opinion of the values of the property as at 21 August 2012 prior to providing the valuation reports.

23 The plaintiff did not join in the giving of instructions to Mr Wotton for him to provide further information or to carry out further valuations, and opposed that course.

24 On 28 May 2013, Mr Wotton provided a new set of valuations of the properties. The new reports all stated that the properties had been valued as at 21 August 2012. Apart from changes being made to the date as at which the valuations were made, the valuations were almost the same word for word as the earlier valuations.

25 There are three qualifications to this. In a number of cases, Mr Wotton corrected the text of the earlier valuations to correct a date of a letter of instructions. This is immaterial.

26 A second qualification is that, in the case of a property at Darcy Road, Wentworthville, Mr Wotton stated in his first valuation that he had considered a "value range" for the property, and was of the view that the value range should be in the order of $385,000 to $435,000, being a rate of $300 to $330 per square metre of land area. In the second valuation, expressed to be made as at 21 August 2012, Mr Wotton adopted the same range of value per square metre in two places in his report. But in a separate table, he modified the upper rate per square metre of land value from $330 per square metre to $325 per square metre, and he modified the range of value to be from $385,000 to $415,000. Notwithstanding this adjustment, Mr Wotton stated in the next sentence of the report that the calculations he had used indicated a value range from $385,000 to $435,000. He adopted a value of $400,000 in his first report, and did not change that value in his second report.

27 The third qualification is that, whereas in the first reports Mr Wotton stated that four of the properties had been inspected at dates after 16 January, namely, on 18, 22 and 23 January 2013, in his second reports Mr Wotton stated that those properties had been inspected on 16 January 2013. This anomaly was not explained. Mr Wotton filed a submitting appearance and did not serve an affidavit. Neither party called him.

28 The plaintiff submitted that in those of his second reports, where Mr Wotton changed the stated date of inspection, he simply copied across a sentence from the other reports without any regard to its accuracy.

29 These were the only instances of material changes between the first and second sets of reports, other than the changes to the dates as at which the valuations were made. In a number of cases, the second valuations referred to comparable sales that occurred after 21 August 2012. Although the use of comparable sales that occur after the valuation date is a matter for a valuer's judgment, the plaintiff points to fact that no post-valuation date comparable sales had been used in the first reports.

30 The plaintiff submits that it is remarkable that for none of the properties was there a single dollar movement in the valuation, notwithstanding that the valuation was said to have been made five months before the date of the initial valuation, and there was reference in the first valuations for each of the residential properties to the potential for short-term changes in market conditions. Mr Wotton stated in his reports that the valuations could not be relied on after three months from the date of the valuations.

31 Some of the second valuations included commentary on market conditions in 2013. The plaintiff submitted that this was plainly irrelevant to a valuation as at 21 August 2012. For example, in the second valuation of a property in Pennant Hills Road, Oatlands, Mr Wotton repeated the same words as he had used in the first valuation, namely, that:

"The property market within Sydney has been in a soft state for most of 2009 through to 2012; this has continued into the early part of 2013.

...

Interest rates have remained at relatively low levels in recent months with a number of interest rate reductions over 2012 ..."

32 In the same report, under the heading "Town Planning", Mr Wotton stated that the property was zoned low density residential under the provisions of a local environmental plan gazetted on 5 October 2012, that is, after the date as at which the valuation was expressed to be made.

33 The plaintiff submitted that it should be inferred that Mr Wotton had not made a genuine revaluation of the properties as at 21 August 2012, but had cut and pasted the first valuations as at an earlier date to seek to retrieve his earlier mistake. This inference, so it was submitted, should be more readily drawn because the first to third defendants, who were relying upon the second valuations and on Mr Wotton's letter of 13 May 2013, did not call him.

34 The plaintiff submitted that the letter of 13 May 2013 was not a further valuation, and that neither it nor the second valuations could be relied upon by the first to third the defendants. This was, so it was said, because Mr Wotton had demonstrated that he was not impartial. The reason for this was that he had acted at the request of only one side of the dispute contrary to the wishes of the plaintiff and contrary, so it was submitted, to para 14 of his letter of 29 November 2012 in which he promised not enter into any discussions or correspondence with any one of the sides.

35 The plaintiff submitted that, in writing the letter of 13 May 2013 and providing the second valuations at the request of the first to third defendants, Mr Wotton exhibited partiality to those parties. The plaintiff also submitted that the second valuations were not binding because Mr Wotton valued the properties in their state at the time of his inspection, and not as at 21 August 2012. He also submitted that the second valuations were not binding because the time for Mr Wotton to provide the valuations had long passed.

36 As I have said, it is not disputed that the first valuations were not made in accordance with the Heads of Agreement or the instructions to Mr Wotton. Those valuations are not binding on the parties (Legal and General Life of Australia Limited v A Hudson Pty Limited (1985) 1 NSWLR 314 at 335-336; AGL Victoria Pty Limited v SPI Networks (Gas) Pty Limited [2006] VSCA 173; Jones v Sherwood Computer Services plc [1992] 2 All ER 170).

37 The first to third defendants did not submit that the departure from Mr Wotton's instructions in his first valuations was not material because it would not have affected the result. That position was correct for the reasons in Veba Oil Supply & Trading GmbH v Petrotrade Inc [2001] EWCA Civ 1832; [2002] 1 All ER 703.

38 Instead, the first to third defendants relied on the later valuations, or alternatively, the letter of 13 May 2013, if it could be considered as a valuation. These, it was said, were made in accordance with the Heads of Agreement and the initial instructions to Mr Wotton.

39 The first to third defendants submitted that Mr Wotton was still entitled and indeed obliged to provide valuations in accordance with his instructions after 10 April 2013 and after it had been pointed out to him that he had failed to value the properties in accordance with his instructions. On the other hand, the plaintiff submitted that Mr Wotton was functus officio.

40 None of the cases to which I was referred has considered the question whether an expert appointed to resolve a dispute who makes an error that means that his or her determination is not binding can retrieve the position once the error is pointed out. It was not argued that authorities on the question whether, statute apart, an arbitrator who has made his or her award could correct mistakes in the award provided a relevant analogy. (See Mordue v Palmer (1870) LR 6 Ch App 22).

41 Whether it was open to Mr Wotton to provide further valuations after he had provided his first round of valuations in purported performance of his contract depends on the terms of the parties' contract or contracts either express or implied.

42 Mr Wotton was to complete his valuation within a specified time. The time was not stated to be essential, nor do I think it was, in the sense that either party was entitled to say that the appointment of Mr Wotton failed if he did not provide his valuation precisely within the eight weeks specified in his letter of engagement.

43 Nonetheless, time was important. The parties' contract does not expressly provide for a case where the expert departs from his instructions so that his first attempt at performance is ineffectual. In my view, it cannot be implied that in the circumstances of this case the parties intended that the expert having tendered performance that was ineffectual could retrieve his mistake by providing fresh valuations.

44 Such a term is not obvious, nor reasonable, nor necessary to give business efficacy to the contract. To the contrary, it is clear that there is an implied term that the expert carry out his or her task honestly and impartially. The implication of the term of honesty and impartiality connotes that the expert should not have a personal interest in the determination.

45 In such a case as has arisen here, there would be a real risk, as is alleged to have happened here, that on the error being pointed out, the expert would not bring an independent mind to the real question, but would act so as to minimise the consequences of his or her earlier mistake.

46 The first to third defendants submitted that Mr Wotton had not completed his task, and that it did not matter what was the trigger for him to realise that his task was still not complete. I do not agree. Mr Wotton said that he had completed his task. The fact that he had not done so in compliance with his instructions did not mean that his tendered performance was incomplete as distinct from its being erroneous.

47 If one supposes a case in which Mr Wotton had not provided further valuations, but was sued for breach of contract more than six years after he had delivered his first reports, I do not accept that in such a case the limitation period would not have expired because he had an ongoing obligation to provide reports that complied with his contract (Larking v Great Western (Nepean) Gravel Limited (1940) 64 CLR 221 at 236).

48 The first to third defendants postulated a case where an expert valuer having perhaps numerous valuations to perform mistakenly provided a valuation of a different property from that which he or she was required to value for the particular client. They submitted that it was clear that in such a case the valuer could correct his or her mistake by providing the intended valuation of the correct property.

49 Such an example postulates a different case involving a mistaken tender of performance. In the example postulated, the valuer could not have intended to provide the valuation of the wrong property. The valuation would not be binding on the parties. It would of course, be a matter of construction of the parties' contract whether the valuer could correct such a mistaken tender of performance by providing the correct valuation.

50 The mistake in the present case is of a different kind. Mr Wotton was not mistaken in tendering his valuations to the parties who had asked for them. His mistake was in how he carried out the variations. Had he simply provided wrong valuations, that is, valuations of properties that had been carried out for some other client, no-one could think that Mr Wotton might be compromised by such a mistake. The position is different where he was mistaken in how he carried out the valuations he was contracted to carry out.

51 I do not think that the suggested analogy is helpful in the present case. I conclude that Mr Wotton's task was complete when he provided the last of his valuations, and the parties are not bound by his letter of 13 May 2013 or the second valuations.

52 Indeed, the letter of 13 May 2013 is not itself a valuation of the properties. At the hearing, counsel for the first to third defendants did not rely on that letter as satisfying the Heads of Agreement and as varied by the instructions to Mr Wotton, but on the second set of valuations.

53 Having regard to my earlier conclusion that Mr Wotton's task was complete, it is unnecessary to decide whether his second valuations could in any event be impugned. However, as the matter was fully argued, and in case I am wrong on the first point, it is appropriate that I state my conclusions.

54 Although time is a consideration that is relevant to whether Mr Wotton could make a second valuation, if, contrary to my opinion, I had concluded that he could do so, then I do not consider that the delay until 28 May 2013 would invalidate the second valuations. I do not consider that the time for the carrying out of that task was essential.

55 Nor do I accept that the second valuations would be invalidated because Mr Wotton did not address the state of the properties as at 21 August 2012. There was no evidence that any of the properties were in a different state as at 21 August 2012 than as at the date of inspection. The plaintiff provided details of the properties at Mr Wotton's request, but did not refer to any such changes to the state of the properties after 21 August 2012.

56 The first valuations valued the properties in their state as at the date of inspection, but that was not a separate ground on which the plaintiff challenged the first valuations in the statement of claim. The letter of instructions for Mr Wotton of 23 November 2012 stated that the properties were to be valued in their "present state", not in their state as at 21 August 2012.

57 I would reject this ground of challenge.

58 I do not accept that, by acting on the request of Mr Ryckmans, the solicitor for the first to third defendants, to value the properties in accordance with his initial instructions, Mr Wotton showed partiality towards the first to third defendants, or bias against the plaintiff. However, there is a reasonable basis to infer that Mr Wotton was protective of his own position, and was desirous of minimising the consequences of his initial mistake.

59 The criticisms of the second valuations referred to earlier in these reasons do give rise to the inference that the second valuations were not fresh valuations that were the product of a genuinely independent mind addressed to the correct question as to the value of the properties as at 21 August 2012.

60 No evidence was called from Mr Wotton to rebut that inference.

61 Accordingly, even if Mr Wotton were entitled to make further valuations after 10 April 2013, his valuations of 28 May 2013 were not in accordance with the parties' agreement.

62 Accordingly, none of the valuations provided by Mr Wotton is binding on the parties.

63 Neither party contends that the Heads of Agreement is no longer on foot. The mechanism for the appointment of valuers of the real property has not failed. It is not appropriate that Mr Wotton be asked to provide a third set of valuations. Unless the parties agree on another valuer or valuers, the persons nominated by the President of the Australian Property Institute should be instructed to carry out the valuations provided for in the Heads of Agreement. The fact that those valuations would not be expressed to be capable of being relied on by an incoming lender is neither here nor there.

64 It is not the fault of the first, second and third defendants that the mechanism for valuation agreed on in the Heads of Agreement has miscarried.

65 One matter of concern is that the first mortgagee of the property, Citibank, through its solicitor has indicated that it might seek to enforce its securities. Whilst prima facie the plaintiff is entitled to an order for specific performance, it would not be just if the first to third defendants were compelled to purchase the plaintiff's share in the properties at a valuation made as at 21 August 2012 that is yet to be provided if in the meantime the mortgagee exercised its power of sale. If there were an exercise by of the mortgagee of its power of sale, and such a sale were completed, then the plaintiff could not comply with his obligation to transfer his interest to the first to third defendants. On the other hand, if there were such an exercise of the power of sale but the sale were not completed, the first to third defendants might find themselves in the position of having to acquire the plaintiff's interest at valuation, but the properties nonetheless being sold under forced conditions. That would not be a just outcome, and it would not be appropriate to make an order for specific performance if that were to result.

66 On the other hand, it is not clear that Citibank would move to enforce its securities.

67 Subject to this consideration concerning the possibility of a mortgagee enforcing its powers in respect to the properties, the plaintiff is entitled to an order for specific performance.

68 The parties requested that if I were of that view, the matter should stand down in order for the parties to formulate the terms of the orders for specific performance. Such orders should preserve the position of the first to third defendants in the event that a mortgagee seeks to enforce its securities.

69 I will stand the matter over for the parties to bring in short minutes of order in accordance with these reasons. Prima facie, the plaintiff is entitled to his costs against the first to third defendants, and is entitled to his costs against the fourth defendant up to the time of his filing a notice of submitting appearance.

70 I will hear the parties on costs, but the fourth defendant should be given notice of any application for a costs application against him.

[Parties addressed.]

71 Costs will follow the event, and the orders should provide for the first to third defendants to pay the plaintiff's costs.

Decision last updated: 06 August 2013