Baju Henley Square P/L v Bruce - [2015] SASC 169

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BAJU HENLEY SQUARE P/L v BRUCE
[2015] SASC 169
Judgment of The Honourable Justice Bampton
28 October 2015
CONVEYANCING - MATTERS ARISING AFTER COMPLETION - GENERALLY
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
CONVEYANCING - BREACH OF CONTRACT FOR SALE AND REMEDIES - VENDOR'S REMEDIES - SPECIFIC PERFORMANCE
Defendant contracted with the plaintiff to purchase an apartment off the plan in a development at Henley Beach (the Contract) – settlement scheduled for 15 February 2012 – defendant commissioned an internal measurement survey of the apartment on 15 February 2012 – following receipt of the survey the defendant served a Notice of Termination on the plaintiff asserting that the plaintiff had breached the Area Condition of the Contract – defendant claimed he had contracted for an apartment of 130 square metres and asserted that a marketing plan drawing (the Drawing) bearing the notation 130 square metres is of contractual effect – plaintiff served a Notice to Complete on the defendant on 24 February 2012 nominating settlement for 13 March 2012 – defendant served a second Notice of Termination asserting that the plaintiff had failed to obtain development approval by the satisfaction date provided for in the Contract – plaintiff seeks specific performance of the Contract – defendant by cross-claim seeks declarations that the plaintiff has breached the Area Condition or the Development Approval Condition of the Contract and seeks a return of the deposit he paid plus interest.
Whether the Drawing is of contractual force and effect – whether the Architect’s Plans depict the area of the apartment – whether the area of the apartment includes the area occupied by nibs – whether the area of the apartment includes an additional area to the edge of the balcony slab – whether the plaintiff has established he validly terminated the Contract for a breach of the Area Condition – whether the defendant has established he validly terminated the Contract for a breach of the Development Approval Condition – whether the plaintiff entitled to specific performance.
Held:
1. The Drawing is not of contractual force and effect.
2. The first Notice of Termination is invalid.
3. The second Notice of Termination is invalid.
4. The plaintiff is entitled to specific performance.
Community Titles Act 1996 (SA) s 9, s 19(4), s 28(1); Development Act 1993 (SA) s 32, s 33, s 40; Development Regulations 2008 (SA) reg 15, reg 42, reg 46, reg 47, Sch 5, Sch 6, referred to.
City of Marion v Paior (2013) 117 SASR 223; CSS Investments Pty Ltd v Lopiron Pty Ltd (1987) 16 FCR 15; Jones v Dunkel (1959) 101 CLR 298; Oakden Shopping Centre Pty Ltd v City of Port Adelaide Enfield [2004] SASC 373; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Rivergum Homes Pty Ltd v The District Council of the Copper Coast [2004] SASC 376; Sullivan v Glennon (1986) 68 ALR 399; Tiplady v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] SASC 169
Decision Date: 28 October 2015

CaseChat Overview and Summary

In the case of Baju Henley Square P/L v Bruce, the dispute arose from a contract for the sale of an apartment in a development at Henley Beach. Craig Bruce, the defendant, contracted with the plaintiff, Baju Henley Square P/L, to purchase an apartment off the plan. Following settlement, Bruce terminated the contract, asserting breaches by the plaintiff in relation to the area of the apartment and development approval. The plaintiff sought specific performance of the contract, while Bruce sought declarations of breach and a return of the deposit plus interest.

The court was required to determine several legal issues, including whether a marketing plan drawing was of contractual effect, the interpretation of the Architect’s Plans regarding the area of the apartment, whether the area included the area occupied by nibs, if it included an additional area to the edge of the balcony slab, and whether either party validly terminated the contract for breach of the Area Condition or the Development Approval Condition. Additionally, the court needed to decide if the plaintiff was entitled to specific performance of the contract.

The court found that the marketing plan drawing was not of contractual effect, and the area of the apartment was to be determined from the Architect’s Plans. The court also held that the area included the area occupied by the nibs but not the additional area to the edge of the balcony slab. The court accepted the measurements provided by Mr Kennedy, which were within the allowable five percent variance as permitted by the Area Condition. The court concluded that Bruce had not established a valid breach of the Area Condition or the Development Approval Condition. Consequently, the court ruled that both notices of termination were invalid.

In summary, the court determined that the plaintiff was entitled to specific performance of the contract, and the defendant’s claims for breach and termination were dismissed.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In discussing Craig and Karen Bruce’s evidence, I will refer to Lot 221 as “the apartment” (as they did in their evidence) and then revert to referring to it as “Lot 221” for the balance of my reasons.Craig Bruce’s evidence Mr Bruce gave evidence about his discussions with Baju’s sales agent, Julianne Price, prior to execution of the Contract. The import of his evidence was that the size of the apartment was important to him and his wife. Mr Bruce’s reasons for choosing the apartment were that it would be on the second level; have three bedrooms; and have better quality fixtures and fittings than the Baju apartments which were to be built next to the H2O apartments. Mr Bruce said that he was told by Julianne Price that the apartment would be ‘seven star luxury’. In cross-examination, he agreed that he wrote an email to Julianne Price that said “we were promised five star luxury”. He remembers the Drawing being in the Contract but could not recall where. Mr Bruce gave evidence that he visited the site every couple of weeks during the period of construction to see how it was coming along.[7] [7] T68. Mr Bruce received a letter from North East Conveyancers, dated 2 December 2011, stating that Practical Completion of the apartment was imminent and inviting him to inspect prior to settlement.[8] He described being unbelievably disappointed at what he saw. He said “we just wouldn’t have paid that amount of money for this property if we’d seen it completed, it was very disappointing”.[9][8] Exhibit P1.[9] T70. He said that, given the amount of money that they had spent and the expectation set by Ms Price, they assumed they were going to be walking into a beautiful, modern, spectacular apartment. Instead, Mr Bruce said it was just incredibly disappointing and you could barely swing a cat in the living room. Mr Bruce said his mental impression of the apartment was not specifically informed by the Drawing. It was informed partly by it and also by conversations with Ms Price and another person. He said it was not formed by the Architect’s Plans. Mr Bruce said that he did not compare or measure the actual area of the apartment with the living space detailed on the Drawing. Mr Bruce claimed to have absolutely placed reliance on the internal dimensions of rooms as shown on the Drawing and yet he did not know whether the internal areas were or were not consistent with the internal areas depicted on the Drawing. He said the living space, being the living room and the kitchen, was not unliveable but that there was not a lot of it. Following inspection of the property, Mr Bruce and his wife decided they would sell the property “for the right price”. Mr Bruce was notified of Practical Completion by letter dated 19 December 2011.[10][10] Exhibit P16. In January 2012, Mr Bruce sought access to the apartment so that his sales agent could show prospective buyers through it.[11][11] Exhibit P17. The date nominated for settlement by Baju in an email dated 2 February 2012 pursuant to Special Condition 9.3 was 15 February 2012.

Decision

Reasons for decision

BAMPTON J

Further, I agree with Baju’s construction of Special Condition 1.4 to the effect that if it is thought to be a freestanding right of termination, it nevertheless falls to be considered in the context of ordinary principles of vendor and purchaser law.ConclusionFindings In summary, my findings are:·The Drawing is of no contractual effect. ·The area of Lot 221 is to be discerned from the Architect’s Plans.·The area of Lot 221 includes the area occupied by the nibs as shown in C27018.·The area of Lot 221 pursuant to the Architect’s Plans measured according to the Residential PCA Guidelines is 131.30 square metres or by reference to the CTA is 123 square metres.·The area of Lot 221 as built measured according to the Residential PCA Guidelines is 132.40 square metres and therefore exceeds the area promised in the Architect’s Plans measured according to the Residential PCA Guidelines. ·The area of Lot 221 as built measured on the CTA basis is 123.40 square metres and therefore exceeds the area promised in the Architect’s Plans measured according to the CTA.·I accept the measurements of Mr Kennedy. The measurements he arrived at by reference to the Residential PCA Guidelines and the CTA were both within five per cent of the area promised as permitted by the Area Condition.·I am unable to make a finding that the area of Lot 221 includes the additional area to the edge of the slab. ·Mr Bruce has not established there has been a breach of the Area Condition.·The First Notice of Termination is invalid.·Mr Bruce was not aware of the issuing of the Development Approval Notification Form after 30 June 2011 until he consulted his solicitors in March 2012.·I am satisfied that all necessary consents for the purpose of the Contract were obtained by 16 May 2011 at the latest.·There is no evidence of any reserved matter remaining outstanding after 29 June 2011.·It is a reasonable inference to be drawn from Mr Smith’s evidence and Council documents tendered that the Development Approval Notification Form could have been issued by the Satisfaction Date if an invoice had been raised and paid immediately following Mr Smith’s meeting with the engineer in the afternoon of 29 June 2011.·Mr Bruce has not established there has been a breach of the Development Approval Condition.·The Second Notice of Termination is invalid. Had I found that the reference to 130 square metres in the Drawing had contractual force and effect, that it overrode the promissory reference to the area depicted in the Architect’s Plans, and that Lot 221 as built comprised the area asserted by Mr Andrew, the difference in the area promised, less 5% permitted in the Area Condition, is 0.15 square metres. Further, if there was a non-fulfilment of the Development Approval Condition it was rectified by, at the latest, 8 July 2011. In my view, if there was a breach of the Area Condition or the Development Approval Condition; it was insubstantial. As Fitzgerald J stated in Tiplady v Goldcoast Carlton Pty Ltd:[61]It has been established by a long line of authority that a purchaser’s right to rescind is limited to cases in which the difference between the property agreed to be transferred and the property which the vendor was able to transfer was substantial. … Shortly stated, the test is whether the property which the purchaser would receive is substantially different from that which he contracted to buy.(Emphasis added)[61] (1984) 3 FCR 426 at [45].

Ratio Decidendi

Legal Principle Established

Established by: BAMPTON J

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