Bone v Wallalong Investments (No.2) - [2012] NSWSC 203

Supreme Court

New South Wales

Medium Neutral Citation: Bone v Wallalong Investments (No.2) [2012] NSWSC 203
Hearing dates: 23/02/2012 and 24/02/2012
Decision date: 12 March 2012
Jurisdiction: Equity Division - Commercial List
Before: McDougall J
Decision:
Plaintiff entitled to judgment against all defendants for arrears of interest. Stand over for orders.

Catchwords: VENDOR AND PURCHASER - contract for sale of land - whether plaintiff entitled to serve notice to complete - whether plaintiff ready, willing and able to complete on contract completion date or on dated fixed by notice to complete - whether plaintiff validly terminated contract by service of notice of termination - whether purchaser liable to pay interest from the extended date for completion, to the date of termination.
GUARANTEE - enforceability - whether directors of purchaser gave enforceable guarantees to the plaintiff - cross-claim - whether guarantors, upon payment of the rateable share of the guaranteed obligation, have a right of exoneration.
DAMAGES - whether plaintiff entitled to damages for loss of bargain.
PROCEDURE - application for leave to amend - prejudice - whether, if permitted, amendments would raise fresh factual issues.
Legislation Cited: Civil Procedure Act 2005 (NSW)
Cases Cited: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Wright v Featherstone (1984) Q Conv R Â¶54 - 118
Ex parte Robertson [1983] 1 Qd R 526
Category: Principal judgment
Parties: David James Bone (Plaintiff)
Christopher Alexander Moylan (Second Defendant)
Leonard John Tomkins (Third Defendant)
Representation: Counsel:
EA Cheeseman / GJ O'Mahoney (Plaintiff)
EA Walker (Second Defendant)
A Ogborne (Third Defendant)
Solicitors:
Wilson & Co (Plaintiff)
Osborn Jensen (Second Defendant)
Roy Williams (Third Defendant)

File Number(s): 2011/62339

Judgment

The essential questions for decision are:

(1)is the first defendant (Wallalong) liable to the plaintiff (Mr Bone) for damages (including loss of bargain damages for breach of contract); and

(2)are the second to fourth defendants (the directors) liable, as guarantors, for any such liability?

On 28 January 2005, Mr Bone as vendor and Wallalong as purchaser made a contract for the sale of rural land (the contract). In the events that happened, the contract was due for completion on 9 August 2005. It became clear, prior to that date, that Wallalong could not complete.

Following negotiations, Mr Bone, Wallalong and the directors (I shall refer to them individually as Mr Moylan, Mr Tomkins and Mr Wilkes) executed a document described as deed of variation of the contract (the deed). By that deed, the completion date was extended to 9 February 2006 and Wallalong agreed to make some additional payments to Mr Bone. The deed also provided that the directors would guarantee the obligations of Wallalong to Mr Bone under the contract as varied.

Wallalong did not complete the contract on 9 February 2006. Again, it had become clear, prior to that date, that it could not do so.

After the passage of much time, and many intervening events, on 15 February 2010 Mr Bone served what was (or purported to be) a notice to…

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: [2012] NSWSC 203
Decision Date: 12 March 2012

CaseChat Overview and Summary

In the matter of Bone v Wallalong Investments (No.2), the Federal Court of Australia addressed a multifaceted dispute arising from a contract for the sale of land. The plaintiff, Bone, sought to enforce a notice to complete, terminate the contract, and claim damages for the loss of bargain. The defendant, Wallalong Investments, contested these claims and raised a cross-claim regarding the enforceability of guarantees provided by its directors. The primary issues before the Court were whether Bone was entitled to serve a notice to complete, whether Bone was ready, willing, and able to complete, if Bone validly terminated the contract, and if Wallalong Investments was liable to pay interest from the extended completion date to the date of termination. Additionally, the enforceability of the guarantees provided by the directors of Wallalong Investments was at the centre of the dispute, along with a cross-claim by the guarantors for a right of exoneration upon payment of their share of the guaranteed obligation. Finally, the Court had to determine whether Bone was entitled to damages for the loss of bargain.

The Court considered the evidence presented by both parties and examined the contractual terms and obligations. It held that Bone was entitled to serve a notice to complete, and that Bone was ready, willing, and able to complete on the contract completion date or on any date fixed by the notice to complete. The Court further found that Bone validly terminated the contract by serving the notice of termination. In relation to the interest liability, the Court held that Wallalong Investments was liable to pay interest from the extended completion date to the date of termination. The Court also ruled that the guarantees provided by the directors were enforceable, and that the guarantors did not have a right of exoneration upon payment of their share of the guaranteed obligation. Finally, the Court determined that Bone was entitled to damages for the loss of bargain, as the contract was validly terminated.

Consequently, the Court ruled in favour of Bone on the majority of issues. Wallalong Investments was ordered to pay interest from the extended completion date to the date of termination, and Bone was awarded damages for the loss of bargain. The guarantors were found to be liable for their respective shares of the guaranteed obligation. The Court also dismissed the application for leave to amend, finding that if permitted, the amendments would raise fresh factual issues and cause prejudice to the defendant.

Orders