Burnett v 3 Property Group 10 Pty Ltd (No 2)

[2023] ACTSC 215

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Burnett v 3 Property Group 10 Pty Ltd (No 2)

Citation: 

[2023] ACTSC 215

Hearing Date: 

8 August 2023

Decision Date: 

8 August 2023

Before:

Mossop J

Decision: 

See [16].

Catchwords: 

REAL PROPERTY – CAVEATS – Application to extend caveat – where caveat supported by asserted claim to specific performance – where orders previously made extending caveat subject to plaintiff taking steps to cure defects in proceedings –plaintiff seeks leave to file further Originating Claim, Statement of Claim and to join second plaintiff – whether plaintiffs’ claim for specific performance is supported by evidence of plaintiffs being ready to complete – whether plaintiffs have elected for damages over specific performance – whether defence of laches applies – caveat extended

Legislation Cited:

Land Titles Act 1925 (ACT), s 108

Cases Cited: 

Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459

Boensch v Pascoe [2019] HCA 49; 268 CLR 593

Green v Somerville (1979) 141 CLR 594

Kuper v Key West Constructions Pty Ltd (1990) 3 WAR 419

Parties: 

Sheridan Burnett ( First Plaintiff)

John Griffiths (Second Plaintiff)

3 Property Group 10 Pty Ltd ( Defendant)

Representation: 

Counsel

R Markham ( Plaintiffs)

D Robens ( Defendant)

Solicitors

Adero Law ( Plaintiffs)

Hall and Harrington ( Defendant)

File Number:

SC 223 of 2023

MOSSOP J:  

Introduction

1․Following the making of orders on 27 July 2023, the plaintiff has filed an application in proceeding seeking a number of orders. They include orders permitting the filing of an Originating Application, a Statement of Claim and an order that John Gabriel Griffiths be joined as the second plaintiff. Those orders were uncontroversial and I made them earlier today. The joinder of Mr Griffiths overcomes one of the arguments put against the continuation of the caveat raised by the defendant on the previous occasion.

2․The balance of the orders sought involved the continuation of the caveat, a regime for the substitution of a narrower caveat limited only to Unit 30 after the units plan was registered and orders for costs. It is the continuation of the caveat which remained a matter of controversy.

3․The plaintiff read the additional affidavits of Ms Burnett dated 2 August 2023 and Mr Griffiths dated 2 and 7 August 2023. Those affidavits went to the plaintiffs’ intention to pursue specific performance and whether or not they were ready willing and able to perform the contract.

4․Ms Burnett was cross-examined on her affidavit, particularly in relation to her financial position and capacity to perform the contract if asked to.

5․The defendant did not contest the proposition that a caveatable interest may arise commensurate with the plaintiffs’ ability to obtain specific performance or other equitable relief to secure their rights under the contract. The plaintiff relied upon the decision in Kuper v Key West Constructions Pty Ltd (1990) 3 WAR 419. In that case Malcolm CJ, speaking for the court, recognised that in the case of a contract to purchase land that was to be the subject of a strata plan, a court may be prepared to protect the purchaser’s interest under a contract of sale at the inchoate stage both by granting specific performance in the sense of requiring the vendor or to do all things necessary to be done to procure registration of the strata plan as well as restraining the vendor by injunction from dealing with the land inconsistently with the purchaser’s right. That was sufficient to ground a caveatable equitable interest in the relevant land notwithstanding the conditional nature of the contract.

6․In the present case there is no contest over the question of principle. Rather the defendant contends that this is not a case in which equitable relief would be granted and hence no caveatable interest arises. The two principal points made on behalf of the defendant in opposition to the continuation of the caveat were:

(a)whether or not the plaintiffs were ready, willing, and able to complete the contract so as to allow the making of an order for specific performance; and,

(b)whether or not an election had been made which was inconsistent with the maintenance of a claim for specific performance.

Ready and willing to complete?

7․The defendant relied upon the proposition that “[i]t is a condition precedent to success in a purchaser’s action for specific performance that the purchaser should, at the institution of the suit, be ready and willing to perform the contract”: Green v Somerville (1979) 141 CLR 594 at 600. So far as the first point is concerned, the evidence established that the plaintiffs do not presently have finance for the purchase of the property approved. That was explained by Ms Burnett on the basis that no date for purchase had been identified and hence seeking such approval lacked utility. However, the evidence also established that she has a substantial taxable income and Mr Griffiths, although presently not employed, has received an offer of further employment and is likely to be employed in the near future. It also discloses that, collectively, they are likely to have equity in properties in Dickson and Watson and that the selling price of units in the development of which specific performance is sought are some $250,000 more than the contracted sale price. Further, although the deposit was repaid on 3 June 2022, Ms Burnett’s evidence was that she and Mr Griffiths would be able to pay the deposit from existing funds of $15,000 along with funds borrowed from family members. In my view, the plaintiffs are ready and willing to perform the obligations remaining to be performed under the contract and are not unable to do so by reason of their financial circumstances.

Election

8․So far as the claim of an election is concerned, the chronology appears to be as follows:

(a)22 February 2021: Contract for sale of property.

(b)8 September 2021: Purported rescission of contract.

(c)17 December 2021: A letter from Adero in relation to undertakings. The letter confirms that “an undertaking is not required for those group members who are seeking damages from the 3 Property Group of companies.” The letter attaches an annexure which lists certain purchases in the “Allegro development” but does not include the plaintiffs.

(d)21 December 2021: Harrington Hall replies providing an undertaking by the directors of the defendant not to deal with certain listed units. Those include each of the Allegro clients listed in the annexure to the letter of 17 December 2021.

(e)20 May 2022: Solicitor for Ms Burnett requests repayment of the deposit funds, stating “this request does not constitute an agreement that the rescission is valid, and is in no way a waiver of her rights to pursue legal action.”

(f)3 June 2022: Deposit refunded.

(g)1 June 2023: McWilliam J permits a further caveat to be lodged.

(h)2 June 2023: Current caveat lodged.

(i)28 June 2023: Adero writes to Harrington Hall proposing, without “waiving their rights to specific performance”, a regime whereby units may be sold to third parties but that the proceeds will not be disbursed without giving notice. Included in the schedule of clients was Ms Burnett. The offer was not accepted.

(j)13 July 2023: Application was lodged to lapse the caveat.

9․It is not possible to have both specific performance and damages. A party must choose between specific performance and damages. The granting of an order for specific performance is based upon the contract still being on foot. An award of damages is based upon acceptance of its discharge. A party may seek specific performance and then elect to accept the other party’s breach and sue for damages. However, on the other hand, if the breach is of an essential term and is accepted, it will put an end to the contract. That would be a bar to a subsequent specific performance suit. Yet where the contract is asserted to remain on foot, there is no impediment to seeking inconsistent remedies of damages and specific performance in court proceedings until the point of judgment.

10․The contention that there has been an election between inconsistent rights in the present case is certainly arguable having regard to the terms of the letter of 17 December 2021. However, the evidence before the court does not provide the full context in which that letter was written and the argument of the parties was limited on this issue and without the benefit of reference to authorities. The plaintiff submitted that any issue would be one of estoppel rather than election, more dependent upon the conduct of the defendant following the representation in the letter of 17 December 2021.

11․In my view, it is inappropriate to attempt to determine this question in the absence of more complete evidence and properly formulated submissions. The position of the defendant is not so strong as to deny that the plaintiff has identified a serious question to be tried in relation to her claim for specific performance.

Laches

12․In its written submissions the defendant raised the defence of laches. Having regard to the fact that the development is only now reaching completion and proceedings for preliminary discovery have been on foot since last year, this does not appear to be a strong substantive defence. It is certainly not a matter which indicates that the plaintiffs’ claim does not involve a serious question to be tried, nor does it weigh significantly against the plaintiff when considering the balance of convenience.

Conclusion as to caveat

13․The plaintiffs have established that they have a caveatable interest. Having regard to the narrowing of the scope of the caveatable interest contemplated by the orders that I made previously, the balance of convenience favours the maintaining of that more limited caveat so long as an undertaking as to damages is given. As to the requirement for such an undertaking, this is an appropriate condition in circumstances where damages may be suffered by the defendant in circumstances where the threshold for an obligation to compensate under s 108 of the Land Titles Act 1925 (ACT) is not reached: Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 478; Boensch v Pascoe [2019] HCA 49; 268 CLR 593 at [113].

Undertakings instead of a caveat?

14․If it was otherwise the case that the caveat should continue in effect, the defendant sought that it be substituted with an undertaking from each of the directors. The affidavit of the first plaintiff indicates that she is willing to consent to the lapsing of the caveat on the undertakings being given in the form of the draft undertaking provided to the defendant in the letter of 6 July 2023. The position appeared to have changed by the conclusion of the argument today, it not being clear that such undertakings would be accepted. Although counsel for the defendants made some reference to the possible financial consequences that may flow from maintenance of the caveat rather than the undertakings, there was no specific evidence of any real difficulties that would arise by reason of maintenance of a caveat over Unit 30. In those circumstances it is appropriate to continue the caveat unless the parties agree otherwise or there is real evidence of practical difficulties with that course.

Costs

15․In relation to costs, I accept the submission made on behalf of the defendant that the costs of the application to extend the caveat and the application to join Mr Griffiths and amend the pleadings, including the reserved costs, should be costs in the cause. Although the plaintiff has been successful in maintaining the caveat, that has been on a narrowed basis and after the plaintiff had the opportunity to put on further evidence and bring the application for joinder and amendment of the pleadings. Making an order that costs be costs in the cause means that who pays the costs will be determined by the merits of the parties’ positions on the ultimate issue. That appears to be a fair outcome in the circumstances. I do not accept the submission that the defendant should pay the plaintiffs’ costs. That is because of the need for the defendant to address procedural matters such as the joinder of Mr Griffiths and amendment of the Statement of Claim and the fact that the defendant’s position was reasonably arguable having regard to the apparent changes in position adopted on behalf of the plaintiff over time.

16․In addition to orders 1-3 made earlier today, the following additional orders will be made:

4.Upon the plaintiffs giving the usual undertaking as to damages, Caveat number 3248911 (Caveat) lodged by the First Plaintiff in respect of Block 1 Section 28 in the Division of Throsby in the Australian Capital Territory (Land), is to remain registered on title until further order of the Court.

5.Despite the Caveat, the Registrar General may register a Units Plan for the property at the Land.

6.Upon the registration of the Units Plan pursuant to order 5, the First Plaintiff is to lodge forthwith a further caveat in relation to unit 30 in the units plan only and, upon doing so the Caveat lapses.

7.Orders 1, 2 and 3 made on 27 July 2023 are discharged.

8.Costs of the application in proceeding dated 24 July 2023 and the application in proceeding dated 3 August 2023 are costs in the cause.

I certify that the preceding sixteen [16] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop

Associate:

Date: