Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: C&P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 Hearing dates: 09.04.2013, 10.04.2013 Decision date: 27 May 2013 Jurisdiction: Equity Division Before: Lindsay J Decision: Short Minutes of Orders to be brought in, providing for: (1) Judgment for the plaintiff against the first defendant in the sum of $575,000 plus interest; and (2) dismissal of proceedings against the second defendant
Catchwords: CONVEYANCING - options - construction and operation of put option - dispute concerning whether letter purporting to exercise put option was received together with contracts of sale - whether put option was duly exercised.
EQUITY - equitable remedies - specific performance - jurisdiction and availability - whether (and if so, in what circumstances) innocent party is entitled to orders for specific performance upon election to treat repudiation of wrongdoer as discharging contract - whether plaintiff is entitled to order for specific performance in aid of damages claim for breach of contract.Legislation Cited: Supreme Court Act 1970 NSW
Statute of Frauds 1677 (UK)
Conveyancing Act 1919 NSW ss 23c, 54A
Electronic Transactions Act 2000 NSW, s 8
Practice Note SC Gen 16Cases Cited: Jones v Dunkel (1959) 101 CLR 298
Goldsbrough Mort & Co Limited v Quinn (1910) 10 CLR 674 at 678 and 691
Carter v Hyde (1923) 33 CLR 115 at 122-125
Ballas v Theophilos [No 2] (1957) 98 CLR 193 at 207-209
The Farmers' Mercantile Union and Chaff Mills Limited v Coade (1921) 30 CLR 113 at 123
Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 at 79
Spectra Pty Limited v Pindari Pty Limited [1974] 2 NSWLR 617 at 622-624
Prudential Assurance Co Limited v Health Minders Pty Limited (1987) 9 NSWLR 673 at 677B-678A
Hankey v Clavering [1942] 2 KP 326
Mooney v Williams (1906) 3 CLR 1 at 7
Walsh v Lonsdale" (1882) 21 Ch D 9 at 14-15 Chan v Cresdon Pty Limited 168 CLR 251-254
Majik Markets Pty Limited v S&M Motor Repairs Pty Limited (No 1) (1987) 10 NSWLR 49 at 54C-F.
Carter v Hyde (1923) 33 CLR 115 at 122-123.
Moschi v Lep Air Services Limited [1973] AC 331 at 345G-346B, 350C-351A and 352A-B
Hadley v Baxendale (1854) 156 ER 145 at 151
Wenham v Ella (1972) 127 CLR 454 at 471-472
Allen v Carbone (1975) 132 CLR 528 at 532-533
Burns v Man Automotive (Aust) Pty Limited (1986) 161 CLR 653 at 657-658 672-673 Hungerfords v Walker (1989) 171 CLR 125 at 142 and 149
Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]
Equuscorp Pty Limited v HGT Investments Pty Limited (2005) 218 CLR 471 at 483-484 [33]-[36]
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 177-183 [35]-[48]
Tonitto v Bassal (1992) 28 NSWLR 564 at 574G-575F
Pakenham Upper Fruit Co Ltd v Crosby (1924) 35 CLR 386 at 394-395;
JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 297-299
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- AGLC
- C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643
- Case
- [2013] NSWSC 643
- Decision Date
CaseChat Overview and Summary
The case of C & P Syndicate Pty Ltd v Reddy revolves around a dispute between the plaintiff and the defendant over the enforcement of a put option and the subsequent repudiation of the contract by the defendant. The plaintiff sought specific performance and damages, while the defendant argued against the enforceability of the put option and the applicability of specific performance. The Supreme Court of New South Wales was tasked with determining whether the defendant had properly exercised the put option and whether the plaintiff was entitled to specific performance or common law damages.
The primary legal issues before the court were whether the letter sent by the defendant's solicitor to the plaintiff's solicitor was a valid exercise of the put option, and if the plaintiff was entitled to specific performance or damages in lieu of specific performance following the defendant's repudiation. The court needed to interpret the terms of the Option Deed, consider the effect of the defendant's repudiation, and determine the appropriate remedy for the plaintiff.
The court found that the defendant had not validly exercised the put option, as the letter did not comply with the terms of the Option Deed. The court also concluded that the plaintiff was entitled to damages rather than specific performance because the defendant had repudiated the contract, and the plaintiff had elected to treat the contract as at an end. The court held that specific performance was not available to the plaintiff as it would have been an exceptional remedy in aid of an accrued right. The measure of damages was determined to be the difference between the contract price and the market value of the land at the time the contract was lost, with an allowance for any deposit paid. The court also awarded pre-judgment interest to the plaintiff.
In conclusion, the court ruled that the defendant had not properly exercised the put option, and the plaintiff was entitled to common law damages for the breach of contract. The court dismissed the plaintiff's claim for specific performance and ordered the defendant to pay the plaintiff damages and pre-judgment interest.
The primary legal issues before the court were whether the letter sent by the defendant's solicitor to the plaintiff's solicitor was a valid exercise of the put option, and if the plaintiff was entitled to specific performance or damages in lieu of specific performance following the defendant's repudiation. The court needed to interpret the terms of the Option Deed, consider the effect of the defendant's repudiation, and determine the appropriate remedy for the plaintiff.
The court found that the defendant had not validly exercised the put option, as the letter did not comply with the terms of the Option Deed. The court also concluded that the plaintiff was entitled to damages rather than specific performance because the defendant had repudiated the contract, and the plaintiff had elected to treat the contract as at an end. The court held that specific performance was not available to the plaintiff as it would have been an exceptional remedy in aid of an accrued right. The measure of damages was determined to be the difference between the contract price and the market value of the land at the time the contract was lost, with an allowance for any deposit paid. The court also awarded pre-judgment interest to the plaintiff.
In conclusion, the court ruled that the defendant had not properly exercised the put option, and the plaintiff was entitled to common law damages for the breach of contract. The court dismissed the plaintiff's claim for specific performance and ordered the defendant to pay the plaintiff damages and pre-judgment interest.
Orders
Orders of the court
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Background
Background to the litigation
The Facts, in Context. It is plain enough that the first defendant repudiated her contractual obligations on 19 May 2011, by the email of that date (extracted at paragraph 50 above) sent by her solicitor to the plaintiff's solicitor. That communication served both to dispute the validity of the plaintiff's exercise of the put option and to assert that all the parties' obligations under the Option Deed were at an end. True enough, the same email served as an invitation to treat; but the negotiations it foreshadowed were firmly predicated upon an assertion that the first defendant was under no current contractual obligation to purchase the property. In classic terms, the first defendant renounced any liability she may have had under, or by reference to, the Option Deed and, thereby, repudiated the contract; she evinced an intention not to be bound by the contract: Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626. An entitlement to "loss of bargain" damages does not, however, arise simply from a wrongdoer's repudiation of a contract. The "bargain" is not lost until the innocent party "accepts" the wrongdoer's repudiation as putting an end to the contract: Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260-261 and 273; Ronnoc Finance v Spectrum Network Systems Ltd (1997) 45 NSWLR 624 at 633A and 636D-E; RP Meagher, "Future Directions in Equity" in R Megarry and RP Meagher, Whither Equity? (College of Law, Sydney, 1985), pp 26-27. Until such time as it has elected to treat the contract as at an end, the innocent party can seek an order against the wrongdoer that the contract be specifically performed: Ogle v Comboyuro Investments Pty Limited (1976) 136 CLR 444 at 461-462. After such an election is made, the fact that the innocent party has elected to treat the contract as at an end operates, generally, as a bar to any application by it for an order for specific performance: PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney, 2009), para [14.300], citing Fry, A Treatise on the Specific Performance of Contracts (Stevens & Sons, London, 6th ed, 1921), p 477 (and, by implication, pp 495-497); G Jones and W Goodhart, Specific Performance (Butterworths, London, 1986), p 232 n 20, citing Johnson v Agnew [1980] AC 367 at 392 E-H. When, upon the other party's breach of a condition, an innocent party elects to treat their contract as no longer binding on him, both parties are discharged from further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach continue unaffected: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477, cited by Johnson v Agnew at [1980] AC 396 D-H. That leaves open the possibility that, although an order for specific performance will not be granted to compel performance of a whole contract discharged by election upon breach, a limited form of order for specific performance might be able to be made, exceptionally, in aid of enforcement of an accrued right referable to the contract: Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 250-256, especially at 254-255, citing P Sparkes, "Back-dating Specific Performance" (1989) 10 Journal of Legal History 33.
Evidence
Evidence Before The Court
The focal date for valuation evidence. In their presentation of evidence about the value of the subject land as at "the date of breach", both sides of the record treated the relevant date as the agreed date of completion for the purchase contract for which the option provided (15 June 2011) rather than the date (namely, 19 July 2011) upon which the plaintiff elected to accept the first defendant's repudiatory conduct as putting an end to the contract. At an abstract level, there is room for debate about which of those two dates is correct. The parties' contract required the first plaintiff to complete her purchase on 15 June 2011; any delay on her part after that date could have grounded a claim in damages to compensate the plaintiff for delay, even if the contract thereafter proceeded to completion: Louinder v Leis (1982) 149 CLR 509 at 513 and 526; Raineri v Miles [1981] AC 1050 at 1083 B, 1084 B-C, 1090 H-1091 A and 1093 D. In Castle Constructions Pty Limited v Fekala Pty Limited (2006) 65 NSWLR 648 at 651 [11] the Court of Appeal's statement of principle adopted the date of completion as the point of reference without adverting to any difference. In Johnson v Agnew [1980] AC 367 at 401B Lord Wilberforce's statement of principle opted for the date "the contract is lost" rather than the date of "the original breach". PJ Butt, The Standard Contract for Sale of Land in New South Wales (1985) at pp 523-524; (1998) at pp 509-510 notices a range of dates adopted. Ultimately, the selection of a date depends upon an application of the principle identified in Robinson v Harman (cited in paragraph 184 above) and the dictates of justice in the particular case. Nothing of consequence turns upon the difference between 15 June 2011 and 19 July 2011 on the facts of this case. There is no evidence of a material change in the value of the subject land between those two dates. That a falling market manifested itself over the longer period between mid 2011 and 20 December 2012 does not justify, or compel, a conclusion that the valuation evidence directed to 15 June 2011 provides an unjust foundation for quantification of the plaintiff's entitlement to damages. Upon an assessment of the value of the subject land, I am content to proceed, as the parties have done, on the basis of the valuation evidence directed to 15 June 2011. Pre-judgment interest. As a corollary of selection of "the date of breach" as the date for assessment of common law damages, the plaintiff should be allowed an award of pre-judgment interest under the Civil Procedure Act 2005 NSW, 100. That section permits the Court, in its discretion, to include in a judgment for the recovery of money an allowance for interest "for the whole or any part of the period from the time the cause of action arose until the judgment takes effect": s 100(1)(b). The purpose of such an award is not to compensate a plaintiff for loss arising out of a cause of action, but (subject to considerations of justice as between plaintiff and defendant) to provide compensation when a sum of money has been outstanding for a period of time: Pheeney v Doolan [No 2] [1977] 1 NSWLR 601 at 604C-605B, 613E-F and 619E-F; MBP (SA) Pty Limited v Gogic (1991) 171 CLR 657 at 663.
Decision
Reasons for decision
Conclusion: The Plaintiff's Remedy is Damages at Common Law. The plaintiff's entitlement against the first defendant lies in an award of common law damages. An order for specific performance is neither necessary nor appropriate. An award of damages under the Supreme Court Act, s 68, is not available. Abstract principles. The purpose of an award of damages, at common law, for breach of contract is to compensate the innocent party for loss flowing from the breach (which, in this case, was the first defendant's repudiation) of the contract: Butler v Fairclough (1917) 23 CLR 78 at 89; Gray v Motor Accident Commission (1998) 196 CLR 1 at 6-7 [13]. For a loss to be assessed as "flowing" from a breach of contract, there must be a causal connection between the breach and the loss: Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310. Where an innocent party (in this case, the plaintiff) sustains a loss by reason of a breach of contract, that party is, so far as money can do it, to be placed in the same position, by an award of damages, as if the contract had been duly performed: Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365; Wenham v Ella (1972) 127 CLR 454 at 460; Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 at 80, 98, 134, 148 and 161. The innocent party's right to recover damages for loss caused by a breach of contract is qualified by the rule in Hadley v Baxendale. The guilty party cannot be held liable for loss which, although caused by its wrongful conduct, is too remote from what was within the contemplation of the parties at the time they made their contract to be fairly held to the wrongful party's account. According to settled law, the measure of common law damages in a case such as this one (where a vendor of land claims loss of bargain damages consequent upon a purchaser's repudiation of their contract for sale) is, prima facie, the difference, if any, between the contract price and the market value of the land at the time the bargain was lost, with an allowance in favour of the purchaser for any deposit paid under the contract: PJ Butt, The Standard Contract for Sale of Land in New South Wales (1985), pp 523-524; (1998), pp 437 and 507-510; Carpenter v McGrath (1996) 40 NSWLR 39 at 59E-G; Palasty v Parlby [2007] NSWCA 345; 13 BPR 25, 311 at [43]-[45]. That measure is sometimes explained by reference to Laird v Pim (1841) 7 M&W 474; 171 ER 852 at 854. Common law damages were traditionally said to have been assessed "as at the time of breach"; perhaps more accurately, at the time a cause of action arose. With misgivings expressed in some quarters (eg, by RP Meagher in Wither Equity?, cited in paragraph 145 above), the House of Lords presaged a more flexible approach in Johnson v Agnew [1980] AC 367. Since Johnson v Perez (1988) 166 CLR 351 at 355-356, 367, 371 and 380, Australian law has accepted that, although common law damages are normally assessed as at the time a cause of action arose, they can, if necessary to avoid injustice, be assessed as at such other date as may be appropriate.
Ratio Decidendi
Legal Principle Established
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