Carringville Pty Ltd v Gatto Group Pty Ltd

[2003] NSWSC 123

Reported Decision: (2004) NSW ConvR 56-069

Supreme Court

CITATION:	Carringville Pty Ltd v The Gatto Group Pty Ltd [2003] NSWSC 123
HEARING DATE(S):	24 and 25 February 2003
JUDGMENT DATE:	28 February 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Declarations and orders made.
CATCHWORDS:	CONVEYANCING [58]- Completion- Purchaser fails to attend settlement- Whether vendor in order to terminate must prove ability to convey. RESTITUTION [35]- Money paid to obtain development consent under contract for sale of land which fails- Whether recoverable as unjust enrichment of vendor.
CASES CITED:	Bradley v Moorhead (1952) 52 SR (NSW) 128 Clancy v Salienta Pty Ltd [2000] NSWCA 248 Doe d Whayman v Chaplain (1810) 3 Taunt 120; 128 ER 49 Foran v Wight (1989) 168 CLR 385 Jenkins v Smyth [1973] VR 441 Lacey v Hayden (2000) 10 BPR 18,199 Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 Lion White Lead Ltd v Rogers (1918) 25 CLR 533 Marston v Charles H Griffith & Co Pty Ltd (1985) 3 NSWLR 294 Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 State Bank of NSW v Commonwealth Savings Bank of Australia (1985) 6 FCR 524 Stern v McArthur (1988) 165 CLR 489 Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 Tang v Chong (1988) 4 BPR 9507
PARTIES :	Carringville Pty Limited, Ronald Southwood and Helen Joy Southwood (P) The Gatto Group Pty Limited (D1) Albert Hugh Lindsay (D2) Delma Ruth Lindsay (D3)
FILE NUMBER(S):	SC 2921/02
COUNSEL:	R J H Darke SC and G K J Rich (P) T S Hale SC and R Sofroniou (D1) D2 in person
SOLICITORS:	Bolster & Co (P) Hynes Lawyers (D1)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 28 February 2003

2921/02 – CARRINGVILLE PTY LTD v THE GATTO GROUP PTY LTD

JUDGMENT

1 HIS HONOUR: By contract of sale dated 17 August, 2000, the plaintiffs agreed to sell land in the western part of Tweed Heads South to the first defendant.

2 The property is sometimes referred to as the Club Watersports Site as it was previously owned and occupied by that club from whose receiver the plaintiffs purchased it. The plaintiffs purchased as three sets of tenants in common, the first plaintiff, Carringville Pty Limited (a company controlled by Mr I D Fraser), having a one-third undivided share, the second and third plaintiffs, Mr and Mrs Southwood holding as joint tenants inter se a second one-third share, and the second and third defendants, Mr and Mrs Lindsay holding the remaining undivided one-third share as joint tenants inter se. The contract was in the 2000 edition of the standard form. It named as “vendor” the five owners without any indication of the shares in the property they respectively held. The vendor’s solicitors were named as Bolster & Co.

3 The contract nominated the completion date as “on or before 360 days from the dsate of the contract” ie 11 August 2001. The purchase price was $3.4 million with a deposit of $60,000, which was released to the vendor.

4 The contract contained the following significant provisions:

In Clause 1, “Party” is defined as “each of the vendor and the purchaser”.

Clause 4.1 Normally , the purchaser must serve the form of transfer at least 14 days before the completion date.

Clause 15 Completion date The parties must complete by the completion date and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so.

Clause 20.4 If a party consists of 2 or more persons, this contract benefits and binds them separately and together.

Clause 20.6 A document under or relating to this contract is –

20.6.01 signed by a party if it is signed by the party or the party’s solicitor (apart from a direction under clause 4.3); and

Special Condition 1 The parties acknowledge and agree that fourteen days will be accepted by them as a reasonable and proper period to specify in any notice to complete which either of them may become entitled to serve pursuant to this agreement.

5 By special condition 10.1, the contract was made conditional on the grant of a development application by the Tweed Shire Council “for tourism resort accommodation” within 300 days of the date of contract.

6 On 12 July 2001, the parties varied the contract by extending the date for obtaining development approval to 16 August 2001 and by extending the date for completion until 30 days of the development approval being given. They also added a new special condition 16 providing for the purchaser to pay 16% interest on the purchase price from 12 August 2001.

7 Development approval was given on 15 August. It is common ground that the contract became unconditional.

8 On 14 November 2001, the parties agreed to vary the contract again by extending the completion date to 20 December 2001 on the basis that the interest from 20 November 2001 would increase to 20%.

9 On 20 December 2001, the vendor, by Bolster & Co, served a notice to complete on the purchaser. No-one has suggested that such notice was not valid in form and sufficient as to time and made time of the essence of the contract for 8 January 2002.

10 However, on 21 December, the purchaser’s solicitor wrote with respect to the notice to complete:

“Please be advised that the Settlement Date of the contract has been extended to the 20th February 2002 by agreement between our client and Mr A Lindsay on behalf of the Vendors.”

11 On 28 December 2001, Mr Lindsay wrote to the purchaser:

“I, Albert Lindsay, hereby notify you, that any documents signed by me on Friday 21st December 2001 implying extension of the settlement date for the Watersports Property, beyond the date of completion in the 'Notice to Complete', dated 20th December, 2001, from Bolster & Co, are invalid. I had no authority or Power of Attorney to sign any such documents on behalf of all the Vendors, and as such, any documents signed by me in that regard, are null and void.

This does not mean that I am not prepared to extend settlement beyond the date referred to in the 'Notice to Complete', but any extension is to be done through negotiations with representatives of all other owners of the property present.”

12 A meeting was held on 28 December at the Watersports property. There was present Messrs Fraser, Lindsay and Southwood representing the vendor and Messrs Ericksen & C Pappas representing the purchaser. The meeting agreed that settlement would take place on 21 February 2002, interest would continue at 20% and that time is of the essence. I would infer that Mrs Southwood and Mrs Lindsay concurred in this variation. The pleadings note that this variation agreement is accepted by all.

13 Bolster & Co forwarded settlement sheets to the purchaser’s solicitor, Reynolds & Associates, who, although not named in the contract, appear to have acted as the purchaser’s solicitors throughout the relevant part of the transaction.

14 A meeting was held between the interested parties at the property on 19 February, and as a result offers and counter-offers flowed as to the terms on which the vendor would be prepared to grant an extension for 35 business days. The culmination was that the vendor proposed a deed on 25 February for a 35 business day extension, time to remain of the essence. The purchaser reacted by saying it could not pay the amount proposed, but would the vendor extend the deadline for resolving the matter until 4 pm on 1 March 2002.

15 Bolster & Co responded by saying that the vendor would extend the time for settlement to 4 pm on 1 March 2002, time being of the essence. On 1 March, Bolster & Co sent Reynolds & Associates a settlement sheet for settlement at the Commonwealth Bank Coolangatta at 3 pm New South Wales time.

16 Reynolds & Associates responded by forwarding a notice of extension signed by Mr Lindsay purporting to agree on behalf of himself and on behalf of the vendors to extend the completion date to 23 April, 2002. No mention was made in this document, which was drawn by Mr Reynolds, of time being of the essence. The price paid was $15,000 which was to be considered part of the interest payable if the contract was completed. In negotiations, the vendor’s solicitor had sought $20,000 immediately plus interest at 20% on the outstanding purchase money.

17 Clause 4 of the notice of extension reads:

“Although I informed you on 28 December last that I did not have the authority to give the extension of time I now reconsider my position. I now feel free to grant the extension sought and any advices to the contrary are wholly withdrawn.”

18 Bolster & Co responded immediately that Mr Lindsay had no authority to grant an extension and that the contract required completion by 4 pm NSW time that day.

19 The purchaser handed Mr Lindsay a cheque for $15,000. Mr Lindsay took that cheque to Mr Bolster’s office and left it there. Bolster & Co returned the cheque unbanked.

20 Heather Hedrick gave evidence that she was employed by Bolster & Co and attended the Commonwealth Bank at Coolangatta between 3:30 and 3:50 pm and again from 4 to 4:20 pm with Tanya, an officer of the Commonwealth Bank, but no-one attended on behalf of the purchaser. Later on 1 March, Bolster & Co gave a notice of termination of contract and forfeited the deposit.

21 The purchaser disputed the termination and on 29 April 2002 lodged a caveat to protect its purported interest in the property.

22 On 17 May 2002, the purchaser purported to give a notice to complete to the vendor making time of the essence for 2 July 2002. The notice was given by “its solicitors, Messrs Hynes Lawyers” and indicated that if the contract was not completed it would terminate and sue for damages. Messrs Hynes were not the purchaser’s solicitors noted in the contract. The plaintiffs commenced these proceedings by summons on 28 May 2002. The principal orders sought were declarations that the contract had been terminated, the deposit forfeited, removal of the caveat and an order under s 66G of the Conveyancing Act, 1919 to appoint trustees for sale. Pleadings were ordered and a statement of claim was duly filed.

23 The first defendant filed a defence denying breach and claiming that the plaintiffs’ rights to completion on 1 March had been waived or that the plaintiffs were estopped from asserting the contrary. It also filed a cross claim seeking specific performance. However, it subsequently filed an amended cross claim seeking only a declaration that the plaintiffs were estopped from claiming that the notice of termination was valid or alternatively for restitution of $600,000 allegedly paid by the first defendant to obtain the development approval.

24 The proceedings came on for hearing before me on 24 and 25 February 2003. Mr R Darke SC and Mr G Rich appeared for the plaintiffs and Mr TS Hale SC and Ms Rena Sofroniou appeared for the first defendant. The second defendant, Mr Lindsay, appeared in person. The third defendant, Mrs Lindsay, knew all about the hearing, but considered herself unfit to attend and Mr Lindsay looked after her interests.

25 The discussion of the case can commence with the common ground that, on 28 December 2001, all parties agreed that the contract would be completed on or by 21 February 2002 and that time would be of the essence. It was also common ground that there was no completion on that day. It is further common ground that the plaintiffs were content to allow until 1 March, 2002 for completion whilst negotiations took place as to whether agreement could be reached on an extension of the time for completion.

26 It is here that the parties part company. The plaintiffs simply say that there was no completion in accordance with the agreement of 28 December and thus, time being of the essence, the contract is now at an end.

27 The first defendant says that the notice of extension signed by Mr Lindsay waived the obligation to complete or else was effective to extend the time for completion until April.

28 The plaintiffs counter this by saying that Mr Lindsay never had any authority to bind all the vendors. They say that this is evident from what had happened on 28 December, particularly the letter Mr Lindsay wrote the purchasers and was reinforced by the pattern of negotiations in the week leading up to 1 March.

29 The first defendant relies on Mr Lindsay’s evidence that he did not authorise the termination on 1 March. Mr Lindsay says that he never gave Mr Bolster any instructions to give the notice of termination on his behalf or on behalf of his wife and further, that had he been asked, he would not have given any such instructions. The first defendant also relies on Mr Bolster’s file note of 27 February 2002, DX150, which records an attendance of the Southwoods and the Frasers with the Lindsays being unavailable and notes instructions “give extension to 4 pm DST on Friday 1st March, 2002 with time being of the essence. If they have not settled by then contract will be terminated.”

30 I will evaluate this submission shortly.

31 The second ground for resistance is that the vendor could not have settled on 1 March as Mr Bolster would have been unable to produce transfers of the whole fee simple as there would not have been transfers by the Lindsays of their one-third share as tenant in common.

32 The third submission made by the first defendant was that, if it was unsuccessful in the previous arguments, it was entitled to be awarded the cost of obtaining the development approval by way of restitutionary action to relieve against what otherwise would be an unjust enrichment. Mr Lindsay gave evidence for the first defendant. However, he addressed on his own behalf and made it clear that he was still prepared to complete the contract. The trouble with taking this position is that none of the other parties wish to do so.

33 Accordingly, the issues for me to decide are:

1. What, if anything was the effect of the document signed by Mr Lindsay on 1 March 2002 on the plaintiffs' rights to terminate the contract?

2. Are the plaintiffs estopped from relying on the notice of termination?

3. Does the absence of a transfer signed by Mr Lindsay on 1 March affect the position?

4. Should the plaintiffs be granted the declarations they seek?

5. Should an order be made under s 66G of the Conveyancing Act for the appointment of trustees for sale of the land?

6. Is the first defendant entitled to any amount for its restitutionary claim?

7. What orders, including orders for costs, should be made?
I will deal with these matters seriatim.

34 1 and 2. The full relationship between the parties styled “vendor” in the contract has not been disclosed in the evidence. There is in evidence a trust deed which suggests that if at a relevant time one of the three tenants in common had contributed more than the others, there would be an adjustment to their interests in equity.

35 It is also clear that all the vendors must have retained Bolster & Co. However, after this, there is a great dearth of evidence. Bolster & Co’s retainer was not put in evidence nor even any costs agreement which might have mapped out their authority. Again, it is usual conveyancing practice and indeed is required by clause 4 of the contract for the purchaser to submit a stamped transfer to the vendor’s solicitors at least 14 days before the completion date. The vendor’s solicitor then obtains the signatures of the vendor to the document and holds it pending settlement. There is no evidence one way or the other that Bolster & Co did or did not hold such a transfer. Further, Ms Hedrick does not say whether she had such a transfer with her when she attended for settlement.

36 There is no evidence from Mr Lindsay that he ever conveyed to Bolster & Co that any authority that firm had to act for the vendors as a group was terminated. Indeed, I would infer that he never said anything to Bolster & Co about terminating authority. The defendants were merely content to make the point that Mr Bolster was not invested with authority by Mr Lindsay.

37 However, most of this discussion is irrelevant to the real issue. It is common ground that, by reason of the agreement of 28 December 2001, the contract had to be settled by 21 February 2002 and time was of the essence. That did not occur. There was a delay in asserting the termination, but an actual breach had occurred on 21 February which entitled the vendors to terminate.

38 The only real questions that arise are:

(a) whether Bolster & Co needed the consent of all vendors to terminate the contract;

(b) if that were necessary, whether Bolster & Co indeed possessed the authority of all vendors to terminate the contract; and

(c) whether there was any waiver.

39 As to (a) Mr Darke relied on the decision of the High Court in Lion White Lead Ltd v Rogers (1918) 25 CLR 533, 551. In that case Isaacs and Rich JJ clearly said:

“If A and B jointly agree with C, and if C announces, before the normal moment of performance arrives, that he renounces the contract, it is competent for A and B jointly to accept that renunciation, and to terminate the contract. But that is a new agreement, and requires the assent of all. A may refuse, and, if so, B and C must abide by the bargain until the time for actual performance arrives. The contract may or may not then be normally performed. But once that time has arrived, if C commits an actual breach going to the root of the bargain, A has a right, by virtue of the contract already made, to say he will not proceed further, and he may refuse notwithstanding B’s desire to waive his rights and proceed. The same necessity of a new bargain which in the case first put prevents A from altering the existing position prevents B in the second case from affecting A’s accrued right.”

That excellent textbook, Glanville Williams on Joint Obligations (Butterworths, London, 1949) p 157 says much the same, though the basis for this is the Lion White case.

40 This passage was reviewed by McInerney J in Jenkins v Smyth [1973] VR 441, 447. His Honour reads as if he has applied the Lion White principle, but comes to the opposite result because he considers that in order to terminate a contract, one is not exercising an accrued right, but is taking a new action.

41 The Lion White case was mentioned with approval by Lockhart J in State Bank of NSW v Commonwealth Savings Bank of Australia (1985) 6 FCR 524, 551, though his Honour found that the relevant contract was a several contract so that the principle was irrelevant.

42 The difference in approach illustrates the difference between several contracts each made by a tenant in common and a contract made by joint tenants. This distinction crops up in many connections. Thus, ordinarily, one joint owner can give a tenant a notice to quit which will bind all (see Bradley v Moorhead (1952) 52 SR (NSW) 128) but a tenant in common may only give a notice in respect of his or her undivided share: Doe d Whayman v Chaplain (1810) 3 Taunt 120; 128 ER 49.

43 An analogous situation is where there is a guarantee by more than one guarantor; see eg Marston v Charles H Griffith & Co Pty Ltd (1985) 3 NSWLR 294.

44 Although in the present case each set of owners held a one-third undivided share as tenant in common, a situation which usually would involve a set of several contracts, I agree with Mr Darke’s submission that the only possible approach is to construe the contract as one joint contract. The major pointers to this conclusion are the use of the term “Vendor” to describe the sellers as a group, the fact that the whole of the land was being sold by the group, not three sets of undivided shares, the appointment of a common solicitor and the scheme of there being one set of requisitions etc.

45 In my view, as from 21 February, the owners had an accrued right to terminate. That right could be exercised under the Lion White principle by all or any of the sellers. I do not, with respect agree with the distinction made by McInerney J in Jenkins v Smyth. The act of terminating is not a new act, it is merely making it clear that one relies on the existing breach. This view is reinforced by the fact that an intimation of termination may suffice: Tang v Chong (1988) 4 BPR 9507.

46 Thus, in my view, it was not necessary to get Mr Lindsay to join in the termination.

47 I should make it clear that the position might well have been different had the contract been framed as a rolled up set of several promises by three sets of people each to convey their one-third share. However, for the reasons I have given, the present contract is one joint contract to sell the whole fee.

48 Sub-question (b) thus does not arise.

49 As to sub-question (c), waiver is a positive act. I do not need to dwell on this point as the extension document signed by Mr Lindsay on 1 March was a variation which was an act requiring all to join.

50 There is no doubt from the surrounding circumstances that there was never any holding out of Mr Lindsay as the agent of the whole group to make a waiver or variation on behalf of all. The particular circumstances are the letter of 28 December and the activities of the remaining vendors and Mr Bolster in the week preceding 1 March.

51 The only excuse that Messrs Ericksen & Pappas could put for dealing with Mr Lindsay alone was that they said it was impossible to communicate with Mr Fraser or Mr Southwood so that they were virtually forced to deal with Mr Lindsay alone. I do not accept this. There was constant communication through the solicitors the whole week. Even if I had accepted this story, it would have been irrelevant to the outcome.

52 Accordingly, I answer sub-question (c), No.

53 It follows that questions 1 and 2 should be answered as follows: (1) None; (2) No.

54 3 and 4. In one sense, question 3 may be a false question. I just do not know whether there was a transfer in existence signed by Mr Lindsay or not. As I said earlier in these reasons, usual conveyancing practice and cl 4 puts an obligation on the purchaser to supply a transfer. In the absence of contrary evidence and recognizing that both parties were represented by experienced solicitors, I should infer that this occurred. As the vendors were expecting completion in December, it might also have been expected that the signed transfer would have been prepared by then.

55 I was disturbed for a time by the fact that I was not actually given this evidence because, had it been available, it was clearly in the plaintiffs’ camp. The answer given was that the present point was not clearly made on the pleadings. This is not a complete answer, but I think it goes someway for me not to draw adverse inferences I might otherwise have drawn.

56 The principal point being made by Mr Hale SC is that a vendor seeking to terminate must be itself ready willing and able to complete on the day fixed for settlement. He says that as Mr Lindsay was willing for there to be a 35 day extension, he was clearly not going to hand Mr Bolster a signed transfer to force settlement on 1 March or to authorise Mr Bolster to hand over a transfer that he may have signed previously.

57 This last matter can be simply answered by noting that Mr Lindsay in fact gave no instruction to Mr Bolster during the relevant period. This principal point made by Mr Hale SC is a good general statement of the law; see eg Foran v Wight (1989) 168 CLR 385, but is subject to a number of significant exceptions and modifications.

58 It is difficult to analyse the ratio of Foran v Wight as each of the five judges who were party to the decision decided the case on different grounds. However, there have been a plethora of decisions since the decision in which it has been analysed and discussed, one of the most recent being Lacey v Hayden (2000) 10 BPR 18,199 a decision of the NSW Court of Appeal in which Giles JA gave the leading judgment in which Fitzgerald and Heydon JJA agreed.

59 The basal thought that emerges from these cases is that a person seeking to terminate is obliged to show that he or she was ready willing and able to complete and fulfil the conditions precedent to the other party’s performance. However, the court in a situation where the alleged defaulting party intimates to the other party that it will not be settling the purchase and a fortiori a defaulting party who does not even attend settlement, is either estopped from asserting that the claimant was not ready willing and able to complete or alternatively that a minimum of evidence needs to be presented to discharge the burden as to readiness willingness and ability.

60 In the present case, the statement of claim pleaded the 28 December 2001 variation which was admitted and then simply alleged in paras 20 and 21 that the first defendant failed to complete and has remained in breach of an essential obligation and that the plaintiffs terminated.

61 The defence to paras 20 and 21 admitted non-completion, but merely denied that the first defendant acted in breach of contract or that if it did, any such breach was waived.

62 There was thus no mention in the pleadings of any allegation that the plaintiff was not itself ready willing and able to complete.

63 Under Pt 15(11) of the Supreme Court Rules, an allegation that all conditions precedent have been fulfilled is implied in a pleading. It was thus for the first defendant to have specifically pleaded the non-performance of the condition. It did not do so and, in my view, this issue was not strictly speaking available to it, a point that Mr Darke SC made in his reply.

64 However, even if the point were open, I would find sufficient evidence to show that the plaintiffs would have been ready to convey or, if the necessary approach is to look to see whether the actions of the first defendant had dispensed the plaintiffs with further performance, that such dispensation occurred.

65 Thus, I must answer Question 3, No and it follows that Question 4 must be answered, Yes.

66 5. The claim under s 66G is one between the plaintiffs and the Lindsays. The claim needs to be considered as the reasoning I have already revealed shows that the contract is at an end and that the plaintiffs and the Lindsays are co-owners who do not see eye to eye about the property.

67 Section 66G virtually gives a right to co-owners with at least a 50% interest in the land to have the court order sale or partition. I have not yet seen any material which would bring this case into the exceptional class where the court in its discretion might refuse an order.

68 However, there is no consent from any person to be appointed trustee for sale.

69 Thus, I consider it more appropriate to intimate that unless there is material filed in the next month as to why an order should not be made under the section and provided the appropriate consents are filed, short minutes of such an order can be brought in by the plaintiffs. However, as it is much cheaper to effect a sale by co-operation, it may be that some informal regime can be worked out between the parties to effect a sale at minimum cost.

70 6. In view of my findings, it is necessary to deal with the first defendant’s restitutionary claim.

71 The essence of the claim is that the first defendant alleges that it spent over $500,000 in securing the development approval for the land. It says, and this is virtually conceded, that, in general, land with a development consent is more valuable to a prospective purchaser than land without such approval. Thus, unless a restitutionary order is made, the plaintiffs will be unjustly enriched in that they will have the land, and the deposit and the benefit of the development approval.

72 The principal authority relied upon by the first defendant is the judgment of McPherson J in Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446.

73 That was the case of an instalment contract for the purchase of a high rise building in Surfers Paradise. The purchaser defaulted after paying instalments of $4,500,000 of a total purchase price of $11,000,000. The purchaser sought specific performance and relief against forfeiture.

74 The judge declined specific performance and also declined to order relief against forfeiture of the equitable fee simple. However, he did give relief in equity by ordering repayment of part of the instalments and in some other respects which are significant for the present case.

75 His Honour said at 454-5, omitting almost all references to the many cases his Honour cited:

“The fundamental principle applicable to a vendor who rescinds for breach after receiving payment, wholly or in part, on account of the price is that ‘he cannot have the land and its value too’: Laird v Pim (1841) 7 M & W 474, 478; 151 ER 852, 854 per Parke B. Hence money so paid by the purchaser is recoverable from the vendor. At law it is recoverable as money had and received upon a total failure of consideration where the consideration for which it was paid is the conveyance or transfer that has not taken place: in equity it is recoverable by proceedings for restitution: Equity relieves against a contractual provision purporting to entitle the vendor in the event of default to retain money so paid. A deposit properly so called falls outside the scope of this right to relief because it is paid as security for completion of the contract. Equity has never intervened to relieve against forfeiture of a deposit that is reasonable in amount, and a deposit of no more than 10 per cent of a purchase price is prima facie reasonable: A vendor is therefore entitled to retain such a sum, although credit must be given for the deposit in assessing any claim by the vendor for damages for breach of contract:
With that exception money paid on account of the purchase price is repayable if the sale goes off. That includes not only instalments of price (other than deposit) but also interest thereon paid pending completion: However, interest in arrears at the date of rescission is regarded as an element in the vendor’s damages for breach: as also is interest that was payable after such date: On money that is repayable to the purchaser in accordance with these principles the vendor is liable to pay interest:
In addition, the purchaser is entitled to restitution in respect of permanent improvements made to the land while in his possession to be measured by the extent to which the value of that land has been enhanced.”

76 At 457-8, his Honour said:

“The evidence does not disclose precisely who paid the surveyors’, Council and Title Office fees required for registration of the building units plan, although it seems likely that it was the purchaser. I would regard registration of that plan as being in the nature of a permanent improvement.”

77 The matter was considered further by Derrington J in Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214. In that case, a purchaser of an orchard had, with the vendor’s permission gone into possession. Although the contract required the written consent of the vendor before improvements could be made to the property, the purchaser made improvements. The contract came to an end because of the purchaser’s default. The purchaser claimed restitution for the improvements made. Derrington J refused this claim. As the headnote says:

“In circumstances in which the plaintiff was not mistaken as to its title to the property and made the improvements merely in the expectation of completion of the contract and not in the exercise of a contractual right to do so or even with a mistaken belief in one and the defendants did not acquiesce in and/or encourage the making of the improvements, the plaintiff was not entitled to restitution.”

78 His Honour discussed the cases particularly Lexane v Highfern (see p 226) and noted that that decision was made in the context of equitable adjustments to a failed instalment contract. He noted that there could be cases outside failed instalment contracts where the court would order restitution, but the claimant would need to show some reason in conscience why such an order should be made.

79 There is no need to discuss many other cases as the Court of Appeal in Clancy v Salienta Pty Ltd [2000] NSWCA 248 has given the definitive answer to the problems posed in this case.

80 Clancy’s case was a decision of a court consisting of Beazley, Stein and Giles JJA. Beazley JA was in dissent on the present point. Stein JA gave relatively brief reasons agreeing with Giles JA who gave a lengthy judgment discussing all the relevant authorities.

81 The majority held that there was no automatic right to restitution of the increased benefit to a property brought about by the activities of a purchaser under a contact which fails. This is so whether or not the vendor was aware of the activity.

82 I would extrapolate from Clancy’s case and the authorities discussed by the members of the court in that case, that a purchaser may get relief if and only if it can come within one of the following classifications (these classes may overlap to some extent):

1. Where there is a common money count to recover at law money paid on failure of consideration.

2. Where equity is taking accounts and making appropriate adjustments after a failed instalment contract or similar.

3. Where there is unconscionable conduct on behalf of the vendor such as requires a gain that would otherwise flow to the vendor to be disgorged.

4. Where the court decides to grant relief against forfeiture in accordance with accepted principles.
5. Where the work done is of incontrovertible value to the vendor.

83 The fifth class is a bit fuzzy and its parameters are developing. However, it is only applicable where it is fairly clear that the purchaser has, in reality effected the very same improvements that the vendor wanted to have done. It cannot apply here where there is no evidence that the development approval obtained is the approval that the vendor itself would have sought.

84 I should add that where a restitutionary claim is allowed in this area of the law, it is for the value of the improvements, not necessarily their cost; see Stern v McArthur (1988) 165 CLR 489, 509 approving what McPherson J had said in Lexane. Whilst I can accept that there was some increase in value of the property as a result of the development approval, there was no material from which I could accurately deduce the scope of such increase.

85 Accordingly, the restitutionary claim fails.

86 7. I thus need to make declarations (i), (iii) and (iv) in paragraph 30 of the statement of claim and order (v). I stand over until 11 March 2003 at 9:30 the matters raised under s 66G of the Conveyancing Act. I dismiss the cross claim. I order that the first defendant pay the plaintiffs’ costs of the proceedings. I stand over until 11 March what, if any order for costs should be made against the second and third defendants. The exhibits may be returned.

87 I should note one matter that was of concern though in the upshot ceased to be relevant.

88 Had I reached the view that the contract had not been validly terminated on 1 March, I would have had to consider whether it was still on foot or how it had come to an end. The pleadings as filed were not adequate to expose this issue. However, the court must always bear in mind that the High Court made it plain in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 that the court must deal with all issues arising out of the dispute between the parties. Normally this requires someone to claim specific performance or damages.

89 The position is quite unsatisfactory to leave matters, as the first defendant’s pleadings do, by abandoning any claim for specific performance, never claiming damages and then maintaining that the contract is still on foot. The problem is exacerbated when the first defendant issues what is probably an invalid notice to complete (as it was not given by the company or its solicitor on the record) a notice which in any event only seeks damages.

90 Another unsatisfactory aspect of this case, which was no one’s fault, is that we have not been able to focus sufficient attention to Mr Lindsay. He and his wife always wanted to complete the contract and were prepared to allow further time for that to happen. This may partly be explained by the consultancy agreement he had entered into with the first defendant on 10 December 2000. However, he has been left high and dry by the activities of the other parties and will probably have to deal with s 66G trustees. It is because this aspect of the case has been out of prime focus that I have left over the question of what costs the Lindsays should bear.

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Last Modified: 03/05/2003