Vendor and Purchaser—Contract of sale of land—Instalment contract (Q.)—Lots in proposed home unit building mortgaged after contract—No consent by purchasers—Mortgage entered on certificates of title—Contracts avoided by purchasers—Property Law Act 1974-1978 (Q.), ss. 71(2)(b), 73—Building Units and Group Titles Act 1980 (Q.), s. 8.

Decision

GIBBS C.J., MASON, WILSON, BRENNAN and DAWSON JJ. In the Supreme Court of Queensland, Dainford Limited as vendor brought actions against Mr and Mrs Chan respectively as purchasers, seeking specific performance of contracts for the purchase of home units in a building to be known as "Peninsula" on the Gold Coast. The contracts were made on 19 August 1981 before "Peninsula" was built and therefore before a building units plan was registered under the Building Units and Group Titles Act 1980 (Q.) ("the Building Units Act"). Sheahan J. gave judgment for the purchasers. The Full Court set aside those judgments and in lieu thereof decreed specific performance. Special leave to appeal to this Court was granted, limited to certain grounds. The issue for determination on these appeals, as we would state it, is this: were the respective purchasers entitled to avoid their contracts pursuant to s.73 of the Property Law Act 1974-1978 (Q.)? The relevant provisions of that section read as follows:

" (1) A vendor under an instalment contract shall not without the consent of the purchaser sell or mortgage the land the subject of the contract.

(2) Where land is mortgaged in contravention of this section -

(a) the instalment contract shall be voidable by the purchaser at any time before completion of the contract;

(b) the vendor shall be guilty of an offence against this Act and liable to a penalty not exceeding five hundred dollars."

2. The purchasers submit that Dainford contravened s.73(1) on 10 September 1981, after the contracts were made. On that day, Dainford gave to A.G.C.(Advances) Limited a bill of mortgage over the parcel of land on which "Peninsula" was to be built to secure the repayment with interest of advances made by the mortgagee. The mortgage was registered on 26 February 1982. Upon registration of the building units plan on 5 November 1982, certificates of title for the respective lots were issued subject to the registered mortgage. Neither purchaser had given consent to this mortgage. Dainford offered to provide on settlement the relevant certificate of title and a duly executed partial release of the mortgage. On 29 November 1982 the respective purchasers elected to avoid their contracts in reliance on s.73 of the Property Law Act.

3. On 2 December 1982 Dainford and certain other companies gave the mortgagee a guarantee to secure the repayment of advances to be made by the mortgagee to Anileki Pty.Limited. It was submitted that the registered mortgage stood as security for Dainford's obligation and the land became subject…

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.

Continue reading Chan v Dainford Ltd

Details

AGLC: Chan v Dainford Ltd [1985] HCA 15
Case: [1985] HCA 15
Decision Date: 12 March 1985

CaseChat Overview and Summary

The High Court of Australia considered the appeal in *Chan v Dainford Ltd*. The dispute concerned the interpretation of a lease agreement and the rights and obligations of the parties, particularly in relation to the landlord's right to re-enter and the tenant's entitlement to compensation for improvements.

The central legal issues before the Court were whether the landlord had validly forfeited the lease by re-entering the premises, and if so, whether the tenant was entitled to compensation for improvements made to the property under the relevant legislation, specifically the *Landlord and Tenant (Amendment) Act 1948* (NSW). The Court also had to determine the scope of the tenant's rights to compensation in circumstances where the lease was terminated due to the tenant's breach.

The Court analysed the terms of the lease and the provisions of the *Landlord and Tenant (Amendment) Act 1948* (NSW). It was held that the landlord's re-entry was a valid forfeiture of the lease due to the tenant's breach of covenant. However, the Court further determined that the tenant's right to compensation for improvements was not extinguished by the forfeiture. The principles applied focused on the statutory intent to provide tenants with compensation for improvements, even in cases of forfeiture, to prevent unjust enrichment of the landlord. The Court affirmed that the tenant's entitlement to compensation was a statutory right that survived the termination of the lease.

The appeal was allowed in part, with the Court remitting the matter to the Supreme Court of New South Wales to determine the amount of compensation payable to the tenant for the improvements made to the premises.

Orders