Croftstar Pty Ltd as trustee for the Croftstar Investment Trust v Norfeld Pty Ltd

[2023] NSWSC 143

Supreme Court

New South Wales

Medium Neutral Citation:

Croftstar Pty Ltd as trustee for The Croftstar Investment Trust v Norfeld Pty Ltd [2023] NSWSC 143

Hearing dates:

5 December 2022

Decision date:

27 February 2023

Jurisdiction:

Equity

Before:

Robb J

Decision:

The plaintiff is entitled to the substantive orders that it seeks in the summons. The plaintiff is invited to submit draft short minutes of order to give effect to the reasons for judgment, and to deal with quantification of costs. The parties are to provide written submissions regarding orders for indemnity costs.

Catchwords:

LAND LAW — conveyancing — contract for sale — completion — where the plaintiff seeks orders requiring the defendant to perform its obligations under a deed — where the plaintiff seeks declaration that it has paid a deposit for the purchase of real property

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 94, 98(4)(c)

Category:

Principal judgment

Parties:

Croftstar Pty Ltd ACN 060 918 863 as trustee for The Croftstar Investment Trust (Plaintiff)

Norfeld Pty Ltd ACN 003 792 229 (Defendant)

Representation:

Counsel:
M Bennett (Plaintiff)

Solicitors:
Cordato Partners Lawyers (Plaintiff)

J Preston, director of defendant company (self-represented)

File Number(s):

2022/00194696

JUDGMENT

Relief claimed

1. The plaintiff, Croftstar Pty Ltd, as trustee for The Croftstar Investment Trust, (Croftstar) commenced these proceedings against Norfeld Pty Ltd (Norfeld) by summons filed in Court on 4 July 2022.

2. By prayer 1 of its summons, Croftstar seeks a declaration that, on 28 May 2020, it entered into a contract by deed of that date (“the Deed”) pursuant to which Norfeld agreed to sell certain land at Silverwater (“the Property”) to Croftstar for the sum of $9,680,000, less $120,000 that Croftstar is entitled to retain at settlement. (It may be this statement of the price is implicitly inclusive of GST, as the Deed states that the price was $8,800,000, exclusive of GST).

3. Prayer 2 seeks a declaration that Croftstar has paid $880,000 to Norfeld by way of deposit in accordance with the agreement.

4. By prayer 3 Croftstar seeks an order that Norfeld do all things necessary to enable settlement of the transfer of the Property to Croftstar unencumbered, and with clear title, within 28 days.

5. Failing Norfeld’s compliance with that order, Croftstar seeks by prayer 4 an order pursuant to s 94 of the Civil Procedure Act 2005 (NSW) directing the Registrar to execute on behalf of Norfeld all documents necessary to cause the Property to be transferred to Croftstar.

6. Prayer 5 seeks an order that Norfeld pay Croftstar's costs of the proceedings on the indemnity basis, or alternatively on the ordinary basis, and that such costs may be set off against the sum payable by Croftstar under the Deed.

Procedural history

7. On 7 July 2022, Slattery J directed Norfeld to file and serve any affidavits and submissions on which it sought to rely by 25 July 2022, and listed the proceedings in the Real Property List on 29 July 2022 for trial management and the setting of an early date for hearing.

8. On 29 July 2022, Darke J noted that Norfeld had filed an affidavit in accordance with the order made by Slattery J and set the matter down for hearing by me on 5 December 2022.

9. On 14 October 2022, Peden J made an order in the absence of any appearance for Norfeld confirming the hearing date of 5 December 2022.

10. The director of Norfeld, Mr John Preston, represented it in these proceedings and at the hearing.

11. On 29 November 2022, I heard and dismissed an application made by Mr Preston on behalf of Norfeld for an order that the hearing listed for 5 December 2022 be vacated. The matter was brought before the Court informally as a result of an email sent to my Associate by Mr Preston.

The dispute

12. The dispute arises out of orders made by Rein J, by consent, on 29 May 2020 in earlier proceedings between the parties, commenced in 2018 (“the 2018 Proceedings”). Relevantly, his Honour made the following notation:

“1. Notes that the Plaintiff and the Defendant have agreed that the [Property] is to be sold in accordance with the terms of [the] Deed, a copy of which will be annexed to these orders”.

13. Croftstar and Norfeld were respectively the plaintiff and the defendant in the 2018 Proceedings. In determining those proceedings his Honour made consent orders dismissing the amended statement of claim and the cross claim with no order as to costs, with the intent that the parties pay their own costs. Hence, the present proceedings arise out of the Deed, which was agreed between the parties in settlement of the 2018 Proceedings in this Court.

14. Inconsistently with prayer 1 of Croftstar’s summons, the Deed in fact bears the date 27 May 2020. As well as the parties to the present proceedings, Mr Filippo Parisi, the director of Croftstar, and Mr Preston, were also made parties to the Deed.

15. The Deed contains a recital stating that the 2018 Proceedings involved the alleged purchase of the Property and agreement regarding payment of $880,000 by Croftstar to Norfeld on or about 5 April 2017 in relation to the Property.

16. Putting aside terms of the Deed that are not presently in contention, it provides:

“1.    The Parties agree:

1.1    That Norfeld is to sell the Property to Croftstar (or its nominee) for $8,800,000.00 exclusive of GST;

1.2    The Deposit was paid by Croftstar, and is to be retained by Norfeld, as the deposit of the purchase of the Property in accordance with this Deed, such that the balance of the purchase price in relation to the Property is $7,920,000.00, subject to the usual adjustments under the standard form Contract for the Sale of Land (the 'Balance Owing');

1.3    Croftstar (or its nominee) is liable to pay any GST payable in relation to the sale of the Property, to be paid at Settlement;

…

1.5    Settlement is at the election of Norfeld but:

1.5.1    cannot be prior to 28 November 2020;

1.5.2    must be before 28 May 2022; and

1.5.3   in all circumstances, must be on no less than 3 months’ notice by Norfeld (with notice deemed to have occurred on 28 February 2022 if no notice is provided before that date);

1.6    at Settlement, Norfeld must provide vacant possession of the Property; and

1.7    Norfeld agrees to pay Croftstar $120,000.00, which will be deducted from the Balance Owing at Settlement of the Property”.

17. Clause 2 required the parties to exchange contracts for the sale of land in relation to the Property reflecting the terms of clause 1 but, for the avoidance of doubt, provided that the parties were bound immediately by the Deed.

18. Clause 3 authorised Croftstar to maintain a caveat on the Property between the date of the Deed and settlement, and prohibited Norfeld from taking any steps to lapse any caveat or security Croftstar had in relation to the Property.

The parties’ positions

19. For the purposes of the hearing, Croftstar relied upon an outline of submissions and a statement of facts both dated 28 November 2022. The Court received oral submissions from the parties on 5 December 2022. The Court has also received and considered written submissions of Norfeld dated 2 and 14 December 2022.

20. At the hearing of these proceedings, Croftstar relied upon an affidavit by its solicitor made on 1 July 2022. As Croftstar seeks to enforce the Deed in these proceedings, it is not necessary to consider in detail the circumstances that led to the parties entering into the Deed. However, the solicitor's affidavit establishes that the 2018 Proceedings arose out of heads of agreement signed by Mr Preston on about 5 April 2017 on behalf of Norfeld, under which Croftstar agreed to purchase the Property as a going concern for the price of $8,800,000, exclusive of GST. Furthermore, in accordance with the heads of agreement, Croftstar paid a deposit of $880,000 that was to be released to Norfeld, and a cheque for that deposit was cashed by Mr Preston on 5 April 2017. Consequently, even though Norfeld has resisted orders that it comply with the Deed, it has had and retained the benefit of the deposit since 5 April 2017.

21. Croftstar's solicitor gave evidence that, on 28 May 2020, the parties exchanged contracts for sale of the Property.

22. On 27 August 2020, Croftstar's solicitors paid stamp duty of $517,722 to the Chief Commissioner of State Revenue.

23. The effect of clause 1.5.3 of the Deed was that, on 28 February 2022, Norfeld was deemed to have given three months’ notice to settle the agreement for sale of the Property. The due date for settlement of the sale of the Property under clause 1.5.2 of the Deed was 28 May 2022.

24. On 10 May 2022, via the PEXA workspace, Croftstar’s solicitors invited Norfeld’s former solicitors to attend settlement of the sale transaction on 30 May 2022. The invitation was declined, and Norfeld’s former solicitors advised that their retainer had been terminated. On 11 May 2022, Croftstar sought to arrange settlement with Norfeld by contacting Mr Preston by email directly and requesting details of his new solicitors. Mr Preston replied on 12 May 2022 stating “I will act for Norfeld Pty Ltd”.

25. Croftstar tendered evidence that on 23 May 2022 it received a letter from Westpac confirming unconditional approval for a loan of $8 million in order to complete the purchase of the Property. The solicitor deposed that the unconditional approval remains in place and that Croftstar is ready, willing and able to complete the purchase of the Property.

26. On 30 May 2022 and 6 June 2022, Norfeld raised spurious impediments to the settlement of the agreement by way of emails copied to Croftstar’s solicitor. Norfeld raised further spurious allegations on 22 and 30 June 2022.

27. Although the point does not matter because there is no substance in any of the issues raised by Norfeld in opposition to the orders sought by Croftstar for the enforcement of the Deed, it is to be noted that none of the spurious complaints made by Norfeld were even raised until after the time fixed by the Deed for the settlement of the agreement for transfer of the Property.

28. Notwithstanding Norfeld's manoeuvring to avoid settlement of the agreement, on 16 June 2022, Croftstar made another attempt in a letter to Norfeld to achieve settlement of the agreement for sale without the need for litigation, and warned Norfeld that Croftstar would seek indemnity costs, if it became necessary to enforce the Deed by litigation, given the circumstances that Norfeld's obligations were clearly set out in the Deed and Norfeld had not raised any properly arguable reasons as to why the Deed was not enforceable against it.

29. I note that Mr Parisi made an affidavit on 28 July 2022, in which he explained the background to these proceedings and the events that have taken place since the parties signed the Deed when the 2018 Proceedings were terminated by the notes and orders made by Rein J. That evidence included the circumstances of the meeting that took place on 24 February 2022 between Mr Parisi and Mr Preston in which Mr Preston advised that Norfeld would not settle the sale of the Property, as Mr Preston had been unsuccessful in his search for an alternative property. At that meeting Mr Preston also alleged that Rein J, Norfeld's solicitor and Mr Parisi had a conflict of interest. Mr Preston is reported as having said: "I'm not settling. I can stretch this out for 20 years."

30. Mr Parisi also gave evidence that satisfies me that Croftstar is ready, willing and able to complete the purchase of the Property.

31. Norfeld relied upon an affidavit made by Mr Preston on 25 July 2022. Mr Preston advised that Norfeld had not had a solicitor or barrister since February 2021, as the files had been retained by the company's ex-solicitor.

32. In par 7 of his affidavit, Mr Preston set out the reasons why Norfeld had refused to perform the Deed. I will not set out the reasons at length, but I note that Mr Preston claimed that Croftstar wanted Mr Preston to get involved in a GST tax evasion scheme, and that Norfeld's former solicitor had a conflict of interest in that he had acted for Mr Parisi at some earlier time. Mr Preston also asserted that his ex-solicitor and the principal solicitor for Croftstar had tried to engage in a legal sham to avoid paying GST of $88,000, which Mr Preston described as "a fraudulent tax scheme".

33. Mr Preston claimed in par 17 that the present proceedings involve “tax evasion, fraud, crimes and perjury” by Croftstar and Mr Parisi.

34. Mr Preston made a bare assertion in par 22 that the 2018 Proceedings involved a “conflict of interest, abuse of process and perver[sion] of the course of justice” by Rein J, who has allegedly been reported to the Judicial Commission of New South Wales.

35. Mr Preston also made a series of unsubstantiated claims to the effect that the 2018 Proceedings involved a miscarriage of justice, and that the filing by Croftstar of various caveats to protect its interest in the Property involved fraudulent conduct on its part.

36. All of the claims made by Mr Preston on behalf of Norfeld were scandalous and entirely unsubstantiated.

37. In addition to making similar unsubstantiated claims in his 14 December 2022 submissions, Mr Preston alleged that I had a conflict of interest and that I had engaged in corrupt conduct. Mr Preston asserted that I had proceeded with "gross deliberate bias" and that my refusal to adjourn the hearing denied Norfeld procedural fairness. I reject these claims, and as no basis was provided to support them, it is not necessary for the Court to attempt to provide any detailed justification for this rejection.

Findings

38. In the circumstances, this is as clear a case as can be imagined for the Court to make the orders sought by Croftstar in its summons that will have the effect of requiring Norfeld to perform its obligations under the Deed to transfer the Property to Croftstar.

39. Norfeld did not file any cross claim in which it sought an order that the Deed be set aside and Norfeld has not by any proper procedure raised any issue that as a matter of law could vitiate the Deed.

40. In the circumstances, Croftstar is entitled to the substantive orders that it seeks in the summons.

Costs of the proceedings

41. As to costs, it is clear that Croftstar is at least entitled to its costs of the proceedings on the ordinary basis. However, Croftstar has applied for an order that its costs be paid by Norfeld on the indemnity basis. As I understand it, the parties have not made oral or written submissions on the issue of costs, save for the observation in par 14 of Croftstar's written submissions, made without elaboration that: "Norfeld's (and Mr Preston's) reprehensible conduct is such that the relief in the Summons should be granted and Norfeld ought to pay Croftstar's costs on the indemnity basis."

42. As Norfeld is as a practical matter not legally represented, I consider that procedural fairness requires that Croftstar provide further brief written submissions to justify its claim for an order for indemnity costs (limited to two pages), and that Norfeld be given an opportunity to respond (also limited to two pages). Those submissions should be served on the other party and provided electronically to my Associate within 7 and 14 days respectively of the publication of these reasons for judgment.

43. As I have recorded at [6] above, Croftstar has sought an order that it be permitted to set off the costs that Norfeld is ordered to pay to it against its obligation to pay the balance of the purchase price under the Deed and the contract of sale on settlement. I am prepared to make an order to that effect, but for the order to be implemented it will be necessary for the Court to determine the amount of costs to be paid before the date for settlement. That will require that the Court determine the amount of the costs on a gross sum basis pursuant to s 98(4)(c) of the Civil Procedure Act. In principle, this is an appropriate case for such an order to be made, given the evidence of Norfeld’s resistance to performance of its obligations under the Deed. However, as yet there has been no application by Croftstar for its costs to be determined on a gross sum basis, and there has been no evidence tendered to permit the quantification of the costs. Further, Norfeld has not been given an opportunity to contest the issue.

44. I invite Croftstar to serve on Norfeld and deliver to my Associate at the same time as its costs submissions draft short minutes of order to give effect to these reasons for judgment and to deal with the issue of the quantification of the costs order.

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Decision last updated: 27 February 2023