CS1 Evaline Pty Ltd v Ong

[2023] NSWSC 1065

Supreme Court

New South Wales

Medium Neutral Citation:

CS1 Evaline Pty Ltd v Ong [2023] NSWSC 1065

Hearing dates:

4 September 2023

Date of orders:

4 September 2023

Decision date:

04 September 2023

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

See [25]

Catchwords:

LAND LAW – claim by purchaser for specific performance of contract for sale of land – purchaser failed to complete by completion date – vendors issued notice to complete – vendors thereby affirmed contract – purchaser ready and willing to complete at completion date specified in notice to complete – vendors failed to perform – purchaser has continued to seek performance since – purchaser remains ready and willing to complete – vendors have not performed – specific performance ordered

Legislation Cited:

Nil

Cases Cited:

Foran v Wight (1989) 168 CLR 385

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397

Texts Cited:

Nil

Category:

Principal judgment

Parties:

CS1 Evaline Pty Ltd (Plaintiff)
Khanh Son Ong (First Defendant)
Ngoc Hanh Ong (Second Defendant)

Representation:

Counsel:
G Stapleton/R Wathukarage (Plaintiff)

Solicitors:
HFW (Plaintiff)
In person:
KS Ong (First Defendant)

File Number(s):

2022/377079

Publication restriction:

Nil

JUDGMENT- ex tempore

Revised from transcript and annotated; issued on 5 September 2023

1. This is an application for specific performance of a contract for the sale of land. The land in question is a property at Evaline Street, Campsie, in Sydney. The defendants, Khanh Son Ong and Ngoc Hanh Ong, are the vendors. The plaintiff, CS1 Evaline Pty Ltd (“CS1 Evaline”), is the purchaser.

2. The contract bears the date 5 July 2022. It was entered into pursuant to an exercise of an option which had originally been granted by Mr and Mrs Ong to a company named Tipstrong Pty Ltd (“Tipstrong”). CS1 Evaline was the assignee of Tipstrong.

3. The contract provided that settlement was to take place 42 days after the date it was made. It is common ground between the parties that that date was 16 August 2022. But the contract was not completed on that date. It seems that this was because CS1 Evaline wanted more time. Eventually, the solicitors acting for Mr and Mrs Ong, Truston Lawyers, issued a notice to complete to the solicitors acting for CS1 Evaline, HFW Lawyers.

4. The notice required completion on 9 September 2022. On the afternoon of 8 September, the day before the contract was due to complete, HFW wrote to Trustons stating that the purchaser was ready, willing and able to complete the contract. By this stage, a PEXA workspace had been opened for the access of all interested parties to enable the completion to take place electronically. HFW also noted that Tipstrong was still recorded on the title search as a caveator of the property. HFW noted that the caveat needed to be removed to allow the settlement to proceed.

5. Further correspondence passed between Trustons and HFW on the day of settlement, 9 September. It appears that the caveat was in fact removed late in the afternoon. But HFW was not notified of this, or, at least, was not notified in time to allow the settlement to proceed on that day.

6. The proposed settlement day was a Friday. On the following Monday, 12 September, further communication took place between HFW and Trustons about removing the caveat, and about the interest to be paid by the purchaser on account of the delay in settlement since 16 August. In the course of the communications, Mr Tran of Trustons wrote:

We enclose a copy of updated title search showing the caveat was removed. We advise that we are [sic] still waiting from [sic] our clients' instructions. Please take your client’s instructions regarding the removal of interest [sic] because the caveat lodged by the grantee who nominated your client as nominee [an apparent reference to Tipstrong]. Please help us to convince our clients to settle and finalise this matter.

7. In response to this email, HFW advised Trustons that the purchaser would agree to pay interest up to 9 September 2022, in a total amount of about $23,000. HFW asked Trustons to get instructions. No substantive response, however, was forthcoming.

8. On the afternoon of the following day, Tuesday 13 September, HFW wrote to Trustons stating again that their client was ready, willing and able to settle the purchase and asking Trustons to attend to the workspace tasks allocated to them, so that settlement could occur on that day. Trustons replied that they no longer acted for the vendors.

9. Mr and Mrs Ong did not appoint a replacement solicitor to act for them in the transaction and took no steps towards completing it. HFW continued to press for completion but to no avail.

10. These proceedings were commenced on 14 December. CS1 Evaline's lawyers experienced difficulties in serving the statement of claim on the Ong’s and eventually an order for substituted service was made by the Registrar. Following the making of that order, a solicitor entered an appearance for the Ong’s as defendants in the proceedings. As a result, service is taken to have been effected, independently of compliance with the order for substituted service, as at the date that appearance was entered.

11. The solicitor who entered the appearance later withdrew from representing Mr and Mrs Ong in the proceedings and since then they have been unrepresented. No defence has been filed to CS1 Evaline's statement of claim.

12. At today's hearing CS1 Evaline was represented by counsel. Mr Ong appeared at the hearing and conducted his defence with the aid of an interpreter. Mrs Ong did not appear.

13. To assist Mr Ong, I summarised the plaintiff's case as presented by counsel in a number of propositions which I asked Mr Ong to address in his submissions.

14. Mr Ong accepted that the contract had validly been made on 5 July 2022 and that it should have been completed on 16 August 2022. He also agreed that through their solicitors, he and Mrs Ong had set the completion date as 9 September.

15. It emerged from Mr Ong's arguments that his real concern had been with the fact that the request to remove the caveat had only been made on 8 September, one day before the completion date. Mr Ong said that the purchaser would have been well aware of the caveat's existence and should have asked to have it removed earlier. Inferentially, Mr Ong seems to have believed that there would be some difficulty in removing the caveat. He said that the purchaser, in only asking to remove the caveat the day before the transaction, was trying to delay the settlement again. He said that as a result, he thought that the purchaser lacked the funds to complete the transaction.

16. Mr Ong asserted that had it been possible to complete the transaction on 9 September, he would have accepted payment, but he said that when payment was not made on that date, he told his lawyer (presumably Mr Tran) that he did not wish to go on with the transaction and he wished to terminate the contract. Mr Ong also said that he told Mr Tran that he would no longer retain his services beyond 9 September.

17. These statements by Mr Ong were not verified by oath or affirmation. They are not easy to reconcile with the evidence before the Court. It is by no means apparent why there should have been a difficulty with removing the caveat, even though the request was made only the day before the settlement. Nor is what Mr Ong said about not retaining his lawyer beyond 9 September consistent with the evidence, which shows that Trustons only withdrew from acting on 13 September.

18. Mr Ong's position is, in any event, legally untenable. Mr and Mrs Ong were obliged, as vendors, to provide clear title as at the date of settlement. This included removing the caveat and notifying other affected parties of its removal, so that the transaction could proceed. There was no obligation on the purchaser to make an application (if that were possible) to remove the caveat itself.

19. I should add that there is no reason to think that CS1 Evaline lacked the funds to complete the transaction on 9 September. If Mr Ong really did think that that was so, he jumped to the wrong conclusion.

20. The remaining elements of CS1 Evaline's case are that the contract remains on foot, and that it is ready, willing and able to complete the contract now. It is clear, as a matter of authority, that even though CS1 Evaline was in default in failing to comply with the contract, this did not automatically bring the contract to an end. Rather, Mr and Mrs Ong, as vendors, through their solicitor, affirmed the contract by issuing a notice to complete. The effect of this was to preserve the contract as a set of binding obligations on both parties. When Mr and Mrs Ong failed to complete on that date, the contract remained available to be enforced by CS1 Evaline, notwithstanding its earlier default. [1] The evidence makes it clear that since 9 September last year, CS1 Evaline has been seeking to enforce the contract and, accordingly, it remains on foot.

    1. In the present case, the obligation to complete by 16 August had not been made essential (cf Foran v Wight (1989) 168 CLR 385). CS1 Evaline’s default had not therefore been repudiatory and would not have allowed Mr and Mrs Ong to terminate anyway.

21. I offered Mr Ong an opportunity to consult with Mrs Ong to see whether they were prepared, even at this late stage, to complete the contract voluntarily at the original contract price, namely $3.75 million. Mr Ong declined. His position remains that he does not want to proceed with the contract, although he claims to remain open to further negotiations for a new contract, presumably at a higher price.

22. Even though Mr Ong did not expressly accept that CS1 Evaline is ready, willing and able to complete the purchase, on the evidence before the Court there is no reason to doubt that this is so. CS1 Evaline has paid a sum of money necessary to complete the contract (apart from adjustments) into its solicitors’ trust account. On the evidence it has sources of funding which would, on any view, be sufficient to meet any interest and other adjustments which may be required.

23. As a result, the defence to CS1 Evaline’s claim fails. I will make a declaration that the contract is on foot and an order that it be specifically performed and carried out under the control of the Court.

(The parties then addressed the Court on further orders and costs)

24. CS1 Evaline seeks an order for indemnity costs. In my view, this application is warranted. The course of the proceedings has revealed that there is not and never was any substantive defence, of any merit, to the claim. CS1 Evaline was seeking to enforce a contract which, on my findings, it was always entitled to enforce. [2]

    2. Properly advised, Mr and Mrs Ong would have known this: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401.

25. The orders of the Court are:

1. Declare that the plaintiff and the defendants, as purchaser and vendors respectively, are parties to a contract for the sale of Lot 1 in DP900319 at Evaline Street, Campsie, New South Wales, which contract is dated 5 July 2022 and is still on foot.

2. Order that the contract be specifically performed and carried into effect under the supervision of the Court.

3. List the proceedings in the Expedition List on Friday 8 September 2023, for the making of any application consequential on the decree of specific performance.

4. Order that the defendants pay the plaintiff's costs of the proceedings to date on an indemnity basis.

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Endnotes

Decision last updated: 05 September 2023