Dacco Pty Ltd v CV Crows Nest Fund Pty Ltd atf CV Crows Nest Property Fund Unit Trust

[2020] NSWSC 1550

Supreme Court

New South Wales

Medium Neutral Citation:

Dacco Pty Ltd v CV Crows Nest Fund Pty Ltd atf CV Crows Nest Property Fund Unit Trust [2020] NSWSC 1550

Hearing dates:

30 October 2020

Decision date:

30 October 2020

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1. Enter judgment for the plaintiff against the defendant pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) for principal, damages and interest in the amount of $1,517,729.00.

2.   Order the defendant to pay the plaintiff’s costs of the proceedings and the costs of the motion.

Catchwords:

LAND LAW — Conveyancing — Options — Statutory requirements — Summary judgment — Default judgment

Legislation Cited:

Conveyancing Act 1919 (NSW), ss 52A, 66S, 66U, 66Y, 66ZG

Conveyancing (Sale of Land) Regulation 2017 (NSW), cls 1, 4, sch 1, sch 4

Uniform Civil Procedure Rules 2005 (NSW), rr 13.1, 16.2, 16.3, 16.6, 18.7

Cases Cited:

Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27

Donaldson v State of New South Wales [2019] NSWCA 109

Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 233 CLR 115; [2007] HCA 61

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444; [1976] HCA 21

Young v Hones [2013] NSWSC 580

Category:

Principal judgment

Parties:

Dacco Pty Ltd (Plaintiff)
CV Crows Nest Fund Pty Ltd atf CV Crows Nest Property Fund Unit Trust (Defendant)

Representation:

Counsel:
Ms P Lane (Plaintiff)
No appearance for the Defendant

Solicitors:
Kydon Segal Lawyers (Plaintiff)
No appearance for the Defendant

File Number(s):

2019/00334329

Publication restriction:

Nil

Judgment

1. HER HONOUR: Before me for hearing in the Real Property List on 30 October 2020 was an application by the plaintiff in these proceedings, Dacco Pty Ltd (Dacco), by notice of motion filed on 30 September 2020, seeking summary judgment under r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) or, in the alternative, default judgment under r 16.3 of the UCPR.

2. There was no appearance on the hearing of the summons by the defendant, CV Crows Nest Fund Pty Ltd (CV Crows Nest), the trustee of the Crows Nest Property Fund Unit Trust (the Trust); and its solicitors had previously (on 16 June 2020) filed a notice of ceasing to act in the proceedings. However, there was evidence of the service on CV Crows Nest of the amended statement of claim (see the affidavit of service affirmed 29 September 2020 of Ms Sibel Tas), and service of the present notice of motion and supporting affidavits (see the affidavit of service affirmed 20 October 2020 of Ms Maria Skotadis); and I was taken to communications sent to the director (or purported director) of CV Crows Nest (Mr Aaron Lui) notifying him of the adjournment of the notice of motion to the hearing on 30 October 2020 (see the affidavit of service affirmed 29 October 2020 of Ms Susan Owen). I was therefore satisfied that CV Crows Nest was on notice of the present application and that it was appropriate to proceed in its absence (see r 18.7 of the UCPR).

3. Having heard the submissions on the application and considered the material before me I concluded that it was appropriate to enter summary judgment in favour of Dacco for the amount claimed by it, and I made orders to that effect. I noted that, had I not been persuaded that summary judgment should be entered I would nevertheless have entered default judgment in favour of Dacco. As the matter was in the midst of the Real Property List’s Friday applications, I made the orders and indicated that I would publish my reasons for the making of those orders as soon as practicable thereafter. These are those reasons.

Background

4. Dacco is the registered proprietor of certain land in Wollstonecraft, New South Wales (the Wollstonecraft Property).

5. On 3 July 2017, Dacco (as Grantor) and CV Crows Nest (as Grantee), expressly in its capacity as trustee for the Trust, entered into a Deed of Put and Call Option (the Deed). I consider below in more detail the Deed’s provisions. However, for present purposes I note that the substance of the arrangement there documented was that Dacco granted CV Crows Nest an option to purchase the Wollstonecraft Property in accordance with the Contract for Sale annexed to the Deed (the Call Option), that option being exercisable in accordance with the provisions of the Deed within the Call Option Period (24 months from the date of the Deed) but not until 18 months after the date of the Deed and after the payment by CV Crows Nest of the balance of the “Call Option Fee” as provided for in the Deed; and there was a corresponding Put Option – namely, the Deed contained an irrevocable offer on the part of CV Crows Nest to purchase the Wollstonecraft Property for the Price and in accordance with the terms of the Contract for Sale annexed to the Deed but that offer could only be accepted by Dacco if the Call Option was not exercised (and it was to be accepted in accordance with the provisions of the Deed).

6. The Call Option Fee was paid in accordance with the Deed. However, the Put Option Fee (of $10.00) was not paid on the date of the Deed as required pursuant to cl 2.1 of the Deed.

7. By letter dated 19 February 2019, the solicitors who had then commenced acting for CV Crows Nest in the matter (HFW Australia) notified Dacco’s solicitors that, with effect from the date of the letter, they acted for the Trust and directed that all future notices to their client under the Deed be sent to HFW Australia at a specified office and email address (see the affidavit sworn 22 January 2020 by Dacco’s solicitor, Mr George Vlahakis at [3]; Annexure A). (In that regard, I note that the notice provisions under the Deed are facilitative not mandatory – see cl 11.1; and that the notice provisions had specified notice to the Grantee via its previous lawyers.)

8. By letter dated 1 July 2019, which was hand delivered to HFW Australia’s offices, Dacco’s solicitors wrote to HFW Australia tendering the Put Option Fee of $10.00 (see Mr Vlahakis’ affidavit sworn 22 January 2020 at [4]; Annexure B). No issue is taken as to the service of this on HFW Australia (as opposed to the contention that failure to pay the Put Option Fee on the date of the Deed amounted to failure of a condition precedent to the exercise of the Put Option or breach of an essential term or repudiation of the Deed – as to which, see below).

9. The Call Option Period expired on 3 July 2019, without exercise by CV Crows Nest of the Call Option.

10. On or around 12 July 2019, Dacco executed and served on CV Crows Nest (by courier to HFW Australia) the Contract for Sale (thereby, it contends, exercising the Put Option) (see Mr Vlahakis’ affidavit sworn 22 January 2020 at [5]; Mr Vlahakis’ 29 October 2020 affidavit at [3]-[4]; and Ex A). Again, no issue is taken as to the service of this document, as such.

11. By letter dated 19 July 2019, HFW Australia gave Dacco’s solicitors notice that CV Crows Nest rescinded the Contract for Sale pursuant to s 66U of the Conveyancing Act 1919 (NSW) (Conveyancing Act) (see Mr Vlahakis’ affidavit sworn 22 January 2020 at [6]; Annexure D).

12. By letter dated 29 July 2019, Dacco’s solicitor responded, disputing the purported rescission of the Contract for Sale by CV Crows Nest and asserting that CV Crows Nest’s refusal to acknowledge that the Contract for Sale was binding on it constituted a repudiation of the Contract for Sale. The letter went on to call upon CV Crows Nest to withdraw the purported rescission notice and to confirm that it would comply with its obligations under the Contract for Sale, foreshadowing legal proceedings for specific performance, and reserving Dacco’s rights (see Mr Vlahakis’ affidavit sworn 22 January 2020 at [7]; Annexure E).

13. CV Crows Nest’s response (via its solicitors’ letter dated 2 August 2019) was to deny that its actions constituted a repudiation of the contract for sale in respect of the Wollstonecraft Property and to assert (see Mr Vlahakis’ affidavit sworn 22 January 2020 at [8]; Annexure F) that:

Our client was correctly within its rights to exercise the cooling-off right under section 66U of the Conveyancing Act 1919 (NSW) that arose from your client’s acceptance of our client’s irrevocable offer to purchase the Property (being a residential property).

14. The completion date under the Contract for Sale as executed by Dacco was 10 September 2019. Completion did not take place on that date.

Proceedings

15. By statement of claim filed on 24 October 2019, Dacco sought specific performance of the Contract for Sale of the Wollstonecraft Property that it alleged was formed on the valid exercise by Dacco (as grantee) of the Put Option granted by CV Crows Nest under the Deed entered into on 3 July 2017. In the alternative, Dacco alleged in its pleading that CV Crows Nest, by purporting to exercise a statutory “cooling off” right when no such right existed, had itself repudiated the Contract for Sale, such that Dacco was entitled to terminate the Contract for Sale.

16. CV Crows Nest, at a time when it was still represented by lawyers (HFW Australia) and, as I understand it, having sought and obtained judicial advice in its capacity as trustee of the Trust, filed a defence on 18 May 2020 raising a number of defences to Dacco’s claim. In essence, CV Crows Nest claimed that the failure by Dacco to pay the Put Option Fee (as defined in the Deed) by 3 July 2017 meant that Dacco had not satisfied a precondition to the valid exercise of the Put Option in the Deed; and that this constituted, in the alternative: a breach of the Deed; a failure to satisfy a condition precedent for the Put Option to be exercised validly; and a repudiation of the Deed.

17. Further, CV Crows Nest alleged that, if the exercise of the Put Option created a binding contract for the sale of the Wollstonecraft Property, CV Crows Nest had exercised its “cooling off” rights in respect of the contract (under s 66U of the Conveyancing Act). In addition, CV Crows Nest alleged that, if a contract was formed, the contract did not annexe the documents prescribed by s 52A of the Conveyancing Act and sch 1 of the Conveyancing (Sale of Land) Regulation 2017 (NSW) (the Regulation), because the Certificate of Title shows a registered instrument (V899085) referring to a deposited plan (DP629714) which shows an easement for support, and that deposited plan was not attached to the Contract for Sale.

18. By its reply filed on 3 June 2020, Dacco joined issue with those allegations. In particular, as to the alleged breach of the Deed, or failure to satisfy a condition precedent, Dacco contended that on its proper construction the Deed did not impose the payment of the Put Option Fee as a condition of validity of the Deed or as a condition precedent to the enforcement of the Put Option. Further, as to the failure to pay the Put Option Fee on the date of the Deed, Dacco contended that if, on the proper construction of the Deed, the payment of the Put Option Fee was not a condition precedent to valid exercise of the Put Option, by accepting the payment of the Put Option Fee CV Crows Nest had abandoned any right to rely on it as a breach of the contract or failure of any condition precedent (or, as put in oral submissions, CV Crows Nest had elected not to rely upon such a breach). Finally, as to the alleged non-compliance with ss 52A and 66U of the Conveyancing Act, Dacco maintained that there was no statutory “cooling off” right applicable to the Contract of Sale and it did not admit that there was any failure to annexe the prescribed documents to the contract.

19. Subsequently, having made certain enquiries as to the position of CV Crows Nest (and having formed a view as to its likely inability specifically to perform the Contract for Sale if ordered to do so), on 16 June 2020, Dacco served a Notice of Termination of the Contract for Sale on CV Crows Nest.

20. By amended statement of claim, filed by leave on 13 August 2020, Dacco elected not to pursue its claim for specific performance and, instead, included in the orders ought by way of relief an order that the Contract for Sale had been validly terminated by notice to CV Crows Nest on 8 July 2020. The amended statement of claim was served by post on CV Crows Nest’s registered office.

21. Pausing here, although the application for specific performance may be said to have amounted to an election to affirm the Contract for Sale, the initial pleading also contained (as noted above) an allegation that there had been a repudiation of the Contract for Sale by CV Crows Nest.

22. A vendor entitled to rescind a contract for sale of land who elects to sue for specific performance is not thereby precluded from later rescinding the contract and claiming damages if the purchaser’s conduct evinces an intention no longer to be bound by the contract (see Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 (Ogle v Comboyuro) at 459-460, per Gibbs, Mason and Jacobs JJ; [1976] HCA 21). See in this regard the distinction drawn in Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190, by reference to Ogle v Comboyuro, between inconsistent rights to terminate or affirm a contract (as to which the institution of proceedings for specific performance is an election to affirm the contract) and the choice between inconsistent or alternative remedies of specific performance or damages (as to which no election arises until judgment) (see at [77], per Gleeson JA, with whom Bathurst CJ and I agreed).

23. Here, where there was a continuing insistence by CV Crows Nest of its entitlement to rescind the Contract for Sale and affirmation of its position in that regard, it was open to Dacco (as it ultimately did) to elect not to pursue its claim for relief by way of specific performance and instead to terminate the Contract for Sale and pursue its claim for damages for loss of bargain.

Issues

24. Dacco submits that the following are the primary issues between the parties on the pleadings as they stand (though, as noted above, there has been no defence filed in answer to the amended statement of claim).

25. First, on the proper construction of the Deed, whether the obligation to pay the Put Option Fee was a condition precedent to the validity of the Deed or the exercise of the Put Option; and whether Dacco’s failure to pay the Put Option Fee on time prevented the valid exercise of the option because it amounted to a breach or repudiation of the Deed.

26. Second, the operation of ss 52A and 66U of the Conveyancing Act in respect of the existence of a “cooling off” period, and whether there was compliance with the requirement to annexe the prescribed documents to the Contract for Sale.

27. In summary, as to those issues, Dacco submits that there is no arguable defence on the facts to the claim for damages for breach. It says that the Deed was binding on the parties, and operated to create a Call Option, and in default of exercise of the Call Option, a Put Option; that the Put Option was exercised within the Put Option period; and that the Put Option Fee was paid (albeit late) and accepted by CV Crows Nest (which then purported to exercise a right of rescission of the contract so formed). Dacco says that CV Crows Nest’s purported rescission was not justified by the terms of the Conveyancing Act, as there was no “cooling off” right, and the contract otherwise satisfied the requirements of s 52A of the Conveyancing Act.

Deed

28. It is convenient at this point to summarise the relevant provisions of the Deed.

29. There are no recitals to the Deed, the operative provisions commencing with cl 1, headed “Definitions and interpretation” (defined terms being capitalised). I will return to the applicable definitions in due course.

30. Clause 2, headed “Call option”, commences with cl 2.1 which obliges the Grantee (CV Crows Nest) to pay the Call Option Fee (defined as being the sum of $105,000, being 3% of the Price, which in turn is defined as meaning the price payable for the Property by the Grantee or Nominee under the Contract) by three equal instalments in the manner there provided ($35,000 on exchange of the Deed; $35,000 within 12 months from the date of the Deed, the clause providing that “in this respect time is of the essence”; and $35,000 within 18 months from the date of the Deed, time again being expressed to be of the essence in this respect).

31. Clause 2.2 provided for the grant by the Grantor (Dacco) of the Call Option to the Grantee (CV Crows Nest) or Nominee, upon payment of the First Instalment; the Call Option being expressed to be binding on the Grantor.

32. Clause 2.3 provided that the Nominee “may exercise the call option in substitution for the Grantee”, but only if there was delivery of a nomination form substantially in accordance with the Schedule at the time of exercise of the Call Option. Clause 2.4 provided for the assignability of the Call Option.

33. Clause 3, headed “Exercise of call option”, then made provision for the time of exercise of the call option and its lapse if not exercised in accordance with cl 3.

34. Relevantly, cl 3.1 was headed “Conditions Precedent and Procedure to Exercise”. The wording of cl 3.1 should here be noted. The clause provided that the Call Option “must not be exercised until” a specified time (18 months after the date of the Deed and the payment of the second and third instalments of the Call Option Fee), and then went on to provide that “but otherwise may be exercised within the Call Option Period [24 months from the date of the Deed] as follows” (there specifying the manner of exercise of the option).

35. Clause 4 provided for the Call Option Fee. Pursuant to cl 4.1, absent a breach by Dacco, the Call Option Fee once paid was to remain its property and was not refundable nor was it to be credited towards the Deposit or towards the purchase price payable under the Contract for Sale. Pursuant to cl 4.2, on a valid exercise of the Call Option, the Call Option Fee was to be credited towards the Deposit.

36. Clause 5 (headed “Put option”) and 6 (headed “Acceptance of put option”) dealt with the corresponding Put Option.

37. Clause 5.1 (headed “Consideration”) provides that:

The Grantor [Dacco] must pay the Put Option Fee to the Grantee [CV Crows Nest] on the date of this Deed [i.e. 3 July 2017].

38. Clause 5.2 (headed “Grant”) then contains an irrevocable offer by CV Crows Nest to purchase the Wollstonecraft Property:

The Grantee irrevocably offers to purchase the Property for the Price and in accordance with the terms of the Contract (put option).

39. Clause 5.3 then provides that Dacco can only accept the offer contained in cl 5.2 if CV Crows Nest or its nominee has not exercised the Call Option in accordance with cl 5.3.

40. Clause 6 sets out the manner of exercise of the Put Option (cl 6.1), and that the Put Option lapses if not exercised in accordance with the clause (cl 6.2). Clause 6.1 in its terms provides that the Grantor “may accept the offer made under” cl 5.2, during the Put Option Period by inserting into the Contract for Sale the name of the Grantee (i.e., CV Crows Nest) as purchaser and by delivering the Contract for Sale, signed by the Grantor (Dacco) to CV Crows Nest or its lawyer as specified in the Contract for Sale.

41. Clause 7 (headed Contract) contains provisions as to what was to follow on the exercise of the Call Option or Put Option. Relevantly, cl 7.1 provided that, on exercise of the Call Option or the Put Option, an agreement for the sale and purchase of the Wollstonecraft Property on the terms and conditions contained in the Contract for Sale came into being between the parties and cl 7.4 made clear that this was the case, even if one of the parties failed to comply with its obligations in relation to the delivery of the Contract for Sale under the Call Option or Put Option, as the case may be.

Dacco’s submissions

42. As to the issues identified above, Dacco submits as follows.

Proper construction of the Deed

43. Dacco notes that the relevant principles of interpretation require that the text of the Deed be considered in context and with regard to its purpose (see in this regard Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37).

44. Dacco points out that the Deed contains no recitals which might be called in aid as contextual material; and that it is in the conventional form of a put and call option agreement.

45. As to the text of the Deed, Dacco points to the wording of cl 2 of the Deed (which, as noted above, provides for the payment of the Call Option Fee, the grant of the Call Option, provision for a nominee, and acknowledgement of the right to assign). Dacco submits that, if the Deed were conditional on payment by Dacco of the Put Option Fee, then it would have been appropriate to include a condition to that effect in the grant of the Call Option (noting that no such condition there appears).

46. Dacco also points to the reference in the heading to cl 3.1 to “Conditions Precedent”, and notes that this clause refers to the requirement for the Grantee (CV Crows Nest) to have paid the Call Option Fee in accordance with cl 2.1.

47. Dacco says that the language used in cl 3.1 is significant; in particular that the Call Option “must not” be exercised until certain conditions are satisfied, but otherwise “may be” exercised by the steps there set out.

48. It is noted that cl 4 deals specifically with the Call Option Fee and provides for its retention or payment towards the deposit depending on whether the Call Option was exercised.

49. Dacco emphasises that in none of these clauses is there any suggestion that the validity of the Call Option (or the Deed) depends on the satisfaction by Dacco of any condition.

50. It is noted that the definition in cl 1.1 of the “Put Option Fee” does not do any more than specify the amount of the fee, and does not deal with the manner or significance of payment. Dacco notes the definition of “Put Option Period” (as meaning the period of 14 days from the expiration of the Call Option Period) and that CV Crows Nest has not made any allegation that the Put Option was exercised outside the Put Option Period.

51. Dacco notes that cl 5.1 expresses the consideration for the Put Option but says that it does not (other than by use of the word “must”) attach any consequences to the failure to pay the Put Option Fee on the date of the Deed; pointing out, in particular, that cl 5.1 does not use the words “conditions precedent” (which do appear in the heading of cl 3.1, which relates to the exercise of the Call Option). Dacco says that there is nothing, other than perhaps the position of the clauses, to suggest that the payment of the Put Option is a condition precedent to the existence (or exercise) of the Put Option (contrasting this with the terms of cl 5.3, which Dacco accepts do impose a condition precedent to valid exercise – by reference to the words “can only”, which it accepts denote conditionality).

52. It is noted that cl 6, in relation to the acceptance of the Put Option, provides that Dacco “may” accept the Put Option offer by inserting the name of the Grantee as purchaser into the contract and delivering the Contract for Sale. Dacco says that the definition of “Put Option Period” imposes a further condition that the Put Option must be exercised within 14 days of the expiry of the Call Option Period.

53. Thus Dacco maintains that the obligation to pay the Put Option Fee is not to be characterised as a condition precedent to the existence of the Put Option but is simply expressed as Consideration in the Deed for the irrevocable offer.

54. Dacco accepts that the consideration was not paid on the date of the Deed but argues that the Deed did not make the payment a trigger for the operation of the Deed, or the existence of the Put Option. It is said that further words (linking the two obligations and making the timely payment of the Consideration essential) would have been required to achieve that result.

55. It is noted that Dacco paid the Put Option Fee on or about 1 July 2019 and that, while that was not payment in accordance with the terms of the Deed, the payment was accepted. Thus Dacco says it thereby paid the Consideration expressed in the Deed. It says that its breach of the Deed was not an essential breach because time was not of the essence, nor was it a condition precedent (as it was not expressed or implied).

56. It is said that, Dacco having exercised the Put Option on 12 July 2020, Dacco accepted the offer contained in cl 5.2, and a contract was formed; and that CV Crows Nest, as purchaser was required to pay the Deposit under the Contract for Sale, and to execute a counterpart contract within 5 business days after receiving the Vendor’s executed Contract for Sale.

57. Dacco says that CV Crows Nest’s acceptance of the late payment of the Put Option Fee amounted to an election not to insist on timely payment of the Put Option Fee, such that CV Crows Nest cannot now rely on this as a breach by Dacco (let alone as a repudiation of the contract as it asserts in its original defence). Dacco further says that CV Crows Nest’s actions in purporting to exercise “cooling off’ rights amount to an admission that the exercise of the Put Option was valid and created a binding contract between Dacco and CV.

Sections 52A and 66U of the Conveyancing Act

58. As to the purported rescission by CV Crows Nest of the Contract for Sale pursuant to the right given by s 66U of the Conveyancing Act, Dacco says that, for the following reasons, there was no “cooling off” right in respect of the contract formed by the exercise of the Put Option.

59. It is noted that s 66S is contained in div 8 of pt 4 of the Conveyancing Act and that s 66Y of that same Division provides that div 8 does not apply to prescribed vendors, purchasers or contracts for the sale of land in prescribed circumstances. In particular, it is noted that the Regulation provides that contracts referred to in pts 1 and 3 of sch 4 of the Regulation are excepted from the operation of div 8 of pt 4.

60. Part 3 of sch 4 of the Regulation contains items 11 and 12, which provide that:

11.    A contract arising from the exercise of an option to purchase land where the option is contained in a will or a lease.

12. A contract arising from the exercise of any other option to purchase land (not being an option that is void under section 66ZG of the Act) so long as the proposed contract, and the documents (referred to in clause 4 and Schedule 1) prescribed under section 52A(2)(a) of the Act, are attached to the option.

61. Dacco says that the documents prescribed by s 52A(2)(a) of the Conveyancing Act were annexed to the option contract (referring to Ex A). It is noted that sch 1 to the Regulation provides the documents which must be annexed to a contract (or option), including (inter alia): a planning certificate; sewerage authority diagrams; a property certificate and deposited plan for the property; and (see at item 4), relevant dealings namely:

(a)    [copies of] all deeds, dealings and other instruments that are lodged with the Registrar-General or registered that are shown on the property certificate for the lot and that create (or purport to create) any of the following interests that burden or benefit (or purport to burden or benefit) the land or any part of the land, together with copies of all memoranda referred to in any such instruments —

(i)    easements,

(ii)    profits a prendre,

(iii)    restrictions on the use of land,

(iv) positive covenants imposed under Division 4 of Part 6 of the Conveyancing Act 1919, and

(b)    all memoranda referred to in any such instruments.

62. In its defence, CV Crows Nest particularises the instruments said not to have been attached to the Contract for Sale by reference to which it is said that there was not compliance with s 52A of the Conveyancing Act, those being documents falling within item 4(a)(iv) of sch 1 to the Regulation.

63. Dacco notes that what is required to be annexed in that regard are copies of all deeds, dealings and other instruments that are lodged with the Registrar-General or registered “that are shown on the property certificate for that lot and that create (or purport to create) …”; relevantly this includes, easements that burden or benefit the land.

64. Dacco says that the deposited plan in question (DP629714) (which was not attached to the Contract for Sale) was not required to be attached to the Contract for Sale because it was not shown on the property certificate for the land. Rather, it is said, what is shown on the property certificate (and was annexed to the Contract for Sale) was dealing V899085, being a transfer granting easement for support. It is said that the reference to the deposited plan (DP629714) in that dealing referred to an earlier deposited plan on which the building retained was described in addition to the description in the dealing itself. Thus it is said that DP629714 was not an instrument that “purported to create” an easement (rather; the dealing V899085 created the right to support), and that the earlier plan assisted in identifying the buildings supported, which were, in any event, defined in V899085.

Relief

65. As to the relief claimed by Dacco, by its amended statement of claim it seeks a declaration that the contract was validly terminated, and damages.

66. It relies on the affidavit sworn 29 September 2020 by David Anthony Ward as evidencing the damages flowing from the termination of the Contract for Sale; those being damages for loss of bargain, calculated in accordance with cl 9 of the Contract for Sale.

67. It is noted that, pursuant to cl 4 of the Deed, the Call Option Fee is only credited towards the Deposit under the Contract for Sale resulting from exercise of the Call Option in circumstances where the Call Option is exercised, and that in any other case (cl 4.1), the Call Option Fee is not credited towards the deposit.

68. Dacco claims the amount of the Deposit due under the contract as a liquidated sum (based on cl 9.1 of the Contract for Sale) in the amount of $350,000. As it has not yet entered into a contract to resell the Wollstonecraft Property, Dacco claims loss of bargain damages for the failure to perform the contract, measured by reference to the difference between the value of the contract and the value of the land as at the date of termination.

69. Dacco relies on the report of Winter Real Estate which provides a valuation of the Wollstonecraft Property as at 12 July 2020 in the amount of $2 million, exclusive of GST. It is noted that the Contract for Sale was GST free as not being a taxable supply, so it is said that the valuation exclusive of GST is reflective of the damages sustain by loss of the bargain.

70. Mr Ward’s affidavit sets out the calculation of damages, on the basis that the loss in total is $1.5 million, and giving credit for the amount of the deposit of $350,000 as a liquidated sum. Dacco says that the unliquidated damages sustained by CV Crows Nest’s failure to perform the contract amount to $1.15 million.

71. Dacco thus claims judgment for the amount of $1.15 million, together with interest from 16 July 2019 on the outstanding amount of the deposit of $17,729.00, and the costs of the proceedings including the costs of the motion.

Determination

Summary judgment

72. The applicable principles on a summary judgment (or summary dismissal) application are well known (see General Steel Industries IncvCommissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27; applied by the Court of Appeal in, amongst other cases, DonaldsonvState of New South Wales [2019] NSWCA 109 (Donaldson), and see also Young v Hones [2013] NSWSC 580).

73. The test requires an applicant for summary judgment to meet a high hurdle. It is thus necessary for Dacco to persuade the Court that the matters relied on by way of defence by CV Crows Nest are clearly “so obviously untenable that [they] cannot possible succeed” (Donaldson at [3], per Macfarlan and Meagher JJA).

74. In the present case it is relevant to note that the issues raised by the defence filed by CV Crows Nest (albeit that being the defence filed in answer to the original statement of claim) involve only questions of the proper construction of the Deed and of the application of ss 52A and 66U of the Conveyancing Act and the Regulation; and do not raise any factual enquiry in respect of contextual circumstances surrounding the entry into the Deed or otherwise. Thus it is possible to determine whether there is a tenable defence by reference to the documentary evidence. As Dacco contends, there is no question of an argument based on the need for contested facts to determine the rights of the parties. Further, Dacco says that, although no defence to the amended statement of claim has been filed, CV Crows Nest’s director has communicated with Dacco and indicated that it nevertheless maintains for the reasons on which it defended the claim for specific performance that no binding contract arose. Therefore, Dacco (and I accept) that it is appropriate to proceed on the basis that the only defences that CV Crows Nest would advance to the amended claim for damages are those already contained in the existing defence.

75. Turning to the defences based on the proper construction of the Deed, notwithstanding that it might be said that in most cases it may be difficult to exclude any possible construction argument, here the construction of the Deed advanced by CV Crows Nest finds no support in the text of the Deed and there are clear textual indications to the contrary. The fact that the parties seemingly turned their minds to the specification of conditions for the exercise of the Call Option (albeit that the reference to “conditions precedent” appears only in the heading of the clause) and not to the Put Option is telling, as is the fact that there was no limitation contained in cl 5.3 (which dealt with the only specified “limit on exercise” of the Put Option) referable to payment of the Put Option Fee (by contrast with the fact that the Call Option was not exercisable until the balance of the Call Option Fee was paid); and no limitation on the manner of exercise of the Put Option in cl 6.1. These matters to my mind make untenable the construction contended for by CV Crows Nest (i.e., that payment of the Put Option Fee was a condition precedent either to the validity of the Deed or to the exercise of the Put Option).

76. The Deed expressly provides for an irrevocable offer by CV Crows Nest to purchase the Wollstonecraft Property for the Price and in accordance with the terms of the Contract for Sale. Nowhere is the payment of the Put Option Fee (which one might consider to be little more than nominal in amount) expressed to be a condition precedent; nor is the making of such a payment on entry into the Deed made an essential term (cf the specification of payment of the instalments of the Call Option Fee as being time of the essence).

77. It is clear that the Put Option Fee was the stated consideration for the Put Option (although, as it was conferred by way of deed, no consideration beyond the execution of the deed was required). Failure to pay on the date of the Deed was a breach, but that breach was clearly waived by the subsequent acceptance of the sum tendered by way of Put Option Fee. Moreover, the purported exercise of a right of rescission is consistent only with an acceptance that there was a contract on foot.

78. As to the purported rescission of the Contract for Sale by CV Crows Nest based on the exercise of the statutory “cooling off” right, I accept (for the reasons advanced by Dacco) that there is no tenable basis on which it could be said that such a statutory right arose. This was a contract arising from the exercise of an option to purchase land other than an option of the kind specified in cl 11 of the Regulation (and not being an option that is void under s 66ZG of the Conveyancing Act); and as to the proposed contract the relevant documents (referred to in cl 4 and sch 1 of the Regulation) prescribed under s 52A(2)(a) of the Conveyancing Act were attached.

79. Therefore, I am satisfied that there is no tenable defence disclosed in the pleading by CV Crows Nest. I am also satisfied that the evidence referred to above establishes that CV Crows Nest has repudiated the Contract for Sale (having made manifest its intention not to be bound by the Contract for Sale – see Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 233 CLR 115; [2007] HCA 61 at [43]-[49], per Gleeson CJ, Gummow, Heydon and Crennan JJ), and that the evidence has also established both the amount claimed by way of liquidated damages and the amount claimed by way of unliquidated damages for the loss of the bargain.

Default judgment

80. Pursuant to r 16.2 of the UCPR, a defendant is in default if there has been a failure to file a defence within 28 days of service of a statement of claim. The amended statement of claim was filed pursuant to leave granted by Darke J and was posted by registered post to CV Crows Nest’s registered office, with a copy to its principal place of business, on 14 August 2020 (see affidavit affirmed 29 September 2020 by Sibel Tas).

81. CV Crows Nest has not filed any defence to the amended statement of claim. The last communication from CV Crows Nest’s solicitor was to the effect that CV Crows Nest had not changed its position and maintained that it had correctly exercised its rights to rescind the contract (see the email dated 2 August 2019). It does not appear that CV Crows Nest has appointed any new legal representatives.

82. Had it been necessary to determine the application for default judgment (which was put in the alternative to the summary judgment application), I would have concluded that it was appropriate to enter default judgment. There has been default in the filing of a defence to the amended statement of claim; and no indication of any step being taken to do so. Dacco has, through Mr Ward, deposed to the matters required by r 16.6 of the UCPR in relation to that part of its claim that is a liquidated claim and has satisfied the evidentiary requirements to establish the amount of damages the subject of its unliquidated claim.

Orders

83. For the reasons set out above I made the following orders:

1. Enter judgment for the plaintiff against the defendant pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) for principal, damages and interest in the amount of $1,517,729.00.

2. Order the defendant to pay the plaintiff’s costs of the proceedings and the costs of the motion.

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Decision last updated: 03 November 2020