Galafassi v Kelly

Case [2014] NSWCA 190


Court of Appeal


Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Galafassi v Kelly [2014] NSWCA 190
Hearing dates:10 - 11 March 2014
Decision date: 13 June 2014
Before: Bathurst CJ at [1];
Ward JA at [4];
Gleeson JA at [5]
Decision:

1.Appeal allowed in part.

2.Set aside order 1 made by the primary judge on 31 May 2013.

3.In lieu thereof, judgment for the plaintiff against the defendants in the sum of $602,500.82.

4.Liberty to apply in respect of the calculation in [203] above.

5.In default of agreement as to costs or any further orders consistent with these reasons for judgment, direct:

(a)the appellants to file and serve within 14 days their proposed short minutes of order, together with brief written submissions in support;

(b)the respondent to file and serve within a further 14 days her proposed short minutes of order, together with brief written submissions in support.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: CONTRACTS - general contractual principles - repudiation and non-performance - renunciation - where purchasers evinced an intention no longer to be bound by the contract and where purchasers declared that they were unwilling and unable to perform their contractual obligations - continuing representation of financial incapacity - whether purchasers wholly and finally disabled from performing the essential terms of the contract altogether - continuing repudiation by the purchasers - vendor entitled to terminate
CONTRACTS - general contractual principles - repudiation and non-performance - election - whether by commencing proceedings for specific performance and later filing a statement of claim the vendor elected to affirm the contract - whether vendor therefore precluded from terminating based on prior repudiation by the purchasers - vendor not precluded where after the commencement of proceedings the purchaser commits a breach of an essential term or otherwise evinces an intention to no longer be bound by the contract - purchasers’ unretracted declarations of inability and unwillingness to perform remained as a fact in the history of the matter and gave an unmistakeable colour to their continued inactivity and entitled the vendor to terminate
CONTRACTS - general contractual principles - remedies for breach - loss on resale - measure of damages - claim made under cl 9.3.1 of standard contract is one for liquidated damages - availability of special condition interest and land tax for late completion when completion does not occur - damages to be assessed based on the price of the first contract if it had been completed according to its terms - payments contingent upon completion unable to be included as part of the price of the first contract - whether land tax…

Continue reading Galafassi v Kelly

Sign in free to access the full text

Details
AGLC
Galafassi v Kelly [2014] NSWCA 190
Case
[2014] NSWCA 190
Decision Date

CaseChat Overview and Summary

The case of *Galafassi v Kelly* involved a dispute between purchasers and a vendor concerning a contract for the sale of land. The purchasers had evinced an intention not to be bound by the contract, declaring themselves unwilling and unable to perform their contractual obligations due to ongoing financial incapacity. The vendor subsequently sought to terminate the contract. The appeal was heard by Bathurst CJ, Ward and Gleeson JJA of the Court of Appeal of New South Wales.

The central legal issues before the court were whether the purchasers' conduct constituted a continuing repudiation of the contract, thereby entitling the vendor to terminate, and whether the vendor's commencement of proceedings for specific performance constituted an election to affirm the contract, precluding subsequent termination. The court also considered the measure of damages available to the vendor upon resale, including the applicability of liquidated damages, special condition interest, land tax, and the vendor's duty to mitigate loss. Furthermore, the necessity of a notice to complete in circumstances of repudiation was examined, as was the admissibility of communications made in connection with settlement negotiations under the *Evidence Act 1995*.

The Court of Appeal held that the purchasers' unretracted declarations of inability and unwillingness to perform, coupled with their continued inactivity, amounted to a continuing repudiation of the contract. This conduct, demonstrating a wholly and finally disabled intention to perform essential terms, entitled the vendor to terminate without issuing a notice to complete. The court found that the vendor's initiation of specific performance proceedings did not preclude termination, as the purchasers' repudiation persisted. Regarding damages, the court clarified that a claim under clause 9.3.1 of the standard contract was for liquidated damages, and that payments contingent upon completion could not be included in the assessment of damages based on the original contract price. The court also addressed the vendor's duty to mitigate loss on resale and the application of section 131 of the *Evidence Act 1995* to settlement communications.

The appeal was allowed in part. The order of the primary judge was set aside, and judgment was entered for the plaintiff (vendor) against the defendants (purchasers) in the sum of $602,500.82, with liberty to apply regarding the calculation of this sum. Directions were given for the parties to file proposed short minutes of order and submissions concerning costs and any further orders.

Orders

Orders of the court

1.Appeal allowed in part.

2.Set aside order 1 made by the primary judge on 31 May 2013.

3.In lieu thereof, judgment for the plaintiff against the defendants in the sum of $602,500.82.

4.Liberty to apply in respect of the calculation in [203] above.

5.In default of agreement as to costs or any further orders consistent with these reasons for judgment, direct:

(a)the appellants to file and serve within 14 days their proposed short minutes of order, together with brief written submissions in support;

(b)the respondent to file and serve within a further 14 days her proposed short minutes of order, together with brief written submissions in support.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.