Gateway Parramatta Two Pty Limited v Boyded Industries Pty Limited
[2016] NSWSC 457
•15 April 2016
Supreme Court
New South Wales
Medium Neutral Citation: Gateway Parramatta Two Pty Limited v Boyded Industries Pty Limited [2016] NSWSC 457 Hearing dates: 15 April 2016 Date of orders: 15 April 2016 Decision date: 15 April 2016 Jurisdiction: Equity - Duty List Before: Kunc J Decision: Ex parte interlocutory injunction granted
Catchwords: REAL PROPERTY – Conveyancing – Matters arising between contract and conveyance – Notice to complete – Serious question to be tried – Whether notice can be suspended and reactivated Category: Procedural and other rulings Parties: Gateway Parramatta Two Pty Limited (Plaintiff)
Boyded Industries Pty Limited (Defendant)Representation: Counsel:
Solicitors:
Plaintiff: G Sirtes SC and A Avery-Williams (ex parte)
Plaintiff: Madison Marcus Law Firm
File Number(s): 2016/00116828-1 Publication restriction: No
EX tempore Judgment
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HIS HONOUR: These proceedings concern the sale and purchase of a large commercial development site located in Church Street, Parramatta (the “Property"). The defendant is the vendor and registered proprietor of the Property. The plaintiffs are the purchasers.
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By a contract made on 16 December 2015 the vendor agreed to sell the Property to the purchasers for $50,000,000 with a completion date, originally, of 29 January 2016 (the “Contract”). The plaintiffs apply for urgent ex parte relief to restrain any purported termination of the Contract.
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Completion did not occur on 29 January 2016.
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On 15 February 2016 the vendor gave the purchasers a notice to complete of that date (the "Notice"). The Notice recited the failure to complete the Contract on 29 January 2016 and asserted that the vendor was ready, willing and able to complete the Contract. The Notice appointed 12.30pm on Tuesday, 1 March 2016 for the settlement of the Contract.
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This is obviously a large and complex conveyance. A number of matters were being dealt with and discussed by the parties in the background to the formalities of completion and the Notice. Those discussions apparently continued after the date the Notice was given. On 26 February 2016 the solicitors for the vendor wrote to the solicitors for the purchasers:
We are instructed that the Vendor undertakes not to take any step consequent to the Notice to Complete dated 15 February 2016 (Notice to Complete) without providing to you as the Purchaser's solicitor prior written notice of not less than five business days of intention to do so.
We are further instructed that the Vendor acknowledges that your client reserves all of its rights to the Notice to Complete and that your client's conduct is not a waiver nor an admission that the Notice to Complete is a valid notice to complete given under the contract or that the Notice to Complete is of any effect.
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Pausing there, it may be observed that an undertaking "not to take any step consequent to the Notice to Complete" is, at least on one view, more obscure than clear as to its actual content. Mr Sirtes of Senior Counsel, who appeared with Ms Avery-Williams of Counsel on this application, submitted that the letter of 26 February 2016 and the undertaking given in that letter constituted an attempt to "put the Notice into deep freeze" in a way not known to the law. There is, at least for the purposes of determining whether there is a serious question to be tried in this case, force in that submission.
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On 7 April 2016 the vendor's solicitors again wrote to the purchasers’ solicitors referring to the undertaking contained in the letter of 26 February 2016:
The Vendor hereby gives the Purchaser 5 business days’ written notice of the Vendor's intention to take any step consequent to the Notice to Complete.
The Vendor appoints 12.30pm, 15 April 2016...as the time and place for completion.
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The fact that the notice contained in the letter of 7 April 2016 mirrors precisely the language of the undertaking does nothing to answer the underlying question as to what it actually meant in terms of an intention "to take any step consequent to the Notice to Complete".
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It was put by Mr Sirtes SC that the letter of 7 April 2016 constitutes a legally ineffective attempt to revive the Notice. His submission was that the process of putting the Notice on hold and then its purported revival was ineffective and that the Notice had in fact ceased to be of any effect after 1 March. Furthermore, the reasonableness of the revived period of notice is subject to challenge by the purchasers as being less than the 14 days’ notice which Special Condition 34.3 of the Contract deems to be reasonable for the period of any notice to compete. Again, there is a serious question to be tried raised by those submissions.
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This application was originally made at about 12.30pm today, 15 April 2016 before Slattery J, who was sitting as Duty Judge this morning. There is no evidence before the Court as to what, if anything, was done by the vendor to effect the settlement proposed for that time by the letter of 7 April 2016. There is evidence, however, that both last night and this morning the vendor's solicitors were put on notice of this application, including its transfer between this morning and this afternoon from Slattery J to me. At no time has there been an appearance before the Court today on behalf of the vendor.
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There are two other matters upon which Mr Sirtes SC relies to demonstrate that there is a serious question to be tried. Both of them satisfy that test.
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First, in circumstances which are unnecessary for me to go into in any detail, part of the Contract included a planning agreement which the vendor had entered into with Parramatta Council which was registered on the title of the Property. Clause 18 of that planning agreement provides that the vendor could not sell or transfer the Property unless it had procured a deed of novation from the purchasers and delivered the same to the council. It was submitted by the purchasers that the annexation of the planning agreement to the Contract meant that it was a condition of the Contract that the deed of novation had to be both procured and delivered to Parramatta Council before settlement.
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There is evidence that that did not occur, and could not have occurred, on or before 1 March 2016. The deed of novation was put into evidence on this application and is dated 7 March 2016.
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The purchasers rely on that fact to make the submission that as at 1 March 2016, quite apart from any undertakings, the vendor was not in fact able to complete by reason of the failure to have attended to the deed of novation in accordance with the terms of the planning agreement.
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The purchasers also rely on a charge in favour of General Motors Acceptance Corporation (“GMAC”) which is registered on the Personal Property Securities Register. That charge is expressed to cover the vendor's property "both present and future". On its face, it relates to the Property.
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Mr Sirtes SC fairly drew to my attention that GMAC was itself deregistered. He accepted that there was a question as to the extent to which the charge remained operative, notwithstanding its registration on the Personal Property Securities Register, in circumstances where the chargee had itself been deregistered.
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For present purposes it is sufficient to note that the evidence does not disclose a satisfactory arrangement being in place between the parties that would have enabled the vendor, either as at 1 March 2016 or as at today, to be able to deliver good title in the light of the GMAC charge. The parties had negotiated a deed of escrow in an endeavour to deal with that problem and one was executed on 11 March 2016. The deed of escrow itself seems now to have been disavowed by the vendor. All I need to say, for present purposes, is that the presence of the charge on the Property, at least at this early stage of the proceedings, itself appears to give rise to a serious question as to whether, at any relevant time, the vendor could have satisfied its obligation to transfer the Property free of encumbrances.
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For these reasons I am satisfied that there is a serious question to be tried as to whether or not the vendor is entitled to terminate the Contract. In relation to the balance of convenience, this is clearly a valuable, unique property and it could not properly be said that damages would be an adequate remedy should the purchasers be deprived of the possibility of completing the purchase of the Property.
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The final relief claimed in these proceedings includes an order for specific performance of the Contract. There is some evidence, at least sufficient for today, that the purchasers are ready, willing and able to complete the Contract on 14 days’ notice. Fourteen days is appropriate having regard to Special Condition 34.3 of the Contract (see paragraph 9 above).
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Finally, the usual undertaking as to damages is offered. Mr Sirtes SC properly disclosed that the purchasers are special purpose development vehicles. However, an undertaking is offered by Mr Sam Fayad. He is the managing director of the plaintiffs. Significantly for present purposes, in the Contract itself Mr Fayad has guaranteed the obligations of the purchasers. If his guarantee was considered adequate by the vendor for the purposes of the Contract then, at least for now, the Court is satisfied that an ex parte injunction should be ordered upon the usual undertaking as to damages being given to the Court by Mr Fayad. Mr Sirtes SC has informed the Court that he has instructions to give that undertaking on Mr Fayad’s behalf.
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Decision last updated: 18 April 2016
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