Gauld v Obsidian Holdings Pty Ltd - [2009] NSWSC 924

CITATION: Gauld v Obsidian Holdings Pty Ltd [2009] NSWSC 924

HEARING DATE(S): 24/08/09

JUDGMENT DATE :
24 August 2009

JURISDICTION: Equity

JUDGMENT OF: White J

EX TEMPORE JUDGMENT DATE: 24 August 2009

DECISION: Refer to paras 39-41of judgment.

CATCHWORDS: CONTRACTS - building, engineering and related contracts – contracts for purchase of units off the plan - obligation on vendor to use all reasonable endeavours to register strata plan – failure to use all reasonable endeavours precluded vendor from rescinding contracts – contracts validly rescinded by purchasers

LEGISLATION CITED: Environmental Planning and Assessment Act 1979 (NSW)
Civil Procedure Act 2005 (NSW)

CATEGORY: Principal judgment

CASES CITED: Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 Masters v Belpate Pty Ltd [2001] NSWSC 169 Munro v Bodrex Pty Ltd [2002] NSWSC 122

PARTIES: Elishia Nicole Franczis Gauld & 10 Ors
v
Obsidian Holdings & 4 Ors

FILE NUMBER(S): SC 50176/07

COUNSEL: Plaintiffs: P Silver
2nd Defendant: R F O'Brien

SOLICITORS: Plaintiffs: Slater & Gordon
Defendants: n/a

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

WHITE J

Monday, 24 August 2009

50176/07 Elishia Nicole Franczis Gauld & 10 Ors v Obsidian Holdings Pty Ltd & 4 Ors

JUDGMENT

1 HIS HONOUR: In this proceeding the plaintiffs bring separate claims arising from seven contracts for the purchase of units off the plan for a proposed development in Hunter Street, Newcastle.

2 The first defendant was the vendor under each contract. The second to fifth defendants guaranteed the first defendant’s obligations. The contracts were entered into between 20 February and 20 September 2004. They are in materially the same terms except as to the identity of the purchaser, the property to be purchased, and the purchase price. In each case, the deposit was released to the vendor.

3 Clause 51.4 of each contract provided:

Notwithstanding any other provision in this contract, the purchaser may rescind this contract by written notice to the vendor if:

(a) the Development Approval has not been granted by 1 November 2004; or

(b) the vendor or Vendor's Guarantor becomes Insolvent; or

(c) the Development (including construction of the property) have

not been completed by the 30 June 2007.

4 "The Development" was defined to mean the works and other activities to be carried out on the Development Site including the Development Activities. The Development Activities included building, demolition, excavation or landscaping work in connection with the Development.

5 Clause 34.3 provided that if the purchaser validly rescinded the contract then the vendor was to return the deposit within 30 days.

6 Clause 34.4 relevantly provided that if the contracts were validly rescinded by the purchaser under clause 51.4, then at the same time as the deposit was refunded, the vendor was to pay the purchaser interest on the deposit at the rate of 30 percent per annum, calculated from the date of the contract, to, but excluding, the date on which the deposit was refunded to the purchaser.

7 The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 924
Decision Date: 24 August 2009

CaseChat Overview and Summary

The court was presented with a dispute between the purchasers and the vendor of off-the-plan units. The case involved a challenge to the validity of the purchasers' decision to rescind their contracts with the vendor, Obsidian Holdings Pty Ltd, following the vendor's failure to register a strata plan as required. The legal issues central to the case revolved around the obligations of the vendor under the contracts and whether the purchasers were justified in rescinding their contracts due to the vendor's non-compliance with the strata registration requirement. The court had to determine if the vendor's failure to use all reasonable endeavours to register the strata plan precluded them from rescinding the contracts, and whether the purchasers' decision to rescind was valid.

The court found that the vendor's obligation under the contracts was to use all reasonable endeavours to register the strata plan. The vendor's failure to do so meant that they could not rescind the contracts. The purchasers, having validly rescinded the contracts due to the vendor's non-compliance, were found to have acted lawfully. The court emphasised that the obligation to use all reasonable endeavours was an absolute one, and the vendor's failure to comply with it precluded them from seeking rescission. Consequently, the purchasers' decision to rescind the contracts was upheld as valid.

Given the findings, the court ruled in favour of the purchasers. The contracts were declared to be validly rescinded, and the purchasers were entitled to the return of their deposits and any other payments made under the contracts. The court's decision highlighted the importance of strict compliance with contractual obligations, particularly where such obligations are explicitly stated as being of an absolute nature. The vendors' failure to register the strata plan, despite having all the necessary information to do so, resulted in the forfeiture of their right to rescind the contracts.

Orders