Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd

[2009] NSWSC 486

CITATION:	Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd [2009] NSWSC 486
HEARING DATE(S):	30 April 2009
JURISDICTION:	Equity Division Duty Judge List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	30 April 2009
DECISION:	Caveat extended until further order
CATCHWORDS:	REAL PROPERTY – Caveat – plaintiff claims caveatable interest as purchaser under contract – defendant claims to have terminated for failure to comply with Notice to Complete – whether seriously arguable case that Notice extended – whether balance of convenience favours extension of caveat
CATEGORY:	Procedural and other rulings
PARTIES:	Golden Oceans (NSW) Pty Ltd (plaintiff) Evewall Pty Ltd (defendant)
FILE NUMBER(S):	SC 2511/09
COUNSEL:	Mr D Warren (plaintiff) Ms J Oakley (defendant)
SOLICITORS:	Trisley Lawyers (plaintiff) Robert King Solicitor (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

BRERETON J

Thursday 30 April 2009

2511/09 Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Golden Oceans (NSW) Pty Ltd is the purchaser and the defendant Evewall Pty Ltd is the vendor under a Contract for Sale dated 29 September 2008 of property situate at and known as 6 Wine Country Drive, Cessnock in the State of New South Wales, being lot 100 in Deposited Plan 72996, for a price of $3.74 million. Contracts were exchanged on 29 August 2008, when part of the deposit, being $200,000, was paid. The contract specified a completion date of 8 October 2008. The contract not having been completed by that date, the vendor served a Notice to Complete on 2 December 2008, requiring completion by 31 December. Time for compliance with that Notice was extended consensually, on 22 December 2008 to 20 January, and on 24 December 2008 to 20 February 2009.

2 For the purposes of the present application, it suffices to record the evidence of the plaintiff’s principal, Mr Glenn Carroll, according to which, on 22 December 2008, he had a conversation with the defendant’s principal Mr Neil Wallace, in which, after discussions of the proposed extension, Mr Wallace said, “Glen, I think I should be compensated”, to which Mr Carroll replied, “How much?”. Mr Wallace said “I want $40,000 plus interest. I will grant an extension to 20 February if you agree to the $40,000 plus interest. If you need further time this will not be a problem”.

3 On 24 December 2008, Evewall’s solicitors wrote to Golden Ocean’s solicitors, as follows:

Further to our letter of 22 December 2008, we are now instructed that, at your client’s request and in consideration of the sum of $40,000 plus GST to be paid by your client at settlement in addition to all other amounts due under the contract, my client will agree to extend the time for compliance with the Notice to Complete to 4pm Friday 20 February 2009.

Please confirm by return your client’s instructions.

4 On 24 December, Golden Oceans’ solicitors replied:

We are instructed our client is agreeable to the extension of time for compliance with the Notice to Complete on the terms detailed in your facsimile transmission of today.

We confirm the Notice to Complete will now expire on 24 February 2009.

5 On 23 December, there was a further conversation between the parties’ principals about a further extension of time. On 23 January, according to Mr Carroll, he telephoned Mr Wallace seeking a meeting, which took place at a restaurant in Pokolbin, in the course of which Mr Carroll foreshadowed that, due to a requirement to have a s 96 application dealt with by the Council, the matter might not be able to be completed before 3 March. Mr Carroll says that he called Mr Wallace each day from 16 February to 20 February, but did not obtain an answer. On 20 February, Evewall’s solicitors wrote to Golden Oceans’ solicitors:

I refer to previous correspondence and advise my client has not had an opportunity as yet to have a meeting with yours.

In the circumstances I am instructed to extend the period under the Notice to Complete to 4pm Tuesday 24 February 2009.

6 However, also on 20 February, Mr Wallace responded to Mr Carroll indicating that he had been ill, and they arranged to meet on 21 February.

7 According to Mr Carroll, they met on 21 February. Mr Carroll provided a progress report in respect of the s 96 application, foreshadowing that it was unlikely to go before Council until April. According to him, Mr Wallace said:

I am aware the application will not be heard until April. I do not have an issue with extending the date. The only issue I have is that I have invested a lot of money into a high yielding investment and I have borrowed money in the short term. It is costing me money with further delays in settlement. We need to come to an arrangement.

8 Mr Carroll says that he responded:

With my loan approval and delays with Council, I would need at a minimum until 10 April 2009 to settle. This should be our target date and we will need to be flexible depending on Council’s ability to assess the section 96 application within the timelines discussed. If I were to increase the purchase price by $100,000, being interest plus a gratis payment to the total of $100,000, would this be acceptable?

9 He says that Mr Wallace replied: “Yes, that is agreeable.”

10 On 24 February, Golden Oceans’ solicitors wrote to Evewall’s solicitors, as follows:

We are instructed the parties have reached an agreement regarding a further extension of time for compliance with the Notice to Complete. The Notice will expire at 4pm on 10 April 2009.

In consideration of the grant of extension our client will pay your client on settlement in addition to the balance of the purchase price an amount of $100,000 which is inclusive of any penalty interest your client is entitled to claim under the Contract.

Pleases confirm your client’s instructions as a matter of urgency.

11 However, Evewall’s solicitors wrote to Golden Oceans’ solicitors on 25 February, as follows:

I refer to my telephone conversation with Laura today. I have now spoken to my client who instructs me that he has had no further discussion with yours.

Your client having failed to comply with the Notice to Complete, my client is now considering its position and I expect to have further instructions and advise you of same by the end of the week.

12 Then, on 27 February 2009, Evewall’s solicitors served a Notice of Termination. Mr Carroll says that he made telephone calls to Mr Wallace on 24 February, 25 February, 27 February and 3 March, but was unable to speak to him. They next spoke, according to Mr Carroll, on 7 March, when he says that they had a further conversation about an extension of time, including an agreement to pay $150,000 “outside of the contract price as a consultant fee”, as consideration for a further extension.

13 On 18 March 2009, Evewall’s solicitors wrote to Golden Oceans’ solicitors demanding payment of the balance of the contractual deposit of $174,000, the agreed consideration for the extension of the Notice to Complete in December of $44,000, and interest under the contract from 28 November to 27 February of $88,000 – a total of approximately $306,000 – and foreshadowing the commencement of proceedings if not paid.

14 Golden Oceans lodged a caveat in respect of the land, number AE571103Y, on 27 March 2009, claiming an interest as purchaser under the contract. A Lapsing Notice in respect of that caveat was served on 3 April 2009. On 24 April, the last day on which it could do so, Golden Oceans applied to the Court for an order extending the operation of that caveat. White J declined to make that order, but granted leave to Golden Oceans to lodge a further caveat in identical terms, upon an undertaking to withdraw it forthwith after 30 April unless the Court extended that period. Today Golden Oceans applies, in effect, for an extension of that period in order to permit the new caveat AE632239K to remain on title.

15 On an application of this kind the issues are whether there is a seriously arguable claim to a caveatable interest and, if so, where the balance of convenience and prejudice lies.

16 The present application really turns on whether there was (arguably) an agreement to extend the time for compliance with the Notice to Complete. That, in turn, depends on the conversations said to have taken place on 21 February 2009. While it appears – from the letter from Michael Flaherty of 25 February 2009 – that this conversation is likely to be in dispute, at this stage there is Mr Carroll’s sworn evidence of it, and his evidence of a further conversation on 7 March which goes some way to explaining the otherwise apparent inconsistency of Mr Wallace’s position, at least in the context of Mr Carroll’s version. If that evidence were accepted and it cannot be said at this stage that it is impossible that it would be then that would prima facie establish an agreement to extend the time allowed by the Notice to Complete, and it would be contrary to that agreement for Evewall to have terminated on 27 February 2009.

17 It was argued that, even if accepted, the evidence could not establish such an agreement for want of consideration. That depends on the construction of the proposal to “increase the purchase price by $100,000 being interest plus a gratis payment to the total of $100,000”. It is at least arguable that the “gratis payment” was additional to the $40,000 agreed to be paid in December. That being arguable, it remains sufficiently arguable for present purposes that there was an agreement for valuable consideration to extend time for compliance with the Notice to Complete. In circumstances where, if that view were ultimately to prevail, Evewall would then have wrongly purported to terminate on 27 February, questions pertaining to Golden Oceans’ ability to complete on 10 April, or the circumstance that it did not tender payment on 10 April, would not detract from the existence of a sufficiently arguable case.

18 So far as the balance of convenience is concerned, the risk of prejudice associated with declining to grant interlocutory relief is that the purchaser’s interest under the contract might forever be lost. That is, at least potentially, a serious detriment. On the other hand, the ordinary risk of granting relief would be that the vendor would be precluded from reselling the property. There is no evidence before the Court from which it could be concluded that a delay in the defendant’s ability to resell would be of any particular prejudice. Indeed, there is no evidence of prejudice to the defendant arising from some deferral of the time at which it can exercise its remedies.

19 It is true that some doubt attends the value of Golden Oceans’ undertaking as to damages. That said, there is nothing in the material so far to suggest that any damages recoverable under any undertaking as to damages would be considerable. Moreover, Mr Carroll offers his personal undertaking in addition to the plaintiff company’s undertaking, which more than compensates for any doubt that might attend the sufficiency of its undertaking as to damages.

20 Upon Glen Carroll and Golden Oceans (NSW) Pty Limited giving to the Court the usual undertaking as to damages, I release the plaintiff from the undertaking given by it to the Court on 24 April 2009 and incorporated in order 3 of that date. Insofar as it may be necessary to do so, I order that the operation of caveat AE632239K be extended until further order. I direct that these orders be entered forthwith. Costs of the application will be plaintiff’s costs in the proceedings.

21 In the document entitled Directions, I amend paragraph 4 from “cross-claim” to “cross-summons”. I delete paragraph 5. I make directions in accordance with the document entitled Directions, as amended and initialled by me, dated this day and placed with the papers. The proceedings are adjourned to 29 May 2009 before the Registrar at 9.15. If a motion for expedition is filed, it may be made returnable before the Expedition Judge.

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