Hillam v Leduva Pty Limited - [2010] NSWSC 1360

No judgment structure available for this case.

CITATION: Hillam v Leduva Pty Limited [2010] NSWSC 1360
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 12 November 2010
19 November 2010

JUDGMENT OF: Slattery J at 1

CATCHWORDS: EQUITY - equitable remedies - specific performance - contract for sale of land - purchaser let into occupation - fails to pay occupation fees - vendor commences proceedings for possession - proceedings settled with deferral of settlement - purchaser fails to settle on adjourned date - vendor allowed writ for possession on consent judgment - subsequently purchaser obtains finance for purchase - whether plaintiff entitled to relief against forfeiture - whether plaintiff entitled to specific performance - HELD - specific performance granted.

LEGISLATION CITED: Conveyancing Act, 1919, ss 66W, 129
Residential Tenancies Act 1987, s 5
Trade Practices Act 1974, ss 51AA, 87
Uniform Civil Procedure Rules 2005, r 36.16(2)(b)

CATEGORY: Principal judgment

CASES CITED: Foran v Wight (1989) 168 CLR 385
Jobson v Johnson (1989) 11 ALL ER 621
Legione v Hateley (1983) 152 CLR 406
Matthews v Smallwood [1910] 1 Ch. 777
Meadows v Clerical and General Life Insurance Society [1981] Ch. 70
Melacare International Ltd v Daley Investments Pty Ltd (1999) 9 BPR 17,095
Metwally (No. 2) v University of Wollongong (1985) 60 ALR 68
Pioneer Quarries (Sydney) Pty Limited v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562
Platt v Ong [1972] VR 197
Rands Developments Pty Limited v Davis (1975) 133 CLR 26
Shiloh Spinners Ltd v Harding [1973] AC 691
Sloman v Walter (1783) 1 Bro CC 418; (1783) 28 ER 1213
State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29
Workers Compensation Nominal Insurer v Detailed Flooring Pty Limited [2010] NSWSC 1056.

TEXTS CITED: Butt, The Standard Contract for the Sale of Land in New South Wales, LBC Information Services 1998
Meagher et al, Equity – Doctrines and Remedies, 4th edition (2002) , Butterworths Lexisnexis

PARTIES: Plaintiff- John Frederick Hillam
Defendant- Leduva Pty Limited

FILE NUMBER(S): SC 2010/287070

COUNSEL: Plaintiff-D.A. Smallbone
Defendants- A.M. Gruzman

SOLICITORS: Plaintiff-Holman Webb lawyers
Defendants- McBride Harle & Martin solicitors

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SLATTERY J

MONDAY, 20 DECEMBER 2010

2010/287070 JOHN FREDERICK HILLAM v LEDUVA PTY LIMITED

JUDGMENT

1 HIS HONOUR: The plaintiff, John Frederick Hillam, seeks specific performance of a contract to purchase a residential apartment in Henderson Road, Alexandria. The vendor and defendant, Leduva Pty Limited resists the grant of this relief. Mr Hillam claims that the contract for sale, originally made on 8 January 2008, was varied by a further agreement recorded on 30 June 2010 in Short Minutes of Order in possession proceedings in the Common Law Division of this Court (295808/2009). Leduva agrees that the 8 January 2008 contract for sale of the Alexandria apartment was varied in June this year but says that Mr Hillam defaulted on the varied terms and that as a result it has validly terminated the varied contract. Leduva says there is now no contract for Mr Hillam to have specifically performed.

2 Mr Hillam says that Leduva is getting ahead of itself because it has not yet even terminated the varied agreement. But Mr Hillam concedes that he must first obtain relief against forfeiture under the June 2010 varied terms before seeking specific performance. He says that on discretionary grounds both relief against forfeiture and specific performance should be granted here.

3 Mr D. Smallbone of counsel appeared for Mr Hillam and Mr A. Gruzman of counsel appeared for Leduva. These reasons do not identify the exact address or title details of the Alexandria apartment or of any party or witness in conformity with the Court’s policy of reducing the risk of identity theft through the Court’s published judgments.

4 These proceedings already have a complex history, which starts with the 8 January 2008 contract.

Background

Sale of the Alexandria Apartment

5 By contract for sale of land dated 8 January 2008 Leduva agreed to sell the Alexandria apartment to Mr Hillam. The contract itself set a date for completion exactly 12 months later, on 8 January 2009. If completion was not effected by the nominated completion date, special condition 3 dealt with the outcome which was that either party would be entitled to issue a notice to complete requiring completion within a further period of 14 days. Special condition 3 provided:

“3. Notice to Complete

That if the completion of this Contract is not effected by the completion date, then either party shall be entitled to issue a Notice to Complete requiring completion within a further period of fourteen (14) days from the date of service of such notice and in respect of that time shall be of the essence.

6 The purchase price of the Alexandria apartment was $795,000. A deposit of $79,500, being 10% of the purchase price was paid as to $6,500 on exchange and the balance of $73,000 was immediately due and payable at the earlier of completion or the nominated completion date of 8 January 2009 (special condition 12).

7 The January 2008 contract was in the form of the 2005 edition of the Law Society of New South Wales/Real Estate Institute of New South Wales Contract for the Sale of Land. In addition, the contract contained three special conditions relevant to the arguments now deployed by the parties.

8 First, a penalty interest clause (Special Condition 3) provided that if completion did not occur on or before the completion date as a result of the default of the purchaser then, provided the vendor was ready willing and able to complete on the completion date, the purchaser was entitled to claim interest on the unpaid balance of the purchase price at the rate of 8% after the actual date of completion.

9 Second, the building is a new building. The vendor is associated with the developer. The purchaser was entitled (by special condition 14) to notify the vendor of any defects or faults due to faulty materials or workmanship, which may appear in the property within three months after the date of completion and provided that the defects so notified did not include fair wear and tear, then the vendor was obliged to make good such notified defects or faults good at its own cost.

10 Third, the contract acknowledged that Mr Hillam had already taken up occupation of the Alexandria apartment from 23 August 2007. Special Condition 16 gave Mr Hill an entitlement to "exclusive possession” of the property until completion but on terms that have become the source of the issues now being agitated between the parties. That entitlement was on terms that Mr Hillam paid an occupation fee of $1,000 per week in advance calculated from 23 August 2007 up to completion. Special condition 16 provided:

“16. Occupation by Purchaser

(a) An occupation of $1,000 per week calculated from 23 August 2007 to the date of completion; and

(b) The occupation fee is to be paid weekly in advance and is to be paid direct to the Vendor as the Vendor shall in writing direct; and

(c) If any given weekly occupation fee remains unpaid for a period of not less than 28 days after the date due for payment, such time being of the essence, then the Vendor may terminate this contract.

later than fourteen (14) days after the completion date, and in this respect time is of the essence, the total of the occupation fee paid by the Purchaser (and provided that the occupation fee is paid in accordance with the provisions of this Clause as and when it falls due by the Purchaser to the Vendor), shall be credited towards the balance of the purchase price payable on completion.

(ii) However, if completion of this Contract does not occur on or before fourteen (14) days after the completion date (and in this respect time is of the essence), then the total occupation fee paid by the Purchaser will be forfeited to the Vendor and no credit shall be given to the Purchaser whatsoever.

(iii) The Vendor shall not be entitled to forfeit the total occupation fee under clause 16(c)(ii) if completion does not occur on or before 14 days after the completion date as a direct or indirect result of any default or other act or omission on the part of the Vendor.”

11 The parties are now in contest as to whether these clauses are still operative after the variation effected by the June 2010 agreement.

January 2008 to June 2010.

12 The vendor and purchaser had a troubled legal relationship from the first. During the two and a half years from the making of the contract in January 2008 through to the June 2010 agreement that varied it, Mr Hillam was alleged to have been in default in the payment of occupation fees. Leduva attempted several times in 2009 to terminate the January 2008 contract but later accepted payments of occupation fees. Mr Hillam says that Leduva agreed to extend the date for completion. The January 2009 completion date was not met and in August 2009 Leduva commenced the possession proceedings.

13 Mr Hillam’s alleged non-payment and Leduva’s attempts at termination continued. Although Mr Hillam says that the events of this period before the June 2010 agreement are irrelevant, they have nevertheless featured in the parties’ arguments. It is difficult to make any findings on the contested versions of the facts during this time, because there has been very little examination of the competing versions in cross-examination. I have decided that is not necessary to determine these issues as they were all compromised in the making of the June 2010 agreement. But a short account of them is nevertheless useful.

14 Mr Hillam says that between 27 August 2007 and 1 May 2009 he paid a sum of $101,000 either in cash or by way of bank cheque on account of the continuing Special Condition 16 (a) occupation fees of $1000 per week. He says that he was up to date with these payments. Leduva’s principal witness, Mr Amerr Taouk disputed that some of these payments had been made and further contended that in addition to the payments actually made Mr Hillam had provided a number of cheques that had been dishonoured. Mr Hillam did not admit that his cheques had been dishonoured.

15 Leduva twice issued notices to complete and then notices to terminate to Mr Hillam between January 2008 and the commencement of the possession proceedings in August 2009. These notices were issued after the passing of the contractual completion date of 8 January 2009. Leduva issued a 14 day notice to complete on 3 February 2009 and a notice of termination on 24 February 2009 after Mr Hillam neither completed nor paid the balance of the deposit of $73,000 by 17 February 2009. Mr Hillam contended that Leduva was not in a position to complete by reason of a defect in title. On 26 February 2009 Leduva accepted a payment of $9,000 from Mr Hillam on account of occupation fees. Then on 23 April 2009 Leduva issued another notice to complete followed by a notice of termination on 12 May 2009. Leduva accepted payments of occupation fees from Mr Hillam after this date.

16 Leduva commenced its proceedings for possession in August 2009. It alleged that it had terminated the January 2008 contract on account of Mr Hill's non-payment of occupation fees and his failure to complete the contract on 9 January 2009. Mr Hillam alleged in his defence that throughout the same period Leduva was not ready willing and able to complete the 8 January 2008 contract and consequently could not issue a notice to complete to Mr Hillam, because of a defect in title due to various flaws in the Alexandria apartment building. These flaws had by then been identified by building consultants and consulting engineers. Mr Hillam alleged that he was not obliged to settle until the defect in title was rectified.

17 After the commencement of the possession proceedings, according to Leduva, Mr Hillam again defaulted in payment of the occupation fee and in completing the contract for sale. Leduva issued a notice to complete on 22 October 2009. After a failure to complete on 9 November 2009, Leduva issued a notice of termination on 1 February 2010. There do not seem to have been any payments on account of occupation fees accepted by Leduva from Mr Hillam after 1 February 2010.

18 There was a vast gulf between the allegations on each side as to what had been paid on account of occupation fees. Leduva alleged that as at the date of statement of claim in the possession proceedings that 127.5 weeks occupation fees (amounting to $127,500) were due of which $56,500 had been received on account, leaving a balance due of $71,000. Mr Hillam was alleging that he had paid $101,000 over the shorter period from August to 2007 to May 2009.

19 The calculation of occupation fee payment figures on both sides is quite strange. Leduva’s claim that 127.5 weeks had passed between 23 August 2007 and 12 August 2009 is obviously wrong. The period between these two dates is closer to 100 weeks. On the other hand Mr Hillam does not seem to be able to produce cash receipts for the cash payments that he alleges were made to Leduva. Moreover, if he had paid $101,000 during the period 27 August 2007 to 1 May 2009 he was about $13,000 or $14,000 ahead in his payments for that period.

The June 2010 variation agreement

20 The possession proceedings brought matters to a head. On 26 May 2010 Short Minutes of Order were filed in those proceedings. The May 2010 Short Minutes of Order included a consent judgment in Leduva’s favour in the sum of $140,000 which it was agreed could be entered one year later on 29 May 2011 if that amount had not by then been paid. That consent judgment then became the subject of the June 2010 agreement, which was made on 28 June 2010 and entered as court orders on 30 June 2010.

21 The June 2010 agreement provided for a series of steps to cover most contingencies that might arise after attempts were made to complete the contract for sale. The June 2010 agreement sought to cover the possible scenarios whether the contract was completed or not. The terms included an escrow period after which the vendor Leduva would in certain circumstances be at liberty to enter judgment against Mr Hillam in accordance with the May 2010 Short Minutes of Order. The June 2010 agreement relevantly provided:

“BY CONSENT the Court orders that:

1. The proceedings be stood over to 30 July 2010 for directions; and

2. There be liberty to restore on 3 days notice.

3. The Defendant will pay to the Plaintiff the sum of $750,000 on or before 25 July, 2010 (the balance of the purchase price);

4. On receipt of the balance of the purchase price, the Plaintiff will convey to the Defendant all of the land comprised in Certificate of Title Folio Identifier SP17/77095 (the Property) and the subject of the Contract of Sale between the parties dated 8 January 2008;

5. The Defendant will pay to the Plaintiff the sum of $140,000 on or before 25 May 2011 (the further payment);

6. On transfer by the Plaintiff to the Defendant of the Property, the Defendant will execute a mortgage in favour of the Plaintiff to secure payment of the further payment (such mortgage to rank second behind any incoming first mortgagee which first mortgage shall secure a principal sum of no more than $640,000). The mortgage in favour of the Plaintiff shall be registered only in the event of any default in payment under paragraph 5 above however the Defendant acknowledges that the Plaintiff shall be entitled forthwith on execution to lodge a caveat recording such mortgage interest. The sum of $140,000 shall be a charge on the Property, such charge to be secured by caveat until the sum referred to in paragraph 5 is paid;

7. In the event that the Defendant fails to pay the balance of the purchase price on or before 25 July 2010, the Plaintiff shall on 30 July 2010 be at liberty to enter judgment against the Defendant;

(a) for possession of the Property;

(b) writ of possession to issue forthwith;

8. In the event that the Defendant pays the balance of the purchase price, the proceedings will be adjourned by consent to 29 May 2011;

Civil Procedure Act

11. The orders referred to in paragraph 7 and 9 above have been executed by the Defendant and are held in escrow by the solicitor for the Plaintiff provided that:

(a) in the event that the Defendant complies with paragraphs 3, all the orders referred to in paragraph 7 shall be returned to the solicitor for the Defendant forthwith on completion of the sale of the Property; and

22 The sum of $750,000 described in the June 2010 agreement as “the balance of the purchase price” was calculated as representing the original purchase price of $795,000 less $45,000, which Mr Hillam had by then already paid in reduction of the purchase price.

23 Mr Hillam did not pay Leduva $750,000 before the extended date of 25 July 2010. It is common ground though that Mr Hillam paid $40,000 on 29 June 2010 and that the consequent obligation on 25 July 2010 was for Mr Hillam to pay the balance of $710,000. Once the 25 July 2010 deadline had expired Leduva’s solicitors acted. In a letter on 29 July 2010 they notified Mr Hillam’s solicitor that “we are instructed to enter judgment tomorrow, 30 July 2010”.

24 On 30 July 2010, true to its word, Leduva entered judgment against Mr Hillam in the possession proceedings. There was no appearance for Mr Hillam in the Common Law Division directions list before the Registrar that day to oppose Leduva entering judgment. Leduva says that that judgment was entered regularly on 30 June 2010 in accordance with the compromise agreement of 26 May 2010 and the Short Minutes of Order dated 28 June 2010. No formal application to set aside the judgment entered on 30 July 2010 has been made. Leduva contends that no grounds to set aside the judgment could be made out in any event. This is because Leduva says that final judgment was entered by consent pursuant to the earlier orders and in the possession proceedings the Court is now functus officio. Mr Hillam counters this by pointing out that Equity, which acts in personam can direct Leduva not to act upon the June 2010 consent orders.

25 After entry of the judgment on 30 July 2010, the parties re-activated the possession proceedings. Leduva sought and obtained the issue of a writ for possession of the Alexandria apartment. Mr Hillam moved for orders staying execution of the writ for possession.

26 On 26 August 2010 Rothman J stayed execution of the writ of possession. His Honour stayed the writ until 31 August 2010 but expressed some doubts that the unconscionability case Mr Hillam was advancing came within the limited circumstances in which the Court was empowered to set aside a consent judgment. His Honour ordered mediation and listed the matter before the Common Law Division Duty Judge on 31 August 2010.

27 In the meantime, on 27 August 2010 Mr Hillam filed the Statement of Claim that commenced these proceedings. Importantly also on the same day he received notification of an approval for finance to complete the purchase from a financier, Liberty Financial Pty Limited. The approval was for the purchase of the Alexandria apartment in the name of CFM Media Holdings Pty Limited with Mr Hillam as guarantor of repayment of the loan monies to Liberty Financial, a matter which has created its own issues in the proceedings.

28 On 31 August 2010 Schmidt J extended the stay on the writ of execution on condition that Mr Hillam paid a weekly occupation fee of $1,000.00 on the terms of an undertaking he had offered to the Court. Mr Hillam advanced to Schmidt J the case that was argued in these proceedings: that the January 2008 contract was still on foot; that time was not of the essence; that Mr Hillam was still entitled to pursue specific performance; that the question of staying the writ of possession was a matter of the balance of convenience, pending completion of the contract after the grant of specific performance; and, that in any event as judgment had been entered in the absence of Mr Hillam on 30 July 2010 that it should readily be set aside.

29 This outline of facts is sufficient to introduce the issues for determination. Other factual disputes are determined in the course of dealing with particular issues in these reasons.

Issues

30 On the basis of the above facts the plaintiff seeks specific performance of the contract of 28 January 2008 as varied by the June 2010 compromise agreement. The claim for this relief raises a number of issues, which were gathered into a structure under which the parties organised their closing submissions.

31 The three principal issues were: whether the plaintiff was entitled to relief against forfeiture of his interest in possession of the property; whether the plaintiff is entitled to set aside the consent orders entered in the Common Law division on 30 June 2010; and, whether the plaintiff is entitled to specific performance of the 8 January 2008 contract for sale as varied by the June 2010 agreement. The first of these issues was an ancillary question that it became convenient to consider at the outset in order to show its subsidiary relationship to the other issues. The second issue relating to the June 2010 consent orders is one that Leduva raised as a preliminary obstacle to Mr Hillam claiming any relief by way of specific performance. Finally, Mr Hillam’s claim to specific performance itself raised many sub-issues, the most prominent of which was whether he had established that he was ready willing and able to complete the contract.

32 These three issues generated the following sub issues.

UCPR

in personam

Conveyancing Act

Trade Practices Act

i Was the contract still in existence after the compromise?

33 The parties used this structure in final submissions. It is convenient to adopt the same structure in these reasons. These three issues with their various sub-issues are now considered in turn.

1. Is the plaintiff entitled to relief against forfeiture of his interest in possession of the property?

34 Mr Hillam seeks relief against forfeiture of his interest in possession of the Alexandria apartment pending completion of the sale: prayer for relief 7. He also seeks an order pursuant to Conveyancing Act 1919 s129 (2) granting relief against forfeiture of his interest in possession pending completion: prayer for relief 8. Mr Hillam’s counsel, Mr Smallbone rightly described these claims as “less important”, on the basis that if the contract for sale is specifically performed Mr Hillam or his nominee would obtain the fee simple. So these claims are advanced to protect his interest in possession as lessee until completion.

35 This claim is subsidiary. It depends on the success of Mr Hillam’s claim that the contract has not been terminated and is capable of specific performance and should now be specifically performed. The June 2010 agreement contemplated that Mr Hillam would remain in possession until completion. Mr Hillam does not contend that the right to possession would survive a valid termination.

36 Mr Hillam raises a number of issues about the general availability of relief against forfeiture under the June 2010 agreement which are considered below in connection with issues 2 (a) and (c). All that is considered here are the matters that were specifically argued under Issue 1.

a What is the basis for any such relief against forfeiture?

37 Mr Hillam contends that as a matter of construction of the June 2010 agreement that the provision of the consent order was in the nature of security for the performance of Mr Hillam’s primary contractual obligation to pay the agreed balance on completion of the sale. Because they have that character, he contends that they are the proper subject of his claim for relief against forfeiture.

38 I accept the validity of this submission and agree that the June 2010 compromise may be the proper subject of relief against forfeiture. Clauses 3 and 4 of the June 2010 agreement contain the primary contractual obligation of the parties, as varied, to complete the purchase: for the purchaser to pay $750,000 in exchange for the vendor conveying the title to the Alexandria apartment. Clauses 5 and 6 provide for the payment of the further sum of $140,000 before 25 May 2011 and for its future payment to be secured over the Alexandria apartment after completion. Clause 6 is really a security for the performance of the payment obligation in clause 5. The consent order in clause 7 giving Leduva liberty to enter judgment for possession of the Alexandria apartment and judgment for $140,000 is a security for the performance of Mr Hillam’s obligations in clauses 3 and 5. Finally clause 11 of the June 2010 agreement records that consent orders to allow the entry of judgment in accordance with clause 7 have actually been executed, are being held in escrow, and may be returned relevantly upon compliance with clause 3 of the June 2010 agreement.

39 The entry of judgment for possession, the acceleration of the $140,000 liability otherwise payable in May 2011, and the associated order for costs are all a security for the performance of the obligation to pay $750,000 to complete the contract for sale. The plaintiff’s contention is correct that as a result the forfeiture that occurred on breach in respect of each of these three matters is the proper subject of Mr Hillam’s equitable claim for relief against forfeiture. This flows from consideration of the applicable equitable principles.

Relief against Forfeiture

40 Equity has unlimited and unfettered jurisdiction to relieve against contractual forfeitures and penalties; what have sometimes been seen as fetters to the jurisdiction are more properly to be seen as considerations that the Court will weigh in exercising an unfettered jurisdiction: Shiloh Spinners Ltd v Harding [1973] AC 691 at 726-7 per Lord Simon and see R Meagher et al, Equity – Doctrines and Remedies, 4^th edition (2002) , Butterworths Lexisnexis at [18-010]. The jurisdiction does not involve a general dispensing power with respect to oppressive bargains but applies to contracts involving the transfer of proprietary or possessory rights: Melacare International Ltd v Daley Investments Pty Ltd [1999] NSWSC 496; (1999) 9 BPR 17, 095. The jurisdiction relates to penalties which are in the nature of punishment for non-observance of a contractual stipulation and forfeitures which are in the nature of the loss or determination of an estate or interest in property or a proprietary right, in consequence of a failure to observe a covenant: see Legione v Hatley (1983) 152 CLR 406 at 445 per Mason and Deane JJ.

41 An applicant seeking relief from forfeiture must establish first that the Court has jurisdiction, before demonstrating that the applicant is entitled to relief: Meadows v Clerical and General Life Insurance Society [1981] Ch. 70 at 74. The termination of performance of a contract deprives a party of the benefits that may be expected from future performance of the contract. To counter this effect, a contract may enable the promisee to retain money paid under the contract by providing that such money is forfeited if the contact is discharged. The Court does not have general jurisdiction to relieve against the loss of benefit of a contract, however there is jurisdiction to grant relief against the forfeiture of money or property.

42 The jurisdiction is commonly exercised in the case, as with equitable jurisdiction generally, of fraud, accident, surprise or mistake: Matthews v Smallwood [1910] 1 Ch. 777. But historically a broad view has been taken of the possible circumstances in which these concepts operate: see Meagher et al, Equity – Doctrines and Remedies, 4^th edition (2002), Butterworths Lexisnexis at [18-010].

43 The court may offer relief from forfeiture in a wide variety of forms. The Court may order the repayment of money, grant an injunction based on the performance of the terms of the contract, or make an order for specific performance: Legione v Hateley (1983) 152 CLR 406.

44 Relief against forfeiture often involves considerations of whether the contractual object is still capable of attainment. As Lord Wilberforce stated Shiloh Spinners Ltd v Harding [1973] AC 691 at 723 the Court will intervene:

“where the primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the court, and where the forfeiture provision is added by way of security for the production of that result.”

45 In order to claim relief the party seeking relief must have a sufficient interest in the object of the contract. The object of the bargain must not only still be attainable but also be one in respect of which it is appropriate for the Court to grant relief.

46 Whether it is appropriate for the Court to grant relief is determined by whether it is unconscionable to allow the forfeiture to remain although the necessity to establishing unconscionability has been much debated: Meagher et al, Equity – Doctrines and Remedies, 4^th edition (2002), Butterworths Lexisnexis at [18-145]. Internal considerations that may limit the cases in which Equity will relieve against forfeiture include: whether it is reasonable to require a party who is prima facie entitled to invoke a forfeiture or penalty clause to accept alternative relief; whether vindication of contractual rights would be excessive and harsh having regard to the damage actually done to the promisee; and, whether there is moral culpability on the part of the promisor: Shiloh Spinners Ltd v Harding [1973] AC 691 at 726-7 per Lord Simon and see Meagher et al, Equity – Doctrines and Remedies, 4^th edition (2002), Butterworths Lexisnexis at [18-010].

Applying the principles in relation to relief against forfeiture

47 Clauses 7 and 11 of the June 2010 agreement attract Equity’s jurisdiction to relieve against forfeiture. These clauses are both in the nature of a forfeiture (the loss of possession) and a penalty (the acceleration of the payment of $140,0000 from May 2011 to July 2010) imposing an additional liability on breach. They are the appropriate subject matter of the Court’s jurisdiction to relive against forfeiture. Whether or not such relief should be granted, based on the principles identified, is discussed in relation to issue 2.

48 Leduva sought to argue that there was no forfeiture here on two grounds. But its arguments were not persuasive. Leduva pointed to the fact that the judgment was entered on 30 July 2010 pursuant to executed consent orders, which were not an interest in land. As Mr Gruzman said, “it was a consent rather than a forfeiture”. But the consent orders held in escrow under clause 11 were merely the mechanism by which the performance of the promise in clause 3 was performed. They were in that form to achieve an effective capacity to quickly enter judgment. That judgment was entered not only pursuant to consent orders but also after and conditional upon a default in payment of the purchase price, which default triggered the loss of possession and an additional monetary payment defined in the consent orders.

49 Next Leduva argued that there was no jurisdiction to grant relief because Mr Hillam was advancing as the new purchaser a third party, CFM Media Holdings Pty Limited, a private company of which he is the sole director and holds 50% of the share capital. Leduva argued that it was really CFM that was seeking relief against forfeiture and the remedy was therefore not available to Mr Hillam.

50 This argument is not valid. Mr Hillam did propose in negotiation that Leduva enter into a new contract for CFM to purchase the Alexandria apartment. But before the Court he was content to rely upon his undoubted right, subject to the form of the contract, to nominate a purchaser under the existing contract through a transfer by direction: Rands Developments Pty Limited v Davis (1975) 133 CLR 26 at 31. There is no contrary provision in either the January 2008 contract or the June 2010 agreement. Mr Gruzman also identified on behalf of Leduva some differences between the form of contract he thought Mr Hillam was now proposing on behalf of CFM and the original January 2008 contract. But this argument also falls away in light of Mr Smallbone’s reliance on the original contract.

51 In summary, the provisions of clauses 7 and 11 of the June 2010 agreement are such as may attract an exercise of the Court’s jurisdiction to relieve against forfeiture.

b Should such relief be granted now or is it interdependent with the grant of any other remedies?

52 I agree with Mr Hillam’s submission that the claim for relief against forfeiture was really there to protect his interest in possession as lessee until completion. It stands or falls with his claim that the contract is still on foot and ought to be performed. The defendant did not really contest the correctness of this position. The real question is whether the Court should grant relief against forfeiture in this case.

2. Is the plaintiff entitled to set aside the consent orders entered in the Common law Division on 30 July 2010?

53 Leduva contends that the consent judgment in the possession proceedings cannot now be set aside and that it represents therefore an insuperable obstacle to the grant of relief against forfeiture and specific performance of the contract.

54 In this section I reject this argument in its various sub issues and I find that if the Court is otherwise prepared to grant relief by way of specific performance that it is not necessary to set aside the consent orders in the possession proceedings. Equity can grant relief by staying the operation of the consent orders until completion and then a permanent stay can be put in place.

a What parts of those orders were a forfeiture?

55 These reasons have already identified the parts of the June 2010 agreement which attract the Court’s jurisdiction to grant relief against forfeiture.

b Can the orders now be set aside?

56 The consent orders do not need to be set aside if relief against forfeiture is warranted.

i Are the consent orders final so they cannot be set aside?

57 The defendant argues that the consent orders in the possession proceedings are final and cannot be set aside. I agree with the plaintiff’s submission that describing the consent orders as “final” does not address the Court’s longstanding equitable jurisdiction to enjoin execution upon a common law judgment if the judgment creditor’s conscience is bound to that course, where for example the forfeiture exceeded the actual damage found upon the trial of the issue: Meagher et al, Equity – Doctrines and Remedies, 4^th edition (2002) , Butterworths Lexisnexis at paragraphs [18-060] and [18-070] and Sloman v Walter (1783) 1 Bro CC 418; 28 ER 1213 and Jobson v Johnson (1989) 1 ALL ER 621; (1989) 1 WLR 1026.

58 The act of forfeiture was the act of obtaining the orders of 30 July. If exercise of the jurisdiction to relieve against forfeiture is warranted in this case, it is not necessary for Equity to set aside the judgment. The relief Mr Hillam seeks in prayer 10, restraining Leduva from enforcing the judgment for possession would be sufficient. The writ for possession now lies in Court and is incapable of immediate execution. If relief against forfeiture is warranted the convenient course is to maintain the present situation and leave in place the stay imposed by Rothman J and continued by Schmidt J until Mr Hillam has, if he is entitled to it, the benefit of specific performance. If he is not entitled to specific performance then the stay can be lifted. The plaintiff does not ask for relief against forfeiture, if he is not found to be entitled to specific performance.

ii Can they be set aside under UCPR r36?

59 Leduva points to the restricted circumstances in which consent orders may be set aside. Uniform Civil Procedure Rules 2005, r 36.16(2)(b) relevantly provides:

(a) it is a default judgment (other than a default judgment given in open court), or

(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or

60 The exercise of the Court’s discretion under UCPR, r 36.16(2)(b) to set aside orders regularly entered has been well described in authority. The approach to be taken is defined in the joint judgment of Gibbs CJ, Mason J, Wilson J, Brennan J, Deane J and Dawson J in Metwally (No. 2) v University of Wollongong (1985) 60 ALR 68; (1985) 59 ALJR 481 at 482-3; [1985] HCA 28. The power must be exercised with great caution after weighing what otherwise might be irremediable injustice against the public interest in maintaining the finality of litigation: see also State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29 at 38; (1982) 72 ALR 289. This provision has also been closely analysed by Barrett J in Workers Compensation Nominal Insurer v Detailed Flooring Pty Limited [2010] NSWSC 1056.

61 But I agree with the plaintiff’s submission that if relief against forfeiture is otherwise warranted that UCPR, r 36.16(2)(b) is irrelevant. For the reasons previously explained the consent orders do not need to be set aside.

iii Can equity here order the defendant to participate in setting aside the orders and if so are there any discretionary or other reasons preventing the grant of such in personam relief here?

62 Mr Hillam contends that there are no discretionary bars pleaded to the grant of relief against forfeiture and therefore none can now be relied upon. It is true that neither laches nor any other recognised discretionary bar to equitable claims has been pleaded. I accept the plaintiffs’ submission that no discretionary bar can be relied upon to deny an entitlement to relief. The real issue is whether the plaintiff has made the ingredients for relief against forfeiture.

63 If Mr Hillam can show he is willing, ready and able to have the contract specifically performed and there are no other discretionary defences which would prevent that remedy being granted then there is no thing which would prevent Mr Hillam having a grant of relief against forfeiture.

64 The Court should grant relief against forfeiture here for several reasons: it is still possible to achieve the object of the original agreement to sell the Alexandria apartment; Mr Hillam is willing to pay the sum for which the consent orders are an escrow security; he is ready, willing and able to complete the contract; he acted quickly to commence these proceedings, on 27 August 2010 the very same day that Liberty Financial approved finance for completion and barely two days after the due date for completion under the June 2010 agreement; but for the costs it has incurred in these proceedings, which can be the subject of separate costs orders, Leduva does not suffer greatly from allowing the contract to be enforced; and, despite his earlier defaults, which have mainly been related to occupation fees (traditionally not an essential matter for which termination would be permitted see P. Butt, The Standard Contract for the Sale of Land in New South Wales, LBC Information Services 1998) it has not been established that his professed reason for non-payment because of a defect in title was without merit.

65 Mr Hillam also contended that Leduva had refused to and was unwilling to accept the payment of the secured sum when it was offered in July/August 2010. But this contention was mixed up with Mr Hillam’s offers of alternative contracts with CFM as a purchaser and I find that the contention was not clearly made out.

c Was the defendant required to give notice under Conveyancing Act 1919, s 129 before effecting any forfeiture by these orders?

66 Mr Hillam additionally contended in relation to the issue of relief against forfeiture that Leduva was required to but had failed to give Mr Hillam notice under Conveyancing Act s129 before effecting the forfeiture of his lease, upon the entry on judgment on 30 July 2010. Mr Hillam contended that the January 2008 contract for sale, including special condition 16, coupled with the plaintiff’s prior entry into possession in August 2007 amounted in the circumstances to the grant of a lease to him. The June 2010 agreement varied the terms of that lease to make it a condition of the leasehold interest that the plaintiff pay $750,000 by 25 July, 2010 failure upon which would warrant forfeiture of the leasehold. Mr Hillam’s contention is that this falls within the scope of Conveyancing Act s 129. Leduva’s failure to serve a Conveyancing Act s 129 notice contravenes that section and the plaintiff is consequently unable to act on the forfeiture for this additional reason. Leduva’s contention in contrast is that there is no lease in existence between the plaintiff and the defendant.

67 This argument does not add much to Mr Hillam’s case. The statutory power to relieve under Conveyancing Act, s 129 is generally speaking co-extensive with the inherent power of a court of Equity to give such relief: Platt v Ong [1972] VR 197 at 198 and Pioneer Quarries (Sydney) Pty Limited v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562 per Hope J.

68 A difficulty with Mr Hillam’s argument is that it appears to be inconsistent with his pleaded position in the possession proceedings. Mr Hillam admitted in his defence to the possession proceedings that he was not a tenant. He now says that is wrong and was an allegation as to a matter of law not of fact. As the Court’s discretion under Conveyancing Act s 129 is co-extensive with its existing discretion, a decision on the application of Conveyancing Act s 129 will not make any difference to the outcome of this case. It is not necessary therefore for the Court to decide this issue.

d Is the costs order a penalty and liable to be set aside on that ground?

69 The costs orders included in the judgment that may be entered pursuant to clause 7 (iii) of the June 2010 agreement are also a penalty. Under clause 10 of the June 2010 agreement upon completion and payment of the additional $140,000, the possession proceedings were to be discontinued by consent with no order as to costs and with all existing costs orders vacated. The damages which would flow from the breach complained of, namely the failure to pay the $750,000 on completion of the sale of the Alexandria apartment on time and in accordance with the June 2010 agreement, bear no obvious relationship to the costs of the whole of the possession proceedings which had already been incurred since August 2009. The costs order is a penalty and is also liable to be set aside.

70 The costs orders in these proceedings will need to be the subject of separate argument in the light of this judgment. I find later in these reasons that Mr Hillam is entitled to specific performance. But he is seeking an indulgence by way of relief against forfeiture. Leduva’s actual costs of the default associated with these proceedings may come into prominence in the course of that debate.

71 When considering Clause 7 (iii) it is appropriate to observe that the acceleration of the $140,000 is also a penalty. Mr Gruzman sought to identify the sum itself as a compromise and it clearly represented a commercial figure to cover many things that were alleged to be outstanding on Mr Hillam’s side in June 2010, including occupation fees and legal costs. Paid in May 2011 it was an unexceptionable compromise figure to cover these matters. Mr Gruzman pointed out that there was no claim for interest within the judgment even though there was interest chargeable on the default. Neither party called evidence to show how this sum was calculated. The plaintiff only contended that its acceleration was a penalty and I infer that it was, because the acceleration of the payment did not bear any obvious relationship with Leduva’s loss due to Mr Hillam’s default.

e Are the orders of 30 July 2010 liable to be set aside under Trade Practices Act 1974 (Cth), s 87 because the defendant engaged in any conduct in contravention of Trade Practices Act 1974 (Cth), s 51AA.

72 The Trade Practices Act 1974 (Cth), s 51AA claim fell away at trial. Mr Hillam relied for the claim under Trade Practices Act s 51AA and s 87on the same grounds that might otherwise enliven equitable jurisdiction. Mr Hillam did not argue, in the end, that s 51AA widened the scope of relief in any way or changed the nature of the exercise of the Court’s discretion to grant relief.

3. Is the plaintiff entitled to specific performance of the contract for sale as varied by the compromise agreement?

73 There are many differences between the parties on issues of specific performance. Mr Hillam says the January 2008 contract for sale is still on foot and can still be performed. Leduva says the contract for sale has been terminated and is incapable of further performance. These issues arise before the Court considers the features of the remedy sought.

74 Leduva also argues that there is an issue estoppel in relation to the action brought by Leduva Pty Limited. The plaintiff argues that the consent judgment which was entered was merely a security for performance of the orders. There is dispute between the parties as to what is owed and how much is still required under the purchase price to be paid to allow the purchaser to call for completion of the contract.

75 The defendants argument against specific performance of the contract is headed by the contention that specific performance of the contract for sale would require compliance with all its terms including payment under the occupation fees under the contract. The defendant asserts that there can be no dispute that a substantial sum was payable for the occupation fees but that no tender of that sum has been made. Leduva uses Mr Hillam’s non-payment of occupation fees in another way. Leduva claims that the non-payment of occupation fees demonstrates his lack of readiness, willingness and ability to complete the contract affording it a further defence.

76 The defendant challenges Mr Hillam’s readiness, willingness and ability to complete the contract. Mr Hillam, the plaintiff, bears the onus of proof of establishing his readiness, willingness and ability to complete the contract once the matter was put in issue. Much of these proceedings have been concerned with proof of that question.

a What, if any, is the effect of the any earlier terminations of the contract before the compromise of the common law proceedings?

77 An initial question arises as to how much of Mr Hillam’s conduct is relevant to assessment of the discretionary remedy of specific performance that he seeks.

i Can the defendant rely on any conduct of the plaintiff before 25 July 2010 or on such earlier terminations and if so on what basis?

78 The plaintiff says that the Court cannot have regard to terminations of the contract before 25 July 2010. The plaintiff says that what can be taken into account is the relevant failure to tender the $710,000, balance of the purchase price on 25 July 2010 being the unpaid balance of the $750,000 agreed under clause 3 of the compromise. Mr Hillam’s case is that in the June 2010 agreement Leduva abandoned any right or claim to rely on earlier alleged breaches of contract. Moreover, Mr Hillam contends that the issues raised in the possession proceedings are of no further significance as it was the purpose of the compromise agreement to resolve the disputes in those proceedings. It follows the plaintiff says that the cross-examination of Mr Hillam on these issues has largely been irrelevant.

79 I agree with Leduva on this issue. The present readiness, willingness and ability of Mr Hillam to complete the Contract for Sale is an ingredient of his establishing an entitlement to the remedy of specific performance. To determine the question of his readiness, willingness and ability to perform the contract the circumstances surrounding prior terminations of the contract as varied and its predecessors are of some relevance. Leduva submits that those prior terminations assist in establishing Mr Hillam’s lack of capacity to complete. I agree that the earlier terminations can be relevant to that issue. The 2010 agreement is not a protective shield that prevents the Court looking backwards in time before that date at otherwise relevant evidence on the issue of readiness, willingness and ability to complete. Accordingly the Court will take those matters into account. However the evidence establishes that there are recent events such as the Liberty Financial approval that caution against giving too much weight to these earlier events.

80 Mr Hillam has an alternative argument. He says that if the earlier purported terminations are relevant that Leduva resiled from those terminations by giving fresh notices to complete and making fresh attempts to terminate.

81 Mr Hillam’s alternative argument has some merit. With the exception of the February 2010 termination, Leduva seems to have accepted occupation fees after serving notices of termination. It is difficult therefore in my view to make much of the two earliest alleged terminations in 2009 because Leduva seems to have subsequently abandoned them.

ii Can the plaintiff rely on any of the defendant’s conduct prior to 25 July 2010 and if so on what basis?

82 Mr Hillam no longer seeks to assert he is entitled to credit occupation fees he has paid against the balance agreed in clause 3 of the June 2010 agreement. Rather Mr Hillam says that the June 2010 compromise agreement wrapped into an agreed liability of $140,000, postponed to May 2011, the various matters in dispute as to other money sums in the possession proceedings. These disputes included disputes as to outstanding occupation fees. Indeed it is difficult to surmise as to what, apart from occupation fees, this sum of $140,000 really related. Under clause 11 it was an agreed sum for the entry of judgment if not paid by 25 May 2011. I have found above that the judgment for this sum already entered should not be set aside but stayed.

b What is the effect of the compromise?

83 I agree with the plaintiff’s contention that the January 2008 contract for sale was still in existence up to 30 July 2010 and survived the making of the June 2010 agreement. It existed and was capable of termination on and from 30 July 2010. I conclude this for the following reasons.

84 First, clauses 3 and 4 of the June 2010 agreement refer to “the balance of the purchase price”. To understand what the ‘purchase price’ is one must go to the contract of 8 January 2008.

85 Second, clause 4 appears to refer to the “Contract for Sale between the parties dated 8 January 2008” in the present tense and in terms that assume it continues to have legal force and on an apparent assumption that the contract is still in existence and in respect of which something called the “the balance of the purchase price” was payable. This language is not compatible with some entirely new contract.

86 Third, the sum of $750,000 is not a new purchase price under a new contract comprised solely in the June 2010 agreement. Rather it presents an agreement as to what balance is due in respect of the purchase price on an existing agreement.

87 Fourth, the June 2010 agreement does not contain all the necessary machinery provisions that are contained within the original January 2008 contract for sale of land. These include for example the vendor disclosure requirements imposed by the Conveyancing Act 1919, s 66W certificate. It is not likely that the parties intended cooling off would be available in respect of the compromise agreement as a fresh contract of sale. No such provision was necessary because the January 2008 contract already had within it a Conveyancing Act s 66W certificate.

88 Fifth, there is nothing in the June 2010 agreement which seeks to displace the application of the general terms of the January 2008 Contract for Sale.

c Did the defendant validly terminate the contract after 25 July 2010?

89 Mr Hillam accepts that on 25 July 2010 he breached the contract for sale as varied by the June 2010 agreement. The loan approval from Liberty Financial was not available until 27 July. But he says that it was necessary for the defendant to issue a notice to complete before attempting to terminate the contract and that in addition a separate notice of termination was required. Mr Hillam’s case is that time was not expressed to be of the essence in the contract and the contract provided by special condition 3 that 14 days would be sufficient notice in a notice to complete to make time of the essence. Without a notice to complete he says that the preconditions for the termination did not exist.

90 It follows Mr Hillam says that Leduva was not entitled to terminate because late payment is not a repudiation and no notice, making time of the essence, had been give after default on 25 July 2010 and no notice of termination had been served.

91 The defendant seeks to answer this argument by pointing out that time does not have to be made of the essence because the contract for sale, through the June 2010 agreement, appointed a date for completion.

92 It was necessary in my view for Leduva to issue a notice to complete to make essential the time stipulation in clause 3 of the June 2010 agreement. Clause 3 required Mr Hillam to pay Leduva $750,000 on or before 25 July 2010. But for several reasons the appointment of this date on its own did not make time of the essence.

93 First, the June 2010 agreement does not stand alone but varies the 8 January 2008 contract which subsists subject to the variation. The intention of special condition 3 was to leave the contract on foot if the appointed completion date was missed. The steps to completion or termination were left open to each party. One or other party “shall be entitled to issue a Notice to Complete requiring completion”. Until that notice was issued, time was not an essential term of the contract. Clause 3 provides that if a Notice to Complete “requiring completion within a further period of fourteen (14) days from the date of service of such notice….” was given that time will then become of the essence, “….and in respect of that time shall be of the essence.” The service of the Notice to Complete makes the time of the essence with respect to the particular notified date in the notice. Unless a notice is served time is not of the essence with respect to any time stipulations in the contract.

94 Nothing in the June 2010 agreement varies this effect of clause 3. Although the June 2010 agreement gives the right to Leduva to enter judgment for possession upon default in meeting the 25 July time stipulation, the existence of that right is not inconsistent with a continuing requirement to issue a Notice to Complete before termination the contract. The judgment for possession if acted on merely restores Leduva to the position of an ordinary vendor remaining in possession before completion.

95 Special condition 16(d) is to be contrasted with special condition 3. Special condition 16 refers to a time “on or before fourteen (14) days after the completion date, and in this respect time is of the essence,…” when providing for the payment of occupation fees. This provision has not been crafted with special condition 3 in mind and perhaps suggests the possibility that time was automatically of the essence 14 days after the date appointed for completion. That would be in tension with special condition 3. In my view the better interpretation of the various sub clauses of special condition 16(d) is that they make the time of the essence for the payment of the total accrued occupation fee, so that a separate notice does not have to be issued in addition to a special condition 3 Notice to Complete.

96 Leduva did not, in any event, even purport to terminate. Leduva seeks to explain the absence of a notice of termination in several ways.

97 First, Leduva says that the entry of the consent orders replaced the need for termination. But neither the June 2010 agreement nor the consent orders of 30 July 2010 provided for termination of the contract for sale. Termination of the June 2010 compromise would have destroyed all prospective obligations under it including the obligation to pay $140,000 in May 2011 and would have arguably returned the parties to their previous positions in which they were in dispute on the issues identified on the possession proceedings pleadings.

98 Secondly Leduva says that the defence in the current proceedings itself operated as a notice of termination. But the answer to this is that the defence does not plead that the defence has this effect. Paragraph 10(e) of the defence only pleads a denial that “ a contract for the sale of land remains on foot”. It does not plead that the defence itself is operative as a Notice of Completion. It would be unfair to allow Leduva to rely on such an argument in final submissions when it was capable of answer by further pleading in reply and further evidence in the proceedings.

99 In summary Leduva has not made time of the essence as a precondition to exercising a right to terminate and has not terminated the 8 January 2009 contract for sale, which as varied is still on foot. It is still open to Leduva to issue a notice to complete now, and to terminate if there is non compliance with that notice.

d Is the plaintiff ready willing and able to perform the contract?

100 Leduva has refused to convey the land to the plaintiff or his nominee. The defendant made this clear in Court when giving evidence. Mr Hillam says that it is because the defendant does not want Mr Hillam on the body corporate causing trouble. That accusation was put in cross-exanimation and denied. I have no objective basis on which I could find that it was true.

i Has the defendant refused to accept performance of the contract since 28 July 2010?

101 Mr Hillam says that he offered to perform the contract for sale on 28 July 2010 as soon as he had the approval from Liberty Financial, even though the offer was 3 days after the 25 July 2010 date appointed by the June 2010 agreement. Mr Hillam says that Leduva refused to accept performance on any basis since that date and that his failure to attempt to perform after 28 July 2010 should not be taken as evidence of financial inability to perform. I conclude in this section that Leduva did decline to accept performance from 28 July although it was justified in doing so. Nevertheless the stand off between Vendor and Purchaser means that these events are not a basis to infer Mr Hillam does not have the financial ability to complete the contract.

102 On 15 July 2010 Mr Hillam proposed through his solicitors Holman & Webb the remaking of the contract in the name of CFM as purchaser. Leduva declined the proposal, coming as it did 10 days before completion was due on 25 July 2010.

103 On 28 July Holman & Webb put another proposal to Leduva which also kept open the possibility of making of a contract between Leduva and CFM. The 28 July 2010 proposal is not just an offer to perform the existing contract. Leduva was not unreasonably cautious about accepting it. Indeed Mr Taouk reasonably explained in cross-examination that his refusal to accept completion of the contract involving money coming from CFM was simply because of “a lengthy two year history of his incompetence and [in] ability to make payments on time and…at the eleventh hour” and the inability to prove CFM had sufficient funds to complete the total contract price. This is why no appointment to settle has been made.

104 But the Court is now in a position to see that there are funds available from CFM for settlement.

ii If so, what is the effect of that refusal on any requirement on the plaintiff to demonstrate readiness willingness and ability to perform the contract?

105 Mr Hillam’s contention is that Leduva’s persistent refusal to accept performance reduces the plaintiff’s requirements of proof in the proceedings. Mr Hillam says that because performance is a mutually dependent obligation that Leduva’s refusal to accept performance on any basis since 28 July 2010 has dispensed with any need for the plaintiff to attempt performance at any particular time since then: Foran v Wight (1989) 168 CLR 385; (1989) 88 ALR 413.

106 The plaintiff’s contention is that where there has been no termination but the vendor refuses to accept performance, despite Mr Hillam’s evidence that finance is available, that no inference adverse to Mr Hillam should be drawn. It should not be inferred that he does not have the financial capacity to complete.

107 The real issue here is whether on the facts Leduva has refused to accept performance. The picture is confusing. Leduva was entitled to refuse what was offered. But the result is that Mr Hillam’s present capacity to complete has not been tested. There is instead direct evidence as to this.

iii Does the plaintiff have the financial capacity to complete the contract?

108 This issue was strongly contested. But in my view Mr Hillam has established he is ready willing and able to complete the contract.

109 The evidence about Mr Hillam’s ability to fund the purchase has moved throughout the trial. The evidence that his nominee purchaser CFM has the capacity to complete is now strong. It was not so strong where the trial began on 12 November 2010. This may be relevant to later argument on issues of costs. It is sufficient now to state the position as the evidence now stands.

110 The amount paid under the June 2010 agreement was $750,000. On 29 June 2010 $40,000 was paid to Leduva on account of the purchase price leaving a balance of $710,000. This sum is to be funded by a net amount (after deduction of fees and interest) of $501,398.70 sourced from Liberty Financial to CFM the proposed nominee purchaser. The balance of $210,000 is presently held in the Holman Webb’s trust account in the name of the proposed nominee purchaser CFM. Holman Webb have given the following undertaking to the Court on behalf of CFM.

“5. CFM Media Holdings Pty Ltd undertakes to the Court that until judgment and, if the Court’s determination be that contract is on foot and ought be performed, then until completion of the sale CFM Media Holdings Pty Ltd will not direct Holman Webb to apply that money otherwise than to payment of the purchase money.”

111 I can infer from this that those funds will be available at settlement of the proposed purchase.

112 Mr Hillam is ready, willing and able to complete the 8 January 2008 contract as varied by the June 2010 agreement.

e Is there any other discretionary reason why the remedy of specific performance should not be granted to the plaintiff, especially the doctrine that he who seeks equity should do equity?

113 Leduva did not plead any specific discretionary reasons for refusing the remedy of specific performance to Mr Hillam. I do not find that there are any.

114 Leduva has the benefit of the payment of the $140,000 in May 2011 to remedy Mr Hillam’s alleged defaults before 26 May 2010. Leduva has also been protected since 31 August 2010 by receiving occupation fees under the terms of the stay granted by Schmidt J on that date. But the period between 26 May and 31 August has not been covered. A decree of specific performance of the contract will only be granted on terms that any default in the payment of occupation fees to Leduva for this period is remedied at the time of settlement. The form of decree will also reflect Mr Hillam’s waiver of any right to complain about defects in title. He should settle within 14 days.

115 The parties should be able to agree on this figure. If they cannot then they may approach the Court under the liberty to apply granted in my orders.

Conclusions and orders

116 The Court has found that the contract for sale of the Alexandria apartment was still on foot on 30 July 2010 and was not terminated by the entry of judgment on that date. The contract has not otherwise been terminated by any act on the part of Leduva. I have also found that Mr Hillam is ready willing and able to perform the contract and is entitled to specific performance of it in accordance with he contract of 8 January 2008 as varied by the June 2010 agreement. Mr Hillam is entitled to relief against forfeiture with a stay on the possession orders entered on 30 July 2010 and on the acceleration from May 2011 to July 2010 of the payment of $140,000 under those orders. That sum will remain payable in May 2011. The costs consequences of these reasons will need to be the subject of further submissions.

117 Accordingly the Court: (1) directs the parties to bring in short minutes of order to give effect to these reasons; (2) directs that the parties file and exchange submissions in relation to issues of costs by 5.00pm on Monday, 31 January 2011; and (3) grants liberty to apply.

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30/03/2011 - typographical errors - Paragraph(s) 110 & 112

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Citations

Hillam v Leduva Pty Limited [2010] NSWSC 1360

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CITATION:	Hillam v Leduva Pty Limited [2010] NSWSC 1360 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	12 November 2010 19 November 2010
JUDGMENT OF:	Slattery J at 1
CATCHWORDS:	EQUITY - equitable remedies - specific performance - contract for sale of land - purchaser let into occupation - fails to pay occupation fees - vendor commences proceedings for possession - proceedings settled with deferral of settlement - purchaser fails to settle on adjourned date - vendor allowed writ for possession on consent judgment - subsequently purchaser obtains finance for purchase - whether plaintiff entitled to relief against forfeiture - whether plaintiff entitled to specific performance - HELD - specific performance granted.
LEGISLATION CITED:	Conveyancing Act, 1919, ss 66W, 129 Residential Tenancies Act 1987, s 5 Trade Practices Act 1974, ss 51AA, 87 Uniform Civil Procedure Rules 2005, r 36.16(2)(b)
CATEGORY:	Principal judgment
CASES CITED:	Foran v Wight (1989) 168 CLR 385 Jobson v Johnson (1989) 11 ALL ER 621 Legione v Hateley (1983) 152 CLR 406 Matthews v Smallwood [1910] 1 Ch. 777 Meadows v Clerical and General Life Insurance Society [1981] Ch. 70 Melacare International Ltd v Daley Investments Pty Ltd (1999) 9 BPR 17,095 Metwally (No. 2) v University of Wollongong (1985) 60 ALR 68 Pioneer Quarries (Sydney) Pty Limited v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562 Platt v Ong [1972] VR 197 Rands Developments Pty Limited v Davis (1975) 133 CLR 26 Shiloh Spinners Ltd v Harding [1973] AC 691 Sloman v Walter (1783) 1 Bro CC 418; (1783) 28 ER 1213 State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29 Workers Compensation Nominal Insurer v Detailed Flooring Pty Limited [2010] NSWSC 1056.
TEXTS CITED:	Butt, The Standard Contract for the Sale of Land in New South Wales, LBC Information Services 1998 Meagher et al, Equity – Doctrines and Remedies, 4th edition (2002) , Butterworths Lexisnexis
PARTIES:	Plaintiff- John Frederick Hillam Defendant- Leduva Pty Limited
FILE NUMBER(S):	SC 2010/287070
COUNSEL:	Plaintiff-D.A. Smallbone Defendants- A.M. Gruzman
SOLICITORS:	Plaintiff-Holman Webb lawyers Defendants- McBride Harle & Martin solicitors