IGA Distribution Pty Ltd v King & Taylor Pty Ltd - [2002] VSC 440

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 2068 of 2001

IGA DISTRIBUTION PTY LTD	Plaintiff
v
KING & TAYLOR PTY LTD	First Defendant
DELAHEY PROPERTIES PTY LTD	Second Defendant

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JUDGE:	NETTLE J
WHERE HELD:	Melbourne
DATES OF HEARING:	3, 4, 5, 6, 9, 10, 11, 12, 13, 17, 18, 19, 20, 23, 24, 25 and 26 September 2002
DATE OF JUDGMENT:	16 October 2002
CASE MAY BE CITED AS:	IGA Distribution Pty Ltd v King & Taylor Pty Ltd and Anor
MEDIUM NEUTRAL CITATION:	[2002] VSC 440

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§ Contract – breach of contract – repudiation – agreement for lease – whether failure to pay stamp duty amounted to repudiation of agreement for lease.

§ Equity – specific performance – agreement for lease – whether failure to pay stamp duty was a bar to specific performance of agreement for lease.

§ Real property – agreement for lease – failure to lodge caveat – subsequent purchaser – whether agreement for lease postponed.

§ Notice – constructive notice – imputed notice, Property Law Act 1958, s. 199.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R.M. Garratt QC with Mr M.K. Moshinsky	Cornwall Stodart
For the First Defendant	Mr J.D. Hammond QC with Ms J.E. Richards	Richard Szental
For the Second Defendant	Mr P.J. Hayes with Ms L. Hannon	Efron & Associates

TABLE [L1]OF CONTENTS

INTRODUCTION................................................................................................................................................................................ 1

THE FACTS............................................................................................................................................................................................ 3

REPUDIATION.................................................................................................................................................................................. 35

Failure to pay stamp duty............................................................................................................................................. 35
(i)     Breach of Clause 12.4....................................................................................................................................................... 35
(ii)     Breach of implied term..................................................................................................................................................... 38
(iii)    Seriousness of the alleged breaches................................................................................................................................ 39
Entry into sub-lease........................................................................................................................................................ 42
Demand for penalty indemnity.................................................................................................................................. 47
Submission of new forms of agreement................................................................................................................... 52
Denial of existence of original agreement.......................................................................................................... 53
The threat of “appropriate action”........................................................................................................................ 55

SPECIFIC PERFORMANCE.......................................................................................................................................................... 57

Does IGA remain in breach of the lease?............................................................................................................... 57
Is IGA ready and willing to perform?..................................................................................................................... 59
Is the agreement for lease susceptible to an order for specific performance?................................... 60
(a)    Priorities............................................................................................................................................................................. 64
(b)    The failure of IGA to caveat............................................................................................................................................ 65
(c)    The absence of detriment................................................................................................................................................. 69
(d)    Notice.................................................................................................................................................................................. 71
(e)    Actual Notice..................................................................................................................................................................... 71
(f)     Constructive Notice.......................................................................................................................................................... 72
Hardship............................................................................................................................................................................... 80
Damages, an adequate remedy?................................................................................................................................. 81
Clean Hands....................................................................................................................................................................... 81

THE SECOND DEFENDANT’S CLAIM.................................................................................................................................. 83

Defect in title..................................................................................................................................................................... 83
Misleading and deceptive conduct......................................................................................................................... 83
Damages................................................................................................................................................................................ 86

CONCLUSION................................................................................................................................................................................... 87

HIS HONOUR:

Introduction

The IGA group of companies is in the business of the wholesale distribution of grocery products to independent supermarket operators. It supplies some 3500 supermarkets of varying sizes up and down the east coast of Australia. Approximately 1200 of those independent supermarkets trade under the name of IGA and in the case of about one quarter of those, the plaintiff, IGA, holds the premises as lessee and the independent operator holds as sub-lessee.

Mark and Antonio Assetta (to whom I shall refer as the Assettas) are in the business of property development and construction. They are the directors of the first defendant, King & Taylor Pty Ltd, and they are also the directors of…

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: [2002] VSC 440
Decision Date: 16 October 2002

CaseChat Overview and Summary

In the case of IGA Distribution Pty Ltd v King & Taylor Pty Ltd, the dispute revolved around an agreement for lease of certain property between the parties. The plaintiff, IGA Distribution, sought to enforce the agreement for lease against the defendant, King & Taylor. The dispute was heard in the Supreme Court of Victoria. The plaintiff alleged that the defendant had repudiated the agreement for lease by failing to pay stamp duty and that the defendant's failure to lodge a caveat had resulted in the agreement for lease being postponed to a subsequent purchaser. The plaintiff further sought an order for specific performance of the agreement for lease.

The primary legal issues that the court had to decide were whether the defendant's failure to pay stamp duty amounted to repudiation of the agreement for lease, whether the failure to pay stamp duty was a bar to specific performance of the agreement for lease, and whether the agreement for lease had been postponed by the defendant's failure to lodge a caveat. The court had to examine the terms of the agreement for lease, the relevant statutory provisions, and the principles of equity to determine whether the plaintiff was entitled to specific performance.

The court held that the defendant's failure to pay stamp duty did not amount to repudiation of the agreement for lease. The court found that the agreement for lease contained a clause that expressly provided that stamp duty was to be paid by the parties in proportion to their respective beneficial interests in the property. The court also held that the failure to pay stamp duty did not bar specific performance of the agreement for lease. The court found that the agreement for lease was a valid and binding contract and that specific performance was an appropriate remedy in the circumstances. Finally, the court held that the agreement for lease had not been postponed by the defendant's failure to lodge a caveat. The court found that the subsequent purchaser had actual notice of the agreement for lease by virtue of the registered mortgage over the property, and that this notice was sufficient to bind the subsequent purchaser.

The court ordered that the defendant execute and deliver a lease of the property to the plaintiff in the form set out in the agreement for lease, and that the defendant pay the plaintiff's costs of the proceeding.

Orders