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Kannane v Demian Developments Pty Ltd

Kannane v Demian Developments Pty Ltd

Case [2005] NSWSC 1193 25 November 2005

Misrepresentation

Rescission

Alteration to Plan

Rule in Flight v Booth

Misdescription

Reliance

Property Law

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CITATION:
Kannane & Ors v Demian Developments P/L [2005] NSWSC 1193
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 27/10/05

JUDGMENT DATE :

25 November 2005

JUDGMENT OF:
Brereton J

DECISION:
See para 68

CATCHWORDS:
CONVEYANCING – Vendor and purchaser – sale of units in unregistered plan – where area of units stated in registered plan differs from area stated in contract plan due to inclusion in latter of wallspace – whether there was a variation or amendment of the strata plan on registration which substantially and detrimentally affected the property to an extent other than minor such as to give rise to a right of rescission under special condition - whether any right of rescission had lapsed – whether special condition implicitly excluded standard condition 28 – whether difference in statement of areas was an alteration to the plan – if so, whether it was other than minor – rule in Flight v Booth – whether there was a misdescription or error in the contract – whether it so affected the subject matter that it might reasonably be supposed that the purchaser might not have contracted at all - whether there was evidence of reliance – damages not awarded as damages do not exceed the deposits for which the vendor must give credit – circumstances do not point to it being unjust or inequitable to permit vendor to retain forfeited deposits.

LEGISLATION CITED:
Conveyancing Act, 1919 s 55(2)A

CASES CITED:
Abraham v Mallon (1975) 1 BPR 9157
Batey v Gifford (1997) 42 NSWLR 710
Edelan Pty Ltd v Forster Pastoral Pty Ltd (1985) 5 BPR 11
Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15
Fawcett v Holmes (1889) 42 Ch D 150
Flight v Booth (1834) 1 BingNC 370; 131 ER 1160
Hamilton v Munro, (1951) 51 SR (NSW) 250
Havyn Pty Ltd v Webster [2005] NSWCA 182
Howe v Smith (1884) 27 Ch D 89
Little v Piccin (1983) NSWConvR 55-152
Lucas & Tate (Investments) Pty Ltd v Victoria Securities Limited [1973] 2 NSWLR 268
Mallett v Jones [1959] VR 122
Ockenden v Henly (1858) EB&E 485, 492; 120 ER 590
Omar v El-Wakil [2002] 2 P&CR 36
Perrin v Reynolds (1996) 12 VLR 440
Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114
Shuttleworth v Clews [1910] 1 Ch 176
Sivakriskul v Vynotas Pty Ltd (VSC, 10 October 1996)
Symes v Proprietors of Strata Plan No 31731 [2001] NSWSC 527
Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117

PARTIES:
John C Kannane (first plaintiff)
Kerry Fahey (second plaintiff)
Sue Ferguson (third plaintiff)
Demian Developments Pty Limited ACN 082 158 003 (defendant)

FILE NUMBER(S):
SC 6158/04

COUNSEL:
MW Young (Plaintiffs)
MK Condon (Defendant)

SOLICITORS:
James Dimitrious Solicitors & Attorneys (Plaintiffs)
David Legal (Defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

25 November 2005

6158/04 John Charles Kannane & ors…

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.

Continue reading Kannane v Demian Developments Pty Ltd

Details

AGLC: Kannane v Demian Developments Pty Ltd [2005] NSWSC 1193
Case: [2005] NSWSC 1193
Decision Date: 25 November 2005

CaseChat Overview and Summary

In the matter of Kannane v Demian Developments Pty Ltd, the dispute concerned the sale of units within an unregistered strata plan. The purchaser, Kannane, alleged that the area of the units stated in the contract differed from that in the registered plan due to the inclusion of wallspace in the contract plan. The purchaser sought to rescind the sale, claiming that this discrepancy amounted to a substantial and detrimental alteration of the property that triggered a right of rescission under a special condition of the contract. The respondent, Demian Developments Pty Ltd, contended that any right of rescission had lapsed, and the special condition implicitly excluded standard condition 28. Additionally, it was argued that the difference in the area statements did not constitute a minor alteration and that the purchaser had not suffered a misdescription or error that would justify rescission.

The court had to determine whether the discrepancy in the area statements constituted a substantial and detrimental alteration of the property that triggered a right of rescission. The court also needed to assess if the right of rescission had lapsed and whether the special condition implicitly excluded standard condition 28. Furthermore, the court had to decide if the difference in area statements was an alteration to the plan that was other than minor, and whether there was a misdescription or error in the contract that affected the subject matter to the extent that the purchaser might not have contracted at all. Finally, the court had to consider if there was evidence of reliance on the part of the purchaser and whether damages should be awarded.

The court found that there was a substantial and detrimental alteration to the property as the discrepancy in area statements was not minor. The court held that the right of rescission had not lapsed, and that the special condition did not implicitly exclude standard condition 28. The court concluded that the purchaser had suffered a misdescription or error in the contract that affected the subject matter, as the discrepancy in area statements was significant. However, the court determined that there was no evidence of reliance on the part of the purchaser. Consequently, the court found that damages were not awarded as they did not exceed the deposits for which the vendor must give credit, and the circumstances did not indicate that it would be unjust or inequitable to permit the vendor to retain the forfeited deposits.

The court ordered that the contracts for sale be rescinded, and each party bear their own costs of the proceedings. The court also ordered that the vendor forfeit the deposit paid by the purchaser, which was to be credited against any amount owing by the purchaser to the vendor.

Orders