Kurnnan v Pivovarova - [2012] NTSC 48

Kurnnan & Anor v Pivovarova [2012] NTSC 48
PARTIES:KURNNAN, Satheesh Kumar Madathil

And:
SATHEESH, Deepthi
v
PIVOVAROVA, Tatiana

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING APPELLATE JURISDICTION
FILE NO:LA 6 of 2011 (21110241)
DELIVERED:  17 July 2012
HEARING DATE:  2 March 2012 and28 June 2012
JUDGMENT OF:  BARR J
CATCHWORDS:
LOCAL COURT – APPEAL AND CROSS-APPEAL – ERROR OF LAW

Magistrate found in favour of respondent (plaintiff) and awarded damages for breach of contract – case decided on a breach not pleaded and not relied on by respondent – error of law but result correct – appeal dismissed, cross-appeal allowed and judgment awarded in favour of respondent
CONTRACTS – SALE OF LAND – BREACH OF CONTRACT
Agents Licensing Act (NT) – standard form contract approved under s 121A – interpretation of finance clause – purchasers’ right to rescind following failure to obtain finance – contract became unconditional as to finance upon purchasers’ failure to comply with obligations under finance clause – vendor entitled to terminate contract and claim damages for breach after purchasers failed to complete unconditional contract
Agents Licensing Act (NT) s 121A
Local Court Act s 19

BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, followed
Alice Springs Town Council v Mpwetewerre Aboriginal Corporation and Others (1997) 115 NTR 25; Dodds v Kennedy (No 2) (2011) WASCA 131; Meehan v Jones (1982) 149 CLR 571, considered
REPRESENTATION:
Counsel:
Appellants:G Phelps
Respondent:  Self represented
Solicitors:
Appellants:Ward Keller Lawyers
Respondent:  Self represented
Judgment category classification:    B
Judgment ID Number:  Bar1209
Number of pages:  23

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Kurnnan & Anor v Pivovarova [2012] NTSC 48

No. LA 6 of 2011 (21110241)
BETWEEN:

SATHEESH KUMAR MADATHIL KURNNAN
First Appellant

And:

DEEPTHI SATHEESH

Second Appellant

AND:

TATIANA PIVOVAROVA

Respondent

CORAM: BARR J
REASONS FOR JUDGMENT
(Delivered 17 July 2012)
Introduction
[1]For consistency and ease of reference, I will refer to the appellants as “the defendants” and the respondent/cross-appellant as “the plaintiff”.
[2]The magistrate in the Local Court found in favour of the plaintiff, but he did not decide the plaintiff’s case as pleaded. As a result, his Honour made findings and reached conclusions on some matters which should not have been decided. This led the defendants to appeal the correctness of those aspects of the magistrate’s decision.
[3]The Local Court Act limits appeals to questions of law. After determining an appeal, the Supreme Court “may make such order as it thinks fit, including an order remitting the case for re-hearing to the (Local) Court with or without directions on the law.”[1]
[4]For reasons which I set out below, I find that the magistrate erred in law. Nonetheless, I have determined that the result in the Local Court was correct. I propose to dismiss the appeal, allow the cross-appeal and give judgment…

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: [2012] NTSC 48
Decision Date: 17 July 2012

CaseChat Overview and Summary

The dispute in Kurnnan v Pivovarova involved the defendants, who were buyers of a property, seeking to rescind the contract of sale on the basis of a failure to obtain finance. The plaintiff, the vendor, terminated the contract and sought damages for breach of contract. The matter was heard in the Local Court of New South Wales, and the plaintiff was successful. The defendants appealed the decision, and the plaintiff cross-appealed the costs awarded.

The central legal issue was whether the defendants had the right to rescind the contract based on their failure to obtain finance and if the plaintiff was entitled to terminate the contract and claim damages. The court had to determine whether the contract had become unconditional as to finance and if the defendants' failure to comply with the finance clause resulted in the loss of their right to rescind.

The court found that the contract became unconditional as to finance upon the defendants' failure to comply with their obligations under the finance clause. Consequently, the defendants lost their right to rescind the contract. The court held that the plaintiff was entitled to terminate the contract and claim damages for breach. The court also found that the magistrate had misunderstood the plaintiff's costs claim and ordered that the defendants pay the plaintiff's legal costs and disbursements of the Local Court proceeding at 75% of the costs under the Appendix to Order 63 of the Supreme Court Rules. The plaintiff's costs should be taxed, if not agreed, by the Taxing Officer of the Local Court.

The appeal was dismissed, and the cross-appeal was allowed. The plaintiff was awarded judgment in the sum of $13,840.23, plus pre-judgment interest at the rate of 10.5% from 25 March 2011. The court directed the parties to file draft orders for settling and gave liberty to apply should there be any further matter on which the court was required to rule.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The defendants then threatened to rescind the contract “in the extended cooling off period” and actually purported to rescind, as appears from their conveyancing agent’s letter to the plaintiff’s conveyancing agent dated 12 May 2010: “… Our client will not agree to the penalties insisted on by your client and advise they are unreasonable. If you and your client will proceed without those penalties then our clients will proceed also. If you client disagrees then we have no alternative other than to rescind the contract in the extended cooling off period.If your client does not agree: we hereby rescind the Contract of Sale dated 22 April 2010 pursuant to Clause 30 of Contract.”[37]The plaintiff’s conveyancing agent subsequently replied by letter dated 12 May 2010 to assert that the defendants had no right to rescind the contract pursuant to Clause 30 (the ‘cooling off’ clause). Further, it was pointed out that the defendants had not provided a transfer to the vendor for signing.[16] [38]The plaintiff’s conveyancing agent wrote a further letter dated 12 May 2010 stating the plaintiff’s view that the defendants no longer had the right to rescind the contract pursuant to the finance provisions.[17][39]Apparently undeterred, the defendants’ conveyancing agent replied to the plaintiff’s conveyancing agent on 12 May 2010 as follows: “I refer to our prior communications and advise that my clients have failed to obtain finance and hereby rescind the Contract of Sale pursuant to Clause 24 (Finance).Please authorise the agent to release the deposit monies at your earliest convenience.”[40]Subsequently, the plaintiff (who by now was acting on her own behalf) wrote to the defendants’ conveyancing agent by letter dated 21 May 2010, relevantly as follows:“I advise that your rescission of the contract as set out in your letter received on 12.05.10 is invalid and accordingly of no force or effect. … I am not excepting [accepting] the rescission notice from your clients, as they did not have any express right to rescind the Contract. Your clients breached Conditions of the contract.[41]The letter continued at length, setting out numerous breaches. The plaintiff then wrote: “According to the contract your clients failed to pay the purchase price on the 10.05.10 and your clients failed to comply with other terms of the Contract. On the 12.05.10 your clients did not have any express right to rescind the contract. By the 10.05.10 they already breached the contract and they were liable for the damages I incurred. According to Condition of Contract 18 I notify your clients that they are in default by breaching reference Schedule H condition 3.1 and 17.1 of the Contract by refusing to settle by due date and pay compensation and they are requiring that the fault be remedied within the period of 10 days from today.… If the purchasers will refuse to settle within 10 days I won’t have a choice as according to condition of the contract 20.1 (b) to terminate the contract, forfeit the deposit, resell the property without further notice to the purchasers and sue them for damages for breach.”[18][42]Notwithstanding the words “they are requiring that the default be remedied” it was tolerably clear that the plaintiff was requiring the defendants to remedy their default.[43]Subsequently, by letter dated 7 June 2010, the plaintiff terminated the contract in the following terms:“I refer to our previous correspondence in respect of the above matter and advise that your clients failed to remedy the default as set out in my letter dated 21.05.2010. I hereby terminate the contract of sale and forfeit the deposit pursuant to condition of the contract 20 (Buyer’s default). According to this condition of contract I have the right to sue your clients for damages for breach, resell the property and recover from your clients any liquidated damages so long as the resale is completed within 12 months of termination of this Contract.”[19] Conclusion [44]The plaintiff was entitled to terminate the contract pursuant to clause 20.1(b), having given the notice required by clause 18.1, on account of the defendants’ failure to remedy their default and complete the contract. She was further entitled to forfeit the deposit, re-sell the property and sue for damages.[45]There is no issue on appeal as to the magistrate’s assessment of the plaintiff’s damages. The plaintiff will therefore have judgment in the sum of $13,840.23, plus pre-judgment interest thereon under Local Court Rule 39.03 at the rate of 10.5% from 25 March 2011. [46]In relation to the costs of the proceeding in the Local Court, there is an additional issue raised on the cross appeal that the learned magistrate, having found for the plaintiff, erred in his award of costs. His Honour misunderstood the plaintiff’s costs claim and (without hearing from the plaintiff) allowed her the costs which had been endorsed on the initiating process, and not the costs to which she was properly entitled as the successful party at trial. [47]The plaintiff is entitled to a costs order in her favour, and I therefore order that the defendants pay the plaintiff’s legal costs and disbursements of the Local Court proceeding, such costs to be allowed at 75% of the costs under the Appendix to Order 63 of the Supreme Court Rules. The plaintiff’s costs should be taxed, if not agreed, by the Taxing Officer of the Local Court. [48]Although she has been successful, the plaintiff has not been represented on this appeal. I would therefore propose to make no order as to her costs. However, I will hear from the parties before I make any costs orders in relation to the appeal. [49]I direct that the parties file draft orders for settling, and I give liberty to apply should there be any further matter on which I am required to rule. ---------------------------

Ratio Decidendi

Legal Principle Established

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