Lenferna v Torane

[2022] NSWSC 635

Supreme Court

New South Wales

Medium Neutral Citation:	Lenferna v Torane [2022] NSWSC 635
Hearing dates:	18 May 2022
Date of orders:	18 May 2022
Decision date:	18 May 2022
Jurisdiction:	Equity - Expedition List
Before:	Parker J
Decision:	See [21]
Catchwords:	REAL PROPERTY – specific performance – contract for the purchase of residential property – vendors refusing to complete – purchasers fail to pay all of the deposit on time – vendors decide to terminate but fail to communicate termination – purchasers pay balance of deposit – vendors refuse to complete – hardship – vendors not having alternative accommodation – specific performance ordered
Cases Cited:	Caird Seven Pty Ltd v Attia (No 3) (2016) 92 NSWLR 457
Category:	Principal judgment
Parties:	Ian Henri Lenferna (First Plaintiff) Alexandra Patricia Lenferna (Second Plaintiff) Marcus Torane (First Defendant) Jessy Torane (Second Defendant)
Representation:	Counsel: M Klooster (Plaintiffs) H Fielder (Defendants) Solicitors: Country Law Practice & Associates Pty Limited (Plaintiffs) Stonebraker Lawyers (Defendants)
File Number(s):	2022/55650
Publication restriction:	Nil

Judgment – EX TEMPORE

(Revised from transcript; issued 20 May 2022)

1. This is an application for specific performance of a contract for the purchase of land. The subject land is a residential property at Box Hill in the Hills District of north-western Sydney. The contract is in standard form, presumably including special conditions. It is not necessary, for the purposes of this judgment, to go into its terms.

2. The plaintiffs are a married couple who entered into the purchase contract with the defendants, who are also a married couple, on 26 October 2021. The property is currently used as a home by the defendants, and the plaintiffs wish to use it as their home.

3. The contract price was $1.5 million with a ten per cent deposit which was to be paid by 9 November 2021. The plaintiffs paid $3,750 (0.25 per cent of the purchase price) on the day of the exchange. They did not pay the balance of the deposit by 9 November as the contract required. It seems that the conveyancer acting for the defendants agreed to give the plaintiffs an extension. The plaintiffs paid a further $71,250 on 10 November, bringing the amount paid up to five per cent of the purchase price. The remainder of the deposit was paid on 1 December 2021.

4. It seems that the decision by the defendants' conveyancer on 9 November to give the plaintiffs an extension of time to pay the deposit was not authorised by the defendants themselves. In fact, the first defendant, who represented the defendants in their dealings with their agent and their conveyancer, gave written instructions on 9 November that the contract was "hereby terminated". But it seems that this was never passed on to the plaintiffs, and no point was taken in these proceedings that the conveyancer’s lack of authority was known to, or affected the enforceability of the contract by, the plaintiffs.

5. After the plaintiffs paid the balance of the deposit on 1 December they tried to proceed towards completion of the contract. The defendants, however, refused to complete.

6. The plaintiffs began these proceedings by summons on 25 February this year. Pleadings followed and the matter was entered in the Expedition List. On 29 April the proceedings were fixed for hearing today and I have now heard the evidence and submissions.

7. Counsel for the defendants in his written submissions took four points. I will deal with them in turn.

8. First, counsel submitted that the defendants had, on 9 November, manifested an intention to terminate the contract on the grounds of the plaintiffs' failure to pay the full deposit as required by the terms of the contract. But counsel accepted in the course of argument that, until and unless this termination was communicated to the plaintiffs, it could not affect their entitlement to enforce the contract.

9. It seems that, when the proceedings were begun, the defendants believed that the agent or the conveyancer might have communicated the defendants' instructions to the plaintiffs. But in the course of preparation for the trial the agent’s and the conveyancer’s records were obtained on subpoena, and counsel accepted that no evidence had emerged of any such communication. In the circumstances there was no termination defence available.

10. Counsel's second point fastened on a lack of repudiation by the defendants. As I understood the submission, counsel argued that the defendants' conduct in November and December was entirely consistent with a belief on their part, which they held in good faith, that they were not obliged to complete the contract. Again, however, it is not necessary to go into this question. It is plain that the defendants' position, since before the proceedings were commenced in February, and probably going back to December, has been that they will not complete the contract unless ordered to do so by the Court. This is sufficient to found the Court's jurisdiction to grant specific performance.

11. Counsel's third point was the damages were, in his submission, an adequate remedy. Counsel argued that there was nothing particularly special about the property which is the subject of the proceedings. There is an active real estate market in the area and there are many properties available of a similar size and with similar features to the subject property.

12. If accepted this would be a somewhat startling proposition. I have never heard it questioned that residential property in Sydney (or anywhere else for that matter) is sufficiently special to attract an award of specific performance. Counsel acknowledged that he was unable to point to any authority in which any such argument had been upheld and ultimately abandoned the point.

13. Counsel's final argument was based on hardship. Initially, the plaintiffs' evidence was that their offer of finance expired on Sunday 22 May. It was for this reason that the expedited hearing date was fixed. The first defendant, in an affidavit made 13 May, stated that, if forced to complete the sale and give vacant possession by Friday 20 May, the defendants would be unable to find somewhere else to live in Sydney and would be without a home.

14. The defendants have no family in Sydney, and it was suggested that, in order to maintain their employment, they might have to live in their cars and put their possessions into storage. The first defendant also stated that in 2011 he was diagnosed with depression and is still seeing a general practitioner to deal with that condition. He stated that he was concerned that being required to move would trigger a severe depressive episode.

15. When the Court makes an order for specific performance the formal order of the Court is in general terms. The order states that the contract in question "be specifically performed and carried into execution under the supervision of the Court". Once that order is made, the Court has dealt with the substantive question between the parties, but retains power to make further orders (interlocutory in nature) to give effect to the specific performance order. [1] For this purpose both parties may apply for directions (for example, fixing the date for completion), or for the variation of earlier directions, according to the exigencies of the case.

    1. See Caird Seven Pty Ltd v Attia (No 3) (2016) 92 NSWLR 457 at [17].

16. In these circumstances it seems to me that the matters raised in the first defendant’s affidavit do not go to hardship in the relevant sense at all. If the defence of hardship succeeds, it does so because the Court is persuaded that the contract should not be specifically performed at all. In such a case the proper order would be to dismiss the application for specific performance. At best, the matters raised in the first defendant's affidavit might be taken into account by the Court in giving directions, and in particular fixing the time for completion, once an order for specific performance is made. However, even for that purpose I consider them to have little weight.

17. The defendants have lived in the property only since 2020. They contracted to sell the property, as I have stated, in late October last year. The contract originally provided for a three month settlement period. While it may be that there was a period of time during which the defendants believed that they had terminated the contract and they would be able to stay, that would have lasted for only a few weeks at most. Counsel for the defendants accepted that there was no evidence of any action taken by the defendants during that period in reliance on the assumption that the contract was off and which might now give rise to detriment, irreversible or otherwise.

18. Shortly before the hearing the plaintiffs obtained an extension on their finance for another three months. Counsel for the plaintiffs accepted that, for practical purposes, completion by 20 May was unlikely to be possible. This was because it would usually take two weeks or so to obtain a figure from the defendants’ bank. Counsel indicated that the plaintiffs were prepared to agree to a three week period in which to complete.

19. For his part, counsel for the defendants asked for a completion period of eight weeks. Counsel submitted that there was no evidence of any specific detriment to the plaintiffs. That may be so, but I do not think that it is the right way to look at the question.

20. On my findings, the plaintiffs have a clear right to specific performance of the contract. It is not for the plaintiffs to demonstrate that they will suffer prejudice if the defendants do not comply with their legal obligations. It is for the defendants to show substantial hardship, or other good reasons, why they should not be required to comply. For the reasons which I have given, I do not think that the matters raised by the defendants provide any justification to extend the settlement period beyond the three weeks which the plaintiffs are prepared to allow.

21. The orders of the Court are:

1. A declaration that the contract for sale of [XX], Box Hill NSW 2765 ID [XX] (the “Property”) dated 26 October 2021, between the first and second defendants as vendor and the first and second plaintiffs as purchaser is a valid and enforceable contract binding upon the first and second defendants (the “Contract”).

2. Order that the Contract be specifically performed and carried into effect under the supervision of the Court.

3. Direct that the date for completion of the purchase shall be 8 June 2022 or such other later date as the plaintiffs may specify in writing.

4. Liberty to apply for further or varied directions concerning the performance of the Contract.

5. Order that the defendants pay the plaintiffs’ costs of the proceedings to date.

**********

Endnote

Decision last updated: 20 May 2022