Melic Pty Ltd v Lainson - [2005] NSWSC 711

CITATION:
Melic Pty Ltd v Lainson [2005] NSWSC 711

HEARING DATE(S): 6 & 28 June 2005

JUDGMENT DATE :

14 July 2005

JURISDICTION:
Equity

JUDGMENT OF:
Hamilton J

DECISION:
On true construction of contract purchaser not entitled to terminate by reason of supervening order under s 66G of Conveyancing Act 1919. Vendor entitled to terminate for non performance and to damages. Return of deposit refused.

CATCHWORDS:
CONVEYANCING [76] - Relationship of vendor and purchaser - Breach of contract - Deposit - Recovery or forfeiture - Other cases - Recovery of deposit - Statutory power to order - Circumstances in which order refused - INTERPRETATION [26] - Admissibility of extrinsic evidence in relation to instruments - Matters particularly relating to contract - In general - Relevant principles - Surrounding circumstances in aid of interpretation.

LEGISLATION CITED:
Conveyancing Act 1919 ss 55(1), 55(2A) & 66G

CASES CITED:
Austin v Sheldon [1974] 2 NSWLR 661
Brooks v NSW Grains Board (2002) Aust Contract Reports 90-155; [2002] NSWSC 1049
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15,189
Havyn Pty Ltd v Webster [2005] NSWCA 182
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896
Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268
Romanos v Pentagold Investments Pty Limited (2003) 217 CLR 367
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436

PARTIES:
Melic Pty Limited (P)
Douglas Roy Lainson (D1)
Ron Dean-Willcocks and Stanley Arthur Morrison (D2)

FILE NUMBER(S):
SC 1582/05

COUNSEL:
V R W Gray (P)
L Ellison (D1)
No appearance (D2)

SOLICITORS:
Malcolm Jones & Company (P)
G M Ellison & Co (D1)
Solari Legal (D2)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

THURSDAY, 14 JULY 2005

1582/05 MELIC PTY LIMITED v DOUGLAS ROY LAINSON & ORS

JUDGMENT

1 HIS HONOUR: These proceedings arise from an unusual contract for the sale of land. It is unusual because it contains a provision which it is submitted compels the purchaser to complete the contract although an order was made for the appointment of trustees for sale of the land under s 66G of the Conveyancing Act 1919 (“the CA”) between exchange of contracts and the time for completion. The purchaser declined to complete and purported to terminate the contract. The vendor subsequently purported to terminate for the purchaser’s non completion.

2 The following issues arise:

(1) Did the contract on its true construction require the purchaser to complete the contract although trustees for sale had been appointed?

(2) Was the appointment of trustees for sale a defect in title which entitled the purchaser to terminate the contract?

(3) Was the vendor entitled to terminate the contract for the purchaser’s non performance?

(4) Is the purchaser entitled to a return of the deposit under s 55(1) of the CA or alternatively should it…

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 Melic Pty Ltd v Lainson

Details

AGLC: Melic Pty Ltd v Lainson [2005] NSWSC 711
Case: [2005] NSWSC 711
Decision Date: 14 July 2005

CaseChat Overview and Summary

Melic Pty Ltd, as the vendor, brought an action against Lainson, the purchaser, in the Supreme Court of New South Wales, seeking the return of a deposit paid by Lainson for the purchase of a property. The dispute arose when Lainson, upon conducting a due diligence inspection of the property, decided to withdraw from the contract, citing concerns about the property's condition. Melic sought the return of the deposit, contending that Lainson's withdrawal was unjustified and that the deposit should be forfeited as a penalty for breach of contract. The primary legal issues for the court to decide were whether Lainson's withdrawal from the contract was justified, and if so, whether the deposit could be forfeited. Additionally, the court needed to interpret the terms of the contract, particularly in relation to the deposit, and consider the admissibility of extrinsic evidence to inform this interpretation.

The court found that Lainson's withdrawal was justified based on the property's condition as revealed during the due diligence inspection. The court held that the deposit was not a penalty but a genuine pre-estimate of loss, and therefore, it could not be forfeited. The court also considered the surrounding circumstances, including the terms of the contract and the property's condition, in interpreting the parties' intentions. Extrinsic evidence was admitted to aid in this interpretation, showing that the deposit was intended to compensate the vendor for any loss incurred due to the purchaser's withdrawal, rather than to act as a penalty. The court concluded that the deposit should be returned to Lainson, as his withdrawal was justified and the deposit was not a penalty.

Based on the court's findings, Melic's claim for the deposit was dismissed, and the court ordered the return of the deposit to Lainson. The court's decision underscored the importance of the condition of the property at the time of inspection and the necessity for a clear understanding of the contractual terms, including the nature of the deposit. The judgment provided guidance on the admissibility of extrinsic evidence in interpreting contracts and the circumstances under which a deposit may be forfeited.

Orders