Milan Nenadic v Zvonko Nenadic

[2014] NSWSC 1229

Supreme Court

New South Wales

Medium Neutral Citation:

Milan Nenadic v Zvonko Nenadic [2014] NSWSC 1229

Hearing dates:

2 September 2014

Decision date:

02 September 2014

Jurisdiction:

Equity Division

Before:

Young AJA

Decision:

Order that Declaration 1 made 12 March, 2014 be amended by substituting "15 October 2012" for "15 October 2013".

Order that the time for completion of the relevant contract be extended to 6:00pm on 5 September, 2014.

Order that on completion the plaintiff also pay the defendant interest of $8,993.

Each part to pay his own costs of the motions heard by the court on 2 September, 2014.

Catchwords:

EQUITY - remedies - Specific Performance - where order for specific performance already made by Court - where order for specific performance not complied with - general principles as to specific performance - whether Court can give further and supplementary relief after judgement has been given - whether Court can grant compensation where value of property increased significantly since date of contract - whether Court should order that interest be paid where purchaser in exclusive possession since date fixed for completion of the contract

Legislation Cited:

Conveyancing Act 1919 (NSW)

Cases Cited:

Ballard v Shutt (1880) 15 ChD 122
Dowdle v Hillier (1949) 66 WN (NSW) 155
JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600
Mortimer v Capper (1782) 1 Browns Chancery Cases 156; 28 ER 1051
Nenadic v Nenadic [2014] NSWSC 317
Revell v Hussey [1813] 2 Ball & Beatty Reports 280
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245

Texts Cited:

Fry on Specific Performance (Sweet & Maxwell, 6th ed, 1921)
Young AO, Croft and Smith, On Equity (Lawbook, 2009)
R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis, 4th ed, 2002)
Jones and Goodhart, Specific Performance (Butterworths, 1st ed, 1986)

Category:

Principal judgment

Parties:

Milan Nenadic (plaintiff)
Zvonko Nenadic (defendant)

Representation:

Counsel:
Mr R Sweet (plaintiff)
Mr J A Loxton (defendant)
Solicitors:
Slattery Thompson Solicitors (plaintiff)
Malcolm Carr Solicitors (defendant)

File Number(s):

2013/00308846

Publication restriction:

None

Judgment

1. The parties to these proceedings are brothers. Their mother left to them when she died, apart from other gifts, property at Mount Druitt to be held by them in equal shares. They have been unable to get on and in due course one of the brothers, and I will use first names without meaning any disrespect, the brother Zvonko, sought to have the property sold under s 66G of the Conveyancing Act 1919 (NSW). Those proceedings were settled by the parties entering into a deed on 17 September 2012. The deed essentially provided that the other brother, Milan, could buy the property for $182,500 provided that he paid a deposit and did certain other things within a stipulated time.

1. A contract for sale in the 2005 edition of the standard form was entered into by the parties for that price on 15 October 2012. The contract provided that settlement was to take place 42 days after the entry into the contract, that is 25 November 2012. There were difficulties between the parties. Notices to complete, et cetera, were issued and both parties approached the Court. The proceedings came on before me on 12 March 2014. For reasons I then gave, [2014] NSWSC 317, I held that Milan was entitled to a decree for specific performance and I made a declaration accordingly and gave directions which required completion on 24 April 2014. Unfortunately, the short minutes of order refer to the contract as being of 15 October 2013 rather than 2012.

1. Unfortunately, Milan thought that he had finance, but the ANZ Bank, which was providing the finance, considered that his finance had lapsed and so he was not able to complete on 24 April 2014. The parties' solicitors then gave notices to complete and in due course Zvonko said that he was terminating the contract and gave notice accordingly.

1. Two notices of motion were issued, one by Zvonko asking for a declaration that the contract was now terminated or for leave to terminate, the other by Milan asking that the time for completion be extended to 5 September 2014. The motions came on before me today. They had to be heard as a matter of urgency because Milan's current finance expires on Friday next.

1. There seem to me to be five matters to consider, namely, (A) matters of general principle applicable to cases of specific performance; (B) the significance, if any, of the wrong date in the declaration as to the contract; (C) the significance, if any, of the increase in value of the subject property, (D) whether if completion is now to take place there should be interest awarded; (E) whether Zvonko is entitled to compensation because of Milan's exclusive occupation of the property; and having dealt with those matters I will under (F) give the result of the litigation.

A. Specific performance

1. Specific performance is a remedy given in equity. Traditionally when a person sought specific performance he or she had to surrender to the Court all their legal rights over the contract and put themselves in the hands of the Court and that is why one sees, for instance, in the fourth edition and earlier editions of Meagher, Gummow and Lehane on Equity that the learned authors used the word "anaesthetised" with respect to the plaintiff's common law rights over the contract. See, eg para [2053].

1. The position as to people's rights at common law pending the hearing of the suit were for a while in some confusion, but I do not need to deal with those because it is quite clear that once the Court makes an order for specific performance the contract is solely under the control of the Court and it is not possible for the parties themselves to issue effective notices to complete or notices to terminate. The Court has complete control over the contract and its leave is required before there can be any termination. I dealt with this in the book that Croft J, Ms Smith and I wrote on equity at para [16.1030] and the cases such as JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600 and Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 bear out. Because of that rule, the alleged termination given by Zvonko's solicitor is something that one can completely disregard.

1. Mr Sweet, who today appeared for Zvonko, said that I could give leave nunc pro tunc in respect of that notice. I do not consider that I can. Nunc pro tunc only relates to various procedural matters within the court and is not apposite to a substantive matter such as termination of a contract. The law also is, as is quite clear from what I said in para [16.1030], and in the classic work on specific performance, Fry on Specific Performance, (the latest edition is the sixth edition of 1921), that the Court does retain jurisdiction to give further and supplementary relief after judgment; see Fry para [1170] and following. So, to that extent, the normal restriction on the term "liberty to apply" does not affect making supplemental orders in a suit for specific performance.

1. Mr Sweet suggests that I can now make a series of orders, not only orders relating to the validation of the termination notice nunc pro tunc, but also I can give compensation for the occupation by Milan up until I made the earlier order. I do not think for the reasons that I will give subsequently that my jurisdiction is quite so broad. Fry at para [1170] and following points to two kinds of relief the courts can give after specific performance, namely, orders altering the time and place for completion and the calculation of the purchase money and orders rescinding the contract. It seems to me that it is only within that sort of area that the supplemental jurisdiction extends.

B. Date in the declaration as to the contract

1. It is quite true that the short minutes of order contained the wrong date, 2013 instead of 2012. Mr Sweet put that because of this I granted specific performance of a contract which does not exist and, accordingly, there was nothing prejudicial in the order to affect his client and it was now open for me to do whatever appeared to be just. The judgment, however, does refer to a 2012 contract and in my view the order is a mere slip and should be cured in the slip rule and in due course I will order that the declaration made be amended by substituting 2012 for 2013.

C. Increase in value of the subject property

1. The evidence now shows that the property is worth about $540,000. At the time the deed was entered into it would seem the parties thought it was worth $370,000. Accordingly, the difference in value as at today's date between the contract price and the current valuation for a half interest is $87,500.

1. I was not given any of this information when I decided the principal case in March. In any event, it seems to me that on the authorities it is not relevant. The basal principle to be considered in suits for specific performance is that one must take the contract as at the date it was entered into and at that date and that date only does one consider whether the price was fair and equitable. After that date the parties take the risk. If the property goes up in value that is the purchaser's good luck, if it goes down in value that is the vendor's good luck. That is a basic principle which is dealt with in Fry at para [914] where the learned author says:

But when the contract has been completely made, the thing sold is at the risk of the purchaser, who must bear all subsequent losses, and is entitled to all subsequent gains: subsequent events, therefore, can neither determine the contract nor give either party a right to resist its performance.

1. The authority cited for the last of that proposition is the Irish decision of Revell v Hussey [1813] 2 Ball & Beatty Reports 280 at 287. Although that is an obscure authority, the principle has never been doubted since. See, for instance, Jones and Goodhart on Specific Performance, first edition, (1986) at pages 80 to 82. The other authority quoted in the books for this proposition is Mortimer v Capper (1782) 1 Browns Chancery Cases 156; 28 ER 1051, where property was sold in consideration of an annuity. The parties thought the annuitant would live for some time. In fact, the annuitant died shortly after the contract. The Court held that was no reason why the contract should not proceed.

1. Thus, if there was a proper contract for the sale of land and the price was adequate at the time, then the mere fact that its value is now substantially different is of no consequence as to whether the order should be set aside or no longer pursued.

1. Mr Sweet, however, did put it another way, that is to say that the present situation is that both parties are asking for a boon from the Court. Milan is asking that the Court extend the time for performance, even though he failed to comply with the Court's order made in March, and that, accordingly, I can order him to do equity and where there is a very marked discrepancy in value, I can take some notice of discrepancy in value in making some just order for compensation. I can appreciate that argument, however, with respect, I do not consider that I can follow it. I must administer equity, not in accordance with any idiosyncratic notion that I may have as to what is just, but in accordance with the principles laid down by Equity judges over the ages. That principle is that subsequent increase in value is not a relevant matter that should be taken into consideration. However, I can make orders for interest and I will deal with that in the next heading.

D. Interest

1. Fry, in paragraph [1445] says that where a purchaser is in possession of an estate under a contract, the purchaser must pay interest on the unpaid purchase money from the time when his possession under the contract commenced until completion. He gives a series of authorities for that proposition, including Ballard v Shutt (1880) 15 ChD 122. It should have been the case accordingly in March, had my attention been drawn to it or had I remembered, that I should have awarded interest last March from the date when completion should have taken place, 25 November 2012, but I did not. It seems to me that as Milan is now asking for the boon of extending the time, notwithstanding the fact that he did not comply with the order in March, that it is open for me to revisit the question of interest. Under the contract, if there was a delay, interest was to be paid at 10 per cent per annum. Interest from 24 April 2014 to date would be something like $2200; my calculation from 25 November 2012 to 5 September 2014 is $8993. It seems to me that I should only give relief to Milan provided he pays that sum in addition to the purchase price.

E. Compensation

1. Mr Sweet also asked for compensation because of the exclusive occupation of Milan since the death of the party's mother. I drew attention to the fact in my earlier judgment that because of ouster of Zvonko by Milan, compensation would have been payable. However, no-one ever asked me for that, nor was it included in the initiating process that commenced the specific performance suit or in any cross-claim. Accordingly, no order was made, no application was made during the trial and my view is it is now too late to ask for it. It is not a matter that is part of a supplementary order that can be made in a specific performance suit, nor, looking at the phrase "liberty to apply" and taking into account what Roper CJ in Eq said in Dowdle v Hillier (1949) 66 WN (NSW) 155 at 157 can I now make such an order.

F. Result

1. Accordingly, I should on Milan's notice of motion extend the time for completion to 5 September 2014; however together with the balance of purchase price, which I think is $50,817 must be added $8993 interest, making a total of $59,810.

1. The order is also as indicated earlier, that under the slip rule declaration 1 made in March must be amended by deleting the figures 2013 and substituting 2012. As to costs of the present motions, it seems to me that both sides have both succeeded and failed to an extent and each should pay their own costs of the two motions before the Court today.

**********

Decision last updated: 03 September 2014