Nelson v Bellamy
[2000] NSWSC 182
•3 March 2000
CITATION: LORI ANN NELSON v LYNETTE MARIE BELLAMY [2000] NSWSC 182 CURRENT JURISDICTION: EQUITY FILE NUMBER(S): SC 1844/1997 HEARING DATE(S): 3,4,5 MARCH and 31 MAY 1999 JUDGMENT DATE: 3 March 2000 PARTIES :
LORI ANN NELSON (Plaintiff)
LYNETTE MARIE BELLAMY (Defendant)JUDGMENT OF: Simos J
COUNSEL : P.Le Gay Brereton (Plaintif)
M.A.Twigg, Solicitor (Plaintiff)
G.E.Underwood (DefendantSOLICITORS: Adrian Twigg & Co. (Plaintiff)
Matthews (Defendant)CATCHWORDS: Vendor and purchaser - Sale of land - Vacant possession - Vendor able to give vacant possession notwthstanding certain items remaining on land at completion date - Contract - Condition or warranty - Breaches of contract alleged were breaches of warranty only - Purchaser not entitled to terminate - Contract - Wrongful termination by purchaser - Vendor entitled to terminate and to claim damages - Conveyancing Act 1919 - Section 55(2A) - Purchaser entitled to return of deposit - Fair Trading Act 1987 - Alleged representations either true or made with reasonable ground or not established - Defendant's cross-claim dismissed. LEGISLATION CITED: Fair Trading Act 1987
Conveyancing Act 1919CASES CITED: Argy v Blunts & Lane Cove Real Estate Pty. Limited (1990) 26 FCR 112
Cumberland Consolidated Holdings Limited v Ireland (1946) KB 264
C.Czarnikow Ltd. v Koufos (1969) 1 AC 350
Davies v Hastwel-Batten (1985) NSW ConvR 55-261
DTR Nominees Pty. Limited v Mona Homes Pty. Limited (1978) 138 CLR 423
Eighth SRJ Pty. Limited v Merity (Young J, 25 March 1997, unreported)
Franich v Swannel (1993) 10 WAR 459
Hadley v Baxendale (1854) 9 ExCh 341; 156 ER 145
Hongkong Fir Shipping Co. Limited v Kaasaki Kisen Kiasha Limited (1962) 2 QB 26
Jampco Pty. Limited v Cameron (No. 2)(1985) 3 NSWLR 391
Johnson v Agnew (1980) AC 367
Liverpool Holdings Limited v Gordon Lynton Car Sales Pty. Limited (1978) QdR 279
Lucas & Tait (Investments) Pty. Limited v Victoria Securities Limited (1973) 2 NSWLR 268
Mallick v Parish (1916) 16 SR(NSW) 305
Murdaca v Fisher (1981) 2 BPR 9287
Noble v Edwards (1877) 5 ChD 378
O'Brien v Smolonogov (1983) 53 ALR 107
Point Glebe Pty. Limited v Lidofind Pty. Limited (1988) NSW ConvR 55-412
Tramways Advertising Pty. Limited v Luna Park (NSW) Ltd. (1938) 38 SR(NSW) 632DECISION: Plaintiff (Vendor) entitled to terminate contract and damages; cross-claim under Fair Trading Act 1987 dismissed.
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
SIMOS J
FRIDAY, 3 MARCH 2000
(NO. 1844/1997): LORI ANN NELSON v LYNETTE MARIE BELLAMY
JUDGMENT
The Proceedings
Statement of Claim
1 HIS HONOUR: By statement of claim filed 23 May 1997 Lori Ann Nelson, the plaintiff, alleged against Lynette Marie Bellamy, the defendant, that by contract for sale of land dated 19 September 1996, ("the contract”), the plaintiff agreed to sell and the defendant agreed to purchase the property situate at and known as Villa Tuscany B/134 Ocean View Drive, Wamberal in the State of New South Wales, being Lot B. in Plan 341313 ("the land") for a price of $285,000. The plaintiff further alleged that pursuant to the. said contract the defendant paid to the plaintiff's solicitors as deposit holder a deposit of $28,500.00 ("the deposit").
2 The plaintiff further alleged that it was a term and condition of the contract that completion of the contract should take place by 31 October 1996 or within 21 days from notification to the defendant or her solicitor of registration of the plan (of subdivision), whichever should last occur ("the completion date") and that if the contract was not completed by the completion date either party would be at liberty to issue a notice to complete fixing a time for completion which time would be of the essence of the contract. It was further alleged that it was a term and condition of the contract that if the defendant did not comply with the contract or a notice under it or relating to it in an essential respect the plaintiff could terminate the contract by serving a notice and then keep or recover the deposit, except so much of it as exceeded 10% of the price, and sue the defendant to recover damages for breach of contract, or where the plaintiff had resold the property under a contract made within twelve months after termination, to recover the deficiency on resale (with credit for any of the deposit kept or recovered) and the reasonable costs and expenses arising out of the defendant's non-compliance with the contract and of the resale and any attempted resale.
3 The statement of claim further alleged that on 9 January 1997 the plaintiff notified the defendant that the plan had been registered pursuant to which the completion date in accordance with the contract was 30 January 1997. It was further alleged that the defendant did not complete the contract by the completion date whereupon on 4 February 1997 the plaintiff issued a notice to complete fixing 19 February 1997 for completion and making time of the essence. It was further alleged in the statement of claim that on 19 February 1997 the plaintiff was ready, willing and able to complete the contract but that the defendant failed on that day or at all to complete the contract. It was further alleged in the statement of claim that on 20 February 1997 the defendant purported to terminate the contract and thereby repudiated the contract, and that on 14 March 1997 the plaintiff accepted the repudiation and terminated the contract. The plaintiff further alleged that by reason of the defendant's failure to complete the contract the plaintiff had suffered loss and damage, being loss of the benefit of the bargain contained in the contract and the incurring of wasted costs and expenses of the sale and of the vendor's non-compliance with the contract.
4 The plaintiff claimed that, in these circumstances, the plaintiff was entitled to keep the deposit and interest accrued on it and to recover damages.5 By her defence the defendant alleged that as at the completion date, namely, 30 January 1997, the plaintiff was in breach of a number of the special conditions of the contract which special conditions required the plaintiff to complete, prior to completion, certain work in relation to the property the subject of the contract. The defendant also alleged that as at 19 February 1997 the plaintiff was in breach of condition 17.1 of the contract which provided that the plaintiff must give the defendant vacant possession of the property on completion, and was also in breach of certain of the special conditions of the contract which, as stated earlier, required the plaintiff to complete certain work in respect of the subject property prior to completion. The defendant also alleged that as at 19 February 1997 she was willing and able to complete the contract, but, as a consequence of the plaintiffs breaches, the plaintiff was not ready or able to complete the contract, by reason whereof the defendant's election to terminate the contract in accordance with the plaintiffs notice to complete, and for breach of an essential term of the contract, was lawful.
Defence
6 By her cross-claim the defendant alleged that, prior to the entry into the contract, the plaintiff (cross-defendant) represented to the defendant (cross-claimant) as follows as set out in paragraph 4 of the cross-claim.
Cross-Claim
(a) that the second dwelling in the course of construction on the land had been sold to a purchaser 'off the plan' for about $335, 000. 00 and that the difference in price arose because the second dwelling included a swimming pool;
(b) that construction of the dwelling, the subject of the contract, on the land would be completed by about December 1996 and that the second dwelling would be completed by about January 1997, by which time the driveway to the land would be commenced and completed by about March 1997;
(c) that the cross-defendant would supply and install wrought iron gates on the land, as depicted in a plan produced to the cross-claimant by the cross-defendant, such gates to incorporate a sail pattern to match the canopy at the front of the house and to have the words 'Villa Tuscany' incorporated into the metal work of the gates and that such gates would be delivered and installed by the end of September 1996;
(d) that an iron gate would be installed by the cross-defendant in a gap in the brick boundary wall to the land and that such gate would match the gates referred to in paragraph 4(c) and that such gate would be delivered and installed by the end of September 1996;
(e) that door handles for the internal doors and window latches for the windows had already been purchased by the cross-defendant and would be left in the house;
(f) that a range hood would be supplied and installed by the cross-defendant in the kitchen of the dwelling and that it would be large and of solid stainless steel construction, that it would be delivered to the site within one week following the cross-claimant's inspection of the property and installed above the gas hotplate in the kitchen and that a cupboard in Lupus Blue' would be installed to the side of the range hood.”7 The defendant (cross-claimant) alleged that she was induced to enter into the contract in reliance upon the said representations and each of them, and further, that in respect of certain of those representations which were representations with respect to future matters, the plaintiff (cross-defendant) did not have reasonable grounds for making the representations or any of them.
8 The defendant further alleged in the cross-claim that, in making the representations, the plaintiff (cross-defendant) engaged in conduct that was misleading and deceptive and that such conduct did in fact mislead and deceive the defendant (cross-claimant).
9 Arising out of these matters the defendant (cross-claimant) claimed relief pursuant to the Fair Trading Act 1987, including a declaration that the contract was void from its beginning, damages, and an order that the deposit be paid to the defendant (cross-claimant).
10 The cross-claim also alleged that the termination of the contract by the defendant (cross-claimant) was valid. In respect of this claim the defendant (cross-claimant) sought a declaration that the contract had been validly terminated by her, an order that the amount of the deposit be paid to her and, in the alternative, an order pursuant to section 55(2A) of the Conveyancing Act 1919 for the return to her of the deposit paid pursuant to the contract.11 By her defence to the cross-claim the plaintiff (cross-defendant), denied in substance, all material allegations made in the cross-claim.
Defence to Cross-Claim
The Facts
12 In, and prior to, September 1996, the plaintiff was the owner of the property 134 Ocean View Drive, Wamberal, upon which was erected an old house. The plaintiff decided to demolish the old house, to subdivide the land into two lots, and to build a separate dwelling on each of the two lots. The plaintiff decided that she would sell one of the two dwellings, which was named Villa Tuscany, for a profit to enable her to repay certain debts, and to live in the other dwelling, the northernmost dwelling, called Villa Umbria, with her parents, who would purchase an interest in the dwelling, and her daughter. The plaintiff was assisted in this endeavour by her husband (through a company), from whom she was later divorced, and who had no financial interest in the project as a result of certain arrangements made in the Family Court of Australia. Building of both the dwellings had commenced, but the southern most dwelling, namely, Villa Tuscany, was more advanced to the extent that as at September 1996 the plaintiff was living therein with her daughter.
13 On 14 September 1996 the plaintiff advertised Villa Tuscany for sale in the Sydney Morning Herald describing it as a "Provincial Farmhouse". The advertisement also contained the following text:-
"Rustic Tuscany style Torrens Title villa. 100m from Pacific Ocean. Romanesque courtyard, ha~f metre thick walls, handmade timber french doors and windows (all shuttered), huge pantry room, wild open fire, terra cotta roof, antique pine doors. Porters limewashed bagged walls, linen room. Private tree covered battle axe position. Neg. $285, 000.
One already sold (off plan nearing completion)
'VILLA TUSCANY' READY FOR SALE FROM DEVELOPER.
Open for inspection Saturday & Sunday 2-3pm
134 OCEAN VIEW DRIVE WAMBERAL.”14 The advertisement also included a telephone number for enquiries. On the day upon which the advertisement was published the defendant telephoned the plaintiff and arranged an inspection at about 12 noon on that day. The plaintiff and the defendant subsequently met at the property, and the defendant showed the plaintiff the two dwelling houses which were in the course of construction at the end of a right of way leading from the street frontage. The construction of the southern dwelling, Villa Tuscany, was in a much more advanced stage of construction than the northern dwelling, Villa Umbria, and, as stated above, the plaintiff and her daughter were living in Villa Tuscany. There was conversation between the plaintiff and the defendant on this occasion as more fully set out in the affidavits of the plaintiff and the defendant, which reveal differences of recollection between the plaintiff and the defendant as to what was said and what was not said as more fully referred to hereafter.
15 On 16 September 1996, following upon her inspection of the property, on 14 September 1996, the plaintiff instructed her solicitor to act for her in relation to her proposed purchase of the subject property. Further, an architect, Mr. Stephen Moore, was retained on behalf of the defendant to provide a home inspection report in relation to Villa Tuscany. Mr. Moore first inspected the subject property on 17 September 1996. On 19 September 1996 exchange of contracts for the sale and purchase of the subject property between the plaintiff and the defendant occurred, after certain negotiations as to the terms and conditions of the contract arising, inter alia, from Mr. Moore's inspection and report. In particular, there were two special conditions inserted in the contract, namely, special condition 23 and special condition 26, each of which detailed certain work which was agreed to be done by the vendor prior to completion, in respect of which disputes later arose as to whether or not the plaintiff had complied with her obligations in these respects and which disputes, inter alia, were the subject of the present proceedings.
16 Pursuant to the terms of the contract, the defendant's daughter and three of her friends occupied the subject property prior to completion, from 6 December until 8 December 1997, on which day they moved out, the defendant having inspected the property on 7 December 1997. To allow this occupation to occur the plaintiff and her daughter moved out of the property, and the plaintiff obtained a lease of a nearby property.
17 There followed considerable correspondence between the solicitors for the plaintiff and the solicitors for the defendant. The plan of subdivision was duly registered on 9 January 1997, and the solicitors for the plaintiff notified the solicitors for the defendant accordingly, by letter dated 9 January 1997, which concluded with the words:-
“As per the contract this matter should now be completed within 21 days. "
18 Following further correspondence, the solicitors for the plaintiff wrote a letter to the solicitors for the defendant dated 4 February 1997 enclosing a notice to complete, nominating an appointment to settle at a specified time and place on 19 February 1997.
19 On 3 February 1997 the plaintiff, in company with Mr. Moore, the architect, inspected the subject property following which inspection the solicitors for the defendant wrote a letter to the solicitors for the plaintiff dated 3 February 1997 enclosing a list of work which it was alleged that the plaintiff was required to do pursuant to the contract but which had not been done or which had been done but not in a proper and workmanlike manner. A copy of this list is set out later in this judgment, and it was agreed between the parties that this list embodied the various matters of that kind which were the subject of dispute in the present proceedings.
20 On 19 February 1997 the solicitors for the plaintiff and the solicitors for the defendant and representatives of their respective mortgagees attended at the time and place specified for settlement in the notice to complete, but the settlement venue was changed to another location. The relevant parties then met at the new location. The solicitor for the defendant, Mr. Matthews, left the settlement room with the defendant and had a conversation with her and then returned to the settlement room. On his return Mr. Matthews said that he had been instructed not to settle the contract because the vendor was not in a position to complete the contract because of her failure to give vacant possession on that day as required under the contract, by reason of the fact that there was a significant amount of rubbish and builder's debris on the property. The proposed settlement was then aborted.
21 Subsequently, by letter dated 20 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff the defendant purported to terminate the contract. This letter was in the following terms:-
"20 February 1997
Facsimile No: 9264 7508
Adrian Twigg & Co. Your ref:PT. JA
Suite 3,
Level 10 -
162-166 Goulburn Street
SYDNEY NSW 2000
1 page
Dear Mr Twigg
Bellamy purchase from Nelson
Property: Villa Tuscany B/134 Ocean View Drive Wamberal
I have been instructed to advise that the purchaser has elected to terminate the Contract for sale of the above described property dated 19 September 1996 because of the vendor's failure to complete the sale in accordance with the said contract for sale and the vendor's Notice to Complete dated 4 February 1997 being a breach of an essential term of the Contract:
In particular, the vendor failed to offer vacant possession to the purchaser at the time and date fixed for completion in the Notice to Complete. Inspection at the time fixed for completion revealed large quantities of building materials, chattels, builder's rubble and other debris remained on the property.
In addition the vendor failed to comply with Special condition 26 of the Contract by failing to install washout blocks in the south wall of the property, prior to completion.
The vendor has failed to comply with Special condition 23 of the Contract by failing to install, prior to completion, open corner supports for garbage bin and an open shelf for microwave in the kitchen of the property.
Further the vendor failed to comply with Special conditions 23 and 26 of the Contract by failing, prior to completion, to carry out works required by those conditions in a proper and workmanlike manner, (a schedule of such items was served on the vendor on 18 February 1997).
I hereby direct and authorise you as stakeholder named in the contract to repay the deposit to the purchaser forthwith. In accordance with clause 3.2 of the contract all interest earned on the deposit is also due to be paid to the purchaser. You are directed to pay the interest to the purchaser forthwith.
Yours faithfully
(signed)
Neil S Matthews22 Subsequently again, by letter dated 14 March 1997 from the solicitors for the plaintiff to the solicitors for the defendant, it was stated by the solicitors for the plaintiff that the plaintiff regarded the defendant's purported rescission of the contract on 20 February 1997 as a repudiation of the contract by the defendant, and that the plaintiff thereby terminated the contract for the defendant's repudiation and failure to comply with the notice to complete.
23 The relevant paragraph in this letter was in the following terms:-24 In her defence the defendant alleged, as stated earlier, that as at the completion date, the plaintiff was not in a position to give vacant possession. In this connection the defendant alleged in her defence that this was by reason of the fact that
"It does not appear to our client that your client (is) genuinely interested in trying to complete the contract. Therefore our client has demanded of us that we account to her for the deposit. Our client denies that your client is entitled to rescind and regards your purported rescission of the contract on the 20th February 1997 as a repudiation of the contract. Our client hereby terminates the contract for your repudiation and in particular in regards to the failure to comply with the notice to complete.”
Vacant Possession
25 In addition, in the course of the hearing, mention was made of the shutters for the French doors which were apparently left stacked under the house. These, however, were included in the contract as items being purchased by the defendant as appears from their inclusion in the section of the contract entitled "Furnishings and chattels" as follows:-
”'building materials and rubbish remained on the land the subject of the sale, namely:
1 large wooden pallet, 3 wooden brick pallets, quantity of concrete blocks, quantity of pine board flooring off cuts, quantity of timber off cuts, 1 circular pole, broken concrete blocks, quantity of loose dried cement, quantity of other builder's rubble and used materials and two for sale' sign boards.”
"10 shutters to match french doors (to befitted by purchaser) (all inspected by the purchaser). "
26 The contract provided that the property being sold was "The following land and the following furnishings and chattels".
27 It is obvious in those circumstances the purchaser is not entitled to rely upon the existence of shutters in the undercroft as constituting evidence that the plaintiff was not in a position to give vacant possession as at the date of completion.
28 In this connection counsel for the plaintiff relied, inter alia, upon special condition 1(a) which, so far as material, was in the following terms: -29 In my opinion, however, the various items, other than the shutters for the french doors, particularised as having been present on the property at the relevant date, which are relied upon by the defendant as giving rise to the conclusion that as at the relevant date the plaintiff was not in a position to give vacant possession of the subject property, do not fall within the description of fixtures, furnishings and chattels included in and forming part of this sale. Accordingly, in my opinion, special condition l(a) did not operate in the circumstances of the present case to relevantly qualify the obligation of the plaintiff to provide vacant possession on completion pursuant to condition 17.1 of the contract which is in the following terms:
“1. The purchaser acknowledges that:-
(a) … all fixtures, furnishing and chattels included in and forming part of this sale (the fixtures, furnishings and chattels ) are being purchased in their present condition and state of repair and with all faults and defects (apparent or latent) subject to any infestation and dilapidation and as a result of the Purchaser's own inspection investigation …”.
"Normally, the vendor must give the purchaser vacant possession of the property on completion .”
30 The parties agreed that the relevant test to be applied was that stated in Cumberland Consolidated Holdings Limited v Ireland (1946) KB 264 at 271, namely, that in order to constitute a breach of a vendor's obligation to give vacant possession material left on the property must be "an impediment which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property."
31 In my opinion, the items referred to above which were present on the property at the relevant time were not, within the meaning of the relevant principle, "an impediment which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property."
32 I accept the submission made on behalf of the plaintiff to the effect that such items did not impinge at all on the living areas, including the courtyard, and did not substantially prevent use of the undercroft or the side alleys which did not, in any event, constitute, relevantly, "a substantial part of the property". I also accept the submission made on behalf of the plaintiff that Mr. Moore's close-up photographs give an exaggerated view of the impact of the builder's rubbish in the alleys (side passages) and that a far better perspective of its relative insignificance for present purposes is given by Mr. Greenish's photographs from a more natural distance.
33 In my opinion, as submitted on behalf of the plaintiff, the alleyways cannot be described as a "substantial part of the property" having regard to the design of the property and its user. I am further of the opinion, as submitted on behalf of plaintiff, that even if the alleyways could be described as a substantial part of the property such building waste as there was in those alleyways did not, as submitted on behalf of the plaintiff, in my opinion, substantially prevent or interfere with the enjoyment of the right of possession to those alley ways.
34 So far as concerns the undercroft, I am of the opinion that, again as submitted on behalf of the plaintiff, it did not constitute "a substantial part of the property", and further, that the only material which might have substantially prevented or interfered with the enjoyment of the right of possession of the undercroft were the stack of shutters for the french doors which were part of the subject matter of the sale.
35 In my opinion, these findings are not inconsistent with Mr. Moore's evidence that two men would be required for one day at a cost of $600 to remove the subject items.
36 The relevant date upon which it must be determined whether the plaintiff was or was not in a position to give vacant possession to the property is 20 February 1997, the date upon which the defendant purported to terminate the contract for breach by the plaintiff including the alleged breach by the plaintiff to be in a position as at that date to give vacant possession of the subject property to the defendant.37 By affidavit dated 3 July 1997 Stephen Moore, architect retained on behalf of the defendant gave evidence, inter alia, as to the state of the property on 19 February 1997, such evidence-in relation to the question of vacant possession including the following:-
The Evidence
"15. As at 2.30pm on 19 February 1997, 1 observed the following
(a) Builder's rubbish and building materials were lying around the southern dwelling and in the undercroft of the southern dwelling. There were numerous lengths of timber of assorted sizes on the southern side of the house, broken pieces of concrete blocks which I estimate to have been one cubic metre in volume on the eastern side of the southern dwelling; lengths of building timber and off cuts on the eastern side of the southern dwelling; a large circular pole lying on the eastern side of the southern dwelling; eleven wooden doors were stacked on top of 1 large heavy wooden pallet and there were several concrete 'Besser' blocks beneath the pallet as well as four 'Besser' blocks lying on the ground. A further three heavy wooden pallets used for the delivery of bricks were in the undercroft of the house; there was one further large timber pallet in the undercroft, lengths of pine board flooring and off cuts thereof were lying in the undercroft of the house; around the perimeter of the house there was a significant quantity (which I would estimate to be one cubic , metre) of dried cement, builder's rubbish and pieces of used building materials in the undercroft of the house and two 'For Sale' signs in the undercroft of the house.
…
16. In my opinion the building material and rubbish described in paragraph 15(a) above which I observed on 19 February 1997 would have required the following work to be carried out to remove it from the site:38 Mr. Moore also gave oral evidence, principally by way of cross-examination, inter alia, as follows:
(a) provide a truck to the site to carry the material;
(e) pick up concrete blocks and load onto truck;
(b) provide two men to the site with the necessary tools including shovel, wheel barrow and mattock
(c) pick up timber and pallets and load these materials onto the truck .
(d) use shovel and wheel barrow to pick up and place in the truck all loose building materials and building rubbish;(h) whipper snipper to cut weeds after clean up.
(f) provide a chain saw to cut large timber pole into pieces capable of being lifted;
(g) use truck to deliver the materials to the nearest public general tip, pay tipping fee and return unloaded truck
17. Two men would be required to complete the above work. I estimate that one full day for two men would be required to remove the material from the site .
18. My opinion on the cost of removing any building materials and debris which was inside the southern dwelling on 19 February My opinion on the cost of labour and equipment hire for the work referred to in paragraph 17 is $600.00. This opinion excludes the cost of removing eleven doors stacked in the undercroft of the house …”
39 This was elicited in evidence in relation to a statement in Mr. Moore's affidavit as follows:
"On the southern side of the house 'my estimate would be there were about four or five pieces of timber ... various sizes ....from my recollection in the order of two metres, the smallest probably about six inches ... probably two (of the order of six inches).’”
"There were numerous lengths of timber of assorted sizes on the southern side of the house.”
40 In other words, Mr. Moore had described the relevant "four or five pieces of timber" on the southern side of the house as "numerous", which, on one view, might seem to have been something of an exaggeration.
41 Mr. Moore also said, perhaps somewhat inconsistently, that there were two pieces of timber in the back alley, the southern alley and similar bits within the leaves and debris between the retaining wall and the house.
42 Mr. Moore gave evidence in respect of the eastern side of the subject dwelling as follows:-
"Q. … you refer to lengths of building timber and off-cuts on the eastern side of the southern dwelling'. How many pieces did you observe?
A. I would estimate on the eastern side there were about 22 to 30 pieces of timber.
Q. The lengths of those pieces of timber?
A. These pieces of timber were generally of small size, six inches, eight inches, that sort of order.43 The two "For Sale” signs were in the undercroft on 19 February 1997 and had not been taken away by the agents before that date as Mr. Moore's photographic records indicate that on inspection on 19 February 1997 the signs were there. Mr. Moore said that the signs were stacked against a pillar in the undercroft.
44 Mr. Moore saw some pallets on the earth floor of the undercroft. Also "a pile of shutters, French doors" eleven doors stacked neatly on top of a wooden pallet beside one wall of the undercroft with the wooden pallet itself supported by some concrete blocks.
45 Mr. Moore gave evidence that he saw three pine board off-cuts, one probably about three metres long by about six millimetres, another one a metre wide by about two metres long, and another one about the same size.
46 Mr. Moore had no difficulty gaining access to the undercroft on 19 February 1997 through the undercroft access gate within the eastern wall of the house.
47 The photograph of the eastern alley was taken at a height of just above a metre and Mr. Moore was possibly "at least leaning over to take those photographs".
48 The defendant agreed that the plaintiff was to leave the shutters for the French doors on the property so that the defendant, not the plaintiff, could install them. In oral evidence (principally in cross-examination), the plaintiff gave evidence that there were a few lengths of timber left on the property and a telegraph pole; there were four to ten pieces of timber of the kind that could be used as firewood which were hardwood and in size they could have been between one and two metres. She said that on the eastern side of the house there were smaller pieces of timber ("little bits or cut-offs") approximately one foot in length, numbering four or five. The plaintiff said that there were pieces of concrete blocks on the southern side of the house, ("chips and some debris" in size five or six inches, in total a bucketful) and that on 19 February 1997 there was a barrow load of debris which could be collected from the property. The plaintiff stated that there were probably five or six timber pallets in the undercroft and there were lengths of "particle board and off-cuts in the undercroft. The plaintiff conceded that there were two "For Sale" signs in the undercroft on 19 February 1997.
49 The plaintiff also stated that there was no debris in the courtyard area or in the habitable part of the property.
50 In re-examination on this subject matter the plaintiff was asked:-51 The plaintiff replied as follows:-
"Wh ere in the house or where around the house was there anything which might be described as builder's rubbish?”
“A Not in the courtyard, not inside the dwelling. If you had raked and got a wheelbarrow to a part of the side passage and maybe raked heavily, raked under the house, you could have constituted that as rubbish or probably two or three barrow loads if you had finally, finally raked it.
Q. What did it comprise?
A. Bits of mortar, maybe chips underneath the house, a side of a block.
Q. You are indicating about what size?
A. This size, maybe hand size.
Q. Up to palm size?
A. Yes.”52 The plaintiff stated that she left the telegraph pole on the property at the request of the defendant for use as firewood and rejected the suggestion that no such conversation occurred as the defendant claimed. Mr. Moore gave evidence that the telegraph pole was of a kind which a builder might use on a site to provide temporary electricity supply to the site.
53 The plaintiff said that there was nothing that might be described as builder's rubbish in the courtyard nor inside the dwelling but that if "you had raked and got a wheelbarrow to a part of the side passage and maybe raked heavily, raked under the house, you could have constituted that as rubbish or probably two or three barrow loads if you had finely, finely raked it." She stated that the rubbish she was describing was "bits of mortar, maybe chips underneath the house, a side of a block" up to palm size.54 To recapitulate, in relation as to whether the plaintiff was at the relevant date in breach of her obligation to be in a position to provide vacant possession of the subject property, the evidence as at 20 February 1997, is generally as follows:-
Summary
Southern Side of House
55 Four or five pieces of timber, the biggest of which was in the order of two metres, with the smallest being probably about six inches, of which there were two such pieces.
56 A large circular pole (of a kind used by builders to obtain a temporary electricity supply to building sites). It is unnecessary to resolve the issue as to whether this pole was there with the consent or at the request of the defendant since, in my opinion, even if it was present without the consent of the defendant at the relevant time it would make no difference to my ultimate conclusion.
Eastern Side of the House
57 Broken pieces of concrete blocks estimated (by Mr. Moore) to have been one cubic metre in volume.
58 Twenty to thirty pieces of timber or timber off-cuts being generally of a small size being of the order of six to eight inches.
Undercroft
59 Eleven shutters for french doors stacked on top of one large heavy wooden pallet with the pallets having been placed upon several concrete blocks. These were present pursuant to the contract and may be ignored for present purposes.
60 Four concrete blocks.
61 Four wooden pallets.
62 Lengths of pineboard flooring and off-cuts.
63 Two "For Sale" signs.64 One cubic metre of dried cement, builder's rubbish and pieces of used building materials.
Around the Perimeter of the House
65 It was not suggested that there were any items material to this issue contained within the house or within the courtyard of the house.
Within the House and the Courtyard
66 It would have required two men and the use of a truck, shovel, wheelbarrow and mattock for one day to remove the above materials to the nearest general public tip.
Work Required to Remove Alleged Materials
Decision
67 In my opinion, as stated above, and accepting that the application of the relevant principle involves questions of fact and degree, I am of the opinion that it cannot be said that any of the relevant materials either individually or cumulatively substantially prevented or interfered with the enjoyment of the right of possession by the defendant of any substantial part of the property as at the relevant date. In particular, I am of the opinion that any intended enjoyment of the right of possession to the undercroft of the property was not substantially prevented or interfered with by the existence of the relevant items in the undercroft, having regard to what one might infer would have been the intended use of the undercroft which was plainly not intended to be used as a living area. The same is true in my opinion of the other relevant areas, including the southern side of the house, and even including the "large circular pole" on the eastern side of the subject property.
68 It follows in my opinion that the plaintiff was, as at 20 February 1997, in a position to give vacant possession of the property and that, accordingly, the defendant was not entitled to terminate the contract as at that date on the ground that the plaintiff was not in a position to give vacant possession of the property.
Other Alleged Breaches By Plaintiff
69 As stated earlier, the defendant also relied upon certain other alleged breaches by the plaintiff of the contract as entitling her to terminate the contract on 19 February 1999.
70 The relevant special conditions contained in the contract which it was alleged gave rise to the obligations in respect of which it is alleged the plaintiff was in breach, were the following:-
"23. Prior to completion the vendor is to install in a proper and workmanlike manner and supply the following which are to be included in the purchase price: -
(a) Supply and installation of one cream aluminium window to the pantry room 600 x 1000.
(b) Supply and installation of one stainless steel Extractor fan above gas hotplate with blue kitchen cupboard to match existing kitchen in Lupus Blue.
(c) Supply and installation of kitchen cupboards to under ISLAND BENCH, to match existing kitchen as follows :
(i) under sink cupboards with doors;
(ii) open corner supports for garbage bin;
(iii) open shelf for microwave;
(iv) partion shelf for dishwasher side, dishwasher not supplied.
(d) Supply and install kikuyu turf to area on patio of approximately 4 metres x 3 metres.71 It will be observed that each of these special conditions requires the vendor to have done certain work "prior to completion".
26. (a) Prior to completion the vendor agrees to do the following works in a proper and workmanlike manner, complete the top capping to top of courtyard walls, increase the height of the common courtyard wall by 40cm or two blocks, subject to council approval, which will be applied for by the vendor as soon as possible after the date of this contract, will install washout blocks in the east and south walls with finishing and pointing to suit (not rendered), will removal masking paper around windows in bedroom 2 and will install a window in the pantry, will complete internal painting to internal walls around doors and windows, will detail silicone around basin in bathroom, will complete painting around vanity basin in bathroom, will affix handles to dressing table in bedroom 1 and will apply finish to timber cupboards in bedroom 1, to fill the gap between roof and wall on northern wall in main bedroom above robe to prevent egress of water and animals and complete painting of gap between the brickwork and tiles in the north wall of bedroom 1.
Condition or Warranty
72 In my opinion, in accordance with the relevant principles, neither of these special conditions is a condition, breach of which would entitle the defendant (purchaser) to terminate the contract.
73 It was submitted on behalf of the defendant that special conditions 23 and 26(a) of the contract in respect of which it was alleged that the plaintiff was in breach were conditions (essential terms) of the contract, the breach of which entitled the defendant to terminate the contract. In this connection attention was drawn by counsel for the defendant to the fact that each of those clauses commenced with the words "Prior to Completion" and, in particular, to the fact that those words had been written in at the beginning of special condition 26(a), this latter consideration, presumably, being said to indicate that the parties regarded those words as of some importance. Reference was also made on behalf of the defendant to special condition 30 of the contract which provided, so far as material, that "If any dispute arises between the vendor and the purchaser as to whether ... (b) the vendor has complied with its obligations under clauses 23 and 26 the dispute will be referred to an architect" who "will act as an expert only". It was submitted that any such reference would have to take place "Prior to Completion" and that this also was some indication that the parties had regarded special conditions 23 and 26(a) as conditions (essential terms). I do not agree that references- pursuant to special condition 30 necessarily had to occur prior to completion but, even if that were the case, that consideration, in my opinion, lends only slight support to counsel for the defendant's submission that special conditions 23 and 26(a) were conditions (essential terms) of the contract, and, in my opinion, that slight support is convincingly outweighed by other considerations. The same is true in my opinion of the use of the words "Prior to Completion".
74 Rather, as counsel for the defendant submitted in his written submissions, in order that a term of a contract should be considered to be a condition it should be a term that "goes directly to the substance of the contract, or, in other words, is so essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all."
75 The generally accepted judicial statement of this general principle is that of Jordan CJ in Tramways Advertising Pty. Limited v Luna Park (NSW) Ltd. (1938) 38 SR(NSW) 632 at 641-2 which is in the following terms:-
"The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. "
76 This statement of principle was approved by the High Court in DTRNomineesPty. Limited v Mona Homes Pty. Limited (1978) 138 CLR 423 at 430-1.
77 In my opinion, considering the general nature of the subject contract considered as a whole, neither special condition 23 nor special condition 26(a) can be regarded as being "of such importance to the promisee that (she) would not have entered into the contract unless (she) had been assured of a strict or a substantial performance of the promise." Accordingly, in my opinion, those special conditions are not conditions (essential terms) of the contract.
78 The conclusion to be drawn in this connection involves, of course, questions of fact and degree considered in the context of the whole of the circumstances of the case. In my opinion, however, when one has regard, inter alia, to the fact that the substance of the contract was the sale and purchase of a substantial building and land for the sum of $285,000 one has only to read each of the items referred to in special conditions 23 and 26(a) which are the subject of controversy in the present proceedings, and have regard to the general nature of those breaches and to what would be involved in remedying such breaches, to be compelled to the conclusion that none of those items either individually or cumulatively could be regarded by a reasonable person in the position of the defendant purchaser, as being of such importance that such a person would not have entered into the contract unless he or she had been assured of a strict or a substantial performance of the relevant promises. The same is true in my opinion in respect of the defendant who, for present purposes, must, in my opinion, be regarded as a reasonable person.
79 It is, moreover, in my opinion, also legitimate to have regard in this connection to the consideration that there is provision in the contract for a three months defect liability period (special condition 28) as well as special condition 30 previously referred to, both of which, in my opinion, indicate an intention to deal with any breaches of special conditions 23 and 26(a) in the manner provided for in special conditions 28 and 30 rather than by the more drastic remedy of entitling the purchaser to terminate the contract.
80 It is plain in my opinion that breaches by the defendant of either of special conditions 23 and 26 of the contract would not deprive the purchaser (the party not in default) of substantially the whole benefit which it was intended that she should obtain from the contract and, accordingly, in my opinion, those special conditions may be classified for present purposes as being warranties, rather than conditions, for breach of which (warranties) the plaintiff may be liable to the defendant in damages but in respect of which breaches the defendant would not be entitled to rescind the contract.
Non-Essential Breaches
81 Counsel for the plaintiff, however, also submitted, in the alternative, in effect, that if, contrary to my view, it were inappropriate to classify those special conditions as either conditions or warranties, and if it were to be held that the plaintiff was in breach of those special conditions, nevertheless any such breach would not be an essential breach entitling the defendant to rescind. On this approach according to the relevant authorities, special conditions 23 and 26 of the contract might be described as "intermediate" or "innominate" terms, being terms, the breach of which entitles the purchaser to rescind the contract only if the breach is an essential breach, that is, a breach the effect of which is to deprive the purchaser of substantially the whole of the benefit which it was intended that he or she should obtain from the contract.
82 It is plain, in my opinion, that on this approach the breaches of special conditions 23 and 26 complained of by the defendant, even if fully made out, would not constitute essential breaches since they would not, in my opinion, have the effect of depriving the defendant of substantially the whole of the benefit which it was intended she should obtain from the contract.
83 The relevant statement of legal principle in this connection may be found in the judgment of Diplock L.J. in Hongkong Fir Shipping Co. Limited v Kawasaki Kisen Kiasha Limited (1962) 2 QB 26 at 69-70:-84 It was agreed between the parties in the course of the hearing that the relevant alleged breaches were constituted by the alleged failure of the plaintiff to complete prior to completion certain items agreed by her pursuant to the contract to be completed prior to completion, as more particularly set out in the annexure to the letter dated 18 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff which annexure was in the following terms:-
"No doubt there are many simple contractual undertakings, sometimes expressed but more often because of their very simplicity... to be implied, of which it can be predicated that every breach of such an undertaking must give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract. And such a stipulation, unless the parties have agreed that breach of it shall not entitle the non-defaulting party to treat the contract as repudiated, is a "condition ". So too there may be other simple contractual obligations of which it can be predicated that no breach can give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and such a stipulation, unless the parties have agreed that breach of it shall entitle the non-defaulting party to treat the contract as repudiated, is a 'warranty' .
There are, however, many contractual undertakings of a more complex character which cannot be categorised as being 'conditions' or 'warranties' ... Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertaking as a 'condition' or a 'warranty'.”
Alleged Breaches
[Yes/No]
[If not reasons why]
No. Extractor fan must be either connected to the exterior or, if it is a recirculating type, must be fitted with a charcoal filter23(c)Supply and install Kitchen cupboards to under island to match existing kitchen as follows:
1. under sink cupboards with doors;
2. open corner supports for garbage bin;
3. open shelf for microwave;
4. partition shelf for dishwasher sideYes to 1.&4.
No to 2.&3.23(d)
Supply and install kikuyu turn to area on patio of approximately 4 x 3 metres
Yes26(a)
Complete the top capping to top of courtyard walls
Yes
No. Completed poor quality manner in that the quality of render is poor26(a)
Increase height of the common courtyard wall by cm or two blocks (subject to Council approval)
Yes
No. Render finish does not match render on lower portion of wall - a recess should be cut to delineate between renders at different times26(a)
Install washout blocks in the east and south walls with finishing and pointing to suit Rest of wall (not rendered)
Washout blocks not installed on South wall
Chris Thompson of Gosford City Council advised that he asked Mrs. Nelson to provide as much underfloor ventilation as possible - washout blocks do not provide ventilation to the underfloor space and therefore should be installed26(a)
Remove masking paper around windows in bedroom 2
Yes26(a)
Install window in pantry
Yes26(a)
Complete internal painting to internal walls around doors and windows
Yes26(a)
Detail silicon around basin in bathroom
Yes
No. Silicon (around) basin is a poor quality installation26(a)
Complete painting around vanity basin in bathroom
Yes26(a)
Affix handles to dressing table in bedroom 1
Yes26(a)
Apply finish to timber cupboards in bedroom 1
Yes
No. Sanding and an additional coat required26(a)
No. Painting required
Fill gap between roof and northern wall in main bedroom above robe to prevent egress of animals and water
Yes26(a)
Complete pointing of gap between brickwork and tiles in the northern wall of bedroom 1
Yes27
Supply and install clothes line”
Yes85 The following paragraphs deal with my findings in relation to each of the relevant items alleged by the defendant either not to have been completed, or to have been completed but not in a proper and workmanlike manner.
Findings As To Alleged Breaches
A. "23(a) Supply and installation of one cream aluminium window to the pantry room 600 x 1000 ."
86 The complaint made in relation to this item as set out in the schedule to the letter of 18 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff is to the effect that the relevant window had been supplied and installed but had not been supplied and installed in a workmanlike manner because the "catch does not work".
87 Mr. Moore gave evidence that the "catch did not operate", whilst the plaintiff gave evidence that she last saw and used the catch on 20 December 1996 at which time it worked, although she stated that the catch was not "lockable". Mr. Moore's evidence was based upon his inspection of the property on 3 February 1997.
88 In relation to this matter I am of the opinion, based on Mr. Moore's evidence, that the probability is that the catch to the aluminium window to the pantry was not operative on 19 February 1997. In my further opinion, however, no breach of this special condition would entitle the purchaser to terminate the contract since special condition 23 of the contract is a warranty and not a condition. Further, in my opinion, it is beyond question that the breach thereby involved on the part of the plaintiff was not an essential breach so far as concerns the contract (on the assumption that, contrary to my view, it was not appropriate to characterise this condition as either a condition or a warranty).
B. "23(b) Supply and installation of one stainless steel Extractor fan above gas hot plate with blue kitchen cupboard to match existing kitchen in Lupis blue.
89 Evidence was given by Mr. Moore in his affidavit to the effect that at his inspection on 3 February 1997 he observed that "a basic model recirculating rangehood (sic) fan and cupboard unit had been installed in the kitchen". His written report following this inspection stated that there was "a basic model retractable extractor fan installed in cupboard unit of modest size to enclose extractor unit. Extractor fan not connected to outside. Extractor fan may be one (of) two types. 1. Recirculating, usually equipped with a charcoal filter. 2 Exterior exhaust."
90 The plaintiff conceded in oral evidence that there was no charcoal filter supplied with the extractor fan, nor was the extractor fan connected to the exterior of the building. The plaintiff, however, gave evidence to the effect that there was nevertheless some kind of filter for the extractor fan. The plaintiff also gave evidence to the effect that the extractor fan was not connected to the exterior of the house "because it was a double cavity and under those circumstances it could be vented between the blocks to the cavity so it did not have to go straight out through the wall."
91 The defendant gave evidence that the plaintiff said that she was going to install a "large silver rangehood". The defendant also gave evidence to the effect that she saw in the contract that it provided for an extractor fan and not a rangehood but that she "didn't really pick up the difference" between an extractor fan and a rangehood which she understood to be referring to the same thing.
92 In my opinion the plaintiff was not in breach of her obligation to supply and install an extractor fan as required by special condition 23(3) of the contract. The evidence satisfies me that an extractor fan was installed in a cupboard unit of sufficient size to enclose the extractor fan unit in accordance with Mr. Moore's evidence, and in my opinion, on the true construction of the relevant provision in the contract there was no obligation upon the plaintiff to ensure that the extractor fan either contained a charcoal filter or to ensure that the extractor fan should be connected to the exterior of the house. I am further of the opinion that the plaintiff’s obligation in this connection pursuant to the contract was not altered as a result of any conversation between the plaintiff and the defendant particularly having regard to the failure of the defendant to differentiate between an extractor fan and a rangehood and to the various other matters referred to later in this judgment in the course of dealing with the alleged representations by the plaintiff concerning this subject matter.
C. "23(c) Supply and installation of kitchen cupboards to under ISLAND BENCH , to match existing kitchen as follows:-
(i) under sink cupboards with doors …
(iv) Partion (p) (sic) shelf for dishwasher side, dishwasher not supplied.”
93 The plaintiff gave evidence to the effect that as part of the under-island bench there was an area with a bi-fold door behind which was a microwave and power point for it and that she had when living there placed a microwave there and had used it. The plaintiff said that the bi-fold door covered the microwave when closed. The plaintiff also gave evidence to the effect that there were in fact open corner supports for a garbage bin. These items do not appear to have been referred to by Mr. Moore in his evidence nor, in my opinion, was the evidence of the plaintiff in this connection relevantly challenged by any evidence from the defendant.
94 In all the circumstances I find that the plaintiff was not in breach of the contract in respect of either of these items.95 Although this item appears in the annexure to the letter dated 18 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff, the annexure states in effect that the turf was supplied and installed and makes no complaint in relation to whether it was installed in a workmanlike manner. However, Mr. Moore's affidavit states the following in relation to this item.
D. “23(d) Supply and install kikuyu turf to area on patio of approximately 4 x 3 metres .”
"15. As at 2.30pm on 19 February 1997, I observed the following: …
(c) The patio on which Kikuyu grass has been laid was inspected and I found the grass to have substantially died back and was weed infested. In my opinion the Kikuyu grass had not been laid in a proper and workmanlike manner in that poisoning of weeds and cultivation of the ground had not been carried out prior to laying the soil and grass; also the grass would not have died had it been prepared properly with sufficient regular watering during its establishment period
96 Counsel for the defendant stated during the hearing that the complaint in respect of the grass "was a workman (like) quality complaint" notwithstanding that this complaint was not made in the annexure to the letter of 18 February 1997.
97 It will be noted that the substance of this complaint as set out in Mr. Moore's affidavit was that "poisoning of weeds and cultivation of the ground had not been carried out prior to laying the soil and grass". Mr. Moore stated in his affidavit that the relevant area was on 19 February 1997 "weed infested" but he did not give any details of the extent or nature of that weed infestation which, accordingly may have been extensive or may have been relatively minor.
98 The plaintiff gave evidence to the effect that prior to laying the Kikuyu turf in the first instance "There was top soil brought in to lay the base down. It was clean and weeded and raked ... Just with normal garden practice. "The plaintiff said that "There would have been, there was debris and bits of building rubble, etc., on it so that it was raked and tidied up and then topsoil was installed and it was aerated and it was, I used lawn food to put underneath it.” The plaintiff also said that the topsoil was aerated "With a pitchfork, with a fork and when it was delivered by the turf company, the delivery person was an expert in turf and he assisted me and helped me lay it. The area is approximately 4 metres by 4 metres.” The plaintiff also said that the relevant area "was tidied up. It was dug out, cleaned of any rubble, it had. topsoil laid on it, it had fertiliser put on it, it was aerated and then the turf was laid." The plaintiff also gave evidence to the effect that there were weeds in the area prior to the turf being laid "but they were removed" but that no "spray (was) put onto the area to kill any weeds or vegetation in that area prior to the placing of the topsoil" because she didn't use chemicals.
99 Mr. Moore's evidence was as set out above to the effect that the laying of Kikuyu grass in a proper and workmanlike manner involved, inter alia, "poisoning of weeds" so that on the assumption that Mr. Moore, an architect, has sufficient horticultural expertise to express an expert view in relation to such matters, it would appear that the plaintiff was in breach of her obligation to lay that Kikuyu grass in a workmanlike and proper manner in that what she did did not include any poisoning of weeds, although as she stated, all weeds were removed.
100 Even on that assumption, however, I am of the opinion that for the same reasons as given above in relation to item A, this breach by the plaintiff was neither breach of a condition entitling the defendant to rescind, because special condition 23 is a warranty and not a condition, nor an essential breach of a term entitling the defendant to rescind.
E. "26. (a)Prior to Completion the vendor agrees to do the following works in a proper and workmanlike manner, complete the top capping to top of courtyard walls ...”
101 The affidavit of Mr. Moore contains the following statement in relation to this item:
15. As at 2.30pm on 19 February 1997, I observed the following …
(e) Render the top of the courtyard wall of the southern dwelling was not applied in a proper and workmanlike manner and was applied in a different and untradesmanlike fashion compared to the remainder of the wall . "
103 The evidence given by the plaintiff in respect of this item included the following:-
102 It appears from Exhibit H being a facsimile copy of the annexure to the letter dated 18 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff, that the substance of this complaint was "Poorly -rendered match to existing".
"Brereton:Q. So far as the quality of the render to the sides was concerned was there anything special or different about the side rendering ... as compared to the render below it?
A. Not that I felt. I had instructed Brian to keep it higgledy-piggledy . That was the nature of ... all of the render on the entire villa.
HIS HONOUR: Q. And on that wall in particular?
A. I just said just in keeping, I don't want it to look smooth and perfect.
Q. How did that seem with the rendering on the bottom of the same wall?
A. It was to my mind of the same nature.”.
104 The plaintiff also gave evidence that she was herself satisfied with the render and that it had been done in a good and workmanlike manner.
105 The rendering to the top of the courtyard walls was completed at the same time as the courtyard walls were capped, all the work in this regard being completed on 2 or 3 December 1996, a few days before the defendant took possession of the premises.
106 The necessity for capping the courtyard walls was described by the plaintiff in evidence as follows:
"Q. What is top capping for the courtyard walls?
A. When you build with blocks, they are hollow and where the wall finishes, unless you cap the top of them, the rain and the weather will continue to go into them so they have a special block known as a capping block.”
107 The plaintiff also gave evidence as follows:-
"Q. Before 19 February did you cause any works to be done concerning the top capping for the top of the courtyard walls?
A. Yes.
Q. Who did that work?
A. Brian Tilley who was my gold licence builder, who assisted me with the requirements of the contract .
Q. Were you present when he did that work?
A. Yes.
HIS HONOUR: Q. How long did it take?
A. Probably about half a day.
BRERETON: What did you see him do?
A. Well I physically moved the capping blocks in the area where they were needed according to Brian and he fixed up the mortar, attached the capping blocks and completed them as need to be completed ...
Q. Was it (the top capping) rendered?
A. The sides of the top capping were rendered
Q. What is the height of the sides of the top capping?
A. Possibly 30 centimetres your Honour.
Q. And you said the sides were …were you about to add something?
A. Yes and a fine render to the top, not a thick render
Q. So far as the quality of the render to the sides was concerned was there anything special or different about the side rendering? As compared to the rendering below it?
A. Not that I felt. I had instructed Brian to keep it higgledy piggledy. That was the nature of - all of the render on the entire villa.
Q. And on that wall in particular?
A. I just said, just in keeping, I don't want it to look smooth and perfect .
Q. How did that seem with the rendering on the bottom of the same wall?
A. It was to my mind of the same nature.”
108 Later in cross-examination of the plaintiff the following appears:-
"Q. Is this your view, that that rendering which was done to the top capping was acceptable apart from the paint factor that you referred to earlier in the day?
A. I was happy with the work that Brian had produced.”
109 In relation to this item, however, I have looked at photograph number 4 of Exhibit SM1 which bears the words on the reverse thereof:-
"Poor quality render at top of courtyard wall 19.2.97 SM".
111 In my opinion, however, for the same reasons as are stated in respect of items A and C above, this breach did not entitle the defendant to rescind the contract.
110 In my opinion it is plain from that photograph that the evidence of Mr. Moore to the effect that the render of the top of the relevant courtyard wall of the subject property was not applied in a proper and workmanlike manner in that it was applied in a different and untradesmanlike fashion compared with the remainder of the wall should be accepted.
E. "26. Prior to completion the vendor agrees to do the following works in a proper and workmanlike manner ... increase the height of the common courtyard wall by 40cm or 2 blocks ....”
113 The affidavit of Mr. Moore described this item as follows:-
112 In the letter dated 18 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff it is accepted that this work was done but it is alleged that the work was not done in a proper and workmanlike manner in that "Render finish does not match render on lower portion of wall - a recess should be cut to delineate between renders at different times".
"10. At my inspection on 3 February 1997… some work which had been carried out had not been completed in a proper and tradesmanlike manner as follows: ...
(f) The common wall between the southern and northern dwellings had been increased in height by 40Omm and render finished to match the remainder of the wall. Render was applied satisfactorily, however, poor workmanship was evident in not providing a line delineating renders applied at different times, as a result matching of renders applied at different times is poor ...
15. As at 2.30pm on 19 February 1997 1 observed the following …
(f) The interface of cement render applied at different dates on the dividing wall in the courtyard was not applied in a proper and workmanlike manner.”
115 I note that in Mr. Moore's earlier report being Exhibit G the following is stated in relation to this item:-
114 I infer that the complaint in relation to this item is that there was no provision for "a line delineating render applied at different times, as a result matching of renders applied at different times is poor."
"Completed, with capping blocks installed. Render finish satisfactory but does not match render on lower portion of wall. Note : it is normally difficult to match cement render with a swirl pattern, executed at different times. It would have been better to provide a line such as a recess to delineate between the renders executed at different times”.
116 The nature of this complaint is illustrated in photographs 9 and 10 of Exhibit SM1, each of which have written on the reverse:-
"Joint between render applied at different dates when additional blocks applied on dividing courtyard wall 19.2.97.”
117 So far as these photographs reveal it would appear that there is a reasonable match between the two renders. In addition the plaintiff gave evidence to the effect that the match between the renders would have been different after the initial application but that "it is a lime wash and it takes time to cure and match the original colour. It goes off in about six months. " Shown one of the photographs the plaintiff did not identify any unevenness in the middle but reiterated that the perceptual difference in colour and wash was attributable to the need for curing over time. In addition Mr. Moore agreed that the render of the courtyard wall was "a style of render and part of the character of the property.118 In all the circumstances I am of the opinion that the plaintiff was not in breach of this part of special condition 26(a) of the contract.
119 I am further of the opinion that even if, contrary to my view, the plaintiff was in breach of this part of special condition 26(a) in the contract that breach would not have entitled the defendant to rescind for the same reasons as are stated in relation to items A and C above.
G. "26. (a) Prior to completion the vendor agrees to do the following works in a proper and workmanlike manner ... would install washout blocks in the east and south walls with finishing and pointing to suit (not rendered).”
120 In his affidavit Mr. Moore referred to this item as follows:-
"15. As at 2.30pm on 19 February 1997 I observed the following ...
(d) Blocks had not been installed in washout holes on the southern wall of the southern dwelling.”
122 In his report, being Exhibit G, Mr. Moore noted the following in relation to this item:
121 There was evidence to the effect that such washout holes were left in the course of construction so that debris within the cavity walls could be flushed out and flow through the washout holes but that after completion of construction these washout holes should be filled in with a concrete block. Mr. Moore gave evidence that on his inspection of the property on 3 February 1997 he noted that the washout blocks had been installed in the eastern wall but not in the southern wall. Mr. Moore also gave evidence that he was told by the plaintiff that these had not been filled in because of advice from an officer of the Gosford City Council to the effect that they should not be filled in so that they could operate to allow ventilation.
“COMPLETED in East wall. Wash outs not blocked out on south wall. Ms. Nelson advised that Gosford City Council inspector required the wash outs to be left open for ventilation. Note: Verbal inquiries with Chris Thompson (Gosford City Council) - he advised that he asked Ms. Nelson to provide as much underfloor ventilation as possible. Wash outs do not provide ventilation to the underfloor space and should be enclosed.”
124 In my opinion, in all the circumstances, the plaintiff was in breach of this part of special condition 26(a) of the contract by reason of failing to have installed approximately five wash out blocks in the south wall. In my further opinion, however, that breach did not entitle the purchaser to rescind the contract for the same reasons as are given in relation to items A and C above ("the same reasons").
123 As stated above, Mr. Moore gave evidence that on his inspection of the property on 3 February 1997 the wash out blocks had been installed in the eastern wall but not the southern wall. According to Mr. Moore there were approximately five wash out blocks required to be installed in the southern wall. In Mr. Moore's opinion this would have taken about two hours because of difficulties of access.
H. "26(a).Prior to Completion the vendor agrees to do the following works in a proper and workmanlike manner ... will detail silicon around base and in bathroom ... "
125 In his affidavit Mr. Moore gave evidence in relation to this item as follows:-
"10. At my inspection of 3 February 1997 … some work which had not been carried out had not been completed in a proper and tradesmanlike manner as follows: ...
(j) Silicon sealant installed around the basin in the main bathroom was poor workmanship.”
126 In his report, being Exhibit G, Mr. Moore noted in respect of this item that:-
"Silicon around basin still poor quality installation.”
127 The plaintiff gave evidence to the effect that she caused work to be done on the silicon around the basin in the bathroom somewhere between the 2 and 4 December 1996 and that she saw her builder, Brian Tilley, take a Stanley knife and cut away the excess which operation took ten minutes. The plaintiff expressed the view that the silicon was not unsightly after trimming but stated that "it was that sort of building, I think you would have to understand the building perhaps ... The building was designed to look like a building of 100 years of age in Italy with everything quite rustic and very uneven and it was the nature of the building." The plaintiff rejected the suggestion that the silicon as trimmed was uneven. Mr. Moore disagreed that the silicon sealant around the bathroom sink was in keeping with the character of the property.
128 In my opinion, in all the circumstances, the defendant has not satisfied me that the plaintiff was in breach of her obligation under the contract to detail the silicon around the basin in the bathroom. I am further of the opinion that even if the plaintiff had been in breach of this part of special condition 26(a) it would not have entitled the defendant to rescind for the same reasons.
J. "26(a). Prior to Completion the vendor agrees to do the following works in a proper and workmanlike manner ... will apply finish to timber cupboards in bedroom 1.”
129 Mr. Moore dealt with this item in his affidavit as follows:-
"10. At my inspection on 3 February 1997 some work which had been carried out had not been completed in a proper and tradesmanlike manner as follows ...
(m) a coating to the cupboard in bedroom 1 had been carried out. This had been completed poorly and required sanding and re-coating . "
130 The note made by Mr. Moore in his Exhibit G contains the following notations:-
"Apply finish to timber cupboard in Bed. 1 - Completed. Sanding and additional coat required.”
131 In oral evidence Mr. Moore disagreed that the painting of the cupboard in the main bedroom was in keeping with the character of the property. The plaintiff gave evidence that the original sanding and coating was completed in June 1996 and that an. additional coating was applied in the plaintiff s presence by the builder, Brian Tilley, on either 1, 2 or 3 December 1996. The plaintiff stated that no additional coating was applied after 3 February 1997 because she was unaware that it was necessary.
132 In all the circumstances I am of the opinion that it is probable that the plaintiff was in breach of this part of special condition 26(a) of the contract. I am further of the opinion, however, that this breach did not entitle the defendant to rescind the contract for the same reasons.133 Mr. Moore stated in his affidavit in relation to this item the following:-
K "26(a). Prior to Completion the vendor agrees to do the following works in a proper and workmanlike manner …
to fill the gap between roof and wall on northern wall in main bedroom above rove to prevent egress of water and animals.”
134 In his report, Exhibit G, in relation to this item Mr. Moore made a notation as follows:-
"10. At my inspection on 3 February 1997 some work which had been carried out had not been completed in a proper and tradesmanlike manner as follows: …
(n) a gap between the roof tiles and top of the brickwork on the northern wall had been infilled, however it required painting.”
135 In his affidavit he also stated in relation to this item as follows:-
"Completed. Painting required.”
“(g) The infilled gap on top of the north wall of the bedroom of the southern dwelling was not painted” as at 19 February 1997.
136 The plaintiff conceded that the gap when filled in was never painted.
137 The relevant part of special condition 26(a) of the contract certainly does not expressly require painting, and accordingly, I am of the opinion that the plaintiff was not in breach of this part of special condition 26(a). I am of the further opinion for the same reasons that if it be the case that this part of special condition 26(a) is to be construed as if it contained an implied term to the effect that the relevant area should be painted, any breach by the plaintiff of any such implied term was not such as to entitle the plaintiff to rescind the contract.
The Defendant's Purported Termination of the Contract Was Wrongful
138 Having regard to my findings in respect of the alleged breaches by the defendant of the relevant special conditions of the contract I am of the opinion that the defendant was not entitled to terminate the contract as she purported to do on 20 February 1997.
Plaintiff’s Termination Of The Contract Was Valid
139 That being so I am also of the opinion that the plaintiff was entitled to treat the defendant's wrongful termination of the contract as a repudiation of the contract by the defendant clearly evincing an intention by her not to be further bound by the contract and that, accordingly, the plaintiff was entitled to terminate the contract, and did so validly on 14 March 1997 by facsimile of that date from the solicitors for the plaintiff to the solicitors for the defendant.
Deposit
140 Having validly terminated the contract the plaintiff was, in my opinion, entitled, prima facie, to keep or recover the deposit pursuant to clause 9 of the contract which is in the following terms:
“9 . Purchaser's Default
If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice and then -
1.1 keep or recover the deposit (except so much of it as exceeds 1.0% of the price).”142 Section 55(2A) of the Conveyancing Act 1919 is in the following terms:-
141 I say, prima facie, because this is right subject to the exercise of the Court's discretion under section 55(2A) of the Conveyancing Act 1919 (see later).
"55 Right of purchaser to recover deposit etc
…
(2A) In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.”
143 The relevant approach to be taken by the Court in relation to the application of this section of the Conveyancing Act 1919 as was stated by Street CJ in Eq. in Lucas & Tait (Investments) Pty. Limited v Victoria Securities Limited (1973) 2 NSWLR 268 at 272-273:-
“The jurisdiction under section 55(2A) does not give to a court an overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated. A vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under section 55(2A) unless it is unjust and inequitable to permit him to retain it.”
144 After quoting this passage Young J in Eighth SRJ Pty Limited v Merity (Young J, 25 March 1997, unreported) held as follows:
"The Judges of this Division have constantly refused to set out any 'standard test' as to when a deposit might be refunded under s55(2A) though the general flavour of the decisions has been that, prima facie, a vendor who is at law entitled to forfeit the deposit should be able to do so because the commercial purpose of the deposit is to act as an earnest on the part of the purchaser that the contract will be performed. It is only if there is some significant special factor usually a factor sounding against the vendor's conscience that a court of equity will give relief under s55(2A) of the statute; see eg Pratt v Hawkins (1991) 32 NSWLR 319.
I stand by what I said in Clurstock Pty . Limited v Timanu Pty. Limited (1988) NSW ConvR 55-419 at 57,831, that the flavour that emerges from most of the decisions on s55(2A) is that 'where the purchaser has been caught up in a situation through little fault of his own or perhaps because of the fault of his solicitor and has endeavoured to do the decent thing, the Court will very often exercise its discretion in his favour, notwithstanding. that this will have the effect of depriving the vendor of the right to forfeit the deposit and notwithstanding that the making of such an order will lessen the importance of a deposit as an earnest that the contract will be fulfilled. '
It is clear that the pivotal consideration is the justice of the situation, see the observations of Kirby P in Wight v Foran (1987) 11 NSWLR 470, 482 ...
In SA Mearns v Parris Holdings Pty. Ltd (1994) 6 BPR 13,677 at 13,685, Santow J referred to the necessity of special or exceptional circumstances to warrant the making of an order. Although these words may have flowed through from one of my previous judgments, I must confess that having reread the authorities that may be putting the test a little high. The courts have refused to lay down the standard: it is a matter of looking at each particular case to see whether it is fair and conscionable to give relief or not ...
Although the court does not lay down any 'standard test’, it is clear that the discretion to be exercised is that of a collegiate court and not at the whim of an individual judge. It is thus useful to see how other judges have approached similar problems. The authorities digested in Professor Butt's book and in para. [310401 of Butterworth's Annotated Conveyancing and Real Property Act indicate that the following matters influence the court as to whether it will exercise its jurisdiction under the section in favour of a purchaser:-
(a) Has the vendor received any windfall benefit? (such as the case where the vendor has in fact resold at a higher price?)
(b) However, even if there is no windfall to the vendor, the court may still give relief.
(c) Is non-completion a fault of the purchaser personally or a matter over which it had little control?
(d) Was the purchaser's use of the property thwarted by some factor outside the purchaser's control?
(e) Was there any mis-statement (even short of misrepresentation that would permit recission) in the vendor's camp which affected the purchaser's decision? ”
145 It was submitted on behalf of the plaintiff that the defendant had not discharged her onus of persuading the Court that it would be unjust and inequitable to deprive the plaintiff of her legal right to keep the deposit.146 In support of this submission it was submitted on behalf of the plaintiff, inter alia, that the plaintiff’s financial position was very vulnerable and was rendered "almost untenable" by the defendant's default, meaning, presumably, that because the plaintiff did not receive the purchase price for the property at the time she expected she was unable to meet certain of her financial commitments as a result of which she suffered "considerable personal hardship and inconvenience and distress, including being harassed by her creditors, for which she will not be compensated by damages."
147 It was submitted in this connection also that the plaintiff had to sell the adjourning attached Villa Umbria which she was building prematurely and at an undervalue. It was also submitted on behalf of the plaintiff that the amount of the deposit was in any event relatively small and would not represent "any, let alone a great, windfall" to the plaintiff. It was further submitted on behalf of the plaintiff that the defendant "took a calculated gamble in her approach to the settlement and must be regarded as having assumed the risk that she would lose the deposit.” Finally it was submitted that the subsequent resale by the plaintiff of the subject property for a much better price took a year to achieve, did not compensate the plaintiff for the various losses, financial and otherwise which she suffered, and was not a sufficient reason to relieve the defendant from loss of the deposit because "it (did) not make it unjust or inequitable (in those circumstances) for the defendant to retain the deposit to which she is legally entitled.”
148 Moreover, so it was submitted on behalf of the plaintiff, there was nothing affecting the plaintiffs "conscience" so far as the defendant was concerned which would make it just and equitable that the defendant should not lose the deposit.
149 It was submitted on behalf of the defendant that it would be unjust and inequitable for the plaintiff to retain the deposit primarily because the subject property which had been sold to the defendant for $285,000 was subsequently resold for $349,750 producing a gross profit for the plaintiff of $64,750. It was further submitted on behalf of the defendant that even if the plaintiffs figure for expenses of $24,468 was accepted there still remained a "net profit" for the plaintiff if she retained the deposit of $40,282, which was, of course, a much larger sum than the deposit of $28,500.
150 In elaboration of these submissions it was submitted on behalf of the defendant that if the plaintiff were to keep the deposit of $28,500 as well as the windfall profit on the resale of $64,750, these two sums totalling $93,250, then even deducting the alleged expenses of the abortive sale under the present contract of $24,468, the plaintiff would still retain a "net profit" of $68,782 being approximately 24% of the sale price of $285,000 which would be unjust and inequitable.
151 It was also submitted on behalf of the defendant that she had been put to considerable inconvenience and expense by reason of the contract not being completed including expenses in relation to accommodation and related expenses. It was also submitted on behalf of the defendant that the defendant has few assets and the loss of the deposit will cause her further financial hardship having regard, inter alia, to the fact that she has incurred considerable legal costs in relation to these proceedings.
152 It was further submitted on behalf of the defendant that the plaintiff's personal financial position was of her own making and that the defendant could not be regarded as responsible for the consequences in that connection of the contract not being completed. Moreover, it was submitted on behalf of the defendant that the price at which the plaintiff sold Villa Umbria, namely, $160,000, was approximately it's true value having regard to it's state of completion (unfinished) at the date of sale, and that the fact that it would have been worth more if it had been completed was not to the point because considerable additional moneys would have had to be spent in order to complete it.
Decision
153 There is no doubt in my mind that both the plaintiff and the defendant suffered financial hardship arising from the fact that the contract, the subject of the present proceedings, was not completed on the date anticipated, the plaintiff much more so because of her more vulnerable financial position at and prior to the completion date. It cannot be suggested, however, in my opinion, that the defendant was in any way responsible for the plaintiffs financial position prior to that date. In the same way, it cannot, of course, be suggested that the plaintiff was responsible for the defendant's financial position prior to that date.154 Moreover, in my opinion, it is also the case that the defendant cannot be regarded, for present purposes, as relevantly responsible for the plaintiffs financial difficulties following the non-completion of the subject contract. It might have been otherwise if the defendant had refused to complete without any arguable basis for so refusing and if it had been established that her refusal to complete was coupled with an intention to cause the plaintiff damage or injury. It is plain, however, that such was not the case, even though the defendant has been unsuccessful in the final analysis in her attempt to establish her entitlement to refuse to complete. In those circumstances, in my opinion, for present purposes, the conscience of the defendant is relatively unaffected notwithstanding the somewhat technical nature of some of the arguments and alleged breaches on the part of the plaintiff propounded on behalf of the defendant. In the same way, however, it cannot be said, in my opinion, that the plaintiff’s conscience was in any way affected by the financial and other consequences for the defendant of the contract on being completed. So in that respect, in my opinion, for present purposes, it cannot be said that the conscience of the plaintiff was relevantly affected by any of those matters.
155 On the other hand, in my opinion, the plaintiff did resell the subject property at a very considerably higher price than the contract price albeit approximately one year later. Principally, by reason of that consideration, but also having regard to all the relevant circumstances of the case as adverted to above, I am of the opinion that it is just and equitable that the deposit should be repaid to the defendant.156 The plaintiff having, as I have held, validly terminated the contract, was entitled pursuant to the contract to recover damages for breach of contract in accordance with the following provisions of the contract:
Loss of Bargain
Damages
" Purchaser's Default
If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by sending a notice and then-
9.1 keep or recover the deposit (except so much of it as exceeds 10% of the price); ...
9.3 sue the purchaser to recover damages for breach of contract …”
157 The damages which the plaintiff may recover against the defendant include damages for the plaintiff’s loss of the bargain embodied in the contract, the measure of which is the difference between the market value of the land and the contract price: Noble v Edwards (1877) 5 ChD 378 at 388 (rev'd on other grounds, ibid at 393); Mallick v Parish (1916) 16 SR(NSW) 305, 309; Liverpool Holdings Limited v Gordon Lynton Car Sales Pty. Limited (1978) QdR 279158 As submitted on behalf of the plaintiff the date for assessment of such damages, at least in the case where negotiations for completion continue after termination, is appropriately the date upon which it can be said that the contract is definitely lost: Johnson v Agnew (1980) AC 367, 401 ; Murdaca v Fisher (1981) 2 BPR 9287 , Davies v Hastwell-Batten (1985) NSW ConvR 55-261 at 56-472 ; Jampco Pty. Limited v Cameron (No. 2) (1985) 3 NSWLR 391 .
159 As also submitted on behalf of the plaintiff, in the present case, in my opinion, the contract should be regarded as having been "lost" in or about April 1997, when the negotiations between the parties, which had continued until then, finally broke down. This was stated to be agreed between the parties at an early stage in the hearing and appears also from the correspondence between the solicitors for the plaintiff and the solicitors for the defendant dated 14 March, 25 March, 7 April, 8 April and 8 April 1997 culminating in the letter from the solicitors for the plaintiff to the solicitors for the defendants dated 9 April 1997 ending negotiations.
160 It was submitted on behalf of the plaintiff that at the relevant date the market value of the subject property was $259,000 whereas the purchase price in the subject contract was $285,000 so that the measure of damages for loss of bargain sustained by the plaintiff was the difference between these two amounts, namely, the sum of $26,000.
161 On behalf of the plaintiff reliance was placed on a Citibank valuation tendered on behalf of the plaintiff, adjusted for the size of the building area. It was submitted that the Citibank valuer appeared to have understated the area of the main building at 190 square metres instead of 230 square metres to accommodate which the Citibank valuation should be increased by $24,000 being 40 square metres at $600 per square metre, to $259,000.
162 It was submitted on behalf of the plaintiff that the Citibank valuation so adjusted should be preferred to Mr. Bramall's valuation obtained on behalf of the defendant for the following reasons:
(1) It was prepared independently of either party, for the purposes of an intending lender/mortgagee and so was not susceptible of bias intended or otherwise for a party/client. On the other hand, Mr. Bramall had been told, in the letter of instructions to him, what his client thought the property was worth. This was submitted to be all the more significant when Mr. Bramall's valuation came very late in the litigation. The relevant paragraphs in the letter of instructions from the solicitors for the defendant to Mr. Bramall dated 28 October 1998 were as follows:
“I confirm the following matters: ...
6. She (the plaintiff) is measuring her damages on the basis of the enclosed Valuation Report dated 13 May 1997 by Citibank which was prepared for security purposes only. In that Report the property was valued at only $235,000.
7. Dr. Bellamy considers that in May 1997 the property was valued at about $340,000 to $350,000 and disputes the valuation based on her enquiries about the property market in the area and also based on the fact that in 1997 Ms. Nelson entered into a contract for the sale of the property for $397,750 with settlement of that sale taking place on 22 December 1997...”
(2) Mr. Bramall failed to take into account several relevant comparable sales (which were put to him in cross-examination and had been referred to in the May 1997 St. George valuation of Lot 134A), the dates and locations of which made them of great significance and the prices of which tended strongly against his, and in favour of Citibank's valuation;
(3) Mr. Bramall relied heavily on two unreliable transactions - the uncompleted sale to Bellamy of the subject land, 6 months earlier, and the sale to a special purchaser, 6 months later. Yet these were sales of types which he conceded were not to be relied upon;
(4) Mr. Bramall's analysis of the remaining comparable sales to which he referred in cross-examination, did not reveal any assessment of them in terms which were superior and which were inferior to the subject land, so as to be of any use in facilitating a deduction as to the value of the subject land.
(5) The St. George Bank valuation, which was also in evidence, of the adjoining and very similar lot of Villa Umbria (which was superior, in that it was larger than Villa Tuscany and included a swimming pool), in a completed state, was $280,000, of which $130,000 was attributed to the land. Villa Tuscany would be worth less than the superior Villa Umbria property.
163 It was submitted, on the other hand, on behalf of the defendant, that the valuation of Mr. Bramall was to be preferred of $330,000, with the consequence that the plaintiff had. suffered no damages by way of loss of bargain. It was further submitted on behalf of the defendant that it was not appropriate to use the Citibank valuation of $259,000 because of the error it contained as to the building area and because the author of the document was not called to support his valuation and to be subject to cross-examination. It was further submitted on behalf of the defendant that Mr. Bramall's valuation was to be preferred because both the Citibank and St. George valuations were valuations for mortgagees so that they could be expected to be conservative.164 It was submitted on behalf of the defendant that Mr. Bramall gave "honest answers" when cross-examined about each comparable sale and that, when taken to the comparable sales set out in the St. George valuation, he said that he was "really trying to look for duplex type sales and confine my consideration to a market for those sorts of comparable sales rather than what might be term(ed) ordinary dwelling(s) in residential streets." He said that he relied on the terminated sale as "indicative that there was in the market place at that point of time someone prepared to pay that." He said that he had regard to the market evidence in arriving at his valuation and also he used a summation approach to the valuation to arrive at his opinion of $330,000. He described the Citibank valuation as "a fairly cursory valuation carried out for mortgage purposes" and was of the opinion that the value ascribed by the Citibank valuer of $110,000 for the land was not realistic and was ultra conservative, even for a mortgage valuation, in the light of the sale that was taking place of a virtually identical property in an adjoining similar type of development."
165 Mr. Bramall's valuation which was dated 4 November 1998 and valued the property at $330,000 as at 13 May 1997 contained the following paragraph under the heading “ASSESSMENT":-
"Having regard to the intended but subsequently terminated sale of the subject property in December 1996, to the sale of the adjoining lot in May, 1997 for development and to the ancillary market evidence, we are of the opinion that the market value of the subject property, as at the 13th May 1997, is reasonably assessed at $330,000.
This reflects a rate of $1460/m raised to over the main building area and shows a discount of some 5.65% from the sale price in December, 1997 which is considered reasonable to recognise the elements of special value to the purchaser referred to elsewhere in this report and for the passing of time (some six months).
The value may be apportioned as follows:-
Improvements Component- $180,000 (after allowance for finishing off works. Deduced rate of $738/m2 to the main area).
Land Component - $150,000
$330, 000 .”
166 The "elements of special value to the purchaser referred to elsewhere in this report" apparently refers to the resale of the subject property in December 1997 at a price of $349,750, in respect of which it is stated earlier in the report that "the purchasers had been looking for a retirement home in the area for some time and when shown the subject property were keen to purchase because of its unique characteristics. When it became apparent that it would be difficult to negotiate with the vendor the price was agreed at $349,750 on the basis that the vendor would complete the driveway ... Based on our discussions with the purchaser and the vendor's agents, we have concluded that the purchase price reflected an element of "special value or over market value" to the purchasers attributable to their keenness to buy and their awareness that it would be difficult to pursue negotiations with the vendor if they did not wish purchase to be delayed."167 In relation to the subject sale used as a comparable sale Mr. Bramall agreed that the sale could not confidently be relied upon, presumably, because it was not completed. Mr. Bramall also relied upon the sale of the adjoining lot 134A, being Villa Umbria, at $160,000 as well as the other comparables mentioned in his report but agreed that he did not take into account any of the sales appearing in the St. George valuation.
168 When asked in cross-examination about the sales evidence referred to in the St. George valuation Mr. Bramall replied:-
"A. I was not looking for those sorts of sales. I was really trying to look for duplex type sales and confine my consideration on a market for those sorts of comparable sales rather than what might be termed ordinary dwellings in residential streets. That is why in the first instance of making my assessment I did not pursue those sorts of comparable sales.
169 In answer to a question as to what steps he took to identify relevant comparable sales Mr. Bramall stated that:-
“I used a process of searching through a computer data base called Commercial Property Monitor which identified sales that have (occurred) in any particular area and then I draw from that what I think are the sales that are comparable.”
170 He said that he would expect that several hundred comparable sales turned up on the first use of the data base and that he sifted them. When asked how he did that he replied:-
“I decide what I am looking for, where I would like to see those and the sales that I discovered and identified and incorporated in my report, I believe were the comparable sales I should use.”
171 He said he probably looked at a dozen such comparable sales but he could not remember which ones. When asked how he chose that particular dozen "out of the hundreds" he said:-
"I, first of all, looked for all the sales in Ocean View Drive going back as far as I can, just to see whether they might pick up any history of sales and results. Old sales I discard because I am looking for the most current sales and then I do a global search of sales in the area and I try and pick up those closest to the subject property and where possible with similar characteristics. In other words I was really looking for duplex sales.”
173 In relation to the residential market generally Mr. Bramall said it was a "strengthening market" which was "consistent with falling/borrowing rates and so on, the market was strong and active and developers were out doing developments and finding that there were ready markets for the property." He explained how he arrived at the discount factor of 5.65% referred to earlier. In relation to certain comparables relied upon by him Mr. Bramall, when it was put to him that they were not comparable because they were double what he valued the subject property, he replied:-
172 He agreed that the data base identified strata titles but there was no way one could tell if it was a duplex in respect of which one would "have to go and investigate that and I didn't find any apart from the adjoining property which I thought needed to be taken into account in the duplex sales other than the ones I related in my report." Mr. Bramall agreed that most of the properties he looked at were strata title whereas the subject property was Torrens title. He said that although the strata titles might have included no land component " they had courtyards and common driveways so the characteristics were not dissimilar. The difference is that with Torrens title you have individual control, you are not dealing with a strata plan and shared levies and things of that nature. So in some respects Torrens title makes the property more popular." He agreed that he could not confidently rely on the uncompleted sale, the subject of the present proceedings, but said that it "was indicative that there was in the market place at that point of time someone prepared to pay that."
“A. What that indicates is that they had superior views, they had double garages, they had balconies taking advantage of ocean views and they showed those rates that I mentioned which are in round terms about double and when I look at the sale of the adjoining property 136A, which came out and had a large underlying area of 1690, my summation valuation reflects a rate at $1460 which I thought fitted comfortably into the market findings I employed.”
174 When cross-examination concerning the content of the letter of instructions from the solicitors for the defendant referred to above Mr. Bramall stated that he did not speak to the defendant although he was aware of the defendant’s views as to value at the relevant date as set out in that letter. When it was put to him that he produced a valuation which substantially accorded with the defendant’s position at $330,000 Mr. Bramall replied that he “valued the property at $330,000 which is not the figures that were mentioned in the letter.” Mr. Bramall rejected the suggestion put to him in cross-examination that he could be influenced even unintentionally from a statement by a client as to what they think the property is worth stating “No, my personal approach is to be independent and objective.”
175 Mr. Bramall also expressed the view in relation to the Citibank valuation that “It seems as though it was a fairly cursory valuation carried out for mortgage purposes but in that valuation the valuation has a building area of 190 square metres where, in fact, the building has an area of 226 square metres.” In relation to that valuation Mr Bramall also stated “And he has ascribed a land value of $110,000 and bearing in mind he was doing it on 13 May he ascribes a land value of $110,000. I do not believe that that is realistic, I think that is ultra conservative, even for a mortgage valuation in light of the sale which was taking place of a virtually identical property adjoining, a similar type of development.” In respect of that adjoining property he said that his understanding was that there were footings poured and that in relation to the sale price of $160,000 he "viewed that as reflecting a land component of $150,000." He again denied that he was either directly or indirectly influenced in his valuation by his knowledge of the defendant's view as to the value of the subject property. He said:-
“I read the letter of instructions of course but I do not act as an advocate, I act as an expert in the valuations that I carry out.”
Decision
176 In my opinion, Mr. Bramall was not, in his cross-examination, relevantly shaken in his essential views, including his views in respect of the comparable sales relied upon by him, and I can find no reason to reject his valuation having regard to its content and to that cross-examination as well as to his qualifications and experience.
177 In particular, having regard to these matters, and the whole of the relevant circumstances of the case, I prefer Mr. Bramall's valuation to the valuations of Citibank and of the St. George Bank, the authors of which gave no oral evidence and were accordingly not cross-examined. The result is that in respect of any comparable sales relied upon by the valuer in the Citibank valuation (if any), there are none identified, (the Citibank valuation includes the words "CERTIFICATE OF VALUATION (based on the comparable sales annexed)" but no such sales were annexed), whilst in respect of the comparable sales listed in the St. George Bank valuation, I have no evidence as to any analysis by the relevant valuer in relation to the differences and similarities between those comparable sales and the subject property nor as to the adjustments which might need to be taken into account in using those comparable sales for the purpose of arriving at a value for the subject property as at the relevant date.
178 It follows that, in my opinion, accepting, as I do, Mr. Bramall's valuation, the plaintiff is not entitled to any damages for loss of the bargain embodied in the subject contract.
Expenses of Abortive Sale
179 It is not disputed by the defendant that, on the assumption that the plaintiff was successful, in these proceedings, as is the case, the defendant is liable to pay to the plaintiff, by way of damages for breach of contract, legal costs of the abortive sale being the legal costs of the contract, proof of title and preparing to complete and the legal costs in connection with terminating the contract in the sum of $2,355 as well as the plaintiff’s costs relating to the resale in the sum of $9,921 and the additional interest paid to Westpac Banking Corporation by the plaintiff being the additional interest which the plaintiff had to pay when she refinanced in May 1997 as compared with what she would have had to pay had the sale been completed when it ought to have been, in the sum of $7,242. These three amounts total $19,518.
Cost to Plaintiff of Leasing Alternative Accommodation
180 The plaintiff also claimed by way of damages against the defendant the sum of $4,200 being the cost of leasing alternative accommodation and including the sum of $600 loss of bond for early termination of that lease, in the circumstance that as at the date of the contract the plaintiff and her daughter were living in Villa Tuscany, the property the subject of the sale but moved out in November 1996 to enable the defendant to occupy the property prior to completion pursuant to her right to do so under the terms of the contract. The defendant indicated that she wished to occupy the property as from 4 December 1996, prior to completion, and, as stated earlier, in fact the defendant's daughter and her friends occupied the property from 6 December to 8 December 1996 when they moved out. Although the defendant vacated the property on 8 December 1996 it was, nevertheless, necessary for the plaintiff to incur the expense of renting alternative accommodation nearby where she remained until 14 March 1997 when she terminated the contract, on which date the plaintiff also terminated her lease prematurely, as a result of which she lost the bond she had given in the sum of $600 because of the early termination of the lease. The total of the two relevant amounts is $4,800.181 Although those expenses (other than the loss of the bond) would have been incurred by the plaintiff even if the contract had been completed, I am of the opinion that, in the circumstances that the contract was not completed by reason of the wrongful repudiation of the contract by the defendant, the plaintiff is entitled to recover the relevant amounts in this connection from the defendant on the basis that they constitute an expense incurred by the plaintiff in connection with the plaintiffs performance of her obligation under the contract to make the property available for occupation by the defendant prior to completion if the defendant so required, as she did. In the circumstance that the contract was so terminated, the plaintiff lost the benefit of that expenditure in performance of her part of the contract which she would not otherwise have had to incur. In other words, in my opinion, in the events which happened, the expenditures so incurred by the plaintiff were of no benefit to her and were, accordingly, in my opinion, a recoverable loss sustained by the plaintiff arising from the fact that the contract was never completed as a result of the wrongful repudiation thereof by the defendant.
182 In my opinion, such a loss may fairly and reasonably be considered as arising naturally, that is, according to the usual course of things, from such breach of contract by the defendant and/or may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.
183 Accordingly, in my opinion, the relevant loss is recoverable from the plaintiff by the defendant according to the rule in Hadley v Baxendale in accordance with which damages for breach of contract may be recovered for losses:
"such as may fairly and reasonably be considered either (as) arising naturally, that is, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”: Hadley v Baxendale (1854) 9 ExCh 341 at 354; 156 ER 145 at 151.
184 The loss also, in my opinion, falls clearly within a more recent statement as to what damages are recoverable for breach of contract, namely, that damages are recoverable when:
"on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation”: C. Ckarnikow Ltd. v Koufos (1969) 1 AC 350 at 385, expressly adopted in the High Court by Gibbs J in Wenham v Ella (1972) 127 CLR 454 and 471-2; see also Burns v M.A.N. Automotive (Aust.) Pty. Limited (1986) 161 CLR 653, The Commonwealth v Amann Aviation Pty. Limited (1991) 174 CLR 64 and Baltic Shipping Co. v Dillon (1993) 176 CLR 344.
Storage and Removalist's Expenses
185 On vacating the subject property in November 1996 to permit occupation by the plaintiff prior to completion, the plaintiff rented a property at 132 Ocean View Drive, Wamberal, being "the old house in front of Villa Tuscany", from the beginning of December under a six months' lease. The plaintiff moved in on 4 December 1996 and moved out of there "end of February, March". Thereafter she was in "the Church house" for a week on the Central Coast after which she went to shared accommodation in Ermington.
186 The plaintiff claimed an amount of $750 in respect of expenses incurred, partly in putting goods into storage after she vacated Villa Tuscany, and partly for removalist costs in moving from Villa Tuscany to 132 Ocean View Drive, Wamberal.187 As the plaintiff stated, she "moved the belongings from Tuscany, what could be accommodated, on 3 December into the old house in front and then because there wasn't enough room the goods went into storage." She gave evidence that no part of the $750 claimed was in respect of the cost of moving from Wamberal Central Coast to Ermington. She said “I paid $420 or thereabouts for storage of goods and I paid $250 for, this is what I recall, for a chap to help me to move from the back villa into the front."
188 In my opinion the plaintiff is entitled in respect of these items to recover the sum of $670 from the defendant being the total of the said two sums of $420 and $250.
189 It remains to consider the question of the representations alleged to have been made by the plaintiff to the defendant and which are alleged by the defendant to have been relied upon by her and to have induced her to enter into the subject contract. Those alleged misrepresentations are as set out in paragraph 4 of the cross-claim of the defendant which is quoted earlier in this judgment.
Fair Trading Act 1987
Alleged Representations
" Trade or Commerce”
190 It was submitted on behalf of the plaintiff that in the relevant circumstances of the case the representations alleged to have been made by the plaintiff to the defendant were not made in the course of trade or commerce and that, accordingly, the Fair Trading Act 1987 was not applicable.191 The plaintiff gave evidence that she was the owner of the subject land which originally had an old house on it which was "knocked down to allow development to take place." The plaintiff said that she purchased the land in 1992 with the old house on it,. and in 1994 married her husband who was a "builder developer, licensed builder" and "he began the development with me in 1995 and he in fact was on the Council records as being the developer and the builder and he stayed on the project or on the development basically until the inside was complete to lock up stage is what it is called in the building (industry)". At that point of time he left the marriage and the inside of the building was completed.
192 The plaintiff said that she took over her husband's financial interest pursuant to, presumably, an order in the Family Court which "said that he was to just walk off out of my life and there was no financial consideration given. It was technical.” The plaintiff said that the "developer", "building company", was Living Developments Pty. Limited, which company did not have a financial interest in the development either at the beginning or at the end of the development. The plaintiff said that the intention was to allow the development of two new houses, namely, Villa Umbria and Villa Tuscany. The plaintiff said that Villa Umbria was going to be transferred to the parents of the plaintiff and that the plaintiff was going to live there with her daughter and with her parents.
193 The advertisement to which the defendant had responded described Villa Tuscany and referred to the fact that the price of $285,000 was negotiable and the next line of the advertisement stated "One already sold (off plan nearing completion)". The plaintiff gave evidence in cross-examination as follows:-
"Q. Before 14 September 1996 had Villa Umbria been sold by you to anybody?
A. Yes it was going over to my parents.”194 When asked for what figure the plaintiff replied that she couldn't remember the figure.
195 In cross-examination attention was drawn to the fact that the advertisement stated:-
"VILLA TUSCANY READY FOR SALE FROM DEVELOPER”.
196 When the plaintiff was asked who was the developer that was referred to in the advertisement, the plaintiff replied "Well I guess I was, within reason.” The plaintiff also agreed that she drafted the advertisement and used the word "developer" to describe herself. The plaintiff agreed that the intention in building Villa Tuscany was to "clear my debts to allow me to live with only a small mortgage in the back one, yes." When asked whether it was her intention to make a profit on the sale of Villa Tuscany the plaintiff replied "Actually there was no profit made from Villa Tuscany" although she agreed that it was her intention to sell it and make a profit. The plaintiff also said that the building of Villa Tuscany was financed 100% by mortgage borrowings for which she was solely responsible to the exclusion of her former husband.197 In support of his submission that the alleged representations were not made in the course of trade or commerce, counsel for the plaintiff referred to authority to the effect that the private sale of a dwelling house has been held not to have occurred in the course of trade or commerce within the meaning of the Act; O'Brien v Smolonogov (1983) 53 ALR 107; Franich v Swannell (1993) 10 WAR 459; cf Argy v Blunts & Lane Cove Real Estate Pty. Limited (1990) 26 FCR 112; Eighth SRJPty. Limited v Merity (Young J, 25 March 1997, unreported).
198 On the other hand, it was submitted on behalf of the defendant that the relevant sale, and therefore, the representations, were made in the course of trade or commerce having regard to the content of the advertisement in the Sydney Morning Herald on 14 September 1996 which indicated that one villa had already been sold off the plan and was nearing completion, whilst "Villa Tuscany" was ready for sale from "the developer". Attention was also drawn to the fact that it was beyond dispute that the plaintiff intended to sell Villa Tuscany at a profit so that it could not be said that the advertising and sale of Villa Tuscany was simply the sale of a domestic dwelling as in Argy v Blunts & Lane Cove Real Estate Pty. Limited , supra.
199 Counsel for the defendant also relied upon the principle that, for relevant purposes, whether particular conduct occurred in the course of trade or commerce was a question of fact.
200 Although the matter is not free from doubt, I am of the opinion that the better view is that, as a question of fact, the sale of the subject property, and the representations alleged to have been made in connection therewith, were made in the course of trade or commerce within the meaning of the Fair Trading Act 198. I am of this opinion, principally, because the sale of Villa Tuscany was not merely the sale of a private dwelling house in which the vendor lived, but was rather the sale of a dwelling which had been specifically built for resale at a profit, albeit that the profit was to be used to reduce the debts of the vendor (plaintiff), and that the vendor (plaintiff) did live in that property for a limited period of time, but always with the intention of living in the other building, namely, Villa Umbria permanently, or at least indefinitely. In my opinion, that part of the overall development of the single site into two properties, which involved the sale of one of those properties, namely, Villa Tuscany, at a profit, was, as a question of fact, carried out in the course of trade or commerce according to the ordinary meaning of those words and within the meaning of the Fair Trading Act 1987 because the transaction was of a commercial or business character. In my opinion, whilst repetitive conduct may well be characteristic of most trade or commerce, a single transaction of the nature of the present transaction may for present purposes, nevertheless be held, as a question of fact, to have occurred in the course of trade or commerce.201 I note in relation to these alleged representations that it was not until the letter dated 18 February 1997 from the solicitors for the defendant to the solicitors for the plaintiff that the alleged representations were raised in correspondence. After enclosing "the updated list of works which sets out the status of the works your client was required to carry out pursuant to the contract Prior to Completion", and reference to various other matters, this letter went on to state that:-
Findings As To Alleged Representations
"Subject to the matters raised in this letter and my client's final inspection of the property on 19 February 1997, my client will complete this matter at 2.30pm on 19 February 1997 and in this regard I enclose an amended settlement statement.
202 The letter then went on to refer to: -
"One further matter I have been instructed to raise with you relates to your client's representations in relation to the adjoining property which is owned by her ... "
203 There followed references to the alleged representations and in paragraph 5 of that letter it was stated, inter alia:-
"If your client cannot provide satisfactory details to confirm that her representations about the adjoining property were not misleading and deceptive my client reserves her rights.”
204 The letter concluded with the following paragraph:-
"As your client is not prepared to negotiate in a reasonable manner to resolve the outstanding issues I have been instructed to put you on notice that if my client completes the contract, she will commence proceedings following completion for damages arising from your client's misrepresentations and misleading conduct. Further should your client fail to comply with her continuing obligations after settlement, my client will vigorously enforce her rights against your client.” (underlining supplied) .
205 It is plain, in my opinion, from this paragraph that the defendant did not consider either the alleged breaches of contract by the plaintiff or the alleged representations made by the plaintiff to be sufficiently serious from her point of view to prevent her from nevertheless completing the contract.
206 So far as concerns the alleged representations set out in paragraph 4(a) and the first part of paragraph 4(b) of the defendant's cross-claim, as set out above, I am of the opinion that the better view is that the probability is that each of those representations was made in substance by the plaintiff to the defendant. I am also of the opinion, however, that the first of these representations was true in substance and, further, that the plaintiff had reasonable grounds for making the second representation with the result that neither representation (as alleged in the first part of paragraph 4(b)), with the result that, in my opinion, neither representation entitles the defendant to any relief under the FairTrading Act 1987 .
207 So far as concerns the alleged representation set out in paragraph 4(a) of the Cross-Claim as set out above, the advertisement in the Sydney Morning Herald stated of Villa Umbria: "One already sold (off plan nearing completion)", although it did not mention the price of $335,000, nor that the difference in price arose because the second dwelling included a swimming pool.
208 In addition, however, the plaintiff gave evidence in cross-examination as follows:-
"Q. After Dr. Bellamy had looked at the plan did she say this, 'Would it be possible to build a swimming pool in the courtyard of this house?' referring to the house you two were standing in (Villa Tuscany)?
A. I do not know she said - it could be possible. I recall she said she would like to put some sort of pool in the lower courtyard area ... What I did say was that she would have to speak to the Council about it ...
Q. And then Dr. Bellamy said 'Has this villa definitely been sold because I would like a swimming pool.’
A. Yes, I think she did ask me that.
Q. You said 'Yes, it has been sold for $335, 000 and the difference in price between the two houses is the cost of the swimming pool.”
A. I do not recall that but, yes, I did say it had been sold.
Q. You mentioned a specific price to her?
A. I cannot recall that.
Q. You mentioned to her the reason for the difference in the price between the sale price and the Villa Umbria and the proposed price of the Villa Tuscany was because of the existence of the swimming pool?
A. Not that I recall, because the other reason would be the fact that the back villa is a lot larger than the bottom one. If anything was connected with price it would be based on that reason also. ” (underlining supplied).
210 In re-examination the plaintiff gave further evidence as follows:-
209 It may be noted that the plaintiff did not in terms deny that she mentioned the sum of $335,000.
"Q. It was put to you and you agreed that you had told Dr. Bellamy that the back villa, Villa Umbria, had been sold. As at 14 September 1996 had Villa Umbria been sold?
A. Yes, technically it was, for my parents and I to move into.
Q. For what price had it been sold?
A. It was a Family Court situation and technically my parents had to pay about $160, 000 to own a share so we could all live in it together.
Q. In what shares was it going to be and how much would you have owned?
A. Half each, fifty/ fifty.
Q. Your parents and you?
A. Yes.
Q. And their share was $160, 000?
A. Yes.
Q. When you say it was a Family Court situation, that was a property settlement between who?
A. My ex-husband …
Q. And you?
A. Yes.”
211 The above evidence, in my opinion, renders it probable that the plaintiff did mention a price of the order of $335,000 for Villa Umbria to the plaintiff, such a figure being of the order of $320,000 which would have been the price paid for Villa Umbria on the basis that the plaintiff and her parents would be paying $160,000 each.212 The same evidence does, however, in my opinion, also lead to the conclusion that the representation alleged in paragraph 4(a) of the cross-claim was substantially true, there being no issue as to the proposed swimming pool in Villa Umbria being a factor which would make Villa Umbria worth more than Villa Tuscany.
213 It follows, in my opinion, as stated above, that the representation made by the plaintiff to the defendant as set out in paragraph 4(a) of the cross-claim as set out above was true in substance and that, accordingly, the defendant is not entitled to any relief in respect thereof under the FairTrading Act 1987 .
214 So far as concerns the representation alleged to have been made by the plaintiff to the defendant as set out in paragraph 4(b) of the cross-claim, this alleged representation may conveniently be dealt with in two parts.
215 The first part of the alleged representation, which is alleged to have been made on 14 September 1996, is to the effect that the subject dwelling would be completed by about December 1996. This being a representation as to a future matter, the relevant question to be asked in respect of this part of the alleged representation is whether as at 14 September 1996 the plaintiff had reasonable grounds for making the representation (see section 41).
216 In my opinion, as at 14 September 1996, the plaintiff did have reasonable grounds for making this part of the alleged representation, having regard, inter alia, but in particular, to the fact that the subject dwelling was, in fact, substantially completed by December 1996. In this connection I also note that, as at 14 September 1996, the plaintiff was living in the subject dwelling. I also have regard to the fact that by February 1997 only some of the relatively minor items of work, the subject of dispute in these proceedings, remained to be completed.
217 It is, in my opinion, probable that the plaintiff did make a representation to this effect to the plaintiff, since notwithstanding that the subject dwelling was sufficiently complete to be lived in by the plaintiff as at 14 September 1996 (and probably earlier), the fact is that there was certain additional work to be done as at that date, as set out in the contract which was dated 19 September 1996, in which circumstance it would in my opinion be probable that the defendant would have wished to know when construction of the subject dwelling would be complete in the sense of when the outstanding work to be done would be completed. That being so, it is probable in my opinion that the defendant would have asked when the construction would be completed in the sense of when the outstanding work would be completed.
218 In any event, however, be that as it may, I am of the opinion, as stated above, that as at 14 September 1996 the plaintiff had reasonable grounds for making the representation that the subject dwelling would be completed in December 1996, with the result that the defendant is not entitled to any relief against the plaintiff in respect of that part of the alleged representation set out in paragraph 4(b) of the cross-claim.
219 So far as the second part of the alleged representation set out in paragraph 4(b) of the cross-claim is concerned, I am of the opinion, based principally upon the evidence of the plaintiff, and the presence in the contract of special condition 24, that there was conversation between the plaintiff and the defendant as to when the other property, Villa Umbria, would be completed in the context of the conversation concerning the driveway to the subject property, but that the plaintiff did not specify a date by which she thought Villa Umbria would be completed and the substance of that conversation was in the nature of a negotiation, culminating in an agreement to include in the contract a special condition to the general effect of special condition 24 of the contract, rather than involving the making of a representation as alleged. It was agreed, in effect, in special condition 24 that the driveway would be completed within six months of the date of the contract, which would have been by March 1987, by which time Villa Umbria would be complete, so that there was no occasion to specify a specific date for completion of Villa Umbria. Moreover, if in that context the parties wished to specify a date for completion of Villa Umbria it is more likely that they would have specified March 1997 rather than January 1997 as alleged by the defendant.
220 I do not doubt that the plaintiff was concerned as to the time by which the driveway to the land would be completed, but I note that special condition 24 of the contract provides, inter alia, that the vendor "undertakes to complete the works specified above in a proper and workmanlike manner within 6 months from the date of this contract" and that the "work specified above" includes the following:-
(a) Complete brick paving of the shared road to the boundary of the dual occupancy in antique Sydney common flat bricks ...
(d) Construction of brick paved tracks only, same brick as in (a) above from dual occupancy throughout the right of way to connect to Ocean View Drive …”
221 The full text of special condition 24 of the contract is as follows:-
"On settlement the vendor and the purchaser will each pay the sum of $5,000.00 into a trust account held by the vendor's solicitor and the purchaser's solicitor, (in the purchaser's case, in addition to the purchase price) and as required by council as a fund contribution to the final development of the driveway, to be used as follows:
(a) Complete brick paving of the shared road to the boundary of the dual occupancy in antique Sydney common flat bricks.
(b) Brushwood fencing to screen adjoining property approximately 5 metres .
(c) Electrical lighting to driveway for dual occupancy.
(d) Construction of brick paved tracks only, same brick as in (a) above from dual occupancy throughout the right of way to connect to Ocean View Drive .
(e) Landscaping to building side closest to eastern boundary with box and bougainvillea.
(f) Construction of all weather concrete pad to council requirement at entry point to right of way from ocean view drive for car access.
(g) Construction of joint mail boxes as required by Australia Post at the right of way entering from Ocean View Drive .
The parties agree that payments from the fund shall be made as follows:-
(a) To the vendor from time to time upon receipt by the purchaser's solicitor of satisfactory evidence of the amount required and that such amount is on account of the works specified above.
(b) If funds remain in the account after the works specified above have been completed, the amount remaining to be paid to the parties in equal shares.
The vendor undertakes to complete the works specified above in a proper and workmanlike manner within 6 months from the date of this contract and the purchaser will grant access to the vendor and her contractors and agents to the land to undertake the works at any reasonable time. At all times during the carrying out of the works specified above the vendor will indemnify the purchaser against any claims or liabilities for damage, loss or injury which may occur to the property or person of the vendor or the vendor's agents or contractors, other than by the act or negligent omission of the purchaser.
223 This special condition is, in my opinion, in effect, corroborative of the plaintiffs version of the relevant conversation which, as set out in her affidavit, was in the following terms:-
222 I also note that as stated above the six months from the date of the contract (19 September 1996) referred to would expire in March 1997.
"13. ... I deny that there was any discussion about when the other house was being completed except in the context of discussing the driveway . I said to the Defendant words to the effect "The driveway will have to be built as per the Council requirements. They have given the specification. There will also be landscaping, a brushwood fence, lighting, mailboxes. I will be happy to put all of that in the contract. Obviously if there are other trucks involved in the work on the other lot it’s not of benefit to do the driveway until the other house is complete .” (underlining supplied) .
224 It will be noted that, by implication, the plaintiff denied specifying a date when Villa Umbria would be completed.
225 That the defendants concern with the date of completion of Villa Umbria was associated with her concern as to the driveway is reflected in the manner in which this alleged representation was pleaded in paragraph 4(b) of the cross-claim, the relevant part of which was in the following terms:-
"(b) ... that the second dwelling would be completed by about January 1997, by which time the driveway to the land would be commenced and completed by about March 1997 ” (underlining supplied).
226 The cross-examination of the plaintiff also included the following:-
"Q. Dr. Bellamy said to you: 'When do you think the other house will be finished? And she was referring to Villa Umbria, which was at the rear of Villa Tuscany?
A. Yes I do recall her asking that .
Q. She also asked when the driveway was going to be finished …
A. Obviously the driveway will be completed after the total project - because you don’t build a driveway and then bring up brick trucks to the back Villa Umbria.” (underlining supplied).
227 The plaintiff denied, however, that she said that Villa Umbria would be completed by about January 1997 and said "I always said what I have written (in the contract)... I reassured her the driveway would be complete when the complete development was complete.” (words in brackets supplied).
228 The defendant's evidence also associated the driveway with the other dwelling as appears from the defendant's affidavit evidence which included the following:
229 The cross-examination of the defendant in relation to the driveway included the following:-
"13. ... Bellamy:.. When do you think the other house and the driveway will be finished.” (underlining supplied).
Q. Ms. Nelson told you, the driveway will have to be built as per the Council requirements?
A. Yes, she did.
Q. They have given the specifications?
A. I can't recall her saying those words but it was my understanding that there arrangements with Council about the driveway ...
Q. Obviously, if there are other trucks involved in the work on the other lot, it’s not of benefit to do the driveway until the other house is completed? .
A. Yes, we discussed that aspect of it but not how it was how it was going to be finished.
Q. And you knew that the driveway was not going to be completed until Villa Umbria was completed?
A. That's correct, yes.”
231 Dealing next with the alleged representation concerning the range hood, as set out in paragraph 4(f) of the cross-claim, I note that special condition 23(b) of the contract provides that:-
230 Having regard to the whole of the evidence and to the various considerations referred to above, I am of the opinion that, relevantly, the plaintiff did not make the representation alleged in the second part of paragraph 4(b) of the defendant's crossclaim, that is, did not state that Villa Umbria would be completed by any specifically named month although it was implied that it would be completed by March 1997 which was the last date for completion of the driveway.
"23. Prior to Completion the vendor is to install in a proper and workmanlike manner and supply the following which are to be included in the purchase price :-
… (b ) supply and installation of one stainless steel extractor fan above gas hotplate with blue kitchen cupboard to match existing kitchen in Lupis Blue.”
232 I am satisfied that, although the defendant may have regarded a stainless steel extractor fan as the same as a stainless steel range hood, she was aware, in substance, of the fact that the plaintiff was required by the contract to "supply and (install) one stainless steel extractor fan above gas hotplate with blue kitchen cupboard to match existing kitchen in Lupis Blue". Further, in my opinion, there was nothing said by the plaintiff to the defendant to the contrary. It follows from the following considerations that, in my opinion, the strong probability is that the alleged representations set out in para. 4(f) of the defendant's cross-claim were not made by the plaintiff to the defendant as alleged by the defendant.233 In this connection the plaintiff was firm in cross-examination that she did not, in conversation with the defendant on this subject matter, use the word "range hood" but used only the words "extractor fan", and was equally firm that she told the defendant that there would be a cupboard above "the extractor fan" and did not say that there would be a cupboard "to the side" of a "range hood".
234 The cross-examination of the plaintiff included the following:-
"Q. In your affidavit you say you used the word 'extractor fan'?
A. Above it has two cupboards, and that they were going to be in the matching colour of the rest of the kitchen. If you have a range hood you cannot put cupboards above it.
Q. Dr. Bellamy alleges in her affidavit, she says you told her there was going to be a large stainless steel range hood over the hot plates. You say you did not say that, and you used the phrase "extractor fan "?
A. I said there was going to be a stainless steel extractor fan going above the hot plate with two cupboards above the actual extractor fan. That is what went into the contract and that is what Dr. Bellamy signed in the contract.
There is a difference between having cupboards installed above - you cannot do it with a range hood. It was there in the contract to see ...
Q. Do you deny that you mentioned the phrase "Stainless steel range hood" on that occasion in that discussion with Dr. Bellamy?
A. What I will say - it was discussed by Dr. Bellamy as an option but I said I was putting an extractor fan, and I was putting in the cupboards above. I did not have to do it. There was no reason why I had to do it.
Q. What did Dr. Bellamy say?
A. She thought, she looked at the option of putting in something more elaborate .
235 On the other hand, the defendant, in cross-examination, accepted that she saw in the contract that there was provision for an extractor fan, not a range hood but that she didn't "really pick up the difference". The cross-examination of the defendant included the following:-
Q. Did she use the word "range hood"?
A. Yes. I said - no, I had thought, toyed with that idea but, on my financial structure, it was not possible and, because of the look at the wall, the cupboards and the extractor fan were sufficient.” (underlining supplied).
"Q. Well, you saw in the contract that this speaks of an extractor fan, not a range hood?
A. Yes, I didn't really pick up the difference.
Q. You say that you didn't pick up the difference between an extractor fan and a range hood?
A. That's correct.
Q. You understood it to refer to the same thing.
A. I did.”
236 In my opinion, this failure on the part of the defendant to differentiate between an extractor and a range hood caused the defendant to misunderstand what was being said by the plaintiff. On the other hand, in my opinion, the plaintiff, during the relevant conversation, had very clearly in her mind what the contract required and what she was obliged to do, more especially having regard to her financial circumstances at the time, and, accordingly, it is, in my opinion, more probable that for this reason also the plaintiffs version of the relevant conversation is accurate.237 I am of the same opinion, in general terms, in relation to the alleged representation by the plaintiff to the defendant contained in paragraph 4(e) of the cross-claim, "that door handles for the internal doors and window latches for the windows had already been purchased by the cross-defendant and would be left in the house", because, in my opinion, in this respect also, the plaintiff would have had, at the time of the relevant conversation, very clearly in her mind that the contract did not provide for any such items and that she had no obligation to provide such items, again more especially having regard to the stringent financial circumstances in which the plaintiff was placed at the relevant time.
238 In cross-examination the plaintiff denied that she said to Dr. Bellamy:-
“ still have to finish some painting and timber work on the windows and doors, so I have not put the door handles and window handles on yet, but I already have them.”
239 The plaintiff also said in cross-examination:-
"I never said I would be putting on hardware. There were two reasons for that. One, the financial cost of them and, two, I had not found anything that I liked. At all times Dr. Bellamy was told I was not putting hardware on to the doors, or the windows.”
240 The plaintiff adhered to her affidavit evidence to the effect that she did say to the defendant words to the effect:-
"I still have to finish some painting on the brick work around the four french doors. I will not be putting on hardware, that is, door handles, etc. on the internal doors. I have not found what I liked. I am not prepared to put the money into them.”
242 Special condition 2 of the contract was in the following terms:-
241 In my opinion, the plaintiffs version of the relevant conversation is, in addition, in accordance with the probabilities, having regard to the matters to which I have adverted above, namely, the fact that there was no such provision in the contract and the fact that by reason of the plaintiffs stringent financial position at the relevant time it could be expected that she would be careful not to agree to additional work or items which might require expenditure of money. I also have regard in this connection to the circumstances leading up to the drafting of the special conditions in the contract providing for outstanding work to be done, to the provisions of special condition 2 of the contract and to the certificate of Judith White, solicitor, annexed to the contract.
"2. The Purchaser acknowledges that the provisions of this Agreement constitute the full and complete understanding between the parties and that there is no other understanding, agreement, warranty or representation whether express or implied in any way extending, defining or otherwise relating to the provisions of this Agreement or binding on the parties hereto with respect to any of the matters to which this Agreement relates.”
243 The certificate referred to is in the following terms:-
" Certificate
I, Judith White of 245-250 Oxford Street, Paddington, certify as follows:-
(a) I am a Solicitor currently admitted to practise in New South Wales.
(b) I am giving this certificate in accordance with s66W of the Conveyancing Act 1919 with reference to a contract for the sale of property Villa Tuscany, B/134 Ocean View Drive, Wamberal from Loriann Nelson to Lynette Marie Bellamy in orde r that there is no cooling off period in relation to that contract.
(c) I do not act for Lori NELSON and am not employed in the legal practice of a solicitor acting for her nor am I a member or employee of a firm of which a solicitor acting for the vendor is a member or employee.
(d) I have explained to Lynette Marie Bellamy:
Dated: 19 September 1996
(i) the effect of the contract for the purchase of that property ;
(ii) the nature of the certificate;
(iii) the effect of giving this certificate to the vendor.
(sgd.) Judy White
Solicitor.”
244 In relation to clause 2 of the contract quoted above the defendant gave evidence in cross-examination as follows:-
“Q. But clause two (says) in the simplest possible terms that you couldn't rely on anything other than the contract itself, didn't it?
A. Well, in retrospect, it may well have, but at that time that was not how I read it.
Q. But you put your signature to it and with the benefit of legal advice?
A. I did.”
245 In relation to the certificate referred to above the defendant gave evidence as follows:-
“Q. You agree that she did explain the effects of the contract to you?
A. I think she did, yes
Q. You withdraw the evidence you gave a few moments ago, do you? '
A. Yes. I wasn't unsatisfied with her services. I didn't want to make that sound a negative sort of comment. I just cannot remember the exact wording of the conversation that we had.
Q. But you're quite satisfied that she did explain the effects of the contract to you?
A. Yes, I am, yes.”
246 In all the circumstances I regard the plaintiffs evidence on this issue as more reliable. In my opinion, the defendant's recollection is mistaken having regard to the relatively long period of time that has elapsed since the relevant conversation occurred. I do not for a moment suggest that the defendant gave deliberately false evidence, on this or any other issue, but I find on the balance of probabilities that the defendant's recollection of the relevant conversation was faulty, and not as reliable as the plaintiff’s recollection, in all the circumstances.247 So far as concerns the representations alleged to have been made by the plaintiff to the defendant as set out in paragraphs 4(c) and (d) of the cross-claim concerning the supply and installation of wrought iron gates with the words "Villa Tuscany" and other features to be incorporated into the metal work, to be installed by September 1966 and a gate to be installed in a gap in the brick boundary wall to the land also to be delivered and installed by the end of September 1996, I again prefer the version of the relevant conversation given by the plaintiff, as referred to below, as being more reliable and more in accordance with the probabilities having regard, inter alia, in particular, to the plaintiffs detailed knowledge of what was in the contract, to the stringent financial circumstances of the plaintiff, to the absence of any such provision in the contract coupled with the circumstances surrounding the drafting of the special conditions of the contract providing for outstanding work to be done, to the provisions of special condition 2 of the contract and to the certificate of Judith White, solicitor, annexed to the contract referred to above.
248 In relation to the iron gates the defendant said in her affidavit that the plaintiff said words to the following effect:-
"Nelson: 'No, I’m not building the garage, but I have erected the sail in the courtyard instead of the garage. The people who made the sail are making a double set of iron gates for the car entrance and matching single gate in the wall. The gates will incorporate the sail design and the words 'Villa Tuscany’ will be in the ironwork for the gates .”
249 In her affidavit the plaintiff denied that she said words to that effect but gave evidence that she did say to the defendant words to the effect:-
"Down the track when the development is complete we can get together to discuss possibly having gates for security and in relation to the top capping on the walls.”
250 The plaintiff adhered to her version of the relevant conversation during cross-examination repeating that "Down the track we discussed the possibility, when the total development was complete, of perhaps doing something together ... It was discussed that a possibility down the track when the development was complete we could look at the options."251 The plaintiff agreed that she had drawn a sketch but said that it "was just a dream of what we might be able to achieve down the track." The plaintiff gave evidence that a tradesman named Bruce, a friend, "looked at what I felt what could be achieved. He told me I was flying too high, it could not be achieved, there was too much span. His option, maybe later, was to put one gate across the driveway."
252 The defendant was cross-examined in relation to the circumstances leading up to the exchange of contracts and the absence of any provision in the contract relating to gates as follows:-
Q. Before you executed the contract, you understand that Ms. Nelson negotiated through your solicitors as to the special conditions of that contract, didn't you?
A. We did.
Q. Including in some detail, what work was to be specified in the contract and what wasn't?
A. Correct.
Q. In the course of those negotiations, you understood that Ms. Nelson was agreeing to include in the contract some of the matters which had requested to be done and not others?
A. Correct.
Q. And indeed, you or your solicitors prepared a list of things that you wanted included?
A. Yes.
Q. And to your knowledge Ms. Nelson accepted some of them and rejected others of them?
A. That's correct
Q. And then would you have a look at this further letter. Is this a reply from your solicitors to Adrian Twigg & Co. of 19 September?
A. Yes
Q. And Annexure A to that letter, is that a list prepared on your instructions of the things you wanted included in the contract?
A. Yes, I believe so.
Q. This was after you had had the benefit of seeing what was already in the draft special conditions forwarded the previous day?
A. Yes, that's right.
Q. Nowhere in there did you stipulate for anything about gates, did you?
A. No, I didn't .” (underlining supplied).
253 As stated above, in my opinion, having regard to all the considerations referred to above, but, in particular to the stringent financial situation of the plaintiff at this point of time I find that it is more probable, in all the circumstances of the case, that the version of the relevant conversation given by the plaintiff is accurate, inter alia, because of the expense of supplying such gates, and also because of the fact that it is plain that they had not been previously ordered so as to be capable of being installed "some time in the next couple of weeks" as the defendant said the plaintiff said. On the other hand, in all the circumstances I find it more probable that the gates were mentioned in the context of the conversation as deposed to by the plaintiff as set out above.
254 In all the circumstances I am satisfied that the representations alleged in paragraphs 4(c) and (d) of the defendant's cross-claim were not made by the plaintiff to the defendant as alleged. In regard to these matters also I find that the defendant's recollection was faulty in detail having regard to the lapse of time since the relevant conversation took place.
255 It follows from the above findings that the cross-claim of the defendant must be dismissed.
256 I direct the plaintiff to bring in short minutes of order giving effect to the above reasons for judgment. The short minutes should also provide that the defendant should pay the costs of the plaintiff of the claim and the cross-claim.
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