Poche v Ellingworth

[2022] NSWSC 700

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Poche v Ellingworth [2022] NSWSC 700

Hearing dates:

8 October 2021

Decision date:

30 May 2022

Jurisdiction:

Common Law

Before:

Rothman J

Decision:

(1) Pursuant to the provisions of the Uniform Civil Procedure Rules 2005 (NSW), r 13.1, summary judgment for the plaintiff;

(2) Pursuant to the provisions of the Uniform Civil Procedure Rules, r 13.2, stay of the enforcement of the judgment issued pursuant to r 13.1 until the termination of the Cross-Claim or the expiry of six weeks, whichever occurs earlier;

(3)   Grant expedition to the hearing of the Cross-Claim;

(4) Grant leave to the cross-claimant to file an Amended Cross-Claim that complies with the Uniform Civil Procedure Rules, within 14 days of the date of this judgment;

(5)   The costs of these proceedings are reserved.

Catchwords:

LAND LAW – transfer of title – right of possession

CONTRACTS – collateral contract – transfer as condition precedent to obligations – “essential term” – repudiation – right to damages only

CIVIL PROCEDURE – summary judgment – granted but stayed pending cross-claim or other appropriate order

Legislation Cited:

Civil Liability Act 2002 (NSW)

Contracts Review Act 1980 (NSW)

Legal Profession Uniform Law Application Act 2014 (NSW)

Residential Tenancies Act 2010 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

ARAP 1 NSW v Hudson [2014] NSWCATAP 30

Australian Securities and Investments Commission v Kobelt (2019) 167 CLR 1; [2019] HCA 18 Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342; [2008] HCA 22

Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; [1983] HCA 25

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69

Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; [1933] HCA 25

Moschi v Lep Air Services Ltd; Lep Air Services Ltd v Rolloswin [1973] AC 331

Photo Production Ltd v Securicor Transport Ltd [1980] AC 827

Tramways Advertising Pty Limited v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632

Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56

Webster v Lampard (1993) 177 CLR 598; [1993] HCA 57

Category:

Procedural rulings

Parties:

Justin Wade Poche (Plaintiff/Cross-Defendant)
Stephen William Ellingworth (First Defendant/Cross-Claimant)
Kirsten Avril Da Silva (Second Defendant)

Representation:

Counsel:
B J Skinner (Plaintiff/Cross-Defendant)
J Williams (First Defendant/Cross-Claimant)

Solicitors:
O’Neills Law (Plaintiff/Cross-Defendant)
Antunes Lawyers (First Defendant/Cross-Claimant)

File Number(s):

2021/74701

Judgment

1. HIS HONOUR: The plaintiff, Justin Wade Poche, moves the Court, by notice filed 8 June 2021, for summary judgment. The proceedings were commenced by Statement of Claim filed and served on or about 16 March 2021 seeking possession of property. On 14 May 2021, the first defendant, Stephen William Ellingworth, filed a Defence and on 19 May 2021 filed a Cross-Claim in which the cross-defendant was the plaintiff in the principal proceedings. An Amended Cross-Claim was filed and served on or about 29 July 2021.

2. The hearing was initially conducted on 8 October 2021, after which the first defendant and cross-claimant moved, by notice filed 3 November 2021, for interlocutory orders, the effect of which was to place a restrictive covenant on the Property, should the Court otherwise be minded to grant possession. The first defendant’s Motion was, pursuant to directions of the Court, the subject of written submissions by each party, filed in December 2021. It is necessary to deal with the facts in issue between the parties.

Facts

3. Prior to 15 November 2015, the first defendant was the registered proprietor of property in Upper Burringbar, in the State of New South Wales. Its formal description is Lot 1 in Deposited Plan XXXXX X, being the whole of the land comprised in Folio Identifier: 1/XXXXX X (hereinafter “the Property”).

4. The Statement of Claim alleges that the Contract for Sale — which was between the plaintiff and the defendants and executed and exchanged in or about October 2015 — was to the effect that the first defendant sold to the plaintiff, who bought the Property upon the Terms and Conditions in the Contract. So far, there is nothing unusual in the foregoing.

5. As already stated, completion of the Contract was effected on 15 November 2015. As a consequence of the completion of the Contract and the subsequent steps taken, the plaintiff is now the registered proprietor of the land.

6. The plaintiff maintains that by “oral agreement” made in or about October 2015, being about the time of, and ancillary to, the Contract for Sale, the plaintiff agreed to allow the first defendant to remain in occupation of the Property for a period of two years ending 13 November 2017.

7. According to the evidence before the Court, the plaintiff demanded vacation of the property sometime after 13 November 2017 and the first defendant refused to vacate. The plaintiff maintains that the first defendant is in occupation of the Property without the consent of the plaintiff. Further, by the Statement of Claim, the plaintiff claims the right to possession as a consequence of the transfer of the title in the Property and the failure to vacate.

8. The circumstances of the Contract for the transfer of the Property are not in dispute in the formal sense. The Defence filed in the proceedings — filed on behalf of the first and second defendant, but no issue arises as to any distinction between them for the purposes of this judgment, except as expressly identified — admits that prior to 15 November 2015, the first defendant was the registered proprietor of the property. The defendants deny (although the term utilised in the Defence is “disagrees”) with the proposition that the first defendant sold the property to the plaintiff upon the terms and conditions set forth in the Contract. The Defence is crafted in a manner which is not in a usual form, and which seems not to have been drafted with legal advice.

9. Nevertheless, the defendants allege that the plaintiff has not “fulfilled his agreed obligations towards the Contract” and it seems, on a proper construction of the Defence, that it is to that extent that the defendants deny that the Contract was the determining document for the sale of the Property. The defendants agree that the contract was completed on 15 November 2015. The defendants deny that the oral agreement with the plaintiff was that the first defendant may remain in occupation of the Property for a period of two years.

10. The defendants plead that the plaintiff agreed to an occupation by the first defendant for five years, the first two years of which would be rent-free, whilst the plaintiff renovated the Property to be habitable, or more habitable. Further, according to the defendants, the plaintiff agreed that, at the conclusion of the five-year period, the plaintiff would sell the Property and provide a predetermined percentage of the sale price to the first defendant.

11. Over and above the foregoing, the defendants dispute that they have refused to vacate the premises. Rather, the defendants allege that the plaintiff offered a lease but refused to provide a mandatory Condition Report. Further, at the time there was “no running water, roof leaking, unsafe electric wiring and safety-switches and no cooking facilities”. The defendants also take issue as to whether the second defendant is in occupation.

12. As to the claim for the right of occupation, the defendants plead that they have attempted to find accommodation and their belongings have been required to be put into storage, but accommodation has been difficult, if not impossible, to find because of the critical shortage of housing due to the current pandemic and the first defendant’s disability. The second defendant, it is alleged, is not in occupation of the Property.

13. The Cross-Claim, filed by the first defendant in which the plaintiff is the only cross-defendant, claims damages for the failure to fulfil the obligations “from the sale of land” and damages occasioned by “ongoing vexatious harassment causing considerable stress, anxiety, loss of enjoyment in life, trauma, increased depression, loss of mobility, affecting my chronic illness and pain as a result”. The reference to “my”, is plainly a reference to the cross-claimant/defendant.

14. Hereafter, all references to the defendant are references to the first defendant, Mr Ellingworth. The second defendant will, where it is necessary to refer to her separate interest, be described as such. Further, I will refer to the plaintiff as such even where his interest is as cross-defendant and the defendant as such even in his position as cross-claimant.

15. The pleadings and particulars in the Cross-Claim are that the plaintiff, in these proceedings, failed to honour the “original agreement between the parties” and otherwise refers to an Affidavit in support. The Amended Cross-Claim seeks an interlocutory order restraining the plaintiff from evicting the cross-claimant; a further interlocutory order placing restrictive covenant on the Property prohibiting sale; relief terminating the Contract for Sale; rescission of the Contract; an order for possession of land by the cross-claimant; and, in the alternative to possession, damages. The Amended Cross-Claim was filed on 3 August 2021 and is more expansive than the original Cross-Claim, described above.

16. First, it claims that the cross-defendant has breached the Contract for Sale of land and Residential Agreement. It alleges that on 29 April 2015, there was a written Contract for Sale of the Property which was completed on 13 November 2015. It pleads that the terms of the Contract, which includes the purported collateral contract, were that the purchase would be effected for $400,000 and the defendant would live, rent-free, for two years, after which the defendant would occupy the Property under a lease, to be entered into between the parties, for a further three-year period, at $200 per week. Over and above the foregoing, upon the conclusion of the five-year period, the plaintiff would sell the Property and provide the defendant with 50% of the proceeds of sale of the Property, after expenses of sale.

17. The current market value of the Property is alleged to be $2,195,000 and, the effect of the foregoing agreement was the total consideration agreed between the parties was an amount of $472,000 (the initial purchase price and the rental arrangements) plus 50% of the Property, estimated at $1,095,000, calculated as a consideration agreed to by the parties at $1,567,000.

18. Further, the defendant claims that the collateral agreement to the Contract for the sale of land provided for the plaintiff to renovate the Property to render it habitable and to increase the potential sale price.

19. Further to the foregoing, the Cross-Claim alleges that, on 15 October 2015, the plaintiff arranged a valuation of the Property and commissioned it. The plaintiff is alleged to have advised the defendant that the value of the Property was $350,000. The defendant alleges that, in truth, the valuation was $575,000. As a consequence, the plaintiff engaged in “unfair conduct, undue influence, unconscionable dealing or misrepresentation, giving rise to termination or rescission”. The Cross-Claim does not particularise the basis upon which there was a right to terminate or rescind the Contract, to which these reasons will refer later.

20. The Cross-Claim also alleges breach of “an essential term of the Contract for Sale of land and the Residential Agreement” by virtue of the plaintiff failing to renovate the Property to make it habitable and failing to sell the Property within, or immediately after, the five-year period that is alleged to be the period of the residency.

21. The Cross-Claim purports to deal with the terms of the Contract for Sale of Land and the written terms of the said Contract that require the land to be offered with vacant possession. The Cross-Claim alleges that, prior to the execution of the Contract for Sale, the plaintiff promised the defendant “on a number of occasions” that the defendant would be entitled to occupy the premises following completion of the sale. It is said, in the Cross-Claim, that the “promise was made in consideration of the cross-defendant executing the written Contract and constituted a collateral agreement for the sale of the premises”. The terms alleged by the defendant as being part of the “collateral Contract” have been summarised sufficiently already.

22. The defendant, in the Cross-Claim, alleges that the failure of the plaintiff to provide a Residential Lease Agreement, which it is alleged was an essential term of the Contract and Residential Agreement, was a failure that was “repudiatory”. Further, it is alleged that an essential term of the Contract of Sale and Residential Agreement was that the defendant would live rent-free for two years, as earlier stated, then pay rent at $200 per week for a further three years. It is alleged that the plaintiff’s non-acceptance of the rent from 18 June 2018 until the present day is a repudiation, being a breach of a term that is essential.

23. The third repudiatory breach is said to arise when the plaintiff served an Eviction Notice on the defendant, which occurred on 29 October 2018. The fourth repudiatory breach arose when a second Eviction Notice was served on 2 November 2019.

24. It is also alleged that, on 15 November 2019, the defendant (misnamed as the plaintiff) sought an ex parte injunction in the Local Court at Ballina enjoining the plaintiff from evicting the defendant. This application was dismissed by the Local Court for want of jurisdiction. At or about the same time, it is said that the plaintiff agreed that the defendant could remain in the Property until 20 February 2020 and that offer amounted to a repudiation.

25. The sixth repudiation claimed in the Cross-Claim was a further offer by the plaintiff for the defendant to remain in the Property. This further offer was said to have been made or “agreed” on 1 March 2020 and proposed that the defendant could remain in the Property until November 2020. The remainder of the Property was subject to a Lease Agreement.

26. The seventh repudiation was a second failure by the plaintiff to provide a Residential Agreement. The basis for this “failure” is pleaded as being that a Residential Lease Agreement was served on 30 April 2020, but the Agreement did not contain a “Conditions Report” and that failure gave rise to a repudiation, presumably of the Contract for Sale and the Residential Agreement.

27. The eighth repudiation alleged in the Cross-Claim is the alleged failure of the plaintiff to renovate the Property and maintain it in a habitable state, which, as has already been recited, was said to be an essential term of the Contract for Sale and Residential Agreement.

28. The defendant pleads that his right to possession arises from the breach of the Contract for the Sale of Land and Residential Agreement and, as a consequence of the breach, the defendant has suffered mental and physical pain and suffering and financial and economic loss (including mortgage debt, medical and legal fees, property maintenance costs and repairs) all of which, implicitly, were caused by the breaches of Contract by the plaintiff.

29. From the foregoing pleading, and making allowances for issues of drafting, the foregoing facts and circumstances are undisputed:

1. The defendant was the prior owner of the Property;

2. By Contract for Sale of Land, which Contract required vacant possession, the defendant agreed to sell the Property to the plaintiff;

3. The plaintiff is now the registered proprietor of the Property;

4. There is in existence no Residential Lease and no deficiency in title that prevents the plaintiff from occupying and, to the extent desired, selling the Property.

30. While there is not, before the Court for the purpose of these Motions, any Defence filed to the Cross-Claim, the following can be said to be the case of the defendant at its highest:

1. There was a collateral agreement to the Contract for Sale of Land;

2. The collateral agreement, oral and possibly partly written, entitled the defendant to live, rent-free, on the Property for a period of two years;

3. The same collateral agreement entitled the defendant to occupy the Property for a further three years commencing at the conclusion of the two-year rent-free period for a rent of $200 per week;

4. During or immediately after the three-year period, the plaintiff was to arrange for and implement a sale of the Property from the proceeds of which the defendant would receive 50% of the sale price, less expenses of sale;

5. The plaintiff was to renovate the Property to render it habitable in order for the defendant to be permitted to occupy the Property in accordance with the foregoing.

31. Each of the parties agree, and it is undisputed in the pleadings before the Court, that the transfer of the Property and settlement of the Contract occurred on 15 November 2015. Each of the parties agree that the plaintiff is the registered proprietor of the Property. As a consequence, the five-year period during which, on the allegation of the defendant, the defendant was entitled to occupy the Property, concluded no later than 15 November 2020.

32. The plaintiff relies upon evidence and, in that regard, has read the Affidavit of Mr Richard Ambrose Reading, sworn 8 June 2021 and a second Affidavit of Mr Reading, sworn 30 September 2021. The defendant sought to rely upon the Affidavit of Ms Kirsten Avril Da Silva of 18 August 2021.

33. Ms Da Silva is named as the second defendant in the plaintiff’s Statement of Claim, but there is no allegation that she has any proprietary interest in the Property nor that she is currently occupying the Property. The proceedings against Ms Da Silva as the second defendant were discontinued on 3 June 2021. In any event, Ms Da Silva attests to the proposition that the agreement reached between the plaintiff and the defendant was that after the initial two-year period, a lease would be drawn up for a further three-year period at $200 per week, and, thereafter, the Property would be sold, and the profits would be shared.

34. The defendant also relies upon an Affidavit of Mr Glennys Lee Beams, affirmed 8 September 2021. In short, Mr Beams testifies to the health issues suffered by the defendant, to his character and to his financial position (or lack of it).

35. The defendant also relies upon the Affidavit of Mr David Perry, affirmed 8 September 2021. Mr Perry outlined the maintenance issues required of the Property and also refers to the defendant’s disability and health issues. The defendant further relies upon his own Affidavit, affirmed 8 September 2021, in which he attests to his physical and mental health having deteriorated and attributes the deterioration to the conduct of the plaintiff in failing to fulfil his obligations “from the sale of the Property and his ongoing hostile behaviour”.

36. An Affidavit of Mr Ken Honor, affirmed 9 September 2021, was also read by the defendant. This goes only to the defendant approaching Mr Honor in relation to urgent accommodation. There was an Affidavit of Mr Alistair Monty, affirmed 10 September 2021. Mr Monty claims to have been “privy to the arrangement that Stephen’s [the defendant] landlord, Justin Poche, had made in 2015 when he purchased Stephen’s property”. The Affidavit states that the arrangement consisted of a “purchase price for the Property, together with a five-year tenancy, including a two-year rent-free period. The house on the Property was also to be repaired/rebuilt during this period”.

37. Lastly, the defendant relies upon Affidavit of Mr Ray Goodwin, affirmed 14 September 2021. Mr Goodwin states, without revealing the source of his knowledge, that he is “aware about Stephen [the defendant] had an arrangement with his landlord whereby the defendant would have an equitable interest in the Property at the time of the sale”.

Submissions

38. The plaintiff submits that the Defence does not disclose an arguable defence. The plaintiff relies upon the provisions of the Uniform Civil Procedure Rules 2005 (NSW) (hereinafter “UCPR”), in particular UCPR r 14.15(3) and alleges that the defendant has not pleaded any of the matters required to be pleaded in relation to a claim for possession of land. In particular, the plaintiff claims that the defendant has not pleaded, but is required to plead, any claim for relief against forfeiture; any claim for rectification; and any claim for relief under the Contracts Review Act 1980 (NSW).

39. The plaintiff submits that the defendant is in possession of the Property, without the consent of the owner (being the plaintiff) and the defendant is obliged by law to vacate the premises. The plaintiff submits that there is no arguable defence and categorises the defendant as a trespasser. The plaintiff also refers to proceedings before the New South Wales Civil and Administrative Tribunal (hereinafter “NCAT” or “the Tribunal”), which found that there was no Residential Lease between the parties.

40. Further, the plaintiff submits that, were there to have been a written Tenancy Agreement, any application for relief under the Contracts Review Act is time-barred. A time limit of two years applies to any application for such a review and the two years commences on the date on which the Contract was made. Further, the plaintiff submits that the defendant has not raised any claim for a possessory interest in the Property.

41. As to the Cross-Claim, the plaintiff has submitted that the Amended Cross-Claim of 29 July 2021 is incompetent. The plaintiff submits that the pleading is incompetent because it has not been verified by affidavit; it was commenced by a barrister, who is not a person permitted to commence proceedings on behalf of a party; and, there was a failure to comply with cl 4 of Sch 2 of the Legal Profession Uniform Law Application Act 2014 (NSW) in that the barrister, who has commenced the proceeding invalidly, is not a “law practice” capable of certifying that there are reasonable grounds for believing that a claim for damages has reasonable prospects of success.

42. Over and above the foregoing, the plaintiff submits that even if the pleading were in proper form and commenced validly, it should be dealt with in the Equity Division and transferred to the Division pursuant to UCPR r 19.10. It is not clear whether the plaintiff submits that the filing of the Cross-Claim in the Common Law Division renders it invalid.

43. Further to the foregoing, the plaintiff alleges that the Cross-Claim is irregular because it claims damages for “pain and suffering” without regard to s 11 of the Civil Liability Act 2002 (NSW) and without providing particulars. Further the plaintiff raises that the Cross-Claim is not divided into paragraphs and numbered consecutively, the facts must be pleaded and not evidence, and that it is not possible to draft a Defence to the Cross-Claim in its present form.

44. Over and above the foregoing procedural issues, the plaintiff claims that the Cross-Claim seeks termination or rescission of the Contract for Sale of Land without regard to the doctrines of merger and indivisibility of title; claims for damages and other relief in equity should be ignored because no sale has yet been effected by the plaintiff; and, counsel for the defendant had been invited to withdraw the Cross-Claim on the basis that it disclosed no reasonable cause of action.

45. The health and hardship of, and suffered by, the defendant is, on the submission of the plaintiff, irrelevant. On the plaintiff’s submission to the Court, the actions of the defendant have been solely for the purpose of delay in circumstances where, once the Statement of Claim had been served, it was “inevitable” that the plaintiff would obtain possession. The plaintiff alleges that no rent has been paid by the defendant throughout his occupation of the Property, although no submission has been made as to whether there was an offer which had not been accepted.

46. At the time of the hearing before the Court, notwithstanding directions to that effect, no submissions had been received from the defendant. Nevertheless, submissions have been received from the defendant, albeit significantly delayed.

47. The defendant’s written submissions refer to the tests for summary judgment. A number of the procedural objections to the Cross-Claim were the subject of submission. An issue is taken as to whether, for example, a barrister acting on direct access, is capable of certifying that the pleadings have a reasonable prospect of success. The defendant’s submissions purport to deal with the complaint in relation to s 11 of the Civil Liability Act. The complaints, on the submission of the defendant, are capable of being dealt with by an order to file an Amended Cross-Claim and/or an Amended Defence and are not sufficient to warrant summary judgment.

48. The defendant submits that, given that the plaintiff’s allegations are contested, and the outcome of the proceedings depends upon contested questions of fact, there is no basis for summary judgment.

49. In the course of the foregoing very brief summary of the submissions filed, the Court has referred to proceedings before NCAT. Those proceedings had a file number RT19/09699 and were commenced by the plaintiff on 26 February 2019. The application by the plaintiff sought an order from NCAT terminating the residential tenancy of the Property under the Residential Tenancies Act 2010 (NSW).

50. There was a conciliation that attempted to resolve the issues between the parties on 15 March 2019, but they did not resolve. On 9 May 2019, directions were made as to the filing of evidence and/or submissions and reasons were provided. The Tribunal complained that all of the material necessary to decide the proceedings was not filed in the proceedings and issued further directions.

51. On 13 June 2019, NCAT dismissed the application, holding that NCAT did not have jurisdiction to determine the application, because the Residential Tenancies Act does not apply to the agreement made between the plaintiff and the defendant. The agreement was not “a residential tenancy”, according to the Tribunal, and, as a consequence, NCAT had no jurisdiction to deal with the application.

52. The decision of NCAT depended upon the application of a decision of an Appeal Panel of NCAT,^[1] in which it had been observed that the Residential Tenancies Act applied to a tenancy arising from a Contract for Sale of land only in circumstances where the Contract contained a provision which conferred a right to occupy residential premises on a party to a Contract, and did not apply where the right to occupy is conferred by another agreement, or where the Contract for Sale purports to confer a right to occupy on a third party.

    1. ARAP 1 NSW v Hudson [2014] NSWCATAP 30.

53. In the course of the decision of NCAT, a number of the findings were made on the basis of the evidence produced. Further, of necessity, the plaintiff claimed there was a Residential Tenancy in place for the purposes of the NCAT application. The Court of Appeal has made clear that, in certain circumstances, issue estoppel will rise from proceedings before NCAT. Neither party, in these proceedings, relied on such an estoppel nor referred to why it did or did not apply.

Principles for Summary Judgment

54. Because the defendant has filed a Defence in the principal proceedings, default judgment is unavailable. Further, the provisions of UCPR r 13.4, which deals with frivolous and vexatious proceedings, the absence of a reasonable cause of action and abuse of process, relate to a claim for relief and the dismissal of proceedings.

55. As a consequence, the applicable rule and process is to apply for summary judgment, which is dealt with in a number of rules, but most relevantly in UCPR r 13.1, and requires evidence of the facts on which the claim is based and evidence, accepted by the Court, that the defendant has no defence to the claim or part of the claim.

56. The principles on summary disposal of proceedings are well rehearsed. Great care must be exercised by the Court in entering summary judgment for a plaintiff. The usual rule of thumb is that if there are real questions to be tried, whether questions of fact or questions of law, upon which the plaintiff’s claim depends, then the Court will not enter summary judgment for a plaintiff. ^[2]

    2. Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99; [1983] HCA 25; Webster v Lampard (1993) 177 CLR 598 at 602; [1993] HCA 57.

57. The classic statement of principle is that of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) ^[3] where his honour said:

“[8]    … It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense.

[9]    At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or ‘so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument’; ‘so to speak apparent at a glance’.

[10]    As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J. (as he then was) sums up a number of authorities in Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 VOL CXII-9 where he says (1949) 78 CLR, at p 91: ‘A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.’ Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings (1949) 78 CLR, at p 84, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”^[4]

3. General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69.

4. Ibid, at 129-130.

58. While the foregoing statement by Barwick CJ related to summary dismissals of proceedings brought by a plaintiff (sought by the defendant), the same principles are to be applied in granting summary judgment to a plaintiff, in circumstances where a Defence has been filed. The Defence must be able to be characterised in the manner set out above, as if the reference to the plaintiff’s proceedings were the Defence that has been filed. It is the foregoing approach that the Court is required to apply in dealing with the Motion of the plaintiff. I draw particular attention to the above statement of principle that a Defence may be futile even though it may require extensive argument before reaching the conclusion that it cannot possibly succeed.

Essential Condition and Rescission

59. As can be seen from the foregoing summary of the pleadings and submissions, the defendant, in essence, pleads a breach of a collateral contract to the contract for sale and pleads that the relevant breaches of the collateral contract were “essential terms”, seemingly essential to the contract for sale of land.

60. The defendant then pleads that, as a consequence of the breach of an essential term, the contract for sale of land has been repudiated and the contract ought to be “rescinded” by the Court. The allegation that the breaches that have been alleged were “essential terms” and were essential terms in the Contract for Sale of Land are wholly undeveloped either in the pleadings or in the submissions.

61. It is necessary to deal with some fundamental propositions, including the nature of contractual obligations and the capacity to “rescind”.

62. The term “rescind” or “rescission” is apt to create ambiguity. It is used to refer to rescission ab initio, usually as a result of fraud or some other matter that affects the formation of the contract, as well as “rescission” or “termination for essential breach” following repudiation.

63. As a consequence, in these reasons, the termination of the contract following repudiation will not be referred to as “rescission”. Nor will the verb “rescind” be used to refer to that process. ^[5]

    5. Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342; [2008] HCA 22 at [2], CLR 346 (Gleeson CJ, Gummow, Hayden, Crennan and Kiefel JJ); see also Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 844 (Lord Wilberforce).

64. The law of contract is part of the law of obligations and is, essentially, about the sources and remedies which a court can grant to a person obliged to perform a contractual duty who has failed to perform that obligation voluntarily. In the comments of Lord Diplock, the fundamental nature of the law of contract, was described in the following terms:

“English law is thus concerned with contracts as a source of obligations. The basic principle which the law of contract seeks to enforce is that a person who makes a promise to another ought to keep his promise. This basic principle is subject to an historical exception that English law does not give the promisee a remedy for the failure by a promisor to perform his promise unless either the promise was made in a particular form, e.g., under seal, or the promisee in return promises to do something for the promisor which he would not otherwise be obliged to do, i.e., gives consideration for the promise. The contract which gives rise to the instant appeal does not fall within this exception. In return for the guarantor’s promise to the creditor the latter promised to extend credit to the debtor and to release his lien upon the debtor’s goods.

Each promise that a promisor makes to a promisee by entering into a contract with him creates an obligation to perform it owed by the promisor as obligor to the promisee as obligee. If he does not do so voluntarily there are two kinds of remedies which the court can grant to the promisee. It can compel the obligor to pay to the obligee a sum of money to compensate him for the loss that he has sustained as a result of the obligee’s failure to perform his obligation. This is the remedy at common law in damages for breach of contract. But there are some kinds of obligation which the court is able to compel the obligor actually to perform. In some cases, such as obligations to transfer title or possession of property to the obligee or to refrain from doing something to the detriment of the obligee, a remedy to compel performance by a decree of specific performance or by injunction is also available. It was formerly obtainable only in a court of equity. In these cases it was an alternative remedy to that of damages for breach of contract obtainable only in a court of common law. But, since a court of common law could make and enforce orders for payment of a sum of money, where the obligation was itself an obligation to pay a sum of money, even a court of common law could compel the obligor to perform it. Historically this was the only remedy which the court would grant at common law when an obligor failed to perform this kind of obligation. The remedy of damages for non-performance of the obligation was not available as an alternative.”^[6]

6. Moschi v Lep Air Services Ltd; Lep Air Services Ltd v Rolloswin [1973] AC 331 at 347-348.

65. In this case, the collateral arrangement or contract, assuming for present purposes that it is in the terms pleaded by the defendant, imposes a condition subsequent. The obligations that arise under the alleged collateral contract do not arise until such time as the contract for the sale of land has been effected. In that sense, the contract for the sale of land and its settlement and execution, is a condition precedent to the obligations that arise under what is alleged to be the collateral contract. The defendant does not seek to explain how, in those circumstances, a breach, even of an essential term of the collateral contract, would amount to a repudiation of the sale of the land.

66. The expression “essential term” has been the subject of definition by the High Court and in the English Court of Appeal. The High Court, in Koompahtoo Local Aboriginal Land Council v Sanpine ^[7] described the right to discharge or terminate a contract where the promisor has breached a condition (or essential term) or has sufficiently seriously breached an intermediate term.

    7. Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61.

67. The majority in Koompahtoo ^[8] clarified that an essential term is one that the parties have agreed will always justify termination, if breached. The agreement of the parties is determined by the terms of the contract into which they have entered. Those terms will either expressly define that which is essential and would justify termination of the contract or, by the words of the contract — as understood in the context of the relationship between the parties that the contract creates and the commercial purpose that it serves — will imply that the term is essential. ^[9]

    8. Gleeson CJ, Gummow, Kirby, Hayden and Crennan JJ.

    9. Koompahtoo, supra, at [47], citing Tramways Advertising Pty Limited v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at [641]-[642] and at [48], [49].

68. The majority judgment in Koompahtoo cites the English Court of Appeal judgment in Hong Kong Fir^[10] on the issue of repudiation. There may be a nuanced difference between the term as defined by the English Court of Appeal and by the High Court, particularly to the extent that it refers to the terms “non-essential” and “going to the root of the contract”.

    10. Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26.

69. The High Court approach, which is binding on the Court as presently constituted and otherwise, seems to involve the possibility of greater flexibility, but in so doing, leaves a broader degree of evaluation in drawing the distinction between essential and non-essential terms. ^[11]

    11. See particularly the view expressed by Kirby J in Koompahtoo, supra, at [106].

65. In Hong Kong Fir, ^[12] the English Court of Appeal described the determining factor, entitling a party to discharge the contract, as being that the breach of the other party “deprived the [terminating party] of substantially the whole benefit” of the promise for which they had originally contracted. ^[13] In describing the test that way, Lord Diplock described the test in similar terms to the test under the doctrine of frustration.

    12. Hong Kong Fir, supra, at 71.6 (Lord Diplock).

    13. Ibid, at 72.3 (Lord Diplock).

66. Whether or not there is a nuanced difference between the approach in Hong Kong Fir and that of the High Court in Koompahtoo, as stated, this Court is bound by the judgment of the High Court. In any event, it would seem in all but the most extraordinary cases, that each approach would derive the same result.

67. It is sufficient, for present purposes, to accept that, subject to the express terms of the contract, a breach of a condition, or a sufficiently serious breach of an intermediate term, by one party provides a right to the other party, under the common law, to elect to discharge the contract. In that sense, it is a true “election”, being mutually exclusive alternatives. ^[14]

    14. Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56 at [40] (Gaudron, Gummow and Hayne JJ).

68. As is obvious from the foregoing comments, every breach of a contract, or non-performance of a step in the contract, is not a repudiation of the contract. The breach must deprive the non-defaulting party of substantially the whole benefit of the contract and be such that damages is an insufficient remedy. The classic description of repudiation is that of Dixon J (as his Honour then was) in McDonald v Dennys Lascelles Ltd ^[15] . The passage is in the following terms:

“When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach.” ^[16]

15. McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; [1933] HCA 25.

16. McDonald v Dennys Lascelles Ltd, supra, at 476-477 (per Dixon J).

74. As is obvious from the foregoing passage, discharge of the contract as a result of repudiation relieves each party to the contract of the liability to perform the contract further. However, those rights that have already been unconditionally acquired, and causes of action which have accrued from any breach, continue unaffected.

75. I assume, without deciding, for present purposes, that there was a collateral contract which involved a five year right to occupation, the first two years of which were on the basis of no rent and the last three years of which could be occupied on the payment of $200 per week, as well as a subsequent sale by the plaintiff and a distribution to the defendant of 50% of the subsequent sale price. As a consequence of the foregoing principles, breach of those terms could not give rise to a capacity to rescind ab initio the contract for the sale of land, but would give rise to a claim for damages. In particular, the transfer of land would, on that assumption, be an accused right and the remedy would be damages for breach.

Conclusion

76. Before dealing with the application of the foregoing principles to the issues before the Court, in these interlocutory proceedings, the Court draws attention to the circumstance that there is evidence before the Court that the defendant suffers a mental health condition and physical disability. That evidence is not expert evidence but is the subject of reference in one or more affidavits. ^[17]

    17. See Affidavit of Mr David Perry, affirmed 8 September 2021 and Affidavit of Mr Glennys Beams, affirmed 8 September 2021, each of which is summarised above.

77. Notwithstanding the evidence of mental health and physical issues affecting the defendant and the evidence of his dire financial circumstances, no claim is pleaded relying upon the equitable doctrine of unconscionability.

78. Although the relief claimed in the Amended Cross-Claim seeks an order for rescission on the basis of “unfair conduct, undue influence, unconscionable dealing or misrepresentation” by the plaintiff, the Cross-Claim does not allege a special disadvantage nor a real and substantial ground based on conscience for preventing the plaintiff from relying on that which would otherwise be the plaintiff’s legal rights. ^[18]

    18. Australian Securities and Investments Commission v Kobelt (2019) 167 CLR 1; [2019] HCA 18 at [88] (Gageler J).

79. The Court is required to deal with the matter on the basis of the pleadings before it. On those pleadings, rescission as a result of unconscionability under the general law is not available as there is no claim or allegation that the defendant suffers a special disadvantage known to the plaintiff at the time of the contract.

80. Further, no claim is made under the Contracts Review Act and, if one were to have been made, it seems that it would be time barred.

81. On the forgoing analysis, no other allegation by the defendant can arguably give rise to a “rescission ab initio” and restore the parties to the position prior to the making of each of the contracts. If there were repudiation, as is alleged, then the remedy is to discharge the contract and seek damages.

82. The plaintiff alleges that the Cross-Claim and, to a lesser extent, the Defence are irregular and/or invalid. First, it is said that the pleadings are not verified. The Defence has been verified and, the records of the Court, disclose that the defendant verified the Defence in Murwillumbah and the verification was witnessed and the affidavit sworn before a Justice of the Peace, Simone Sherriff.

83. Secondly, the original Cross-Claim was verified and sworn by the defendant/cross claimant on 14 May 2021. The Amended Cross-Claim is not verified and there is a purported certificate under cl 4 of Sch 2 to the Legal Profession Uniform Law Application Act, signed by counsel. Nevertheless, the Amended Cross-Claim is reliant upon facts to which the original Cross-Claim referred, and those facts were verified.

84. Moreover, the provisions of UCPR r 14.23, requiring verification, if not the subject of compliance, are capable of remedy and do not render the pleading “void”. The Court, pursuant to UCPR r 14.24, would, in such an event, order further verification.

85. As to non-compliance rendering a document void, this will depend on the terms of the requirement and the intention of the instrument. ^[19] The Court has the capacity to waive the rules, where that is necessary.

    19. Victoria v Sutton, supra.

86. The next issue about which the plaintiff complains, in relation to the Defence and/or cross-claim, is that a barrister is not permitted to commence proceedings and cannot certify that there are reasonable grounds for believing that a claim for damages has reasonable prospects of success. As I understand the submission, it is because a barrister is not a “law practice”.

87. The terms in the Legal Profession Uniform Law Application Act, if not expressly defined, take the same meaning as that contained in the Legal Profession Uniform Law Application Act, which defines a law practice as meaning “a sole practitioner; or a law firm; or a community legal service; or an incorporated legal practice; or an unincorporated legal practice.”

88. In turn, a “law firm” means a partnership consisting only of Australian legal practitioners. No argument has been put that would warrant restricting the term “law practice” to a practice of a sole practitioner who is a solicitor.

89. The next procedural issue raised by the plaintiff is that the cross-claimant seeks an order for damages for “pain and suffering” and does not comply with the provisions of s 11 of the Civil Liability Act. To the extent that the cross-claimant seeks damages for “pain and suffering”, which may amount to personal injury, there has been non-compliance with s 11 of the Civil Liability Act.

90. However, the cross-claimant seeks damages for losses under the contract, which include the loss of the payment of the sale price percentage; the failure to provide habitable accommodation for the five-year period; and the inconvenience of renting on the open market or living in premises that were not habitable. As a consequence, while there may be non-compliance with s 11 of the Civil Liability Act, it does not render those matters that depend upon damages for breach of contract void or irregular.

91. Perhaps the high point of the procedural objections is that the Cross-Claim is not divided into numbered paragraphs and numbered consecutively. Such non-compliance does not render the Cross-Claim void. It may require the Cross-Claim to be re-pleaded.

92. The next “objection” is that “facts must be pleaded, not evidence.” But, assuming evidence has been pleaded, which I do not decide, it has no effect on the validity or otherwise of the pleading. It can be the subject of strike out of certain paragraphs, if that is thought appropriate.

93. Lastly, it is not immediately apparent why it is impossible to draft a Defence to the pleading in its present form. Even if that were so, all that would be required would be for an order that the Cross-Claim be amended so as to conform with the rules of pleading.

94. As to the submission on the pleading seeking termination of the contract for sale of land, that has already been the subject of comment in these reasons.

95. Finally, I conclude that the plaintiff has made out a case for summary judgment on the statement of claim, but such a judgment would not deal with the real issue between the parties. I take into account the overriding purpose of the Civil Liability Act, which is to facilitate the just, quick and cheap resolution of the real issues between the parties.

96. Ordinarily, a claim for possession of property in circumstances where there has been a transfer should be dealt with expeditiously, but the Cross-Claim raises significant issues of fact and law upon which summary judgment could not issue because such issues of fact and law are not manifestly unarguable or, even after extensive analysis, unarguable.

97. Fundamentally, those issues depend upon what I assume is a factual contest as to the content of the alleged collateral contract. I assume it is a contest only because, thus far, the plaintiff has not defended the Cross-Claim, but, taking the plaintiff’s case at its highest, I assume the existence of the collateral contract and/or its terms is a matter of dispute.

98. Given the view I have formed that there is no capacity to rescind ab initio the contract for the sale of land and that the proper remedy for the defendant is damages, it would seem that there is a better way to achieve the overriding purpose of the Civil Procedure Act. That purpose would be achieved by an order requiring an account for any sale of the property and the payment into Court of the proceeds thereof, or a significant percentage of those proceeds. While the Court has the power to grant a remedy that has not been requested, such an order would be inappropriate, without hearing the parties fully on the effect of the order and its appropriateness.

99. As such, and given that I intend to require the cross-claimant to amend the Cross-Claim so that it complies with the Uniform Civil Procedure Rules, and to grant expedition, it is appropriate, rather, to utilise the powers conferred by UCPR r 13.2 to stay enforcement of the judgment pending the regularisation of the Cross-Claim and the formulation of appropriate orders. I will place a time limit on the stay to ensure that delay will not prevent the plaintiff from the fruits of the judgment, beyond that which is reasonable; but that time limit may be amended by an order of a judge of the Court on application by motion.

100. Nevertheless, given that this is a matter for possession, it seems to me that it is appropriate to order expedition. For all the foregoing reasons, the Court makes the following orders:

1. Pursuant to the provisions of the Uniform Civil Procedure Rules 2005 (NSW), r 13.1, summary judgment for the plaintiff;

2. Pursuant to the provisions of the Uniform Civil Procedure Rules, r 13.2, stay of the enforcement of the judgment issued pursuant to r 13.1 until the termination of the Cross-Claim or the expiry of six weeks, whichever occurs earlier;

3. Grant expedition to the hearing of the Cross-Claim;

4. Grant leave to the cross-claimant to file an Amended Cross-Claim that complies with the Uniform Civil Procedure Rules, within 14 days of the date of this judgment;

5. The costs of these proceedings are reserved.

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Endnotes

Amendments

31 May 2022 - Correction to representation.

Decision last updated: 31 May 2022