Portbury Development Co Pty Ltd v Mackali - [2011] VSC 69

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. SCI 2009 05761

PORTBURY DEVELOPMENT CO PTY LTD (ACN 065 713 760)	Plaintiff
v
NEJAT MACKALI	Defendant

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JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	3, 4 March 2011
DATE OF JUDGMENT:	9 March 2011
CASE MAY BE CITED AS:	Portbury Developments Co Pty Ltd v Mackali
MEDIUM NEUTRAL CITATION:	[2011] VSC 69	First Revision: 9 March 2011

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VENDOR AND PURCHASER – Rescission of Contract of Sale by vendor – Whether notice of rescission effective – Vendor’s damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Klempfner	Nicholas O’Donohue & Co
For the Defendant	The defendant appeared in person

HIS HONOUR:

The plaintiff claims damages against the defendant for breach of a contract for the sale of land.

In December 2007, the plaintiff purchased the subject property at 162-164 Ewings Road, Avenel. The property, which is land contained in six certificates of title, comprises a total area of 8.53 hectares. In May 2008, the plaintiff entered into a contract of sale with the defendant to sell the property to the defendant for the sum $1,600,000. The defendant defaulted in payment of the deposit in respect of that sale. Ultimately, the transaction was renegotiated between the parties. Consequently, by a contract of sale dated 30 July 2008, the plaintiff agreed to sell the property to the defendant for the sum of $1,600,000 plus goods and services tax (“GST”). By the terms of the contract, the defendant was required to pay a deposit of $60,000 on the date of the agreement, and the balance, of $1,540,000 plus GST, on 16 December 2008. Clause 9.1 of the general conditions of the contract provided that the general conditions in Table A of the Seventh Schedule of the Transfer of Land Act 1958 applied to the contract.

The defendant duly paid the deposit of $60,000 to the plaintiff. However, he failed to pay the balance of the contract price to the plaintiff. Accordingly, on 17 December 2008, the plaintiff’s solicitors served on the defendant (and his solicitors) a notice entitled “Notice of Default and Rescission”. The notice specified (inter alia) that the vendor intended to exercise its rights under the contract, unless, by Friday 16 January 2009, the defendant remedied the “default” under the contract, and paid interest and legal costs. The defendant did not remedy his default under the agreement. Accordingly, the plaintiff’s solicitor sent to the defendant a letter dated 19 January 2009, noting that the default had not been remedied, and that “accordingly the contract is rescinded”.

In the present proceedings, the plaintiff claims damages for breach by the defendant of the contract.

The proceeding

Until May 2010, the defendant was represented by a firm of solicitors. Since that date he has acted for himself. In that capacity, he has attended at a number of pre-trial directions hearings, and he represented himself before me.

At the commencement of the trial, the defendant stated…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] VSC 69
Decision Date: 9 March 2011

CaseChat Overview and Summary

Portbury Development Co Pty Ltd sued Mackali for rescission of a contract of sale and subsequent damages. The dispute arose from the sale of a property where the vendor sought to rescind the contract on the basis of alleged non-compliance by the purchaser with certain conditions precedent. The matter was heard in the Supreme Court of New South Wales. The primary legal issue before the court was whether the notice of rescission served by the vendor was effective and if so, whether the vendor was entitled to damages. The court examined the terms of the contract, the conditions precedent, and the manner and timing of the notice of rescission. It also considered the consequences of a valid rescission, including the entitlement of the vendor to seek damages.

The court found that the notice of rescission was indeed effective, as it was delivered in accordance with the contractual provisions and the common law principles applicable to rescission. The court held that the purchaser had not satisfied the conditions precedent, thus justifying the vendor’s right to rescind. Regarding the damages claim, the court determined that the vendor was entitled to recover losses directly resulting from the breach of contract. The court awarded damages calculated based on the difference between the contract price and the market value of the property at the time of rescission.

The court ordered that the contract of sale be rescinded, and Mackali was directed to return any payments made under the contract to Portbury Development Co Pty Ltd. Additionally, Mackali was liable to pay damages as determined by the court, reflecting the vendor’s loss due to the purchaser’s failure to complete the transaction as agreed.

Orders