Ryan v Urban Construct (SA) Pty Ltd

Case [2012] SASC 128

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

RYAN v URBAN CONSTRUCT (SA) PTY LTD

[2012] SASC 128

Judgment of The Honourable Justice Peek

31 July 2012

CONTRACTS - PARTICULAR PARTIES - VENDOR AND PURCHASER

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - CONDITIONS - INDEPENDENT AND CONCURRENT CONDITIONS

On 18 December 2007 the defendant contracted to buy the plaintiff’s house and land for $3 million with settlement on 31 December 2008. The defendant advised the plaintiff that it would not settle on that date by letter of 19 December 2008 and requested a deferment of settlement of one year. By letter of 8 January 2009 the defendant asserted that the circumstances leading up to the execution of the contract rendered it void or voidable and purported to rescind on that basis.  The plaintiff served notices to complete and then a notice to terminate the contract on 11 February 2009.

Plaintiff sues for breach of contract – whether the defendant’s initial refusal to settle on the  specified date amounts to anticipatory breach and repudiation – whether actual failure to settle amounted to fundamental breach – whether notices to complete and terminate the contract were valid – whether defendant’s letter of 8 January 2009 constituted repudiation.

Held:  The letter of 19 December 2008 constituted an anticipatory breach of an important term of the contract and repudiation of the contract by the defendant. The defendant’s letter of 8 January 2009 constituted express repudiation and the defendant was in fundamental breach of the contract at common law.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - CONDITIONS - INDEPENDENT AND CONCURRENT CONDITIONS

Under the contract the plaintiff was obliged to supply the defendant at settlement with an invoice for any GST to be paid by the defendant. The defendant contended that the land sale transaction was a taxable supply and attracted GST.

Whether the term requiring the plaintiff to provide an invoice was a term the breach of which entitled the defendant to refuse to settle on the transfer of the property – dependent and independent terms and essential and non-essential terms considered.

Whether the plaintiff was in breach in failing to be ‘ready willing and able’ to perform the contract due to not being registered for GST at settlement and whether such failure prevented the defendant from being in breach of the contract.

Whether it was futile and unnecessary for the plaintiff to register for GST or to prepare GST related documents because the defendant had indicated by letter of 19 December 2008 that it would not settle on 31 December 2008 – whether the defendant was estopped from relying on an asserted failure of the plaintiff to produce or tender an invoice for GST due to his actions during together with the terms of the contract itself – Foran v Wight considered.

Held:  The defendant’s letter…

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Ryan v Urban Construct (SA) Pty Ltd [2012] SASC 128
Case
[2012] SASC 128
Decision Date

CaseChat Overview and Summary

The case of Ryan v Urban Construct (SA) Pty Ltd involved a dispute between the plaintiff, Ryan, and the defendant, Urban Construct (SA) Pty Ltd, concerning the sale of a property. The primary issue was whether Ryan had breached the contract by failing to provide a tax invoice at settlement, and if this breach justified Urban Construct in terminating the contract and claiming damages. The dispute also included questions regarding the interpretation of the contract, particularly the conditions related to the GST obligations, and the remedies available to Urban Construct in the event of a breach.

The legal issues the court needed to address were multifaceted. Firstly, whether Ryan's failure to provide a tax invoice constituted a breach of the contract and if this breach was fundamental or amounted to a repudiation. Secondly, whether Urban Construct was entitled to terminate the contract and claim damages based on Ryan's alleged breach. Thirdly, the court had to determine the appropriate measure of damages, including whether Ryan was entitled to claim bargain damages or if Urban Construct's recovery was limited to the deposit, interest, and other costs. The court also considered whether Ryan's failure to register for GST could be considered a breach of the contract and whether Urban Construct's actions in terminating the contract were justified.

The court held that Ryan had indeed breached the contract by failing to provide a tax invoice, but this breach was not fundamental or a repudiation of the contract. The breach, however, justified Urban Construct in terminating the contract and claiming damages. The court found that Urban Construct was entitled to recover the deposit, interest, and costs incurred, but not bargain damages. The court reasoned that Urban Construct's right to terminate the contract and claim damages was based on Ryan's breach of a condition precedent to the obligation to settle. Furthermore, the court held that Ryan's failure to register for GST did not amount to a fundamental breach or repudiation of the contract. The court also rejected the argument that Ryan's failure to mitigate her loss should affect the quantum of damages recoverable by Urban Construct.

The final orders of the court were that Urban Construct was entitled to recover the deposit, interest, and costs incurred, but Ryan was not liable for any bargain damages. The court also dismissed Urban Construct's claims for unconscionable conduct and misleading or deceptive conduct.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

PEEK J
Including the amendments to the pleadings, I understood the defendant’s contentions at trial to be in summary as follows:·an analysis of the transaction and the GST law demonstrates that the sale under the contract would constitute a “taxable supply” and therefore the plaintiff was obliged by law to pay GST.·the plaintiff was therefore obliged to claim an additional amount on account of that GST at settlement from the defendant.·the plaintiff therefore had a positive obligation to supply an invoice to the defendant pursuant to Special Condition 5.3 which states: “… the Vendor shall deliver to the Purchaser at the time that the Purchaser pays the Price a tax invoice for the taxable supply made by the Vendor to the Purchaser under or pursuant to this Agreement”.·the defendant pleaded that the plaintiff served documents on the defendant which specified amounts which did not include GST (third amended defence paragraphs 23.4, 23.5, 23.7, 23.8); and that the plaintiff did not at any time produce or tender to the defendant a tax invoice for the taxable supply setting out the GST payable on the taxable supply pursuant to Special Condition 5 of the contract (third amended defence paragraph 23.6 and repeated verbatim at 23.9).·the Plaintiff “was at no time registered for the purposes of the GST Law as that term is defined in the Contract” (which fact is admitted by the plaintiff in her amended Reply).·the plaintiff was not at relevant times “ready, willing and able” to perform the contract because she was in breach of Special Condition 5.3. The defendant pleads: “At no time was the Plaintiff registered for the purposes of the GST Law as that term is defined in the Contract and as such the Plaintiff was unable to provide a tax invoice setting out the GST payable pursuant to the Special Conditions of the Contract.” ·the failure of the plaintiff to be “ready willing and able” meant that the defendant was not in breach of the contract which in turn meant that the Notices to Complete and Notice of Termination were all invalid since such Notices could only be given to a party in breach of the contract.·the asserted failure of the plaintiff to be “ready willing and able” in fact constituted a repudiation of the contract by the plaintiff. ·in the alternative, on the correct construction of the contract, a vendor who elects to proceed pursuant to clause 7.1.5.2a (to “retain the Property and sue the Purchaser for damages for breach of contract”) rather than adopt the alternate liquidated damages option available under clause 7.1.5.2b (and does not seek specific performance) is not entitled to recover bargain damages but rather is limited to a claim for the deposit paid, interest thereon, any other costs incurred and legal fees.·in the further alternative, any loss that the plaintiff has suffered was brought about by her own actions and she is thereby debarred from claiming bargain damages. This contention may be broadly referred to as “the Shevill contention”.·in the further alternative, the plaintiff failed to mitigate her loss. ·on a broader front, the contract was procured by unconscionable conduct by the plaintiff at law and/or in equity and/or contrary to s 57 Fair Trading Act 1987 (SA) as it then was and/or the plaintiff was guilty of misleading or deceptive conduct under s 56 Fair Trading Act 1987 (SA) as it then was.Summary of the topics to be considered in this judgment

Ratio Decidendi

Legal Principle Established

Established by: PEEK J

I further note that the defendant had the benefit of sufficient time (including the period from 5 September to 13 September 2011) to reflect on the facts and the law as applying to the proposed amendments and also of hearing detailed submissions by senior counsel for the plaintiff inter alia as to his views as to the inutility and ambit of the particular proposed amendments. Thus senior counsel for the plaintiff submitted as to the then proposed amendment Defence [23.10]:[4]That appears to be, with goodwill, a plea that invokes the principle of readiness and willingness to perform concurrent and dependent obligations. But your Honour will note that there is no plea there of a lack of willingness or as the case is sometimes called disposition or resolve. It’s not pleaded against us that we lacked any disposition or resolve to provide a tax invoice; the plea against us is apparently that we lacked the capacity simply because we were not registered. Now the capacity cases sometimes come down to this: you did not have the capacity and you would not have had the capacity. There is no plea here that we would not have been able to achieve registration, the plea is a very narrow one, that simply we were not registered.(Emphasis added)[4] T174. A little later counsel returned to the same topic of [23.10] and stated:[5]… the other limb is 23.10, at no time did the plaintiff register for the purpose of GST law and as such the plaintiff was unable to provide a tax invoice and as I said this morning, and I repeat to emphasise, there is no plea there that we were unwilling to conform. No plea of a lack of disposition or resolve as the terms are used in Foran v Wright. There is no plea that when we were unable to gain registration.(Emphasis added)[5] T220. In my view, the defendant had every opportunity to consider the final proposed wording of its amendments against the background of that very explicit submission but no further alteration to that proposed amendment was sought by the defendant. In all the circumstances, including the substantial indulgence granted to the defendant, it is only fair to the plaintiff that the defendant be kept to the terms, and within the boundaries, of those very late amendments.The plaintiff’s claim for damages (including bargain damages) in summary The plaintiff’s position as to its claim for damages (including bargain damages) may be briefly summarised as follows. First, the defendant’s failure to settle on 31 December 2008 was a breach of contract in that the defendant failed to comply with its obligations under the contract to buy the property and to settle on the date specified.[6] The plaintiff also contended that the nature of the breach in the particular circumstances here amounted to a repudiation of the contract and/or a fundamental breach of the contract which of itself led to the plaintiff having the right to sue for loss of bargain damages.[6] Clauses 2 and 6; Special Condition 2. Second, the above breach (putting aside contentions as to repudiation and fundamental breach[7]) directly engaged specific contractual clauses[8] the application of which led to the plaintiff having the right to sue for loss of bargain damages on the correct interpretation of the contract.[7] Discussed below.[8] Clauses 2, 6, 7.