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
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- [2012] SASC 128
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CaseChat Overview and Summary
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
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.