Sandpiper Kooragang Pty Ltd v Fortis Products Pty Ltd

[2020] NSWSC 1256

Supreme Court

New South Wales

Medium Neutral Citation:

Sandpiper Kooragang Pty Ltd v Fortis Products Pty Ltd [2020] NSWSC 1256

Hearing dates:

1-2 September 2020

Date of orders:

15 September 2020

Decision date:

15 September 2020

Jurisdiction:

Equity

Before:

Darke J

Decision:

Defendant’s termination of the contract held to be ineffective. Orders to be made for specific performance of the contract and damages in addition.

Catchwords:

LAND LAW – contract for the sale of land – validity of Notice to Complete – parties enter into contract upon exercise of call option granted by defendant – plaintiff nominated as purchaser under terms of the call option – defendant sends land tax certificate to plaintiff showing land tax charge – completion does not occur on contractual date for completion – defendant issues Notice to Complete – whether defendant in position to issue Notice to Complete – where plaintiff claims defendant in default of agreement for breach of warranty prescribed under the Conveyancing (Sale of Land) Regulation 2017 – plaintiff further claims that defendant not ready, willing and able to proceed to completion where not in a position to issue clear land tax certificate – held that prescribed warranty did not form part of contract – held that in any event a breach of this kind has no relevant bearing upon obligations to complete – held that defendant was in a position to obtain a clear land tax certificate by the time fixed for completion – Notice to Complete held to be valid

LAND LAW – contract for the sale of land – termination – validity of termination – on day fixed for completion parties continue to exchange documents including settlement figures – solicitor for plaintiff requests that clear land tax certificate be provided on completion – solicitor for defendant states that land tax will be paid from settlement proceeds – completion does not occur – defendant issues Notice of Termination – not in dispute that plaintiff not ready, willing and able to complete – whether defendant validly terminated contract – held that defendant not ready, willing and able to complete because not in a position to provide a clear land tax certificate on completion – termination held to be ineffective

Legislation Cited:

Conveyancing Act 1919 (NSW), ss 52A

Conveyancing (Sale of Land) Regulation 2017 (NSW), cll 9, 11, 17; Sch 1, Sch 3, Sch 4

Land Tax Management Act 1956 (NSW), s 47

Supreme Court Act 1970 (NSW), s 68

Cases Cited:

Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) 18 BPR 35,759; [2016] NSWCA 32

Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202

Collingridge v Sontor (1997) 141 FLR 440

Falconer v Wilson [1973] 2 NSWLR 131

Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41

HG & R Securities Pty Ltd v Sayer [2009] NSWSC 427

Jeppesons Road Pty Ltd v Di Domenico [2005] QCA 391

K & K Real Estate Pty Ltd v Adellos Pty Ltd (in liquidation) [2010] NSWSC 1212

McNally v Waitzer [1981] 1 NSWLR 294

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623

Lavery v Nelson (1983) 3 BPR 9211

Michael Realty Pty Ltd v Carr [1977] 1 NSWLR 553

Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286

Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235

Raphael Shin Enterprises Pty Ltd v Waterpoint Shepherds Bay Pty Ltd [2014] NSWSC 743

Sharjade Pty Ltd v Commonwealth (2009) 15 BPR 28,443; [2009] NSWCA 373

Szanto v Bainton [2011] NSWSC 278

Wilde v Anstee (1999) 48 NSWLR 387

Category:

Principal judgment

Parties:

Sandpiper Kooragang Pty Ltd atf Sandpiper Property Trust (Plaintiff)
Fortis Products Pty Ltd (Defendant)

Representation:

Counsel:
Mr A Harding (Plaintiff)
Mr B DeBuse (Defendant)

Solicitors:
SWS Lawyers (Plaintiff)
Marsdens Law Group (Defendant)

File Number(s):

2020/160842

Publication restriction:

None

Judgment

Introduction

1. By its Amended Statement of Claim filed in Court on 1 September 2020, the plaintiff, Sandpiper Kooragang Pty Ltd, seeks orders in the nature of specific performance of a contract for the sale of certain land at Kooragang owned by the defendant, Fortis Products Pty Ltd. The contract was entered into on 17 January 2020 when a call option granted by the defendant was exercised. The plaintiff was nominated to be the purchaser under the terms of the call option.

2. The central issue for determination is whether the defendant’s purported termination of the contract on 24 March 2020 is valid. The defendant served a Notice of Termination on that day based upon the failure of the plaintiff to comply with a Notice to Complete. The defendant had served the Notice to Complete on 4 March 2020. It called for completion of the contract to occur on the PEXA platform by no later than 2:00pm on 20 March 2020.

3. The plaintiff contends that the Notice to Complete was itself invalid on the basis that at the time of service the defendant was neither free of relevant default, nor in a position to perform its obligations as and when required to be performed up to and including the time fixed for completion. The plaintiff contends that even if the Notice to Complete was valid, and thus effective to make time of the essence for completion of the contract, the defendant was not ready, willing and able to perform its obligations under the contract at the time fixed for completion. It was further contended that the defendant, by its conduct, should be taken to have waived any right to insist that the time for completion was essential. It was submitted that for these reasons the defendant was not entitled to terminate the contract for the plaintiff’s failure to complete within the time stipulated by the Notice to Complete. It is not in dispute that the plaintiff was not itself in a position to complete the contract on 20 March 2020.

4. In brief, the plaintiff challenges the validity of the Notice to Complete on grounds:

1. that when the notice was served the defendant was in breach of a warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Conveyancing (Sale of Land) Regulation 2017 (NSW). That warranty concerns the existence of matters relating to structures on the land that would justify the making of upgrading or demolition orders; and

2. that when the notice was served the defendant was not ready, willing and able to proceed to completion because it was not in a position to comply with its obligations in relation to the removal of a charge for land tax and the provision of a certificate to that effect.

5. The plaintiff contends that the defendant was not ready, willing and able to perform its obligations on 20 March 2020 in the following respects:

1. that it failed to remove the charge for land tax and failed to give a land tax certificate showing that the charge was no longer effective against the land;

2. that it failed to give a notice of attornment in relation to a lease of the land;

3. that it remained in breach of the prescribed warranty;

4. that it proposed arrangements in relation to adjustments that departed from the terms of the contract;

5. that it failed to take certain steps on the PEXA platform such as the signing of documents necessary to effect completion, and the provision of payment details; and

6. that the settlement figures it proposed included an erroneous calculation of interest.

6. The defendant contends that the Notice to Complete it served was valid and effective to make time of the essence for completion. The defendant submitted that even if the contract contained the prescribed warranty, and even if it was breached, it was not relevant to completion and hence did not prevent the defendant from serving a Notice to Complete. The defendant submitted that the fact that the land tax in respect of the property had not been paid did not preclude service of a Notice to Complete as the land tax could be paid on settlement. The defendant denied that it was not ready, willing and able to complete on 20 March 2020. It was submitted that the defendant could have settled on that day, and that any failures to comply with the contract were the result of failures by the plaintiff to so comply. It was contended that by its conduct the plaintiff impliedly intimated that it would be useless for the defendant to tender performance. It was further denied that there was any waiver of essentiality in respect of time for completion. The defendant submitted that it validly terminated the contract due to the failure of the plaintiff to complete on 20 March 2020, and is thus entitled to recover the deposit.

7. Against that, the plaintiff also advanced a claim for relief against forfeiture, and a claim under s 55(2A) of the Conveyancing Act 1919 (NSW) for the return of the deposit.

The Contract for Sale

8. The contract was made upon the exercise of a call option pursuant to a Call Option Deed between the defendant as Grantor and Painted Steel Technologies Pty Ltd (“PST”) as Grantee. The plaintiff was nominated by PST to be the purchaser. By cl 4.3 of the Call Option Deed the relevant contract for sale of the property was formed, and became binding on the parties, on the valid exercise of the option. Clause 4.4 provided that upon exercise of the call option the defendant was obliged to provide an executed copy of the contract to PST or its solicitor within 14 days.

9. The Contract for Sale consists of the 2018 edition of the Law Society/Real Estate Institute standard form, together with a number of Special Conditions. By Special Condition 1.1 it is provided that in the event of any inconsistency between the Special Conditions and the printed clauses, the Special Conditions apply to the extent of the inconsistency.

10. The purchase price for the property is $3 million, with a deposit of $300,000. The deposit was paid and is held by the defendant’s solicitors, Marsdens, as stakeholder. Kain Lawyers was named in the contract as the purchaser’s solicitors.

11. The date for completion is stated to be “One (1) month”. This should be read as providing for completion to occur 1 month from the making of the contract. Whilst the contract has been dated 14 January 2020, the contract was not made until the option was exercised on 17 January 2020 by the service of the required documents. It appears that the documents were served by facsimile to the Grantor’s solicitors, as permitted by the Call Option Deed (see cll 4.2 and 7.1). In these circumstances, the contractual date for completion was 17 February 2020. Clause 15 of the contract provides that:

The parties must complete by the date for completion and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so.

12. By Special Condition 12.1 it is provided that:

The parties acknowledge that a period of fourteen (14) days is a sufficient period for any notice issued under or pursuant to the provisions of this Contract, including but not limited to a Notice to Complete.

13. The contract provides that it is a proposed electronic transaction, such that the provisions of cl 30 apply. It is further provided that land tax is adjustable. Adjustments are dealt with in cl 14, which relevantly provides:

14.1   Normally, the vendor is entitled to the rents and profits and will be liable for all rates, water, sewerage and drainage service and usage charges, land tax, levies and all other periodic outgoings up to and including the adjustment date after which the purchaser will be entitled and liable.

14.2   The parties must make any necessary adjustment on completion.

…

14.4   The parties must not adjust surcharge land tax (as defined in the Land Tax Act 1956) but must adjust any other land tax for the year current at the adjustment date –

14.4.1   only if land tax has been paid or is payable for the year (whether by the vendor or by a predecessor in title) and this contract says that land tax is adjustable;

14.4.2   by adjusting the amount that would have been payable if at the start of the year –

the person who owned the land owned no other land;

the land was not subject to a special trust or owned by a non-concessional company; and

if the land (or part of it) had no separate taxable value, by calculating its separate taxable value on a proportional area basis.

The term “adjustment date” is defined to mean the earlier of the giving of possession to the purchaser or completion. I note that Special Condition 11 makes provision in respect of errors in the adjustment of outgoings.

14. Clause 16 relevantly provides:

16.3   Normally, on completion the vendor must cause the legal title to the property (being an estate in fee simple) to pass to the purchaser free of any mortgage or other interest, subject to any necessary registration.

…

16.6   If a party serves a land tax certificate showing a charge on any of the land, on completion the vendor must give the purchaser a land tax certificate showing the charge is no longer effective against the land.

15. Clause 24.4 relevantly provides:

If the property is subject to a tenancy on completion –

…

24.4.3   the vendor must give to the purchaser –

a proper notice of the transfer (an attornment notice) addressed to the tenant);

any certificate given under the Retail Leases Act 1994 in relation to the tenancy;

a copy of any disclosure statement given under the Retail Leases Act 1994;

a copy of any document served on the tenant under the lease and written details of its service, if the document concerns the rights of the landlord or the tenant after completion; and

any document served by the tenant under the lease and written details of its service, if the document concerns the rights of the landlord or the tenant after completion;

16. Special Condition 2.1 provides:

(1)   The Purchaser purchases the Property subject to the Leases.

(2)   The Vendor assigns to the Purchaser with effect from Completion all of its right, title and interest in the Leases.

Leases is defined to mean any lease (registered or unregistered) in force on or after the date of the contract with respect to any part of the property.

17. Clause 30 relevantly provides:

30.1.   This Conveyancing Transaction is to be conducted as an electronic transaction if –

30.1.1   this contract says that it is a proposed electronic transaction;

30.1.2   the parties otherwise agree that it is to be conducted as an electronic transaction; or

30.1.3   the conveyancing rules require it to be conducted as an electronic transaction.

…

30.5   Normally, the vendor must within 7 days of the effective date –

30.5.1   create an Electronic Workspace;

30.5.2   populate the Electronic Workspace with title data, the date for completion and, if applicable mortgagee details; and

30.5.3   invite the purchaser and any discharging mortgagee to the Electronic Workspace.

30.6   If the vendor has not created an Electronic Workspace in accordance with clause 30.5, the purchaser may create an Electronic Workspace. If the purchaser creates the Electronic Workspace the purchaser must –

30.6.1   populate the Electronic Workspace with title date;

30.6.2   create and populate an electronic transfer;

30.6.3   populate the Electronic Workspace with the date for completion and a nominated completion time; and

30.6.4   invite the vendor and any incoming mortgagee to join the Electronic Workspace.

30.7   Normally, within 7 days of receiving an invitation from the vendor to join the Electronic Workspace, the purchaser must –

30.7.1   join the Electronic Workspace;

30.7.2   create and populate an electronic transfer;

30.7.3   invite any incoming mortgagee to join the Electronic Workspace; and

30.7.4   populate the Electronic Workspace with a nominated completion time.

…

30.9   To complete the financial settlement schedule in the Electronic Workspace –

30.9.1   the purchaser must provide the vendor with adjustment figures at least 2 business days before the date for completion; and

30.9.2   the vendor must populate the Electronic Workspace with payment details at least 1 business day before the date for completion.

30.10   At least 1 business day before the date for completion, the parties must ensure that –

30.10.1   all electronic documents which a party must Digitally Sign to complete the electronic transaction are populated and Digitally Signed;

30.10.2   all certifications required by the ECNL are properly given; and

30.10.3   they do everything else in the Electronic Workspace which that party must do to enable the electronic transaction to proceed to completion.

…

18. Clause 31 of the contract provides:

31.1   This clause applies only if –

31.1.1 the sale is not an excluded transaction within the meaning of s 14-215 of Schedule 1 to the TA Act; and

31.1.2   a clearance certificate in respect of every vendor is not attached to this contract.

31.2   The purchaser must –

31.2.1   at least 5 days before the date for completion, serve evidence of submission of a purchaser payment notification to the Australian Taxation Office by the purchaser or, if a direction under clause 4.3 has been served, by the transferee named in the transfer served with that direction;

31.2.2   produce on completion a settlement cheque for the remittance amount payable to the Deputy Commissioner of Taxation;

31.2.3   forward the settlement cheque to the payee immediately after completion; and

31.2.4   serve evidence of receipt of payment of the remittance amount.

31.3   The vendor cannot refuse to complete if the purchaser complies with clauses 31.2.1 and 31.2.2.

31.4   If the vendor serves any clearance certificate or variation, the purchaser does not have to complete earlier than 7 days after that service and clause 21.3 does not apply to this provision.

31.5   If the vendor serves in respect of every vendor either a clearance certificate or a variation to 0.00 percent, clauses 31.2 and 31.3 do not apply.

Events after entry into Contract for Sale

19. Marsdens, as solicitors for the vendor, created a workspace on the PEXA platform on 11 February 2020. On the same day, Marsdens issued an invitation to Kain Lawyers to join the workspace for the “Incoming Proprietor”.

20. On 12 February 2020 Marsdens sent a land tax certificate to Kain Lawyers. The certificate, issued under s 47 of the Land Tax Management Act 1956 (NSW), stated that the property had a taxable land value of $1,050,000. The certificate (both the Purchaser Copy and the Vendor Copy) included the following:

There is land tax (which may include surcharge land tax) charged on the land up to and including the 2020 tax year.

As the certificate has issued with a charge, the owner of the land will need to arrange for the charge to be removed.

21. The Vendor Copy also included the following:

The owner:

if not registered for land tax. Go to login by using Client ID: 154311465 and Correspondence ID: 1701389692 to register; OR

if registered for land tax. Go to login by using their Client ID and Correspondence ID as shown on their most recent assessment notice;

will need to enter the details of all the land owned and claim any applicable exemptions;

will receive an assessment and should pay the amount due shown on the assessment notice;

can then update the certificate through their Client Service Provider (CSP), or online at allowing sufficient time for the payment to be processed.

22. The Important Information sections of the certificate included the following:

When is a certificate clear from land tax?

A certificate may be issued as ‘clear’ if:

the land is not liable or is exempt from land tax

the land tax has been paid

Revenue NSW is satisfied payment of the tax is not at risk, or

the owner of the land failed to lodge a land tax return when it was due, and the liability was not detected at the time the certificate was issued.

…

When is a certificate not clear from land tax?

Under section 47 of the Land Tax Management Act 1956, land tax is a charge on land owned in NSW at midnight on 31 December of each year. The charge applies from the taxing date and does not depend on the issue of a land tax assessment notice. Land tax is an annual tax so a new charge may occur on the taxing date each year.

How do I clear a certificate?

A charge is removed for this property when the outstanding land tax amount is processed and paid in full. Payment can be made during settlement via an accepted Electronic Lodgement Network or at an approved settlement room.

To determine the land tax amount payable, you must use one of the following approved supporting documents:

Current year land tax assessment notice. This can only be used if the settlement date is no later than the first instalment date listed on the notice. If payment is made after this date interest may apply.

Clearance quote or settlement letter which shows the amount to clear.

The charge on the land will be considered removed upon payment of the amount shown on these documents

23. The contractual date for completion, namely 17 February 2020, came and went.

24. On 18 February 2020 Marsdens sent a letter to Kain Lawyers that enclosed the contract for sale executed by the defendant. Kain Lawyers had earlier made it known that the plaintiff’s financiers would not be able to proceed without that signed contract.

25. On 27 February 2020 Kain Lawyers joined the PEXA workspace as Incoming Proprietor.

26. Marsdens had suggested in their letter of 18 February 2020 that settlement take place on 28 February 2020. Marsdens also stated that if settlement did not occur by then, the defendant reserved the right to issue a Notice to Complete.

27. Settlement did not take place by 28 February 2020, and on 4 March 2020 Marsdens served a Notice to Complete upon the plaintiff. The notice included the following:

WHEREAS:

A. By Contract for Sale dated 14 January 2020 (“the contract”) you agreed to purchase and Fortis Products Pty Ltd (ABN 32 147 250 619) of 16 The Battlement, CASTLECRAG NSW 2068 (“the Vendor”) agreed to sell 6 Sandpiper Close, Kooragang (“the property”) for the sum of $3,000,000.00.

B. You have paid a deposit of $300,000.00 to the Vendor’s Solicitor and agreed to pay the balance of purchase money and adjustments in cash on completion.

C. The time for completion of the contract has expired.

D. The Vendor is ready, willing and able to complete.

E. Despite requests to do so you have failed to complete the contract and are in default.

As Solicitors for and on behalf to the Vendor WE GIVE YOU NOTICE:

You are required to complete the purchase of the property at PEXA by not later than 2:00pm on 20 March 2020 on the PEXA Settlement Platform’s Electronic Workspace ID PEXA204180237 in accordance with clause 30.11.2 of the Contract for Sale and in this respect time is of the essence of the Contract.

If you fail to comply with this notice the Vendor shall by notice in writing to you forfeit the deposit paid by you and terminate the contract and then either sue you for breach of contract or re-sell the property and recover from you as liquidated damages, the deficiency (if any) arising on the resale and all expenses incidental to the resale or attempted resale and your default.

28. Earlier on 4 March 2020 Kain Lawyers had sent a letter to Marsdens in which a complaint was made about the form of the signed contract that had been provided on 18 February 2020. It was stated that the plaintiff reserved the right to seek an extension of time to settle “until 30 days after receipt of a validly signed and dated Contract of Sale”. It was further stated that the plaintiff should be able to settle by 27 March 2020.

29. On 13 March 2020 the plaintiff retained new solicitors, SWS Lawyers, to act on the purchase. By letter to Marsdens dated 13 March 2020, but not sent until 16 March 2020, SWS Lawyers challenged the validity of the Notice to Complete and requested that it be withdrawn immediately. It is not necessary to set out the details of the letter.

30. Marsdens responded by letter on 17 March 2020, maintaining that the Notice to Complete was valid, and reserving the defendant’s rights “to enforce the Notice to Complete which we note requires settlement on 20 March 2020 (time being essential)”.

31. By letter dated 17 March 2020, but not sent until the morning of 18 March 2020, SWS Lawyers responded. Their response included the following:

3.   Electronic transaction

Your client has been on notice since 16 March 2020 that our firm is acting for the Purchaser. Despite this, our firm has not been invited to join the PEXA workspace by your firm. This delay is preventing us from inviting our client’s mortgagee to the PEXA workspace and from complying with our client’s obligations under clause 30 of the standard conditions of the Contract.

Our client reserves its rights in respect of this delay.

32. On 19 March 2020 (at 4:24pm) SWS Lawyers sent a letter to Marsdens which included the following:

We refer to our letters dated 17 March 2020 and 18 March 2020 respectively (Letters).

In each of the Letters, we requested that you provide us an invitation to join the PEXA workspace. As at the time of writing, you have failed to do so. The delay in providing us access to the PEXA workspace prevents our client from being able to comply with the Notice to Complete as issued by your client.

Our client expects to be ready, willing and able to settle tomorrow subject to completing the tasks that require access to the PEXA workspace including stamping.

We are asking, for a third time, that your firm urgently invite us to join the PEXA workspace. In the event you fail to do so within a reasonable time, our client expressly reserves its rights to take any necessary action.

I note that a letter dated 18 March 2020 was sent by SWS Lawyers to Marsdens, but it does not contain any request for an invitation to join the workspace.

33. Ms McDonald of SWS Lawyers sent an email to Mr Wong of Marsdens at 4:38pm on 19 March 2020 in the following terms:

I have tried calling you, your PA and your office. I cannot prepare for settlement tomorrow without your firm’s assistance. Please call me on XXXX XXX XXX urgently.

34. Mr Wong deposed that on 19 March 2020 he had a telephone conversation with Ms McDonald in the course of which he told her that he had requested Kain Lawyers to withdraw and would invite SWS. Mr Wong made a note of the conversation. It is evident from the note that there was also some discussion about the Notice to Complete and whether the plaintiff would be settling on 20 March 2020. The note does not record the exact time the conversation occurred.

35. A few minutes after Ms McDonald had sent her email at 4:38pm, Marsdens issued an invitation to SWS Lawyers to participate in the PEXA workspace as Incoming Proprietor, and requested that Kain Lawyers withdraw accordingly. It seems that SWS Lawyers joined the workspace at 4:45pm, and Kain Lawyers withdrew at 5:12pm. (The PEXA record in evidence shows the times in AEST, but AEDT was the standard applicable at all relevant times.)

36. Ms McDonald deposed that at about 5:00pm on 19 March 2020 she had a telephone conversation with Mr Wong which included words to the following effect:

Ms McDonald:   Are you going to provide a FRCGW clearance certificate?

Mr Wong:   Yes, we’ll just send that through.

The clearance certificate referred to is a Foreign Resident Capital Gains Withholding Clearance Certificate.

37. There is no dispute that there was a telephone discussion concerning such a clearance certificate. However, Mr Wong deposed that he said words to the following effect:

I would (or will) send the FRCGW certificate through if available.

Neither solicitor made a note recording any conversation about such a clearance certificate. Both were cross-examined about the conversation. I will return to this topic later in these reasons.

38. Mr Wong gave evidence that after his discussion with Ms McDonald he had one of his staff make an application to the Australian Taxation Office for a clearance certificate. The clearance certificate was received on 25 March 2020.

39. At 6:38pm on 19 March 2020 Ms McDonald uploaded a letter to the Revenue NSW portal requesting an urgent assessment of stamp duty in light of the fact that a Notice to Complete had issued “requiring settlement at 2:00pm tomorrow”. Ms McDonald made strenuous efforts to obtain a stamp duty assessment over the course of 20 March 2020, but notification of the assessment decision was not received by her until 5:09pm on that day. That was just after the “settlement cut-off time” in the PEXA platform.

40. Ms McDonald was also very busy dealing with many other aspects of the transaction. In the very early morning of 20 March 2020 (at 12:14am) she sent a letter to Marsdens in the following terms:

We refer to settlement of the contract for sale of the Property from the Vendor to the Purchaser (Contract) which is scheduled for 2pm tomorrow.

We have not yet received from you the following:

A foreign resident capital gains withholding clearance certificate;

A clear land tax certificate (that is, a certificate showing there is no charge against the land). The current land tax certificate we received shows a charge and we request evidence of its removal before settlement.

We have now uploaded the proposed adjustment figures to the PEXA workspace for your review and urgent approval. We note the following payments will be required:

(a)   Hunter Water Corporation in the amount of $2,444.68; and

(b)   Newcastle City Council in the amount of $4,501.00.

With respect of the notice of attornment required on completion, please confirm whether this will be provided via the PEXA workspace.

41. At 7:18am on 20 March 2020 Mr Wong sent an email to Ms McDonald in the following terms:

Please send settlement statement with s603 and 66 [sic]. Please also confirm that revenue NSW has stamped/assessed the transaction for settlement to occur today. Thanks

42. Ms McDonald replied at 7:30am as follows:

We propose to use the settlement statement in the electronic workspace rather than prepare a separate settlement statement.

Our Conveyancer will come back to you on the others [sic] points in your email when she is in the office.

In the meantime, can you please respond to the other points in my letter urgently.

43. At 10:03am Ms McDonald sent an email to Mr Wong which attached certificates under s 603 (of the Local Government Act 1993) and s 47 (of the Hunter Water Act 1991). The email included the following:

Can you confirm the land tax assessment for 2020? We have only received a certificate showing that there is a land tax charge but we have no details of the actual assessment.

As requested below, our conveyancer is preparing a settlement statement separate to the PEXA settlement statement and we will send this through once we have the land tax assessment amount.

44. At 10:23am Mr Wong sent an email to Ms McDonald in the following terms:

I have one of my staff preparing our own settlement statement and will send this through to you shortly. In relation to the lease adjustment, my client tells me that this has not been paid by your client via their other entity? Would you please clarify. If the rent is not paid, then I suggest that no adjustment be made.

The reference to “their other entity” is to PST, which had become the lessee of the property.

45. At 10:30am Ms McDonald sent an email to Mr Wong which attached a settlement statement. The email was in the following terms:

Our proposed settlement statement is attached. We have estimated land tax as we have not received the assessment, but can you please provide urgently?

In respect of the rent adjustment, my understanding of clause 24.1 and 24.2 of the contract is that the rent is always adjusted as paid. Clause 24.1 applies if it has not been paid. We have prepared the settlement statement on this basis, however, I can seek instructions on your proposal if you require.

Can you please urgently advise re clearing the land tax certificate and issuing a FRCGW certificate?

46. At 12:26pm Ms McDonald sent an email to Mr Wong in the following terms:

Could you please urgently confirm if:

the settlement figures provided earlier today are approved;

a foreign resident capital gains withholding clearance certificate will be provided before settlement; and

the land tax certificate has been cleared.

We are working urgently towards settlement at 2pm today and require confirmation as to the above.

47. It will be recalled that the Notice to Complete stipulated that completion must occur by 2:00pm on 20 March 2020. At 1:34pm Mr Wong sent an email to Ms McDonald in the following terms:

My staff have updated the pexa workspace with the figures. I was told that there was some discrepancies in the pexa workspace compared to the statement you had sent through, hence the delay. Everything appears to be right now. However, I’m not sure if the adjustments are 100% necessary as I understand that your client (as tenant) is ultimately responsible for council/water/land tax etc. it may be easier to leave this for your client to internally adjust?

The land tax is being paid from settlement proceeds. We are just waiting to get the bpay reference number to have this inputted onto pexa.

I understand that there is still a substantial amount of money that needs to be uploaded. Please confirm that you hold this money in trust. Would you also provide us with the status of the stamping. It is still showing as not verified.

I’m trying to organise settlement remotely and if it is unlikely that settlement will take place from your end then we should discuss potentially booking in for Monday (subject to instructions).

48. Almost simultaneously, at 1:35pm, Ms McDonald sent a lengthy email to Mr Wong which included the following:

1.1 We emailed you on Monday, 16 March 2020 at 11:54AM to put you on notice that we had received instructions to act for the Purchaser. Under clause 30.5 of the Contract, it is the Vendor’s obligation to invite a Purchaser to the Electronic Workspace and we expected this would be attended to promptly upon you being notified that we were acting for the Purchaser.

…

1.6   We received an invitation to the Electronic Workspace at 4:43PM on Thursday, 19 March 2020.

1.7   Promptly upon receiving the invitation to the Electronic Workspace, we accepted the invitation and attended to all tasks which we required access to the Electronic Workspace to complete, including:

(a)   The application for stamp duty assessment. In this regard, we note that we required the transfer on the Electronic Workspace before we could finalise and lodge the documents for stamping.

(b)   Populating the Electronic Workspace with the mortgagee details and inviting the mortgagee to join the Electronic Workspace.

(c)   Completing the draft adjustment figures.

1.8   We emailed you last night at 12.14AM to request you:

(a)   review our proposed settlement adjustments in the Electronic Workspace;

(b)   provide a clear land tax certificate (that is, a certificate showing there is no charge against the land);

(c)   provide a foreign resident capital gains withholding clearance certificate; and

(d)   confirm that a notice of attornment would be provided on settlement.

1.9   You have not yet completed these requests.

1.10   We emailed you at 10.02AM this morning to request you confirm the land tax assessment for 2020 as we had only received a land tax certificate and no details of the actual assessment. We requested this information for the purpose of checking settlement adjustments as, without this, we could only calculate an estimate of land tax.

1.11   You have not responded to this request.

1.12   In an email at 7.18AM, you requested we prepare a settlement statement. As we had prepared a settlement statement in the Electronic Workspace already, we understood this to mean you required a separate word version emailed to you.

1.13   We completed your request and sent you a settlement statement at 10.30AM today. We requested you review and approve it urgently.

1.14   You have not yet responded to this email or approved the settlement statement.

1.15   We sent you a further email regarding the outstanding issues at 12.25PM today and we also left a message for you and Amber Whielden of your office to discuss these issues urgently.

1.16   You have still not responded via email or telephone.

2.   New settlement date

2.1   Your delay in inviting us to join the Electronic Workspace and in attending to the matters outlined at paragraphs 1.8, 1.9 and 1.12 above have prevented our client from being able to be ready for settlement at 2pm today.

2.2   We are of the view that your client cannot terminate the Contract in these circumstances.

2.3   Our client proposes that a new settlement date be agreed urgently.

49. At 1:41pm Ms McDonald responded to Mr Wong’s 1:34pm email. Her response was in the following terms:

I will discuss your proposal re adjustments with my client.

Can you confirm if changes been made [sic] to the settlement statement we proposed? Also, can you provide evidence of land tax assessment amount so we can review?

Do you have a FRCGW clearance certificate for us? Our bank has been chasing.

Happy to discuss rebooking settlement – would be helpful to know when we will receive the above.

50. Ms McDonald sent another email at 1:53pm in which she queried the accuracy and basis of the defendant’s interest calculation.

51. At 2:06pm (after the expiry of the time fixed by the Notice to Complete) Ms McDonald sent an email to Mr Wong in the following terms:

I refer to my earlier email.

I expect there will be no issue in removing the adjustments for water, council and land tax for simplicity reasons.

I would be wanting to see a clear land tax certificate on completion – is that possible when payment comes out of settlement funds? A[t] this stage, I have no knowledge of what is charged on the property and need to ensire [sic] my client is protected.

52. Mr Wong responded at 2:35pm by email in the following terms:

I’m not sure. I’ll have to ask my conveyancer re clear land tax. Would you mind also asking about rent? Considering it is not paid.

53. At 3:15pm Ms McDonald sent an email to Mr Wong stating that she would seek instructions.

54. At 3:50pm Ms McDonald sent an email to Mr Wong in the following terms:

I think this will be ok. I’m confirming with the accountant.

Can you send me a copy of your client’s full signed contract urgently?

55. At 4:14pm Mr Wong sent an email to Ms McDonald that attached a copy of the front page of the contract. Mr Wong stated that that was all he had.

56. The last email of the day was sent at 5:34pm by Ms McDonald to Mr Wong. This was after the settlement cut-off time in the PEXA platform. Ms McDonald confirmed that stamp duty had been assessed. Her email continued:

I just wanted to summarise the issues which now seem to be outstanding.

Outstanding

1.   FRCGW clearance certificate.

2.   Land tax assessment amount for 2020.

3.   Clear land tax certificate (or proposal for how it would be provided on completion).

4.   Notice of attornment – can you confirm if you will provide as part of Electronic Workspace or separately.

5.   Settlement statement.

57. As already mentioned, it was not disputed that the plaintiff was not itself in a position to settle on 20 March 2020. Apart from the stamp duty issue, it is clear that at least part of the funds it required to settle did not become available on that day.

58. On 23 March 2020 Ms McDonald sent an email to Mr Wong requesting a response to the email she sent at 5:34pm on 20 March 2020. It appears that there was no response to that email.

59. On 24 March 2020 Marsdens served a Notice of Termination upon the plaintiff in the following terms:

WHEREAS:

A. A Notice to Complete dated 4 March 2020 was served on you.

B. You have failed to comply with the Notice to Complete.

As Solicitors for and on behalf of the Vendor WE GIVE YOU NOTICE that:

The deposit referred to in the Notice to Complete, paid by you is forfeited to the Vendor.

The Contract for Sale referred to in the Notice to Complete is terminated.

The validity of the Notice to Complete

60. Clause 15 of the contract provides that the parties must complete by the date for completion and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so. It is clear that the parties did not complete by 17 February 2020. It was thus open to the defendant to issue a Notice to Complete on 4 March 2020 if it was “otherwise entitled to do so”.

60. A party to a contract for sale is generally entitled to serve a Notice to Complete after the contractual date for completion has passed provided the party is an innocent party not relevantly in default, and ready, willing and able to perform its obligations as and when they are required to be performed up to and including completion (see McNally v Waitzer [1981] 1 NSWLR 294 at 296-7 and 303-304; Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202 at [20]-[27]; Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) 18 BPR 35,759; [2016] NSWCA 32 at [33]-[35]). In Carrapetta v Rado (supra) Barrett JA (with whom Beazley P and Hoeben JA agreed) stated at [27]:

Case law thus makes it plain that the party seeking to make time of the essence must be an "innocent" party who is not "in default" or "in breach" and is "ready, willing and able" to proceed to completion in accordance with the contract. The underlying concept is that a party who gives a notice to complete and thereby calls on the other party to adhere to the contract must be in a state of both present and prospective adherence to the contract. When it is the vendor who serves the notice, he or she must be seen to be willing and able to perform, on the day the notice fixes for completion, the obligations that the vendor is required to perform on completion - predominantly, in a "cash on completion" case such as the present, the obligation of delivering a clear title in return for the money that the contract requires the purchaser to pay in cash on completion - and to have adopted up to the time of service of the notice a stance consistent with that future performance. If the vendor is in breach of contract when the notice is given, he or she is not in such a state of willingness and ability. Likewise, if the vendor has taken and made known an uncompromising stance that he or she will not deliver title on completion except in return for payment of a sum greater than that required by the contract, that vendor will be "in default" (or "in breach") and not be "innocent" or relevantly "ready, willing and able" because the unequivocal stance inconsistent with the contract bespeaks lack of adherence in the nature of anticipatory breach.

62. In the present case, the plaintiff contended that the defendant was relevantly in default or in breach as at 4 March 2020 because it was in breach of a warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Conveyancing (Sale of Land) Regulation 2017 (“the Regulation”). The plaintiff further contended that the defendant was not as at 4 March 2020 ready, willing and able to proceed to completion because it was not in a position to comply with its obligations in relation to the removal of the charge for land tax and the provision of a certificate to that effect.

63. Before dealing with those contentions it is necessary to say something about the onus of proof. Each party submitted that the other bore the onus of proof. The plaintiff submitted that the defendant had the onus of showing that its Notice to Complete was valid; the defendant submitted that the plaintiff, as a party asserting a claim for specific performance, had the onus.

64. In my opinion, the defendant bears the onus of showing that the requirements for the service of a valid Notice to Complete were met. It is true that the plaintiff is the moving party seeking to enforce the contract for sale. It asserts the existence of a contract (which both parties accept was made) of a type that is susceptible of specific enforcement, and says that in the circumstances orders in the nature of specific performance should be made. However, in opposing the claim, the defendant alleges that it exercised a right to terminate the contract based on the plaintiff’s failure to comply with the Notice to Complete it served. That allegation rests in part upon the assertion that the Notice to Complete was validly served, and thus effective to make time for completion of the contract essential. As a matter of principle, a party seeking to rely upon the validity of a Notice to Complete (whether as a plaintiff or as a defendant) bears the onus of establishing that fact. That conclusion is in accordance with established authority including McNally v Waitzer (supra) at 296 per Reynolds JA (which has been followed, for example, in Lavery v Nelson (1983) 3 BPR 9211 and K & K Real Estate Pty Ltd v Adellos Pty Ltd (in liquidation) [2010] NSWSC 1212 at [16]) and HG & R Securities Pty Ltd v Sayer [2009] NSWSC 427 at [104]. Moreover, it is consistent with the statements made in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 640 (Mason CJ) and 647 (Brennan J) in relation to proof that the time fixed by a Notice to Complete is reasonable.

65. The first matter to consider is whether the defendant was relevantly in default or breach at the time it served the Notice to Complete. In that regard, the plaintiff claims that the defendant was in breach of the warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Regulation. The warranty is in the following terms:

1.   The vendor warrants that, as at the date of the contract and except as disclosed in the contract –

…

(d)   there is no matter in relation to any building or structure on the land (being a building or structure that is included in the sale of land) that would justify the making of any upgrading or demolition order or, if there is such a matter, a building certificate has been issued in relation to the building or structure since the matter arose.

The notion of an upgrading or demolition order is defined in cl 2(d), and includes a Demolition Works Order under the Environmental Planning and Assessment Act 1979 (NSW) in circumstances where a building was erected without a required planning approval.

66. There is no dispute that the land the subject of the contract for sale contains some buildings that were erected without planning approval. It further appears that that fact was not disclosed in the contract for sale.

67. An issue arises at the outset as to whether the prescribed warranty is included within the contract for sale. The prescribed warranty does not apply in relation to certain types of contract (see Conveyancing Act, s 52A(5)(b), and cl 11(1) of the Regulation). In particular, the warranty does not apply to contracts of the type that fall within Parts 1 and 2 of Schedule 4 of the Regulation.

68. In the present case, I am of the view that, as submitted by the defendant, the contract falls within cl 9 of Part 2 which concerns certain contracts arising from the exercise of an option. The plaintiff submitted that the contract did not fall within that exclusion because not all of the prescribed documents were attached to the option; in particular, a copy of a plan for the land issued by the Registrar-General (see cl 3 of Schedule 1 of the Regulation), and a copy of Deposited Plan 1109907 which is a plan of proposed easements (see cl 4 of Schedule 1 of the Regulation). However, a copy of Deposited Plan 771353 showing the relevant lot (Lot 116) was attached to the option, and Deposited Plan 1109907 is not an instrument that creates or purports to create any easements so as to fall within cl 4 of Schedule 1. Accordingly, I am not satisfied that the warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Regulation formed part of the contract between the plaintiff and the defendant.

69. In any event, it seems to me that even if the contract contained the warranty, and even if the defendant was in breach of the warranty, any such breach or default would not be of a character that would disentitle the defendant from issuing a Notice to Complete.

70. Notwithstanding the seemingly unqualified nature of the statement made by Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at 299, it is well-established that not every breach of contract by a party will preclude the party from issuing a valid Notice to Complete. Breaches that are minor or trivial, or are not connected with the securing of completion of the contract, will not so preclude the party in breach (see McNally v Waitzer (supra) at 300-301 per Hutley JA; Collingridge v Sontor (1997) 141 FLR 440 at 447-8; HG & R Securities Pty Ltd v Sayer (supra) at [98]).

71. In my opinion, a breach of the warranty prescribed by cl 1(d) of Schedule 3 Part 1 is not a breach that is relevantly connected with the securing of the completion of the contract. First, completion of the contract is not expressed to be conditional upon whether the warranty was breached; secondly, the warranty does not oblige the vendor to do anything on or prior to completion; and, thirdly, by reason of the operation of ss 52A(6) and 52A(7) of the Conveyancing Act and cl 17 of the Regulation, the only remedy given to the purchaser for breach of the warranty is rescission of the contract.

72. In Szanto v Bainton [2011] NSWSC 278 White J (as his Honour then was) considered the similar warranty prescribed by the Conveyancing (Sale of Land) Regulation 2010 (NSW). After noting (at [39]) that the mere possibility that a statutory power to enter and do work on the property would not be a defect in title, his Honour stated in relation to the warranty (at [44]):

But although the purchaser would be entitled to rescind for breach of that warranty (Conveyancing Act 1919, s 52A(7)), such a breach would not mean that the vendors were not able to proceed to completion at the time they served the notice to complete, where the purchaser had not made a claim, nor sought rescission. The plaintiff does not seek to rescind the contract.

73. That part of his Honour’s judgment was cited by Sackar J in Raphael Shin Enterprises Pty Ltd v Waterpoint Shepherds Bay Pty Ltd [2014] NSWSC 743 at [147]-[150].

74. I respectfully agree that breach of a warranty of this kind does not have the consequence that the vendor is unable to proceed to completion. Moreover, it is not a breach that relevantly bears upon the obligations of the parties with respect to proceeding to completion of the contract. In my opinion, the existence of such a breach does not preclude the vendor from serving a valid Notice to Complete.

75. Before leaving this topic it should be noted that a deal of evidence was adduced going to the question of whether, prior to contract, the sole director of the defendant (Mr Fitch) made it known to the plaintiff (through its managing director, Mr Easling) that there were unauthorised structures upon the land. However, the terms of the warranty are such that it is disclosure in the contract, not pre-contractual disclosure, that is relevant to any question of breach of the warranty. Also, no question of rescission arises in this case where the purchaser seeks specific performance. In these circumstances I do not propose to deal with the question of what disclosure was made by Mr Fitch to Mr Easling about the existence of unauthorised structures.

76. The next matter to consider is whether the defendant, at the time the Notice to Complete was issued on 4 March 2020, was ready, willing and able to comply with its obligations in relation to the removal of the charge for land tax and the provision of a certificate to that effect.

77. Land tax is stated in the contract to be adjustable. So, where land tax has been paid or is payable for the year current at the adjustment date (as defined in the contract), it is to be the subject of an adjustment on completion in accordance with cll 14.2 and 14.4. More fundamentally, as the land tax legislation gives rise to a statutory charge on the land, the defendant must remove any such charge on or before completion so as to comply with its obligation under cl 16.3 to cause the legal title to pass to the plaintiff free of any mortgage or other interest. In addition, because the defendant served a land tax certificate on 12 February 2020 showing a charge on the land, the defendant was obliged by cl 16.6 to give the plaintiff on completion a land tax certificate showing that the charge is no longer effective against the land.

78. As at 4 March 2020 the land tax in respect of the property had not been assessed. However, a land tax assessment notice issued on 20 March 2020 shows that the amount of land tax due by the defendant was $5,078.65. Having regard to the evidence given by Mr Wong to the effect that on 20 March 2020 it was proposed that the defendant would pay the land tax on completion, it can be inferred that $5,078.65 was the amount of land tax that was unpaid as at 4 March 2020.

79. In order for the defendant to thereafter comply with its obligations under the contract, it would need to pay the outstanding land tax and obtain a certificate showing that there was no longer a land tax charge effective against the land. Those matters would need to be done by the time of completion which, if the Notice to Complete was valid, would be 2:00pm on 20 March 2020. A period of about 16 days would thus be available.

80. Evidence was adduced in the form of extracts from the Revenue NSW website. It seems that once an entity is registered for land tax a land tax assessment notice can be obtained online to facilitate the payment of any outstanding land tax. It further appears that once payment is made, an updated land tax certificate showing that the land is clear of land tax (referred to as a “clearance certificate”) can be obtained online. The website indicates that payments generally take 48 hours to process “before the certificate status can be updated”.

81. As at 4 March 2020, there was more than ample time for the defendant to make arrangements for the payment of the outstanding land tax and the obtaining of a clearance certificate by 20 March 2020. There was little evidence of the defendant’s financial position in March 2020 other than that it was the owner of the property the subject of the sale, and that the property was unencumbered by any mortgages or other securities held by lenders. I am prepared in the circumstances to infer that the defendant had the ability to pay the modest amount of $5,078.65 so as to be in a position to obtain a clear land tax certificate by 20 March 2020. I note that it was not suggested to Mr Fitch that the defendant lacked the wherewithal to make such a payment.

82. I have therefore concluded that, as at 4 March 2020, the defendant was in a position of readiness, willingness and ability to proceed to completion of the contract in accordance with its terms. I do not think that this case is one where there is a real doubt about the ability of the vendor to comply with its obligations in relation to land tax by the date fixed for completion (see Wilde v Anstee (1999) 48 NSWLR 387 at [54]; HG & R Securities Pty Ltd v Sayer (supra) at [161]).

83. For the above reasons, I consider that the Notice to Complete served by the defendant on 4 March 2020 was valid and effective to make time of the essence for completion of the contract.

The defendant’s readiness, willingness and ability to perform

84. The Notice to Complete, which of course binds both parties (see Falconer v Wilson [1973] 2 NSWLR 131 at 143; Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (supra) at [39]), called for completion to occur no later than 2:00pm on 20 March 2020. Completion did not occur by that time, or indeed at any time on 20 March 2020. As already noted, it is accepted by the plaintiff that it was not in a position to settle on that day. The issue is whether the defendant was ready, willing and able to perform its obligations on 20 March 2020. Unless the defendant was in such a state, it would not be open to the defendant to rely upon the plaintiff’s failure as a breach of the contract that entitled the defendant to terminate (see Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (supra) at [33] and [48]; Jeppesons Road Pty Ltd v Di Domenico [2005] QCA 391 at [29] and [34]-[38]). Under a contract for the sale of land, the obligations of the parties in respect of completion are regarded as interdependent and concurrent, so a failure to perform is not generally regarded as a breach unless the other party has itself tendered performance (see Michael Realty Pty Ltd v Carr [1977] 1 NSWLR 553 at 571; Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41 at 48; Sharjade Pty Ltd v Commonwealth (2009) 15 BPR 28,443; [2009] NSWCA 373 at [55]).

85. The plaintiff alleges that in numerous respects the defendant was not ready, willing and able to perform its obligations on 20 March 2020. These are set out above at [5]. I turn now to consider those matters, and also the defendant’s contention that the plaintiff, by its conduct, impliedly intimated that it would be useless for the defendant to tender performance. To the extent that such an intimation was given, and acted upon, the defendant would be excused from performance and treated as if performance had occurred, in accordance with the principles stated by Dixon CJ in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 246-7).

86. The first matter raised by the plaintiff is that the defendant failed to remove the charge for land tax, and failed to provide a land tax certificate showing that the charge was no longer effective against the land. It is clear that by cll 16.3 and 16.6 of the contract, the defendant was obliged to do those things on or before completion. The obligation to provide a clear land tax certificate arose because the defendant had on 12 February 2020 served a land tax certificate showing a charge on the land the subject of the contract.

87. By her email sent at 12:14am on 20 March 2020, Ms McDonald noted that the defendant had not yet provided a clear land tax certificate. By her email sent to Mr Wong at 10:03am, Ms McDonald sought details of the amount of the land tax assessment. At 10:30am Ms McDonald sent an email to Mr Wong which contained a request that the land tax assessment be provided urgently, and a request that he urgently advise the position in relation to a clear land tax certificate. At 12:26pm Ms McDonald sent an email to Mr Wong seeking urgent confirmation as to whether “the land tax certificate has been cleared”.

88. Mr Wong did not respond in relation to these matters until 1:34pm. He stated in his email sent to Ms McDonald at that time that the land tax was to be paid “from settlement proceeds” and that he was waiting for a bpay reference number to put onto the PEXA platform. I infer that this would facilitate the payment of the tax on settlement out of the funds to be provided by the plaintiff.

89. It is not clear from Mr Wong’s email when the defendant formed the intention to pay the land tax on settlement in that fashion. However, the intention was not made known to the plaintiff until Mr Wong’s email sent at 1:34pm.

90. Whilst dealing with land tax in that way may have been sufficient to remove the charge for land tax, it is inadequate to discharge the obligation under cl 16.6 to provide a clear land tax certificate on or before completion. Moreover, as the outstanding land tax had not yet been paid, and as it seems that payments generally take 48 hours to process before an updated land tax certificate can be obtained, it was not possible for the defendant to discharge its obligation under cl 16.6 by the time fixed for completion. In this respect, the defendant was not ready, willing and able to perform.

91. I do not accept that the defendant was excused from performance of that obligation or indeed any of its other obligations in relation to completion of the contract. At least up until Ms McDonald’s email sent at 1:35pm on 20 March 2020, no conduct on behalf of the plaintiff could be said to amount to an intimation that it would be useless for the defendant to perform. Neither the communications sent by SWS Lawyers up to that time, nor the position of the plaintiff insofar as it was revealed on the PEXA platform, would lead to that conclusion. Those communications were consistent with the plaintiff taking the steps necessary in order to complete the contract by 2:00pm on 20 March 2020. Whilst the PEXA platform did not show that the plaintiff was in a positive state of readiness (for example, because there was no verification that stamp duty had been assessed and that all the required funds were available), the position it revealed was not inconsistent with the plaintiff getting into a state of readiness fairly promptly. In cross-examination, Mr Wong said that he appreciated that “sometimes the mortgagee would jump in [at the] last minute, and then it could settle”.

84. Ms McDonald’s email sent at 1:35pm on 20 March 2020 included a complaint that delays on the part of the defendant meant that the plaintiff would not be ready for a settlement at 2:00pm. That could be regarded as an intimation that it would be useless for the defendant to continue to take steps towards a settlement at that time. However, the defendant was already in a position where it could not comply with its own obligations in respect of completion. In any case, it does not appear that the defendant acted upon any such intimation. Mr Wong accepted in cross-examination that after that time the parties continued to work in good faith towards a settlement on 20 March 2020. He agreed that even as late as 4:14pm he thought there was still a possibility that the contract might settle on that day.

85. That is reflected in the later communications on 20 March 2020 which included topics such as settlement figures and calculations, and how adjustments might be dealt with. I note that in her email sent at 2:06pm, Ms McDonald stated that the plaintiff would want to see a clear land tax certificate on completion. Her query about whether that would be possible if the tax was paid out of settlement funds effectively went unanswered.

86. The second matter raised by the plaintiff in relation to the defendant’s readiness, willingness and ability to perform is that it failed to give a notice of attornment in relation to the lease of the land that had been entered into by PST. By her email sent at 12:14am on 20 March 2020, Ms McDonald had sought confirmation as to whether the notice of attornment required on completion would be provided via the PEXA workspace. Ms McDonald stated in her email sent at 1:35pm that no confirmation had been given that a notice of attornment would be provided on settlement. There was no response from Mr Wong on 20 March 2020 in relation to this matter.

87. Mr Wong gave evidence to the effect that it was his understanding that unless there was an express agreement to do so, there was no requirement to provide a notice of attornment prior to completion. He said that in his experience the notice is usually provided after settlement.

88. The obligation under cl 24.4.3 is for the vendor to give the purchaser a proper notice of transfer (an attornment notice) addressed to the tenant. The opening words of cl 24.4 operate so that the obligation arises if the property “is subject to a tenancy on completion". It is therefore correct to say that there is no obligation to provide the notice in advance of settlement. Nonetheless, having regard to the function of the notice, which is to notify a tenant that the property has been conveyed to a new landlord, I consider that the obligation upon the vendor under cl 24.4.3 is to provide the notice of transfer to the purchaser upon completion so as to enable the purchaser to promptly give the notice to the tenant.

89. The failure of the defendant to provide a notice of attornment (or upload such a notice to the PEXA website) in advance of settlement was not a breach of the contract. Neither does it show that the defendant was not ready, willing and able to comply with its obligations in that respect. A notice of that type is ordinarily a simple document that can be quickly produced. Over the course of 20 March 2020 the parties were in communication about various matters concerning settlement. These matters included discussion about settlement figures and calculations, and how adjustments might be dealt with. Had those matters been resolved such that it appeared that completion could occur, I have little doubt that Mr Wong would have been able to prepare a notice of attornment to be provided on completion. As he said in cross-examination, once those “core issues” were sorted out, the documents Ms McDonald requested could be uploaded.

90. The third matter raised by the plaintiff was that the defendant remained in breach of the prescribed warranty. For the reasons given earlier, I do not think that the warranty was included in the contract for sale. Even if it was included, and even if the defendant was in breach, the breach would not mean that the defendant was not ready, willing and able to perform its obligations in respect of completion. The warranty does not oblige the vendor to do anything on or prior to completion, or indeed at all; a breach of the warranty would only give the purchaser a right of rescission.

91. The fourth matter raised by the plaintiff is that the defendant proposed arrangements in relation to adjustments that departed from the terms of the contract. That is true, but I do not think that this supports a conclusion that the defendant was not ready, willing and able to comply with its obligations. There was no breach of contract involved in the making of the proposals. The proposals made by Mr Wong were evidently advanced on the basis that they may be convenient for both parties. Ms McDonald stated (at 1:34pm) that she would discuss the proposals with her client. Later (at 2:06pm) she stated that she expected that there would be “no issue in removing the adjustment for water, council and land tax for simplicity reasons”. At 3:50pm, Ms McDonald indicated that she thought Mr Wong’s proposal that there be no adjustment for rent “will be ok” subject to obtaining confirmation from the plaintiff’s accountant. It is clear from Mr Wong’s cross-examination that he appreciated that Ms McDonald could have said no to his proposals at any time. It was not suggested to Mr Wong that had his proposals been rejected, the defendant would not have been willing or able to complete on the basis of adjustments made in accordance with the contract.

92. The fifth matter raised by the plaintiff is that the defendant failed to take certain steps on the PEXA platform such as the signing of documents necessary to effect completion, and the provision of payment details. It was submitted that Marsdens did not in the PEXA workspace sign either the Cord Holder Consent or the Financial Settlement Schedule, and did not populate the workspace with payment details. It was submitted that these failures amounted to a breach of cl 30.10 of the contract.

93. One difficulty with that submission is that the plaintiff was apparently in breach of its own obligations under cl 30. The plaintiff was required by cl 30.9 to provide the defendant with adjustment figures at least two business days before the date of completion. The clear purpose of that obligation is to enable timely completion of the Financial Settlement Schedule.

94. The plaintiff complained that it was hampered in its preparations for settlement because Marsdens only belatedly invited SWS Lawyers to join the PEXA workspace. However, the defendant had invited the plaintiff’s former solicitors, Kain Lawyers, to join the workspace on 11 February 2020. The plaintiff did not retain SWS Lawyers until 13 March 2020, well after service of the Notice to Complete. On the morning of 18 March 2020 Ms McDonald stated that Marsdens should invite SWS Lawyers to join the workspace. As it turned out, SWS Lawyers did not join the workspace until 19 March 2020, shortly after Marsdens had issued an invitation for SWS Lawyers to join.

95. The evidence is not altogether clear as to whether action on the part of Marsdens was required in order for SWS Lawyers to join the workspace, or whether that could have been effected by action on the part of SWS Lawyers and/or Kain Lawyers. Mr Wong suggested that it would have been possible for SWS Lawyers to join without having received an invitation from Marsdens. Ms McDonald did not share that understanding. I am not prepared to find that the rather late joining of the worksite by SWS Lawyers was due to any default on the part of Marsdens in issuing an invitation.

96. In my opinion, that Marsdens did not sign documents in the PEXA workspace, or populate the workspace with payment details, does not lead to the conclusion that the defendant was not ready, willing and able to perform its obligations. Those circumstances are a reflection of the reality that on 20 March 2020 the parties were attempting to resolve various issues concerning completion, in particular in relation to settlement figures and calculations, but did not achieve resolution of those matters in the available time. Had the various issues been resolved a reasonable time before 5:00pm on 20 March 2020, both parties would have been able to attend to the tasks of inserting the payment details and signing the necessary documents in order to facilitate a settlement taking place before the 5:00pm PEXA cut-off time.

97. The provisions of cl 30, which apply when the contract for sale is to be conducted as an electronic transaction, are intended to regulate an orderly and timely progression towards completion. Clause 30.10 requires the parties to ensure that at least one business day before the date for completion all the required documents are populated and signed, and everything else done that must be done to enable the sale to proceed. That did not occur in this case. The parties left themselves little time to perform the requisite tasks. The responsibility for this situation lies just as much with the plaintiff as it does with the defendant.

98. The sixth and final matter raised by the plaintiff is that the settlement figures proposed by the defendant included an erroneous calculation of interest. The error that was pointed out in Ms McDonald’s email sent at 1:53pm on 20 March 2020 was minor. It was that the calculation should have been made on the basis of a 366 day year rather than a 365 day year. Mr Wong has since calculated the difference as a mere $33.96.

99. Again, in circumstances where the parties failed on 20 March 2020 to resolve a range of issues concerning settlement figures and adjustments, the fact that the defendant advanced an incorrect calculation and did not later correct it, does not lead to the conclusion that the defendant was not ready, willing and able to perform its obligations. Had the parties reached a point where the other matters were resolved, it is highly likely that this minor matter of calculation would also have been resolved.

100. In summary, I have concluded that in one respect the defendant was not ready, willing and able to perform its obligations on 20 March 2020. The defendant was not ready, willing and able to discharge its obligation under cl 16.6 to provide a clear land tax certificate on or before completion. Having not paid the outstanding land tax, intending that payment be made on settlement out of the funds to be provided by the plaintiff, it was not possible for the defendant to provide a clear land tax certificate by the time fixed for completion. That is not a minor matter, particularly in circumstances where the plaintiff was not made aware of the amount that was charged on the land for land tax. The defendant accepted that it did not at any time provide any assessment of land tax to the plaintiff.

101. As the defendant was not ready, willing and able to perform its obligations in respect of completion, it is not open to the defendant to rely upon the plaintiff’s failure to complete as a breach of the contract that entitled the defendant to terminate the contract. It follows that the defendant’s purported termination of the contract on 24 March 2020 was ineffective, so the contract remained on foot.

Other matters

110. The above conclusion renders it unnecessary to deal with a further argument advanced by the plaintiff which is that the defendant, by its conduct, waived any right to insist that the time for completion was essential. However, it is appropriate that I deal with one aspect of that matter, which does not rest upon the written communications that passed between the solicitors.

111. Part of the conduct relied upon in this regard is an assurance said to have been given by the defendant that it would provide a Foreign Resident Capital Gains Withholding Clearance Certificate. Clause 31.4 of the contract provides that if the vendor serves such a certificate, the purchaser does not have to complete earlier than 7 days after that service. The plaintiff alleges that the assurance was given by Mr Wong to Ms McDonald in a telephone conversation on 19 March 2020. The conversation is referred to above at [36]-[37], where the respective versions are set out.

112. Whilst I accept that, as a result of the conversation, Ms McDonald formed a belief that the defendant was going to provide a certificate, I do not think that Mr Wong made any unqualified statement to that effect. Ms McDonald’s later communications on the topic do not refer to any such statement. I think it is likely that Mr Wong, in response to Ms McDonald’s query, said something to the effect that he would send the certificate if it was available. I accept that when he had the conversation with Ms McDonald he did not know whether such a certificate had in fact been obtained. Mr Wong gave evidence that he had many conveyancing matters to deal with, and that he is not the person who applies for such certificates. This particular conveyance was being handled by a senior conveyancer, subject to Mr Wong’s oversight. In these circumstances, it is unlikely that he would have given an unqualified undertaking to provide a certificate, even if he thought it likely that such a certificate would have been obtained.

113. My conclusion that the contract remains on foot also renders it unnecessary to deal with the plaintiff’s fall-back arguments for relief against forfeiture and the return of the deposit.

Conclusion

114. The defendant’s purported termination of the contract on 24 March 2020 was ineffective, so the contract remained on foot. A declaration to that effect should be made.

115. The defendant did not suggest that if the Court so concluded, orders in the nature of specific performance should not be made. It seems to me that it is appropriate that orders for specific performance be made.

116. The plaintiff seeks, in addition, damages pursuant to s 68 of the Supreme Court Act 1970 (NSW). There is evidence that the plaintiff, after serving its own Notice to Complete on 9 April 2020 that called for completion by 1 May 2020, was in a position to complete by 1 May 2020, but the defendant failed to complete, maintaining that the contract had been validly terminated. In these circumstances, the plaintiff alleges that completion has not occurred due to the defendant’s breach, and claims damages for the rental income it would have received had the breach not occurred and the contract completed on 1 May 2020.

117. There is evidence that the plaintiff would have received rent from PST at the rate of $23,466.66 per month. The defendant did not in submissions challenge this claim for damages. In my view, it is appropriate for damages to be awarded to the plaintiff as claimed in respect of the period from 1 May 2020 to the date when completion actually occurs.

118. There seems to be no reason why costs should not follow the event. Accordingly, the Court will make an order that the defendant pay the plaintiff’s costs of the proceedings.

119. I direct that the parties confer and, within 7 days, submit a form of Short Minutes of Order to give effect to these reasons.

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