Simmons & Ors v Jordan Marketing Pty Ltd & Anor
[2009] QDC 29
•27 February 2009
DISTRICT COURT OF QUEENSLAND
CITATION:
Bradney Simmons & others v Jordan Marketing Pty Ltd & another [2009] QDC 29
PARTIES:
BRADNEY SIMMONS & others (Applicant)
AND
JORDAN MARKETING PTY LTD & another (Respondent)
FILE NOS:
27/09
DIVISION:
District Court of Queensland, Maroochydore
PROCEEDING:
Originating Application
ORIGINATING COURT:
District Court at Maroochydore
DELIVERED ON:
27 February 2009
DELIVERED AT:
Maroochydore
HEARING DATE:
20 February 2009
JUDGE:
Judge J.M. Robertson
ORDER:
Originating Application for payment of deposit dismissed. Application to pay respondent costs to be assessed on standard basis or as agreed.
CATCHWORDS:
Contract… where buyer defaults and seller elects to affirm and seek specific performance; where buyer does not respond and seller then terminates and seeks forfeiture of deposit, whether seller was bound by its election, whether failure to complete constitutes a continuing default, where seller seeks deposit.
Cases Considered:
Emeness Pty Ltd. v Rigg [1984] 1 Qd. R. 172
Johnson v Agnew [1980] A.C.367, 398
Wendit v Bruce (1931) 45 CLR 245Ogle v Comboyvro Investments Pty Ltd (1976) 136 CLR 444
COUNSEL:
Mr. Mellick for Applicant
Mr. Nevison for RespondentSOLICITORS:
Sykes Pearson & Miller Lawyers for Applicant
Quinn & Scattini Lawyers for Respondent[1] On the 1 March 2007, the respondent (Jordan Marketing) entered into a contract to purchase Lot 6 in a Community Title Scheme yet to be registered in a complex to be known as “Ocean View Rainbow Beach” from the applicants for $2,150,000 and a deposit of $215,000 was paid by instalments.
[2] The lot was purchased “off the plan” and delays in construction occurred and ultimately settlement was to occur on 9 October 2008.
[3] On that date Jordan Marketing requested a further extension of the settlement date which was not granted.
[4] It is accepted that Jordan Marketing were thereby in breach of the contract as buyers.
[5] The applicants have applied to the court by way of originating application for an order that the deposit of $215,000 together with accrued interest be paid to them.
[6] Jordan Marketing argue that the application is misconceived on the basis that having made an election to affirm the contract and seek specific performance, the applicants are bound to that course. Jordan Marketing do not suggest that the applicants can not now sue for damages but submit that the election made is binding.
The Election
[7] The applicants solicitors Sykes Pearson & Miller were appointed under the Contract as deposit holders and were authorised by Clause 4.3 – 4.8 of the contract to invest the deposit with a bank in an interest bearing deposit and are directed to “distribute the deposit and interest earned” … “if this Contract is terminated due to the buyer’s default: to the seller”.
[8] The dispute between the parties focuses on Clause 19.1 of the Contract which under the general heading in 19 of “DEFAULT OF THE BUYER” is in these terms:
“If the Buyer fails to comply with the conditions of this Contract or any of them, the Seller, in addition to any other rights at law or in equity may:-
(1)affirm the Contract and sue the Buyer for damages for breach of Contract;
(2)affirm the Contract and sue the Buyer for specific performance and damages in addition to or instead of damages for breach; or
(3)Terminate the Contract from the date of the breach and:-
(a)resume possession of the Lot (if possession prior to the Completion shall have been given); and/or
(b)forfeit to the Seller the moneys paid on account of the Purchase Price by the Buyer to the extent of 10% of the total Purchase Price; and/or
(c)sue the Buyer for damages for breach of Contract; and/or
(d)without notice to the buyer re-sell the Lot by public auction or private Contract with power to vary or rescind any Contract of sale and to buy at any auction and the deficiency in price on such re-sale and the Default Expenses shall be recoverable as liquidated damages. Any profit on re-sale shall belong to the Seller”.
[9] It is common ground that following Jordan Marketing’s failure to complete on 9 October 2008, the applicants solicitors wrote to their solicitors on the 17 October 2008 (relevantly) in these terms:
“Your client is in breach of the Contract of Sale dated 28 February 2007 in respect to a contract to purchase unit 6 of “Ocean View Rainbow Beach.
The contract provides for default in clause 19.
My client exercises its option under clause 19.1(2) to affirm the contract and sue for specific performance and damages whilst reserving its other rights under the contract and at law.
I am instructed to institute proceedings forthwith in the Supreme Court.
Please advise if you have instructions to accept service.
If your client wishes to avoid litigation then please confirm as a matter of urgency that your client will now complete the contract”.
[10] There was no response from Jordan Marketing solicitors.
[11] On the 13 November 2008, the applicants solicitors wrote again (relevantly) in these terms:
“… your client continues to be in default under the contract.
My client has now elected to terminate the contract.
As such and in my capacity as the seller’s solicitor, this fax now constitutes notice to your client that my clients elect to terminate the contract in accordance with clause 19 and forfeit the deposit.
On behalf of my client I continue to reserve my client’s rights under the contract, including, but not limited to, the right to recover damages from your client”.
[12] Sykes Pearson & Miller then attempted to obtain Jordan’s agreement to the payment of the deposit to its client which was not forthcoming.
[13] The first response from Jordan Marketing after 9 October was a letter to Sykes Pearson & Miller from their present solicitors Quinn & Scattini who had not acted for them on the conveyance.
[14] This letter, in effect, refused to authorise the release of the deposit; alleged that by their conduct the applicants had repudiated the contract; and elected on behalf of Jordan Marketing to terminate and demanded return of the deposit. The letter raised as its central theme the argument now advanced by Mr. Nevison on behalf of Jordan Marketing. It also raised an issue about execution of the contract by the applicants which is not pursued.
The issue discussed
[15] Mr. Nevison’s argument is that the applicants were entitled under Clause 19.1 to make either the elections under (1) and (2) to affirm the contract or terminate pursuant to 19(3) and forfeit the deposit pursuant to 3(b). However, once having clearly and unequivocally elected to affirm the Contract and seek specific performance as the applicants did in the letter of the 17th October, the election was binding upon them and (absent any further breach after affirmation) they could not then exercise the alternative right available under 19.1(3). Mr. Mellick for the applicants argues that as the breach i.e. failure to complete, was a continuing one, and even having elected to affirm the contract, the applicants were nevertheless entitled to terminate in the face of Jordan Marketing’s on-going default.
[16] Both counsel rely in support of their argument on the judgment of Carter J. in Emeness Pty Ltd. v Rigg [1984] 1 Qd. R. 172.
[17] Before turning to the passage relied upon by both counsel, it is important to understand the facts in that case because there is an important difference when contrasted with the facts here.
[18] Relevantly what occurred in that case was the Contract was to be completed on 01.09.82. The purchaser did not complete. The vendor then elected to affirm the contract and to require performance and issued a writ for specific performance.
[19] While the action was progressing, the vendor’s solicitors wrote to the purchases solicitors in terms that affirmed the contract and requiring completion by 11.08.83. The purchaser did not complete which, by further letter dated 12.09.83, the vendor accepted as repudiation of the contract and then elected to rescind on account of the breach. The letter further advised that the vendor plaintiff proposed to amend its claim by abandoning the claim for specific performance and proceeding only with a claim for damages.
[20] The issue at trial was the relevant date for the purpose of assessment of damages.
[21] After referring to Johnson v Agnew [1980] A.C.367, 398 at 399, his Honour said (at 75):
“The plaintiff having elected to keep the contract on foot and having sought to enforce performance of it by the defendant, the latter might at any time remedy his default by delayed performance. Having breached the contract by his failure to complete it, that breach continues so long as he fails to repair it and it remains for the innocent party to continue to insist on performance or alternatively, so long as the failure to complete the contract continues, to decide what course he ought to pursue. It is only when the innocent party decides to accept the continued default of the other and so to regard himself as relieved of his obligation to complete the contract, that he is subsequently precluded from insisting that the other party complete. His remedy then is for damages”.
[22] There is no doubt that the alternative remedies available to a seller in the face of a buyer default under 19.1 are, as Mr. Nevison submits “inconsistent remedies necessitating a choice or election to be made by them”.
[23] There is no doubt that the applicants here unequivocally elected to affirm and sue for specific performance. This is not a case in which there is any doubt about the notice of election.
[24] Once the applicants had affirmed the contract they were bound by that election: Wendit v Bruce (1931) 45 CLR 245 at 253. This is not a case like Emeness Pty Ltd. v Rigg, where the purchaser repudiated the contract after proceedings for specific performance had started by failing to complete after a second date for completion had been set by the vendor.
[25] On the facts here there is no evidence of “subsequent repudiation”: Ogle v Comboyvro Investments Pty Ltd (1976) 136 CLR 444, by Jordan Marketing. Its silence in the face of the 9th October letter is not evidence of repudiation, nor is it necessarily evidence of “continued default”. The applicants, having affirmed the contract, would have been entitled to set another completion date (as occurred in Emeness) and to elect to terminate but they were not entitled to exercise their alternative right under 19.1(3)(b) in the circumstances here which were of their own making.
[26] In the result the application for payment of the deposit is dismissed with costs.
[27] The applicants are not precluded from suing for damages which may, or may not exceed the deposit and accrued interest.
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