The Public Trustee (WA) v Brumar Nominees Pty Ltd [No 2]

[2012] WASC 337

THE PUBLIC TRUSTEE (WA) -v- BRUMAR NOMINEES PTY LTD [No 2] [2012] WASC 337

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2012] WASC 337
Case No:	CIV:1658/2011	Heard:	21 JUNE & 2 JULY 2012
Coram:	PRITCHARD J	Delivered:	17/09/12
No of pages:	24	Judgment Part:	1 of 1
Result:	Application for declaration allowed in part
Category:	B
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Parties:	THE PUBLIC TRUSTEE (WA) BRUMAR NOMINEES PTY LTD DELGA NOMINEES PTY LTD TRACEY DALE KITTELTY SHANE BURNETT KITTELTY
Catchwords:	Contract Contract for sale of land Whether enforceable Whether specific performance available Turns on own facts Interest Join Form of General Conditions for the Sale of Land cl 4.2 Whether purchasers entitled to interest or compensation Meaning of 'attributable to the Seller' Administration of estates Administration Act 1903 (WA) s 35 Whether the Public Trustee should be appointed a receiver for the purpose of performing contract
Legislation:	Administration Act 1903 (WA) Guardianship and Administration Act 1990 (WA) Public Trustee Act 1941 (WA)
Case References:	Adderley v Dixon (1824) 1 Sim & St 607, 610; 57 ER 239 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Broulee Developments Pty Ltd v Mackay [2008] NSWSC 32 Carpentaria Investments Pty Ltd v Airs [1972] Qd R 436 Colyton Investments Pty Ltd v McSorley (1962) 107 CLR 177 De Chatelain v Pontigny (1858) 1 SW & TR 34; 164 ER 616 Dougan v Ley (1946) 71 CLR 142 Dowsett v Reid (1912) 15 CLR 695 Duke v Royalstar Pty Ltd [2001] WASCA 273 Fitzgerald v Masters (1956) 95 CLR 420 Foran v Wight (1989) 168 CLR 385 Gall v Mitchell (1924) 35 CLR 222 Holland v Roperti [2009] VSC 378 Hoon v Westpoint Management Ltd [2011] WASC 239 Lamshed v Lamshed (1963) 109 CLR 440 Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 Mehmet v Benson (1965) 113 CLR 295 Norgard v Abco Holdings Pty Ltd [2001] WASC 324 Petelin v Cullen (1975) 132 CLR 355 Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146 Rehins Pty Ltd v Debin Nominees Pty Ltd [No 2] [2011] WASC 168 SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 Slee v Warke (1949) 86 CLR 271 Streeter v Western Areas Exploration Pty Ltd (No2) (2011) 278 ALR 291 The Public Trustee (WA) v Brumar Nominees Pty Ltd [2012] WASC 161 The Public Trustee in and for the State of Western Australia v Seow [2003] WASC 62 Turner v Bladin (1951) 82 CLR 463

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : THE PUBLIC TRUSTEE (WA) -v- BRUMAR NOMINEES PTY LTD [No 2] [2012] WASC 337 CORAM : PRITCHARD J HEARD : 21 JUNE & 2 JULY 2012 DELIVERED : 17 SEPTEMBER 2012 FILE NO/S : CIV 1658 of 2011 BETWEEN : THE PUBLIC TRUSTEE (WA)

Plaintiff

AND

BRUMAR NOMINEES PTY LTD
First Defendant

DELGA NOMINEES PTY LTD
Second Defendant

TRACEY DALE KITTELTY
Third Defendant

SHANE BURNETT KITTELTY
Fourth Defendant

Catchwords:

Contract - Contract for sale of land - Whether enforceable - Whether specific performance available - Turns on own facts

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Interest - Join Form of General Conditions for the Sale of Land cl 4.2 - Whether purchasers entitled to interest or compensation - Meaning of 'attributable to the Seller'

Administration of estates - Administration Act 1903 (WA) s 35 - Whether the Public Trustee should be appointed a receiver for the purpose of performing contract

Legislation:

Administration Act 1903 (WA)

Guardianship and Administration Act 1990 (WA)
Public Trustee Act 1941 (WA)

Result:

Application for declaration allowed in part

Category: B

Representation:

Counsel:

Plaintiff : Ms C F Holyoak-Roberts
First Defendant : Mr A P Hershowitz
Second Defendant : Mr A P Hershowitz
Third Defendant : Mr M M Mony De Kerloy
Fourth Defendant : Mr M M Mony De Kerloy

Solicitors:

Plaintiff : Public Trustee (WA)
First Defendant : Paiker & Overmeire Solicitors
Second Defendant : Paiker & Overmeire Solicitors
Third Defendant : Mony De Kerloy
Fourth Defendant : Mony De Kerloy

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Case(s) referred to in judgment(s):

Adderley v Dixon (1824) 1 Sim & St 607, 610; 57 ER 239
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Broulee Developments Pty Ltd v Mackay [2008] NSWSC 32
Carpentaria Investments Pty Ltd v Airs [1972] Qd R 436
Colyton Investments Pty Ltd v McSorley (1962) 107 CLR 177
De Chatelain v Pontigny (1858) 1 SW & TR 34; 164 ER 616
Dougan v Ley (1946) 71 CLR 142
Dowsett v Reid (1912) 15 CLR 695
Duke v Royalstar Pty Ltd [2001] WASCA 273
Fitzgerald v Masters (1956) 95 CLR 420
Foran v Wight (1989) 168 CLR 385
Gall v Mitchell (1924) 35 CLR 222
Holland v Roperti [2009] VSC 378
Hoon v Westpoint Management Ltd [2011] WASC 239
Lamshed v Lamshed (1963) 109 CLR 440
Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221
Mehmet v Benson (1965) 113 CLR 295
Norgard v Abco Holdings Pty Ltd [2001] WASC 324
Petelin v Cullen (1975) 132 CLR 355
Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146
Rehins Pty Ltd v Debin Nominees Pty Ltd [No 2] [2011] WASC 168
SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26
Slee v Warke (1949) 86 CLR 271
Streeter v Western Areas Exploration Pty Ltd (No2) (2011) 278 ALR 291
The Public Trustee (WA) v Brumar Nominees Pty Ltd [2012] WASC 161
The Public Trustee in and for the State of Western Australia v Seow [2003] WASC 62
Turner v Bladin (1951) 82 CLR 463


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1 PRITCHARD J: The factual background to this matter is set out in my reasons for decision in The Public Trustee (WA) v Brumar Nominees Pty Ltd[2012] WASC 161. These reasons should be read in conjunction with my earlier reasons for decision, and I have continued to use the same abbreviated references as I used in my earlier reasons for decision.

2 In my earlier reasons for decision, I concluded that when Mr Robert Kittelty entered into a contract for the sale of his property at 7 Barnet Place, North Perth on 15 June 2009 (the Contract) he had the mental capacity to do so, and that the Contract was valid. On 22 May 2012 I made an order declaring that the Contract was valid.

3 The proceedings to determine the validity of the Contract constituted the resolution of one part of the matter commenced by the Public Trustee by originating summons. The relief sought in the originating summons was:

1. a declaration as to the validity and enforceability of the Contract;

2. the appointment of the Public Trustee pursuant to s 35 of the Administration Act 1903 (WA) (the Administration Act) to perform the Contract (if it is valid and enforceable);

3. a declaration as to the liability of the estate of Mr Kittelty for interest claimed by the first and second defendants pursuant to the default notice.

The Public Trustee now seeks the balance of the relief sought in the originating summons.

The position of the parties in relation to the relief sought in the originating summons

4 As I explained in my earlier reasons for decision, the first hearing in relation to the originating summons was (with the agreement of the parties) confined to dealing with the question of Mr Kittelty's capacity to enter into the Contract, and thus with the validity of the Contract. That course was taken in the expectation that once the issue of capacity was resolved, the parties may give consideration to whether a further hearing was required to deal with the balance of the issues in the originating summons. A further hearing has proved necessary to resolve those issues.

5 The circumstances of this case are rather unusual, as is manifest in the position of the parties in relation to the balance of the relief sought in the originating summons.

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6 The first and second defendants are the purchasers of the Property under the Contract. The first and second defendants' position is that as the Contract has been declared to be valid, it is enforceable and the Public Trustee should be appointed a receiver for the purpose of performing the Contract and affecting the sale of the Property as soon as possible. The first and second defendants say that as at 14 August 2009 - the date of settlement under the Contract (the settlement date) - they were, and remain, ready, willing and able to perform the Contract. However, pending the resolution of the question of Mr Kittelty's capacity, the first and second defendants did not commence proceedings seeking an order for the specific performance of the Contract.

7 The Public Trustee has not refused to perform, and is not actively opposed to performing, the Contract, but presses the Court to make a declaration as to whether the Contract is 'enforceable'. As I understood his position, the Public Trustee does not submit that the Contract is not enforceable, or advance any reason why he should not proceed to perform the Contract (assuming that he is appointed a receiver of Mr Kittelty's estate for that purpose). Instead, the Public Trustee seeks a declaration that the Contract is enforceable because concerns have been raised by the third and fourth defendants (who are potential beneficiaries of Mr Kittelty's estate under the earlier will) that the Contract should not be performed. In short, the Public Trustee's position appeared to be that he seeks a declaration from the Court in order to confirm that there is no reason why (subject to his appointment as a receiver) he should not proceed to perform the contractual obligations of the vendor under the Contract.

8 The first and second defendants have also taken the view that Mr Kittelty's estate is liable to pay them compensation, pursuant to the terms of the Contract, because settlement of the Property was delayed for a reason attributable to the vendor. The position of the Public Trustee is that the purchasers are not entitled to compensation at all, but that if they are, the Court has a discretion in relation to whether compensation should be paid, and that in the circumstances he should refuse to exercise that discretion. The Public Trustee seeks a declaration as to whether, under the terms of the Contract, compensation is payable by the estate of Mr Kittelty to the first and second defendants as the purchasers of the Property.

9 As I explained in my earlier reasons, the third and fourth defendants were named as beneficiaries under the earlier will made by Mr Kittelty (but not the later will). Until probate is granted, they are, at best, potential

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beneficiaries of Mr Kittelty's estate. The third and fourth defendants do not wish to see the Property sold. At the hearing, counsel for the third and fourth defendants made clear that his clients opposed the performance of the Contract. He submitted that the Court should decline to make a declaration that the Contract is 'enforceable'.

10 These reasons for decision deal with three issues:

1. Whether the Contract is 'enforceable';

2. Whether Mr Kittelty's estate is liable to pay compensation to the first and second defendants pursuant to the terms of the Contract; and

3. Whether the Public Trustee should be appointed a receiver pursuant to s 35 of the Administration Act for the purpose of performing the Contract.

1. Whether the Contract is 'enforceable'

11 In the originating summons, the Public Trustee sought a declaration to the effect that the Contract was both valid and 'enforceable'. The Court having found that the Contract was valid (and having made a declaration to that effect) it would necessarily follow that the Contract is a legally enforceable agreement. In other words, the parties to the Contract would ordinarily be expected to comply with their obligations under the Contract, and in the event of a failure by one party to do so, the other party may have remedies for that breach. It is difficult to see how a declaration that the Contract was 'enforceable' would, in practical terms, add anything to the declaration already made that the Contract was valid.

12 The parties' submissions did not expressly address what they understood was meant by a declaration that the Contract was 'enforceable'. However, it was implicit in the submissions of the Public Trustee and of the third and fourth defendants, that those parties equated the question of 'enforceability' of the Contract with the question whether specific performance is available in respect of the Contract.

13 The third and fourth defendants submitted that the first and second defendants had lost their right to be able to specifically enforce the Contract because there was no evidence from the first and second defendants to confirm that they were ready, willing and able to settle either as at the date of settlement or the date of the hearing. In addition, the third and fourth defendants submitted that there had been a gross delay

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on the part of the first and second defendants, in enforcing their rights under the Contract, and that that delay was not explained. It was further submitted that that delay, either on its own, or in conjunction with circumstances which supported an inference that the delay was aimed at securing a commercial advantage depending on the market conditions, or in conjunction with detriment suffered by third parties, including Mr Kittelty's estate and the third defendant, would give rise to the equitable defence of laches, and would warrant the refusal of specific performance.

14 However, at least since the resolution of the question of Mr Kittelty's capacity, and thus of the validity of the Contract, there has been no refusal by the vendor (that is, by the Public Trustee on behalf of Mr Kittelty's estate) to perform the Contract, and nothing to indicate that the vendor now intends to refuse to perform the Contract: cf Turner v Bladin(1951) 82 CLR 463, 472 (the Court); Carpentaria Investments Pty Ltd v Airs[1972] Qd R 436. In addition the first and second defendants have not commenced proceedings seeking an order for specific performance. Consequently, the question whether the Contract is specifically enforceable does not, strictly speaking, arise for consideration in the present context.

15 However, lest I am wrong in this conclusion, and having regard to the prolonged history of this matter and the interests of all of the parties in the final resolution of this matter, it is appropriate that I indicate why I do not consider that the circumstances would have justified the refusal of an order for specific performance had one been sought.

16 Before dealing with the submissions made by the third and fourth defendant it is appropriate to briefly set out some relevant aspects of the history of the matter.

(i) Factual background

17 Most of the facts and time line of events relevant to the issues arising in this hearing were not in dispute. The Contract was entered into on 15 June 2009, and shortly thereafter, the first and second defendants paid a deposit of $20,000 to Acton Realty, the real estate agents who acted for Mr Kittelty in the sale of the Property.

18 On 24 June 2009, the fourth defendant was appointed the plenary administrator of Mr Kittelty's affairs, pursuant to s 64 of the Guardianship and Administration Act 1990 (WA) (the GA Act). On 8 July 2009, the

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fourth defendant wrote to Acton Realty and advised that he was not prepared to proceed with the sale of the Property.

19 Some time in July 2009, the first and second defendants paid the stamp duty on the Contract, and on 29 July 2009, the solicitors for the first and second defendants prepared a preliminary settlement statement in preparation for settlement.

20 On 16 July 2009 the first and second defendants lodged a caveat over the Property to protect their interest under the Contract.

21 Under the Contract, settlement was due on 14 August 2009. It did not proceed on that date.

22 On 31 August 2009, the solicitors for the first and second defendants prepared a default notice and served it on Mr Kittelty, indicating that the purchasers were ready, willing and able to complete the purchase of the Property, advising Mr Kittelty that he was in default of his obligation to complete settlement on the settlement date, requiring him to remedy the default within 10 business days, and seeking interest pursuant to the Contract (the default notice).

23 On 7 September 2009, the fourth defendant wrote to the solicitors for the first and second defendant and advised that he had been appointed the administrator of Mr Kittelty's affairs, and that the Contract was invalid as Mr Kittelty did not have the mental capacity to enter into the Contract.

24 On 6 October 2009, Mr Kittelty died.

25 On 18 March 2011, the solicitors for the first and second defendants wrote to the Public Trustee advising that their clients remained ready to proceed to settlement, that they claimed interest pursuant to the Contract, and that they intended to commence proceedings to seek an order for specific performance of the Contract. However, they did not ultimately commence those proceedings. The present proceedings were commenced by the Public Trustee on 14 April 2011.

(ii) Were the first and second defendants ready, willing and able to settle?

26 The Contract being one for the sale of land, the general rule is that damages would be an inadequate remedy for breach of contract and an order for specific performance could be sought in the event that the vendor of the Property (or, in this case, the Public Trustee on behalf of his estate, pursuant to s 9 of the Public Trustee Act 1941 (WA)), refused to perform the Contract: Adderley v Dixon(1824) 1 Sim & St 607, 610; 57

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ER 239, 240 (Sir John Leach VC); Dougan v Ley(1946) 71 CLR 142, 150 (Dixon J); Rehins Pty Ltd v Debin Nominees Pty Ltd [No 2][2011] WASC 168 [213] (Murray J). This would be so even though the evidence of the first and second defendants was that they had entered the Contract with the intention of developing the Property: cf Pianta v National Finance & Trustees Ltd(1964) 180 CLR 146, 151 (Barwick CJ).

27 There was no evidence in this case to suggest that damages would be an adequate remedy. There was, however, evidence to suggest that the Property was the primary asset of Mr Kittelty's estate. That being the case, an order for damages against the estate would be more likely than not to necessitate the sale of the Property in any event. In that circumstance, the submission that damages would constitute an adequate alternative remedy has little merit in practical terms.

28 The third and fourth defendants submitted that there was no evidence that the first and second defendants were ready, willing and able to settle as at the date of settlement, or as at the date of the hearing, and that this warranted the denial of specific performance: Fitzgerald v Masters(1956) 95 CLR 420, 434 (Dixon CJ & Fullagar J); Mehmet v Benson(1965) 113 CLR 295; Foran v Wight(1989) 168 CLR 385, 451 - 454 (Dawson J), Bahr v Nicolay (No 2)(1988) 164 CLR 604, 619 (Mason CJ & Dawson J); SDS Corporation Ltd v Pasdonnay Pty Ltd[2004] WASC 26 [455] (Roberts-Smith J) and the authorities and cases cited therein.

29 The evidence which was before the Court supports the conclusion that on the balance of probabilities, the first and second defendants were ready, willing and able to settle both as at the date of settlement and as at the date of the hearing. Although there was no evidence before the Court as to whether the first and second defendants had, at the date of settlement, purported to tender the balance of the purchase price for the Property, I accept the evidence of both the first and second defendants that at the date of settlement they had funds available to them for the purchase of the Property, and that at the time of the hearing they had the funds available to proceed to settlement. I also take into account the unchallenged evidence that the first and second defendants had paid the deposit for the Property under the Contract, and that they had paid the stamp duty on the Contract in preparation for settlement. That evidence also lends support to the conclusion that the first and second defendants were ready, willing and able to proceed to perform the Contract.

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(iii) Alleged delay or laches by the first and second defendants

30 Counsel for the third and fourth defendants submitted that there had been gross delay on the part of the first and second defendants, and that this delay, without more, would have warranted the refusal of specific performance (on the basis of a defence of laches) for three reasons: the delay was a gross delay, or constituted an abandonment by the first and second defendants of their rights to enforce the Contract, or constituted an attempt by the first and second defendants to gain a commercial advantage (cf Duke v Royalstar Pty Ltd[2001] WASCA 273 [27] (Wheeler & McLure JJ)).

31 The third and fourth defendants contended, in the alternative, that the first and second defendants' delay, in conjunction with prejudice to Mr Kittelty, or to his estate, or to the third defendant, gave rise to a defence of laches which would have warranted the refusal of specific performance of the Contract.

Delay and the remedy of specific performance

32 The orthodox view is that the remedy of specific performance is available only to those who are prompt to claim it. However, the degree of promptness required depends on the nature of the case and all its circumstances. The balance of authority suggests that delay is a relevant and material consideration, but that the fact of delay (and even of a significant delay) by a party in enforcing rights under a contract is not of itself conclusive against the grant of specific performance: Lamshed v Lamshed(1963) 109 CLR 440, 453 (Kitto & Windeyer JJ agreeing), see also Broulee Developments Pty Ltd v Mackay[2008] NSWSC 32 [48] - [52] (McLaughlin ASJ), and see also the discussion in Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (4th ed, 2002) [36-065] - [36-080].

33 Accordingly, where there is nothing in the circumstances to justify the conclusion that the plaintiff's delay would make it unjust to grant the relief sought - for example, because the delay has caused prejudice to the defendant, or to any third party, or because the plaintiff ought to be regarded as having abandoned any rights he or she ever had - specific performance is not ordinarily refused: Lindsay Petroleum Co v Hurd(1874) LR 5 PC 221, 239 - 240 (Sir Barnes Peacock); Fitzgerald v Masters(433) (Dixon CJ & Fullagar J); Lamshed v Lamshed(453) (Kitto & Windeyer JJ agreeing), and see the discussion of the authorities in relation to the defence of laches in Streeter v Western Areas Exploration Pty Ltd (No2)(2011) 278 ALR 291, 405 - 407 (Murphy J); see also Hoon

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v Westpoint Management Ltd[2011] WASC 239 [73], [76] - [77] (Corboy J).

The basis for the claim of delay

34 Counsel for the third and fourth defendants submitted that there had been delay by the first and second defendants at three points. First, it was submitted that there was a delay by the first and second defendants in issuing the default notice, which delay was not explained. It was submitted that the default notice could have been issued at any time after the date of settlement but was not issued until 31 August 2009.

35 Secondly, it was submitted that the first and second defendants did nothing to enforce the performance of the Contract following the issue of the default notice on 31 August 2009 until Mr Kittelty's death on 6 October 2009, despite the fact that on or about 7 September 2009 their solicitors had been advised by the fourth defendant (as the administrator of Mr Kittelty's affairs) that he did not intend to perform the Contract. It was submitted that this delay was also not explained.

36 Thirdly, it was submitted that nothing was done by the first and second defendants to enforce the performance of the Contract between the time of Mr Kittelty's death on 6 October 2009 (after which the Public Trustee assumed responsibility for handling his estate) until 18 March 2011, when the solicitors for the first and second defendants advised the Public Trustee that they intended to commence proceedings seeking an order for specific performance. It was submitted that this delay was also not explained.

Delay in this case, of itself, not sufficient to justify refusal of specific performance

37 There can be no dispute that in this case there was some delay on the part of the first and second defendants in asserting their right to the performance of the Contract. Regrettably, there was a dearth of evidence about precisely what happened, and why no action was taken to enforce the performance of the Contract, in the three periods to which the third and fourth defendants pointed as manifesting delay. However, having regard to the evidence which was before the Court, I am not persuaded that I should infer that the delay, in the circumstances, constituted an abandonment by the first and second defendants of their right to enforce the Contract, or that the delay, of itself, would have been a sufficient basis on which to refuse specific performance.

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38 This was a very unusual case. The first and second defendants entered into the Contract without there being anything to indicate to them that there might have been a question as to whether Mr Kittelty had sufficient mental capacity to enter into a contract for the sale of the Property. They were subsequently made aware of a claim that Mr Kittelty did not have capacity to enter into a contract for the sale of the Property. There was no evidence before the Court as to when the first and second defendants actually became aware that the fourth defendant (as the administrator of Mr Kittelty's affairs) did not intend to perform the Contract. A letter dated 7 September 2009 from the fourth defendant to the solicitors for the first and second defendants simply indicated that Mr Kittelty did not have capacity to enter into the Contract. However, that letter did not indicate whether the fourth defendant, as the administrator of Mr Kittelty's affairs, claimed that this was a case where the incapacity of the vendor meant that the Contract was voidable, or whether it was claimed that the Contract was void on the grounds of non est factum: Petelin v Cullen(1975) 132 CLR 355. No doubt these were matters on which the first and second defendants would have required legal advice.

39 Approximately one month later, the situation was further complicated when Mr Kittelty died. After that time the Public Trustee assumed responsibility for managing his estate. There was no specific evidence of the Public Trustee's immediate position in relation to whether the Contract should be performed. However, such evidence as was before the Court - namely some correspondence passing between the Public Trustee and the first and second defendants' solicitors - permits the inference to be drawn that the Public Trustee did not claim that the Contract was invalid, or that it was voidable, but rather that the Public Trustee's immediate intention was simply to establish what were the facts, having regard to any available medical and other evidence about Mr Kittelty's mental capacity.

40 The situation was also complicated by the fact that Mr Kittelty had made two wills, and there was a question about his testamentary capacity to make the later will. Without probate being granted in respect of one of the wills made by Mr Kittelty, or an order for the appointment of the Public Trustee as a receiver pursuant to s 35 of the Administration Act, the Public Trustee could not have proceeded to perform the Contract in any event.

41 Even if the first and second defendants had commenced proceedings against the Public Trustee at this stage for an order for specific

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performance, those proceedings could not have been resolved without first resolving whether the Contract was void or voidable (having regard to Mr Kittelty's mental capacity). The evidence established that by early 2010 the Public Trustee had begun to make enquiries to ascertain Mr Kittelty's mental capacity at the time he entered into the Contract. The solicitors for the first and second defendants responded to such enquiries as were made of them by the Public Trustee, and by letter dated 17 March 2010 advised the Public Trustee that 'our clients are anxious to have this matter finalised'.

42 In my view, in all of the circumstances, the conduct of the first and second defendants cannot properly be construed as an abandonment by them of their rights under the Contract.

43 Counsel for the third and fourth defendants also submitted that the absence of an adequate explanation by the first and second defendants for the delay in pursuing the enforcement of the Contract meant that 'the only inference can be ... that they are seeking commercial advantage depending upon market conditions' (written submissions of the third and fourth defendants, 14 June 2012, par 11(c)). The evidence relied upon by the third and fourth defendants in support of this submission did not support an inference of the kind for which they contended. There was no evidence to support an inference of that kind.

44 Further, even if delay, of itself, were a sufficient basis to found a defence of laches, and so to refuse specific performance, in my view, the circumstances of this case are not such as to warrant the specific performance of the Contract on the grounds of delay alone.

(iv) Alleged delay and prejudice to Mr Kittelty, or his estate

45 The third and fourth defendants contended that the delay by the first and second defendants in combination with prejudice to the estate of Mr Kittelty which was occasioned by that delay, was a sufficient basis on which specific performance would be refused in this case. The third and fourth defendants pointed to three types of prejudice to the estate of Mr Kittelty:

(i) the delay prevented Mr Kittelty himself and/or his administrator (the fourth defendant) from dealing with the matter prior to Mr Kittelty's death, and the prompt enforcement of the first and second defendant's rights 'would almost certainly have raised in the minds of Mr Kittelty and his plenary administrator the

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appropriateness or otherwise of making an application under s 82 of the GA Act';

(ii) the possibility that the first and second defendants might pursue legal action against the estate to enforce the Contract, and the uncertainty that that would cause;

(iii) increased cost to the estate as a result of bringing the enforcement action, and of the additional complexity of the proceeding (by virtue of the arguments concerning laches) and prolongation of the administration of the estate.

Alleged prejudice in loss of opportunity to deal with enforcement while Mr Kittelty was alive, or to pursue relief under s 82 of the GA Act

46 The prejudice alleged by the third and fourth defendants appears to amount, in essence, to a claim that had the first and second defendants sought an order for specific performance, the fourth defendant, as the administrator of Mr Kittelty's estate, would have considered making an application under s 82 of the GA Act.

47 Quite how this amounted to prejudice was not entirely clear. Presumably the prejudice was the loss of the opportunity to pursue an application in the State Administrative Tribunal (the Tribunal) to set aside the Contract.

48 In any event, I am not persuaded that the failure by the first and second defendants to pursue the enforcement of the Contract in the period between the settlement date and the date of Mr Kittelty's death gave rise to the prejudice alleged. The fourth defendant was clearly aware of the existence of the Contract, and of the obligation which, on its face, the Contract imposed on Mr Kittelty to proceed with the sale of the Property. It was not suggested that the fourth defendant was unaware of the power of the Tribunal under s 82 of the GA Act. As the administrator of Mr Kittelty's affairs, it was open to the fourth defendant at any time during his administration of Mr Kittelty's affairs to make an application to the Tribunal to have the Contract set aside. It would perhaps have been prudent for him to have done so. However, the fourth defendant did not make any such application. In the circumstances, the evidence does not support the inference that the fourth defendant would have commenced an application under s 82 of the GA Act had he been put on notice that the first and second defendants intended to seek specific performance.

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49 More importantly, however, any opportunity for the fourth defendant to have made an application under s 82 of the GA Act necessarily ended upon Mr Kittelty's death, which occurred only a little over a month after the default notice was issued. In my view, it was that event, rather than the delay by the first and second defendants in seeking to enforce the Contract, which meant that it was ultimately not open to the fourth defendant to pursue relief under s 82 of the GA Act.

Alleged prejudice caused by the ongoing possibility of legal action

50 The type of prejudice said to have existed was that referred to by Kitto J (Windeyer J agreeing ) in Lamshed v Lamshed:

But a circumstance which is of importance, where it exists, is that the defendant has denied that he is bound by the contract. The case in which that has occurred has been called 'the typical case' for refusing specific performance by reason of a delay of even a few months: Fitzgerald v Masters. 'In such cases (as those of purported rescission for breach of contract or under a special condition as to title) the purchaser who wishes to attack the validity of the rescission must always come very promptly to a court of equity. It is natural and reasonable that this should be required of him, for the vendor is not to be placed indefinitely in the position of not knowing whether he can safely deal with the property in question on the footing that the contract has ceased to exist' [Fitzgerald v Masters]… . By parity of reasoning, a definite denial by one party that he has ever become bound by a contract of sale to which the other seeks to hold him places a clear obligation upon that other to sue promptly if he is to obtain from a court of equity a decree for specific performance. Equity will not allow the possibility of its making such a decree to be held unfairly long over the head of the party who denies the existence of the contract and asserts a right to deal with the property as his own. This is a particular application of the general principle of laches as expounded in Lindsay Petroleum Co v Hurdand Erlanger v New Sombrero Phosphate Co. To repeat words from the latter case, 'a court of equity requires that those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by. (453) (footnotes omitted, emphasis added)

51 However, this is not a case of the kind posited by Kitto J, for two reasons. First, this was not a case where there was a 'definite denial' by the vendor not to proceed with the sale. It is true that by letter dated 7 September 2009 the fourth defendant (in his capacity as the administrator of Mr Kittelty's estate) advised the solicitors for the first and second defendants that he did not intend to perform the Contract. However, after Mr Kittelty's death, the responsibility for Mr Kittelty's estate fell to the Public Trustee. As I have already observed, the available evidence supports the conclusion that the Public Trustee did not maintain
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the position that the Contract would not be performed. At least initially the position appears to be that the Public Trustee simply wished to ascertain the factual position, and then to clarify the legal position arising from those facts, but with an open mind as to whether the Contract should be performed. At the hearing, counsel for the Public Trustee submitted that there was 'no reason to depart from an order for specific performance'.

52 Secondly, the Public Trustee does not point to any prejudice or hardship to Mr Kittelty's estate if the Contract were to be performed.

53 More particularly, this was not a case where the first and second defendants can be said to have held over the Public Trustee's head the possibility that they would enforce the Contract, without taking any action to do so, for a period of time which was unfair in all the circumstances: cf Holland v Roperti[2009] VSC 378 [90] (Hansen J). The position appears to be to the contrary: the Public Trustee required some time to make enquiries as to Mr Kittelty's capacity, to enable him to make a decision about whether he considered the Contract to be valid, and the first and second defendants cooperated with the Public Trustee in relation to his enquiries, while at the same time making clear that they were anxious to finalise the matter. According to a letter dated 18 March 2011 from the solicitors for the first and second defendants to the Public Trustee, it was only after having heard nothing from the Public Trustee for a lengthy period about the outcome of his enquiries, that the first and second defendants decided to seek specific performance of the Contract. From this perspective, the situation appears to me to be more appropriately characterised as one which involved a degree of mutuality in the delay: cf Norgard v Abco Holdings Pty Ltd[2001] WASC 324 [114] - [115] (Parker J).

Alleged prejudice in the form of increased cost to the estate

54 I do not give this claim any weight for three reasons. First, the Public Trustee did not advance a submission to the effect that there had been an increased cost to the estate as a result of any delay by the first and second defendants in pursuing the enforcement of the Contract.

55 Secondly, there was no evidence as to the quantum of any increased cost to the estate as a result of the alleged delay by the first and second defendants.

56 Thirdly, the available evidence does not support the claim in any event. Resolution (through litigation) of the question of Mr Kittelty's

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capacity to enter into the Contract, so as to determine whether the Contract was valid, would have been required before the Contract could be performed, irrespective of any alleged delay on the part of Mr Kittelty's estate. Further, there was no evidence as to whether the administration of the estate had been prolonged as a result of the alleged delay by the first and second defendants, and it is not possible to draw that inference from the available evidence. Finally, as I have already observed, the delay appears to have involved a degree of mutuality, as between the vendor and the purchaser.

(v) Alleged hardship to third parties

57 The third and fourth defendants contended that hardship to the third defendant, together with the delay on the part of the first and second defendants, would have warranted the refusal of specific performance in this case. Two types of hardship to the third defendant were alleged: uncertainty endured by the third defendant (as the tenant of the Property) as to whether the Property was to be sold, and the fact that the third defendant expended funds to maintain and improve the Property.

58 There is clear authority that in some circumstances, specific performance will be refused if it would inflict undue hardship on a defendant: see, for example, Dowsett v Reid(1912) 15 CLR 695; Slee v Warke(1949) 86 CLR 271, and see generally Seddon NC & Ellinghaus MP, Cheshire and Fifoot's Law of Contract (9th ed, 2008) [24.8].

59 There is also authority for the proposition that hardship to third parties will be a basis for refusing specific performance, but the circumstances in which specific performance will be refused on this basis are not entirely settled. The authorities on this issue mainly concern situations where the performance of the contract by a party would amount to a breach of trust or of a fiduciary duty or where the performance of the contract would cause prejudice to the rights of third parties beneficially interested in the property the subject of the sale agreement: see Colyton Investments Pty Ltd v McSorley(1962) 107 CLR 177, 185 (the Court); see also the discussion in Jones G & Goodhart W, Specific Performance (1st ed, 1986) 81. Otherwise, hardships to third parties entirely unconnected with the property are immaterial: Gall v Mitchell(1924) 35 CLR 222, 230 (Isaacs J).

60 Furthermore, there is some authority for the proposition that the hardship to third parties must shown to have existed as at the date of the contract: Jones G & Goodhart W, Specific Performance (1st ed, 1986)

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81 - 83; Fry E, A Treatise on the Specific Performance of Contracts (6th ed, 2002) 199.

Whether prejudice to the third defendant (in conjunction with delay) would warrant the denial of specific performance

61 The third and fourth defendants contended that the third defendant had suffered detriment in the form of uncertainty on her part as to whether the sale of the Property was to proceed, given that she occupied the Property and thought of it as her home.

62 The third and fourth defendants also contended that the Property had been maintained (by the payment of rates and taxes, and by repairs) and improved by the third defendant, and that an order for specific performance would cause hardship to her for this reason. There was evidence from the third defendant that she made the improvements to the Property because she believed that the first and second defendants would not proceed with the purchase of the Property.

63 There was no quantification of the amounts expended by the third defendant on repairs and improvements to the Property, or otherwise paid by the third defendant in relation to the Property (such as on rates and taxes). Counsel for the third and fourth defendants accepted that such evidence as there was in relation to the nature of the improvements made by the third defendant (such as painting several rooms, installation of some pantry shelving, replacement of light fittings in three rooms) suggested that the cost of those improvements was likely to have been very modest.

64 I am not persuaded that the third and fourth defendants established a case for hardship by the third defendant which would have warranted the refusal of an order for specific performance, for four reasons. First, it was not contended that performance of the Contract would constitute a breach of trust or of a fiduciary duty, nor was it contended that the third defendant has any present legal or beneficial interest in the Property. (At the time of the Contract, and since, the third defendant has only been a tenant at the Property.)

65 Secondly, even if it is assumed that without such an interest in the Property any hardship which might be suffered by the third defendant would be material to the availability of specific performance, the evidence relied on by the third and fourth defendants did not establish a case of hardship which would have been sufficient to warrant refusing an order for specific performance of the Contract. Such evidence as there was

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raised a number of questions as to whether the third defendant would, in fact, suffer hardship of the kind claimed, particularly why the third defendant was liable to pay the rates and taxes in respect of the Property and why the third defendant would not be entitled to seek reimbursement from the estate for those expenses and possibly for improvements to the Property when the tenancy came to an end. Indeed, counsel for the third and fourth defendants accepted that the detriment or hardship to the third defendant could be resolved in that way (ts 261).

66 Thirdly, because the amount expended by the third defendant on improvements to the Property appears to have been very modest, in my view, it would not be unjust to require the specific performance of the Contract notwithstanding that the expenditure had been incurred by the third defendant.

67 Finally, to the extent that hardship to a third party must exist at the time of entering into a contract, then the evidence was that the expenses incurred by the third defendant were incurred after the date of the Contract being entered into, and hence would not support a claim that the Contract should not now be performed.

2. Whether Mr Kittelty's estate is liable to pay compensation to the first and second defendants pursuant to the terms of the Contract

68 The Public Trustee seeks a declaration as to the liability of the estate of Mr Kittelty for compensation claimed by the first and second defendants pursuant to the default notice.

69 Counsel for the first and second defendants submitted that his clients were entitled to the payment of interest pursuant to cl 4.2 of the Joint Form of General Conditions for the Sale of Land (2002 revision) (the General Conditions) which formed part of the terms of the Contract. In fact, what is sought is not interest, but compensation, under the Contract. Clause 4.2 provides:

If for any reason attributable to the Seller, Settlement is not completed within 3 Business Days after the Settlement Date the Seller must allow to the Buyer at Settlement, as a deduction from the Purchase Price, compensation on:

(a) the balance of the Purchase Price; and

(b) any other money payable at Settlement.

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70 Clause 4.7(b) of the Contract is also relevant. It provides:

It is the intention of the Parties that where there is a delay in respect to Settlement:

(1) compensation should be paid; and

(2) interest payable at the Prescribed Rate for the period of the delay represents the best estimate that the Parties can give as to the damages sustained arising from the delay.

71 The compensation payable is to be calculated in accordance with cl 4.3 of the General Conditions. Amongst other things, it is to be calculated from and including the settlement date under the Contract, up to but excluding the date on which settlement actually occurs. However, by virtue of cl 4.7(a) of the General Conditions, the rights of a party to claim compensation cease with effect from the date on which proceedings are instituted by a party for specific performance, or a declaration that the Contract remains valid and enforceable. Although that would tend to suggest that if compensation is payable under the Contract, it would be payable for the period from the date of the default notice until the date on which the Public Trustee commenced the present proceedings, counsel for the first and second defendants indicated that compensation was not sought for the entirety of this period. Instead, compensation was sought for the period from 31 August 2009 (the date of the default notice) until 17 March 2010 (when the solicitors for the first and second defendants responded to the Public Trustee's inquiries and advised that they were anxious to have the matter finalised).

72 Counsel for the first and second defendants submitted that the fourth defendant, as the administrator of Mr Kittelty's estate, was his legal personal representative, and thus stood in the position of the 'Seller' under the Contract, at the date of settlement. He also submitted that the words 'any reason attributable to the Seller' in cl 4.2 of the General Conditions meant that any reason referable back to the Seller, no matter what the nature of the reason and irrespective of fault on the part of the Seller, was a reason 'attributable to the Seller'. Counsel for the first and second defendants submitted that settlement did not occur as required under the Contract because the fourth defendant decided not to proceed with the Contract. In that sense, counsel submitted that the delay was attributable to the Seller.

73 Counsel for the Public Trustee submitted that the failure by the first and second defendants to commence proceedings to enforce the Contract,

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after the fourth defendant advised that he did not intend to perform the Contract on the grounds of invalidity, should be taken into account in determining whether the first and second defendants were entitled to compensation. She submitted that the Court had a discretion as to whether compensation should be paid, which discretion arose under cl 4.7(c) of the Contract, or at common law.

74 The terms of cl 4 of the General Conditions give rise to a number of interesting questions of construction. However, the meaning of the terms in cl 4 of the General Conditions was not the subject of any detailed analysis by the parties, and counsel were unable to refer me to any authority in which the clause had been construed or applied in circumstances similar to those in this case. In the end, it is not necessary to determine the various questions of construction which arise in relation to the terms of cl 4 of the Contract, as the question of compensation is resolved by the rather unusual facts of this case.

75 I am not persuaded that in the circumstances of this case, the first and second defendants have a claim to compensation under cl 4.2 of the General Conditions. This was a case in which the Contract was entered into shortly before, and settlement was due shortly after, the appointment of the fourth defendant as the administrator of Mr Kittelty's estate. The grounds for his appointment as administrator (under s 64 of the GA Act) of themselves necessarily gave rise to legitimate questions about Mr Kittelty's capacity to enter into the Contract, and thus as to whether the Contract was valid.

76 An administrator is under a duty to act according to his opinion of the best interests of the represented person (s 70(1) of the GA Act). In addition, an administrator may apply to the Tribunal, pursuant to s 82(1) of the GA Act, for an order to set aside a transaction (including a disposition of property) entered into by a person the subject of an administration order within two months prior to the appointment of the administrator. An application of that kind may be made in the period of two years following the transaction: s 82(2) of the GA Act.

77 Given that there was a real question about Mr Kittelty's capacity to enter into the Contract, and given the duty on the fourth defendant to act in Mr Kittelty's best interests, it was to be expected that the fourth defendant might have concerns about whether the Contract should be performed, and would need to consider what action should be taken. One course of action which a prudent administrator might take would be to apply to the Tribunal to set aside the Contract pursuant to s 82 of the

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GA Act. (By commencing such an application, any obligation to pay interest would arguably cease: cl 4.7(a)(3) of the General Conditions.)

78 In the present circumstances, however, other events intervened. After Mr Kittelty died, the Public Trustee assumed the role of the administrator of Mr Kittelty's estate, and commenced enquiries to ascertain Mr Kittelty's capacity to enter into the Contract. As I have noted, having regard to the evidence before the Court, there was some mutuality in that course of action: the first and second defendants cooperated with the Public Trustee's enquiries and they did not take any action themselves to pursue specific performance of the Contract while those enquiries were being pursued. Counsel for the first and second defendants submitted that 'it was reasonable in all of the circumstances to wait for the Public Trustee to complete its investigations into the question of capacity before [the first and second defendants] threatened to bring proceedings for specific performance]': written submissions par 37.) As it was, months passed before the first and second defendants were again heard to insist upon settlement.

79 In all of the circumstances, I am not persuaded that the delay in proceeding to settlement was for a reason 'attributable to the Seller' for the purposes of cl 4.2 of the General Conditions.

3. Whether the Public Trustee should be appointed a receiver pursuant to s 35 of the Administration Act for the purpose of performing the Contract.

80 Section 35 of the Administration Act provides:

The Court may, pending any proceedings touching the validity of any will, or for obtaining, recalling, or revoking any probate or administration, appoint an administrator of the personal estate and a receiver of the real estate of any deceased person, at such remuneration and with such full or limited powers as the Court may think fit.

81 All of the parties accepted that if the Contract was to be enforced, it would be necessary to appoint a receiver for that purpose and there was no objection to the appointment of the Public Trustee for that purpose: De Chatelain vPontigny(1858) 1 SW & TR 34; 164 ER 616.

82 Jurisdiction to make an appointment under s 35 is founded on the existence of a pending application for probate: The Public Trustee in and for the State of Western Australia v Seow[2003] WASC 62 [23] (EM Heenan J). In this case, proceedings for the grant of probate in solemn form for the later will made by Mr Kittelty have been commenced

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by the Public Trustee. I was advised by counsel that the resolution of those proceedings is some way off, given that Mr Kittelty's testamentary capacity is in issue. It would not be appropriate for settlement of the Contract to be further delayed pending the resolution of those proceedings.

83 The fact that the Public Trustee is nominated as the executor of Mr Kittelty's estate under both the earlier will and the later will, that he is clearly familiar with the Contract and the estate generally, that he is an independent statutory officer who is clearly able to perform the functions of a receiver in respect of the Property, and that he is willing to undertake that role, all support the appointment of the Public Trustee for that purpose.

84 I am satisfied that this is an appropriate case for the making of an order under s 35 of the Administration Act, and that it is appropriate to appoint the Public Trustee as the receiver, subject to one qualification. That qualification concerns the details of the appointment, including the remuneration payable to the Public Trustee, and the scope of the powers required to be given to the Public Trustee, for the purposes of the receivership.

85 These are matters which will need to be resolved before determining finally whether, and in what terms, an order for the appointment of the Public Trustee as a receiver, should be made.

Conclusion

86 For the reasons that I have given:

• No declaration should be made that the Contract is enforceable because such a declaration would add nothing to the declaration already made that the Contract is valid;

• Subject to confirmation of appropriate terms for his appointment, the Public Trustee should be appointed as a receiver pursuant to s 35 of the Administration Act for the purpose of performing the Contract;

• There should be a declaration that the estate of Mr Killelty is not liable to pay compensation to the first and second defendants pursuant to cl 4.2 of the General Conditions.

87 I will hear from the parties about these, and any other, orders which should be made to give effect to these reasons.