Timothy Neil McQueen v Leduva Pty Limited - [2008] NSWSC 284

No judgment structure available for this case.

CITATION: Timothy Neil McQueen v Leduva Pty Limited [2008] NSWSC 284

HEARING DATE(S): 25 & 26 March 2008

JUDGMENT DATE :
3 April 2008

JUDGMENT OF: Hammerschlag J

DECISION: Verdict for defendant vendor

CATCHWORDS: CONTRACT - Vendor - purchaser suit - whether purchaser's conduct amounted to repudiation - Notice to Complete - whether period given sufficient to make time of the essence - right to recover deposit

LEGISLATION CITED: Environmental Planning and Assessment Act 1979 (NSW)
Environmental Planning and Assessment Regulations 2000 (NSW)

CASES CITED: Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd (1980) NSW ConvR 55-004
Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959
Sindel v Georgiou (1984) 154 CLR 661
McNally v Waitzer [1981] 1 NSWLR 294
Halkidis v Bugeia [1974] 1 NSWLR 423
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Lohar Corp Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
Alghussein Establishment v Eton College [1991] All ER 267

PARTIES: Timothy Neil McQueen
Leduva Pty Limited (ACN 001 777 206)

FILE NUMBER(S): SC 5914/2006

COUNSEL: D.L. Warren (Plaintiff)
F.P. Hicks (Defendant)

SOLICITORS: Carneys Lawyers (Plaintiff)
Cadmus Lawyers (Defendant)

- 28 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

HAMMERSCHLAG J

3 APRIL 2008

5914/2006 TIMOTHY NEIL MCQUEEN -V- LEDUVA PTY LIMITED ACN 001 777 206

JUDGMENT

Introduction

1 HIS HONOUR: This is a contest as to which of the defendant vendor or the plaintiff purchaser was entitled to terminate a contract (“the Contract”) entered into between them on 12 July 2004 for the purchase of lot 53 in an unregistered strata plan, being part of the land in Folio Identifier 121/1030021 ("the Property") for $456,500. The land is at Henderson Road, Alexandria in the State of New South Wales.

2 It is common cause that the Contract is no longer on foot.

3 The defendant purported to terminate the Contract on 3 October 2006. The plaintiff asserts that the defendant was not entitled to do so and that its termination was a repudiation which the plaintiff validly accepted on 10 October 2006.

4 There is no issue that, if the defendant was not entitled to terminate, its action amounted to a repudiation that the plaintiff would have been entitled to accept.

5 The central issue is whether the defendant was, on 3 October 2006, entitled to terminate.

6 By summons issued on 22 November 2006, the plaintiff seeks a bare declaration that it validly terminated the Contract.

7 By cross-summons issued on 26 March 2007, the defendant claims $45,650 or, in the alternative, damages. The amount is the 10 per cent deposit that was payable under the Contract. Together with interest and costs, it is all that is at stake.

The salient features of the Contract

8 The Contract was in the terms of the 2000 edition of the Law Society of New South Wales and the Real Estate Institute of New South Wales form, supplemented by Special Conditions.

9 The Contract contemplated the construction of a home units development and the registration of a strata plan.

10 Completion of the Contract was conditional upon registration of the strata plan and the construction of the home units.

11 Special Condition 30.3 provided that, if any minor repairs were required, the purchaser would not be entitled to delay settlement but accepted the vendor’s undertaking to rectify such repairs within 28 days from the settlement date.

12 Under Special Condition 34, the purchaser was to pay a deposit of 10 per cent on exchange.

13 Special Condition 38 provided as follows:

“If the purchaser pays the deposit by a Bond, the Bond shall be delivered at the time of making this Contract… Upon completion of this contract the purchaser shall pay the amount stipulated in the Bond to the Vendor in cash or by a bank cheque. The Bond shall cover the period of the Contract up to completion and shall be approved by the Vendor.”

14 The purchaser provided a guarantee (which the parties regarded as a Bond) from an insurance company for $45,650. The Bond was issued on 13 May 2004 and expired on 13 May 2006.

15 Special Condition 35 provided that the Completion date was fourteen days from the date on which the vendor’s solicitor notified the purchaser or his or her solicitor that the strata plan had been registered by the Registrar-General. That Special Condition went on to provide that, if the purchaser did not complete within either fourteen days after the notification of registration or forty-two days after the Contract, whichever was the later, the purchaser became liable to pay, in addition to the purchase price, 10 per cent (presumably per annum) on the balance of the purchase price calculated from the date of the purchaser’s default to the date of settlement.

16 Special Condition 36 provided that:

“Both the Purchaser and Vendor agree that 14 days (including weekends and public holidays) is a reasonable and sufficient period for a notice to complete, in which time is of the essence. The earliest date in which the Notice to Complete can be issued is after 3:00pm on the date of completion as per contract.”

17 Special Condition 54 provided as follows:

“The Purchaser acknowledges that they [sic] do not require the Vendor to provide a Certificate of Occupation, Discharge of Mortgage and Withdrawal of Caveats prior to settlement. The aforesaid documents (if required) will be provided on settlement.”

18 Clause 9.1 provided as follows:

19 Clause 16.6 provided as follows:

“If the purchaser 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.”

20 Clause 16.11 was in the following terms:

Normally,

16.11.1 if a special completion address is stated in this contract – that address; or

16.11.2 if none is stated, but a first mortgagee is disclosed in this contract and the mortgagee would usually discharge the mortgage at a particular place – that place; or

solicitor’s

21 The vendor’s solicitor’s address was stated and the contract annexed a title search which disclosed a first mortgagee, Perpetual Nominees Limited (“Perpetual”). There was no evidence of any particular place at which Perpetual would usually discharge a mortgage.

Factual background

22 Throughout, the defendant has been represented by Cadmus Laywers, solicitors. From the time of exchange until July 2006, the plaintiff was represented by Goldbergs Lawyers, solicitors. For a short time in July 2006, he was represented by Burridge & Legg, solicitors, and from 17 July 2006 until the present he has been represented by Carneys Lawyers, solicitors.

23 Goldbergs Lawyers were acting for a number of other purchasers of units in the development.

24 Under cover of a letter dated 4 April 2006, the defendant’s solicitors sent to the plaintiff’s solicitors a copy of an Interim Occupation Certificate dated 30 March 2006 for the property, issued under ss 109C(1)(c) and 109H of the Environmental Planning and Assessment Act 1979. The certificate was signed by Lyall Ernest Dix as Principal Certifying Authority. On its face, the certificate indicates that there was attached to it an interim fire safety certificate. The Occupation Certificate stated that a fire safety certificate had been issued for the building. However, the copy of the certificate delivered to the plaintiff was not accompanied by such a fire safety certificate.

25 The letter informed the plaintiff’s solicitors that the strata plan was anticipated to be registered within the next three weeks and requested him to be ready to complete within the time stipulated in the Contract.

26 On 13 May 2006, the Bond expired.

27 On 26 May 2006, the strata plan was registered and on 29 May 2006 the defendant’s solicitors gave notice to the plaintiff’s solicitors of that fact and requested settlement in accordance with the Contract.

28 The completion date was therefore 12 June 2006; that is, fourteen days after the notification.

29 On 2 June 2006, under cover of a letter to the defendant’s solicitors, the plaintiff’s solicitors provided a list of repairs that needed to be attended to in accordance with Special Condition 30.3, and requested confirmation that they would be rectified within twenty-eight days following settlement.

30 As early as 7 June 2006, the plaintiff’s solicitors had been in contact with the Principal Certifying Authority with a view to inhibiting the issue by him of an Occupation Certificate.

31 On 14 June 2006, the plaintiff’s solicitors sent to the defendant’s solicitors a list of items that had been omitted from the unit or that had been “detrimentally altered” and sought a timetable for the vendor to provide or replace each of the items. Their letter concluded with the following statement:

“Unless and until these matters have been attended to the Vendor will not be in a position to require settlement of this matter to take place.”

32 On 21 June 2006, in a letter to the defendant’s solicitors, the plaintiff’s solicitors asked (not with reference to the defendant but rather to other purchasers) for a draft adjustment sheet and a copy of the Occupation Certificate that was to be handed to them on completion.

33 With respect to the plaintiff, they said:

“In the matter of sale to MCQUEEN at 38/49 Henderson Street [sic], he has advised that his mortgagee is unable to provide the funds until the 30th June 2006. We will be grateful if you would seek instructions from your client that in this particular case time to complete can be extended to that date if necessary without penalty.”

34 Before 26 June 2006 (and probably on 23 June 2006), the plaintiff received legal advice in writing from his solicitors which may well have included advice concerning the issue to the defendant of a Notice to Complete. The advice itself was not in evidence. The defendant called for it during the hearing, but it was not produced. The defendant did not pursue the call further.

35 On 26 June 2006, the plaintiff sent an email to his solicitors in the following terms:

“thanks for your advice.

I agree, let’s issue the notice to complete on them, and see what happens. My finance is approved, and will be available within a couple of days. This (Alexandria) property is not to be a security, if that makes any difference.

The reality is the defects on the property will be detrimental, but not endangering or anything like that.

Please issue the notice to complete ASAP.”

36 On the same day, the plaintiff’s solicitors served upon the defendant’s solicitors a Notice to Complete requiring completion on or before 11 July 2006.

37 Later that day, the plaintiff sent a further email to his solicitors in which he said amongst other things:

“I am hoping they cannot comply with the notice to complete – therefore I can rescind.”

38 On 27 June 2006, the plaintiff’s solicitors advised him that they had been contacted by the defendant’s solicitors advising that they were ready, willing and able to settle on Tuesday 4 July 2006 at Galloways at 3:00pm.

39 In an email to his solicitors on 28 June 2006, the plaintiff said amongst other things:

“I am not of a mind to settle – the place is really not up to scratch.

Please let me know what I should do next!!”

40 On 29 June 2006, the plaintiff received advice from his solicitors by email, the substance of which was that the defects he complained of were not grounds for not completing, and that if settlement did not occur as scheduled the likelihood was that the defendant would issue its own Notice to Complete.

41 In the meantime, the plaintiff’s solicitors had made further contact with the Principal Certifying Authority, Mr Dix. They had drawn to his attention defects in the building work and concluded an email to him dated 26 June 2006 with the following:

“As it is likely that the Vendor will require our client to abide by conditions in the Contract only requiring the Vendor to repair defects following completion, it will require completion on receipt of a Final Occupation Certificate.

Our client and others are reliant on your withholding that Certificate until the development has been completed to a reasonable standard.”

42 On 28 June 2006, after a conversation between the parties’ solicitors, the defendant’s solicitors confirmed that settlement had been “amended for” Wednesday 5 July 2006, 3:00pm at Galloways.

43 On 29 June 2006, the defendant’s solicitors provided a settlement adjustment sheet which required that a cheque be provided to the Office of State Revenue of $3,707.41 for land tax.

44 By letter dated 29 June 2006, the defendant’s lawyers gave directions for bank cheques to be available on settlement including to the first mortgagee and the Office of State Revenue.

45 In evidence was a document entitled Settlement Instructions prepared by the defendant’s solicitors, which contained the following notation:

“NB/ Please clear Land Tax Certificate enclosed with cheque 3 (OSR) and hand to Goldbergs Lawyers upon clearance. Please also forward Cheques 2 & 4 to our office.”

46 The evidence indicates that as at 30 May 2006 there was land tax charged on the land up to and including the 2006 tax year, and that the defendant intended to clear the liability at settlement.

47 On 3 July 2006, the plaintiff’s solicitors wrote to the defendant’s solicitors informing them that they required certain documents by midday that day for each of the seven purchasers for whom they acted, including an undertaking that the list of defects issued would be attended to within 28 days after settlement pursuant to Special Condition 30.3.

48 On 5 July 2006, the plaintiff’s solicitors wrote to the defendant’s solicitors in the following terms:

“We note that we have advised you of various defects in and about our clients [sic] unit, and other units and surrounds being acquired by other clients of this firm (which have not yet been acknowledged by you).

Mr McQueen has become aware of matters relating to the construction generally and in the circumstances he has now instructed us to cancel settlement of this matter today.

We enclose a Notice of Claim pursuant to clause 7 of the Contract and Defect Report.”

49 The settlement scheduled for 3:00pm that day accordingly did not proceed.

50 Later that day (5 July 2006), the defendant served its own Notice to Complete requiring the plaintiff to complete on or before 3:00pm on 19 July 2006 and made time of the essence of the Contract in that respect. The Notice included the following:

19 July 2006,

5. If you fail to comply with this requirement the sum of $45,650.00 which you have paid by way of a deposit guarantee must be paid in accordance with special condition 38 of the Contract, with such amount to be forfeited to the Vendor who shall be entitled to terminate the Contract and thereafter either sue you for breach of Contract and balance of the deposit or resell the property as owner and any deficiency arising on such resale and all expenses of an incidental to such resale or attempted resale and to your default shall be recoverable by the Vendor from you as liquidated damages.”

51 Still later on that day, the plaintiff’s solicitors acknowledged receipt of “a document purporting to be a Notice to Complete”. Their letter concluded with the following statement:

“We acknowledge receipt of a document purporting to be a Notice to Complete. Our client denies your client’s right to issue that notice and further notes that it is in any event defective. Any action taken to enforce that Notice to Complete will be denied by our client and our client will thereafter take action to enforce our client’s rights pursuant to the Contract and the general law.”

52 On 6 July 2006, the plaintiff’s solicitors withdrew his Notice to Complete of 5 July 2006.

53 On 12 July 2006, the defendant’s solicitors responded to the plaintiff’s solicitor’s letter enclosing the Notice of Claim with respect to the alleged defects. They pointed out that the defects list did not entitle the plaintiff to cancel or delay settlement. They remarked that they found it peculiar that the plaintiff had refused to settle on the day of arranged (booked) settlement after he had issued a purported Notice to Complete on 26 June 2006. The letter concluded as follows:

“Your client is now under an obligation to complete the purchase of the aforesaid property as per our Notice to Complete.

Your urgent attention to this matter is appreciated.”

54 On 12 July 2006, the plaintiff’s solicitors (then Burridge & Legg) wrote to the defendant’s solicitors in the following terms:

“We note you have not responded to our client’s claim served on 5 July 2006.

Our client is left with no option but to instruct us to advise that unless the claim is acknowledged, that confirmation is given that the funds required to be retained will be retained following settlement and that your firm will undertake to hold funds, in that regard we will be instructed to make application to the Supreme Court for appropriate orders.

In the circumstances we state that the appropriate course for your client to take is to withdraw the Notice to Complete purportedly served. In the event that does not occur by 5 p.m. today we will also seek appropriate orders in that regard in the proceedings to be instituted in the Supreme Court.”

55 The Notice to Complete was not withdrawn as demanded or at all. This notwithstanding, the plaintiff took no steps as foreshadowed.

56 On 17 July 2006, the plaintiff’s solicitors (now Carneys) wrote to the defendant’s solicitors in the following terms:

“We act on behalf of Timothy Neil McQueen, the purchaser of the above property. Goldbergs Solicitors have provided to us the file. We note that your Notice to Complete expires on 19 July, 2006. We note that Goldbergs on behalf of the Purchaser provided you on 5 July, 2006 with a Notice of Claim and Defect Report and alleged that the Notice to Complete was defective.”

57 On 18 July 2006, the plaintiff’s solicitors sent an email to the defendant’s solicitors in which they said:

“In McQueen … we allege your notice is defective.”

58 On 17 August 2006, the defendant’s solicitors informed the plaintiff’s solicitors that they had been instructed “to direct” the plaintiff to complete by Thursday, 24 August 2006. In their letter, they stated:

“Such direction is no way to be seen as a waiver of any of our client’s rights pursuant to the Contract.”

59 They enclosed a settlement adjustment sheet as at 3pm, 24 August 2006. That adjustment sheet referred to a cheque to the Office of State Revenue for $3,707.

60 On 3 October 2006, the defendant’s solicitors wrote to the plaintiff’s solicitors in the following terms:

“We confirm that your client has continuously neglected, ignored and refused to settle the purchase of the aforesaid property despite numerous requests and demands including the Notice to Complete.

To this end, we enclose herewith by way of service Notice of Termination.”

61 The Notice of Termination was itself dated 3 October 2006 and concluded as follows:

HEREBY GIVE YOU NOTICE

62 The position initially taken by the plaintiff was that the defendant was not entitled to terminate because it had failed to respond to requisitions that had been forward on 15 July 2004, and was therefore itself in default. This contention was persisted in until submissions before me, and then abandoned.

63 On 10 October 2006, the plaintiff through its solicitors asserted that the defendant’s termination was a repudiation and himself terminated the Contract.

The parties’ contentions

64 The plaintiff put the following:

a the defendant’s Notice to Complete was served on 5 July 2006 and required completion by 19 July 2006. Special Condition 36 contemplated a reasonable and sufficient period for a Notice to Complete which made time of the essence, to be 14 days. The defendant’s Notice to Complete did not give a full 14 days. The established method for calculating such periods does not include the day of service but includes the whole of the fourteenth day: Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd (1980) NSW ConvR 55-004 at 56,123. The law does not recognise fractions of a day: Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959 at 14,963. Here, the Notice to Complete required settlement at 3pm on the fourteenth day and so fell short;

b strong circumstances must be shown to justify the giving of a Notice to Complete which allows less than the period contemplated by the Contract to be reasonable so as to make time of the essence: Sindel v Georgiou (1984) 154 CLR 661 at 670. There were no such strong circumstances in the present case;

c even if the 13 days given was sufficient, in order to rely on its Notice to Complete, the defendant bore the onus of showing that, at the time stipulated for settlement, it was itself ready, willing and able to complete: McNally v Waitzer [1981] 1 NSWLR 294 at 302. The defendant was not ready and able to complete on 19 July 2006 because:

i. no arrangements had been made to discharge the land tax charge;

ii. no arrangements had been made for the first mortgagee to be present at the required place of settlement with a discharge of mortgage and the certificate of title; and

iii. the defendant was not in a position to deliver a Certificate of Occupation because the certificate in its possession failed to meet a statutory requirement for such a certificate, being that it had to be accompanied by a fire safety certificate;

d finally, even if the defendant was entitled to terminate, its money claim was bound to fail because it had accepted in lieu of payment of the deposit the Bond which had expired. It followed that no deposit was payable or claimable under the Contract. The reference in cl 9.1 of the Contract to the vendor being able to recover the deposit was a reference to recovery under the Bond and that was no longer possible. Moreover, by terminating the Contract, the defendant limited itself to the recovery of loss of bargain damages which required it to establish that it had made a loss; that is, that there was a negative difference between the position it was now in and the position it would have been in had the Contract been performed by the plaintiff, and it had failed to adduce evidence of any such detriment.

65 The defendant put the following:

a the plaintiff, by its conduct over the period 13 May 2006 until the defendant terminated, had evinced an intention not to be bound by the fundamental terms of the Contract and had repudiated it; which repudiation the defendant was entitled to, and did, accept. This intention was evinced by the following conduct of the plaintiff:

i. failing to furnish any deposit, in that the plaintiff failed to maintain, renew or replace the Bond from 13 May 2006;

ii. failing to complete by the completion date of 13 June 2006 following notice of registration of the strata plan given on 29 May 2006;

iii. directing communications to the Independent Certifying Authority seeking that the Occupation Certificate be withheld or withdrawn so as to place the defendant in a position where it could not complete the Contract in circumstances where the plaintiff had issued a Notice to Complete;

iv. failing or refusing to complete on or by the agreed date by reference to alleged defects, which matters did not permit the plaintiff to delay completion;

v. failing to complete in accordance with his own Notice to Complete served on 26 June 2006;

vi. purporting to withdraw his own Notice to Complete without the express consent of the defendant;

vii. failing to complete in accordance with the Notice to Complete issued by the defendant on 5 July 2006;

viii. failing to take any or any reasonable steps to complete the Contract in the period up to and including 3 October 2006, notwithstanding the further written and oral communications of the defendant; and

ix. failing to respond or communicate in any meaningful way with the defendant and its solicitors in the period between July 2006 and October 2006, despite a fax of 17 August 2006 and telephone messages from the defendant’s solicitors.

b even if repudiation was not made out, the defendant was entitled to terminate because of the failure of the plaintiff to comply with its Notice to Complete of 5 July 2006 on the basis that the 13 days given was adequate to make time of the essence with respect to settlement, having regard to the plaintiff’s own conduct which, before he withdrew his own Notice to Complete, demanded settlement on 11 July 2006;

c the defendant was, as at 5 July 2006, ready, willing and able to complete and this remained the case up to and including 19 July 2006. Reliance was placed on the statement of McLelland J in Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd at 56,123 that: “readiness to complete does not connote readiness instantly to hand over everything required on completion.” What is required is readiness to comply with any reasonable request by the other party for completion. Readiness to proceed to completion must be determined “with due regard to common sense and the practicalities of ordinary conveyancing transactions”: Halkidis v Bugeia [1974] 1 NSWLR 423 at 428; Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd at 56,123;

d under cl 9 of the Contract, if the defendant terminated because of the plaintiff’s non-compliance with the Contract in an essential respect, the defendant was given an express contractual right to recover the deposit directly from the plaintiff.

66 A contention that the defendant was entitled to recover damages as a result of the plaintiff’s failure to provide a Bond which covered the period of the Contract up to completion as required by Special Condition 38 so that the defendant lost of the use of the money it would have had had it called on the Bond, was abandoned during submissions.

67 In response to the defendant’s contention of repudiation, the plaintiff put that:

a the defendant had, by its Notice to Complete, elected to affirm the existence of the Contract; and

b the defendant was thereby disentitled from relying on the behaviour of the plaintiff as constituting repudiatory conduct or conduct amounting to an anticipatory breach entitling the defendant to terminate.

Consideration

Repudiation

68 Repudiation will be established if the conduct of the plaintiff whether verbal or otherwise conveyed to the defendant the plaintiff’s inability to perform the Contract or an intention on his part not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. Whether there has been repudiation depends on objective acts and omissions and not on uncommunicated intention. There will be repudiation if the conduct of the plaintiff was such as to convey to a reasonable person in the position of the defendant repudiation or disavowal either of the Contract as a whole or of a fundamental obligation under it: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 648 and 658.

69 Repudiation may occur at any time between formation of the contract and discharge by performance of it. Anticipatory breach is “a species of the genus repudiation”: Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195 at 203. Anticipatory breach occurs before the time for performance has arrived.

70 If a party to a contract repudiates it or a fundamental obligation under it, the innocent party has the election to accept the repudiation and bring the contract to an end. When time has been made of the essence for the performance of a fundamental obligation, a clear inability or unwillingness to perform it at the stipulated essential time is an anticipatory breach entitling an innocent party to bring his contractual obligations to an end: Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260 and 276.

71 If a party repudiates and the other elects not to terminate but to affirm the contract, but thereafter the repudiating party continues to repudiate, the wronged party may terminate on the basis of the continued repudiation: Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444.

72 A party, in order to be entitled to rescind for anticipatory breach, must at the time of his rescission himself be willing to perform the contract: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 433.

73 It is not necessary to consider the plaintiff’s behaviour before 5 July 2006. The objective acts and omissions of the plaintiff on and from 5 July 2006 establish a clear and continued intention on his part not to perform the contract generally and, in particular, not to perform the fundamental obligation upon him to pay the purchase price against conveyance to him of the property.

74 On 5 July 2006, the plaintiff cancelled the settlement scheduled for that day on a basis that the terms of the Contract clearly did not justify. It was not put that the plaintiff was acting on a wrong, although bona fide, construction of the Contract. Nor could that properly have been put.

75 The plaintiff gave evidence and was cross-examined about the circumstances under which the Notice to Complete was given on his behalf when, at about the same time, steps were being taken on his behalf that would have (if they had succeeded) put it beyond the defendant’s ability to complete. His evidence was that he did not think it would be possible to settle because of “[D]efects, repairs being ignored, etc”.

76 However, he accepted that he knew defects were not a basis upon which he could delay or defer settlement and was unable to explain what the reason was in that event for having instructed that Notice to Complete be given.

77 The plaintiff persisted in refusing to perform on an unjustified basis on 12 July 2006 as articulated in the letter from Burridge & Legg of that date.

78 The defendant’s Notice to Complete required settlement on 19 July 2006. The plaintiff failed or refused to complete. His objective behaviour was consistent only with an intention not to do so.

79 The Notice to Complete, for the reasons articulated below, gave the plaintiff more than a reasonable time within which to do so.

80 If the defendant’s Notice to Complete amounted to an affirmation of the Contract at that time and up to 19 July 2006, the plaintiff persisted in his repudiatory conduct thereafter.

81 When on 17 August 2006 the defendant called for settlement by 24 August 2006, the plaintiff did not even respond. He responded only after the Notice to Terminate was given on 3 October 2006.

82 The defendant was accordingly, as at 3 October 2006, entitled to accept the plaintiff’s repudiation and bring the Contract to an end.

83 In reaching this conclusion, I have disregarded the plaintiff’s conduct in seeking the non-issue of an Occupation Certificate and any subjective unwillingness to perform, because these matters were not conveyed to the defendant.

84 I also find that, throughout the period 5 July 2006 to 3 October 2006, the defendant was willing to perform the Contract. It tendered performance on 5 July 2006. I deal below with the specific aspects raised by the plaintiff with respect to the defendant’s position on 19 July 2006. On 17 August 2006, it provided a settlement adjustment sheet as at 24 August 2006, effectively reiterating its willingness to perform.

Effectiveness of the Notice to Complete to make time of the essence

85 In my view, the period given by the defendant’s Notice to Complete – namely 13 days – was sufficient, indeed, more than sufficient in the circumstances of this case.

86 On 21 June 2006, the plaintiff had sought an extension for settlement to 30 June 2008.

87 By 26 June 2006, the plaintiff’s finance had been approved and was to be available within a couple of days.

88 On 26 June 2006, the plaintiff served a Notice to Complete appointing 11 July 2006 as the settlement date.

89 As at 3 July 2006, both parties contemplated settlement on 5 July 2006; that is, four days before the date the plaintiff himself had earlier specified.

90 On 5 July 2006, the plaintiff for no or no good reason called off settlement. It was not suggested on the plaintiff’s behalf that he was not in a position to settle on 5 July 2006, or that there was any basis for his calling off of the settlement, other than that which was disclosed in the correspondence.

91 A demand on 5 July 2006 to settle on 19 July 2006 gave the plaintiff more than 7 days beyond the date he had stipulated in his own Notice to Complete and more than 13 days from 5 July 2006 which both he and the defendant had contemplated as early as 3 July 2006 to be the settlement date.

92 The time given was, in these circumstances, more than reasonable: Lohar Corp Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177.

93 The plaintiff failed to settle on 19 July 2006 and, so long as the defendant was ready, willing and able to settle on that day, the plaintiff’s failure to do so gave the defendant the right to terminate because the notice was effective to make time of the essence in the performance by the plaintiff of his obligation to complete.

Was the defendant ready, willing and able to complete on 19 July 2006?

94 The first point that the plaintiff took was that the defendant was not, on 19 July 2006, in a position to provide a land tax certificate showing that the charge for land tax was no longer effective against the land. The evidence showed that land tax had been charged upon the land up to and including the 2006 tax year. The plaintiff’s point is without substance. Under cl 16.6 of the Contract, the defendant was obliged only to provide such a certificate if, prior to completion, the plaintiff had served a land tax certificate on the defendant. There is no evidence that any such a certificate was served and, given the plaintiff’s clear intention not to perform, the reality is that no such service was going to occur in the context of completion. The Court should operate on realities: TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 156.

95 In addition, there was evidence from Ms Delilah Rahe, a solicitor employed by the defendant’s solicitors at the time, who gave evidence of a facility for the clearance of land tax at settlement.

96 Had the plaintiff attended settlement, required a land tax clearance and allowed a reasonable time for the mechanical process of obtaining such a clearance to occur, there is no reason to doubt that the defendant would have obtained it.

97 The second point taken by the plaintiff was that no arrangements had been made by the defendant for the first mortgagee to be present at the required time and place of settlement with a discharge of mortgage and certificate of title. Ms Rahe gave evidence that she believed she had notified “the bank” that it would be required to attend at settlement on 19 July 2006 at “Espreon” – apparently settlement rooms.

98 She gave evidence that the defendant was in a position to settle on 19 July 2006 but that the plaintiff’s solicitors indicated that they were not going to settle, and that she had advised the bank of this. Ms Rahe’s evidence that the plaintiff’s solicitors had informed her that they were not going to settle was not challenged. Costs are incurred when settlement is scheduled and not proceeded with.

99 It was put that, on the evidence, the completion address was, under cl 16.11 of the Contract, at the defendant’s solicitors and that no arrangements had been made for the first mortgagee to attend there on 19 July 2006.

100 Given the defendant’s manifest desire to have the transaction completed, had there been any inkling from the plaintiff that there was any chance of settling on 19 July 2007, and had there been any request (express or implied) allowing a reasonable time for the mechanical process of arranging for the first mortgagee to be present with the relevant documents, there is no reason to doubt that the defendant would have taken the necessary action.

101 The purchase price to be paid was more than sufficient to discharge the mortgage and any outstanding land tax on settlement. The second point is equally unsustainable.

102 The third point taken by the plaintiff was that the defendant was not in a position to provide a Certificate of Occupation on settlement because the document that the defendant had (a copy of which had previously been provided to the plaintiff) did not comply with reg 155 of the Environmental Planning and Assessment Regulations 2000 which, at the time of settlement, was in the following terms:

“ 155 Form of occupation certificate

(ii) the name of the accreditation body by which he or she is accredited,

Building Code of Australia

103 At the time the Occupation Certificate in this case was issued – that is, on 30 March 2006 – the regulation was in the following terms:

“ 155 Form of occupation certificate

Building Code of Australia

104 The significant relevant difference between the terms of the regulation as at the date of the issue of the certificate and as at 19 July 2006 (the date of demanded settlement) is that, at the earlier date, the certificate was not to be issued unless the certifying authority was satisfied that such other requirements set out in the regulations had been complied with; whereas, as at the date of settlement, the certificate was to contain a statement to the effect that a fire safety certificate had been issued for the building and the occupation certificate was to be accompanied by such a fire safety certificate.

105 The plaintiff’s point was that the defendant could not comply with the requirement to provide such a Occupation Certificate because the one it had was not accompanied by a fire safety certificate.

106 This point is bad for a number of reasons.

107 As at the date the Occupation Certificate was issued, it was not required to be accompanied by a fire safety certificate. The Occupation Certificate was issued under the regulation as it then stood, and not under the regulation as it stood on 19 July 2006.

108 There is nothing to suggest that the Occupation Certificate that the defendant had was not valid and in accordance with the regulations under which it was issued.

109 Even if it be the case that the plaintiff was entitled to a Occupation Certificate issued under the regulations as at 19 July 2007, in my view, the absence of the accompanying document did not render the Certificate void.

110 Regulation 155(1) stipulated what an Occupation Certificate must contain. The term “occupation certificate” is defined in s 4 of the Environmental Planning and Assessment Act 1979 to mean a certificate referred to in s 109C(1)(c) of the same Act.

111 Section 109C(1)(c) relevantly provides that an Occupation Certificate is one that authorises the occupation and use of a new building. The Occupation Certificate provided certifies that the building is suitable for occupation, and records that it is a certificate issued under s 109C(1)(c) of the Environmental Planning and Assessment Act. It is, accordingly, such a certificate.

112 Moreover, the Occupation Certificate on its face records that an interim fire safety certificate was attached, presumably to the original Occupation Certificate. In my view, the regulation makes it clear what the requirements are for a document to constitute an Occupation Certificate. Those are the matters in reg 155(1). If a fire safety certificate has been issued, and the certificate contains a statement to that effect, it is a valid Occupation Certificate. The absence of an attached fire safety certificate does not in my view make such a certificate a nullity in any event.

113 In the circumstances, I find that the defendant was not in default of its contractual obligations on 19 July 2006 and was ready, willing and able to perform them.

114 It follows that the defendant was entitled to terminate the Contract when it did so on 3 October 2006.

115 It further follows that its conduct in doing so was not a repudiation and that the summons must be dismissed.

Relief

116 Clause 9.1 of the Contract entitles the defendant on valid termination to recover the deposit.

117 It terminated for a failure by the purchaser to comply with the Contract in an essential respect and is accordingly entitled to recover the deposit.

118 The plaintiff has not paid the deposit whether by the Bond or otherwise. It provided a Bond other than in accordance with the Contract. It cannot take advantage of its own wrong: Alghussein Establishment v Eton College [1991] All ER 267.

119 The entitlement to recover the deposit is in my view an entitlement to recover it in debt from the plaintiff under the Contract.

120 The submission that there is no such entitlement because the Bond was provided and expired does not withstand scrutiny. Special Condition 38 provides for the payment of the deposit in cash or by bank cheque upon completion, even where a Bond has been given. There is no logical or rational reason why, on termination, the entitlement to recover the deposit would be eroded by a Bond having been given earlier.

121 The orders of the Court are accordingly:

a summons dismissed;

b judgment for the defendant in the amount of $45,650 together with interest at the Court rate from 19 July 2006 to the date of judgment;

c plaintiff to pay the defendant’s costs of the proceedings.

**********

Citations

Timothy Neil McQueen v Leduva Pty Limited [2008] NSWSC 284

Most Recent Citation

Cases Citing This Decision

45

Pasini v United Mexican States [2002] HCA 3

AB v The Queen [1999] HCA 46

Director of Public Prosecutions (Cth) v Kainhofer [1995] HCA 35

Cases Cited

6

Statutory Material Cited

2

Sindel v Georgiou [1984] HCA 58

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23

Actions

Download as PDF Download as Word Document

CITATION:	Timothy Neil McQueen v Leduva Pty Limited [2008] NSWSC 284
HEARING DATE(S):	25 & 26 March 2008
JUDGMENT DATE :	3 April 2008
JUDGMENT OF:	Hammerschlag J
DECISION:	Verdict for defendant vendor
CATCHWORDS:	CONTRACT - Vendor - purchaser suit - whether purchaser's conduct amounted to repudiation - Notice to Complete - whether period given sufficient to make time of the essence - right to recover deposit
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 (NSW) Environmental Planning and Assessment Regulations 2000 (NSW)
CASES CITED:	Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd (1980) NSW ConvR 55-004 Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959 Sindel v Georgiou (1984) 154 CLR 661 McNally v Waitzer [1981] 1 NSWLR 294 Halkidis v Bugeia [1974] 1 NSWLR 423 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Lohar Corp Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Alghussein Establishment v Eton College [1991] All ER 267
PARTIES:	Timothy Neil McQueen Leduva Pty Limited (ACN 001 777 206)
FILE NUMBER(S):	SC 5914/2006
COUNSEL:	D.L. Warren (Plaintiff) F.P. Hicks (Defendant)
SOLICITORS:	Carneys Lawyers (Plaintiff) Cadmus Lawyers (Defendant)