U108 Pty Ltd v SING Fan & Ors - [2010] VSC 12

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 138 of 2010

U108 PTY LTD (ACN 105 692 126)	Plaintiff
v
SING FAN & ORS (according to the attached Schedule)	Defendants

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JUDGE:	HARGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 January 2010
DATE OF JUDGMENT:	3 February 2010
CASE MAY BE CITED AS:	U108 Pty Ltd v Sing Fan & Ors
MEDIUM NEUTRAL CITATION:	[2010] VSC 12

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VENDOR AND PURCHASER ‑ Purchasers failed to complete on due date – Rescission notices – Whether valid – First rescission notice specified wrong due date – Second rescission notice specified correct due date, but covering correspondence asserted that the due date specified in the first rescission notice was correct – First rescission notice not expressly withdrawn – Other confusing conduct by vendor as to due date for settlement – Held: reasonable purchasers might entertain doubts as to whether the first rescission notice was being relied upon – Rescission notices declared invalid – Catley v Watson (1981) V Conv R 54-003; Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd (1998) V Conv R 54-575; Greydae Pty Ltd v Malilane Pty Ltd [2003] VSCA 27; Robinson v Becata Pty Ltd [2004] NSWSC 310 – Transfer of Land Act 1958 (Vic) Seventh Schedule, Table A, General Conditions 5, 6.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Kohn	Leonard Legal
For the First and Second Defendants	Mr P Little	Michael Benjamin & Associates
For the Third Defendant	No appearance

HIS HONOUR:

The plaintiff, U108 Pty Ltd, is a property developer. I will refer to it as ‘the vendor’. The first and second defendants, Sing Fan and Yu Zhao (‘the purchasers’), agreed to purchase an apartment and car park (‘the property’) from the vendor.

The relevant contract of sale is dated 11 April 2007. Although it appears that it was in fact entered into in June 2007, nothing turns on this. At the time of the contract of sale, the property had not been constructed. The purchasers were buying the property ‘off-the-plan’.

Following completion of construction, the vendor contended that the purchasers became obliged to complete the contract of sale. There was uncertainty about the due date for completion. Notwithstanding this, a settlement was arranged. Due to a combination of family circumstances and lack of funds, the purchasers were unable to complete on this day. They sought an extension to enable them to put the necessary finance in place. The request for an extension was refused by the vendor, and a notice of rescission (‘the first rescission notice’) was served on the purchasers, requiring completion of the contract of sale within 14 days. Shortly afterwards, another notice of rescission (‘the second rescission notice’) was served, requiring completion within 14 days from the date of that notice.

The purchasers were unable to complete the contract of sale within the time specified in the second rescission notice. In these circumstances, the vendor treated the contract…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] VSC 12
Decision Date: 3 February 2010

CaseChat Overview and Summary

U108 Pty Ltd sought a declaration from the Court that the rescission notices sent by SING Fan and others were invalid, as well as an order for specific performance of the contract of sale. The dispute arose from the parties' contract for the sale of property in Melbourne, where the purchasers failed to complete on the due date, leading the vendor to send rescission notices. The Court of Appeal of the Supreme Court of Victoria heard the matter. The central legal issue was whether the rescission notices sent by the vendor were valid under the Transfer of Land Act 1958 (Vic) and the relevant case law. Specifically, the Court needed to determine if the first rescission notice, which specified the wrong due date, coupled with subsequent correspondence and the second rescission notice, led to confusion that invalidated the notices. The Court also considered whether the vendor's conduct regarding the due date for settlement contributed to the confusion.

The Court found that the first rescission notice was flawed because it specified the wrong due date, but the key issue was whether the second notice, which corrected the due date, was rendered invalid due to the vendor's conduct. The Court held that the vendor's conduct, including the correspondence that asserted the due date specified in the first notice was correct, led to confusion that reasonable purchasers might entertain doubts as to whether the first notice was being relied upon. As the first notice was not expressly withdrawn and the vendor's actions added to the confusion, the Court concluded that the rescission notices were invalid. The Court referred to previous cases, such as Catley v Watson, Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd, and Greydae Pty Ltd v Malilane Pty Ltd, to support its decision. The Court also considered the statutory provisions under the Transfer of Land Act 1958 (Vic) and the General Conditions in the Seventh Schedule, Table A.

The Court declared the rescission notices invalid and ordered specific performance of the contract of sale, thereby enforcing the original agreement for the sale of the property. The Court's decision was grounded in the need to protect the purchasers from undue confusion and to ensure clarity in contractual obligations, particularly in the context of rescission notices. The Court's ruling emphasised the importance of clear and unambiguous communication in contractual dealings to avoid potential disputes and the need for parties to act in good faith.

Orders