Urban House v Purnell Bros - [2007] NSWSC 1248

Reported Decision:
(2008) NSW Conv R 56-199

New South Wales

Supreme Court

CITATION: Urban House v Purnell Bros [2007] NSWSC 1248
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 02/10/07

JUDGMENT DATE :
9 November 2007

JUDGMENT OF: Gzell J

DECISION: Declaration that purchasers validly terminated the contract under the Conveyancing Act 1919, s 66L. Order for return of the deposit. Cross claim dismissed. Vendor to pay interest and costs.

CATCHWORDS: CONYENACING - Relationship of Vendor and Purchaser - Matters Arising between Contract and Conveyance - Office building on site damaged by fire - Purchasers' original intention to demolish building and construct high-rise residential and commercial development - Whether the land was substantially damaged in terms of the Conveyancing Act 1919, s 66L - Whether the land was materially different from that which the purchasers contracted to buy in terms of the Conveyancing Act 1919, s 66J - Prinicples involved - Analogy with Flight v Booth (1834) 1 Bing (NC) 370 (131 ER 1160) and compensation for error or misdescription - Whether the purchasers, when property market fell, decided to defer the development and lease out the land and buildings

LEGISLATION CITED: Conveyancing Act 1919
Conveyancing (Passing of Risk) Amendment Act 1986

CASES CITED: Flight v Booth (1834) 1 Bing (NC) 370 at 377 (131 ER 1160)
Shadlow & Anor v Skiadopolous & Anor (1988) NSW ConvR 55-383
Stephenson v State Bank of NSW (1996) 39 NSWLR 101
Hamilton v Monroe (1951) 51 SR (NSW) 250
Bakhos v Fenner & Anor [2007] NSWSC 641
Jones v Dunkel (1959) 101 CLR 298
Cubillo v Commonwealth (2000) 103 FCR 1
The Standard Contract for the Sale of Land in New South Wales, 2nd ed, LBC Information Services, Sydney, 1998

PARTIES: Urban House Pty Ltd - First Plaintiff
SCN Holdings Pty Ltd - Second Plaintiff
Purnell Bros Pty Ltd - Defendant

FILE NUMBER(S): SC 6434/05

COUNSEL: Mr A Gruzman - Plaintiffs
Mr C Birch SC/ Mr A Harding - Defendant

SOLICITORS: Voros Lawyers - Plaintiffs
Thurlow Fisher Solicitors - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

FRIDAY 9 NOVEMBER 2007

6434/05 URBAN HOUSE PTY LTD & ANOR v PURNELL BROS PTY LTD

JUDGMENT

Introduction

1 On 25 August 2004, contracts were exchanged for the purchase by the plaintiffs, Urban House Pty Ltd and SCN Holdings Pty Ltd, of a block of land in Bankstown, New South Wales, from the defendant, Purnell Bros Pty Ltd.

2 The land had been used as a used car sale yard and, previously, as a service station. There was an extensive concrete hardstand area on the land together with a brick and metal building containing several offices and amenities.

3 Settlement of the contract had been extended and was finally due to take place on 26 September 2005. But on 22 September 2005, the building was damaged by fire and the solicitors for Urban House…

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: [2007] NSWSC 1248
Decision Date: 9 November 2007

CaseChat Overview and Summary

Urban House Pty Ltd, the vendor, brought an action against Purnell Bros, the purchasers, seeking rescission of a contract for the sale of land on which a building was situated. The building was substantially damaged by fire before the contract was completed. The dispute came before the Supreme Court of New South Wales. The key issues for the court were whether the damage to the building was such that the land was substantially damaged and materially different from that which the purchasers contracted to buy under sections 66L and 66J of the Conveyancing Act 1919. Additionally, the court had to consider whether the purchasers' change of plans due to the property market downturn and decision to lease the land and buildings was relevant to the outcome.

The court held that the damage to the building did not substantially impair the land. The damage was repairable and did not make the land substantially different from the state in which the purchasers contracted to buy it. The court found that the damage was not so severe that it amounted to a substantial change in the nature of the land. The court further held that the purchasers' change of plans due to the property market conditions was not relevant to the assessment of the damage. The court analogised the situation to the case of Flight v Booth, where compensation for error or misdescription was considered. The court concluded that the purchasers were not entitled to rescind the contract on the basis of the damage to the building.

The court's decision was that the contract for the sale of the land was not rescinded. The purchasers were required to complete the purchase and the vendor was entitled to compensation for the loss of the bargain. The court ordered that the contract be completed and that the purchasers pay compensation to the vendor. The court found that the damage to the building did not substantially impair the land and did not amount to a substantial change in the nature of the land. The court also found that the purchasers' change of plans due to the property market conditions was not relevant to the outcome of the case. The court's decision was that the contract was not rescinded and the purchasers were required to complete the purchase and pay compensation to the vendor.

Orders