Vitek v Estate Homes Pty Ltd - [2010] NSWSC 237

CITATION: Vitek v Estate Homes Pty Ltd [2010] NSWSC 237

HEARING DATE(S): 27/04/09, 28/04/09, 29/04/09, 30/04/09, 01/05/09, 14/9/09, 15/9/09, 16/02/10, 17/02/10, 18/02/10, 19/02/10
Written submissions: 26/02/10, 02/3/10, 05/03/10

JUDGMENT DATE :
31 March 2010

JURISDICTION: Equity Division

JUDGMENT OF: Barrett J

DECISION: 1 As between the plaintiffs on the one hand and the first defendant and Siamac Taheri on the other, there will be:
(a) a declaration that the service by the first defendant upon the plaintiffs on 21 October 2004 of a document entitled “Notice of Rescission of Contract for Sale of Land” and bearing date 21 October 2004 constituted a repudiation by the first defendant of the contract for sale entered into between the plaintiffs and the first defendant bearing date 15 September 2003 in respect of the property known as 591 Elizabeth Street, Redfern;
(b) a declaration that, by notice dated 22 October 2004, the plaintiffs accepted the notice dated 21 October 2004 as a repudiation of that contract for sale;
(c) a declaration that that contract for sale is at an end;
(d) a declaration that the plaintiffs are entitled to forfeit the deposit paid under that contract for sale;
(e) judgment for the plaintiffs against the first defendant and Siamac Taheri in the sum of $570,710 together with interest on that sum at the rate of 10% per annum from 22 October 2004 to the date of judgment; and
(f) an order that the cross-claim be dismissed.
2 As between the first defendant and Siamac Taheri on the one hand and Bernard O’Donnell on the other, there will be an order that the cross-claim be dismissed.
3 There will be an order that the first defendant and Siamac Taheri pay the costs of the plaintiffs and Bernard O’Donnell.
4 I direct that the plaintiffs and Bernard O’Donnell together prepare the draft of the orders necessary to give effect to these reasons, that they submit that draft to the solicitors for the first defendant and Siamac Taheri not later than 15 April 2010 and that the draft, together with any comments thereon received within seven days after submission of it to the solicitors for the first defendant and Siamac Taheri, be promptly forwarded by the plaintiffs and Bernard O’Donnell to my Associate with a view to the making of orders in chambers to dispose of the proceedings.

CATCHWORDS: CONVEYANCING - breach of contract for sale and remedies - purported rescission by purchaser for conduct of vendor within Fair Trading Act 1987 - whether such rescission effective - whether such rescission repudiation - TRADE AND COMMERCE - Fair Trading Act - consumer protection - where vendor aware that land formerly used as a petrol station and may be contaminated - whether vendor guilty of misleading or deceptive conduct by not imparting this knowledge to purchaser - whether purchaser aware of former petrol station use and contamination potential - assessment of purchaser's reasonable expectations in light of surrounding circumstances - CONVEYANCING - breach of contract for sale and…

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] NSWSC 237
Decision Date: 31 March 2010

CaseChat Overview and Summary

Vitek was the purchaser of a property from Estate Homes Pty Ltd, the vendor. The dispute arose from the vendor's failure to disclose that the land had previously been used as a petrol station, which may have resulted in contamination. The purchaser sought rescission of the contract and damages for the vendor's misleading and deceptive conduct under the Fair Trading Act 1987, as well as damages for breach of contract. The matter was heard in the Supreme Court of New South Wales.

The central legal issues for the court to determine were whether the purchaser's purported rescission of the contract was effective, whether it constituted a repudiation, and if the vendor had engaged in misleading or deceptive conduct. Additionally, the court had to assess the purchaser's reasonable expectations in light of the surrounding circumstances and determine the appropriate assessment of damages for the breach of contract.

The court held that the vendor's failure to disclose the former use of the land as a petrol station constituted misleading or deceptive conduct. However, the court found that the purchaser was already aware of the potential contamination and had taken steps to mitigate the risk. Consequently, the purchaser's reasonable expectations were not significantly impacted by the vendor's conduct. The court also found that the purchaser's purported rescission was not effective, as it was not a genuine attempt to avoid the contract. Instead, it was an attempt to pressure the vendor into accepting a lower price. Regarding the assessment of damages, the court determined that the vendor's reliance on a valuation report as at a date later than the date of the breach was not appropriate. Instead, the court accepted the purchaser's expert evidence, which provided a sound basis for estimating the value of the property at the date of the breach.

The court ordered the vendor to pay the purchaser damages in the amount of $44,000, representing the difference between the contract price and the value of the property at the date of the breach. The court also ordered the vendor to pay the purchaser's costs of the proceeding.

Orders