Specific Performance Granted for Property Sale Failure

The Court granted specific performance to the claimant for the sale of his interest in a property at Mount Druitt, finding that the respondent had failed to complete the contract and there was no termination of the contract.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] v [NAME]; [NAME] v [NAME] [2014] NSWSC 317 Hearing dates: 12 March 2014 Decision date: 12 March 2014 Jurisdiction: Equity Division Before: [NAME] Decision: [NAME] as plaintiff is entitled to specific performance. [NAME] as plaintiff is not entitled to specific performance. [NAME] to pay [NAME]'s costs. Catchwords: CONTRACTS - failure to complete - lack of termination - specific performance Legislation Cited: Conveyancing Act 1919 (NSW) Category: Principal judgment Parties: [NAME] (plaintiff - 2013/00308846; defendant - 2013/00306353) [NAME] (plaintiff - 2013/00306353; defendant - 2013/00308846) Representation: [NAME] ([NAME]) [NAME] ([NAME]) [NAME] ([NAME]) [NAME] ([NAME]) File Number(s): 2013/00306353; 2013/00308846 Publication restriction: Nil

Judgment 1This is a very unfortunate case between two brothers, and it is quite obvious from the evidence given that, unfortunately, there is no relationship between them. I was particularly unimpressed with the evidence of [NAME] because it seemed to me that he has now got himself into such a stage that he has almost a conspiracy theory about everything his brother does and I could not accept a lot of what he said. But, really, most of the evidence that was put on is quite irrelevant to the legal question that I have to decide. 2The property in question at Mount Druitt was owned by the parties' mother. When she died, she devised it and other real estate she owned in equal shares to the two brothers, her two sons, the present plaintiff and defendant. She also appointed them joint executors. However, they could not get on and there was a contest in court. [NAME] says that he lost that contest because his solicitor mistakenly appeared for the wrong side. I find it difficult to accept that. It does not really matter because whatever happened probate was granted to [NAME] solely. He, accordingly, became the proprietor of the land in question. 3That is relevant because [NAME] continued to reside there and treated it as his own. Indeed, [NAME] repelled any attempt by [NAME] even to inspect the property. The significance of that is that even if they were tenants in common in equity or joint tenants in equity, because one co-owner had been excluded that would make [NAME] liable for an occupation fee for the time he was in occupation. 4Zvonko started proceedings to have the property sold under s 66G of the Conveyancing Act 1919 (NSW). That suit was settled by a deed of settlement made 17 September 2012. The deed recognised that the three properties, Mount Druitt and two properties in [ADDRESS], Balmoral, that Balmoral being on Lake Macquarie, were held as tenants in common in equal shares and the agreement was in paragraphs 7-9 which are as follows: 7. "[NAME] agrees to sell as vendor and [NAME] agreed to buy as purchaser, [NAME]'s interest as tenant in common in the property at XXX Mount Druitt, New South Wales, subject to the following terms and conditions: (i) The sale price shall be $182,500.00; (ii) The parties hereto agree that the form of the contract of sale shall be in the form of the Law Society of NSW and Real Estate Institute of NSW [POSTCODE] copyright edition Contract for the Sale of Land. (iii) Upon exchange of contracts, [NAME] shall pay a deposit of $18,250.00 to [NAME]; (iv) The contracts to be exchanged within 4 weeks of the date of this deed, time to be of the essence; (v) [NAME] to purchase the property with vacant possession; (vi) Completion of the sale to take place simultaneously with the sale of the first sale of the parcels of land at Balmoral, time being of the essence for that completion.

8. If [NAME] fails to pay the deposit within the time allowed under clause 7(iv) or fails to complete the contract under clause 7(vi), [NAME] then agrees to sell his co-interest in the property at Mount Druitt for the sum of $182,500.00, completion to take place upon the sale of the first sale of the parcels of land at Balmoral.

9. Upon completion of the first of the sales of the land at Balmoral, the whole of the net proceeds of sale shall be paid to [NAME] in part payment of the moneys due by [NAME] to [NAME] under the contract of sale for the Mount Druitt property." 5There were then provisions in clauses 10 and 10A as to what would happen if [NAME] was to be the purchaser and what would happen when the last sale of the land at Balmoral took place. 6Contracts were exchanged on 15 October 2012. They were in the 2005 form of the Law Society and Real Estate Institute's standard form. The first Balmoral sale was completed on 22 July 2013. [NAME]'s solicitor wrote on 24 July 2013 to [NAME]'s solicitor: [redacted] Time is of the essence. The balance of the purchase price is:" (There were then some calculations and conclusions) "Balance owing to [NAME] $50,817.81. [NAME] have the funds to settle?" 7There does not appear to be any response to that letter at all. However, on 26 [NAME] obtained finance from a bank to enable him to complete the purchase and that funding appears still to be available. 8Zvonko's solicitor emailed the solicitor for [NAME] on 6 September: "We are close to resolution. [NAME] will agree to sell to [NAME] if he ([NAME]) has his 'stuff' from his bedroom in his mother's house. I will call later". That was responded to by an email: "In order for our client to adhere to your client's resolution to settle his purchase, we require an unconditional guarantee to settle our client's [sic] purchase in spite of [NAME]'s visit, as you say, "[NAME] will agree to sell to [NAME] if he ([NAME]) has his 'stuff' from his bedroom in his mother's house." 9Nothing seemed to happen. On 25 September 2013 [NAME]'s solicitor gave a notice to complete, alleging the contract was still on foot and attempting to make time of the essence. This, of course, was completely useless as [NAME] was seeking not to rescind but seeking specific performance. 10The original deed made time of the essence for 22 July. That time passed without there being completion of the Mount Druitt property. It is rather strange that there is no evidence of any letters passing between solicitors. It is usual in this sort of situation for the solicitor who has control of the sale of the Balmoral property to give the other side warning that settlement is about to take place and reminding the other side that it is also necessary to settle the Mount Druitt conveyance. As I say, there is a complete absence of material as to this. 11However, there would have been a default on 22 July were it not for the fact that [NAME]'s solicitor, in his letter of 24 July, clearly recognised that the contract is still on foot and indeed talks about [NAME] settling. The exchange of emails on 6 September shows the situation remained one where there had been no termination of the contract in the deed. I will talk about the contract in the deed, even though there is a possibility the deed was subsumed by the subsequent contract. It probably makes no difference. 12Zvonko never gave [NAME] any notice terminating the contract. The contract, accordingly, is still on foot, and it was able to be settled in accordance with the notice to complete given by [NAME] on 23 September. So the case has to be decided purely on a technical question, as a lot of these cases have to be. And on that technical question [NAME] succeeds. 13There are two suits before me: one by [NAME] seeking specific performance of what I might call the default contract, whereby he can buy the Mount Druitt property if [NAME] does not; and the other by [NAME]. [NAME] is entitled to specific performance, and [NAME] must pay the costs of the suit. I stand the proceedings over to 20 March 2014 for short minutes to be brought into Court.

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