Anastasia Kalathas v 89 Ebley Street Pty Limited

Judgment

1. These proceedings relate to a contract for sale of small commercial premises in a new building in Bondi Junction NSW that was to contain both residential and commercial elements ("the Contract"). The First Defendant, 89 Ebley Street Pty Limited, was the vendor under the Contract ("the Vendor"). Ms Anastasia Kalathas, the Plaintiff and purchaser under the Contract ("the Purchaser"), contends that the Contract is at an end and she seeks return of the $37,500 deposit paid by her to the Second Defendant, DRM Law Pty Ltd ("DRM"). DRM has filed a submitting appearance and takes no part in the proceedings. Mr H El-Hage of Counsel appears for the Purchaser and Ms J Williams of Counsel appears for the Vendor.
2. The undisputed facts are as follows: 1. On 23 November 2017 at 11:45am, Ms Catherine Shad of Shad Partners, the solicitor acting for the Purchaser, wrote to Mr Rod Hawkins of Iris Capital who were the agents for the Vendor and requested (at CB 236) that: "…a car space be marked on the front page for the Retail Lot [Lot 1 89 Ebley Street Pty Limited]." There was a follow up on the same day from Ms Shad, and a reply from Mr Hawkins at 1:54pm (see CB 238): "Yes, a car space is included and this can be marked on the front of the contract." 1. On 24 November 2017 the Purchaser entered into the Contract to purchase "Proposed Lot 1 of proposed retail strata plan which is to be part of land described in Auto consol 150-9735 and folio identifiers 1/826800 and 2/826800" with improvements which included "car space": see CB 54-223. 2. The Contract contained relevantly the following Special Conditions (see CB 75): "1. Definitions In this contract, these terms (in any form), mean: … (h) Completion Date is the later of: (i) Twenty one days after the date the vendor serves notice of Registration of the Strata Plan; and (ii) Twenty one days after the vendor serves a copy of an Occupation Certificate. …. (p) Draft Strata Plan the draft strata plan annexed to this contract. … (w) Minor Strata Variation a Strata Variation where the reduction in amenity to the purchaser as the owner of the Lot would only be minor and, in this regard, each of the following variation shall be deemed to be Minor Strata Variations: (i) Any alteration between the lot number shown in the Draft Strata Plan and that shown in the Strata Plan; and/or (ii) Any alteration of less than five per cent (5%) between the area of the Lot as shown in the Draft Strata Plan; and/or (iii) Any alteration of less than three (3) metres between the position of the Lot as shown in the Draft Strata Plan and that shown in the Strata Plan; and/or (iv) The consolidation of any proposed number of lots as shown in the Draft Strata Plan into a single lot in the Strata Plan; and/ or (v) The subdivision of any proposed lot as shown in the Draft Strata Plan into one or more lots in the Strata Plan; and/or (vi) The inclusion of any part of the Buildings and/or Development shown as a Lot in the Draft Strata Plan as Common Property in the Strata Plan; and/or (vii) The inclusion of any balcony, balconies, terrace and/or terraces which are shown as the Common Property in the Draft Strata Plan as part of a lot or lots in the Strata Plan where it may be reasonably assumed that the balcony, balconies, terrace and/or terraces was or were intended to be used in association with a particular lot or lots. … (ii) Scheduled Strata Registration Date means 29 March 2019. … (ll) Strata Plan a plan registered pursuant to the provisions of the Strata Legislation which divides the Building into lots and which shows the property as separate lot or lots. … (pp) Strata Variation a variation between the Draft Strata Plan and the Strata Plan. … (uu) Sunset Date is 730 days after the Scheduled Strata Registration Date. … 5. Registration of Plans and Documents (a) Completion of this contract is condition on: … (ii) Registration of the Strata Plan; … (c) If the Strata Plan has not been registered by the Sunset Date either party can rescind. … 6. Late Completion (a) For the purpose of clause 15: … (ii) Without affecting any other right, a party who has issued a notice to complete under this contract can, at any time before the expiration of the notice, revoke the notice by serving a notice of revocation. … 13. Changes to the Strata Plan (a) The vendor generally has the right to make Strata Variations and Stratum Variations. (b) Before Registration, the vendor can make changes which the vendor considers necessary or desirable to the Strata Plan including but not limited to: (i) The total number of lots from those shown on the Strata Plan; (ii) The numbering of lots from those shown on the Strata Plan; (iii) The dimensions or areas of lots from those shown on the Strata Plan; (iv) The location of lots from those shown on the Strata Plan; (v) The location of areas of Common Property; and, (vi) The location of easements from those shown on the Strata Plan. … (e) Unless otherwise provided the purchaser cannot make a claim or requisition or rescind or terminate or delay completion in respect of any changes to the Strata Plan or Stratum Plan." 1. The draft strata plan (at CB 128) shows two car spaces on the lower ground floor with a notation "car space (allocation to be advised)". 2. In November 2017 the Purchaser paid $37,500 to DRM as the deposit required by the Contract (modified to 5% by agreement): CB 241. 3. On 24 February 2020 the strata plan for the entire site lodged by the Vendor was registered ("the February Strata Plan"). It did not contain a car space for, or associated with, Lot 3. It did show a car space for Lot 1 (which is now the 500m2 site for a proposed hotel). 4. On 2 April 2020, Mr Dion Manca, the solicitor acting on behalf of the Vendor, sent an email to the Purchaser's solicitor enclosing a Completion Notice. This Notice is at CB 295 and requires completion in accordance with special condition 1(h) of the Contract by 23 April 2020. The email (see CB 294) attached a copy of the February Strata Plan (see CB 297). Mr Manca then emailed the s 47 Land Tax Management Act 1956 (NSW) certificate for the property to Shad Partners on 9 April 2020 at 10:33am. 5. On 9 April 2020 at 10:37am, Ms Rana Arabi of Shad Partners sent an email to Mr Manca noting that the s 47 certificate attached to Mr Manca's email of 9 April 2020 related to Lot 3 whereas the Purchaser was acquiring Lot 1: see CB 256. 6. Mr Manca, in an email of the same day, advised that the lots had been reconfigured and Lot 1 had become Lot 3: see CB 256. 7. On 9 April 2020 at 1:28pm, Ms Arabi wrote to Mr Manca (see CB 345) noting that "special condition 13(b) enables the vendor to make changes to the Strata Plan before registration" and that the Purchaser had not been served with any notice that the proposed Lot 1 would be changed to another lot number. Ms Arabi advised that her client, the Purchaser, requires completion in accordance with the terms of the Contract and asked for Mr Manca to send a PEXA workspace invite and provide Shad Partners with a settlement adjustment statement. 8. On 10 April 2020, Mr Manca wrote to Ms Arabi noting that he was aware that she had declined the PEXA invitation to settle the matter (see CB 360). Mr Manca referred to a discussion which took place on 9 April 2020: "Further to our discussion yesterday, we confirm that your client is of the view that she is acquiring lot 1 in SP100092. As explained, lot 1 is the hotel lot comprising around 500m2 which is being retained by the developer. That your client would even consider that my client would transfer this lot to her is ridiculous." Mr Manca further noted that there is no requirement for the Vendor to notify the Purchaser of changes to numbering or the dimensions unless such changes constituted anything other than Minor Strata Variations (and that any alteration between the lot number shown in the draft strata plan and that shown in the February Strata Plan is a Minor Strata Variation). 1. On 14 April 2020 at 4:11pm, Ms Arabi wrote to Mr Manca confirming the Purchaser was of the view that she was acquiring Lot 1 and that "to state that the numbering of the Lots is inconsequential is incorrect": see CB 363. Ms Arabi further advised that if the Vendor did not complete in accordance with the terms of the Contract and Completion Notice served on 2 April 2020, the Purchaser would terminate the Contract in accordance with cl 8.2 as a result of the Vendor not complying with the Contract and Completion Notice. 2. On the same day at 4:18pm, Ms Arabi wrote to Mr Manca advising that the Purchaser will need to re-apply for finance for Lot 3 because "the bank was currently working off Lot 1", and that the Purchaser had given instructions that she was willing to complete the Contract on the following conditions (at CB 401): "1. The parties enter into a deed of variation varying the Contract by varying Lot 1 to Lot 3; and 2. The date for completion shall be extended by 6 months to allow [the Purchaser] to re-stamp the contract and deed of variation, and arrange/ finalise her finance." 1. On 17 April 2020 the Purchaser lodged a Caveat over 1/SP100092: see CB 314. 2. On 20 April 2020 at 2.51pm, Ms Arabi wrote to Mr Manca advising that (at CB 367): "The purchaser is willing able and ready to complete this contract in accordance with the Completion Notice issued on 2 April 2020." 1. On 20 April 2020 at 3:16pm, Mr Manca wrote to Ms Arabi (at CB 371) advising that the PEXA invitation sent to the Purchaser had been declined by Shad Partners. 2. On 22 April 2020 at 1:03pm, Ms Arabi wrote to Mr Manca asking for the Vendor to extend the completion date by six months to allow the Purchaser sufficient time to re-apply for finance for Lot 3 (see CB 376). Ms Arabi advised that the Purchaser is a make-up artist who owns and runs her own business and due to COVID-19 and the government mandatory shutdown of make-up and beauty salons she "does not have any income" and "as a result, our client cannot complete tomorrow on Lot 3." The email asserted, however, that the Purchaser could complete on Lot 1 as her finance was applied for upon acquiring Lot 1 in the strata plan, and the Contract was assessed on Lot 1. 3. On 23 April 2020 at 3:08pm, Mr Manca emailed to Ms Shad and Ms Arabi the settlement figures, insurance invoice and the clear land tax certificate for settlement that day: see CB 381. 4. On the evening of 22 or 23 April 2020 the Purchaser's husband drew to the Purchaser's attention the fact that the February Strata Plan did not provide for a car space for Lot 3: see T25.31. The Purchaser did not speak to Shad Partners about this issue until a few days later on 24 April 2020: see T25.24-32, the Affidavit of Ms Kalathas at CB 50, the Affidavit of her husband, Elias McGrath, at CB 229 and see also (23) below. 5. Ms Arabi emailed Mr Manca on 24 April 2020 at 8:27am asking him to respond to her email of 22 April 2020 seeking an extension: see CB 394. At 8:29am the same day, Mr Manca advised that the Vendor's position had not changed and that the Purchaser was required to complete on 23 April 2020 and that an extension was not agreed to: see CB 399. 6. On 24 April 2020 at 2:21pm Ms Arabi emailed Mr Manca advising that the Purchaser "still wishes to proceed with the property purchase" but was unable to do so due to fact that Lot 1 had become Lot 3 with no notice having been given to the Purchaser of the change. Ms Arabi advised that "the bank will not consider any reassessment of her loan application for the time being" as she does not have any income as a result of the COVID-19 shutdowns (see CB 405). 7. On 24 April 2020 at 5:30pm Mr Manca on behalf of the Vendor sent to the Purchaser a Notice to Complete which required the Purchaser complete the Contract by 5:00pm on 8 May 2020 (see CB 309). 8. On or around 24 April 2020 (there is some uncertainty as to the precise time and date) the Purchaser and her husband contacted Shad Partners in connection with their discovery (on the evening of 22 or 23 April 2020, see (19) above) that the February Strata Plan did not include a car space for Lot 3. 9. On 28 April 2020 at 2:26pm, a letter was sent from Shad Partners to Mr Manca (CB 264) noting that the February Strata Plan neglects to provide a car space (for Lot 3) as required by the Contract and as such there is a discrepancy between the subject matter of the Contract and what was available to be conveyed in satisfaction of the Vendor's obligations under the Contract. The letter also refers to failure to answer requisitions on title, although nothing appears to turn on that allegation in this case. The Purchaser sought to rescind the Contract in accordance with the principles of Flight v Booth (1834) 1 Bing (NC) 370; (1834) 131 ER 1160. The Purchaser, in the alternative, sought to rely on the Notice to Complete as a repudiation of the Contract. 10. On 29 April 2020 Mr Manca wrote to Shad Partners asking for the Purchaser to remove the caveat over 1/SP100092 as the Purchaser has no interest in Lot 1 (which is the hotel lot of approximately 500m2) and because the Contract "prohibits [the Purchaser] from lodging a caveat over such title": see CB 316. On 1 May 2020 at 9:43am, Shad Partners replied asking for a copy of the DRM ledger but by the close of business Shad Partners had lodged a withdrawal of caveat: see Exhibit 1 and Exhibit B. 11. On 7 May 2020 Mr Manca emailed Shad Partners denying that the Purchaser was entitled to terminate the Contract (as she had purported to do), and advising that the Vendor "is in a position to deliver a car space" and "remedy any error…if [the Purchaser] confirms that she will complete the contract within a reasonable time": CB 320. 12. On 7 May 2020 the Purchaser commenced proceedings in this Court against the Vendor and DRM. 13. On 8 May 2020 the Vendor issued a Revocation of Notice to Complete to revoke the Notice to Complete dated 24 April 2020: see CB 267. 14. On 20 May 2020 the Purchaser issued an open offer to the Vendor (see CB 269), the terms of which were that the parties agree the Contract has been validly rescinded by the Purchaser, the deposit is to be accounted to the Purchaser, there be no order as to costs, and the proceedings be otherwise dismissed. The offer was open until 5:00pm on 11 June 2020 and was expressed to be a Calderbank offer. 15. Between May and July 2020 the Vendor set about endeavouring to have lodged and approved a new strata plan. That new strata plan ("the July Strata Plan") was approved on 31 July 2020. To achieve that registration the Vendor had to obtain a certificate from a surveyor and an accredited certifier (see CB 326) and agreement of the Vendor's financier (see T30). 16. On 6 July 2020 the Purchaser made another open offer (see CB 271), the terms of which were that the parties agree the Contract has been validly rescinded by the Purchaser, the deposit is to be accounted to the Purchaser, the Vendor pay the Purchaser's costs on the ordinary basis (as agreed or assessed) up until the date the offer is accepted, and the proceedings be otherwise dismissed. The offer was open until 5:00pm on 27 July 2020 and it was also expressed to be a Calderbank offer. 17. On 31 July 2020 the Vendor obtained registration of the July Strata Plan (SP101875). That plan shows what was Lot 3 on the February Strata Plan as being included in what is now Lot 5, and shows Lot 5 as including a car space. 18. On 3 August 2020 Mr Manca emailed Shad Partners advising that the July Strata Plan had been registered and that the July Strata Plan shows the commercial Lot 5 which comprises of 50m2 of retail space and a car park space: see CB 332 to 333. The Vendor, in this email, gave formal notice pursuant to Special Condition 1(h) of the Contract of registration of the July Strata Plan and advised settlement was to take place on or before 24 August 2020.