Crown Developments Australia Pty Ltd v Ginger Development Enterprises Pty Ltd

1 By proceedings commenced on 11 December 2002 the Plaintiff seeks an order for specific performance of a contract for the sale of land in Crown Street, Surry Hills, dated 15 February 2002 between the Plaintiff as purchaser and the Defendant as vendor. In addition, the Plaintiff seeks damages or equitable compensation in respect of the Defendant's failure to complete the contract. 2 By its Amended Defence, the Defendant alleges that the contract was validly rescinded by it by a Notice of Termination dated 27 November 2002. Alternatively, it says that if the contract has not been rescinded the Plaintiff is guilty of laches whereby specific performance ought to be refused. By its Cross Claim, the Defendant alleges that, as the contract has been validly rescinded, the Plaintiff is not entitled to maintain the caveat lodged against the title to the subject land and seeks an order for the removal of the caveat. Further, the Defendant alleges that the Plaintiff breached the contract in failing to complete on 26 April 2002, whereby the Defendant has suffered loss. Additionally, it claims interest under a clause of the contract.

3 The Defendant originally intended to develop the subject land itself. It caused an architect to prepare plans for the development. The architect was a company, ACE Project Group Pty Ltd ("ACE"), the principal of which is Ms Shan Ruan. Development Approval was obtained for the proposed development but the Defendant and ACE became involved in a dispute over fees said to be due to ACE by the Defendant. 4 On 2 August 2001, ACE lodged a caveat against the title to the subject land. The nature of the estate or interest in the land claimed was described thus: "[The Defendant] owes money to [ACE] pursuant to an writen agreement." (sic) 5 The Defendant's solicitors applied to the Registrar General for a lapsing notice under s.74J(1) Real Property Act 1900 (NSW) ("RPA"). A lapsing notice was duly served on ACE, no action was taken by it to extend the caveat or otherwise to support its alleged interest in the land, and on 31 October 2001 the caveat lapsed pursuant to s.74J(2) RPA. 6 On 9 October 2001, Ms Ruan herself lodged a caveat against the subject land. The estate or interest claimed in the contract was described thus: "[The Defendant] owes money to Shan Ruan pursuant to an writen agreement. 49% share in profits to be derived from development of the land." (sic) 7 The Defendant's solicitors applied to the Registrar General for a lapsing notice, the notice was served, no action was taken by Ms Ruan, and on 5 December 2001 the caveat lapsed pursuant to s.74J(2) RPA. 8 Contracts for sale of the subject land were exchanged between the Plaintiff and the Defendant on 15 February 2002. No further caveats had been lodged against the land by ACE or Ms Ruan since 5 December 2001. No other caveats against the title were in effect as at the time of exchange.

9 The completion date is defined on the front page of the contract as the seventieth day after the contract date. The parties agree that this is 26 April 2002. 10 Special Condition 30 is of critical importance. It is in the following terms: " COMPLETION

(a) Completion of this Agreement shall take place on whichever shall be the later of:

(ii) the date being fourteen (14) days from the date on which FIRB Approval shall have been obtained pursuant to special condition 32;

(iii) the day that is the 42nd day after the date of this Contract;

(iv) the day that is the 21st day after the vendor has informed the purchaser in writing that the caveats are ready to be discharged or the caveator(s) is/are willing to withdraw the caveats in due course.

(b) In the event that FIRB Approval has not been obtained pursuant to Special Condition 23 within 2 (two) months from the date of this Agreement then the Vendor may rescind this Agreement by not less than fourteen (14) days notice in writing served on the Purchaser whereupon the provisions of clause 19 herein shall apply.

(c) In the event that the caveats are not discharged one hundred and eighty (180) days after the completion date is due, either the vendor or the purchaser is entitle (sic) to rescind the Contract by providing not less than fourteen (14) days notice in writing to the other party whereupon the provisions of clause 19 herein shall apply." 11 Special Condition 31.1 provides: " Issue of Notice

(a) If completion does not occur on or before 3pm on the completion date as a result of the breach of or default by a party, then the other party may:

(i) at any time serve a notice requiring completing of this contract on a specified date (being not less than 14 days (Notice Period) after the date of service of that notice; and

(ii) make time of the essence for compliance with that notice.

(b) The parties agree that the Notice Period is sufficient.

(c) Notice could be served by way of facsimile to the legal representatives of both sides." 12 Special Condition 55 appears in the contract but it was deleted prior to exchange. Nevertheless, its terms aid in the construction of Special Condition 30. Special Condition 55 was in the following terms: " Notice of caveat The purchaser acknowledges that there are caveats in the property of this Contract as disclosed by the vendor. The purchaser shall not make any claim, objection or requisition or rescind in respect of the caveats." 13 Clause 15 of the printed terms in the contract provides: " Completion date The parties must complete by the completion date and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so."

14 On 22 April 2002, the Defendant's solicitors wrote to the Plaintiff's solicitors noting that settlement was due on 26 April and requesting details of settlement. On 26 April the Defendant's solicitors wrote to the Plaintiff's solicitors noting that the Defendant was ready to settle. Settlement did not, however, occur on 26 April. 15 On 29 April the Defendant's solicitors served on the Plaintiff's solicitors a Notice to Complete requiring completion on 16 May 2002. There is no dispute that this Notice to Complete was validly given. However, on the same day ACE lodged a caveat against the subject land. The nature of the estate or interest claimed was described thus: "Cestui que trust as to a one-half share in profits to be derived from development of the land. 2. One-half share in profits to be derived from development of the land pursuant to an writen joint venture agreement." (sic) 16 On 8 May the Plaintiff's solicitors submitted settlement figures and sought an extension of time under the Notice to Complete in order to effect settlement on 23 May 2002. On 10 May 2002 the Defendant's solicitors advised that the Defendant extended time for completion as requested. 17 On 13 May the Defendant's solicitors wrote to the Plaintiff's solicitors advising that ACE had lodged a caveat and stating: "… we have already proceeded to lapsing of caveat. We expect that the lapse of caveat and serving the notice of lapse of caveat can be completed by 7th June, 2002. We'll keep you inform (sic) as soon as the caveat lapsed and advise you of the settlement date." 18 On 16 May the Defendant's solicitors served a lapsing notice on ACE in respect of the caveat which it had lodged on 29 April. 19 On 24 May the Plaintiff's solicitors responded to the Defendant's solicitors' letter of 13 May, requesting advice as to when the caveat had been "withdrawn". 20 On 5 June Ms Ruan lodged a caveat against the land. The nature of the interest or estate claimed was described in exactly the same terms as were contained in the caveat lodged by ACE on 29 April. 21 On 7 June the Plaintiff's solicitors wrote to the Defendant's solicitors advising that the Plaintiff's mortgagee would require five working days' notice of settlement. 22 On 13 June the caveat lodged by ACE on 29 April lapsed, but the caveat lodged by Ms Ruan on 5 June was still current. On 11 July the Defendant's solicitors served a lapsing notice in respect of the caveat lodged by Ms Ruan. 23 On 2 August ACE lodged another caveat against the subject land. The nature of the estate or interest claimed was described in exactly the same terms as contained in the caveat which it had lodged on 29 April, save that the words "joint venture" were omitted before the word "agreement" . 24 On 6 August the Defendant's solicitors wrote to the Plaintiff's solicitors as follows: "Please also note that the vendor expected to have Caveat cleared by 8th August and will be ready to settle on Monday 12th August 2002. Please send us your settlement statement and we suggest to have settlement on 12th August 2002 at 12:00 noon at our office W. Chan & Co, Level 3, 750 George Street, Sydney 2000." 25 On 9 August the caveat which had been lodged by Ms Ruan on 5 June lapsed but the caveat lodged by ACE on 2 August was still current. On the same day, the Defendant's solicitors wrote again to the Plaintiff's solicitors as follows: "The vendor has just noted that a caveat has been lodged. We'll let you know when the Title is free of caveat." 26 On 15 August the Defendant's served a lapsing notice in respect of the caveat which had been lodged by ACE on 2 August. In response, on 5 September Ms Ruan lodged another caveat against the land. The nature of the estate or interest claimed was described in exactly the same terms as contained in the caveat lodged by ACE on 2 August. 27 On 13 September the caveat lodged by ACE on 2 August lapsed, but the caveat lodged by Ms Ruan on 5 September was still current. 28 On 24 September the Plaintiff's solicitors wrote to the Defendant's solicitors in the following terms: "We refer to our numerous telephone calls and letters in an endeavour to settle this matter. You have not indicated that you are in a position to complete.

We therefore have instructions that unless we hear from you within the next seven days with a firm appointment for settlement, and your confirmation that the Caveat will be withdrawn we have instructions to serve you with a Notice to Complete.

We are further instructed that if your client does not comply with the Notice, we are instructed to commence proceedings for specific performance of the Contract together with damages and costs." 29 On the same day, 24 September, the Defendant's solicitors served a lapsing notice in respect of the caveat lodged by Ms Ruan on 5 September. 30 On 30 September the Defendant's solicitors wrote to the Plaintiff's solicitors in the following terms: "We refer to your fax dated 24th September 2002 and please note that have proceed to lapse of caveat. The Caveat is expected to be lapsed by 23rd October 2002. Settlement is assumed to be ready by the week of 28th October 2002 and we'll provide you with prior notice accordingly." 31 On 16 October, the Defendant's solicitors wrote to the Registrar General in the following terms: "We refer the following caveats that had been lodged by Shan Ruan and ACE Project Group Pty Ltd respectively in 2001 and 2002 and noted that these caveats had been lodged by the caveators with the same or similar interest claimed and only with variations in wordings: … (the letter then set out particulars of the three caveats lodged by Ms Ruan on 9 October 2001, 5 June and 5 September 2002, and the three caveats lodged by ACE on 2 August 2001, 29 April and 2 August 2002) .

We have lodged lapsing of caveat to each of the above caveats and they lapsed according to the expiration date after Notice served and no response from the caveator. However, the caveators keep lodging similar caveats right after each of these caveats lapsed. The unreasonable behaviour of the caveators had seriously affected the registered proprietor.

We understand that caveat no. 8929326 lodged by Shan Ruan is expected to lapse again around 22nd October 2002 on the expiration date (Application of Lapsing Caveat - Application No 8957593). We would like to draw your attention to this matter and you should refuse, in case similar caveat lodge again by Shan Ruan or ACE Project Group Pty Ltd, any unreasonable similar caveat lodged again.

We are instructed to complain that similar caveats are allowed to be lodged more than once. We request you to review the situation immediately pursuant to section 74 of Real Property Act 1900 and to remove these caveats from the property." 32 On 23 October 2002, the period of 180 days from the date of completion specified in the contract expired. The parties are in agreement that whatever rights were exercisable by the parties under Special Condition 30(c), if any, were exercisable on 23 October 2002. On that day, two things happened: the caveat lodged by Ms Ruan on 5 September lapsed and ACE sought to lodge a further caveat against the subject land. The caveat form described the nature of the estate or interest claimed by ACE in exactly the same terms as contained in the caveat which ACE had lodged on 2 August and which had lapsed on 13 September. 33 A senior officer of Land & Property Information NSW ("LPI") (formerly the Land Titles Office), Mr J. Fitzgerald, has given evidence as to the practice in LPI as to registration of caveats. From such evidence, and from documents subpoenaed from LPI, it appears that what happened when ACE, or its representative, attended LPI on 23 October to file the caveat was that the document was accepted over the counter and then sent to an examiner, who observed that the caveat claimed the same interest as had been claimed in a previous caveat lodged by ACE. The document was given a bar code and a number, 9062650, and sent to the legal section for further processing. At some stage, probably very soon afterwards, it was stamped "Unregistered". 34 On the following day, 24 October, LPI sent a letter to ACE in the following terms: " Re: Caveat 9062650 by ACE Project Management Pty Ltd

I note the above Caveat in respect of the same estate or interest in the land contained in Register folios A/342277 and B/342277 as that described in Caveat 8542951 in respect of which lapsing action has been taken. Consequently, pursuant to section 74O of the Real Property Act 1900, the above caveat is of no force or effect.

I hereby give you notice that pursuant to section 74O of the Real Property Act 1900 I intend to remove caveat from Register Folios A/342277 and B/342277 on the expiration of 21 days from the date of this Notice unless within that time you furnish -

(i) an Order of the Supreme Court authorising the recording of the Caveat; or

(ii) the written consent of the registered proprietor to the recording of the Caveat.

(iii) cogent reasons to my satisfaction as to why Section 74O Real Property Act should not apply hereto within fourteen (14) days. If my officers do not find the reasons provided to be satisfactory a further period to approach the Supreme Court will be granted.

Should you have any inquiries please contact Anthony Booth, Legal Officer on telephone 9228 6726. 35 On the same day, 24 October, the Defendant's solicitors wrote to the Plaintiff's solicitors as follows: "We refer to the subject matter and enclose Title Search for your reference. Please send us settlement statement and book for settlement as soon as possible." 36 The enclosed searches showed under a heading "Notations": "Unregistered dealings: x 9062650" . Both the Plaintiff's solicitors and the Defendant's solicitors understood that the prefix "x" indicated a caveat and that the notation showed that a caveat had been lodged but not registered. 37 Ms A. Lee was the law clerk having the day-to-day conduct of the matter in the office of the Defendant's solicitors. She said that she drafted the letter of 24 October to the Plaintiff and sent it after having been authorised to do so by Mr Chan, the principal of the firm. She said that shortly before she sent the letter she had spoken to someone at LPI and had been told that the caveat lodged by ACE on 23 October would not be registered. 38 On 6 November the Plaintiff's solicitors served a Notice to Complete requiring completion of the contract on or before 29 November. 39 By letter dated 26 November the Registrar General advised the Defendant's solicitors that the caveat form sought to be lodged by ACE on 23 October had been rejected. The letter continued: "However, in the meantime the same caveator has lodged a new caveat numbered 9151281 which appears to be claiming the same interest as the previous caveat.

We can if you wish serve another notice under Section 74O, however we cannot prevent further caveats being lodged. If you wish to prevent this caveator lodging further caveats you will need to take Supreme Court Proceedings for an injunction against the caveator. The Registrar General will need to be made a party to the action and we will consent to such orders being made.

Please advise what action you intend to take." 40 The "new caveat numbered 9151281" cannot now be found. However, I infer that the nature of the interest in the subject land claimed therein by ACE was described in the same terms as in the "previous caveat", i.e. the document numbered 9062650, which had been rejected. 41 On the following day, 27 November, the Defendant's solicitors wrote to the Plaintiff's solicitors in the following terms: "1. We enclose a copy of a letter that we have received from the Registrar General dated 26th November 2002.

2. The Registrar General has been asked to serve Notice on the lodging party under s74O.

3. Nevertheless, the 180 day period, for which Special Condition 30(c), of the subject contract, provides has now expired and our client is entitled to rescind the contract.

4. Pursuant to that Special Condition and on behalf of the Vendor we now provide you, as solicitors for the Purchasers, 14 days' Notice of rescission.

5. At the expiration of that period the contract will stand rescinded by the Vendor for the purposes of Special Condition 30(c) and Clause 19 of the Contract will apply. Pursuant to Clause 19.2.1 the Deposit will be refunded." 42 On 28 November, according to an internal record of LPI, Ms Ruan attended the LPI and uplifted the caveat form lodged on behalf of ACE on or about 26 November, stating that she did not wish it to be registered. On 29 November, the time limited for settlement in the Plaintiff's Notice to Complete delivered on 6 November expired, but the Defendant failed to complete. 43 On 6 December the Defendant's solicitors were informed by the LPI that the caveat lodged by ACE had been uplifted. On 11 December the Plaintiff commenced these proceedings. Construction of Special Condition 30

44 There is no dispute between the parties as to the construction of Special Condition 30 in so far as it refers to the completion date. The parties agree that paragraph (a)(ii), (iii) and (iv) and (b) have no application in the circumstances of the case. By paragraph (a)(i) completion was required to take place on 26 April 2002. However, on 29 April the caveat lodged by ACE prevented completion and a succession of caveats lodged by ACE and Ms Ruan thereafter produced the result that time began to run for the purposes of Special Condition 30(c) from 26 April, expiring on 23 October. The parties agree that 23 October is, therefore, the "completion date" for the purposes of Special Condition 30(c). 45 The first question is: what is meant by "the caveats" in Special Condition 30(c)? It is a clear enough inference from the terms of deleted Special Condition 55 that when the contract was first drafted there were caveats on the title, namely those lodged by ACE and Ms Ruan on 2 August and 9 October 2001. Those caveats had lapsed by the time that the contract was exchanged on 15 February 2002 and no other caveats had been lodged, probably producing the deletion of Special Condition 55. Special Condition 30, however, was not deleted so that it must have been intended to refer to caveats not yet lodged. The words "the caveats" must therefore mean "any caveats". 46 As at 23 October there was no caveat actually registered against the title to the subject land. The caveat which had been lodged by Ms Ruan on 5 September lapsed on 23 October. Mr McKenzie, who appears for the Defendant, did not seek to argue that that caveat was still effective for the purposes of Special Condition 30(c). The caveat which was filed by ACE on 23 October was not, of course, registered because the LPI had observed that the nature of the interest in the land claimed therein was the same as that which had been claimed in the caveat lodged by ACE on 2 August which had lapsed on 13 September. The caveat filed by ACE on 23 October was, therefore, of no effect by virtue of s.74O RPA. 47 Section 74O, in so far as is relevant, provides: "(1) This section applies if a caveat lodged under a provision of this Part in respect of any particular estate or interest in land or any particular right arising out of a restrictive covenant:

(a) subsequently lapses, or …

(2) A further caveat to which this section refers has no effect unless:

(a) the Supreme Court has made an order giving leave for the lodgment of the further caveat and the order or an office copy of the order accompanies the further caveat when it is lodged with the Registrar-General, or

(b) the further caveat is endorsed with the consent of the primary applicant or possessory applicant for, or the registered proprietor of, the estate or interest affected by the further caveat." 48 In the present case, neither of the conditions precedent to validity specified in s.74O(2) had been fulfilled in respect of the caveat which ACE sought to lodge on 23 October. Even though the document was accepted over the counter at the LPI, noted by an examiner and forwarded to the Legal Department for assessment as a matter of routine office procedure, the document was, in law, a nullity. The mere fact that a reference number was given to the document and that that reference number appeared under the heading "Notations. Unregistered dealings" on a search of the title could not give the document any legal efficacy contrary to the clear terms of s.74O(2) 49 Mr McKenzie has not sought to argue that the document filed in the LPI by ACE on 23 October was effective in law despite s.74O(2). Rather, he submits that the word "caveats" in Special Condition 30(c) is not limited to caveats effective in law but extends also to anything purporting to be a caveat which would have the effect of preventing registration on 23 October of a transfer pursuant to the contract, or preventing completion of the contract on that day as a matter of commercial reality. Mr McKenzie submits that the contract should be construed as a commercial agreement because the parties to it were commercial parties and that, accordingly, regard must be had to the commercial result of the document which ACE filed on 23 October. 50 Mr McKenzie relies upon the evidence of the LPI officer, Mr Fitzgerald, which was to the effect that even though it was quite clear from the face of the caveat lodged by ACE on 23 October that the interest claimed was the same as had been claimed in the lapsed caveat which had been lodged by ACE on 2 August so that the 23 October caveat was of no effect under s.74O(2), office procedure required that the caveat form be sent to the Legal Department, and the Legal Department would send a standard form letter to the caveator giving the caveator fourteen days to show cause why the caveat should not be treated as a nullity. Mr McKenzie says that the LPI's procedure, in reality, produced the result that a transfer from the Defendant to the Plaintiff lodged on 23 October would not have been registered on that day. 51 Further, Mr McKenzie says, a purchaser in the position of the Plaintiff, dependent on finance to complete the purchase, could not complete the contract on 23 October because a search of the title on that day revealed the "unregistered caveat" and no financier/mortgagee would have settled in those circumstances. 52 I am unable to accept Mr McKenzie's submission as to the construction of "caveats" in Special Condition 30(c). The word "caveat" is a term of art with a well understood meaning, whether used in a contract for sale of land or in any other commercial agreement. Section 74F RPA prescribes the circumstances in which a caveat may be lodged, what the caveat form must contain and what the Registrar General must do when a caveat is lodged. Section 74H RPA prescribes the effect of a caveat while it is in force. In my opinion, when Special Condition 30(c) uses the word "caveat" it uses that word in its commonly understood meaning as a document filed in accordance with s.74F and having the effect provided in s.74H. 53 If the parties to the subject contract had intended to provide an "escape route" under Special Condition 30(c) if anything at all could have prevented immediate registration of the transfer on 23 October or could have inhibited completion on that day, it would have been easy enough to make that intention expressly clear. I am unable to read "caveat" in Special Condition 30(c) as having any wider meaning than its ordinarily understood meaning. 54 The fact that a transfer presented for registration on 23 October might, and I emphasise might, not have been registered until the LPI's office procedures had been complied with is, in my view, of no consequence. A transfer lodged for registration on 23 October would have been entitled in law to registration on that day because the document filed by ACE, being a nullity under s.74O(2) could not legally have been an impediment to its registration. I do not think that Special Condition 30(c) is concerned with the mechanics and office procedures of registration within the LPI, nor is it concerned with the consequences on arrangements for settlement of a notation on a search which reveals what is an "unregistered dealing". The Special Condition is concerned with legal impediments to completion of the contract and legal impediments to the registration of the transfer on 23 October. 55 In my view, the meaning of Special Condition 30(c) is that if there has been any caveat lodged against the title to the subject land after exchange of contracts which is effective under s.74H RPA and which has not been removed, either by lapsing, withdrawal or order of the Court, by 23 October then either party is entitled to give notice of rescission. Caveats effective in this sense had been lodged after exchange of contracts but, by 23 October, all had lapsed and no effective caveat remained against the title on that day. It follows, in my opinion, that the Defendant was not entitled to give a notice of rescission under Special Condition 30(c) on 24 October. 56 Mr McKenzie submits that Special Condition 30(c), on its proper construction, gives a right of rescission if a caveat is lodged after 23 October but before completion; he relies on the form of caveat filed by ACE on or about 26 November but uplifted on 27 November without it having been registered. I cannot see how the filing of this caveat assists the Defendant. First, it was not a "caveat" within the meaning of that word in Special Condition 30(c): it was a nullity by virtue of s.74O(2) RPA. Second, it had not been filed as at 23 October, which is the date upon which a state of affairs giving rise to a right of rescission must exist.

57 As an alternative argument, the Plaintiff submits that the Defendant was not entitled to give a notice of rescission under Special Condition 30(c) on 27 November because it was then in breach of its contractual duty to do all things necessary to ensure that the Plaintiff received the benefit of the contract: Butts v O'Dwyer (1952) 87 CLR 267, at 283; Plumor Pty Ltd v Handley (1996) 41 NSWLR 30, at 34E. Mr Whittle SC, who appears with Mr O'Loughlin for the Plaintiff, says that in accordance with that duty the Defendant was obliged to remove all caveats, good and bad, effective and ineffective, prior to the date for settlement and that, conformably with that obligation, the Defendant should have obtained an injunction restraining ACE and Ms Ruan from persistently and vexatiously lodging further caveats. Mr Whittle says that it is well established that an injunction may be granted to restrain the threatened lodgement of an unsustainable caveat where compensation under s.74P RPA would be an inadequate remedy: see e.g. Stocks & Holdings (Imperial Arcade) Ltd v Fink (1965) 82 WN (Pt 1) (NSW) 386, at 397-398. 58 Mr Whittle submits that it should have been obvious to the Defendant by 29 April 2002 that ACE would continue to lodge vexatious caveats because the caveat lodged by it on that day claimed essentially the same interest in the subject land as had been claimed in its caveat lodged on 2 August 2001. Similarly, he says that it should have been obvious that Ms Ruan would continue to lodge vexatious caveats when, on 5 June 2002, she lodged a caveat which claimed essentially the same interest in the subject land as had been claimed in her caveat lodged on 9 October 2001. Certainly a pattern of lodging vexatious caveats should have emerged by 2 August 2002 when ACE lodged its third caveat, or by 5 September when Ms Ruan lodged her third caveat. 59 The Plaintiff's argument based upon an implied term requires consideration only if I am wrong in my view that "caveats" where used in Special Condition 30(c) means "effective caveats". In my opinion, if "caveats" has the meaning for which Mr McKenzie contends, then Mr Whittle is correct in his submission, for the following reasons. 60 Mr McKenzie says that the duty to give the benefit of a contract upon which the Plaintiff relies is not implied by law in the present contract because it is a commercial contract which makes express provision for what is to happen if a state of affairs exists after 180 days from the specified completion date. However, whether that state of affairs exists is, in the particular circumstances of this case and as between the parties to this contract, entirely a matter within the control of the Defendant. I accept that by 5 September at the latest the Defendant should have realised that ACE and Ms Ruan were engaging in a deliberate stratagem of lodging caveats in the same terms and letting them lapse, with the object of impeding the Defendant's ability to deal freely with the subject land. If Mr McKenzie's construction of Special Condition 30(c) is correct, the ability of ACE and Ms Ruan to continue indefinitely to file caveats ineffective under s.74O RPA was nevertheless an obvious threat to the enforceability of the contract by the Plaintiff when the period specified in Special Condition 30(c) expired. The Defendant was in full possession of these facts but not the Plaintiff. From 5 September 2002 onwards the Defendant could have sought an injunction restraining ACE and Ms Ruan from continuing to file caveats claiming the same interest in the subject land. It is difficult to see how such an application could have failed if the consequence of refusing the injunction was shown to be that the contract was liable to rescission under Special Condition 30(c). The Defendant, however, made no application but, on 27 November, rescinded the contract in reliance on a state of affairs which, as between the parties to the contract, it alone could have prevented from arising. 61 In these circumstances, I am satisfied that, if the Defendant's construction of Special Condition 30(c) is correct, nevertheless the Defendant committed a breach of its duty, implied by law, to prevent the circumstance entitling rescission from arising. The consequence is that the Defendant was not entitled to rely upon that circumstance in exercising its rights under Special Condition 30(c): see Plumor Pty Ltd v Handley (supra) at 34E and the cases there cited.

62 Finally, Mr Whittle submits that if, contrary to all of his other submissions, a right of rescission under Special Condition 30(c) did arise on 23 October, then the Defendant, with knowledge of all relevant facts, irrevocably elected to affirm the contract by its solicitors' letter dated 24 October to the Plaintiff's solicitors. 63 In my view, this submission is undoubtedly correct in so far as it relates to the caveat which had been filed by ACE on 23 October, and Mr McKenzie did not really have an answer to it. The Defendant's solicitors knew exactly the state of the title of the subject land on 24 October because they forwarded to the Plaintiff's solicitors the relevant title searches which showed the "unregistered caveat" filed on 23 October. Yet their letter unequivocally called for completion of the contract rather than electing for an exercise of the right to rescind afforded by Special Condition 30(c). 64 Mr Whittle submits that the Defendant's solicitors' letter of 24 October amounted also to an election in respect of any further caveats which might be filed in the future by ACE or Ms Ruan claiming the same interest in the land. Because of this election as to such future caveats, he says, the Defendant was not entitled to rely upon the caveat filed by ACE on or about 26 November in giving its rescission notice on 27 November. 65 I am unable to accept this submission. When the Defendant was informed of the lodgement of the new caveat on or about 26 November a fresh event had occurred, with possibly fresh consequences for the Defendant which the Defendant was entitled to consider afresh if that new event gave rise to a right of rescission. I cannot read what was said in the Defendant's solicitors' letter of 24 October as necessarily implying that the Defendant elected to affirm the contract whatever happened in the future which might give it a right of rescission under Special Condition 30(c). This conclusion does not, however, avail the Defendant unless I am wrong in my view as to the meaning of "caveats" in Special Condition 30(c), in my view that circumstances entitling rescission had to exist as at 23 October, and in my view that at all times from 5 September 2002 onwards the Defendant was in breach of the implied term relied upon by Mr Whittle.

66 It remains to consider the Defendant's defence to the claim for specific performance founded on laches. Mr McKenzie says that the Plaintiff was in default of its obligation to complete the contract on 26 April; if it had been in a position to complete on that day, completion would have occurred because there was no caveat then affecting the title. Accordingly, says Mr McKenzie, the Plaintiff has in a real sense brought about the delays and difficulties which have occurred as a result of caveats being lodged by ACE and Ms Ruan from 29 April onwards. 67 I am unable to accept this submission. It is clear that the Plaintiff was willing to complete the purchase as at 26 April, although it was not then able to complete because its finances were not in place. A Notice to Complete was served by the Defendant on 29 April but completion could not have taken place on that day because ACE had lodged a caveat. Thereafter, the correspondence between the parties' solicitors clearly proceeded on the basis that it was the responsibility of the Defendant to remove the caveats and that the Defendant's solicitors would notify the Plaintiff's solicitors when the caveats had been removed and settlement could be arranged. 68 By 24 September it was the Plaintiff, not the Defendant, which was becoming impatient with the delay, as evidenced by the letter of complaint written by the Plaintiff's solicitors to the Defendant's solicitors on that day. 69 In my opinion, the evidence clearly shows that it was difficulty on the Defendant's side of the transaction which caused the lengthy delay in settlement from 29 April onwards. The delay on the part of the Plaintiff in failing to settle between 26 and 29 April is not, in my opinion, sufficient to afford a defence of laches.

70 The Plaintiff has for some time had arrangements in place to finance its purchase of the subject land. Those arrangements are still current and the Defendant did not otherwise seriously challenge the readiness, willingness and ability of the Plaintiff to complete. The Defendant's defence of laches having failed, the Plaintiff is entitled to an order for specific performance.

71 The Plaintiff claims damages for the Defendant's breach of contract in failing to complete in accordance with the Plaintiff's Notice to Complete served on 6 November and expiring on 29 November 2002. The damages are said to be in the nature of costs and expenses "thrown away" by reason of the Defendant's failure to complete by 29 November. 72 There was no cross examination on the Plaintiff's evidence as to the damages which it claimed. Nevertheless, I am not entirely satisfied that all of the Plaintiff's claimed loss of $23,260 is referable to the Defendant's delay in completion since 29 November. Certainly, any fees paid to the Plaintiff's financier in respect of renewal of credit facilities after 29 November and any other expenses paid in connection with such renewal would be included under this head of damage. However, it is not apparent to me on the evidence so far why, for example, quantity surveyor's fees paid much earlier than November 2002 would be thrown away because settlement of the contract did not proceed on 29 November 2002. 73 I am satisfied that the Plaintiff has suffered substantial loss by reason of the Defendant's breach in failing to complete the contract by 29 November. If the parties themselves are unable to agree upon the quantification of that loss, I will refer the matter to the Master for enquiry.

74 Special Condition 33.1 of the contract provides: " Payment of interest

If completion does not occur on or before the completion date, the Purchaser shall pay to the Vendor, in cash on completion, interest calculated:

(b) on the balance of the purchase price payable under this contract,

in respect of the period (Interest Period) commencing on the day following the completion date and ending on completion." 75 Special Condition 33.3 of the contract provides: " Delay by Vendor Sub-clause 1 does not apply in respect of any part of the Interest Period during which completion has been delayed due to the fault of the Vendor." 76 By its Cross Claim, the Defendant claims interest under these provisions from 26 April 2002 onwards. The Plaintiff says that since 29 April until the present time completion has been delayed due to the fault of the Defendant, within the meaning and operation of Special Condition 33.3. 77 In my opinion, the Plaintiff's submission is correct. As I have noted above, the correspondence between the parties' solicitors shows that the Defendant accepted responsibility for removing the caveats from 29 April onwards. The Defendant could have sought injunctions which would have restrained ACE and Ms Ruan from lodging any further caveats but it did not do so, preferring to rely, apparently, on complaints to the Registrar General. Its failure to seek injunctions was the reason that caveats were still being lodged by ACE and Ms Ruan up to and including 23 October. 78 In my opinion, in those circumstances, Special Condition 33.3 operates to exonerate the Plaintiff from any claim for interest from 29 April to date. The Plaintiff will, however, be liable for interest for 27 and 28 April 2002. 79 The Defendant further claims general damages for breach of contract under Clause 15, which provides that "the parties must complete by the completion date" , i.e. 26 April 2002. Mr Whittle concedes that the Plaintiff is liable for damages for breach of contract but he says that the Court is not able to make any assessment as to damages on the evidence so far adduced by the Defendant. I agree with that submission. 80 The Defendant has filed some evidence, in a very general form, as to the holding costs which it has incurred by reason of non-completion of the contract. However, the Defendant's evidence does not make it clear what holding charges are attributable to its holding of the subject land and what charges are attributable to another development in which the Defendant was engaged. 81 Further, the Defendant's evidence does not make it clear what holding charges are attributable to the Plaintiff's failure to complete between 26 and 29 April and what charges are attributable to the delay caused by the Defendant's failure to prevent vexatious caveats from being lodged from 29 April onwards. In short, there are real issues of causation and quantification yet to be resolved before it can be seen whether the Defendant has suffered any loss by reason of the Plaintiff's failure to complete on 26 April. 82 I am not satisfied that any compensable loss which the Defendant may have suffered by reason of the Plaintiff's breach of contract must be so small as not to justify a reference to the Master. If the parties are unable to resolve this aspect of the Defendant's Cross Claim when the matter is brought back for the making of Short Minutes, I will refer the matter to the Master for enquiry.

83 The Plaintiff's claim for specific performance succeeds. If the parties are unable to resolve the further issues of liability and quantum arising in their respective claims for damages and interest, these claims will be referred to the Master for enquiry. 84 I will stand the proceedings over for a short time to enable the parties to bring in Short Minutes of Order in accordance with these reasons. I will then hear any argument as to costs. - oOo -

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