Culjak v Akrawe [2022] NSWSC 949 | Case summary

Summary of relevant facts

The contract for sale was entered into on 12 December 2020 following an auction at which the first defendant was the successful bidder. The plaintiffs (Mr and Mrs Culjak) engaged Mrs Frances Belluccini of Kingfisher Conveyancing Services Pty Ltd to act for them on the sale. The first defendant (Mr Akrawe) engaged Mr Kugathas Pathmathas of Path Legal to act for him on the purchase.
On 17 December 2020, Mr Pathmathas sent an email to Mrs Belluccini in which it was stated that the purchaser wanted to change the name of the purchaser to that of his son, Mr Saad Saeed. On 18 December 2020, Mrs Belluccini sent an email in reply, in which it was stated that the plaintiffs did not agree to the request. Mrs Belluccini also sought confirmation that the balance of the 10% deposit had been paid. It seems that only $100,000 had been paid at that stage.
Later on 18 December 2020, Mr Akrawe (then aged 81) and his son, Mr Saeed, went to Mr and Mrs Culjak's home. There was a discussion about extending the completion date of the contract by 4 weeks, to 22 February 2021. There is a dispute about who requested the extension, but it is unnecessary to resolve it. The evidence is clear that whatever discussion occurred on 18 December 2020, an agreement was reached to extend the completion date to 22 February 2021. That agreement is evidenced by the email sent by Mr Pathmathas to Mrs Belluccini on 19 December 2020, and her email in response on 23 December 2021.
By that time, the full $155,000 deposit had been paid. It seems that Mr Saeed provided the funds for the deposit. He deposed that he paid it in two instalments of $100,000 and $50,000.
I note in passing that it appears from the evidence that Mr Akrawe and Mr Saeed had various discussions, both before and after the contract was entered into, as to who should be named as the purchaser. At least after the contract had been entered into, one consideration was whether it would be preferable for the purchase to be funded by a loan taken out by Mr Saeed rather than by using Mr Akrawe's funds, which were partly held in United States dollars that would need to be converted into Australian dollars at an unfavourable exchange rate. I think it is likely that Mr Saeed raised this matter on the occasion he and his father attended the Culjak's home on 18 December 2020.
On 8 February 2021, Mr Saeed and his three children went to the Culjak's home. Amongst other things, there was discussion on that occasion between Mrs Culjak and Mr Saeed about the Culjaks renting the property for a period following settlement of the contract. Mr Saeed went to the Culjak's home again on 11 February 2021.
On at least one of those occasions (most likely on 11 February 2021), Mr Saeed made a request that the contract be changed so that he would become the purchaser instead of his father. I think it is likely that Mr Saeed also said that he would want six weeks to complete the purchase. I am satisfied that both Mr and Mrs Culjak responded by saying words to the effect that they would like to help, but they would first need to speak to Mrs Belluccini about it. Mrs Culjak said in cross-examination that she went to see Mrs Belluccini shortly after 11 February 2021, and discussed with her the fact that Mr Saeed wanted a new contract in his name. The content of this discussion, which seems also to have included Mr Culjak, was not explored in any detail in the evidence.
On 12 February 2021 Mr Pathmathas sent a settlement sheet to Mrs Belluccini. On 15 February 2021 Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I confirm that settlement is scheduled to take place on 22 February, 2021 at 12.30pm. Please find attached amended settlement figures. I will upload vendor destination line items to PEXA prior to settlement. Your client has been in touch with my clients and advised them that they wish to delay settlement. Please kindly confirm via return email that this matter will be proceeding to settlement on 22 February, 2021. My clients reserve their rights pursuant to the Contract. Please contact me if you have any queries.
At 10:35am on 16 February 2021, Mrs Belluccini sent a further email to Mr Pathmathas that included the following: My clients have instructed me to request confirmation that settlement will be taking place on Monday, 22 February, 2021 as scheduled. My clients are extremely concerned as your client has advised that they may need to obtain finance to complete the purchase and consequently have to delay settlement for another 6 weeks. Also your clients attended the property and selected certain items of furniture that they would like my clients to leave in the property following completion… I would appreciate if you would provide a reply to my email and confirm that settlement will take place Monday 22 February, 2021.
Mrs Belluccini sent another email to Mr Pathmathas at 4:27pm on 16 February 2021, in which she sought confirmation that the purchaser had given instructions to proceed to settlement.
In the evening of 16 February 2021, Mrs Culjak sent a text message to Mr Saeed which included the following: Hi Saad Tried calling couldn't get through Just teaching [sic] bases with u Frances tells me that settlement is on Monday 22 Need to know if u want us to leave furniture as discussed the other night for a minimal amount $ Please let me know so as I can start packing…
Mrs Belluccini deposed that she had a telephone conversation with the purchaser's solicitor (presumably Mr Pathmathas) on 17 February 2021 in which she was told that the purchaser would not be able to settle on 22 February 2021 as he did not have the funds to complete. Mrs Belluccini sent an email to Mr Pathmathas later on 17 February 2021 in the following terms: I refer to our telephone conversation today and confirm the following: Your client will be attending your office tomorrow, 18 February, 2021 to provide you with further instructions; and Notwithstanding the above you have advised me that settlement will not take place on Monday, 22 February, 2021 as scheduled as your client does not have funds to complete the purchase. I note that based on your advice your client is now in breach of the terms and conditions of the Contract and as such my clients reserve their rights. My clients are ready, willing and able to settle this matter on 22 February, 2021. I confirm my advice that I respectfully request that you advise your client and his family member NOT to contact my clients to discuss this matter and that any communication is to be directed to me through yourself. I look forward to your further advices regarding your client's position. Please contact me if you have any queries.
On 18 February 2021, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: Our client has attended our office today. He has instructed to seek two months extension on the settlement date from 22 February 2021 without any penalties. He has been also told us [sic] that he was going to meet the Vendor and the real estate agent today to speak with them directly. He had the impression that the Vendor also wanted to stay on the Property for few months. Please kindly seek your client's instruction and let us know. We appreciate your kind cooperation in this regard.
Later on 18 February 2021, Mrs Belluccini sent an email in response that included the following: I note that completion pursuant to the exchanged Contract was to take place on 25 January, 2021. The purchaser has already been granted an extension for completion to take place on until [sic] 22 February, 2021. Your request for a further extension is a considerable lengthy time. Please provide an explanation as to why the purchaser requires a further 2 month extension from 22 February, 2021. I await your urgent reply. Please contact me if you have any queries.
Mrs Belluccini sent a further email on 19 February 2021 in the following terms: I refer to my email below to which I have not received a reply. I would appreciate a reply as a matter of urgency. Until a satisfactory reply is provided by [sic] clients reserve their rights pursuant to the Contract. Please contact me if you have any queries.
Mr Pathmathas responded later on 19 February 2021 in the following terms: We refer to our telephonic conversation made on even date. Our client is kindly seeking for an extension on the settlement date as discussed. We have been instructed that our client wanted to extend the settlement date for 2 months from 22 February 2021 without any penalties. As he has instructed us that he needs to organise for the money from overseas and [sic] facing some unexpected delays in getting the money at present. He has told us that he was much interested on this Property and he bought on a higher price, which he considers and he wanted to settle this matter within 2 months from 22 February 2021. Should he organises [sic] the money before two months, he will provide 5 days' notice and ready to go for an earlier settlement before 2 months. Our client has also told us by considering his age and his current health condition at this age, he kindly requesting for this extension on a humanitarian basis and expecting a satisfactory reply from the Vendor. He has told us the Vendors were aware of this. Please explain the situation to your client and let us know your client's instruction. We appreciate your kind cooperation on this regard.
Mrs Belluccini replied later on 19 February 2021, stating that she would seek instructions from her clients and advise accordingly.
I note that 19 February 2021 was a Friday. Settlement was due to occur on Monday 22 February 2021.
Mr Akrawe and Mr Saeed went to the Culjak's home on the evening of 21 February 2021. The visit was not by invitation. It seems that Mr Saeed had been attempting to call Mr Culjak and Mrs Culjak on that day, but they did not answer the calls. They deposed that they had been advised by Mrs Belluccini not to speak to Mr Akrawe or Mr Saeed. However, a discussion occurred outside the Culjak's home on that occasion between Mr and Mrs Culjak, Mr Akrawe and Mr Saeed. The content of the discussion is a matter of dispute between the parties. However, I do not think that anything of significance turns upon the differences between the respective recollections of what was said. I think it is likely that there was discussion about the settlement date for the contract (being the following day), and the fact that the settlement would not actually be proceeding. It is also likely that there was some further discussion about the possibility of cancelling the existing contract and entering into a new contract with Mr Saeed as purchaser. I consider it unlikely that Mr Saeed asked why the new contract had not come to his solicitor as had been agreed. I accept the denials of Mr and Mrs Culjak in that regard. I formed the impression that each was an honest witness who attempted to give accurate evidence to the best of their recollection. In addition, it seems unlikely that Mr Saeed would have spoken in such terms, as Mr and Mrs Culjak had earlier made it clear that they would need to speak to Mrs Belluccini about any new contract, and there is no indication in any of the written communications between the parties that Mrs Belluccini was in the process of preparing a new contract.
A number of emails passed between Mrs Belluccini and Mr Pathmathas on 22 February 2021.
At 12:00pm, Mrs Belluccini sent an email in the following terms: I refer to the above matter and the emails trailing below and advise that I have now received instructions from my clients. I have been instructed to advise that my clients will agree to extend the completion date until 19 April, 2021 on the following basis: Unconditional release of the deposit monies currently held in the real estate agent's trust account to my clients less the agent's commission forthwith; The purchaser must pay the sum of $155,00[0].00 which will be unconditionally released to the vendors. This payment will be non-refundable; The completion date to be extended until 19 April, 2021 and this time is essential; Interest pursuant to Special Condition 4.6 will be waived on the basis that completion takes place on or before 19 April, 2021. Should completion not take place on 19 April, 2021 the interest will be payable and will be charged on and from 22 February, 2021 up to and including the actual date of settlement; A Deed of Variation must be entered into between the parties varying the terms of the Contract as indicated above; and My professional fees in relation to the Deed of Variation in the sum of $550.00 will be borne by the purchaser and paid at the time of execution of the Deed. Please seek your client's instructions and revert back as a matter of urgency. My clients require a reply to this email by close of business today. My clients reserve their rights pursuant to the Contract and at law. Please contact me if you have any queries.
Mr Pathmathas replied by email at 1:43pm in the following terms: We refer to your email received on even date and our telephonic conversation with you on even date. We have been instructed that our client wanted to change the Contract into his son's name: Saad Saeed. We have been instructed that the Vendors were aware of it. We have been also instructed that on the basis of the above request, he is agreeable to your email received at 12.00 noon today once he get the satisfactory reply from you. Please seek your client's instruction and let us know ASAP.
At 2:52pm, Mrs Belluccini sent an email to Mr Pathmathas that included the following: You indicated in our telephone conversation that the purchaser is now looking to obtain loan funds to complete the purchase. Please clarify if this is still the case or if your client is still awaiting funds from overseas as per your earlier email to complete the Contract. The purchaser that entered into the contract CANNOT be changed by the stroke of a pen. I suggest that you look into the option of a Transfer not in Conformity with the Contract. Once again I ask that you advise your client not to approach or communicate with my clients on any basis whatsoever. Any communication must be directed through yourself. My clients reserve their rights pursuant to the Contract and at law.
Mr Pathmathas replied by email at 3:43pm in the following terms: We refer to your email received on even date, as we explained over the phone. We are not requesting to simply change the name. Our client requested, to amend the contract in his son's name. Are there any possibilities to rescind the contract mutually with the current contract and enter into a new contract with the sons name with the same terms and conditions as per the current contract. We have been instructed now, they have to organise for the loan as due to the USA currency rates issues, he was not able to proceed for a cash purchase. Please seek your client's instruction and let us know ASAP.
Finally, at 4:32pm, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: My clients have instructed me to advise that they will agree to the existing contract being rescinded and a new contract entered into between the vendors and Saad Saeed. The rescission of the existing contract and new contract would be entered into simultaneously on the following terms: Deed of Rescission of existing contract with the deposit paid to the vendors; New Contract with Saad Saeed. Essentially the terms and conditions will be the same except for: date of completion being 19 April, 2021 and time of the essence; unconditional release of 10% deposit to the vendors at the date of the Contract; reference to the deposit in rescinded Contract to be applied to new contract; and penalty interest. My professional fees will be $990.00 to be borne by the purchaser and paid at the time of exchange of the deed of rescission and new contract. Please confirm that your client agrees to the above and I will prepare the appropriate documents. Your client has once again made contact with my clients. I respectfully request once again that your client and his family members refrain from communicating with my clients. My clients reserve their rights pursuant to the Contract and at law.
It appears that Mr Akrawe later gave instructions to Mr Pathmathas to the effect that he was agreeable to proceeding in accordance with the terms of the above email. I infer that Mr Pathmathas communicated that to Mrs Belluccini, because she proceeded to prepare documents including a Deed of Mutual Rescission of Contract and a new contract for sale which named Mr Saeed as the purchaser.
On 25 February 2021, Mrs Belluccini sent an email to Mr Pathmathas which included the following: I refer to the above matter and now enclose the following: Deed of Mutual Rescission of Contract; and New Contract. The above documents are subject to final approval by my clients and is forwarded on the basis that no binding relationship is created prior to exchange. I look forward to receipt of the following by way of exchange: Duly executed Deed of Mutual Rescission of Contract; Duly executed Contract; Section 66W Certificate; Order on the Agent; and Bank cheque in favour of Kingfisher Conveyancing Services Pty Ltd Trust Account in the sum of $155,000.00. Alternatively the purchaser may wish to transfer the funds to my trust account: …
On 1 March 2021, Mrs Belluccini sent an email to Mr Pathmathas in which she enquired as to when she would receive the documents executed by his clients in readiness for exchange. Mrs Belluccini sent a further email to Mr Pathmathas on 2 March 2021 seeking his advice as to his client's instructions as a matter of urgency, and reserving her clients' rights pursuant to the contract.
On 3 March 2021, Mrs Belluccini served a Notice to Complete. The notice was served upon Mr Pathmathas by email, and further hand delivered to Mr Akrawe's address. No dispute was raised concerning service of the notice. The Notice to Complete was in the following terms: This Notice to Complete is given in accordance with the Contract for Sale and Purchase of Land between Ante Culjak and Margaret Marita Culjak (as Vendors) and you (as Purchaser) dated 12 December 2020 (Contract). In accordance with the Contract you agreed to purchase and the Vendors agreed to sell the property for the price stated in the Contract. You have paid a deposit of [sic] and agreed to pay the balance of the price and adjustments on completion. Despite requests to do so you have failed to complete the purchase of the property and are in default. You are required by the Vendors to complete the purchase of the property at PEXA Workspace ID: PEXA215550550 at 12:00PM on 18 March, 2021 and in this respect time is of the essence. If you fail to comply with this Notice the Vendors may by notice in writing to you at its election do one, more or all of the following: (a) forfeit the deposit paid by you (b) terminate the Contract (c) sue you for breach of contract (d) re-sell the property and recover from you as damages any deficiency arising on resale and all expenses of and incidental to resale or attempted resale and your default. (e) claim costs, losses and expenses incurred in connection with your default (f) exercise any additional rights that the Vendors may have at law arising in connection with your default, including rights arising under the Contract.
On 5 March 2021, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: Our client has attended our office today. He has instructed that now, that he wanted to proceed with the Deed of Mutual Rescission on the agreed terms as per your email dated 25 February 2021. He wanted to terminate the current contract and advised that the new contract should be under his son's name, Saad Behnam Saeed. He has also told me that he was sick and due to that he was not able to action as per your email dated on 25 February 2021. We have been instructed that the Purchaser wants to withdraw the Notice to Complete and [sic] ready to sign on the Deed of Mutual Rescission. On the basis of the agreed terms the settlement date for the new contract should be 19 April 2021. Please seek your client's instruction and reply to us ASAP
Mrs Belluccini sent an email in reply later on 5 March 2021 in which she stated that she would seek her clients' instructions.
On 8 March 2021, Mrs Belluccini sent an email to Mr Pathmathas that included the following: I have been instructed to advise that my clients will agree to proceed with the Mutual Deed of Rescission and new Contract on the basis that all the documents listed below and monies are received by no later than 5pm on 10 March, 2021. Please provide the following by way of exchange: Duly executed Deed of Mutual Rescission of Contract; Duly executed Contract; Section 66W Certificate; Order on the Agent; Payment of my Tax Invoice which is attached; and Bank cheque in favour of Kingfisher Conveyancing Services Pty Ltd Trust Account in the sum of $155,000.00. Alternatively the purchaser may wish to transfer the funds to my trust account: …
At 1:34pm on 10 March 2021, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: Our client is happy to sign on the deed of mutual rescission and Saad Behnam Saeed is ready to enter into the new contract. They wanted to amend the settlement date to be 42 days from the contract date as he need to organise for the loan purpose. Also you have to confirm that the Purchaser has paid 20% deposit in total. Please confirm the above as a matter of URGENCY.
Mrs Belluccini responded by email at 2:44pm that included the following: My clients will agree to settlement for the new contract to read 42 days from the contract date time being of the essence on the basis that the duly executed documents are received in my office by no later than 12pm on 11 March, 2021. Once all the monies are received I will confirm.
No documents were received by 12:00pm on 11 March 2021. At 12:43pm, Mr Pathmathas sent an email to Mrs Belluccini which included the following: We have been instructed that the new purchaser is awaiting for the funds to be cleared on his account in order to transfer the deposit. Unfortunately that [sic] funds are not yet ready. We have been instructed that he was not able to transfer the deposit today, may be it might takes couple of days as he instructed.
At 1:05pm, Mrs Belluccini sent an email in which she stated that she would seek her clients' instructions, and enquired whether Mr Pathmathas' clients had signed the required documents.
At 1:14pm, Mrs Belluccini sent an email to Mr Pathmathas in which she stated that she had not received the required documents and that, as such, his client had not complied with the timeframe required by her clients.
At 1:18pm, Mr Pathmathas sent an email in response in the following terms: My client has told me that he will come today with the cheques and suppose to deliver the contract to your office today. But, he did not come. When I contacted him, he said that he was awaiting for the funds to be cleared. I cannot send the documents with out the required cheques and your fees.
At 4:28pm, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I am still awaiting my client's instructions. Pending my client's instructions the Notice to Complete still stands. Please contact me if you have any queries.
The Notice to Complete called for completion to occur in 7 days' time, on 18 March 2021.
On 16 March 2021, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I refer to the above matter and confirm that settlement is due to take place on 18 March, 2021 at 12pm. A PEXA workspace has been created Workspace ID PEXA215550550 however you have not accepted the date and time for settlement. I confirm that the purchaser has been served a Notice to Complete which is due to expire on 18 March, 2021. Please advise if your client will be complying with the Notice to Complete and proceeding to settlement by the due date and, if so, please provide up-to-date settlement figures for my client's approval. I have been instructed to advise that if the purchaser fails to comply with the Notice to Complete the vendors will pursue their legal rights pursuant to the Notice to Complete, the contract and at law. I await your urgent reply. Please contact me if you have any queries.
On 17 March 2021, Mrs Belluccini received a letter from Path Legal, dated 16 March 2021, that enclosed a number of documents including a Deed of Mutual Rescission of Contract executed by Mr Akrawe, a Contract for Sale executed by Mr Saeed as purchaser, and cheques for the deposit and legal fees. The letter included a statement that there would be no legally binding relationship between the parties until "exchange of Contract" had taken place.
At 6:25pm on 17 March 2021, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I confirm that the Notice to Complete served on 3 March, 2021 is still enforceable and I reserve my clients' rights in relation thereto. In the interim I acknowledge receipt of your letter dated 16 March, 2021 and the contents therein. Please provide documentary evidence such as a loan approval or bank statement to confirm that, if my clients were to execute the new Contract with Saad Benham [sic] Saeed as purchaser, Mr Saeed will have the required funds to complete the Contract on 19 April, 2021. I await your urgent reply. Please contact me if you have any queries.
Mr Pathmathas responded by email on 18 March 2021 at 11:14am, in the following terms: We have forwarded your email to the client and awaiting for his reply. Please note, the settlement is within 42 days from the exchange of the new contract as agreed previously. That was the first of numerous emails exchanged on 18 March 2021.
At 11:31am, Mrs Belluccini sent an email in response in the following terms: I refer to your email and your comments. My clients are not bound by any offers or agreements in previous communications; no legal binding relationship exists and is subject to my clients' final instructions. At this stage my clients rely on the Notice to Complete which expires today. Please contact me if you have any queries.
At 12:12pm, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: We seek the extension of the Notice to complete period further one week from today. As your client already agreed for the deed of mutual rescission and enter into a new contract. We have been instructed that the bank needs the exchanged contract for the loan purpose. We have been also instructed that he was [sic] started his initial process with the bank for the loan purpose.
Mr Pathmathas sent a further email at 2:59pm in the following terms: We have been instructed that the Purchaser, Behnam Said Akrawe wanted proceed with is settlement. We have been also instructed that he wanted to extend the Notice to Complete period till 5.00pm on Tuesday, 23 March 2021 to settle the matter. He is ready and willing to settle the matter. Please seek your client's instruction and reply to us ASAP.
At 3:18pm, Mrs Belluccini sent an email in the following terms: I confirm my telephonic advice that I am awaiting my client's instructions. Please contact me if you have any queries.
Mr Pathmathas responded by email at 3:26pm in the following terms: We refer to our telephonic conversation with you on even date. Please tried [sic] to seek your client's instruction and reply to us before 4.30pm regarding the extension of the Notice to Complete.
At 4:35pm, Mr Pathmathas sent another email, in the following terms: We refer to our emails sent to you on several occasions on even date and our telephonic conversations made with you on even date. The Purchaser is still awaiting for your reply. Please seek your client's instruction and reply to us as a matter of URGENCY. As per our client's instruction he needs the time till 23 March 2021 to settle this money. He needs to organise to deposit the money in the PEXA's account. We seek your URGENT reply
Settlement did not occur on 18 March 2021 as called for by the Notice to Complete. As deposed by Mrs Belluccini, the purchaser did not attend to the PEXA settlement on that day. It appears that Path Legal at no stage accepted the PEXA settlement date of 18 March 2021. Moreover, shortly before 5:00pm, Path Legal changed the time and date of settlement in PEXA to 1:00pm on 23 March 2021. It further appears that stamp duty had not been paid by 18 March 2021.
At 11:13am on 22 March 2021, Mrs Belluccini served a Notice of Termination upon Path Legal. The notice included the following: With reference to the Contract for Sale dated 12 December 2020 (Contract) and made between Ante Culjak and Margaret Marita Culjak as Vendors and you as Purchaser for the sale and purchase of property known as 60 Cobbett Street, Wetherill Park NSW 2164 being Lot 11 in Deposited Plan 263539 and being the whole of the land comprised in Certificate of Title 11/263539 and in consequence of your default under the said Contract in completing the purchase in accordance with the requirements thereof and of the Notice to Complete issued pursuant thereto on 3 March, 2021 the Vendors hereby gives [sic] you notice that the said deposit of $155,000.00 paid under the said Contract is hereby forfeited to the Vendors, the said sale is hereby at an end and the said Contract is hereby terminated and that the Vendors will either sue you for breach of contract or re-sell the property as owner and will claim and recover from you as liquidated damages the deficiency (if any) arising on such re-sale and all expenses of and incidental to such re-sale or attempted re-sale arising from your default and will exercise all such other rights as are conferred upon the Vendors under the said Contract or otherwise by reason of your delay and default in performing the said Contract.

Determination

The concession ultimately made by the first defendant, that the Notice to Complete was valid and thus effective to make time of the essence for completion by 18 March 2021, was properly made. By Special Condition 4.2 of the contract, if completion does not take place by 4:30pm on the Completion Date, a party who is not in default and who is ready to proceed to completion may at any time thereafter give to the other party a notice to complete, by which time will be the essence of the contract. The Completion Date, which was originally 25 January 2021, was extended by agreement to 22 February 2021. Completion did not occur on that date. It was open to the plaintiffs to serve a Notice to Complete on 3 March 2021 because they were not then in default under the contract and the evidence shows that they were ready, willing and able to proceed to completion. Moreover, the notice allowed a period of more than 14 days for completion, such that it must be taken to have provided a reasonable and sufficient time for completion (see Special Condition 4.3). Further, I am satisfied on the evidence that, from the time the notice was given, the plaintiffs remained ready, willing and able to proceed to completion of the contract.
Accordingly, in circumstances where the first defendant failed to complete the contract by 18 March 2021, and thus failed to comply with the contract or a notice under it in an essential respect, the plaintiffs had an entitlement under cl 9.1 of the contract to terminate the contract and recover the deposit. As I have already said, the first defendant ultimately appeared to accept that the plaintiffs had such an entitlement. The plaintiffs exercised the right of termination by the Notice of Termination given on 22 March 2021.
The focus of the case therefore became whether there were circumstances that would justify giving the first defendant relief against forfeiture of his interest under the contract - although the true question in this context is whether equity should intervene on the basis that it would be unconscientious for the plaintiffs to insist upon their legal right to terminate the contract (see Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [5] and [22]). If it would be unconscientious for the plaintiffs to insist upon that right, they could not rely upon their termination of the contract as an answer to the first defendant's claim for specific performance.
The first defendant submitted that he and his son were doing what was necessary on their part to proceed with the proposal that involved rescission of the original contract and entry into a new contract with the son as purchaser, but were not aware that from 11 March 2021 the plaintiffs were not prepared to agree to any further extensions of time for the proposal to proceed. The first defendant submitted that if he had been informed in a timely manner of the plaintiffs' position there would have been ample time for him to put funds into PEXA to settle his purchase on 18 March 2021. It was thus submitted that it was a case where the vendor caused or contributed to the circumstances which gave rise to the seeking of relief against forfeiture (viz, the breach by the first defendant of the essential time stipulation: see Tanwar Enterprises Pty Ltd v Cauchi (supra) at [58]). The first defendant submitted that his failure to complete by 18 March 2021 was due to the conduct of the vendors which lacked transparency in failing to disclose as and from 11 March 2021 that they had decided against proceeding with a new contract with Mr Saeed. It was put that the failure to disclose could be regarded as akin to misleading conduct by silence (see Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32). The first defendant submitted that had the plaintiffs' position been communicated as and from 11 March 2021, he would have been able to organise the funds required for settlement by 18 March 2021.
The plaintiffs submitted that they gave the first defendant and his son ample opportunity to purchase the property, either via the signed contract for sale or a substituted contract. It was submitted that it was unreasonable to expect the vendors to continually defer the settlement date until such time as finances could be organised. The plaintiffs submitted that when the 11 March 2021 deadline was not met in respect of the proposed new contract, it was made clear that the Notice to Complete, served on 3 March 2021 under the existing contract, was still being relied upon. It was submitted that this position was reinforced on 16 March 2021. The plaintiffs denied that they acted unconscionably in exercising their contractual rights when the first defendant failed to complete by 18 March 2021. The plaintiffs further submitted that the first defendant had not in any event established that he was in a position to settle the contract at any stage.
In order to deal with these submissions, it is necessary to refer to some aspects of the evidence beyond the summary set out earlier. In particular, it is necessary to consider the evidence of Mr Akrawe concerning his finances and preparations for settlement, and the evidence of Mr and Mrs Culjak concerning their intentions with regard to the proposed new contract with Mr Saeed.
Mr Akrawe deposed in his first affidavit that at the time of the auction (on 12 December 2020) he had more than enough funds available to pay the deposit and the price for the property. He said that he had transferred at least $2 million from Iraq to Australia, some of which was transferred to Mr Saeed "or his companies", some of which was held in United States dollars in a cash security box, and some of which was in his own account with the ANZ bank. He deposed that although it was his preference for the contract to be changed into the name of his son, he was happy to buy the house himself. He deposed that at all times he had sufficient money available to pay for the house in his own name. I note that this aspect of his evidence was the subject of cross-examination. Mr Akrawe further deposed: At some point I remember going to the office of Path Legal and signing a further document in relation to the change of name into my son. I understand that a further 10% deposit had been paid for a new contract with the owners in the name of my son, and legal fees had been paid to the owners' solicitors for the new contract by Saad. I was under the impression that all the legal documents there were needed for the house sale had been processed. I was shocked when I found out that the owners were not going ahead with the sale.
Mr Akrawe deposed in his second affidavit that he did not see many of the emails annexed to Mrs Belluccini's affidavit, and that he was unaware that Mr Pathmathas was informing Mrs Belluccini that he did not have funds to settle the purchase.
Reference should also be made to Mr Saeed's first affidavit, which included the following in relation to the period around 16 March 2021: I felt some confusion and pressure at this time about whether or not the old contract with my father was still being enforced by the owners pending the new one being finalised. On 18 March 2021 I asked Path Legal on behalf of my father to get a further week's extension on the old contract in case further time was needed for the new one to be finalised, however through the course of the day on 18 March 2021, the situation become [sic] more urgent as clear answers were not being given by the owners' solicitors about the owners' position. As I understood the situation, although a signed copy of the new contract, a s 66W certificate, a deed rescinding the old contract and cheque for the further 10% deposit had been received by the owners' solicitors on 17 March 2021, the owners solicitors were not providing responses to my solicitors on 18 March 2021 about a further short extension of the old contract completion date but had not exchanged on the new contract. … I was shocked when I found about [sic] the Notice of Termination and the rejection of the new contract and the return of the new deposit cheque. I could not believe that after everything that had been said between my father, me, the agent and the owners, and with Path Legal forwarding the new contract documents and the new cheque, that this could happen. I note that Mr Saeed also deposed, in his second affidavit, that he had not seen many of the emails annexed to Mrs Belluccini's affidavit.
Turning now to the evidence concerning the plaintiffs' intentions, Mrs Culjak gave an answer in cross-examination to the effect that after the deadlines of 10 March 2021 and 11 March 2021 were not met, she and her husband then decided that "we're not going ahead". Later, she said that the decision not to go ahead with the new contract had been made before 17 March 2021 because "we didn't have any faith in them to go through".
Mr Culjak also gave evidence in cross-examination to the effect that when the 11 March 2021 deadline was not met he said to his wife that "we should go to [or go back to] the original contract".
Mrs Belluccini did not agree in cross-examination with the suggestion that Mr and Mrs Culjak told her on 11 March 2021 that they were not prepared to consider any further extensions. She deposed that on 17 March 2021, after she received the signed documents, the Culjaks, given the history of the matter, "decided to proceed under the original contract". Mrs Belluccini agreed that she did not communicate that to the purchaser. She said that in her view that was unnecessary.
It may be accepted that by about 11 March 2021, Mr and Mrs Culjak had lost confidence in Mr Akrawe and Mr Saeed going ahead with the proposed new contract. That is hardly surprising. Draft documents had been submitted to Mr Pathmathas on 25 February 2021. Enquiries were made of Mr Pathmathas on 1 March 2021 and 2 March 2021 as to when executed documents would be sent, but those enquiries went unanswered. The Notice to Complete was then served on 3 March 2021. Mr Pathmathas explained in his email of 5 March 2021 that his client (which, read in its context, must be understood as a reference to Mr Akrawe) had been sick but had instructed that he now wanted to proceed with the Deed of Mutual Rescission on the terms set out in Mrs Belluccini's email of 25 February 2021. Mrs Belluccini, by her email of 8 March 2021, indicated that Mr and Mrs Culjak would agree to proceed accordingly, on the basis that the documents and monies were received by no later than 5:00pm on 10 March 2021. In the afternoon of 10 March 2021, that deadline was effectively extended to 12:00pm on 11 March 2021. The extended deadline was not met. Mr Pathmathas explained that the new purchaser (Mr Saeed) was waiting for funds to clear, and that this might take a couple of days.
In those circumstances, Mrs Belluccini stated in her email sent at 4:20pm on 11 March 2021 that, pending her clients' instructions, the Notice to Complete "still stands". It should be noted, in that regard, that no challenge had been raised to the validity of the Notice to Complete. Indeed, Mr Pathmathas' email of 5 March 2021 shows that the Notice to Complete had come to the attention of Mr Akrawe by that time, and the request contained in the email for the notice to be withdrawn is tantamount to a recognition of its validity.
The statement made by Mrs Belluccini on 11 March 2021 was to the effect that, pending her clients' instructions, the existing contract was required to be completed by 18 March 2021, with time being of the essence. I do not think that statement could be reasonably regarded as anything other than a statement to the purchaser that, unless and until the vendors give instructions to the contrary, the contract is required to be completed in accordance with the Notice to Complete. The vendors were of course at liberty to give, or not give, instructions to the contrary, as they saw fit. Mrs Belluccini's email thus conveyed that the purchaser would be required to complete by 18 March 2021 unless the vendors chose to take a different approach. The purchaser could not safely proceed on any basis other than that a failure to complete by 18 March 2021 would be a breach of the contract in an essential respect that would entitle the vendors to terminate the contract.
It is true, as submitted by the first defendant, that the plaintiffs were, in a sense, keeping their options open. They were keeping open the possibility that they might agree to a course other than their present insistence upon completion of the contract in accordance with the Notice to Complete. The plaintiffs were perfectly entitled to adopt that stance. However, the essence of the first defendant's complaint against the plaintiffs is that, having made up their minds not to proceed with the proposed new contract with Mr Saeed, that position was not communicated.
In my opinion, the evidence does not go so far as to establish that on or around 11 March 2021 Mr and Mrs Culjak had come to a final decision that they would not under any circumstances agree to proceed with the proposed new contract. That proposition was not put to either Mrs or Mr Culjak in cross-examination. Nor was it put that they would not genuinely consider proceeding with the new contract if the documents and monies were later provided. In my view, unless the plaintiffs had come to a such a position, the first defendant could not reasonably have expected to be informed about their state of mind concerning the proposed new contract. That proposal remained a matter for negotiation between the parties.
It was clearly stated on 11 March 2021 that the plaintiffs maintained that the contract was required to be completed in accordance with the Notice to Complete which made time of the essence. As I have said, the first defendant could not safely proceed on any basis other than that a failure to complete by 18 March 2021 would entitle the plaintiffs to terminate the contract. If the first defendant had the necessary funds, there was plenty of time to make them available on the PEXA system in readiness for a settlement on 18 March 2021. The evidence given by Mr Akrawe does not explain why that was not done. He does not say, for example, that he delayed doing so because of a belief or hope that the proposed new contract would proceed instead of the existing contract. The fact that he was "shocked" when the plaintiffs did not proceed with the new contract suggests that he may have had such a belief or hope, but the effect that such a belief or hope may have had upon his conduct is not explained. Nor does he say that he would have taken steps to make the funds available on PEXA if he had been told that the plaintiffs would not proceed with the new contract. The first defendant's evidence in this regard is, in my view, inadequate. In these circumstances, I do not think there is a sound basis to be satisfied that any conduct on the part of the plaintiffs caused or contributed to the failure to make funds available.
In any event, the evidence given by Mr Akrawe about his financial position at that time leaves me unpersuaded that he in fact had sufficient funds to enable him to complete by 18 March 2021. The evidence was imprecise, and in a number of respects contradictory and confusing. It can be accepted that considerable sums (perhaps sufficient in themselves to complete the purchase) were transferred by Mr Akrawe from Iraq to Australia in 2020. However, the evidence (including that given by Mr Saeed) shows that some of the funds were later expended, or placed with Mr Saeed or companies associated with him. Further, whilst a significant portion of the funds are claimed to have been held in cash in a security deposit box (which was held in the name of Mr Saeed), no cogent evidence was adduced to establish the actual amounts of cash so held at the relevant time. Finally, it cannot be overlooked that: 1. Mr Pathmathas informed Mrs Belluccini on 17 February 2021 that the first defendant did not have the funds to complete; and 2. Mr Pathmathas informed Mrs Belluccini on 19 February 2021 that the first defendant needed to organise money from overseas, and may need two months. I would infer that Mr Pathmathas (who was not called as a witness) made those statements on instructions received from the first defendant. I am unable to accept Mr Akrawe's evidence to the effect that he was not aware of those statements. The statements undermine Mr Akrawe's evidence that at all times he had sufficient money available to purchase the house.
I should add that both Mr Akrawe and Mr Saeed sought to distance themselves from the email communications that passed between Mrs Belluccini and Mr Pathmathas. They each deposed that they had not seen many of the emails annexed to Mrs Belluccini's affidavit. That evidence may have been intended to suggest that Mr Pathmathas was not keeping them informed about what was occurring. I do not accept any such suggestion. In any event, Mr Pathmathas was plainly Mr Akrawe's agent with authority to act on the purchase, including by communicating with Mrs Belluccini.
For the above reasons, the first defendant has not established that his failure to complete the contract by 18 March 2021, which was a breach of the contract in an essential respect, was relevantly caused or contributed to by conduct (including silence) on the part of the plaintiffs. In my opinion, taking all of the circumstances into account, there was nothing unconscientious about the plaintiffs' exercise of the legal right to terminate. It follows that the termination of the contract for breach of the essential time stipulation may be relied upon by the plaintiffs to defeat the first defendant's claim for specific performance of the contract. The claim for specific performance must be dismissed.
I turn now to the first defendant's alternative claim for an order under s 55(2A) of the Conveyancing Act for the return of the deposit.
Section 55(2A) of the Conveyancing Act provides: In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.
As explained by Santow JA in Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 at [137], s 55(2A) created a jurisdiction to relieve against forfeiture of a reasonable deposit that was hitherto unknown to courts of equity (see also Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 23,629; [2006] NSWCA 40 at [24]).
In Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268, Street CJ in Eq stated at 272: It is one thing to recognize that there is a wide discretion conferred upon the court under this section; it is another thing to determine the guidelines for the exercise of that discretion. The section was designed to provide relief to a purchaser against an unjust and inequitable consequence of forfeiture of a deposit. It is clear enough that at law a vendor's right to forfeit a deposit to himself in the event of a purchaser's default bears no necessary relation to the damages actually suffered by a vendor. At law a forfeited deposit could result in a vendor making a profit which in justice and equity he ought not to be permitted to enjoy at the purchaser's expense. In a complementary sense, an order for the return of the deposit does not necessarily affect the vendor's right to sue a defaulting purchaser at law and recover against him such damages as the vendor can prove. The jurisdiction under s 55(2A) does not give to a court an overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated. A vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under s 55(2A) unless it is unjust and inequitable to permit him to retain it.
It is not necessary to demonstrate special or exceptional circumstances in order to justify an exercise of the discretion under s 55(2A) (see Harkins v Butcher; Butcher v Lachlan Elder Realty Pty Ltd (2002) 55 NSWLR 558; [2002] NSWCA 237 at [77]; Havyn Pty Ltd v Webster (supra) at [149]). However, a proper approach to the discretion must appreciate the legal context of the established nature of a deposit as an earnest of performance in conveyancing transactions (see Havyn Pty Limited v Webster (supra) at [150]-[151]).
As Santow JA stated in Havyn Pty Limited v Webster (supra) at [155]: For these reasons, I do not consider that there is anything controversial in the submission of the vendor that the grounds in support of an application to repay the deposit must be sufficient to warrant a departure from holding the purchaser to its obligations under the contract. Indeed, this goes to the "justice and equity" of the case, drawing on the observations of Street CJ in Eq in Lucas & Tait. That conclusion must be correct, if the notions of justice and equity conditioning the discretion are to have some meaning drawn from the purpose of a deposit and the circumstances in which it is forfeited. The purchaser must therefore do more than merely show that the deposit has been forfeited, and that it will thus result in a 'windfall' to the vendor as will usually be the case. The Court should not take an approach to ordering the return of deposits under s 55(2A) which weakens the proper function of a deposit in providing a sanction so that purchasers treat the making and completing of contracts with due seriousness: Wilson v Kingsgate Mining Industries [1973] 2 NSWLR 713 at 735, Fraser v L O'Malley & Sons Pty Ltd (1975) 2 BPR 9133 at 9139-40. In so saying, I am not to be understood as putting a gloss upon the plain words of s 55(2A), but merely highlighting the critical importance of a judge exercising the wide discretion according to its plainly beneficial purpose to consider 'justice' and 'fairness' in their proper context. See also the observations of Kirby J regarding the important role played by the payment of deposits in contracts for the sale of land in Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 at [54].
It seems to me, applying these principles, that it would not be appropriate to make an order for the return of the deposit. The deposit (of $155,000) was forfeited due to the failure of the first defendant to perform his obligations in accordance with a Notice to Complete that made time of the essence. It has not been shown that this failure was relevantly caused or contributed to by conduct on the part of the plaintiffs. It has not been shown that were the plaintiffs to recover the deposit, they would make a windfall or profit that in "justice and equity" they ought not be permitted to enjoy. In that regard, it should not be overlooked that the termination of the contract occurred some 16 months ago. Moreover, an attempt by the plaintiffs to re-sell the property later in 2021 was stymied by the lodgement of a caveat by the first defendant. The basis of the caveat, being the existence of a contract for sale, has not been sustained. In all the circumstances, and taking into account the important role played by deposits in contracts for the sale of land, I do not consider that allowing the plaintiffs to recover the deposit, in accordance with the terms of the contract, would be unjust or inequitable to the first defendant. The claim for the return of the deposit will also be dismissed.

Culjak v Akrawe

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Cases Cited (9)

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