Ebadeh-Ahvazi v Namrood

Supreme Court of NSW|2017-03-29|Before: Darke J

Introduction

These proceedings concern a contract for the sale of about 5.75 acres of vacant land in Selkirk Avenue, Cecil Park. The contract was made on 16 May 2015 between the plaintiff as vendor and the defendant as purchaser. The contract was in the 2005 edition of the Law Society-Real Estate Institute standard form, supplemented by various special conditions. The purchase price was $1.46 million, including a deposit of $146,000.
The contract did not proceed to completion. Both parties assert that they validly terminated the contract.
In brief, the defendant contends that he validly terminated the contract on 29 July 2015 following a failure on the part of the plaintiff to comply with a Notice to Perform issued in respect of certain orders made by Fairfield City Council ("the Council"); and the plaintiff contends that he validly terminated the contract on 19 October 2015 following a failure on the part of the defendant to comply with a Notice to Complete.
Both parties claim to be entitled to the deposit. The plaintiff says that he is entitled to the deposit in accordance with cl 9.1 of the contract. The defendant says that upon his termination of the contract he became entitled to a refund of the deposit. The defendant further claims that he is entitled to recover the amount of the deposit (and interest) as damages for loss suffered as a result of an alleged repudiation of the contract by the plaintiff, or by conduct said to have been engaged in by the plaintiff in contravention of s 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) ("the Australian Consumer Law"). The defendant also makes a claim for the return of the deposit pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW).

Summary of salient events

The plaintiff purchased the property on 20 August 2014 for $830,000. He became the registered proprietor on 14 November 2014. The purchase was financed in part by a loan of $700,000 from the National Australia Bank to the plaintiff. The plaintiff gave evidence that he intended to build a large home on the property for his parents, two brothers and himself.
On 1 December 2014 the plaintiff obtained a Complying Development Certificate under s 85A of the Environmental Planning and Assessment Act 1979 (NSW) in relation to a proposed new dwelling and swimming pool. In early February 2015 the plaintiff caused loads of soil to be placed upon the property in order to level out the land prior to the building of the house. However, these activities, which were seemingly not approved, came to the attention of the Council which took steps to cause the activities to halt. A Council ranger attended the site, and notices were issued.
On 6 February 2015 the Council issued a Prevention Notice to the plaintiff pursuant to s 96(2) of the Protection of the Environment Operations Act 1997 (NSW). The notice included the following: You are hereby given Notice pursuant to s. 96(2) of the Protection of the Environment Operations Act, 1997 (NSW) (the "Act") that Fairfield City Council, as the appropriate regulatory authority under the Act, is now in possession of evidence that unauthorised excavation works was being undertaken along the eastern boundary of the premises. This activity is considered to be environmentally unsatisfactory as the land form has been altered and the newly exposed sediment has the potential to migrate to adjacent premises and enter into "waters" as defined under the Act. Accordingly, you are now directed to take the following action as specified in this Notice and within the time period as specified in the Notice. REASON FOR THE NOTICE: (s. 96(1) of the Act) (1) At approximately 2pm on 5 February 2015, two (2) Council Officers attended the premises identified as 100-110 Selkirk Avenue Cecil Park NSW in response to a report received concerning the importation of fill and filling of a waterway located at the premises identified as 100-110 Selkirk Avenue Cecil Park NSW. (2) The inspections revealed that a large trench (approximately 100m x 1.5m) had been excavated and a large mound of land fill was observed adjacent to the trench along the eastern boundary of the premises. A site worker was present whom confirmed that works were being conducted to level the site and that the trench has been excavated to allow water to travel through the premises. The site worker was advised by the Council Officers to immediately cease works. (3) Fairfield City Council therefore reasonably suspects that the unauthorised depositing of fill at the premises has resulted in land pollution. As a result of the works carried out on site, the contours and profile of the land form has been altered and the amount and/or level of contamination from the land fill is unknown. … (8) A Prevention Notice is therefore issued to the occupier of the premises to remove all foreign material from the affected premises. Works will also need to be conducted to restore the premises including the overland flow path to its original condition. THE SPECIFIED ACTION: (s. 96(2) of the Act) Immediately: 1 Cease excavation works and importing fill onto the premises. Within seven (7) days from the date of this Notice: 2 Remove all foreign material (land fill) from the subject premises. 3 Submit to Council, copies of receipts for the disposal of land fill/waste associated with the above works. Within fourteen (14) days from the date of this Notice: 4 Restore the premises to the condition in which they were before work was unlawfully carried out. Restoration work shall be conducted for the entire premises including but not limited to the overland flow path. 5 Submit to Council at the completion of the restoration work referred to above, evidence by way of updated surveyors report to substantiate that the levels of the land have been restored to the levels which existed prior to the unlawful work being carried out. … CONTINUING OBLIGATION Under s. 319A of the Act, your obligation to comply with the requirements of this Notice continues until the Notice is complied with, even if the time for compliance has passed.
On 18 February 2015 the Council issued an order to the plaintiff pursuant to ss 121B and 121D of the Environmental Planning and Assessment Act to cease carrying out specified building work, namely the alterations to the existing contours of the land, excavations and unauthorised landfill on the subject land. An order to the same effect was issued to the plaintiff's father, Abdolreza Ebadeh-Ahvazi.
It appears that the activities on the property promptly ceased, although the requirements of the notice dated 6 February 2015 remained, at least for some months, unsatisfied.
In April 2015 the plaintiff placed the property on the market for sale. The plaintiff gave evidence that he decided to sell due to financial difficulties. He said that a sale would enable him to reduce debt and provide funds to assist with a sub-division development being undertaken at Hinchinbrook by a company he controls, namely Donya Constructions Pty Ltd.
The selling agents were BOS Realty, being Mr Dean Boskovic and Mr Dean Boskovic Jr. The sale was listed for auction on 16 May 2015. For some reason not adequately explained in the evidence, the agents advertised the sale as a "mortgagee sale". That expression appeared in some on-line advertising, as well as on a sign which had been erected at the property. The sign included the following: MORTGAGEE SALE - 5.75 ACRES - Price guide $1,000,000 + - 5.75 Acres of prime land - DA approval & CC paid for a double storey 5 bedroom mansion - Fantastic Investment opportunity
Whilst the evidence is not entirely clear, it seems that prior to the auction the sign also stated that there was to be an auction held on 16 May 2015. That conclusion is consistent with the recollection of the defendant.
He gave evidence that about 11:30am on 16 May 2015 he noticed the sign whilst driving along Selkirk Avenue with his wife. At that time the defendant was interested in purchasing a property of at least 2.5 acres to build a home upon. There was no one at the property at that time. The defendant telephoned his son and told him about the property. The defendant's son, who knew Dean Boskovic Jr, offered to telephone the agent. He did so, and was told, amongst other things, that the auction was on that day, it was a great block of land with a development approval, the owner was a manager for Vesta Homes, and the block could be sub-divided down to 2.5 acres. The defendant's son was also told that some drainage work would need to be done (possibly costing about $80,000) to deal with some water overflows from "a dam behind the block".
The defendant's son immediately spoke to his father about what he had been told. In the course of that conversation the defendant asked his son to contact the Council to confirm that the block could be sub-divided, and to call the agent and make an offer of $1.2 million.
An offer of $1.2 million was duly made, but Dean Boskovic Jr stated that the owner was adamant that the property go to auction. The defendant's son attempted to obtain information from the Council about sub-division, but there was no one available to answer his query (it being a Saturday).
The defendant's son then called his father again, and told him about the fate of his offer, and that information about sub-division was not able to be obtained from the Council. Arrangements were made to meet at the auction.
It seems that the auction commenced at about 1:00pm at the property. Prior to the commencement, the auctioneer made a statement to the effect that the vendor would, before settlement, reinstate the land to its original levels, and would pay the cost of such works. That is likely to have been a statement made in relation to an additional special condition that had only recently been added to the draft contract.
The inclusion of the additional special condition had been prompted by the intervention of the Council, an officer of which had sent an email to the agents on 13 May 2015 and informed them that there were outstanding notices and orders, and that potential purchasers should be made aware that remediation work was required. The email attached a notice of Council's intention to make an order under s 121B of the Environmental Planning and Assessment Act. (Such an order was made on 3 June 2015). This intervention of the Council led to the agents raising the matter with the plaintiff's solicitors, and to the subsequent drafting and inclusion of the additional special condition.
There were four or five bidders at the auction. The bidding started at $1 million. The defendant was prepared to bid above his offer of $1.2 million "because other bidders made bids above that price so I thought it was worth more than $1.2 million". The defendant was the successful bidder at $1.46 million. He executed the contract shortly after the auction. The defendant had not obtained a copy of the contract before the bidding started. The payment of the deposit required under the contract was later attended to by the defendant's son.
The contract provided on its front page that the completion date was "35 days after the date of this contract (clause 15)". Special condition 1(A) provided: Completion shall take place within thirty five (35) days after the date hereof and on and after the expiration of the said thirty five (35) days either party shall be entitled to give to the other Notice to Complete this Contract within fourteen (14) days after the date of the said Notice and in this regard time shall be of the essence hereto and the parties hereby expressly acknowledge that where the said fourteen day period has been granted in such notice then such period shall be sufficient and reasonable notice and no objection shall be raised by the recipient of the notice as to reasonableness of time or as to the form of the notice provided that the notice is served in accordance with printed Clause 20 of the printed form of Contract and provides for completion on or after Fourteen (14) days from service and there shall be no requirement for the sender of the Notice to state a time and venue for settlement in the contents of such notice.
The additional special condition referred to earlier provided: Prior to completion, the vendor agrees to carry out the following at the vendor's expense: 1 Remove the load of soil currently lying on the property; 2 Carry out a Survey substantiating that the levels of the land have been restored. 3 Provide copies of receipts for the disposal of land fill/waste associated with the removal of the soil.
Clause 11.1 of the contract provided: Normally, the vendor must by completion comply with a work order made on or before the contract date and if this contract is completed the purchaser must comply with any other work order. Work order was defined to mean a valid direction, notice or order that requires work to be done or money to be spent on or in relation to the property or any adjoining footpath or road.
It appears from an email sent by Dean Boskovic Jr to the plaintiff on 19 May 2015 that on that day either the defendant, or more likely the defendant's son, was informed by the Council that a sub-division of the property might not be approved "due to the dam at the back". A query was raised about whether the problem might be resolved if drainage works were undertaken. The evidence is again unclear, but it seems that the plaintiff may have agreed to provide details of the engineer involved. The plaintiff and the defendant's son exchanged text messages on 23 June 2015 about that matter.
In the meantime, on 20 May 2015 the defendant's solicitor, Mr Isho of Isho Lawyers, sent requisitions on title to the plaintiff's solicitors, Galluzzo Lawyers. Requisition 8 was in the following terms: 8. Is there any outstanding notification, claim or requirement of: (a) a statutory or local authority, or (b) an adjoining owner which affects the property or any part of it? Any such notice, claim or requirement issued before contracts were exchanged must be complied with by the Vendor before completion.
Answers to the requisitions on title were received by Isho Lawyers on about 25 May 2015. The answer to requisition 8 was: 8. (a)-(b) Not as far as the vendor is aware.
In early June 2015 searches undertaken at the direction of Mr Isho revealed the existence of numerous Council notices and orders in relation to the property. These included the Prevention Notice issued on 6 February 2015 and the order for cessation of work issued on 18 February 2015.
The defendant drove to the property on about 5 June 2015 and observed that it seemed to be in the same condition it was in at the time of the auction.
On 17 June 2015 Isho Lawyers sent a letter to Galluzzo Lawyers which was in the following terms: We refer to our requisitions on title, your replies dated 22 May 2015 and the Contract for the Sale of the above property dated 16 May 2015 and advise as follows: Requisition 8: This requisition sought information about whether a statutory or local authority had issued any notice claim or requirement. We note your reply to this requisition "Not as far as the vendor is aware". This reply appears to be inaccurate. We confirm that Fairfield City Council has provided information concerning outstanding Notices and Orders issued by the Council before the date of the Contract, and in particular an Order under the Protection of the Environment Operations Act 1997 s. 96(2). We enclose copies of the letter from Council dated 26 May 2015 and the s.96(2) Order. We request that you provide this firm with evidence that your client has complied with these Notices and Orders. Contract for Sale of Land - Clause 11 Compliance with work orders: If your client has not complied with the attached Orders from Council, your client must comply with the Orders by completion in accordance with the provisions of this Clause. Please provide details of work carried out by your client to comply with the Order. Additional Special Condition: We note that the "additional special condition" contained in the Contract requires your client at his cost to carry out certain works to the property and provide our client with certain documents. Our client instructs that to the best of his knowledge it appears that no works have been carried out to the property since the date of Contract. Please confirm that your client will comply with the provisions of the additional special conditions before completion. Latent Defect in Title: It appears that despite the answer to requisition 8, your client was fully aware of the existence of the Notices and Orders issued by the Council before the Contract was entered into. Under the s.96(2) Order, the Council is empowered to undertake the work required by the Notice if your client does not carry out the work in accordance with the Notice. The Council is entitled to recover the cost of doing so, and to impose a charge on the land for the cost of the work. It appears that if your client does not carry out the work before completion the vendor will not be able to give good title to the Property on completion. We note that the completion date of the Contract is 20 June 2015. Please provide confirmation and supporting documentation that the work on the Land has been carried out to the satisfaction of Council by close of business on 19 June 2015.
On 19 June 2015 Galluzzo Lawyers sent a facsimile to Isho Lawyers in the following terms: We refer to your letter of the 17/06/2015. We advise that our client shall comply with the Additional Special Conditions referred to in the contract in respect to the Council's order.
Completion of the contract did not take place by the completion date of 20 June 2015.
On about 22 June 2015 the defendant again went to the property. He observed that no work had been done upon it.
On 23 June 2015 the plaintiff sent an email to Galluzzo Lawyers attaching a survey of the property. By his email, the plaintiff requested that the survey be forwarded to the purchaser. Ms Zhou of Galluzzo Lawyers forwarded the survey to Isho Lawyers later that morning. Also on that day, the plaintiff paid a fine of $469.50 to the Council in respect of the property. The plaintiff sent a further email to Galluzzo Lawyers attaching a copy of the receipt. Ms Zhou then forwarded that email to Isho Lawyers. She also sent an email to Isho Lawyers in the following terms: We have instructions to book in settlement for this Thursday as the works are completed and docs provided to you.
That email was followed by a facsimile from Galluzzo Lawyers to Isho Lawyers which was in the following terms: We have emailed you (andy@isho.com.au) the fine receipt, Survey and confirm that the vendor's works have completed. Vendor requires settlement on Thursday, 25 June 2015, 3:00pm at NAB Cnr King & Elizabeth Streets Sydney. Would you please provide settlement figures ASAP.
Later on the morning of 23 June 2015 Ms Zhou sent a further email to Mr Isho in which it was stated that rubbish removal works were "happening now" on the property, that the plaintiff wanted to meet the defendant at 1:00pm on 24 June 2015 to carry out a final inspection, and that evidence of soil removal would be provided.
It appears from a tax invoice dated 23 June 2015 issued by 2 Men & A Bobcat, and the accompanying letter, that on 23 June 2015 four loads of rubbish were removed from the property and taken to Benedict's Recycling Centre. That the four loads the subject of the tax invoice (No 1577) were in fact received on that day by Benedict Recycling Pty Ltd is apparently confirmed by a tax invoice issued by Benedict Recycling Pty Ltd dated 30 June 2015.
On 25 June 2015 Galluzzo Lawyers sent a letter to Isho Lawyers which included the following: We refer to the above matter and confirm that the vendor has complied with the Additional Special Conditions of the Contract: 1 The vendor has removed all foreign material (land fill) from the subject premises (carried out yesterday and inspected by the purchasers); 2 Survey substantiating that the levels of the land have been restored (already emailed to your office); and 3 Letter from the removal company is attached to confirm that the works have been carried out. Our client has complied with the conditions under the contract and requires the purchaser to settle on Monday 29 June 2015, interest shall apply if not settled on the day.
However, it seems that the defendant (either personally, or by the agency of his son) did not inspect the property on 24 June 2015. Further, the survey that had been earlier emailed to Isho Lawyers does not appear to be a survey that was carried out after the completion of works on the property. Finally, the letter "from the removal company" was not in fact attached, but was sent separately later that day.
On 25 June 2015 Isho Lawyers sent a letter to Galluzzo Lawyers which included the following: We refer to our letter of 17 June 2015 and note that to date we have not received a proper reply from you in relation to the matters raised in that letter. We have conducted further enquiries with Fairfield City Council and note the following: 1 That Orders provided to you in our letter of 17 June 2015 and served by the Council on 6 and 18 February 2015 remain outstanding; 2 That a further Order was served by the Council on your client on 3 June 2015. Copy of the Order enclosed for your information; 3 The nature of the Orders are serious in particular Order number 3830.1/2015 served on your client on 6 February 2015. Your client is required to comply with these Orders as well as with the Additional Special Condition contained in the Contract. We note that the terms of clause 11 require compliance with an order. The proper evidence of compliance with that order is the satisfaction of Council that it has been complied with. As the failure to comply with an Order may result in the Council imposing a charge on the land, it is your client's responsibility to supply evidence that the Order has been complied with. The survey you emailed to us on 23 June 2015 does not appear to reveal whether or not the land has been restored to its former levels, as the Order requires. We also refer to your letter of today enclosing a letter from "2 Men & A Bobcat" dated 23 June 2015. We confirm that the letter from 2 Men & A Bobcat does not appear to comply with the terms at paragraph 3 of the Additional Special Conditions that states "Provide copies of receipts for the disposal of landfill/waste associated with the removal of the soil". We are instructed to confirm that our client denies your client's allegation that our client inspected the property yesterday as you allege in your letter of today. Your client is not in a position to complete until all works pursuant to the above Orders and the Additional Special Condition are completed and proper documentary evidence are provided to our client. We enclose by way of service a Notice to Preform [sic - Perform].
The Notice to Perform relevantly provided: WHEREAS: A. By Agreement for Sale dated 16 May 2015 ("the Agreement") you agreed to sell and Sarjon Yousif Namrood ("the Purchaser") agreed to buy 100-110 Selkirk Avenue Cecil Park NSW being property fully described in Certificate of Title Folio Identifier 117/31359 ("the Property") for the sum of $1,460,000.00. B. By Clause 11 of the Agreement you agreed to comply before completion with any Order issued before the date of the Agreement. C. There are two Orders made by Fairfield City Council namely order 3830/2015 served on 6 February 2015 and Order 3881.1/2015 served on 18 February 2015 1 ("the Orders"). D. Pursuant to the Agreement you agreed to carry out certain works to the Property at your expense before completion of the Agreement namely: (i) Remove the load of soil currently lying on the property; (II) Carry our Survey Substantiating that the levels of the and [sic - land] have been restored; (iii) Provide copies of receipts for the disposal of the land/waste associated with the removal of the soil. ("the Works") E. The time for completion specified in the Agreement has expired and you have failed to provide evidence of compliance with the Orders. F. The time for completion specified in the Agreement has expired and you have failed to carry out the Works. As Solicitors for and on behalf of the Purchaser WE HEREBY GIVE YOU NOTICE: 1. You are required to provide evidence that the Orders have been complied with to Council's satisfaction by 5.00pm on Friday, 10 July 2015. 2. You are required to carry out the Works on or before 5.00 p.m. on Friday, 10 July 2015 in which respect time for completion shall be of the essence of the Agreement. 3. If you fail to comply with this notice the Purchaser shall be entitled by notice in writing to you terminate the Agreement and to recover damages for breach of the Agreement and loss of bargain damages.
On 29 June 2015 Ms Zhou sent a facsimile to Isho Lawyers which included the following: We refer to the above matter and advise that our client has completed the vendor's works pursuant to the "Additional Special Conditions" in the contract. The vendor is now in the process of obtaining Council compliance. In the meantime our client instructs that the matter be settled on Wednesday 01 July 2015, 3:00pm at NAB. The agent will hold back $13,000.00 in trust pending the issue of Council compliance.
On 1 July 2015 Isho Lawyers replied, maintaining that it did not appear that the plaintiff had complied with the terms of the contract or the Notice to Perform. The provision of evidence of compliance was called for by 3 July 2015.
Ms Zhou responded by email later on 1 July 2015. She maintained that the plaintiff had complied with the Additional Special Conditions. She stated that the plaintiff wanted to settle now with $13,000 being held back "until he gets the Council compliance". Ms Zhou asserted that the purchaser cannot delay the vendor "as long as the vendor's works are complete and evidence provided".
On 7 July 2015 Galluzzo Lawyers sent a letter to Isho Lawyers which included the following: We refer to the above matter and enclose the following pursuant to Additional Special Condition 1, 2 and 3: (1) The soil has been removed; (2) Survey Report dated 03/07/2015 showing levels in red; (3) Letter and Receipt from removal company.
The letter further advised that settlement had been booked for 10 July 2015.
The survey plan attached to the letter of 7 July 2015 was prepared by Apex Surveying. The plan is dated 3 July 2015. It appears to show the levels of the property as at 8 September 2014 and as at 3 July 2015.
Isho Lawyers sent a letter to Galluzzo Lawyers on 10 July 2015. Amongst other things, the letter asserted that evidence had still not been provided to demonstrate that the plaintiff had in fact complied with the Additional Special Condition.
Further correspondence passed between the parties in the period leading up to 29 July 2015. That correspondence largely concerned two Notices to Complete that were issued in that period by the plaintiff. Both of those Notices to Complete were later withdrawn by the plaintiff. It should be noted that the Benedict Recycling Pty Ltd tax invoice was sent to Mr Isho on 13 July 2015. Also, on 17 July 2015, Ms Zhou sent an email to Mr Isho which attached a letter to the plaintiff from the surveyor at Apex Surveying. The surveyor's letter included the following: I am writing in relation to surveys carried out at the above property. An initial contour and detail survey was carried out at the above mentioned property on the 8th September 2014 as per your request. A second survey was then carried out on the 3rd July 2015 using the same methods (ie Global Navigational Satellite Systems). Attached is a plan which overlays the more recent survey over the original survey with the current levels and contour lines shown in red. It is my understanding that in between surveys an amount of soil was brought to and then removed from the site. Generally, as can be seen from the contour lines, the site's current topography is consistent with the original survey. There are a number of areas which have discrepancies of up to 200 millimetres but this needs to be considered in the light of the ground being uneven in nature and that the GNSS survey method is only accurate to +/- 30mm. The areas of the greatest difference are in the western corners adjacent to Selkirk Avenue. In the northwest and southwest corners small gullies have been levelled out although this area was covered in spike rushes which created a significant unevenness to the ground. Should you have any questions in relation to any of the above please do not hesitate in contacting me. A further copy of the letter (and the attached survey plan) was sent to Isho Lawyers on 21 July 2015.
On 29 July 2015 Isho Lawyers sent a letter to Galluzzo Lawyers enclosing a Notice of Termination. The Notice of Termination was in the following terms: WHEREAS: A. You entered into a contract for sale of land known as 100-110 Selkirk Avenue Cecil Park NSW on 16 May 2015 with Mr Sargon Youssif Namrood ("Contract"). B. A notice to perform dated 25 June 2015 was served on you requiring performance of Clause 11 of the Contract and of the Additional Special Condition to that contract ("Notice to Perform"). C. You have failed to comply with the Notice to Perform. D. You have purported to issue a notice to complete while the obligations specified in the Notice to Perform remain unperformed, without taking steps to perform those obligations or to demonstrate your readiness or willingness to do so. As solicitors for and on behalf of the purchaser we HEREBY GIVE YOU NOTICE THAT: The Contract for sale referred to above and in the Notice to Perform is terminated. DATED: 29 July 2015
Later on 29 July 2015, Galluzzo Lawyers sent a letter to Isho Lawyers in which it was stated that the Notice of Termination was a repudiation of the contract and an anticipatory breach of the contract. The letter further stated that the plaintiff was ready, willing able to complete the contract, and was prepared to give the defendant the opportunity to withdraw the Notice of Termination and proceed to completion on 10 August 2015.
On 4 August 2015 Isho Lawyers sent a letter to BOS Realty requiring that the deposit held by the agent be released to the defendant forthwith.
In a letter sent to Galluzzo Lawyers on 5 August 2015, Isho Lawyers stated that the plaintiff had not complied with its obligations under the contract and had not provided evidence to demonstrate compliance with his obligations. The validity of the termination was maintained.
At about this time, the plaintiff sent to the investigations officer of the Council the Apex Surveying survey plan and letter, and "dockets for the site clean-up and soil removal and tipping location". Eventually, on 22 September 2015 the investigations officer (Mr Rueben Sinai) sent an email to the plaintiff which was in the following terms: In lieu [sic] of recent documentation submitted to Council, the Order 12 & Order 19 issued upon yourself and Abdolreza Ebadeh-Ahvazi has been deemed complied. Councils Building Control & Compliance Department is taking no further action at this time.
On 22 September 2015 Galluzzo Lawyers sent a letter to Isho Lawyers which attached a further Notice to Complete. The letter also attached the email from Mr Sinai concerning compliance with the Council orders. The Notice to complete (which was said to replace an earlier notice dated 24 July 2015) was relevantly in the following terms: Sam Ebadeh-Ahvazi (vendor) gives you notice: The vendor is ready, willing and able to complete the conveyance from you of the property known as 100-110 Selkirk Avenue, Cecil Park in accordance with the contract for sale of land dated 16 May 2015 (the contract); You are required to complete the sale on or before 09 October 2015 and in this respect time is of the essence for the completion of the contract; The vendor appoints on or before 3.00pm, 09 October 2015 at the office of National Australia Bank, Cnr King & Elizabeth Streets Sydney as the time and place for completion or at such other place as the vendor may direct; and Should you fail to complete the contract for sale of land within the period specified in this notice then you shall be in breach of the contract and the vendor shall exercise all other rights and remedies as are available to him by reason of your breach. Dated: 22 September 2015
The 22 September 2015 letter and attachments were intended to be sent by facsimile, but it appears that the transmission was not successful. However, the defendant accepted that the letter and attachments were received in the mail on 24 September 2015. No point is taken that the notice did not allow a reasonable time for completion to occur.
Completion did not take place on 9 October 2015. Settlement agents for the plaintiff attended at the time and place stipulated for completion in accordance with the Notice to Complete. There is no suggestion that the plaintiff was not in a position to complete the contract on that occasion. There was no appearance by or on behalf of the defendant at the appointed settlement.
On 19 October 2015 Galluzzo Lawyers sent a letter to Isho Lawyers which enclosed a Notice of Termination. The Notice, which was dated 19 October 2015, was based on the failure of the defendant to complete within the time stipulated in the Notice to Complete of 22 September 2015.
It appears from a Sales Advice issued by BOS Realty that on about 19 October 2015 the plaintiff agreed to sell the property to Hong Ngoc Thi Vo for $1.5 million. It seems that this sale was completed on about 17 November 2015. In the meantime, the plaintiff commenced these proceedings on 23 October 2015.

(a) Validity of the defendant's termination on 29 July 2015

The first issue to determine is whether the defendant validly terminated the contract on 29 July 2015. The defendant primarily submitted that the termination was valid because the plaintiff had failed to perform its obligations under cl 11.1 and the additional special condition, the time for which had been made essential by the Notice to Perform issued on 25 June 2015.
In Louinder v Leis (1982) 149 CLR 509 Mason J (with whom Stephen J agreed and Gibbs CJ and Wilson J generally agreed) referred (at 523) to the joint judgment of Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at 299 where their Honours said: In cases where the contract contains a stipulation as to time but that stipulation is not an essential term then before a notice can be given fixing a time for performance, not only must one party be in breach or guilty of unreasonable delay, but also the party giving the notice must himself be free of default by way of breach or antecedent relevant delay. Only then may a notice be given fixing a day a reasonable time ahead for performance and making that time of the essence of the contract.
Mason J continued (at 524): In my view Barwick CJ and Jacobs J were right in saying that a mere failure to comply with a non-essential stipulation as to time justifies the giving of a notice having the effect of making time the essence of performance of that stipulation, even though the failure to comply does not involve an unreasonable delay. The non-essential stipulation as to time is a term of the contract enforceable by an action for damages and it is the breach of this term that justifies the giving of the notice.
The notion of a notice to perform was later discussed by Mahoney JA in Gustin v Taajamba Pty Ltd (1988) 4 BPR 97,274. After referring to Neeta (Epping) Pty Ltd v Phillips (supra) and Louinder v Leis (supra), Mahoney JA stated: It appears now settled that a distinction is to be drawn between, as I have described them, a notice to perform and a notice to complete. Where a party does not in due time perform an obligation prior to the obligation to complete, the other party may, by a notice, fix the time for performance of that obligation. The effect of such a notice to perform, properly given, is twofold: it fixes a further time for the performance of the obligation; and it makes the obligation an essential obligation of the contract, in the sense that failure to perform it by the new time is a ground for termination of the contract for breach.
Accordingly, a notice to perform may be issued by a party if the other party has not in due time performed an obligation prior to the obligation to complete. The defendant in this case contends that it had the right to issue a Notice to Perform in respect of the plaintiff's obligations under cl 11.1 and the additional special condition because the plaintiff had failed to perform those obligations by 20 June 2015. The contention rests upon the proposition that upon the true construction of those provisions, the plaintiff was obliged to perform the obligations by "the completion date", which was 35 days after the date of the contract, viz. 20 June 2015. The defendant submitted that if cl 11.1, the additional special condition, Special Condition 1(A) and cl 15 were all read together, it was clear that the plaintiff was obliged to carry out its obligations under cl 11.1 and the additional special condition by 20 June 2015.
It is true that 20 June 2015 is "the completion date" under the contract, and that cl 15 provides that the parties must complete by that date, failing which a party is entitled to serve a notice to complete if it is "otherwise entitled to do so". Special Condition 1(A) further provides that completion "shall take place" within 35 days after the date of the contract, and gives either party the right, after that time, to give a Notice to Complete. However, cl 11.1 requires compliance by the vendor with work orders "by completion"; and the additional special condition requires the vendor to do certain things "prior to completion". A question arises as to whether the references to "completion" in those provisions should be read as references to "the completion date", so that the obligations imposed thereby are required to be performed by that date.
In my view, whilst the contract requires the parties to complete by 20 June 2015 (albeit that time is not of the essence - see cl 21.6), and further stipulates that the obligations under cl 11.1 and the additional special condition will be performed by or prior to completion, the contract should not be read as fixing 20 June 2015 as the time for performance of those obligations. The contract, read as a whole, ought instead be read as requiring performance of those obligations by or prior to the time when completion actually occurs.
The language of the contract draws a distinction between "the completion date" and "completion".
The former expression is not only used in cl 15. It is employed, for example, in cl 4.1 to fix the time for service by the purchaser of the form of transfer. By cl 13.4.3 certain obligations may arise if the purchaser is not registered for GST purposes by the completion date. Clause 27.9 provides that in certain circumstances the completion date becomes a later date.
The expression "completion" is employed frequently throughout the contract (including in cl 13.4.3 itself). It is apt to describe the event of completion which occurs when the parties perform their respective obligations whereby the title to the property may be conveyed from the vendor to the purchaser (see Peter Butt, The Standard Contract for Sale of Land in New South Wales, Second Edition, 1998 at p 635). This is reinforced by the nature of the various circumstances in which the expression is used. For example, cll 6 and 7 provide that the purchaser can only make certain claims if the claim is made "before completion". Clause 14.2 provides for the parties to make any necessary adjustment "on completion". Clause 16 provides, inter alia, that "on completion" the vendor must give the documents of title to the purchaser, and the purchaser must pay the price to the vendor. Clause 17 provides that, normally, the vendor must give the purchaser vacant possession of the property "on completion". It would make no sense to read those references to "completion" as meaning "the completion date".
I see no good reason to read the references to "completion" in either cl 11.1 or the additional special condition as referring to "the completion date". The ordinary meaning of the language of those provisions, particularly when viewed in the context of the contract as a whole, indicates that the parties intended that those obligations were to be performed by the time actual completion occurs (in the case of cl 11.1), and prior to the time actual completion occurs (in the case of the additional special condition). No earlier time is fixed by the contract for the performance of those obligations.
That being the case, I do not think it was open to the defendant to issue the Notice to Perform on 25 June 2015. The plaintiff was not then in breach of either cl 11.1 or the additional special condition. The plaintiff had not failed to comply with a non-essential stipulation as to time under either provision. It was not open to the defendant to seek to fix a further or new time for the performance of the obligations, or to make performance by such time essential. It follows that the defendant's termination of the contract, in so far as it is based on an asserted failure by the plaintiff to comply with the Notice to Perform, cannot be supported.
I should note that Mr McGrath of counsel, who appeared for the defendant, referred me to a decision of McLelland J in Jillinda Pty Ltd v McCourt (1983) 3 BPR 97,174. In that case, McLelland J appears to have concluded that a provision requiring the vendor to furnish a certificate "not less than seven days prior to completion" obliged the vendor to do so not less than seven days prior to the completion date stipulated in the contract. However, that case involved a different form of contract (which was varied by a later deed), and the circumstances in which the question of construction arose in that case are not clear. I do not, with respect, think that the decision sheds much light upon the question of construction raised here.
The defendant also sought to support the validity of his termination on the basis that it was an acceptance of the plaintiff's repudiation of the contract. The defendant contended that the plaintiff had repudiated the contract by refusing to comply with his obligations under cl 11.1 and the additional special condition by the completion date of the contract or any reasonable period thereafter, and was only willing to complete the contract in a manner inconsistent with those obligations (see Defence paragraphs 8, 9, 12, 14 and 15; and Cross-Claim paragraph 58). In submissions, it was further put that the plaintiff had made a number of claims prior to 29 July 2015 that his obligations had been performed when that was not in fact the case.
In dealing with the repudiation case it is necessary to consider the nature of the plaintiff's obligations under cl 11.1 and the additional special condition, and the evidence as to the plaintiff's compliance with those obligations.
Clause 11.1 imposed obligations upon the plaintiff to comply with any work order made on or before the contract date. The order issued by the Council on 6 February 2015 falls within the definition of work order as it required work to be done or money to be spent on or in relation to the property. In particular, it required: 1. removal of all foreign material (land fill) from the property; 2. restoration of the property to the condition it was in prior to the undertaking of the unauthorised (excavation and filling) works; and 3. submission to Council of receipts for the disposal of land fill and waste, and an updated surveyors report to substantiate that the levels of the land had been restored to the levels which existed prior to the unlawful work being carried out. The orders issued later in February 2015 to cease carrying out work do not seem to fall within the definition of work order.
The additional special condition required: 1. removal of the load of soil "currently lying on the property"; 2. carrying out a survey substantiating that the levels of the land had been restored; and 3. provision of copies of receipts for the disposal of land fill/waste associated with the removal of the soil.
As I have found, cl 11.1 required compliance by the time of actual completion of the contract, and the additional special condition required compliance prior to the time of actual completion of the contract.
The plaintiff gave evidence that on about 13 June 2015 he engaged 2 Men & A Bobcat "to remove the excess soil from the property", and that on 23 June 2015 2 Men & A Bobcat removed four loads of soil and other materials that had been "imported" onto the property. That evidence, which was not challenged, is corroborated by the tax invoice (No 1577) dated 23 June 2015 which refers to a "site clean" and four loads for which $2,640 was charged. It further appears from the covering letter and the Benedict Recycling tax invoice dated 30 June 2015 that the four loads were received at Benedict's Recycling Centre on 23 June 2015.
The plaintiff gave further evidence that on about 28 June 2015 he engaged Apex Surveying to provide a report regarding the levels of the land on the property, and on about 3 July 2015 he received a survey report showing the levels of the land. The plaintiff subsequently obtained the letter from Apex Surveying dated 16 July 2015, referred to earlier, which provided further information concerning the levels of the land.
The tax invoices, the survey report and the surveyor's letter were all provided to the defendant's solicitors well prior to 29 July 2015.
In my opinion, the evidence clearly establishes that the land fill that had been placed on the property (the "load of soil" referred to in the additional special condition) had been removed on 23 June 2015. The surveyor's letter further indicates that the new survey showed that the current topography of the site was generally consistent with the original survey. The surveyor noted that in some areas (particularly the western corners near Selkirk Avenue) there were discrepancies of up to 200mm, but went on to state that these needed to be considered in the light of the uneven nature of the ground, and allowance had to be made for survey inaccuracies. It further appears that the discrepancies evident in the western corners may have been related to the existence of spike-rushes which create "significant unevenness to the ground".
The evidence establishes, in my view, that the property had been effectively restored to the condition it was in prior to the undertaking of the unauthorised works. The land fill had been removed and there is no suggestion that the "large trench" adjacent to the land fill, referred to in the order of 6 February 2015, remained.
I am also satisfied that the survey plan and the surveyor's letter "substantiate that the levels of the land had been restored to the levels which existed prior to the unlawful work being carried out". The plan and letter provide evidence that the disturbance to the levels brought about by such works had been removed. The existence of the discrepancies noted by the surveyor does not lead to the conclusion that the levels had not been restored as required. I am unable to read the requirements for restoration of the levels as calling for such precision that the existence of discrepancies of the scale and nature noted by the surveyor bespeaks a failure to comply. The requirements involved the undertaking of earthworks upon a large, vacant and apparently uneven site to overcome the effects of certain unauthorised works which included the importation of a large mound of land fill (a "load of soil"), and the making of a "large trench". No particular degree of accuracy was specified as necessary in order to achieve the required restoration of levels.
I do not think that it would be reasonable to read the Council order of 6 February 2015, or the additional special condition, as requiring exact restoration, or restoration to a greater degree than that shown by the survey plan and the surveyor's letter. That conclusion is reinforced by the fact that the Council itself, having considered the matter, and having received the survey evidence, later concluded that its order of 6 February 2015 had been "deemed complied".
It is true that prior to 29 July 2015 the plaintiff had not provided evidence to the defendant that the Council had been given receipts for the disposal of land fill and waste or the updated surveyor's report, as required by the order of 6 February 2015. Indeed, it seems that such information may not have been provided to the Council until about 5 August 2015. I accept that the various statements made by the plaintiff prior to 29 July 2015 to the effect that he had complied with all his obligations were not correct.
Nonetheless, prior to 29 July 2015 the plaintiff had: 1. caused the works (including the removal of soil and rubbish) to be carried out on 23 June 2015; 2. caused a survey to be carried out on 3 July 2015; 3. provided documentary evidence to the defendant showing that four loads had been removed from the property and disposed of at Benedict's Recycling Centre; and 4. provided survey evidence to the defendant showing that the topography of the site was generally consistent with the earlier survey, albeit that there were some discrepancies as described. The plaintiff had further indicated that he was prepared to settle the sale with $13,000 held back until he obtained "Council compliance".
I do not accept that the plaintiff repudiated the contract. The plaintiff took steps to comply with his contractual obligations in relation to the condition of the property (which had to be performed by or prior to actual completion), and furnished evidence in support of his contention that he had done so. There was no refusal to perform in accordance with the contract. Neither was there an insistence that the contract be performed in a manner inconsistent with his obligations. At most, the plaintiff was erroneously contending that he had complied with his obligations when there were in fact outstanding matters to attend to. However, by 29 July 2015 the only outstanding matter was the need to submit certain information to the Council as required by the 6 February 2015 order. In that regard, the plaintiff had indicated that he was, or would be, seeking confirmation from the Council that he had complied with his obligations.
The conduct of the plaintiff, viewed overall, falls far short of conduct that evinces an intention not to perform the contract in accordance with its terms. The defendant cannot support the validity of his termination on the basis that it was an acceptance of the plaintiff's repudiation of the contract.
It follows that the defendant's termination of the contract on 29 July 2015 was invalid.

(b) Validity of the plaintiff's termination on 19 October 2015

The next issue to determine is whether the plaintiff validly terminated the contract on 19 October 2015. The termination was based on the failure of the defendant to complete the contract within the time set within the Notice to Complete dated 22 September 2015.
The defendant challenged the validity of the Notice to Complete. It was submitted that the plaintiff's obligations under cl 11.1 and the additional special condition remained unperformed as at 22 September 2015. It was put that the email from Mr Sinai of the Council, which accompanied the Notice to Complete, did not demonstrate compliance with those obligations. The defendant also submitted that even if the email was sufficient to show compliance, a reasonable time should have been given before the Notice to Complete was served. It was put that until the defendant had been given that time, it could not be said to be in default such as would justify the service of a Notice to Complete upon him.
In my opinion, the Notice to Complete was validly served by the plaintiff. It was not necessary for the plaintiff to have complied with cl 11.1 and the additional special condition at the time the notice was served. Those obligations were not then due for performance. Rather, it was incumbent upon the plaintiff to be ready, willing and able to perform his obligations as and when they were required to be performed up to and including completion (see McNally v Waitzer [1981] 1 NSWLR 294 at 296-7 and 304).
In any case, I think that the plaintiff had in fact complied with cl 11.1 and the additional special condition by 22 September 2015. The plaintiff had by that time submitted to the Council the requisite information concerning disposal of the land fill and waste, and the updated surveyor's report that substantiated that the levels of the land had been restored. The evidence, including the content of Mr Sinai's email, establishes to my satisfaction that the plaintiff had complied with his obligations under both cl 11.1 and the additional special condition by 22 September 2015. For the reasons given earlier, the property had been effectively restored to the condition it was in prior to the undertaking of the unauthorised works, and restoration to a greater degree than that shown in the survey plan and surveyor's letter was not required.
Further, it was not necessary to afford the defendant a reasonable time after the provision of Mr Sinai's email before the service of the Notice to Complete. The Notice to Complete was justified in accordance with the terms of Special Condition 1(A), and the notice (which was received on 24 September 2015) gave at least the 14 day period for completion which the parties had agreed would be sufficient and reasonable notice. Moreover, the defendant was relevantly in default at the time the notice was issued because he was erroneously maintaining that he had validly terminated the contract on 29 July 2015.
The Notice to Complete was effective to make the stipulated time for completion (by 3:00pm on 9 October 2015) essential. The failure of the defendant to complete the contract by that time was a failure to comply with the contract in an essential respect within the meaning of cl 9 of the contract. The plaintiff was thus entitled to terminate the contract by notice.
In my opinion, the plaintiff's termination of the contract by notice given on 19 October 2015 was valid. The plaintiff thereupon became entitled, under cl 9.1 of the contract, to keep or recover the deposit. The deposit did not exceed 10% of the purchase price.

I turn now to consider the defendant's claim for relief under the Australian Consumer Law.
The claim is based on certain conduct of the plaintiff's agents which is said to have been in trade or commerce. The conduct is alleged to have been misleading or deceptive or likely to mislead or deceive within the meaning of s 18 of the Australian Consumer Law. The defendant claims that by reason of such conduct he purchased the property, and thereby suffered loss.
First, it is contended that the use of the term "mortgagee sale" in the marketing of the property was misleading in that it conveyed representations to the effect that the auction was being conducted by a mortgagee to recover monies secured on the property, that the sale was a forced sale, and that the auction was at a low reserve.
Second, it is contended that the statement made by the auctioneer prior to the commencement of the auction, to the effect that the vendor would at his own expense return the land to its original levels before settlement, was misleading in circumstances where there was no disclosure of the existence of the various orders and notices that had been issued by the Council. It was submitted that the statement incorrectly suggested that the plaintiff was voluntarily undertaking to do the works, and in the circumstances created the false impression that the plaintiff was not obliged to undertake such works.
The defendant asserts that the conduct complained of was calculated to, and did in fact, induce him to bid at the auction. The defendant deposed that on about 19 May 2015 he told his solicitor, Mr Isho, that he attended and bid at the auction believing it was a mortgagee sale and that he might get it for a cheaper price. He further deposed that on about 5 June 2015 he told Mr Isho that if he had known that Council notices and orders had been served on the owner he would not have bought the property.
It may be accepted that the incorrect statements made about the sale being a mortgagee sale were misleading or deceptive. It may also be accepted that the defendant, at least when he first saw the sign at the property on 16 May 2015, believed that the sale would be a mortgagee sale. That, together with the price guide of $1,000,000 +, which the defendant agreed attracted him, is likely to have engendered a belief that the property might be purchased for a good price. The defendant gave evidence that he understood that a mortgagee sale was a sale by a bank.
However, prior to the auction, the defendant's son told him that the owner of the property was a manager of Vesta Homes, and that the owner did not want to take any offers. The defendant accepted in cross-examination that he knew that the real estate agent was dealing with that person. I therefore do not accept that the defendant thereafter held any belief that the sale was a mortgagee sale. Indeed, when it was put to him that at that point he did not believe a bank was selling the property, the defendant said that at that stage he "didn't even think about those things".
In these circumstances, and having regard to the defendant's evidence about bidding above $1.2 million because other bidders were doing so, I am unable to conclude that any statement about a mortgagee sale was a cause of the defendant's purchase of the property.
I do not think that the statement made by the auctioneer, coupled with the lack of disclosure concerning the Council's orders and notices, constitutes misleading or deceptive conduct or conduct likely to mislead or deceive. The statement was made in relation to the additional special condition which had only recently been included. It was a statement concerning the effect of that condition. The statement accurately summarised that effect. Moreover, even if, as seems to be the case, the provenance of the condition was a notice of intention to make an order in similar terms, no reasonable expectation of disclosure of the existence of such a notice (or even the existence of orders already made) would arise in the circumstances (see Miller and Associates Insurance Broking Pty Ltd v BMW Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [18]-[20]). In the context of contracts for the sale of land this is a subject area about which it would ordinarily be expected that potential purchasers would make their own enquiries. That position was reflected in this case in the terms of Special Condition 3 of the draft contract. Further, the subject of work orders is expressly dealt with in cl 11 of the contract. In all the circumstances, I do not think that the conduct should be regarded as conduct that leads or is likely to lead potential purchasers such as the defendant into error concerning the obligations of the plaintiff to carry out works.
I would not in any event be prepared to accept that had the defendant been told about the Council's orders he would not have purchased the property. I do not think that such information would have led to any different outcome.
The defendant first saw the property less than two hours before the auction. He did not inspect the property beyond looking at it from behind a fence. He quickly made an offer of $1.2 million, which was not accepted. He then attempted to make an enquiry to the Council about the potential for sub-division of the property, but was unable to obtain any information. He nonetheless decided to attend the auction. When he arrived there he made no attempt to speak to the agent, or even to obtain a copy of the draft contract. He made bids above $1.2 million because other bidders were doing so. In cross-examination he said that he later told Mr Isho that he thought he had acquired the property for a cheap price. In truth, the defendant saw an opportunity to purchase the property at a good price and was prepared to pursue that opportunity, despite knowing virtually nothing about the property.
In addition to the above, I would also reject the claim on the basis that the conduct complained of did not take place in trade or commerce within the meaning of s 18 of the Australian Consumer Law.
The plaintiff's agents were acting in the course of the sale of a large block of land which the plaintiff had purchased and financed in his own name with the intention of building a home for his parents, his brothers and himself. I accept the plaintiff's evidence that he held that intention. That he did so is supported by the terms of the Complying Development Certificate he obtained, including the approved plans. I do not think that the reference on the plans to Vesta Homes calls for a different conclusion. Even though that company is involved in the business of building project homes, there is no evidence (and it was not put to the plaintiff) that the building of the house on the plaintiff's property was to be undertaken as part of the company's business. There is no evidence that the plaintiff's role at the company is other than as a senior employee.
I also accept the plaintiff's evidence that he decided to sell the property for financial reasons, related to a need to reduce debt and provide funds to support a property development being undertaken by a company he controls, Donya Constructions Pty Ltd. There was thus a connection between the sale transaction and that property development. However, the fact remains that the property was a personal asset of the plaintiff's, acquired for domestic, not business, purposes. That the plaintiff subsequently decided to sell the property and intended to use some of the proceeds of sale (after debt reduction) to assist a business venture does not mean that the sale transaction is itself a business or professional transaction or activity. In my view, the sale essentially bears the character of a personal, domestic transaction, albeit one not unrelated to the plaintiff's business activities.
The defendant placed some emphasis upon various communications that were either addressed to or from the plaintiff at Vesta Homes (or from the plaintiff as a director of Donya Group). However, I consider that these forms of address are largely to be explained as matters of habit or convenience (for example, for contractors who have had contact with the plaintiff through his work at Vesta Homes). In my view, they do not indicate that the plaintiff's sale of the property was in the nature of a business or professional activity rather than a personal or private activity.
Having regard to the totality of the circumstances concerning the plaintiff's involvement with the property, it seems to me that the relevant conduct of the plaintiff (engaged in on his behalf by his agents) ought not be regarded as an aspect or element of an activity or transaction that of its nature bears a trading or commercial character (see Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [37]). In my opinion, the conduct did not take place in trade or commerce within the meaning of s 18 of the Australian Consumer Law.
Before leaving this topic I should note a further difficulty standing in the way of the defendant's Australian Consumer Law claim. That difficulty concerns proof that the impugned conduct caused the defendant to suffer loss. Even if entry into the contract was held to have been caused by misleading or deceptive conduct, there is no evidence that the property was worth less than $1.46 million at the time of purchase. It has thus not been shown that entry into the contract itself caused the defendant to suffer loss. The defendant asserts, however, that had he not entered into the contract, he would not have paid the deposit which, to the extent that it cannot be recovered by the defendant, has been lost. The difficulty with that assertion is that the loss of the deposit could be seen, as submitted by Ms Oliak counsel for the plaintiff, to be the result of the defendant's failure to complete the contract, and that such failure ought be regarded as an intervening act that breaks the chain of causation from entry into the contract. It is not necessary for me to decide that question.

(d) The claim for the return of the deposit

The final issue to determine is the defendant's claim under s 55(2A) of the Conveyancing Act for the return of the deposit he paid.
Section 55(2A) 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.
In Baird v Chambers (2010) 15 BPR 28,337; [2010] NSWSC 272 Ball J stated at [13]: The discretion conferred by s 55(2A) is a broad one. It is not to be confined by analogy with the jurisdictions in Common Law and Equity to relieve against penalties and forfeiture. Nor should a gloss be put on the section to require the person seeking an order to show "special circumstances" or something similar. Nonetheless, the discretion should not be exercised lightly. In exercising the discretion, it is important to bear in mind that a deposit is paid as an earnest of performance; and it is payable in accordance with an express term of a contract when performance does not occur: Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 at [173] per Santow JA with whom Tobias JA and Brownie AJA agreed. The evidence must establish that it would be unjust or inequitable to allow the vendors to retain the deposit: Romanos v Pentagold Investment Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 at [27]. See also Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 at [87]-[91]; and Sydney Developments Pty Ltd v Perry Properties Pty Ltd (2016) 18 BPR 35,905; [2016] NSWSC 515 at [51]-[53].
The defendant submitted that it would be unjust and inequitable for the plaintiff to retain the deposit. He cited various matters in support of that submission, including that: 1. the plaintiff misled the defendant about the sale being a "mortgagee sale"; 2. the plaintiff misled the defendant concerning the existence of the Council notices and orders; 3. the plaintiff gave an incorrect answer to requisition 8 concerning work orders; 4. the defendant acted reasonably in seeking to protect his own interests and in giving the plaintiff time to comply with his obligations to undertake works; 5. the Council notices and orders were arguably never complied with; and 6. the plaintiff was able to quickly re-sell the property for an additional $40,000.
As to (a), there was misleading conduct about a "mortgagee sale". However, as I have found, that conduct was not a cause of the defendant entering into the contract. This factor carries little weight.
As to (b), I do not accept that the defendant was misled prior to contract about the existence of Council notices and orders. The defendant could not, in the circumstances, have reasonably expected that the existence of such notices or orders would be disclosed prior to contract. In any event, I do not accept that had he been told about the notices and orders, the defendant would not have purchased the property. This factor also carries little weight.
As to (c), the answer to the requisition was incorrect. However, the inaccuracy was quickly discovered as a result of the searches undertaken at the direction of Mr Isho. The defendant's response was to call upon the plaintiff to comply with his obligations under cl 11.1 and the additional special condition.
As to (d), it was reasonable for the defendant to insist that the plaintiff comply with his obligations to undertake works. However, as I have found, it was not open to the defendant to issue the Notice to Perform on 25 June 2015 (requiring performance by 10 July 2015), and the defendant was not justified in terminating the contract on 29 July 2015 for the plaintiff's failure to comply with the Notice to Perform. Further, the defendant was not justified in thereafter maintaining the validity of the termination.
As to (e), even if it was arguable that the plaintiff had not complied with the Council notices and orders, the plaintiff had by 24 September 2015 provided evidence which strongly suggested that there had been compliance. In the face of that evidence, the defendant declined to complete the contract. As he said in cross-examination, he had terminated the contract in July and he did not want to go ahead with it.
As to (f), the plaintiff was able to secure a price of $40,000 above that agreed to be paid by the defendant. Even though the sale occurred quickly, through the existing selling agents, some additional costs (including solicitors fees) would likely have been incurred by the plaintiff in having to re-sell. The evidence concerning the agent's commission of $58,300 on the re-sale does not reveal whether any of that amount would have been payable in any event. Nonetheless, even if the additional costs incurred were minimal, the achievement of a $40,000 better price in October, some five months after the defendant agreed to purchase the property, does not in my view amount to much of a profit.
Having considered the various matters raised by the defendant, and the circumstances of the case overall, I do not think that it would be unjust or inequitable to allow the plaintiff to forfeit the deposit. I have of course paid regard to the well-established nature of a deposit as an earnest of performance. In this case, the defendant, despite having evidence that strongly suggested that the plaintiff had complied with his contractual obligations, declined to complete, preferring instead to erroneously maintain that he had already terminated the contract. I note that insofar as there was any doubt about the plaintiff's compliance with the order of 6 February 2015, the plaintiff's obligations in that regard would continue after completion, pursuant to cl 20.8 of the contract.
The forfeiture of the deposit in the circumstances of this case would not in my opinion involve injustice to the defendant. I decline to order that the deposit be returned to him.

Conclusion

The plaintiff is entitled to the deposit of $146,000 and any interest accrued thereon. An order will be made that the funds paid into Court may be withdrawn by the plaintiff. The defendant's cross-claim will be dismissed. The Court will also order that the defendant pay the plaintiff's costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 April 2017

Environment Operations Act 1997(NSW)

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