These proceedings were commenced by Statement of Claim filed on 27 November 2019. The plaintiff purchaser seeks specific performance of a contract for the sale of land entered into with the defendant vendor on about 21 May 2019. There seems to be no dispute that the contract was entered into.
The contract concerns a property at Chipping Norton. An unusual feature of the contract is that it provides, in respect of a purchase price of $2.1 million, for a deposit of $2 million. The plaintiff alleges, in paragraph 13 of the Statement of Claim, that it paid the deposit to the defendant on or about 11 June 2019. The particulars to paragraph 13 refer to a "Deed of Acknowledge [sic] of Debt between the plaintiff and the defendant dated 11 June 2019". Paragraph 13 is denied in the defendant's Defence. The plaintiff further alleges, in paragraph 19 of the Statement of Claim, that it is ready, willing and able to perform its obligations under the contract. This allegation is not admitted in the Defence.
The defendant has also filed a Cross-Claim pursuant to which it seeks to have the Deed declared void pursuant to the Contracts Review Act 1980 (NSW).
By Notice of Motion filed on 2 April 2020, the plaintiff seeks summary judgment pursuant to Uniform Civil Procedure Rules 2005 ("UCPR") r 13.1. The relief sought is in the nature of orders for specific performance, including a declaration to the effect that the plaintiff is entitled to specific performance. In support of its application, the plaintiff relies upon the affidavit of Mr Antonio Mazzotta sworn on 2 April 2020. Mr Mazzotta is a director of the plaintiff.
The defendant resists the application for summary judgment. It has not filed any evidence on the application, but has made a number of objections to Mr Mazzotta's affidavit. The parties agreed that the motion could be determined on the papers (including dealing with the objections to the affidavit), and the Court is content to do so. The Court has been assisted by written submissions received from Counsel for the respective parties.
The schedule of objections to evidence will be placed on the Court file. It seems to me that the objections are well founded, save for the objection to a portion of paragraph 7 of the affidavit. The Court will accordingly reject the other portions of the affidavit to which objection was taken.
UCPR r 13.1(1) provides:
(1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief -
(a) there is evidence of the facts on which the claim or part of the claim is based, and
(b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed,
the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.
The affidavit of Mr Mazzotta, including the documents contained in the exhibit to the affidavit, provides evidence which satisfies both r 13.1(1)(a) and r 13.1(1)(b). The real issue is whether the Court should, in accordance with the principles that apply to applications for summary judgment, proceed to exercise the power to give the summary judgment sought.
It is well settled that the power to give summary judgment, thereby terminating proceedings without a final hearing on the merits, is one that must be exercised sparingly, and with exceptional caution (see General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99; Webster v Lampard (1993) 177 CLR 598 at 602-3; Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [24]). The power should only be exercised in the clearest of cases, where there is a high degree of certainty about the ultimate outcome if the matter were allowed to go to trial (see Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [57]; see also Spencer v Commonwealth of Australia (supra) at [24] and [53]).
The plaintiff submitted that it seems that the only bases upon which the defendant resists the plaintiff's claim are:
1. that the plaintiff has not paid the deposit under the contract;
2. that the Deed is liable to be set aside pursuant to the Contracts Review Act; and
3. that the plaintiff is put to proof that it is ready, willing and able to complete the contract for sale.
As to (a), the plaintiff submitted that it is clear from the terms of the Deed (in particular clause 4), and its recitals (in particular recitals F, G and I), that the plaintiff is to be treated as having paid $2 million to the defendant, such that it is only required to pay the balance of $100,000 on completion. The plaintiff submitted that there is insufficient ambiguity in the Deed to make good the defendant's denial of paragraph 13 of the Statement of Claim, and that the defence must inevitably fail.
As to (b), the plaintiff submitted that the Cross-Claim is doomed to fail because the defendant, being a corporation, is plainly barred by s 6 of the Contracts Review Act from obtaining relief under the Act.
As to (c), the plaintiff referred to Mr Mazzotta's evidence, in particular at paragraphs 22 and 23 of his affidavit, and submitted that the evidence shows that the plaintiff is ready, willing and able to complete the contract for sale.
As to the availability of specific performance more generally, the plaintiff submitted that as a contract for the sale of land, damages was not an adequate remedy, and there was no other discretionary basis upon which the Court would decline to make orders for specific performance.
Finally, the plaintiff submitted that the defendant has failed to show any real defence to the claim, such that summary judgment was appropriate.
The defendant submitted that there were at least three triable issues. These were identified as:
1. whether there has in fact been any assignment or novation in relation to the obligations assumed by a company related to the defendant as purchaser under a contract for the sale of a business (entered into with a company related to the plaintiff);
2. if not, whether enforcement of the Deed or contract for sale would create substantive injustice such that relief under the Contracts Review Act may be given; and
3. whether the defendant would suffer hardship if an order was made for specific performance of the contract for sale.
In elaboration of the above issues, the defendant submitted that unless the plaintiff establishes that an assignment or novation has in fact occurred, it must follow that the plaintiff has not provided any consideration in lieu of the $2 million deposit. It was submitted that as neither of the parties to the contract for sale of business were parties to the Deed, and as the plaintiff did not rely upon the Deed as giving rise to any estoppel, the plaintiff cannot prove that any assignment or novation has occurred. The defendant then submitted that in those circumstances a triable issue is raised as to whether the Deed, or the contract for sale, is unjust to the defendant.
Finally, the defendant submitted that in circumstances where it is not clear whether the contract for sale of business has been fully performed by the company related to the plaintiff, there is a triable issue as to whether an order for specific performance of the contract for sale (presumably on the basis that the plaintiff is only required to pay $100,000 on completion) would cause hardship to the defendant such that specific performance ought be refused.
Before dealing with the contentions of the parties, one curiosity should be noted. This is that clauses 31.1 and 34 of the contract for sale appear to contain acknowledgements by the defendant vendor that the $2 million deposit has been received by it, yet the plaintiff does not seek to rely on those provisions in its pleading. The plaintiff is apparently content to rely on the Deed as the foundation for the allegation that it has paid the deposit.
In that regard, I do not think that it is necessary for the plaintiff to show that any assignment or novation has in fact occurred. It seems to me that the plaintiff could make good the allegation that it paid the deposit by showing that upon the true construction of the Deed (which was entered into after the contract for sale), the defendant acknowledged that fact or otherwise agreed that the deposit should be taken to have been paid.
There is much to be said for the construction of the Deed advanced by the plaintiff. However, the Deed is rather clumsily drafted and it does give rise to some ambiguity. The plaintiff asserts that there is insufficient ambiguity to enable the defendant to make good its denial that the deposit has been paid, and that the Defence must inevitably fail. I am not convinced that the matter is as clear or free of doubt as the plaintiff would have it, particularly having regard to clause 2 of the Deed which contains an acknowledgement that the plaintiff is presently indebted to the defendant in the amount of $2.1 million, and clause 3 of the Deed which is very awkwardly expressed. Further, as noted by the defendant, the plaintiff does not seem to rely upon the Deed as giving rise to any estoppel.
The plaintiff's submissions in relation to the availability of the Contracts Review Act seem to be correct, so the defendant's Cross-Claim does not appear capable of giving rise to any triable issue that would stand in the way of the plaintiff's claim.
The defendant has put in issue the plaintiff's readiness, willingness and ability to complete the contract for sale. Whilst the plaintiff's evidence on this issue is not directly challenged on this application, the defendant would ordinarily be entitled to test the evidence at a final hearing, possibly with the benefit of documents disclosed through discovery orders, Notices to Produce, or subpoenas.
The defendant's Defence does not presently raise any defence of hardship. However, it seems to me that in view of the apparent connection between the contract for sale of business and the contract for sale of the Chipping Norton property, an argument along the lines of that outlined by the defendant in submissions might be arguable. The remedy of specific performance is of course discretionary, and I note the submission made by the defendant that where, as here, declaratory relief is sought, the Court is generally reluctant to give summary judgment (see, for example, QBE Insurance (Australia) Ltd v Thornton [2012] NSWSC 217 at [16]).
The plaintiff's submissions in support of summary judgment have some force. However, having considered the totality of the abovementioned circumstances, I have come to the conclusion that the present case is not so clear that, in accordance with the principles referred to earlier, it would be appropriate for the Court to exercise the power to give summary judgment. The matter should be made ready for final hearing as soon as practicable.
The plaintiff's Notice of Motion filed on 2 April 2020 will be dismissed. The Court will also order that the plaintiff pay the defendant's costs of the motion.
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Decision last updated: 21 May 2020