CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH
AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND
NON-PERFORMANCE
– REPUDIATION – GENERAL PRINCIPLES – where the defendant is
Source
Original judgment source is linked above.
Catchwords
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACHAND DEFENCES TO ACTION FOR BREACH – REPUDIATION ANDNON-PERFORMANCE– REPUDIATION – GENERAL PRINCIPLES – where the defendant isthe developer of a multi-storey commercialand residential building –where the plaintiff entered into a contract with the defendant, prior to theconstruction of thebuilding, to purchase two sub-penthouses “off theplan” – where by clause 8 of the contract there was a sunsetdate bywhich either party could end the contract if the steps necessary to createseparate title for the purchased lots had nothappened – where clause 8of the contract obliged the defendant to give notice to the plaintiff once itbecame aware thosethings had been done, but also provided that it “neednot” give the notice until satisfied all of the defendant’sobligations under the contract could be met within 14 days of the notice –where clause 8 provided a right to terminate where
the defendant
“cannot” give the notice by the specified date – where the
defendant was aware the separate title
requirements had been met prior to the
sunset date, but did not give the requisite notice to the plaintiff –
where the defendant
subsequently purported to terminate the contract, on the
basis that a certificate of occupancy for the purchased lots was not yet
available and so it could not complete the contract because it could not give
the plaintiff vacant possession – where the defendant
subsequently entered
into, and completed, contracts to sell each of the lots to third parties, for
more than double the contract
price – whether on the proper construction
of clause 8 of the contract the defendant was entitled to terminate the contract
– whether the defendant was entitled to rely on another clause of the
contract to justify its termination – whether the
plaintiff breached the
contract by lodging a caveat over one of the lots the subject of the contract
– whether the defendant
was entitled to terminate the contract for the
plaintiff’s breach and retain the deposit
DAMAGES – ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT
– GENERALLY – where the appropriate measure of
loss is the
difference between the contract price and the market value of the two lots as at
the date the contract would have completed
but for the defendant’s
repudiation – whether the expert valuer’s evidence as to the market
value of the lots is
reliable and should be accepted in circumstances where he
had not been able to inspect inside the apartments and had regard to sales
of
comparable sales by the defendant developer of apartments within the same
building, as well as comparable sales of other apartments
Allphones
Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) 178 FCR 57
Body Corporate for Ocean Pacifique v Pugliese [2023] QCA 129,
cited
Jones v Dunkel (1959) 101 CLR 298
[1959] HCA 8,
cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015)
256 CLR 104
[2015] HCA 37, cited
Shepherd v Felt & Textiles of
Australia Ltd (1931) 45 CLR 359
[1931] HCA 21, cited
Spencer v The
Commonwealth (1907) 5 CLR 418
[1907] HCA 82, cited
Suttor v Gundowda
Pty Ltd (1950) 81 CLR 418
[1950] HCA 35, cited
Tropac Timbers Pty Ltd
v A-One Ashphalt Pty Ltd [2005] QSC 378, cited
Willis v Crosland
(2021) 65 VR 1, cited
Judgment (103 paragraphs)
[1]
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - GENERAL PRINCIPLES - where the defendant is the developer of a multi-storey commercial and residential building - where the plaintiff entered into a contract with the defendant, prior to the construction of the building, to purchase two sub-penthouses "off the plan" - where by clause 8 of the contract there was a sunset date by which either party could end the contract if the steps necessary to create separate title for the purchased lots had not happened - where clause 8 of the contract obliged the defendant to give notice to the plaintiff once it became aware those things had been done, but also provided that it "need not" give the notice until satisfied all of the defendant's obligations under the contract could be met within 14 days of the notice - where clause 8 provided a right to terminate where the defendant "cannot" give the notice by the specified date - where the defendant was aware the separate title requirements had been met prior to the sunset date, but did not give the requisite notice to the plaintiff - where the defendant subsequently purported to terminate the contract, on the basis that a certificate of occupancy for the purchased lots was not yet available and so it could not complete the contract because it could not give the plaintiff vacant possession - where the defendant subsequently entered into, and completed, contracts to sell each of the lots to third parties, for more than double the contract price - whether on the proper construction of clause 8 of the contract the defendant was entitled to terminate the contract - whether the defendant was entitled to rely on another clause of the contract to justify its termination - whether the plaintiff breached the contract by lodging a caveat over one of the lots the subject of the contract - whether the defendant was entitled to terminate the contract for the plaintiff's breach and retain the deposit
[2]
DAMAGES - ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - GENERALLY - where the appropriate measure of loss is the difference between the contract price and the market value of the two lots as at the date the contract would have completed but for the defendant's repudiation - whether the expert valuer's evidence as to the market value of the lots is reliable and should be accepted in circumstances where he had not been able to inspect inside the apartments and had regard to sales of comparable sales by the defendant developer of apartments within the same building, as well as comparable sales of other apartments
P K O'Higgins KC and M E Clarke for the plaintiff and defendant added by counterclaim
[14]
Auslaw Future for the plaintiff and defendant added by counterclaim
[15]
[1] The defendant is the developer of a multi-storey residential and commercial building in Newstead, known as 'Luminare'. Level 24 of the building is divided into four substantially similar sub-penthouses. On 30 June 2017, prior to construction of the building commencing, the plaintiff (as buyer) entered into a contract with the defendant (as seller) to purchase two of the sub-penthouses (proposed lots 2403 and 2404) "off the plan", for $4,200,000.
[2] The contract provided for a "sunset date", following which either party could "end the Contract" if certain things had not happened (clause 8.3). That date was 5.5 years from the contract date (so, 30 December 2022), with provision for one extension of six months (clause 8.4) which was not exercised.
[3] On 13 April 2023, the defendant gave notice to the plaintiff under clause 8.3 of the contract, purporting to end the contract. The plaintiff says the defendant was not entitled to do that. The defendant subsequently sold both lots 2403 and 2404 to other people for more than double the purchase price under the plaintiff's contract. By this proceeding, the plaintiff seeks to recover damages for breach of contract, being the difference between the purchase price under the contract and the market value of the lots at the time the contract should have settled. The defendant maintains that it was entitled to terminate the contract on 13 April 2023 under clause 8.3. Alternatively, the defendant says termination at that time was justified by another provision, clause 13.1(c) of the contract.[1] Even if termination at that time was not lawful, the defendant contends that the plaintiff later breached clause 23 of the contract, by lodging a caveat over lot 2403 (at a time when the defendant had already sold lot 2404, and had entered into a contract to sell lot 2403), and counterclaims, in essence, to retain (or recover) the deposit paid under the contract.
[4] The issues to be determined are:
[16]
(a) Was the defendant's purported termination of the contract on 13 April 2023, under clause 8.3, lawful?
(b) Alternatively, can the defendant rely on clause 13.1(c) to justify its termination of the contract on 13 April 2023?
(c) If the contract remained on foot after April 2023, did the plaintiff breach the contract by lodging a caveat over lot 2403?
(d) If so, was the defendant entitled to terminate the contract for that breach under clause 14.1 of the contract?
(e) If not, what is the appropriate measure and amount of damages payable to the plaintiff?
[17]
Was the defendant's termination under clause 8.3 lawful?
[18]
[5] This question depends upon the proper construction of clause 8 of the contract.
[6] The principles of contractual construction are not controversial. Relevantly:
[19]
"The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
[20]
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract."[2]
[21]
[7] As already noted, the contract was entered into on 30 June 2017 and was for the purchase "off the plan" of two proposed lots in a building yet to be constructed. The purchase price under the contract for the two proposed lots was $4,200,000. A deposit of $420,000 was paid, as required by clause 4.1 and item 12 of the reference schedule.
[8] The Completion Date (clause 7.1) for the contract, as defined in clause 1.1, was:
[22]
(a) 14 days after the Seller gives written notice to the Buyer under clause 8; and
(b) 30 days after the Contract Date,
[23]
provided that if a certificate of classification for the Building[3] (or that relevant part of the Building) has not issued by the dates in (a) and (b), then the Completion Date is postponed until three Business Days after the Seller notifies the Buyer that a certificate of classification has issued."[4]
[24]
[9] It was common ground that "certificate of classification" in this definition should be read as a "certificate of occupancy", which is the current term for the certificate which is required under the Building Act 1975 before a building, or part of it, may be lawfully occupied.[5]
[10] By clause 7.4(a), on the Completion Date, the defendant was required to give the plaintiff vacant possession of the lots.
[11] Clause 8 provided as follows:
[25]
8.1 The Seller must give the Buyer written notice after the Seller becomes aware that the Plan[6] and CMS[7] have registered, that the Scheme[8] has been established and that a separate title for the Lot[9] has been created. The Seller need not give the notice under this clause until the Seller is satisfied that all obligations required to be performed by the Seller under this contract or at law on or before on or before settlement will be completed within 14 days of the notice given to the Buyer.
[26]
8.2 The Completion Date must not be (and settlement must not take place) earlier than 14 days after the Seller gives advice by notice to the Buyer of the registration of the Plan, recording of the CMS and that the Scheme has been established or changed.
[27]
8.3 If the Seller cannot give the Buyer such notice within 5.5 years after the Contract Date (or by any extended date as referred to in sub-clause 8.4) then the Buyer or the Seller may end the Contract by giving written notice to the other and the Deposit and any interest earned on it shall be refunded to the Buyer.
[28]
8.4 The Seller may at any time and more than once extend the date in sub-clause 8.3 by the length of any delay or delays in registering the Plan or CMS or completing the Building for any of the following reasons:
[29]
(a) damage to or delay in the construction of the Building by fire, explosion, earthquake, lightning, storm, tempest, war, civil commotion or strikes;
(b) disputes with an adjoining or neighbouring owner;
(c) delay of any local or other authority in giving any necessary Approval;
(d) inclement weather;
(e) unavailability of materials or labour;
(f) delay in registering the BMS, the Plan, or recording the CMS; or
(g) any other cause, matter or thing beyond the control of the Seller,
[30]
but the date in sub-clause 8.3 may not be extended any further than 6 months after the Date referred to in clause 8.3, at which time the Contract shall automatically be at an end and the Deposit and interest earned on the Deposit shall be refunded to the Buyer.
[31]
8.5 If the Seller extends the date under sub-clause 8.4 then the Seller must give the Buyer a certificate from the Seller's architect stating the length of the delay and the reason for it, which shall be conclusive evidence."[10]
[32]
[12] Clause 9 dealt with completion of the lot(s), commencing with clause 9.1 which required the seller to "complete the Building and the Lot substantially in accordance with the Disclosure Plan and Specifications". Clause 10 contained provisions in relation to title to the lot(s). Clause 11 limited the buyer's ability to object, delay or refuse to complete the contract in the event of various changes being made by the seller. Clause 12 dealt with "statements, representations and disclosure documents", effectively limiting a buyer's ability to make a complaint about misrepresentations or misleading statements. Clause 13 conferred power on the seller to terminate the contract in particular circumstances. Clause 14 conferred power on the seller to terminate the contract for the buyer's breach. Under clause 23, the buyer was expressly prohibited from lodging a caveat over the "Land or any land containing the Lot", but permitted to lodge a settlement notice over the Lot, once the scheme was established.
[13] It may be observed, by reference to the whole of the agreement, that it is significantly weighted towards the seller's interests. The one clear circumstance in which the buyer may end the contract is where the fundamental requirements to create title in the two proposed lots the subject of the contract are not met within the substantial, but defined, time period provided for in the contract (clause 8.3).
[14] In that regard, it is not disputed that each of the "separate title" requirements referred to in the first sentence of clause 8.1 (registration of the plan of subdivision and the community management statement (CMS), establishment of the community titles scheme, and creation of separate titles for the lots) had occurred by 14 November 2022. Nor is it disputed that the defendant became aware of that around the same time.
[15] The plaintiff contends the defendant was therefore capable of giving the plaintiff the notice required under clause 8.1, before the sunset date provided for in clause 8.3 (30 December 2022).
[16] There was no extension of the date provided for in clause 8.3, in accordance with clauses 8.4 and 8.5.
[17] The defendant did not give the notice under clause 8.1. Instead, on 13 April 2023, the defendant purported to terminate the contract, under clause 8.3. The defendant did so by letter sent from its solicitor to the plaintiff's (then) solicitor, which said:
[33]
"The Contract for the sale and purchase of the above property is dated 30 June 2017.
[34]
Our client experienced development and building approval issues involving the amalgamation of Lots that was critical to the overall project as well as construction and material delays due to Covid and the global pandemic, floods, rain events, supply chain and labour shortages which extended the completion date past the Sunset Date.
[35]
The date by which the Seller's notice that the Plan and CMS have registered, that the Scheme has been established and that a separate title has been created ('the Seller's Notice') is 5.5 years after the Contract. That date is 30 December 2022 ('the Sunset Date').
[36]
Clause 8.1 of the Contract provides that the Seller need not give the Seller's Notice until the Seller is satisfied that all obligations required to be performed by the Seller will be completed within 14 days of the Seller's Notice.
[37]
The Seller's Notice was not given before the Sunset Date.
[38]
The Seller was not able to complete the Lot substantially in accordance with the Specifications for the purposes of clause 9.1. The Seller is not able to give a Certificate of Occupancy to give the Buyer vacant possession of the Lot by the Sunset Date for the purposes of clause 7.4(a). The issue of a Certificate of Occupancy is an Approval that is required for the Buyer to lawfully occupy the Lot and has not been given (for the purposes of clause 13.1(a)).
[39]
In accordance with clause 8.3 of the Contract, on behalf of our client, we give notice ending the Contract.
[40]
The Deposit and any interest earned on it will be refunded to the Buyer."[11]
[41]
[18] A director of the defendant, Mr Cavallucci, says that at the time of this letter, he estimates lots 2403 and 2404 were both less than 50% complete. A certificate of occupancy was not issued in relation to lot 2403 or lot 2404 until 20 January 2024.[12]
[19] The solicitor for the plaintiff responded, on 20 June 2023, refusing to accept the defendant's purported termination.[13] There was no further correspondence between the parties or their solicitors, until 22 March 2024, when the defendant's solicitors wrote asking for bank account details to refund the deposit.[14] Ms Jiang, the director of the plaintiff, says that, after seeing this letter, she became seriously concerned the defendant did not intend to perform the contract, and sought legal advice. In the course of doing that, she became aware that the defendant had already sold lot 2404, and had entered into a contract to sell lot 2403.[15]
[20] In that regard, lot 2404 was sold to another person for $3,500,000 on 13 December 2023 (pursuant to a contract entered into on 27 September 2023); and, on 1 May 2024, the defendant entered into a contract to sell lot 2403 to other persons for $5,300,000. That sale was completed on 3 July 2024.
[21] In support of the plaintiff's claim, that the defendant unlawfully terminated the contract in April 2023, the plaintiff submits that clause 8.3 only permits termination where notice under clause 8.1 cannot be given. That is, where the developer has not been able to register the plan and CMS, establish the scheme or obtain separate title before the sunset date. However, where those conditions are met (as here), the developer is obliged to give the notice. The plaintiff submits the second sentence of clause 8.1 simply allows the developer to choose the timing of giving the notice (once it is aware that the conditions have been met) so that settlement can occur in an orderly way. It does not permit the developer to postpone settlement indefinitely; and does not permit the developer to terminate the contract under clause 8.3.
[22] The defendant submits that, under clause 8.1, the seller was not obliged to give the notice until it was satisfied that all obligations required to be performed by it under the contract or at law on or before settlement would be completed within 14 days of the notice being given to the plaintiff. The defendant submits it was not, and could not be, satisfied of those things, because:
[42]
(a) clause 7.4(a) required the defendant to give the plaintiff vacant possession of the lots at settlement;
(b) construction of the lots was less than 50% complete at about the time of the sunset date;
(c) no certificate of occupancy for the lots had been issued as at the sunset date and, accordingly, the lots could not be lawfully occupied or used, because of s 114 of the Building Act 1975 (Qld);
(d) as a matter of law the provision of vacant possession includes the legal right to use and occupy the subject property; and
(e) therefore, the defendant could not have given the plaintiff vacant possession of the lots 14 days after the notice.
[43]
[23] The plaintiff submits the defendant's reliance on the absence of a certificate of occupancy is misplaced. This is because the definition of Completion Date in clause 1.1 expressly contemplates the circumstance where notice is given under clause 8.1, but there is no certification of occupancy; and, in effect, postpones settlement until three days after the certificate of occupancy is issued.
[24] The plaintiff submits that, properly construed, clause 8.3 is concerned with the capacity of the seller to give the buyer the notice contemplated by the first sentence of clause 8.1. The only circumstance in which the seller cannot give the buyer such notice within the specified time is if the plan and CMS have not registered, the scheme has not been established and separate titles for the lots have not been created - what are referred to as the "separate title conditions". Those conditions do not include obtaining a certificate of occupancy. The plaintiff submits that if the defendant is aware that the separate title conditions have been met, then it is capable of giving the notice, and clause 8.3 is not engaged. The plaintiff submits this is consistent with the commercial purpose of clause 8.3, which is to provide for a period of 5.5 years (which could be extended to 6 years under clause 8.4) for the developer to do what was necessary to obtain separate title, failing which either party could terminate. Once separate title was obtained, neither party could terminate under clause 8.3.
[25] The defendant submits that, properly construed, clause 8.3 encompasses two situations in which the seller "cannot" give the requisite notice:
[44]
(a) first, where the separate title conditions have not been satisfied by the sunset date; or
(b) second, where the separate title conditions have been satisfied, but the seller is not satisfied of the matter in the second sentence of clause 8.1, by the sunset date.
[45]
[26] The defendant submits the construction contended for by the plaintiff invites the court to construe the seller's obligation unduly narrowly and inconsistently with the commercial purpose of the clause. The defendant submits this is also inconsistent with clause 8.4, which permits the seller to extend the sunset date, by up to six months, including where there are delays in "completing the Building" because of a "delay of any local or other authority in giving any necessary Approval". The defendant says the certificate of occupancy is such an Approval, within the meaning of that term as defined in clause 1.1. As to this, I observe that whilst a certificate of occupancy may come within the meaning of Approval, as so defined,[16] there is no evidence to suggest that any delay in completing the building was due to a delay on the part of a building certifier to provide a certificate of occupancy. Indeed, that seems to put the cart before the horse.
[27] In any event, the defendant submits that a literal interpretation of the word "cannot" in clause 8.3 (meaning the inability to do something) is contrary to the commercial purpose of clause 8 which is to provide both the buyer and the seller with some certainty as to completion of the building and contract, particularly in circumstances where the contract was entered into in June 2017, two years before construction of the building even commenced. The defendant submits that clause 8 is for the benefit of both parties and reflects a commitment to a "sunset date period" of up to six years. The defendant submits it is not consistent with the commercial purpose of clause 8 to construe it in such a way that a seller could give notice under clause 8.1, even where completion of the building is more than a year away, and by doing so remove the right of either party to terminate under clause 8.3, despite ongoing delays in construction of the building.
[28] On an objective analysis of the words used in clause 8, having regard to the whole of the contract, the plaintiff's construction of clause 8.3 is accepted as correct.
[29] The whole of clause 8 is concerned with essential legal requirements for the purchase of lots 2403 and 2404 to be completed - that is, the registration of the plan and CMS, establishment of the community titles scheme and creation of separate title for each of the lots the subject of the contract. In the context of a contract to purchase proposed lots in a community titles scheme "off the plan", entered into prior to construction commencing, the point of clause 8 is to give both parties certainty about the ability of the seller to perform the contract in those fundamental respects within an agreed time frame (5.5 years, plus six months if the right to extend the time under clause 8.4 is exercised). Clause 8 is not concerned with construction, or completion, of the Building. That is the subject of clause 9.
[46]
(a) "must", in the first sentence of clause 8.1, connoting a mandatory requirement on the seller to give the specified notice after the seller becomes aware of the separate title conditions being met;
(b) "need not ... until", in the second sentence of clause 8.1, connoting a limited qualification upon the mandatory requirement in the first sentence; and
(c) "cannot", in clause 8.3, to refer to the circumstance in which the parties agree that either of them may end the contract.
[47]
[31] The fact that the two sentences of clause 8.1 form one clause, rather than being the subject of two separate clauses, supports the construction of the second sentence as a limited qualification upon the mandatory requirement in the first sentence. The statement that the seller "need not" give the notice "until" satisfied of something, does not negate or remove the obligation to give the notice entirely; but rather enables the seller to delay the giving of the notice about the separate title conditions being met, until closer to the time when settlement (completion) can actually occur.
[32] Clause 8.3 is a separate provision, conferring a right upon either party to "end the Contract" in limited circumstances. The reference in it to "such notice" is a reference to the notice required to be given under the first sentence of clause 8.1. Clause 8.3 does not operate if the seller has not given, or does not give the buyer such notice; it only operates "if the seller cannot give the buyer such notice".
[33] In its ordinary meaning, "cannot" refers to an inability to do a thing; an impossibility.[17] Where the separate title conditions have been met, and the seller is aware of that, the seller is able to give the notice. The fact that the second sentence of clause 8.1 allows the seller to delay doing that does not affect the seller's ability to give the notice at the time the obligation first arises. The seller remains able to give the notice. It can give the notice. But it has a choice, to delay the giving of the notice until a later time. If the seller gives the notice earlier, as it is able to do, the definition of "Completion Date" in the contract is such that completion would not take place until after a certificate of occupancy has been issued. The absence of a certificate of occupancy does not affect the seller's ability to give the notice.
[34] To construe "cannot" in clause 8.3 as extending to the circumstance where the seller, unilaterally, has chosen to delay giving the notice, even though the fundamental separate title conditions which are the focus of clause 8 have been met, does not produce a commercial result. Such a construction gives an untrammelled and extremely wide power to the seller to end the contract, and deprive the buyer of the benefit of their bargain, which does not make commercial sense. I do not accept that a reasonable businessperson, in the position of the parties, would have understood clause 8.3 to permit the seller to end the contract in circumstances where the separate title conditions had all been met prior to the sunset date, but the seller had chosen, unilaterally, to delay giving the notice required by clause 8.1.
[48]
Can the termination be justified by relying on clause 13.1(c)?
[49]
[36] The defendant submitted that, even if the conclusion above were reached, its termination of the contract, in April 2023, is valid having regard to clause 13.1(c) of the contract, which provided, in the context of the whole of clause 13, as follows:
[50]
13.1 The Seller may terminate the Contract by written notice to the Buyer if:
[51]
(a) any Approval that is required is not given, is withdrawn or changed or is subject to a condition that the Seller in its discretion decides is unsatisfactory or is unable or unwilling to comply with;
(b) the Council refuses to seal the Plan or endorse the CMS;
(c) at any time the Seller forms the opinion that clause 8.3 will apply or the Seller determines it is uneconomical for the Seller to proceed and complete construction of the Building;
(d) a Financier Event occurs and the Buyer does not enter into a Replacement Contract within 30 days after the Seller give the Buyer a Replacement Contract;
(e) being a natural person, the Buyer dies, becomes bankrupt, becomes of unsound mind or becomes sentenced to imprisonment;
(f) being a company, the Buyer becomes subject to any form of external administration referred to in the Corporations Act(Cth) 2001,
(g) the Building or Lot is destroyed or substantially damaged before the Completion Date;
(h) the directors or principal shareholders of the Buyer nominated by the Seller fail or refuse to sign this Contract as Guarantor; or
(i) for any reason the Contract is voidable at the option of the Buyer
[52]
and the Deposit and any interest on it shall be refunded to the Buyer and no party shall have any claim or action against the other."[18]
[53]
[37] The defendant relies upon evidence from Mr Cavallucci, a director of the defendant, that:
[54]
(a) on about 13 April 2023, he instructed the defendant's solicitors to write the letter (above) to the plaintiff's lawyers, terminating the contract on the basis that a certificate of occupancy had not been granted for either lot 2403 or lot 2404 by 30 December 2022;[19] and
(b) he provided those instructions because he had formed the opinion that clause 8.3 of the contract applied.
[55]
[38] The inference to be drawn from Mr Cavallucci's evidence is that he formed that opinion at the time he provided the instructions, in April 2023.
[39] I reject the argument that clause 13.1(c) can be relied upon to validate the termination of the contract on the basis of that evidence. Although the clause commences with the words "at any time", objectively, reading the clause in the context of the contract as a whole, it clearly contemplates a circumstance where the seller forms the opinion, prior to the date in clause 8.3, that clause 8.3 "will apply" - that is, that the seller will not be able to (cannot) give the notice required by clause 8.1. Read in that way, the provision makes commercial sense, because it enables the seller to terminate the contract once it becomes aware, or forms the opinion, that it will be incapable of performing the "separate title conditions" which are the subject of clause 8.1, by the sunset date.
[40] As is apparent from the whole of clause 13, it is concerned with a number of factual circumstances in which the contract will not be able to be performed.
[41] To read the clause in the way contended for by the defendant - that is, to enable a contracting party to exercise a right to terminate a contract, depriving the other party of their bargain, in circumstances where that right to terminate does not apply, but the contracting party later expresses the opinion that it "will [be taken to have] apply[ied]" - makes no commercial sense, and in any event is not consistent with the words used, read in the context of the contract as a whole.
[42] I therefore find that the contract remained on foot, after 13 April 2023.
[56]
Did the plaintiff breach the contract by lodging a caveat over lot 2403?
[57]
[43] As already noted, the defendant entered into a contract to sell lot 2404 to another person on 27 September 2023, for $3,500,000. That sale was completed on 13 December 2023. On 1 May 2024, the defendant entered into a contract to sell lot 2403 to other persons for $5,300,000. That sale was completed on 3 July 2024.
[44] In between the date of the second contract and the completion of it, on 24 June 2024 the plaintiff lodged a caveat over lot 2403, claiming an equitable interest as purchaser of an estate in fee simple under the contract.
[45] By order made on 28 June 2024, the caveat was removed.
[46] Clause 23 (No Caveats) of the contract provided that:
[58]
"The Buyer must not lodge a caveat over the Land or any land containing the Lot. The Buyer may lodge a settlement notice over the Lot once the Scheme is established."
[59]
[47] "Land" is defined in clause 1.1 to mean "the land over which the Plan is to be registered and situated at the address described in the Disclosure Documents and in Item 8 of the Reference Schedule" - relevantly, 20 Festival Place, Newstead, Queensland, Part of Lot 903 on SP 242297 (item 8 of the reference schedule). Lot is defined to mean "the lot described in the Reference Schedule and the Disclosure Documents" (relevantly, proposed lots 2403 and 2404).
[48] At the time the contract was entered into, a "settlement notice" could be deposited by a purchaser of an interest in a lot.[20] The effect of depositing a settlement notice was to prevent registration of an instrument affecting the lot or an interest in the lot[21] (similar to a caveat[22]). The equivalent now is a "priority notice".[23]
[49] Clause 14.1 enabled the seller to terminate the contract, in the event of breach of any term of the contract by the buyer.
[50] If, as I have found, the contract remained on foot after April 2023, the defendant contends the plaintiff breached clause 23 of the contract by lodging the caveat over lot 2403. The defendant relied upon that alleged breach to terminate the contract, by letter dated 26 June 2024. By its counterclaim in this proceeding, the defendant seeks to retain (or recover) the deposit under the contract as damages for this breach.
[51] The plaintiff did not breach clause 23 by lodging a caveat over lot 2403. The provision prohibits the buyer from lodging a caveat over the "Land" and "any land containing the Lot". It does not prohibit lodging a caveat over the "Lot" itself. In fact, the clause expressly contemplates that the buyer may lodge a "settlement notice" over the "Lot once the Scheme is established", the purpose of which would have been to protect the buyer's interest in the lot(s) the subject of the contract. It is plain that clause 23 of the contract differentiates between the concept of a lot, as a separate and distinct parcel of land, and a lot, as a lot included in a community titles scheme. The prohibition applies to lodging a caveat over the relevant land; not over the lot being purchased, within the scheme.
[52] The commercial purpose of clause 23 is to prevent a buyer from doing something that could affect registration on the title of the "Land" (as defined) or any other "land containing the Lot", of any of the instruments which are required for the seller to perform its obligations under the contract or any other contract for sale of other proposed lots in the building. There is no commercial purpose in preventing a buyer, under the contract by which that buyer agrees to purchase a particular lot included in a community titles scheme, lodging a caveat over that lot. That would have no impact on the ability of the seller to perform its obligations under the contract with the buyer, or any contract with any other buyer in respect of other lots in the building.
[60]
[55] The loss claimed by the plaintiff is the difference between the contract price and the market value of the two lots, as at the date the contract would have completed but for the defendant's repudiation. The date nominated in this regard is 14 days from the issue of the certificate of occupancy (20 January 2024), namely, 5 February 2024.
[56] There is no dispute about that as the appropriate measure of loss (if an entitlement to damages is established), nor as to the date at which market value ought to be assessed. But there is dispute about the market value of the two lots.
[57] The plaintiff relies upon the evidence of Mr Walton, a valuer, to prove the market value of the two lots at the relevant time. There was no challenge to Mr Walton's qualifications, and I accept that he is appropriately qualified to express an opinion in this regard.
[58] As mentioned at the outset, level 24 of the Luminare building is divided into four substantially similar "sub-penthouses", including lots 2403 and 2404. These are described as "high value / luxury residential apartments".
[59] Lot 2403 has an internal floor area of 230m2 and an additional balcony area of 21m2 (a total of 251m2). Lot 2404 has an internal floor area of 249m2 and an additional balcony area of 23m2 (a total of 272 m2).[26] Mr Walton says the upper-level units have the benefit of city views and/or river views. In the proceeding, it is admitted lot 2404 has the benefit of city or river views, but not lot 2403.[27]
[60] Mr Walton was not able to gain internal access to either of the lots, and his opinion is therefore based only on a kerbside inspection. He says that he proceeded on the basis that the schedule of finishes provided within the original disclosure statement accompanying the 2017 off the plan contracts "is generally accurate" for both lots. Mr Walton was also able to extract information from marketing material for the sale of lot 2403,[28] and proceeded on the basis that it is accurate. He was also able to identify marketing material referring to lot 2404, but noted that the "descriptive elements from the listing" were generic comments which appeared to have similarly been used for other lots in the building. He was therefore unsure of the internal configuration of lot 2404 and the fixtures and finishes which existed within it.
[61]
(a) identifying sales of high value/luxury residential apartments in Newstead for consideration on a gross sale price basis;
(b) analysing the sales to determine a sale rate ($/m2) of internal area;
(c) considering the sales in the context of their comparability to lot 2403 and lot 2404 (to the extent possible based on his current knowledge) having regard to variations in distinguishing attributes such as location, views, amenity, building and local services and the quality and age of the improvements.
[62]
[62] In terms of comparable sales, Mr Walton identified sales of sub-penthouses within the Luminare building, on levels 22, 23 and 24. Figure 12, in [50] of the report, sets out this information, as follows:
[63]
[63] Mr Walton also identifies the sales of three other similar apartments, in nearby buildings:
[64]
(a) an apartment on level 15, in a building called Le Bain, with a total area of 220m2, sold on 23 May 2024 for $3,250,000 (representing $18,100/m2);
(b) an apartment on level 3 of "Pier", on the waterfront at Newstead, with a total area of 219m2, sold on 13 April 2024 for $3,800,000 (representing $20,300/m2); and
(c) an apartment on level 2 of "Pier", with a total area of 250m2, sold on 14 December 2023 for $4,700,000 (representing $22,200/m2).
[65]
[64] Reconciling the comparable sales, Mr Walton says:
[66]
"54. The marketing material for the sales within Luminare indicates that the level of finish of units which have sold for $5,000,000 to $5,500,000 or approximately $21,000/m2 to $23,000/m2 is generally consistent with the level of finish referred to herein with respect to Lot 2403. The sales identified within this price range occurred between May 2023 and July 2024 and were sold by the developer as new units.
[67]
55. The sale within Le Bain is a large top floor penthouse albeit one of four on the 15th level of the building. It is a re-sale of a unit which was completed in early 2020 of a high standard of finish with city views. Given this is a resale, the lower sale rate at $18,100/m2 compared with the Luminare sales rates is generally appropriate in my view.
The Pier sales are also within a building which was constructed some time ago. It was completed circa 2010. However, the premium sale rates of approximately $20,000/m2 and $22,000/m2 are likely due to the riverfront nature of these units, within a mid-rise building with a high standard of finish.
57. Notwithstanding the differences between Le Bain and Pier in the context of Luminare, I consider them to be useful supporting evidence providing comfort with respect to the levels of value achieved for high value / luxury residential apartment product in Newstead in 2023 and 2024."
[68]
[65] Mr Walton's conclusion in relation to the market value of lot 2403 is as follows:
[69]
"58. Lot 2403 is located to the north eastern corner of Luminare, and I consider its May 2024 sale price of $5,300,000 to be the best evidence of value for both assessments required here, being at the 5 February 2024 and 3 July 2024 Dates of Valuation.
[70]
59. I have not identified any conclusive evidence indicating material market movement over the interim 5-month period with respect to the sub-penthouse lots within Luminare and I have therefore concluded the value of Lot 2403 to be $5,300,000 (excluding GST) at both dates.
60. The later 3 July 2024 valuation assumes the lot would have been sold in an 'as new' condition."
[71]
[66] Mr Walton's conclusion in relation to the market value of lot 2404 is somewhat qualified, because, as noted above, he was unable to ascertain precisely what fixtures and finishes existed within it. In relation to lot 2404, Mr Walton says:
[72]
"61. I have been unable to identify the configuration of Lot 2404 and fixtures and finishes which existed within it, either at the 27 September 2023 contract date or at the 5 February 2024 Date of Valuation. I am therefore unable to assess the Market Value of Lot 2404 with any confidence at the present time. I have made an enquiry with the Buyer's Solicitor nominated on the contract for Lot 2404 seeking further information with respect to the price paid and the opportunity undertake an inspection. I received a brief directing me to speak with my client. In circumstances where further information is provided to me with respect to the price paid and/or I am able to undertake an inspection, I may supplement this report.
[73]
62. Nonetheless, I consider the following matters to be relevant:
[74]
a) I consider it unusual that the September 2023 sale price is only $3,730,000 or $15,000/m2 as the amount is significantly below the Le Bain Lot 1502 penthouse sale on a pro rata basis ($18,100/m2) and significantly out of line with the other eight transactions within the Luminare sub-penthouse levels which occurred over the course of 2023 and 2024 (generally between $21,000/m2 to $23,000/m2).
[75]
b) It may be that the sale was of a 'cold shell' apartment, with a separate contract of sale for the internal fit out of the unit. I have compared the two contracts for Lot 2403 and Lot 2404 and there are less "Included Chattels" nominated in the contract for Lot 2404.
2. c) However, I consider that if the level of fixtures and finishes within Lot 2404 was generally consistent with those identified within marketing material for other sales within Luminare, then the Market Value of Lot 2404 at the 5 February 2024 Date of Valuation would likely fall within the range of $5,000,000 to $5,500,000 (excluding GST)."
[76]
[67] There is evidence from the plaintiff's solicitor that he attempted to contact the owners of lots 2403 and 2404 in December 2024, to request their permission for Mr Walton to inspect the apartments for the purposes of preparing his report. No response was received.
[68] Counsel for the plaintiff invites the court to infer that the configuration of lot 2404, and the fixtures and finishes within it, as at February 2024, were consistent with the marketing material identified by Mr Walton, and to infer that lot 2404 would have been completed in accordance with the contract, in the same way that lot 2403 was. That is said to be supported having regard to the actual marketing material for lot 2403, and also for lot 2203.[30]
[69] I accept it is reasonable to draw that inference. The defendant called no evidence to contradict this. Whilst it is the plaintiff that bears the onus of proof on this issue, the absence of any evidence from the defendant, which would have the requisite knowledge, is such as to enable me to infer that the uncalled evidence would not have assisted the defendant's case.[31]
[70] The defendant sought to undermine the reliability of Mr Walton's opinion as to market value, including on the basis that he had not undertaken an internal inspection of the unit. Mr Walton accepted that a valuer is disadvantaged by not being able to undertake an internal inspection. However, in the present case, Mr Walton said the availability of information about a number of sales of equivalent apartments, in the same building, around the same time, "crystallised the opportunities and benefits and features of the subject property", which he considered an advantage.
[71] In terms of the comparable sales considered, in cross-examination Mr Walton accepted the proposition that, when valuing a unit, he would not rely only upon "developer sales" - that is, sales directly from the developer to the first buyer of a unit - but would also be looking for comparable sales in comparable buildings which were not developer sales. Mr Walton also accepted that that is because it "may be the case" that a developer sale has within it unknown factors (such as incentives or "discounts on fit outs"). There was, however, no evidence that the sale price of any of the Luminare units referred to in figure 12 of Mr Walton's report was affected by anything of that kind.
[77]
(a) he adopted a kerbside inspection only;
(b) he was unable to identify the configuration of lot 2404 and the fixtures and finishes within it;
(c) therefore the underlying assumptions for Mr Walton's opinion as to the market value of lot 2404 (that it has a similar level of fixtures and fittings as the other apartments in Luminare) have not been proved;
(d) he relied on "developer sales" in the same building as comparable sales, which is an unreliable comparison;
(e) the three "re-sales" identified by Mr Walton are a more reliable comparison, but all are "superior" - either because they are apartments in smaller buildings (in the case of Le Bain) or are on the river (in the case of Pier);
(f) a more appropriate sale rate to adopt for the market value of lots 2403 and 2404 is $15,000/m2, which, if applied to the floor area of those lots would give a market value of $3,450,000 for lot 2403 and $3,735,000 for lot 2404 (which is consistent with the sale price for lot 2403).
[78]
[76] For the reasons already given, I do not accept the defendant's submission that the matters outlined in (a) to (e) above support a conclusion that Mr Walton's evidence is unreliable and should not be accepted. Mr Walton has been candid about the limitations affecting the performance of his valuation of the lots, in particular lot 2404. However, in the absence of any contrary evidence, I do not regard the matters put to him in cross-examination were effective to undermine the opinions he expressed in relation to market value. To select the sale rate of $15,000/m2 for lots 2403 and 2404 is arbitrary, inconsistent with the sales of similar apartments in the Luminare building, including the actual sale of lot 2403 (in respect of which Mr Walton did have actual information about the configuration, fixtures and fittings) and also inconsistent with the sale rates for the identified comparable apartments in the other buildings. I note that the estimated market value for lot 2404, based on the lower end of Mr Walton's range, equates to a sale rate of $20,080/m2, which sits comfortably with the comparable sales in other buildings, and slightly below the sale rates for apartments in Luminare.
[77] I accept Mr Walton's evidence that the market value of the apartment which is lot 2403, as at 5 February 2024, was the price that was paid for it under the contract entered into on 1 May 2024 which was completed on 3 July 2024 - namely, $5,300,000. I accept Mr Walton's evidence that the sale price is the best evidence of value, in circumstances where that sale price sits comfortably with the sale prices of equivalent apartments in the Luminare building, and with comparable properties nearby, and there is no evidentiary basis upon which to conclude that, despite being a "developer" sale, it did not reflect the actual market value (the price a prudent, willing but not anxious buyer would agree to pay in an arm's length transaction[32]) for the apartment at the relevant time
[78] I also accept the evidence of Mr Walton that the market value of the apartment which is lot 2404, as at 5 February 2024, would fall within the range $5,000,000 to $5,500,000. Given Mr Walton's point, that fewer chattels were included in the contract for lot 2404, I adopt the lower figure of $5,000,000.
[79] I therefore find that the combined market value of lots 2403 and 2404, as at 5 February 2025, was $10,300,000.00.
[79]
[80] It follows that there should be judgment for the plaintiff on its claim, for the difference between the amount payable under the contract ($4,200,000) and the market value of the lots as at the date the contract ought to have completed ($10,300,000), which is $6,100,000. The plaintiff is entitled to retain the deposit (which has already been deposited into its solicitor's trust account), and any accretions on that amount, but the amount of the deposit should be accounted for in the overall amount of damages ordered to be paid. The plaintiff is also entitled to interest under s 58 of the Civil Proceedings Act 2011 (Qld).
[81] At the time of delivering judgment, the parties will be directed to provide an appropriate form of order consistent with these reasons, including the calculation of interest, and I will give the parties the opportunity to be heard, if required, in relation to costs.
[80]
[1] Relying upon the principle in Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 377-378.
[81]
[2]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[2015] HCA 37; (2015) 256 CLR 104 at 116 [46]- [47] per French CJ, Nettle and Gordon JJ (references omitted). See also the summary in Alphington Developments Pty Ltd v Amcor Pty Ltd[2025] VSCA 48 at [238], per Walker and Whelan JJA, and Body Corporate for Ocean Pacifique v Pugliese[2023] QCA 129 at [18]- [22], to which the parties referred.
[82]
[3] "Building" is defined to mean "the building built or to be built on the Land and identified in the Disclosure Documents" (cl 1.1).
[6] "Plan" means "the building format plan or plans of subdivision to be registered by the Seller under the Land Title Act 1994 relating to the Land and to be substantially in accordance with the Disclosure Plan" (cl 1.1).
[85]
[7] "CMS" means "the proposed community management statement to be registered with the Plan in accordance with the Act and included within the Disclosure Documents" (cl 1.1).
[86]
[8] "Scheme" means "the Community Titles Scheme to be established on the registration of the CMS and the Plan" (cl 1.1).
[87]
[9] "Lot" means "the lot described in the Reference Schedule and the Disclosure Documents" (cl 1.1) - relevantly, proposed Lot numbers 2403 and 2404 (item 8 in the reference schedule).
[88]
[12] At the hearing, I reserved my decision in relation to an objection to [7] of the first affidavit of Mr Cavallucci, on the basis of relevance. Paragraph [7] deals with the reasons for the delays in construction of the building, some of which relate to availability of building materials or labour or delay in obtaining approvals. I find the evidence is not relevant to any issue in dispute, particularly in circumstances where Mr Cavallucci's broad evidence (as to 50% completion) has been admitted and where the defendant, as seller, did not seek to exercise the right to extend the "sunset date", in reliance on any of those factors, under clause 8.4. I do not accept this evidence is relevant to the point made in paragraph [37] below, in terms of Mr Cavallucci's "belief" that clause 8.3 applied.
[89]
[16] Because the definition of 'Approval' in clause 1.1 includes "any approval... or any authority relating to ... the Lot ... or which otherwise affects the Seller's ability to settle the Contract".
[24] Compare Tropac Timbers Pty Ltd v A-One Ashphalt Pty Ltd[2005] QSC 378 at [19]- [21] per Muir J and Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd[2009] FCAFC 85; (2009) 178 FCR 57 at [55]- [76] per Perram J, Goldberg and Jacobson JJ agreeing, at [1]-[2]. See also Willis v Crosland(2021) 65 VR 1 at [58]-[60] per Sifris and Walker JJA and Macaulay AJA (as to the distinction, in this context, between the ability to terminate the contract in reliance upon a contractual right to do so, and the circumstance where the terminating party also seeks to obtain damages for loss of the contract, which it could not do unless it was in a position to comply with its own obligations).
[32]Spencer v The Commonwealth (1907) 5 CLR 418 at 436-437, 441.
Parties
Applicant/Plaintiff:
JYP Jiang Pty Ltd
Respondent/Defendant:
CAV Gasworks Pty Ltd [2025] QSC 134
Legislation Cited (2)
Proceedings Act 2011
Title Act 1994
Cases Cited (7)
(2009) 178 FCR 57
(1959) 101 CLR 298
(2015) 256 CLR 104
(1931) 45 CLR 359
(1907) 5 CLR 418
(1950) 81 CLR 418
(2021) 65 VR 1
[30] A focus on the text of clause 8 reveals the use of three different forms of words:
[35] I therefore find that the defendant's purported termination of the contract, on 13 April 2023, in reliance upon clause 8.3, was unlawful, invalid and of no effect.
[53] Given my conclusion that there was no breach by the plaintiff, it is unnecessary to consider the next point, as to whether, in any event, the defendant could validly terminate the contract for that breach, in reliance upon the express power of termination in clause 14, in circumstances where it repudiated the agreement (by having sold one of the lots, and having entered into a contract to sell the other lot, to other people) and in that way, brought about the happening of an event which makes performance of the contract impossible.[24] One might think that in this case there plainly was a causal connection between the defendant's repudiatory conduct and the actions of the plaintiff in lodging the caveat,[25] which ought to prevent it from doing so.
[54] Nevertheless, as there was no breach by the plaintiff, the counterclaim will be dismissed.
[61] Mr Walton adopted the direct comparison approach as his valuation methodology. This involved the following steps:
[72] In relation to the sale of an apartment on level 15 of Le Bain, it was suggested to Mr Walton that was a smaller building with only 91 units (as compared to about 214 apartments in Luminare) and would therefore be more attractive to a buyer. Mr Walton did not accept that proposition, saying that there may be a number of different features that are attractive to different buyers, including whether it is a penthouse, sub-penthouse or a unit on a lower level; or whether it has a view or other desirable amenities. As to the latter, Mr Walton considered the ground floor amenity of Luminare to be "preferred" to Le Bain. Mr Walton also noted the larger size of the Luminare apartment (which is four bedrooms), as compared with the Le Bain apartment (which is three bedrooms).
[73] In relation to the sales of apartments at the Pier, it was suggested to Mr Walton that those apartments would be worth more because they are on the river and have unimpeded views of the river. Mr Walton accepted an "absolute riverfront property with unimpeded views" has a greater value than one that does not; but otherwise did not agree that isolating one attribute was an adequate basis for the conclusion that the Pier apartments must be "worth more" than the sub-penthouse apartments on upper levels of Luminare.
[74] There was no other challenge to Mr Walton's evidence; and no competing valuation evidence relied upon.
[75] In summary, the defendant submitted the Court should not accept Mr Walton's evidence because: