K & K Real Estate Pty Ltd v Adellos Pty Ltd [2010] NSWCA 293 | Case summary

Friday 5 November 2010 K & K REAL ESTATE PTY LTD v ADELLOS PTY LTD Judgment on Motion 1 HIS HONOUR: This is a motion brought by an unsuccessful appellant to continue an injunction that was made when the Court dismissed the appeal on 3 November to allow for consideration of an application for special leave to the High Court of Australia. There was also an ancillary stay of the order that was made below and confirmed in this Court that the deposit be forfeited and paid over to the respondents who were the vendors. The motion today is that that injunction and stay be extended until a time three days after this Court gives its reasons for dismissing the appeal. 2 The basal background is that on 14 December 2009 the applicant as purchaser and the respondents as vendors entered into a contract for the sale of land at Oran Park for $5.6 million plus GST with a ten percent deposit. The contractual completion date was forty-two days after the date of the contract which works out at 25 January 2010. When the contract was not completed on that day shortly afterwards the vendors in accordance with the contract gave a Notice to Complete for 3pm on 12 February 2010. The contract was not completed on that day either. 3 There was correspondence between the parties from 27 January until at least 15 February, in other words spanning the period in which the Notice to Complete was to expire. There were, it would seem, two strands of correspondence, one a formal rejection of the vendors' rights to give a Notice to Complete, and the other an intimation that commercially it may be better to come to some arrangement. 4 The negotiations on the second strand continued through for some time, and it was not until 8 July 2010 that the respondents served a Notice of Termination of the contract. On the following day it entered into a new contract to sell the same land to a new purchaser with the completion date being 6 August 2010. However it would seem that the "new" contract was subject to a provision in clause 42.1 that should there be an injunction or other restraint for completion the vendors could obtain another three months extension. This they put in place so that the contractual time for completion of the new contract is now tomorrow. The new purchaser has the right to rescind if the contract is not then completed. The Court has been told that the current proposal is to settle the new contract on Monday 8 November. 5 The proceedings were commenced on 5 August 2010, an amended summons being filed on 18 October 2010. Proceedings were heard by Hamilton AJ on 18 and 19 October and his Honour gave judgment on 22 October and made orders on 26 October. The matter was expedited in this Court and was heard last Wednesday, 3 November. At the end of the argument the Court which comprised Giles JA, Handley AJA and myself retired briefly and we came back on to Court within five to ten minutes and ordered the appeal be dismissed with costs and indicated that the reasons for judgment would be given later. 6 The Court also asked the Court Reporting Service to expedite the production of the transcript if that were possible. The usual procedure for obtaining transcript is that it is formally ordered and it comes through electronically. Certainly I received mine at 11.33am yesterday morning, and the normal procedure is that all who had ordered it properly would have also received their copy at the same time, but the respondents' counsel says he hasn't got his and there is some material put on behalf of the applicant that they were told it would take two weeks to obtain the transcript which is rather hard to accept. 7 The argument before the Court was really confined to three points. The first was that essentiality of time had been waived. That involved a question of construing the legal effect of the correspondence and e-mails between the parties, particularly those in February 2010. 8 The second was the application of the principle which lawyers for generations have relied on from Peter Turnbull & Co Pty Ltd v Mundus Trading (Australasia) Pty Ltd [1954] HCA 25; 90 CLR 235 at 246-7 that although the obligations of the vendor and the purchaser in a conveyancing transaction are concurrent, and a vendor is only able to terminate that contract if it itself was ready to fulfil all conditions including being ready, willing and able to complete on the day fixed in the Notice to Complete, circumstances may be such that the purchaser dispenses the vendor from that obligation by an intimation that it is not going to complete and that it would be useless for the vendor to attend and the vendor acts on that intimation. 9 The third point was that the deposit should be refunded to the purchaser in the circumstances because of s 55(2A) of the Conveyancing Act 1919. I can put aside that third point because it is purely a money matter and any appeal to the High Court will not be affected at all if that is the only way in which the applicant will succeed in the High Court. 10 Accordingly there are two matters which may be put in any High Court appeal: (a) the question of waiver which appears to me to be substantially a question of fact; and (b) what I might call the Peter Turnbull principle. 11 That second is the major matter of law. Mr Angyal SC for the applicant says that that matter depends on the proper application of Foran v Wight [1989] HCA 51; 168 CLR 385 and that until the solicitors for the applicants see the reasons for judgment of this Court they will not be able to say whether there is sufficient doubt about the reasons of the judges of this Court for the High Court to wish to give special leave. 12 The solicitor for the applicant swears that he has advised that it is not possible to give the applicant advice as to whether there are good grounds for appeal. However, with great respect, one would have thought that if one had heard the argument and read the written submissions and read the judgment of Hamilton AJ and heard the Court was quite willing to dismiss the appeal out of hand at the end of the argument, one would have a fair idea where the possible problems with the judgment might lie. Indeed Mr Angyal SC outlined them by saying that the question was what the term "intimation" in the Peter Turnbull case really meant in the light of Foran v Wight and whether, in the instant case, Hamilton AJ was sufficiently given evidence which would enable him to find that there was such an intimation within its true construction, and the question of whether or not there were sufficient evidence of reliance. 13 One would have thought it would be quite possible to give general advice. However putting that point aside, when one looks at the possibilities of granting special leave, although sometimes these matters appear to the High Court differently than they appear to the lower courts, it would seem that there are very limited possibilities of the High Court being sufficiently interested in this case when it has to apply the principles of whether this is a case of such importance that it should be given special leave by the highest court in the land. 14 Mr Angyal says it is a point of very great importance to conveyancers. With respect, the Peter Turnbull principle has been applied at first instance in conveyancing cases both in equity and on appeal for many years; the Foran v Wight case does deal with what is the basis of the principle, but it in no way affects what the principle is except perhaps to a very minor extent. So there is a very limited possibility of successful applications for special leave. 15 The applicant's solicitor is not in a position to gainsay that statement. 16 There is hardship on the respondents if the injunction is given because it may lose it's second contract. As to this, the applicant says in paragraph 20 of the solicitor's affidavit that it is willing to pay into court $800,000 being it's estimated maximum difference between the amount realisable by the respondents under the contract and the amount realisable by them under the second contract and give various irrevocable undertakings to the Court as to damages et cetera and give security for about $1.4 million. This they say would alleviate any hardship. It goes some way but I don't think it alleviates it completely. 17 The next matter is that although this is a suit for specific performance, and the general principle is that damages are usually not a sufficient remedy in cases where there is a contract for the sale of land, if the High Court does give special leave and if the High Court does reverse the decision of Hamilton AJ and this Court then the applicant will not be without remedy. It will be able to obtain damages, even though of course the land the subject of the contract would have passed to the second purchaser. 18 The fact that both Hamilton AJ dismissed the suit and that the Court of Appeal was prepared summarily to dismiss the suit reserving reasons, a course which it very rarely takes, seemed to me to reinforce the general presumption that "the Court below is presumed to be right" unless there are substantial matters put the other way. 19 Adding all these factors together I do not see sufficient grounds for continuing the injunction. So far as the stay is concerned, not all the same considerations apply. However Mr Newlinds SC who appears with Mr P T Newton for the respondents has given the undertaking to the Court that there will be no distribution of the monies constituted by the deposit unless seven days prior written notice is given to the applicant, and I will give liberty to apply to a judge of the Equity Division to reimpose the stay should that written notice be given. Otherwise apart from accepting that undertaking I dismiss the Notice of Motion with costs. 20 I authorise the uncorrected judgment to be made available to the parties on the basis that it will, of course, then go through the natural process.

K & K Real Estate Pty Ltd v Adellos Pty Ltd

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