Mordue v Kroone

Mordue v Kroone - [2009] NSWSC 255 - NSWSC 2009 case summary — Zoe

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5636/04 Richard John Mordue & anor v Chandi Kroone JUDGMENT (ex tempore) 1 HIS HONOUR: The defendant Chandi Kroone applies for leave to rescind a contract made on 21 March 2000 between her as vendor and the plaintiffs Richard John Mordue and Lynelle June Mordue as purchasers of two hectares of land comprised in two lots of what is now an unregistered plan of subdivision of lot 12 in DP XXX277, at 74 Back Yamma Road, Parkes, which Hammerschlag J on 30 April 2007 ordered be specifically performed, but which remains uncompleted. 2 The subject contract was itself made pursuant to the exercise on 21 March 2000 of an option contained in an earlier contract made on 11 December 1996 by which the Mordues agreed to sell the land that has since become lot 12 to Ms Kroone and her husband. Special Condition 24 of the December 1996 contract granted to the Mordues an option to repurchase an area of land consisting of approximately seven acres. Hammerschlag J found that that option was duly exercised on 21 March 2000, and that as a result the subject contract - called the "reconveyance contract" the form of which was annexed to the original contract - came into effect on that date. 3 In the reconveyance contract Special Condition 23 provided: The parties agree that this sale is made pursuant to an agreement between them that the land to be transferred to the purchasers [Mordues] forms part of the land originally sold by the purchasers to the vendors [Kroones]. At the time of such sale the subdivision of the land into parcels smaller than four hectares was not permitted by the Parkes Shire Council. 4 Special condition 24 provided: The parties agree that the purchasers shall meet all costs of subdivision, compliance with Council requirements and reasonable conveyancing costs, together with all costs connected with relocating fencing on the new boundaries following the subdivision. 5 Also relevant for present purposes is Additional Condition A6, which provided as follows: A6 Unregistered Plan If any of the property is described as a lot in an unregistered plan- A6.1 the vendor must do everything reasonably necessary to have the plan registered within the plan registration time, with or without minor alteration to the plan or any document to be lodged with the plan validly required or made by a statutory authority or the Registrar-General A6.2 normally, either party can rescind if the plan is not so registered; A6.3 the purchaser must serve the form of transfer within 14 days after either party serves notice of the registration of the plan and every relevant lot and plan number; A6.4 the completion date becomes the later of that date and the date which is 21 days after that service; A6.5 clauses A6.1 and A6.2 apply to any prior plan which is to be registered before the plan is registered; and A6.6 the purchaser cannot make a claim, objection or requisition or rescind or terminate in respect of a boundary adjustment plan making only one or more minor adjustments.

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10 On 21 August 2008, Ms Kroone's solicitors sent a letter to Mr Mordue's solicitors, as follows: We refer to previous correspondence in relation to this matter. We refer to the Judgment/Order dated 13th April 2007 of His Honour Mr Justice Hammerschlag ["the orders"] following the hearing of the matter and in particular to paragraph 3 and 4 which we set out below: 3. Declares that in consequence of the Option having been validly exercised, the parties entered into the Contact signed by the parties and annexed to the Contract for Sale of Land dated 1 December, 1996 ("the Reconveyance Contract") -Annexure "A". 4. Orders that the parties specifically perform and carry into execution the Reconveyance Contract to enable the Plaintiffs to obtain approval of and registration of a subdivision of land in accordance with the terms of the contract (Annexure "A") and to obtain separate title(s) in respect of the land identified therein. Clause A.6 of the Reconveyance Contract provides, inter alia: If any of the property is described as a lot in an unregistered plan - A6.1 the vendor must do everything reasonably necessary to have the plan registered within the plan registration time, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made by a statutory authority or the Registrar-General; A6.2 normally, either party can rescind if the plan is not registered… We note that the plan registration time is six months after the date of the contract (the date of the Reconveyance Contract is 21st March 2000 - see Order 2 of the orders]. Special condition 24 of the Reconveyance Contract provides: The parties agree that the purchaser shall meet all costs of subdivision, compliance with Council requirements and reasonable conveyancing costs together with all costs connected with relocating fencing on the new boundaries following the subdivision. The parties were in dispute about the interpretation of the Orders and the Reconveyance Contract and further Orders were made by consent on 26th March 2008 by His Honour Mr Justice Rein ["the further orders"]. In accordance with Order 1 of the further orders our client lodged a Development Application with Parkes Shire Council on 14th April 2008. Our client provided to your client a copy of the Development Approval under cover of our letter dated 27th May 2008 in accordance with Order 3 of the further orders. Our client has not be [sic] asked to execute any further documents or to do anything else to progress the subdivision since that time. The purpose of this letter is to advise you that unless the plan of subdivision is registered in accordance with Clause A 6.2 within 6 months of the further orders i.e. by 26 September, 2008 our client will instruct us to approach the Court to obtain leave to exercise her rights to rescind the contract pursuant to the terms of the contract. In the event that your clients acknowledge that they can not complete the reconveyance contract please advise in your order to save costs of such application. We reserve the right to tender this letter on such application. 11 Callachor & Helby replied, by facsimile letter dated 21 August as follows:

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21 The short minutes of 26 March 2008, although made by consent, are not part of the contract, but part of the decree for specific performance to facilitate performance of the pre-existing contract. In those circumstances, it is far from clear that time for compliance with an order that does not specify a time for compliance can be fixed by a unilateral notice from a party: the rules provide a method for fixing a time for compliance with an order of the Court where one is not specified in the order, by application under Uniform Civil Procedure Rules r 36.5(2)(b) for the Court to fix a time for compliance. That is not to say that a notice might not have some evidentiary value in establishing unreasonable delay for evidentiary or discretionary purposes. 22 But even if a notice could effectively make time for compliance with order 4 essential, this notice was not effective for that purpose, for two reasons. First, the time allowed was some five weeks. It is not always necessary that a notice to perform allow enough time for all the remaining steps to be taken, but a notice must be reasonable in all the circumstances. Those circumstances can and often do include prior delay by the recipient - and such prior delay is not to be permitted to enlarge the period of notice that would otherwise be required [Michael Realty Pty Limited v Carr [1977] 1 NSWLR 553]. But "all the circumstances" must involve, amongst other matters, the expedition with which the contract has proceeded to that stage, and the approach of each of the parties to performance of their obligations under it. In this respect it is relevant to have regard to the Mordues' prompt payment of the costs of the application for subdivision in June 2008, having been requested in late May. Taking all the circumstances together, a period of five weeks in August - when some time longer than that, probably about two months, was reasonably required to complete all the works - was not reasonable. 23 More significantly, perhaps, assuming that a notice to perform could have been given, this was not an effective notice to perform. While it is not essential to the validation of a Notice to Complete that it expressly makes time of the essence, if by appropriate words it conveys a threat to terminate in the event of non-compliance [Abraham v Mallon (1975) 1 BPR 9157], a notice to perform must at least call on the recipient to perform the outstanding obligation. In this case, the outstanding obligation was that imposed by clause 4 of the short minutes, namely "To do all things and sign all the documents necessary to satisfy each and every condition of the approval ...". The letter of 21 August did not do that, but simply advised "Unless the plan of subdivision is registered in accordance with clause A 6.2 within six months of further order, by 26 September 2008 our client will instruct us to approach the Court to obtain leave to exercise her rights to rescind the contract pursuant to the terms of the contract."

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