Saleh v Romanous [2010] NSWCA 274 | Case summary

The appellants, husband and wife, contracted in May 2004 to sell a development property to the respondents with completion due in 42 days. The contract on the standard terms, which included, in cl 10.1.5, an entire agreement clause, was on its face unconditional. The parties contemplated that the property would be developed in accordance with a development consent obtained by the vendors and the owner of an adjoining property for the erection of eight two-storeyed town houses on the two properties. The purchase of the property for the agreed price only made sense if that development could proceed. The purchasers were not able to negotiate a satisfactory joint venture agreement with the neighbouring owner, who was a brother of one of the vendors.

Thursday 28 October 2010 SALEH & ANOR v ROMANOUS & ANOR Judgment 1 GILES JA: I have had the privilege of reading the reasons of Handley AJA in draft. I agree with them, and with the order proposed. 2 HANDLEY AJA: This is an appeal by vendors from the judgment of Forster J who enforced a pre-contractual promissory estoppel and ordered them to repay the deposit and a loan, and to pay for unrelated building work. They challenged the judgment on factual and legal grounds. 3 The appellants, Michael Saleh (Michael) and his wife Rose (the vendors) are developers who owned 163 Kissing Point Road, Dundas (the property). The husband's brother, Edmond (Edmond) lives in Adelaide and owned the next door property at 165. They obtained development consent for the erection of eight strata titled two storey townhouses on the combined site (the two properties) on 30 July 2003. 4 The first respondent Harris Romanous (Harris) is a plumber and builder and the second respondent (Philomena) is his wife. On 13 May 2004 the vendors entered into a contract to sell the property to the respondents (the purchasers) for $670,000. A 10% deposit was payable to the vendors, and completion was due within 42 days. The purchase price had been negotiated on the assumption that the two properties would be developed together in accordance with the development consent. 5 The purchasers' solicitors attempted, without success, to have additional special conditions included in the contract. The first, making the contract conditional upon the vendors obtaining development consent for the two properties within 6 weeks, was pointless. They already had such a consent conditional upon the grant of a drainage easement over adjoining property. The Judge thought that the condition would have required the vendors to obtain an unconditional consent but this is not supported by the text. The second condition, relating to demolition of the existing house, is not significant. 6 Prior to exchange the vendors gave the purchasers a statutory declaration by Michael dated 10 May 2004 which stated that Edmond had appointed him "as his agent for negotiating" with Harris "concerning the development" of both properties pursuant to the consent. It stated that "all communications and correspondence concerning the development" were to be made to Michael. 7 The Judge found at [47] that in April 2004, before exchange, Michael said to Harris: "Leave Eddie up to me. I'm taking responsibility for Eddie. If Eddie doesn't want to build you don't have to buy and you'll get your money back." 8 He also found at [48] that Michael confirmed this promise (the pre-contractual promise) a few days later. Michael denied making these promises but the Judge accepted the evidence of Harris and his son Joe. The purchasers' solicitor did not attempt to have the pre-contractual promise incorporated in the contract. 9 The contractual date for completion, 24 June 2004, came and went without any attempt by the solicitors to take steps towards completion. 10 On 2 July Michael met Harris and Joe and asked for $200,000. There was a conflict in their evidence about this meeting but the Judge accepted the evidence of Harris and Joe. He found that Michael asked for a loan. 11 On the same day Philomena prepared an agreement with Edmond for a joint development which was sent by their solicitors to Michael. The document, apparently signed by Edmond, was returned on 14 July. The Judge found at [111] that Edmond's signature was forged, "almost certainly by Michael". Harris then gave Michael a cheque for $200,000 but stopped payment. 12 On 25 July there was a meeting between Michael, Edmond, Harris and Joe and the next day Michael collected a second cheque for $200,000 from Philomena which was met on presentation. On 4 August the new solicitors acting for the purchasers wrote to the vendors' solicitors threatening rescission unless contracts for the sale of 165 by Edmond to the purchasers were exchanged by 6 August (Blue 1/324). 13 On 11 August the vendors' solicitors wrote to the purchasers' solicitors demanding completion but the latter claimed that the vendors had agreed to rescission (Blue 3/883). There was a further meeting at Michael's home on 30 August attended by the purchasers and Joe and later that day the purchasers' solicitors sent a draft deed of rescission to the vendors' solicitors (Blue 3/884). 14 A fourth meeting with Edmond and Michael took place on 13 September and on 14 September the vendors' solicitors informed the purchaser's solicitors that the vendors would not agree to a rescission and served a notice to complete (Blue 3/891). 15 The purchasers discharged their solicitors on 17 September and did not instruct solicitors again until January 2006. Further notices to complete were served on 27 September, 3 November and 12 November but the vendors did not attempt to enforce the contract. 16 In January 2005 Michael had a contractor demolish the house on the property. The Judge accepted his evidence that this was done with Harris' consent, and rejected the latter's evidence to the contrary. 17 The parties communicated during 2005 but the vendors did not attempt to enforce the contract and the purchasers did not attempt to rescind. 18 The purchasers' only contact with Edmond after 13 September was through his solicitors who wrote to them on 29 September and 7 October 2004. 19 In December 2005 Harris did work for the vendors on another property. In January 2006 Michael made a payment of $2,000 to the purchasers. In February they invoiced the vendors for the building work Harris had performed (the building debt). On 2 March the purchasers' solicitors sent a letter of demand to the vendors (3/947) claiming $282,637.50 for the deposit, the loan, and the building debt giving credit for the $2000. 20 On 14 March the vendors' solicitors wrote to the purchasers' solicitors asserting a right to forfeit the deposit and offering a further opportunity to complete. On 23 March the solicitors for the purchasers purported to rescind under s 66L of the Conveyancing Act because the house had been demolished. On 30 August the purchasers brought proceedings to recover the deposit, the loan and the building debt. 21 The vendors and the purchasers gave conflicting evidence about their conversations in the latter part of 2004 and in 2005. The vendors said they were pressing the purchasers to complete and the latter were asking for more time. The purchasers said they were pressing the vendors for payment and the vendors were asking for more time. 22 The Judge accepted the evidence of the purchasers on this issue for reasons which included his general findings about the credibility of Michael, Harris, and Joe. One of these involved Michael's payment of $2,000. The Judge held that this acknowledged that the deposit and loan would have to be repaid because Michael would otherwise have offset the building debt against the balance of the purchase money. 23 The Judge upheld the purchasers' claim that their inability to negotiate a satisfactory joint venture with Edmond activated a promissory estoppel, based on the pre-contractual promise, which prevented the vendors enforcing the contract of sale. He ordered them to repay the deposit and loan, and to pay the balance of the building debt. The vendors challenged these findings and submitted that the parol evidence rule and cl 10.1.5 of the contract, an "entire agreement" clause, excluded any pre-contractual promissory estoppel. 24 The Judge's finding that Michael made the pre-contractual promise was clearly based in part on his assessment of the credibility of the witnesses, but the vendors submitted that the finding was glaringly improbable. The purchasers' solicitors failed to get two special conditions, of much less importance, included in the contract but made no attempt to have the pre-contractual promise included. The purchasers did not call their solicitor and Jones v Dunkel was relied on. The Court was asked to infer that they did not tell their solicitor about this promise when the contract was explained to them and when attempts were made to add other conditions. 25 The Judge accepted the evidence of Joe about the pre-contractual promise although he had not mentioned it in his affidavits of 1 March, 23 July and 12 December 2007 and 4 June and 28 August 2009. His evidence about the promise emerged in his cross examination. 26 The vendors also relied on post-contractual conduct. The file note (blue 3/815) of Mr Phillip Day, the vendors' solicitor, of a telephone conversation with Harris and his solicitor on 16 June 2004 recorded a claim by Harris to rescind based on an agreement with Michael on 10 June. Harris did not mention the pre-contractual promise. Michael later denied any such agreement (3/815). 27 At various times between 4 August and 14 September 2004 the purchasers claimed that the vendors had agreed to a rescission but they did not rely on the pre-contractual promise. 28 On 3 and 4 November 2004 when the purchasers were self-represented, Harris spoke to Mr Phillip Day (3/909, 913). When the latter demanded completion Harris made excuses but did not mention the pre-contractual promise. 29 When the purchasers purported to rescind on 23 March 2006 (3/963) their solicitors asserted in their covering letter (3/959-62) that the property had been sold "subject to a joint-venture with" Edmond, that since July 2004 the parties had treated the contract as at an end, that it had been frustrated, and they relied on the demolition of the house. They did not mention the pre-contractual promise although it may have been the basis of the "joint venture" claim. 30 The purchasers' statement of claim filed on 30 August 2006 (red 1) included claims that the parties had treated the contract as at an end, that it had been frustrated, and that it had been induced by fraud. The purchasers did not rely on the pre-contractual promise. 31 An amended statement of claim filed on 2 October 2008 (red 18) added claims under ss 42 and 45 of the Fair Trading Act. It also added an allegation in para 10F that the parties proceeded on the common understanding that the purchase was only to proceed as a step in a joint-venture with Edmond. It particularised the representations and assurances by Michael alleged in paras 5, 7 and 9 that he had authority to bind Edmond, that a joint development would proceed, the provision of Michael's statutory declaration prior to exchange, and the provision of the agreement of 14 July 2004 bearing Edmond's forged signature: [10] above. The pre-contractual promise was not particularised. 32 Paragraph 10H alleged that the vendors were estopped by the matters in para 10F from enforcing the contract and from denying the purchasers' right to rescind and recover their deposit. 33 At the start of the trial on 3 June 2009 (black 5) counsel for the purchasers obtained leave to file in Court a further amended statement of claim. The amendment in para 1A (red 37) alleged a collateral agreement that completion of the contract of sale was conditional on a joint venture agreement with Edmond. 34 On 5 June 2009 the trial was adjourned to 28 August. When it resumed counsel for the purchasers obtained leave to file a second further amended statement of claim (black 1/257). This alleged in para 5(c) (red 61) a "representation" (sic) by Michael that completion of the contract for sale was conditional on a joint-venture with Edmond. This could not be a re-presentation, which must relate to existing facts, it could only be a promise or assurance. This amendment was picked up by paras 10F and 10H and expanded the estoppel claim. 35 The history of the pleadings and the other matters relied upon by the vendors in their challenge to the Judge's credit based findings raised serious questions but there was other material which supported the purchasers' case. 36 The purchase at the price agreed only made sense if there was a joint-venture with Edmond for the development of both properties. Michael agreed in cross-examination that Harris would not have signed the contract unless he was sure there would be a joint-venture. 37 This does not necessarily mean that Michael accepted the risk that a joint-venture would not materialise. Harris may have been so confident that he was prepared to take the risk. However his confidence was based on what Michael had told him because Harris had no contact with Edmond prior to exchange. 38 It is clear that prior to exchange Michael and Harris had discussed a joint development with Edmond. Michael also discussed this with his solicitors (blue 2/352, 376 "land to be consolidated by the purchaser and Eddie"). 39 Contracts were not exchanged until the vendors' solicitors provided Michael's statutory declaration of 10 May (blue 2/486): [6] above. It was not evidence of the pre-contractual promise, but it shows that there were pre-contractual discussions about a joint-venture. 40 Inconclusive negotiations through Michael caused the purchasers' solicitors on 6 July 2004 to send a draft joint-venture agreement with Edmond to the vendors' solicitors (4/1397) to be sent on to Edmond's solicitors. 41 The second page of the fax appears at 4/1318, the other four pages at 4/1398-1401. The third page was sent again 30 minutes later (4/1395-6). 42 Page 2 of the fax (3/826, 4/1418) is of particular relevance. It includes a statement by Harris in the handwriting of his daughter which includes the following (blue 3/1151, blue 1/290, black 1/287): "I know there was no written contract. It was done verbally between Michael and Harris. We didn't need a contract. By law it should have been in the contract. Michael has been promising everyday the past six weeks that his brother Eddie is coming from Adelaide." 43 This document was in the vendors' tender bundle (3/826) and in their solicitors' file tendered by the purchasers (4/1418). It supports the purchasers' case on this issue although it was not referred to by Harris in his affidavit or oral evidence. The Judge referred to it [105] but did not treat it as important. 44 On 11 August 2004 the purchasers' solicitors wrote to the vendors' solicitors (blue 1/60, 108) asserting that Rose Saleh had agreed that day to the contract being rescinded. There was no immediate response. On 30 August the purchasers' solicitors sent a draft deed of rescission to the vendors' solicitors (blue 2/438). Michael instructed his solicitors that he did not agree to a rescission "at this stage", and would discuss the matter with his wife and Harris (blue 2/438). 45 The proposal for an agreed rescission was not rejected until the vendors' solicitors wrote to the purchasers' solicitors on 14 September 2004 (blue 1/332). The purchasers had no right to rescind under the contract and, unless there were some pre-contractual arrangement, there was no reason for the vendors to entertain the claim for a minute, let alone a month. 46 The letter of rescission of 23 March 2006 (blue 3/959), above [20] and [29], failed to elicit more than a denial of the right to rescind (blue 2/377, 3/976). The draft fax (at 4/1324, 1325) was never sent. There was no denial of the conversation between the purchasers' solicitor and Michael on 9 March after he received the letter demanding payment of $282,637.50 above [19]. 47 The letter stated: "Further on 9 March 2006 Mr Michael Saleh contacted our offices and spoke with our Mr Chahine. Mr Michael Saleh was quite hostile and our records of the conversation are as follows: Mr Saleh: 'I am ringing about the letter you sent me yesterday and today, Harris has not given me the *** proper invoices' Mr Chahine: 'I suggest that if you have a problem you go and get some legal advice'. Mr Saleh: 'Just get Harris to come and see me with the proper invoices'. Mr Chahine: 'I think you better go and get some legal advice, I am acting in accordance with my clients' instructions.'" 48 There was no denial in that conversation of the purchasers' right to recover their deposit and their loan. 49 Some of these matters are more significant than others, but in combination they provide substantial support for the Judge's finding. Several matters are of particular significance. Clearly there were pre-contractual discussions about a joint-venture with Edmond which provided the genesis and rationale for the contract. The vendors were unusually reluctant to enforce what on its face was an unconditional contract. They took a surprising time, between 11 August and 14 September 2004, to reject the purchasers' claim that they had agreed to a rescission. Then there was the payment of $2000. 50 In my judgment the vendors have not established that the finding that Michael made the pre-contractual promise was glaringly improbable, or contrary to incontrovertible facts. A comparison of the oral evidence with "the known facts" (Fox v Percy [2003] HCA 22, 214 CLR 118 [30]) supports the Judge's finding. 51 The failure of the purchasers to identify the principles which entitled them to an equitable remedy until a comparatively late stage in the proceedings does not undermine their credibility. The factual basis of their claim was articulated at an early stage in the handwritten note of 6 July 2004 [43]-[44]. 52 Mr Rayment QC for the vendors relied on Johnson Mathey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 and Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 for the proposition that the parol evidence and entire contract rules prevented extrinsic evidence being received to establish a pre-contractual estoppel by convention. He submitted that a pre-contractual promissory estoppel was also excluded. 53 Estoppel by convention is a common law doctrine (MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 at [71]-[72]). It emerged in England during the 19th century as courts of common law extended the principles governing estoppels by deed to other contracts. It was referred to by Latham CJ and Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641, 657, 677, and was recognised as a separate head of estoppel in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 CA, 121. It has been applied in many cases since. The history is traced in Handley "Estoppel by Conduct and Election" 2006 at pp 116-118. 54 Promissory estoppel is an equitable doctrine recognised in Hughes v Metropolitan Railway Co (1877) 2 App Cas 439, 447 (Hughes). The House of Lords affirmed the decision of the Court of Appeal (1876) 1 CPD 120, 133 where James LJ said: "This case must be treated in the same way as if a bill in equity had been filed for relief against the forfeiture after a judgment had been obtained at law." 55 The equitable basis of the doctrine was again recognised in Birmingham & District Land Co v London & North Western Railway Co (1888) 40 ChD 268 CA, 277, 281, 285-7 (Birmingham Land). Like other doctrines developed by the Court of Chancery it imposes equitable restraints on the enforcement of contractual and other rights. The leading promissory estoppel cases before 1973 were based on post-contractual conduct where the parol evidence and entire contract rules did not apply. 56 There are other equitable restraints on the enforcement of contractual rights based on pre-contractual conduct. They include the equitable remedies for common law and equitable fraud, for innocent misrepresentation and mistake, and some restraints on the enforcement of common law rights by injunction or specific performance: eg Martin v Pycroft (1852) 2 DeGM & G 785, 795 [42 ER 1079, 1083]. 57 These remedies and defences trump the legal rules about parol evidence and entire contracts. 58 Mr Rayment relied on Hoyts Pty Ltd v Spencer [1919] HCA 64; 27 CLR 133 as authority for the proposition that an informal collateral contract, in consideration for entering into the principal contract, cannot be inconsistent with it. That case, followed in Maybury v Atlantic Union Oil Co Ltd [1953] HCA 89; 89 CLR 507, is clear authority for that proposition. The Judge held, correctly, that a collateral contract based on the pre-contractual promise would be inconsistent with the contract of sale. 59 In Hoyts' case the alleged contract was collateral to a sub-lease which the sub-lessor could terminate at any time by giving four weeks notice. The sub-lessee alleged a collateral contract that the sub-lessor would not give a notice unless the head lessor gave a similar notice under the head lease. The sub-lessee's action for damages for terminating the sub-lease in other circumstances failed because the collateral contract was inconsistent with the sub-lease. Isaacs J said (ibid at 147): "… a collateral contract, which may be either antecedent or contemporaneous …, being supplementary only to the main contract, cannot impinge on it, or alter its provisions or the rights created by it ; consequently, where the main contract is relied on as the consideration … for the promise contained in the collateral contract, it is a wholly inconsistent and impossible contention that the other party is not to have the full benefit of the main contract as made …." 60 The sub-lessee's action in the common law jurisdiction of the Supreme Court was based on its rights at law under the collateral contract. Isaacs J referred (ibid at pp 146-7) to Carter v Salmon (1880) 43 LT 490 CA, where an action for breach of a contract collateral to a lease also failed. He noted however that James LJ had said that the collateral agreement might have supported an injunction "in equity" and Cotton LJ "gave no opinion as to an equity" against the original landlord. 61 Mr Rayment submitted that the collateral contract in Hoyts' case, like the promissory estoppel in the present case, was an attempt to restrict the exercise of rights under a written contract. He said that a collateral promise which could not be enforced as a contract could not be enforced as a promissory estoppel. 62 I reject these submissions. A promissory estoppel is not enforced as a contract, but as an equitable restraint on the exercise or enforcement of the promisor's rights. Hoyts' case did not decide that the sub-lessee had no equity, and Isaacs J left that question open. 63 The purchasers sought restitution, not damages, but their case, and their defence to the vendors' case, depended on their equity to restrain enforcement of the contract for sale. Enforcement of a pre-contractual promissory estoppel is not barred by Hoyts' case. 64 In Bank Negara Indonesia v Hoalim [1973] 2 MLJ 3 (Bank Negara) the Privy Council held that a pre-contractual promise could support a promissory estoppel. The respondent, a protected tenant, was induced in 1958 to move to other offices in the same building by a promise that he would not be asked to leave while he continued to practise. In 1961 the parties entered into a 3 year lease and the respondent afterwards held over as a monthly tenant. In January 1969 he was given a notice to quit but a promissory estoppel based on the 1958 promise was enforced. Lord Wilberforce said at p 5: "… it appears to their Lordships that the nature of this assurance and the circumstances in which it was given are such as to bring into play the doctrine of promissory estoppel as classically stated in two well known passages." 65 He cited the speech of Lord Cairns LC in Hughes (1877) 2 App Cas 439, 448 and the judgment of Bowen LJ in Birmingham Land (1888) 40 ChD 268, 286 and continued: "Their Lordships do not overlook the point that the rights, which the appellants had against the respondent, and whose enforcement is in question, were not strictly pre-existing rights, but rights coming into existence upon the change in the respondent's situation induced by the appellants' assurance, but in their Lordships' opinion the same equitable principle applies." 66 The judgment of the Privy Council did not affect the rights of the parties at law. The respondent remained a monthly tenant, but the estoppel prevented the landlord giving a notice to quit. Thus a promissory estoppel dating from 1958 trumped the legal rights of the landlord after the fixed term expired in 1964. 67 In City and Wesminster Properties (1934) Ltd v Mudd [1959] Ch 129 Harman J upheld a collateral contract that the landlord would not enforce a user covenant against the original tenant. The decision is contrary to Hoyts' case and the English cases there followed and would now be supported on a promissory estoppel. Harman J would have decided the case on that basis but thought that promissory estoppel was confined to existing rights. 68 Bank Negara was referred to with approval in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7, 164 CLR 387 by Mason CJ and Wilson J at 399, by Brennan J at 420, and by Gaudron J at 459, and was followed by McHugh JA in State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, 193-195. These cases have added pre-contractual promissory estoppel to the grounds on which equity will protect one contracting party from inequitable conduct by the other. In all these cases the legal rights trumped by equity include those protected by the parol evidence and entire contract rules. 69 This is supported by the dictum of Allsop J in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833, 117 FCR 424, at [446] that "it is difficult to see why another remedy in equity … arising out of pre-contractual communications should be defeated by a common law rule about the construction of documents". There are dicta to similar effect in Wright v Hamilton Island Enterprises Ltd [2003] QCA 36 at [13], [37]-[43], [55], [88], although the relief granted should have been negative in substance, restraining the owner from determining the agreements unless the licensees were in breach. 70 There are further dicta in Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, 264 ALR 15. Allsop P said at [34] that "if the estoppel … is equitable … the common law parol evidence rule will not impede its proper operation", and Campbell JA said at [554] that "equity would not permit an entire agreement clause to stultify the operation of its doctrines". 71 In Equuscorp Pty Ltd v Glengallen Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at [35] the Court, in the joint judgment of Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ said: "Where parties entered into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case." 72 The case is significant because, despite the parol evidence rule, the High Court remitted issues to the Queensland Court of Appeal which included the promissory estoppel pleaded by the borrowers. The judgment of Holmes J on the remitted issues: [2006] QCA 194 at [118]-[119] contains further dicta in support of the views expressed above. 73 In my judgment the Judge correctly held that the purchasers had established a promissory estoppel which entitled them to restrain the vendors from enforcing the contract of sale. Such an estoppel is not the equitable equivalent of a contract, and cannot give the purchasers positive rights to rescind and recover their deposit that they would have had if the pre-contractual promise had contractual force. A pre-contractual promissory estoppel which conferred positive rights of that nature would be contrary to Hoyts' case. 74 A promissory estoppel is a restraint on the enforcement of rights, and thus, unlike a proprietary estoppel, it must be negative in substance. In Hughes Lord Cairns LC in his classic statement of principle quoted by Lord Wilberforce in Bank Negara said: "… the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which had thus taken place between the parties." 75 In Birmingham Land, in the other passage quoted by Lord Wilberforce in Bank Negara, Bowen LJ said: "… those persons would not be allowed by a Court of Equity to enforce the rights …" 76 The topic is considered in Handley "Estoppel by Conduct and Election" 2006 at pp 201-3, 214-225. 77 The inherent limitations on the scope of promissory estoppel do not matter in this case because the purchasers can rely on the statutory remedy conferred by s 55(2A) of the Conveyancing Act to recover their deposit without the need to rescind the contract. 78 This provides: "In every case where the court refuses to grant specific performance of a contract, or in any proceedings for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon." 79 The vendors did not seek specific performance and the first limb of subs (2A) does not apply, but the promissory estoppel would have been a defence to such proceedings once it became clear that there would be no joint venture with Edmond. 80 The second limb is in general terms and confers a wide discretion which can be exercised where it is just and equitable to deprive the vendor of the deposit. The case law was reviewed in Harkins v Butcher [2002] NSWCA 237, 55 NSWLR 558, 571-574. 81 The Judge held that the promissory estoppel entitled the purchasers to rescind and recover their deposit. In my judgment positive relief was not available on that ground but his decision that the promissory estoppel prevented the vendors enforcing the contract entitled the purchasers to an order under s 55(2A). The Judge's orders (red 84) can be affirmed without a formal order under the section. 82 In my judgment therefore the appeal fails. The purchasers sought to support the judgment on alternative grounds raised in their notice of contention. These were rightly dismissed by the Judge and may be disposed of without elaboration. 83 The claim based on an oral collateral contract was rightly rejected in accordance with Hoyts' case. The claims in fraud as pleaded failed on the facts, and other possible claims in fraud were not pleaded. The claim under s 45 of the Fair Trading Act could not fall within the section. The claim that the contract had been abandoned also failed on the facts. In January 2005 Michael received permission from Harris to demolish the house. In December 2005 the purchasers lodged a caveat claiming an interest under the contract of sale. The vendors did not take steps to enforce the contract until 2008 but at no stage did their conduct evince an intention to abandon it. 84 The appeal should be dismissed with costs. 85 SACKVILLE AJA: I agree with the orders proposed by Handley AJA and with his Honour's reasons.

Saleh v Romanous

At a glance

Court

Decision date

Before

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Judgment (21 paragraphs)

Parties

Cases Cited (17)

Cited By (35)