Segal v Osborne

Background

1. The property is a large property that rises in height as one moves away from Macleay Street towards the rear of the property. There are two residences upon the property. The first, or lower, residence was constructed by Mr Barel prior to the appointment of the first and second defendants as trustees for sale. It comprises five levels. Mr Barel and his family, who had lived in the lower residence for some time, remained in occupation after the appointment of the first and second defendants. Mr Barel did not complete his move out of the property until about 4 February 2014. The second, or higher, residence was constructed by Dr Segal. At all relevant times it was in an incomplete state. Construction of the higher residence had ceased by January 2009. The higher residence has never been occupied. Parts of it have been left open and somewhat exposed to the elements.

Summary of underlying facts and circumstances

1. Following their appointment as trustees, the first and second defendants (who will henceforth be referred to simply as the defendants) commenced to undertake various tasks in relation to the property. These included arranging insurance and obtaining quotes from real estate agents. By 19 July 2013 the defendants had been informed that both Dr Segal and Mr Barel had filed applications for special leave to appeal to the High Court of Australia. A request was made that the defendants defer carrying out any further work until such applications were determined. The defendants agreed to this deferral, given that Mr Barel's appeal would, if successful, reinstate orders for partition of the property instead of the existing orders for sale. However, by about 7 August 2013 the defendants became aware that Mr Barel had discontinued his application to the High Court. Accordingly, the defendants resumed taking steps to sell the property. The defendants aimed to have the property sold at auction before the end of the year. By the end of August 2013 the defendants had appointed Mr Ben Collier of McGrath Estate Agents ("McGrath") as the selling agent.
2. On 6 September 2013 the defendants wrote to the respective solicitors for Mr Barel (Coopers Law Firm) and Dr Segal (Low Doherty and Stratford) concerning the sale process. The letter noted that the property would be offered for sale with vacant possession with a completion date of 42 days. It was stated that Mr Barel would need to ensure that he and his family vacated the property by the completion date. The letter included an offer by the defendants to meet with the co-owners and their legal representatives later in September 2013. A meeting was in fact arranged for 2 October 2013.
3. The meeting was attended by the defendants, Mr Barel and his solicitor Mr Robert Shacklady, and Dr Segal's solicitor Mr Gary Doherty. A friend of Mr Barel's was also in attendance. According to Mr Osborne, Mr Barel stated during the course of the meeting that he intended to continue in occupation of the property but "will be out by completion of the contract". Mr Osborne also gave evidence about some discussion at the meeting concerning a quantity of building materials and other un-affixed items that were on the property. Mr Osborne recalls discussion about the insertion of a clause into the contract to deal with those matters. That such a discussion occurred is supported by the terms of some notes of the meeting that were taken by Mr Osborne.
4. The defendants retained Mr Charles Xuereb, solicitor, to act for them on the sale of the property. The first defendant sent a letter to Mr Xuereb on 14 October 2013. The letter included the following: 6 There is also the issue of rubbish on the property and fixtures and fittings. 7 Margaret's and my present position is that the contract should be drafted as broadly as possible to release the vendors from any obligation in relation to any of these matters adopting essentially the same approach as the vendors took in the additional conditions I forwarded to you on the 11 September 2013. 8 Margaret and I cannot guarantee that the current occupant will not for example remove items of property that a prospective purchaser might assert were part of the land and to the extent we can we should protect ourselves against this possibility.
5. By 16 October 2013 the defendants had entered into an exclusive agency agreement with McGrath. On 18 October 2013 a certificate of title was issued showing the defendants as the registered proprietors of the property.
6. On 21 October 2013 the defendants carried out an inspection of the property. Also in attendance were Mr Barel and representatives of McGrath. The first defendant (Mr Osborne) dictated various notes during the course of the inspection. The notes include the following: 1. I walked in the entrance to the bottom house and on the left hand side was a garage that had a great deal of material and building material and windows and general bits and pieces and Elie [Barel] said that that would be cleared on completion. … 4. There are two broken windows on the north eastern side of the balcony. Also on Elie's level there are two unfinished garages that are just cluttered with rubbish. 5. So going up to the upper residence, above and behind Barel's residence, the place is strewn with building material. … 7. Coming up to Segal's car space again it is fairly unfinished and full of rubbish with large pieces of timber with nails on them that sort of thing. … 14. There is a kitchen partially installed in the upper residence. There is quite a large walk in pantry. The cupboards in here appear to be resting on their own weight. 15. The kitchen cupboards appear to be affixed. … 21. There is a bathroom on the eastern side of the residence with a huge window looking out across Bondi down the coast. 22. There are some cupboards and things up there. … 29. We then saw a study underneath the Barel residence. It is quite spacious. There is a toilet down here and it has got quite a reasonable view though it is dark. And there is a basement below that with another toilet. 30. All areas down here is just storage. Council does not allow them to be habitable rooms.
7. In relation to the kitchen in the upper residence, Mr Osborne deposed that the kitchen cupboards were affixed to a wall or support. In relation to the eastern side of the residence, Mr Osborne deposed that there were some "free standing cupboards".
8. The second defendant (Ms Hole) deposed that, at the time of the inspection, there was a large amount of rubbish accumulated in various parts of the building and surrounds of the property. She continued: 7. The residence occupied by Mr Barel and his family was presented in a clean and neat condition. The two rooms below the floor of this residence appeared to be used as a storage room and an office and had a large amount of rubbish in them. The rubbish appeared to me to comprise building rubbish and household storage items not being used. There were filing presses which were located in those two rooms. 8. I inspected the garage which was being used by Mr Barel and his family adjacent to the entrance to Mr Barel's residence and I saw there was rubbish and building materials stored in the garage. … 13. I saw on the level on the upper residence where apparently a kitchen was proposed that there were several cupboards that were resting on timber frames and that there was a timber frame sitting on the floor which was loose. I noticed that some of the cupboards may have been affixed to the wall to secure them however some cupboards were resting on frames on the floor. There was also an area that appeared to be for a pantry and there were cupboards placed loose on the floor of that area. I noticed on the same level that there were some items of furniture placed on the floor towards the front. 14. I saw that on the upper level of the unfinished residence there were some cupboards, which seemed to be for the purposes of storing clothing, and they were resting on the concrete floor on the eastern side of the area. I recall that they did not appear to be fixed to the floor. I recall noting that the timbers of the ceiling were open and exposed and in my opinion those timbers were weathered and grey in colour and I noted that the cupboards were exposed to the weather also. … 16. During the inspection I climbed through building rubbish to exit the building from the drive up to the upper residence on to the open ground area on the western side next to the driveway. I observed an open ground area between the drive and the side fence. This area was also strewn with a large amount of building rubbish.
9. A number of photographs were taken on the occasion of the inspection by a photographer from or engaged by McGrath. Amongst those photographs is a photograph of the upper residence kitchen, and a photograph of an upper residence room that contained some wardrobes.
10. On 23 October 2013 the defendants sent a letter to the respective solicitors for the former co-owners. The letter contained a request that the solicitors explain to their clients that, in the absence of an express contractual provision, fixtures cannot be removed in the period prior to completion. The letter also requested that the trustees be advised if either of the clients intended to remove anything "which could be considered a fixture".
11. The auction was held at the property on 21 November 2013. Following the auction the defendants entered into a contract to sell the property to Ms Gaffney for $4,440,000. A deposit of $230,000 was paid. The completion date was 20 January 2014. The contract took the form of the 2005 edition of the Law Society of New South Wales and Real Estate Institute of New South Wales standard form, together with a number of additional clauses.
12. Clause 32.8 provides: The vendor further discloses and the purchaser acknowledges: 32.8.1 the subject matter of this sale is land and fixtures only and does not include any furnishings, fittings, goods or personalty on the property; 32.8.2 there is a substantial amount of chattels, equipment, building materials and rubbish in and about the property; 32.8.3 the vendor is entitled, but not required, to remove any furnishings, fittings, goods, personalty, chattels, equipment, building materials or rubbish from the property prior to completion. The purchaser agrees that the vendor will have given vacant possession of the property even if furnishings, fittings, goods, personalty, chattels, equipment, building materials or rubbish are located in or about the property on the completion date.
13. Clause 32.9 relevantly provides: In addition to the acknowledgement by the purchaser in Additional Clause 32.4, the purchaser agrees: … 32.9.6 the purchaser cannot make a claim or requisition or rescind or terminate or delay completion in respect of any of the matters disclosed in Additional Clause 32.
14. Clause 39 provides: It is an essential term of this contract that the purchase price will increase at the rate of 12% per annum of the balance of purchase price for each day from the completion date up until actual completion. If actual completion is delayed because of the vendor's default, the purchase price will not increase for the period during which completion was delayed by the vendor.
15. Clause 40.1 provides: If a party does not complete this contract on the completion date, the party not in default may, if it is ready willing and able to complete, serve on the party in default a notice to complete, requiring the party in default to complete this contract within not less than fourteen days of the date of service of the notice and making the last day for completion set out in the notice an essential date for completion. A notice to complete will be sufficient as to time if a period of fourteen days from the date of the notice is allowed for completion.
16. In the week prior to 20 January 2014 preparations were made for completion of the contract. On 13 January 2014 Mr Xuereb spoke to Ms Gaffney's solicitor, Mr Brischetto of Reimer Winter and Williamson ("RWW"). Mr Brischetto told Mr Xuereb that he would get back to him in relation to settlement taking place on 20 January 2014. Mr Xuereb reminded Mr Brischetto that he had still not received any transfer. Mr Xuereb sent a facsimile to Mr Brischetto about those matters later on 13 January 2014.
17. Also on 13 January 2014, Mr Brischetto sent a Land Tax Certificate to Mr Xuereb by facsimile, and a form of transfer to Mr Xuereb by express post. Mr Brischetto's letter referred to some outstanding replies to the purchaser's requisitions on title. On 14 January 2014 Mr Xuereb sent a facsimile to Mr Brischetto. Mr Xuereb noted that the form of transfer was unstamped, and that he had not received any requisitions on title.
18. On 15 January 2014 Mr Xuereb sent a further facsimile to Mr Brischetto. The facsimile requested that draft settlement figures as at 20 January 2014 be provided to Mr Xuereb. Mr Brischetto provided draft settlement figures later on that day. Mr Brischetto sent a further facsimile to Mr Xuereb on 15 January 2014 stating that his client's bank required a valuation of the property and thus needed to obtain access.
19. On 15 January 2014 Mr Xuereb sent an email to the defendants in which it was stated that Mr Barel had requested that a settlement take place on 20 January 2014 as he had "a purchase settlement" on 22 January 2014 which needed to be funded from his share of the proceeds of sale.
20. On 16 January 2014 Mr Xuereb had a conversation with Ms Megan Woodley of RWW. She told Mr Xuereb that the purchaser would probably not be in a position to settle on 20 January 2014. Mr Xuereb nonetheless booked the settlement to occur on 20 January 2014, at 3pm.
21. On the morning of 17 January 2014 Ms Woodley telephoned Mr Xuereb and told him that settlement would definitely not proceed on 20 January 2014. She stated that settlement may proceed "towards the end of next week". Mr Xuereb promptly passed that information on to Mr Barel's solicitor Mr Shacklady. Mr Xuereb also informed the defendants and the solicitors for the outgoing mortgagee.
22. Later on 17 January 2014 Mr Barel sent an email to the defendants. The email included the following: I note from a phone call from Mr Shacklady this morning that Ms Gaffney is not going to be able to settle until Friday 24 January. This has greatly inconvenienced me and my family and has meant cancellation of movers, trucks, cleaners etc. it has also put me to considerable expense and stress in regards to my purchase that has to settle on the 22nd January. I request that you enforce clauses 39 and 40 of the Contract of Sale in regards to interest and Notice to Complete. I sincerely hope that Ms Gaffney will be able to complete, otherwise my damages alone will be very very substantial. … Can you please confirm in writing that settlement is NOT taking place on the 20th as I have had to go to a great of trouble to cancel and rebook movers, trucks and cleaners etc.
23. Mr Barel deposed that he and his family had moved out of the house by 20 January 2014, and stayed at his brother's house nearby until the family moved into their new house in Rose Bay. However, as will be seen, Mr Barel did not remove the last of the goods and other items he wanted to take until about 4 February 2014.
24. On 20 January 2014 Mr Xuereb obtained a clear Land Tax Certificate in respect of the property. He forwarded a copy of the certificate to RWW on 21 January 2014.
25. On 22 January 2014 Mr Xuereb sent an email to Ms Woodley seeking a progress report concerning the purchaser's ability to settle.
26. On 24 January 2014 Mr Xuereb had telephone conversations with each of the defendants. Arrangements were made for execution of the transfer. That occurred during the course of the morning. Later on 24 January 2014 Mr Xuereb had a telephone conversation with Mr Brischetto. It appears from Mr Xuereb's note of the conversation that Mr Brischetto told him that his client still did not have a loan approval. It further appears that Mr Xuereb said that he would need to seek instructions about issuing a Notice to Complete and he reminded Mr Brischetto that interest was running under the contract.
27. On 28 January 2014 Mr Xuereb had a further telephone conversation with Mr Brischetto. It appears that Mr Brischetto said that he thought his client had now obtained finance approval. He also told Mr Xuereb that Dr Segal was actually his client, and that it was intended to effect a transfer by direction. Mr Brischetto also told Mr Xuereb that an attempt was to be made to persuade the Office of State Revenue that stamp duty should be paid on only half of the contract price. Finally, Mr Brischetto stated that Dr Segal had said that the premises were still occupied by Mr Barel. Mr Xuereb sent an email to the defendants later on 28 January 2014 in which reference was made to his conversation with Mr Brischetto.
28. On 29 January 2014 the first defendant sent an email to Mr Bordin of McGrath, asking Mr Bordin to go to the property and find out whether Mr Barel and his family had vacated. Mr Bordin responded to the first defendant by email in the following terms: We went past yesterday afternoon and they still appeared to be moving out. We will go past again today at about 12:00 midday. I will let you know what we see.
29. Later on 29 January 2014 Mr Bordin sent a further email to the first defendant. It was in the following terms: After a drive-by of the property today at midday, it appears as though the Barels have vacated. The garage door was shut and there was no evidence of personal belongings or removal trucks in front of the property.
30. On 31 January 2014 Mr Bordin sent another email to the first defendant. The email included the following: Elie [Barel] called last night to say that he still has belongings in the garage and office (building materials, a fish tank and office items). He said that he will remove the items once he has a day and time for settlement.
31. In the meantime, on 30 January 2014 Mr Xuereb had a telephone conversation with Mr Brischetto. Mr Xuereb's note of the conversation indicates that Mr Brischetto told him that his client had not yet received a formal written loan approval, but that this should be available in the next day or so.
32. On 31 January 2014 Mr Brischetto sent Mr Xuereb a form of transfer that named Dr Segal as the transferee.
33. On 4 February 2014 Mr Bordin sent an email to the first defendant, stating that Mr Barel had told him that he had now moved out of the property. The first defendant requested that Mr Bordin confirm that Mr Barel had in fact vacated, and if so should change the locks at the property.
34. On 5 February 2014 Mr Xuereb had another telephone conversation with Mr Brischetto. Mr Xuereb's note indicates that Mr Brischetto told him that his client still did not have a formal loan approval and could not proceed to settlement at that stage. The note further suggests that Mr Brischetto raised the question of vacant possession.
35. Mr Bordin made an arrangement to meet Mr Barel at the property on 6 February 2014. It appears that following that meeting Mr Bordin spoke to the first defendant. Later on 6 February 2014 the first defendant sent an email to Mr Bordin which included the following: I note your advice to me this morning that Mr Barel has vacated the property and that the only goods of his which are still there is rubbish that he does not intend to take. I have spoken to Margaret this afternoon and we are both of the view that we should secure access to the property. Accordingly, I would be grateful if you would arrange for the locksmith to change the locks.
36. Mr Bordin responded, stating that he would arrange for a locksmith to change the locks. It appears that this did not take place until 24 February 2014.
37. On 6 February 2014 Mr Xuereb, as solicitor for the defendants, issued a Notice to Complete. The notice was personally served upon Ms Gaffney. The notice required completion by 3:00pm on 27 February 2014, and in that respect time was made of the essence.
38. On 7 February 2014 Mr Brischetto forwarded to Mr Xuereb a direction from Ms Gaffney concerning the transfer to Dr Segal. On 10 February 2014, the transfer was returned to RWW to enable it to be stamped. By 10 February 2014 Dr Segal had obtained finance approval from St George Bank.
39. On 14 February 2014 Mr Xuereb had a telephone conversation with Mr Brischetto in which Mr Brischetto informed Mr Xuereb that his client had received a loan approval, and that the contract and transfer had been sent to the Office of State Revenue for stamping. On 19 February 2014 Ms Woodley informed Mr Xuereb in a telephone conversation that the contract and transfer were still with the Office of State Revenue. On 20 February 2014 Mr Xuereb sent a letter to RWW seeking confirmation that, apart from the stamping of the contract and transfer, the purchaser was otherwise ready to proceed to settlement.
40. On 21 February 2014 Ms Woodley had a further telephone conversation with Mr Xuereb. She informed him that the contract and transfer were still with the Office of State Revenue.
41. On 24 February 2014 Mr Xuereb sent an email to Mr Brischetto concerning arrangements for the purchaser to undertake a final inspection of the property prior to settlement. Mr Xuereb noted that clause 12.3 of the contract allowed one inspection to occur in the three days before a time appointed for completion. Arrangements were subsequently made for a representative of the purchaser, Mr Leslie Szkirpan, to undertake such an inspection.
42. On 25 February 2014 Mr Brischetto sent an email to Mr Xuereb in which he stated that the stamping of the contract and transfer had still not taken place. Mr Brischetto sought a three week extension of the time for completion set in the Notice to Complete.
43. Mr Szkirpan's inspection took place on 26 February 2014. Mr Szkirpan took numerous photographs during the course of his inspection. Some of the photographs were taken of parts of the lower residence. A number of photographs, particularly of the basement/storage areas and the lower garage, showed those areas to be extremely cluttered, with various items strewn around. Mr Szkirpan deposed that such rubbish and materials were not present when he inspected the property prior to the auction. Mr Szkirpan gave evidence that he inspected the property on two occasions prior to the auction - once a couple of weeks before the auction and once on the day of the auction itself.
44. On 27 February 2014 Mr Brischetto sent an email to Mr Xuereb in the following terms: Notwithstanding clause 32.8 of the Contract, my client's representative instructs that there is significantly more rubbish within the property than at the date of the auction. Clause 32.8 does not permit the vendors to allow the property to become a dumping ground for additional rubbish. This additional rubbish must be removed prior to completion. Further, my client's representative instructs that the built-in wardrobes from the rear dwelling have been removed. My client requires that these are reinstated prior to completion. In the circumstances, the vendors are not ready to complete. Accordingly, your notice to complete should be withdrawn. Please confirm and advise once your clients are ready to complete. Should you wish to discuss further, please contact me.
45. In a later email sent on that date by Mr Brischetto to Mr Xuereb, Mr Brischetto said that he was also instructed that the kitchen to the top house had been partly demolished and removed, and that reinstatement was required. Mr Brischetto also sent to Mr Xuereb copies of the photographs that had been taken by Mr Szkirpan. Mr Brischetto sent yet another email to Mr Xuereb on 27 February 2014. That email included the following: I am instructed that, on the basis that the outstanding matters outlined in my earlier emails to you are not rectified, my client will not attend at settlement today as the vendor is not ready to complete.
46. The contract was not completed within the time set by the Notice to Complete, namely 3:00pm on 27 February 2014. An agent instructed by Mr Xuereb attended at the appointed time and place. There was no attendance by or on behalf of the purchaser.
47. On about 7 March 2014, an agreement was reached between the parties which included the following terms: 1. the purchaser acknowledged that in the event completion did not take place by 3pm on 14 March 2014 the vendors would be entitled to terminate the contract; 2. a sum equal to the interest claimed by the vendors to be payable pursuant to clause 39 would be retained by the vendors pending determination of a claim for interest under that clause; 3. the purchaser did not concede that the vendors were at all material times ready, willing and able to complete the contract on or before 3:00pm on 27 February 2014 or that they were at all material times able to deliver the property to the purchaser in accordance with the contract; and 4. completion of the contract by the purchaser would not indicate an acceptance of the condition of the property, and the purchaser reserved the right to make a claim in respect of the condition of the property.
48. On 10 March 2014 Mr Brischetto sent a letter to Mr Xuereb advising that it was now proposed that the sale be completed by way of a transfer from the vendors to the apparent purchaser (Ms Gaffney) and a transfer from the apparent purchaser to the real purchaser (Dr Segal). Mr Brischetto sought to uplift a transfer (from the vendors to Ms Gaffney), which had earlier been sent to Mr Xuereb, in order to have it stamped. Mr Xuereb agreed to that request, and the transfer was provided on 11 March 2014.
49. Completion of the contract took place on 13 March 2014. An amount of $71,973.70 for interest from 20 January 2014 to 13 March 2014 (calculated in accordance with clause 39 of the contract) was retained by the defendants out of the proceeds of sale, as agreed.

The claims against the defendants as vendors

1. The determination of these claims depends, to at least some extent, upon the physical state of the property during the period from the making of the contract on 21 November 2013 to the completion of the contract on 13 March 2014. In particular, the claims rest upon allegations that certain fixtures were removed during that period, and that a substantial quantity of rubbish was left upon the land.

A. Removal of fixtures

1. Dr Segal alleges that the following items were fixtures that were removed from the property in the period 21 November 2013 to 13 March 2014: 1. a dishwasher from the kitchen of the lower residence; 2. a kitchen cabinet, a timber roller shutter, and island cabinets from the kitchen of the higher residence; and 3. wardrobes from a bedroom in the higher residence.
2. There is no dispute that Mr Barel removed the dishwasher (which was not noted as an inclusion in the contract for sale) from the kitchen in the lower residence. The only question is whether it was a fixture, and thus part of the property to be conveyed pursuant to the contract. Mr Barel agreed that the dishwasher had been installed in a space that was built to house a dishwasher. He also said that it was a standard size opening, and that all dishwashers fit into it. Mr Barel agreed that, in order to operate it, the dishwasher was connected by means of a three pin electrical plug, and a water hose.
3. There is also no dispute that a kitchen cabinet, which had been located together with two other similar cabinets along the western wall of the kitchen in the higher residence, had been removed in the relevant period. The circumstances of the removal are not revealed in the evidence. I note that it was not put to Mr Barel that he was responsible.
4. A number of witnesses gave evidence about the kitchen cabinets. Dr Segal gave evidence to the effect that the kitchen cabinets, apart from the granite tops, had been installed. In cross-examination, Dr Segal did not accept that the kitchen cabinets were simply resting on timber frames. He referred to the photograph he took, which he said showed that the missing cabinet had been "torn off the wall and broken the timber framing". Dr Segal agreed that construction work on the higher residence had ceased by January 2009. He also agreed that the flooring in the kitchen had not been completed, and that tiling had been intended. He said that he did not intend to remove the cabinets in order to install the tiling.
5. Mr Szkirpan deposed that an island bench and a timber roller shutter door for an appliance cupboard both of which were present prior to the auction, were missing when he went back to the property on 26 February 2014. Mr Szkirpan made no mention in his affidavit of the missing kitchen cabinet. In cross-examination, Mr Szkirpan said that he could remember that the three cupboards were there on 21 November 2013 and that it looked like the whole kitchen had been installed. He further said that you could see from the photograph (CB 140) that "it's fixed to the wall somehow". Mr Szkirpan did not agree that the cupboards were resting on timber frames on their own weight.
6. I have already referred to some of the evidence given by the defendants. Mr Osborne gave evidence to the effect that the kitchen cupboards appeared to be fixed to a wall or support. This general evidence was touched upon, but not explored, in cross-examination. Ms Hole gave evidence to the effect that some of the cupboards may have been affixed to the wall to secure them, and that some of the cupboards were resting on frames on the floor. This evidence was not the subject of cross-examination.
7. Mr Barel gave some evidence about the construction of the kitchen. He deposed that the kitchen cupboards were delivered to the site in 2008 (by the kitchen maker, Mr Bates) and "just left on site". Apparently Mr Barel assisted Mr Bates in that task. Mr Barel deposed that the cupboards were "not installed or partly installed" and had been left in that state since 2008. In the witness box, Mr Barel said that he had helped Mr Bates to assemble some of the kitchen, including onto the walls. In answer to a question about the kitchen cabinets, Mr Barel said that some of them had a gap and looked incomplete, and that they were sitting upon a thin frame or base. This evidence was not the subject of cross-examination.
8. There is no dispute that two wardrobes, located in a bedroom on the eastern side of the higher residence, were removed in the relevant period. Again, I note that it was not put to Mr Barel that he was responsible.
9. Dr Segal gave evidence in the witness box that these wardrobes had been built, delivered and installed. He accepted in cross-examination that they were resting on their own weight upon the floor. He agreed that the flooring had not been completed and that he had intended to put carpet on the bedroom floor. He said that he did not plan to remove the wardrobes in order to install the carpet. Mr Szkirpan agreed in cross-examination that it appeared that the wardrobes had been resting on their own weight on the concrete floor of the bedroom.
10. Mr Osborne referred in his evidence to some "freestanding cupboards" suitable for clothing. This may be a reference to the wardrobes that were removed, but this is not clear. Ms Hole referred to some clothing cupboards on the eastern side of the upper level that were resting on the concrete floor, and apparently not fixed to the floor. That is likely to be a reference to those wardrobes. The evidence was not challenged in cross-examination. Neither was her evidence that the cupboards had been exposed to the weather. Mr Barel deposed that the wardrobes were never fixed to a wall or the floor. In the witness box he gave evidence to the effect that the wardrobes were assembled then left on the floor, without being built into the walls or the floor. That evidence was not challenged in cross-examination.
11. The allegations concerning the timber roller shutter and the island cabinets were pursued only faintly in final submissions.
12. It was clear from the evidence, including that given by Dr Segal, that the kitchen island was never built. Any island cabinets were merely placed or stacked on the floor to await future installation as part of the island (see, e.g. CB 266). The evidence given by Mr Szkirpan to the effect that he saw an island bench in the kitchen when he inspected the property prior to the auction is plainly incorrect.
13. As noted earlier, Mr Szkirpan deposed that a timber roller shutter door for an appliance cupboard, which had been present prior to the auction, was missing when he went back on 26 February 2014. Dr Segal, however, was not able to say whether the timber roller shutter had actually been installed. The photographs in evidence did not show that a shutter had been installed.
14. In TEC Desert Pty Limited v Commissioner of State Revenue (WA) [2010] HCA 49; (2010) 241 CLR 576 at [23] the High Court cited Megarry and Wade, The Law of Real Property, (7th ed 2008) as follows: Accordingly, some statement of basic principle is appropriate. In the seventh edition of Megarry and Wade's The Law of Real Property, the following appears: "The meaning of 'real property' in law extends to a great deal more than 'land' in everyday speech. It comprises, for instance, incorporeal hereditaments; and it includes certain physical objects which are treated as part of the land itself. The general rule is 'quicquid plantatur solo, solo cedit' ('whatever is attached to the soil becomes part of it'). Thus if a building is erected on land and objects are permanently attached to the building, then the soil, the building and the objects affixed to it are all in law 'land,' i.e. they are real property, not chattels. They will become the property of the owner of the land, unless otherwise granted or conveyed."
15. The High Court also cited with approval the observations of Conti J in National Australia Bank Limited v Blacker [2000] FCA 1458; (2000) 104 FCR 288 at [10]-[12], and in particular his Honour's statement at [10] that: There is a variety of general principles which should be considered in assessing whether an item of personal property has become attached to land in a manner designed to achieve a specific objective or a variety of objectives, such as to become a part of the realty and therefore, a fixture. Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation.
16. The general principles concerning fixtures were recently discussed by Sackville AJA (with whom Bathurst CJ and Beazley P agreed) in Agripower Barraba Pty Limited v Blomfield [2015] NSWCA 30; (2015) 17 BPR 33,759 at [74]-[81]. At [76] Sackville AJA observed that the law of fixtures, which is of ancient origin, has undergone some adaptation in more modern times, noting that one such adaptation "has been to modify the emphasis on the degree of annexation of chattels to the land in favour of the more amorphous concept of the purpose or object of annexation" (citing, for example, Palumberi v Palumberi (1986) 4 BPR 9106 at 9110 (Kearney J)).
17. The degree of annexation is also relevant to onus of proof. Where an item of property is affixed to the land to any extent, aside from resting on its own weight, it is presumed to be a fixture, and the burden of proof lies upon the party asserting that it is not a fixture. Conversely, where an item of property is not affixed to the land but merely rests on its own weight, it is presumed to be a chattel and the party asserting that it is instead a fixture bears the onus of proof (see National Australia Bank Limited v Blacker (supra) at [17]).
18. There is conflicting authority as to the significance of the intention with which the object in question has been affixed to the realty.
19. In Australian Provincial Assurance Co Limited v Coroneo (1938) 38 SR (NSW) 700 Jordan CJ (in a passage cited by Conti J in National Australia Bank Limited v Blacker (supra) at [11]) said at 712-713: The test of whether a chattel which has been to some extent fixed to land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period, or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose. In the former case, it is a fixture, whether it has been fixed for the better enjoyment of the land or building, or fixed merely to steady the thing itself, for the better use or enjoyment of the thing fixed. If it is proved to have been fixed merely for a temporary purpose it is not a fixture. The intention of the person fixing it must be gathered from the purpose for which and the time during which user in the fixed position is contemplated. If a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended. On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent. But each case depends on its own facts.
20. However, as noted in Agripower Barraba Pty Limited v Blomfield (supra) at [81], in NH Dunn v LM Ericsson Pty Limited (1979) 2 BPR 9241 Mahoney JA said (at 9243-9244) that he had difficulty in accepting that the question whether an object had become a fixture could be tested simply by reference to whether the annexation to the realty is intended to be temporary or permanent.
21. There are numerous matters that courts commonly take into account in considering the issues of purpose or object of annexation, and degree of annexation. Conti J listed several such matters in National Australia Bank Limited v Blacker (supra) at [13]-[14]. These are useful guides, but are neither exhaustive nor definitive. Ultimately, each case depends on its own circumstances (Agripower Barraba Pty Limited v Blomfield (supra) at [81]), and indeed on all of the circumstances of the case: National Australia Bank Limited v Blacker (supra) at [16].
22. The dishwasher, prior to its removal by Mr Barel, had been located in a standard size opening for a dishwasher. It can be seen, albeit partly obscured, in one of the photographs taken by Mr McGrath (CB 258). It was not merely resting on its own weight. The defendants bear the onus of showing that it is not a fixture.
23. Whilst in position for use, the dishwasher was connected by means of a three pin electrical plug to a power socket, and in some fashion connected by means of a hose to plumbing. The degree of annexation is in my view slight. Viewed objectively, the purpose or object of the annexation is more to enable the dishwasher itself to be used than for the better enjoyment of the property in which it was located. The dishwasher was able to be readily detached from the property. There was no evidence, and it was not suggested, that any damage was thereby caused to either the property or the dishwasher itself. However, the removal of the dishwasher undoubtedly produced a gap in the kitchen. The dishwasher was incorporated within a space that was designed to accommodate dishwashers generally. The dishwasher is a common type of household appliance. Such appliances are no doubt usually installed with a view to the appliance remaining in position for some years, but they are replaceable items, and portable to a degree much as refrigerators and washing machines are. It is not uncommon nowadays for such items to be removed from one property and installed for use in another property.
24. I was referred to Hawkins v Farley [1997] 2 Qd R 361, in which a trial judge's decision that a dishwasher was a fixture was upheld. In that case, the trial judge observed that the kitchen had been constructed to incorporate a dishwasher to the extent that the floor in that area was not tiled. Accordingly, removing the dishwasher would leave "a glaring and unsightly gap in the kitchen, which has been custom designed to hold such an item" (as cited by Pincus JA at 368). There was no evidence about the tiling in the present case, or as to whether the kitchen was particularly "unsightly" after the removal of the dishwasher. Mr Szkirpan's photograph of the kitchen (CB 412) does not show the relevant area, and no witness gave evidence to that effect. I would accept that the gap produced by the removal of the dishwasher would detract from the appearance of the kitchen, but only to a small degree; I am not satisfied that removal would produce aesthetic consequences as egregious or "unsightly" as those afforded weight at first instance in Hawkins v Farley (or as upheld on appeal). I note further that Fitzgerald P stated (at 367) that the facts of that case did not seem to establish that the dishwasher could be easily removed without damage. The case is in my view distinguishable.
25. Whilst the facts of this case are similar to those in Hawkins v Farley (supra), when regard is had to all of the circumstances of the case, it is my opinion that the dishwasher that was located in the kitchen of the lower residence was not a fixture. The defendants have discharged their onus in this regard. Accordingly, the dishwasher, which was not noted as an inclusion in the contract for sale, did not form part of the property to be conveyed pursuant to the contract.
26. I have come to the same conclusion in respect of the kitchen cabinet that was removed from the higher residence.
27. I accept the evidence given by Mr Barel, who had some direct knowledge concerning the construction of the kitchen, that the kitchen cabinets were sitting upon a thin frame or base. It is likely that the kitchen cabinet was one of the cupboards Ms Hole observed to be resting on frames on the floor. I do not think that the evidence of Mr Osborne about some cupboards appearing to be fixed to a wall or support leads to a different conclusion. That evidence was not specifically directed to the kitchen cabinets, and is likely to be concerned with other cupboards in the kitchen. Moreover, the photographic evidence does not in my view establish that the kitchen cabinet was in any way affixed to either the wall or some support.
28. The photographs relied upon by Dr Segal (principally Exhibit A; see also CB 140 and 426) show some damage to the timber that was part of the frame upon which the cabinet had been placed. However, they do not indicate that the cabinet had been affixed to the wall, or to the frame itself. It is not clear whether the frame itself was in some way affixed to the wall or the floor. I do not accept that the photographic evidence shows that the cabinet had been torn off the wall. No firm conclusion can be reached about how the damage occurred. No evidence was adduced by Dr Segal concerning the remaining kitchen cabinets, or the frames upon which they were placed, from which inferences may have been able to be drawn about the missing cabinet. Dr Segal has had ample opportunity to do so.
29. I found Mr Szkirpan's evidence to be generally unreliable. He claimed to remember his inspections of the property "very well", yet his first affidavit contained significant inaccuracies; for example, his claims regarding the contents of the properties in paragraph 4.3. His testimony concerning the presence of an island bench in the kitchen of the higher residence was clearly wrong. Further, his evidence needs to be treated with caution in light of the fact that in 2015 he was convicted of an offence involving dishonesty. Mr Szkirpan ultimately admitted in cross-examination that he had forged the signature of a Justice of the Peace on 17 statutory declarations. I do not accept Mr Szkirpan's evidence that the photograph (CB 140) showed that the cabinet had been fixed to the wall somehow. I also do not accept his evidence to the effect that prior to the auction it looked like the whole kitchen had been installed.
30. The evidence establishes that in 2008 the kitchen cabinets had been placed upon timber framing as part of the process of constructing the kitchen. That process was never completed, and the kitchen cabinets remained in that position, resting upon the framing by their own weight, and not affixed to either the floor or the wall. The photographic evidence (CB 265) shows that the cabinets were in an incomplete state. There were no bench tops. It may have been intended that the cabinets remain in such position with some affixing to take place later, but there was no clear evidence about that. (I note that Dr Segal said, and I accept, that he did not intend to remove the cabinets in order to install the floor tiling.) There was clearly much work that remained to be done to complete the construction of the kitchen, including in relation to the cabinets themselves.
31. In these circumstances, I am not persuaded that the incomplete kitchen cabinet, which was merely resting on the property by its own weight, should nonetheless be regarded as a fixture. Dr Segal has not discharged his onus. Had the kitchen been completed, the cabinet might (and most likely would) have become a fixture. However, that position was not reached by the time the contract for sale was entered into. The cabinet did not form part of the property to be conveyed.
32. Even if the kitchen cabinet was a fixture, I would not have concluded that it would be just and equitable for the purchase price to be reduced, in accordance with s 66M of the Conveyancing Act, on account of its removal. The evidence concerning the value of the cabinet was in my view inadequate. Reliance was placed upon a quotation of $17,860 which concerned "two floor units" and included timber roller shutters and replacement of "existing timber doors". It was submitted that a minor portion, perhaps 20%, of $17,860 should be attributed as the value of the cabinet. This was said to be a matter of impression. However, the extent (if any) to which the quotation concerns a kitchen cabinet of the type that was removed is not at all clear. The evidence does not permit a rational assessment of value to be made. To attribute a portion of the $17,860 as representing the value of the cabinet would in my view amount to an exercise in speculation and guesswork. That is not appropriate in circumstances where it would not have been difficult for Dr Segal to adduce evidence of how much it would cost to replace the incomplete kitchen cabinet (compare McCrohon v Harith [2010] NSWCA 67 at [118]-[126]).
33. The evidence is clear that the two wardrobes that were located in a bedroom on the eastern side of the higher residence were merely resting on their own weight upon the floor. Again, Dr Segal has the onus of showing that they are nonetheless fixtures.
34. The wardrobes were custom made and of considerable size and bulk. I accept that they were placed in position where they were intended to be used once construction of the residence, including the bedroom itself, was finished. I further accept that Dr Segal did not intend to remove the wardrobes in order to install carpet in the bedroom. He gave no evidence about whether it was intended to lay carpet underneath, or only around, the wardrobes. There was no evidence that the wardrobes were intended to be later fixed to the property in any way. Despite their size, they would continue to be able to be moved so as to be used in other places.
35. Having regard to all these circumstances, I consider that the wardrobes were chattels, not fixtures. They did not form part of the property to be conveyed pursuant to the contract for sale.
36. Any kitchen island cabinets were plainly chattels, not fixtures. They were merely placed or stacked on the floor awaiting installation as part of the kitchen island. That was never built.
37. As for the timber roller shutter, I am not satisfied on the evidence that it was in place at the time the contract was entered into. Dr Segal could not say whether it had been installed. The photographic evidence does not show that it was. I am not prepared to accept Mr Szkirpan's evidence that a timber roller shutter was present prior to the auction, but missing on 26 February 2014.
38. For the above reasons, I have concluded that no fixtures were removed from the property between the date of the contract for sale and the completion of that contract.

B. Leaving of rubbish

1. Dr Segal contends that a large amount of "additional rubbish" was deposited upon or distributed through the lower residence by Mr Barel. It was submitted that Mr Barel created such rubbish by taking items from their storage places and then leaving them abandoned, scattered all over the floor. It is argued that this rubbish rendered parts of the lower residence unusable, and this constituted damage to the property.
2. In his affidavit, Mr Barel described how he dealt with the goods that were stored in attics, storage areas and cupboards in the lower residence after the property was sold. He deposed that the goods were taken out and placed on the ground in order to sort out what was Dr Segal's and what was his. Mr Barel says that most of what belonged to him was removed from the property, and that he also organised (at a cost of $2,600) for the removal of some vegetation and rubbish that had accumulated on the car parking and driveway area near the higher residence.
3. In cross-examination, Mr Barel agreed that materials that had previously been stored in cupboards in a relatively ordered fashion had been taken out and placed on the ground, and that items that either did not belong to him or that he did not want to take were abandoned and left "strewn around the property". Mr Barel said that he had intended to return to put the items back in place, but when he returned he could not get in because the locks had been changed. Mr Barel was shown a number of the photographs that were taken by Mr Szkirpan, including photographs of the lower garage (on ground level), the entrance area near the lift well (on ground level) and the basement/storage areas (on level 1). Mr Barel agreed that these photographs depicted areas that had earlier been much neater and tidier and in a much more orderly state. Mr Barel accepted that he left a large amount of rubbish around the property. He denied that there was more rubbish on the property at the date of settlement than at the date of the contract.
4. Mr Szkirpan deposed that when he inspected the property prior to the auction the lower residence was in a clean and tidy condition. By reference to the photographs he took on 26 February 2014 of parts of the lower residence, Mr Szkirpan stated that the rubbish and materials shown in the photographs was not present on the date of the auction. In cross-examination, Mr Szkirpan initially said that he had not inspected the ground level garage and the storage areas of the lower residence when he made his inspections prior to the auction. He later clarified that he did so on the occasion when he inspected the property a couple of weeks before the auction. Mr Szkipan said that on that occasion he did not see a large amount of rubbish in the storage rooms, and did not see building material and general rubbish in the garage on the ground level.
5. Mr Osborne deposed that the volume of rubbish depicted in the photographs taken by Mr Szkirpan was consistent with the volume of rubbish he observed when he inspected the property in October 2013. Mr Osborne was cross-examined about what he observed of the internal areas of the lower residence. Mr Osborne referred to an office that had some material in it but not anything like the volume of material in the downstairs garage. He mentioned another room that had a large volume of material in it. That is likely to be one of the basement/storage rooms. Mr Osborne accepted that he made no note about rubbish in the study or in a basement. When shown photographs taken by Mr Szkirpan of the basement/storage areas, Mr Osborne conceded that they were not in that condition when he had inspected them. He accepted that the photographs showed substantially more rubbish and material than he had observed.
6. Ms Hole deposed that when she inspected the property in October 2013 the two storage rooms and the office of the lower residence contained a large amount of rubbish, consisting of building rubbish and household items not being used. She deposed that there was also rubbish and building materials stored in the garage. Ms Hole deposed that the photographs taken by Mr Szkirpan do not show more rubbish than she had observed at the time of her inspection, although some of the rubbish appeared to have been moved. In cross-examination, Ms Hole agreed, by reference to a photograph taken by Mr Szkirpan of one of the storage rooms, that due to the rubbish the room could only be used for the storage of junk. She maintained that the photograph did not show that there was then a greater amount of rubbish. She said that the rubbish was in different places.
7. Mr Bordin of McGrath inspected the property on two occasions prior to the auction - once with the defendants and once at the first "open house". He gave evidence that when he saw the property before the auction he saw that it had a large amount of rubbish, especially building materials, placed around it. He deposed that the photographs taken by Mr Szkirpan were consistent with his recollection of the property throughout the sales campaign, and did not show any more rubbish than he had observed. In cross-examination, Mr Bordin said that he went through the front residence on the occasion of the first "open house". He said that there was a lot of rubbish "under the front of the property", by which he meant the driveway area on the right hand side. Later, he identified the area near the entrance and lift on the ground level, and also the garage, as other areas where there was a substantial amount of rubbish. Mr Bordin could not recall seeing the storage areas prior to the auction. He agreed that the photographs of the storage areas taken by Mr Szkirpan showed them to be unusable due to the amount of rubbish. He was unable to say whether some photographs of the garage taken by Mr Szkirpan showed more or less rubbish than what was present when he had inspected the property prior to the auction.
8. I generally accept the evidence of Mr Barel on this topic. He appeared to give a frank account, and his account is largely borne out by the photographic evidence. It is clear that certain areas of the lower residence, notably the lower garage (on ground level) and the basement/storage areas (on level 1) were left by Mr Barel in a more untidy or disorderly state than they had been at the time of the auction. In those areas, or at least in parts of those areas, a considerable quantity of items that had formerly been stored (mainly in cupboards or on benches) were left strewn across the floor.
9. However, the extent and location of those items is difficult to discern with any particularity. There is evidence that the lower garage and the basement/storage areas contained significant quantities of rubbish even prior to the auction. Mr Osborne gave evidence, which I accept, that the downstairs garage had a large volume of rubbish in it when he inspected the property in October 2013. Mr Osborne made a note to that effect at the time. Ms Hole also gave evidence, which I accept, that she observed that rubbish and building materials were stored in the garage. Mr Bordin gave evidence to similar effect about his own observation of the garage prior to the auction. I do not accept Mr Szkirpan's evidence about the state of the garage. Both Mr Osborne and Ms Hole gave evidence that there was a large amount of rubbish in at least one of the basement/storage areas. I note, however, that Mr Osborne accepted that the photographs taken by Mr Szkirpan of the basement/storage areas showed substantially more rubbish and material than he had observed in October 2013.
10. It appears likely that at least parts of the basement/storage areas were left in a considerably more untidy state than they had been at the time of the auction, even if other parts of the basement/storage areas remained in a similar state as at the time of the auction. Based on Mr Barel's evidence, I think that a similar conclusion can be drawn in relation to the lower garage even if, viewed as a whole, it always contained a large amount of rubbish.
11. Both Mr Osborne and Ms Hole gave evidence of a general nature to the effect that the volume of rubbish depicted in the photographs taken by Mr Szkirpan was consistent with the volume of rubbish observed in October 2013. Ms Hole said that the photographs showed that some of the rubbish appeared to have been moved. That evidence is consistent with Mr Barel's account and is also accepted.
12. The position appears to be that following the auction no new items were brought into and then left within the lower residence. However, numerous items that had been stored in some fashion within the lower residence, notably in the lower garage and the basement/storage areas, were taken from their storage places and abandoned in a disordered manner upon the floor in those areas. Such items were, in a sense, transformed into rubbish. That process resulted in some of those areas becoming very cluttered, such that walking though those areas would be difficult to say the least. Nevertheless, given that garages and basement/storage areas of residential dwellings are commonly used for storage of all sorts of things, I would not conclude that those parts of the lower residence were thus rendered "unusable", although I do not doubt that the degree of disorder would certainly exceed what many would find acceptable. Assuming that the presence of quantities of rubbish sufficient to render parts of a property unusable could in certain circumstances be regarded as damage to the property itself (see Cumberland Consolidated Holdings Limited v Ireland [1946] KB 264 at 269), I do not think that the presence of the "additional rubbish" in this case amounts to damage to the property for the purposes of s 66M of the Conveyancing Act.
13. That conclusion is reinforced by the provisions of clause 32.8.3 of the contract, which relevantly provides that the vendor is not required to remove any goods, personalty, chattels, equipment, building materials or rubbish from the property prior to completion, and will have given vacant possession even if such goods, personalty, chattels, equipment, building materials or rubbish are located in or about the property on the completion date. At all relevant times the items that constitute the "additional rubbish" fell within the expression "goods, personalty, chattels, equipment, building materials or rubbish", even if they may not always have been "rubbish". Further, clause 32.9.6 of the contract provides that the purchaser cannot make any claim or delay completion in respect of the matters disclosed in clause 32.

C. Conclusion concerning damage to the property

1. It follows from my conclusions that no fixtures were removed from the property, and that the "additional rubbish" did not amount to damage to the property, that grounds have not been established for a reduction of the purchase price pursuant to s 66M of the Conveyancing Act.

D. Interest pursuant to clause 39 of the contract

1. Clause 39 provides: It is an essential term of this contract that the purchase price will increase at the rate of 12% per annum of the balance of purchase price for each day from the completion date up until actual completion. If actual completion is delayed because of the vendor's default, the purchase price will not increase for the period during which completion was delayed by the vendor.
2. The purpose of the clause is evidently to provide for the circumstances in which the vendor is to be compensated in respect of a delayed receipt of the balance of the purchase price. The increase in price stipulated by the first sentence of the clause is subject to the exception stipulated in the second sentence. The exception operates if actual completion is delayed "because of the vendor's default". In those circumstances, the purchase price does not increase for the period during which completion was delayed by the vendor. I would read that as meaning "delayed by the vendor's default".
3. Dr Segal submitted that the vendor was in default for the purposes of clause 39 if the vendor lacked readiness, willingness and the ability to complete the contract. Reliance was placed upon Arida v Arida [2015] NSWCA 170 which concerned a clause which was said to operate in a similar manner. (I note, however, that the relevant clause in that case was expressed to operate if "the vendor is ready, willing and able to give title to the purchaser".) Dr Segal then submitted that the vendor lacked readiness, willingness and ability to complete due to the damage sustained to the property after the contract was entered into, and also due to an inability to give vacant possession.
4. I have already dealt with the question of damage to the property. I turn now to the question of the vendor's ability to give vacant possession.
5. The completion date was stated in the contract to be 20 January 2014. In the week leading up to that date, preparations were being made for completion to occur. Mr Barel deposed that he had made arrangements for his family to move out of the lower residence by 20 January 2014. Those arrangements included the hiring of a van and labour. It was also arranged that from 20 January 2014 the family would sleep at Mr Barel's brother's house in nearby Kippara Road pending a move into the Rose Bay property purchased by Mr Barel. It appears that such purchase was due to complete on 22 January 2014.
6. I generally accept Mr Barel's evidence on these matters. Mr Xuereb's email to the defendants of 15 January 2014 indicates that Mr Barel was keen for the settlement of the sale of the property to occur on 20 January 2014. Mr Barel's email to the defendants of 17 January 2014, which was sent after he had heard that the purchaser was not going to be able to settle until 24 January 2014, shows that he was disappointed and frustrated about the delay. Mr Barel, who needed to complete his own purchase, clearly had good reason to want the settlement to occur on time.
7. It was in fact the case that the purchaser was not in a position to complete on 20 January 2014. A clear statement to that effect was made by the purchaser's solicitors on 17 January 2014. That intimation had the effect of relieving the vendor from having to tender performance on 20 January 2014: Foran v Wight (1989) 168 CLR 385 at 417-418 (Brennan J). Moreover, I accept Mr Barel's evidence that after he found out that settlement was not going to take place on 20 January 2014, he altered his arrangements, including by deferring the van and labour. I further accept his evidence that by 20 January 2014 he and his family were no longer sleeping at the property. I conclude that were it not for the purchaser's stated inability to complete on 20 January 2014, Mr Barel and his family would have moved out and the vendor would have given vacant possession by 20 January 2014.
8. As noted earlier, it is clear that Mr Barel did not move the last of the items he wanted until about 4 February 2014. However, bearing in mind the provisions of clause 32.8.3, the vendor was not required to remove such items from the property in order to give vacant possession.
9. As at 4 February 2014 Dr Segal had not obtained finance approval for the purchase. That was not obtained until about 10 February 2014. In the meantime, on 6 February 2014 the vendor issued a Notice to Complete requiring completion by 27 February 2014. Dr Segal then experienced delays in having the contract and transfer documents stamped. The stamping had not taken place by 27 February 2014, and the purchaser did not attend the settlement that was booked to take place that day. Dr Segal does not appear to have been in a position to complete until shortly prior to the actual date of completion of 13 March 2014.
10. It has not been established that the vendor was at any stage in breach of the contract. Further, the vendor was at all relevant times in a position where it was ready, willing and able to proceed to completion.
11. The purchaser, on the other hand, was not in a position to complete on 20 January 2014, failed to complete as required by the Notice to Complete on 27 February 2014, and was not in a position to complete until shortly prior to 13 March 2014.
12. In my opinion, "the vendor's default" within clause 39 of the contract encompasses any breach by the vendor of an obligation it has as vendor under or in relation to the contract for sale (see Luu v Sovereign Developments Pty Limited [2006] NSWCA 40 at [23] (Bryson JA)). In order for the exception in clause 39 to operate, actual completion must be delayed from the completion date of 20 January 2014 "because of the vendor's default". A causal connection between the breach and the delay is required (compare Zaps Transport (Aust) Pty Limited v PJG Warehousing and Distribution Pty Limited [2016] NSWCA 97 at [60]).
13. No such default has been established in the present case. Actual completion of the contract was not delayed because of any such default. There was no period during which completion was delayed by any default of the vendor. It follows that Dr Segal is not entitled to a refund of the $71,973.70 that he paid on completion.

E. Conclusion

1. The various claims made by Dr Segal against the defendants as vendors have not been made out. It is not necessary to determine the question of standing that was raised by the defendants in respect of those claims. Had it been necessary to do so I would have concluded that Dr Segal had standing on the basis that Ms Gaffney entered into the contract as agent for Dr Segal as an undisclosed principal. Although Dr Segal referred to Ms Gaffney as acting as "bare trustee", I would infer from the circumstances of her attendance at the auction, the subsequent conduct of the purchase, and the terms of the stamp duty determination ultimately made by the Office of State Revenue, that Ms Gaffney entered into the contract as Dr Segal's agent.

Claims against the defendants as trustees

1. It may be accepted that trustees for sale appointed pursuant to s 66G of the Conveyancing Act have a duty to take reasonable care in respect of the property the subject of the trust. The duty is akin to the general duty of care applicable to trustees who have control and management of trust property (see, for example, Fouche v The Superannuation Fund Board (1952) 88 CLR 609 at 641). The duty must of course accommodate itself to the statutory context in which it exists, including the provisions of s 66H (which concern consultation between the trustees and the beneficiaries of the trust).
2. The first claim for breach of this duty rests upon the contention that, by reason of such breach, the property sustained damage between the date of the contract and completion of the contract. This claim must fail in consequence of my conclusions that no damage to the property was sustained and that no grounds were established for a reduction of the purchase price under the contract. Even if there was a want of due care on the part of the trustees, the trust estate suffered no damage as a result.
3. The second claim for breach of the duty to take reasonable care is based upon the failure of the trustees to levy any rent or occupation fee from Mr Barel for his continued occupation of the property.
4. It appears that at some stage prior to their meeting with the beneficiaries on 2 October 2013, the trustees had formed a view that Mr Barel would be permitted to remain in occupation until completion of the sale. That view was at least in part based upon a view taken by Mr Osborne that Mr Barel, as a former co-owner, had an entitlement to possession. To that extent, the trustees proceeded upon an incorrect basis (see Harb v Harb [2010] NSWSC 1251 at [15]-[19]). Mr Osborne gave evidence that the trustees considered that it was not open to them to seek to levy rent from Mr Barel. In fact, it would have been open to the trustees to seek a rent or occupation fee from Mr Barel, or to take steps to recover possession from him (see Harvey v Barton (No 2) [2014] NSWSC 1478 at [40]). The view that Mr Barel would remain in occupation is likely to have been further influenced by Mr Osborne's view that it was generally better for a property to be occupied than vacant. Mr Osborne said that he believed that an occupied property is always likely to be more secure and better looked after than one that is vacant.
5. The notion that Mr Barel would remain in occupation until completion of the sale was referred to in the letter sent by the trustees on 6 September 2013 to the respective solicitors for the former co-owners. The notion was the subject of discussion at the subsequent meeting on 2 October 2013. No objection was taken to the trustees' proposed course in that regard.
6. I note, however, that Dr Segal gave evidence that he raised his concern about the matter with his solicitor and asked him to complain to the trustees about Mr Barel's continued occupation. It appears that the solicitor told Dr Segal that the trustees going to Court would just cause additional costs. No letter of complaint was sent.
7. In my opinion, the trustees' duty required them to give due consideration to whether Mr Barel should continue in occupation and, if so, on what terms. In the discharge of that duty, the trustees ought to have ascertained that, following their appointment, Mr Barel had no right of occupation, and thus it was open to them to seek an occupation fee.
8. However, it has not been established that any damage to the trust estate was sustained as a result of any failure of the trustees in this regard. No evidence was adduced concerning Mr Barel's ability, or more importantly willingness, to pay an occupation fee of any magnitude. Mr Barel had lived at the property for many years and, having lost his litigation with Dr Segal, and facing the sale of the property, it is at least as likely as not that Mr Barel would have resisted paying a fee. If that occurred, the trustees would then be faced with having to consider whether to threaten and possibly commence possession proceedings against Mr Barel in order to convince him to pay a fee. It seems to me that, in the absence of any evidence from Mr Barel that he might have agreed to pay an occupation fee, it is not possible to conclude that it is likely that a fee would have been paid had the trustees sought such a fee.
9. The claim that the trustees breached their duty to act impartially by permitting Mr Barel to remain in occupation of the property without paying any fee similarly fails. That is, even if such a breach was established, it has not been shown that any damage to the trust estate was caused as a result. In any case, I do not think that there was any breach of the duty to act impartially. Mr Barel was already in occupation at the time of the appointment of the trustees. The only relevant decision they made was to permit Mr Barel to remain in occupation until completion of the sale. The essence of the decision was merely to continue an existing state of affairs. As noted above, the decision was based, at least in part, upon a view that Mr Barel, as a former co-owner, had an entitlement to possession. Further, there was no evidence and it was not suggested that the trustees, in permitting Mr Barel to continue in occupation, were thereby excluding or restricting Dr Segal from enjoying access to the property. The trustees' letter of 23 October 2013 appears to proceed on the basis that both of the former co-owners could have access to the property and might, at least prior to the auction, remove items from it. Finally, it is relevant to note that the trustees, in the course of their consultations with the beneficiaries, made it known that they were content for Mr Barel to remain in occupation, yet it was not suggested to them that this would entail favourable treatment of Mr Barel at Dr Segal's expense. It is my view, having regard to the circumstances outlined above, that no breach of the trustees' duty of impartiality was established.
10. It follows from the above that the claims against the defendants as trustees for breach of trust have not been established.

Conclusion

1. For the reasons set out above, Dr Segal's Amended Statement of Claim must be dismissed. Costs should follow the event.
2. I direct that the parties, within 14 days, bring in Short Minutes of Order that deal with the dismissal of the claims and costs. If there is no agreement concerning the appropriate orders for costs, the parties should agree upon a timetable for the making of brief written submissions on the question.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2016