Zorbas v Titan Properties

Supreme Court of NSW|2004-03-14|Before: Campbell J

CITATION : Zorbas v Titan Properties (Aust) [2005] NSWSC 213

CATCHWORDS : PROCEDURE - Supreme Court procedure - proceeding with case in absence of defendant - Part 34 Rule 5 Supreme Court Rules - CONVEYANCING - relationship of vendor and purchaser - breach of contract - repeated breaches by purchaser - delay in purchaser completing causes expiry of development consent - purchaser or one of its related companies having demolished cottages on land subject of contract - appropriateness of order for specific performance - time to allow for completion to occur - manner of service of order for specific performance

Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460 CASES CITED : Sudbrook Trading Estate Ltd v Eggleton & Others [1983] AC 444

Peter Zorbas - Plaintiff Titan Properties (Aust) Pty Ltd - First Defendant PARTIES : Delta Constructions (Aust) Pty Ltd - Second Defendant Titan Projects Pty Ltd - Third Defendant

A J McInerney - Plaintiff COUNSEL : No appearance - Defendants

Magney & Magney - Plaintiff SOLICITORS : No appearance - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

5505/04 PETER ZORBAS v TITAN PROPERTIES (AUST) PTY LIMITED & ORS JUDGMENT - Ex Tempore (Revised 15 March 2005) 1 HIS HONOUR: I note that each defendant has been called outside the Court and not appeared. I also note that the defendants filed an appearance in the matter on 12 October 2004. 2 When the defendants did not appear application was made by the plaintiff, under Part 34 Rule 5 Supreme Court Rules 1970, that the Court should proceed with the trial insofar as it has been set down today for the determination of a preliminary question. The matter is one where the defendants have been directed on three separate occasions, namely 25 October 2004, 16 November 2004, and 26 November 2004 to file a defence. At the time the matter came before me in the expedition list on 10 December 2004, and the defendants were legally represented, I directed that the defendants file and serve any evidence on which they sought to rely, together with a defence, by 5pm on 20 December 2004. I noted that the defendants had been ordered to file defences on three prior occasions and had failed to do so. I ordered that in the event that no defence was filed by 20 December 2004 the matter would proceed for hearing on the basis that there was no defence. In those circumstances, it is appropriate to proceed in the absence of the defendants pursuant to Part 34 Rule 5. * * * * * * * * 3 I note the affidavit of David Bruce Magney sworn 9 December 2004, and I note the affidavit of Peter Zorbas sworn 9 December 2004. The exhibits which are marked respectively DM-A to DM-KK to the affidavit of Mr Magney sworn 9 December 2004, will be admitted as exhibits DM-A to DM-KK in the trial. The exhibits PZ-B to PZ-G respectively of the affidavit of the plaintiff sworn 9 December 2004 will be exhibits PZ-B to PZ-G respectively in the trial. 4 I note that the plaintiff undertakes to the Court, pursuant to Part 36 Rule 10B Supreme Court Rules 1970 that the plaintiff will, by 5pm tomorrow, 15 March 2005 forward to the Chief Commissioner the name and address of the person liable to pay duty on the contract for sale dated 28 April 2004 between the plaintiff and the first defendant, together with that contract. * * * * * * * * 5 This is the determination of a separate question concerning whether:

(a) there is a valid and enforceable contract between the plaintiff and the first defendant dated 28 April 2004 for the sale of properties located at 38 and 40 Edgbaston Road, Beverley Hills, being Folio Identifier numbers 1/872208 and 2/872208; and,

(b) there ought be an order for specific performance of that contract. 6 The land at 38 and 40 Edgbaston Road Beverley Hills, which has the folio identifier numbers referred to in the preliminary question, is the property of the plaintiff. It was the subject of a development consent of the Hurstville City Council dated 5 October 2001, which permitted the demolition of two cottages which existed on it, and the erection of a block of six residential units. That development consent was extended, on 4 June 2003, by one year, in consequence of which it was due to expire on 5 October 2004. 7 On 28 April 2004 contracts were exchanged for the sale by the plaintiff to the defendant of the land, for a price of $1,050,000. A comparatively small deposit, of $30,000, was paid. The contract has a contractual completion date of 1 June 2004. 8 On 1 June 2004 the contract was not completed. In consequence, on 2 June 2004 the plaintiff's solicitors served a notice to complete, which appointed 3 pm 17 June 2004 for completion. 9 On 17 June 2004 once again completion did not occur. The plaintiff, and the two directors of the first defendant, Mr Nasr and Mr Yazbek, executed a deed which provided for completion to occur at 3 pm on 25 June 2004. 10 On 25 June 2004 once again completion did not occur. 11 On 14 July 2004 there was a meeting attended by Mr Yazbek, the plaintiff, the solicitor for the first defendant (Mr Tannous) and the solicitor for the plaintiff (Mr Magney). At that meeting, an in-principle agreement was arrived at for an extension of the completion date to 30 September 2004, subject to execution of a deed. 12 While Mr Magney sent a draft deed to the solicitors for the first defendant, and the first defendant's solicitor requested certain amendments to that deed, and, on 13 September 2004, Mr Magney sent a further draft deed, the deed was not executed and returned. 13 On 7 October 2004 the plaintiff and Mr Magney visited both properties, and saw that both cottages had been completely demolished. There was a bulldozer apparently working on the site, and workmen there. It is not the purpose of the present hearing to work out who was responsible for the cottages being demolished, but the fact that they have been demolished is a relevant matter to take into account in deciding whether a discretion concerning specific performance of the contract ought be exercised. 14 The next day, 8 October 2004, the present proceedings were commenced. Justice Palmer made an ex parte order which prohibited the defendants from carrying out any excavation, building or other works on the property until 11 October 2004. On 11 October 2004 the matter came back before Justice Hamilton in the Duty Judge List. The solicitor for the first defendant attended Court on that day. By consent, his Honour extended the orders which had been made on 8 October 2004 until further order. The matter was stood over to 25 October in the Registrar's list. 15 On 12 October 2004 the defendants filed an appearance. 16 Orders were made, on various occasions which I identified earlier in this judgment, for a defence to be filed by a particular time, and for affidavits to be filed, but neither defence nor affidavits has been filed. 17 In consequence, as a result of the Part 15 Rule 20 Supreme Court Rules 1970, the various allegations in the statement of claim are deemed to be admitted. The history which I have set out is based in part on those admissions, and also on evidence which has been given by the plaintiff and Mr Magney. 18 I should also record that, soon after the development consent relating to property had expired, namely on 6 and 7 October 2004, the plaintiff and Mr Magney spoke to a planner at the Hurstville City Council, concerning obtaining an extension of the development approval. While the planner did not purport to give any definitive decision about an extension, he said to them that it was only possible to have one extension of a DA, and as they had already had that, they would have to apply again. As well, he said that he did not think they would get another DA for a six-unit block through the Council. He said that his basis for this view was that, after doing some quick calculations, the block did not seem to be quite big enough to support six units. It was after that meeting with the town planner that the plaintiff and Mr Magney went to the property, and found that the cottages had been pulled down. The cottages were ones which, prior to the plaintiff entering into the contract to sell to the first defendant, had been rented out by the plaintiff - although at the actual date of the contract one of them was unoccupied. 19 In these circumstances, it is in my view appropriate to make an order for specific performance of the contract. Land is usually regarded as being the sort of thing in relation to which an order for specific performance of a contract is appropriate. As Holland J said in Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460 at 9460-1: "… specific performance is not a remedy which should lightly be refused when the vendor has established the existence of a valid contract that equity ordinarily decrees to be specifically performed which the purchaser has declined to complete: Fullers Theatres Ltd v Musgrove (1923) 31 CLR 524 at 548-9; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438."

As Lord Diplock said in Sudbrook Trading Estate Ltd v Eggleton & Others [1983] AC 444 at 478, "… the normal remedy is by a decree for specific performance by the vendor of his primary obligation to convey, upon the purchaser's performing or being willing to perform his own primary obligations under the contract"

See also Meagher, Gummow and Lehane's Equity Doctrines and Remedies , 4th edition, paras [20-030] and [20-035]. 20 In the present case, the facts concerning the expiry of the development consent, the uncertainty about whether another similar development consent would be obtained, and the demolition of the cottages, are all matters which provide an added reason for the order being appropriate. They are all matters which assist in concluding that damages would not be an adequate remedy for the first defendant's breach of contract. 21 In some circumstances, the fact of demolition of the cottages might possibly have been something which the first defendant could have relied upon as a reason why no order should be made. The demolition of the cottages is the sort of thing which, it could be argued, might make what was actually able to be conveyed significantly different to what was contracted to be conveyed. I do not take the course, however, of placing any reliance upon that in the present case. The Statement of Claim in the present proceedings makes allegations which are not directly the subject of the preliminary question being determined today, but which are still relevant to those questions. The Statement of Claim alleges that the first or the second or the third defendant demolished the cottages without the permission of the plaintiff. That allegation is one deemed admitted by all defendants pursuant to Part 15 Rule 20 Supreme Court Rules 1970. The property immediately adjacent to number 38 is one which was owned by the third defendant, and was land where, at the time the contract the subject of this case was entered into, a building project was under way. The second defendant is a company which was identified by Mr Yazbek to the plaintiff, in a meeting which they had on 25 August 2004, as being the company which was going to carry out building work for the first defendant. 22 The first, second and third defendants are all companies which have as their directors the same two men, namely Mr Nasr and Mr Yazbek. No defence has been put on, on the part of the first defendant, saying that it was really the second or third defendants who were responsible for demolition of the cottages, and therefore the consequences of the demolition ought not be visited upon the first defendant so far as any order for specific performance is concerned. 23 The plaintiff asked that an order be made requiring the contract to be completed in seven days. I asked Mr McInerney, counsel for the plaintiff, what he saw as perhaps happening if the matter did not complete on that day. He said that a course which the plaintiff is considering is that proceedings be taken by way of contempt of Court against the defendants, if they were to fail to comply with the order. 24 When that is a course of action which the plaintiff is considering it would not, in my view, be appropriate to order as short a time as one week for the performance of the contract. It seems to me that, given the intervention of the Easter period, a more appropriate date to fix for completion would be 4 April 2005. 25 It is also appropriate, when that course is one which the plaintiff is considering following, to not accede to an application by the plaintiff that service of the order be effected only by facsimile to the solicitors for the first defendant. I note that the contract for sale is one which, in clause 20.6, permits service by facsimile to a defendant's solicitor of documents under the contract, and the fact that there is such a clause in the contract is one which is sometimes given some weight by the Court in deciding how it ought to order service of its own orders relating to that contract. However, in the present circumstances it seems to me to be more appropriate that there be service in the first instance by facsimile to the first defendant's solicitors, by 5pm today of the orders, and that as well personal service of the orders take place at the registered office of the first defendant as soon as practicable and in any event by noon tomorrow. I have amended the plaintiff's Short Minutes of Order to give effect to these matters. 26 I make the declaration in paragraph 1 of the Short Minutes of Order which I initial, date today's date, and shall place with the papers. I make orders in accordance with paragraphs 2, 3, 4 and 5 of those Orders. I make the order in paragraph 6 of the Short Minutes of Order, and paragraph 7 that the orders be entered forthwith. **********

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Judgment (13 paragraphs)

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Cases Cited (2)