Carmelita Paolucci v Makedyn Pty Ltd [2020] NSWSC 1871

Supreme Court New South Wales

Medium Neutral Citation: Carmelita Paolucci v Makedyn Pty Ltd [2020] NSWSC 1871 Hearing dates: 23, 24 and 25 November 2020 Date of orders: 17 December 2020 Decision date: 17 December 2020 Jurisdiction: Equity - Real Property List Before: Rein J Decision: [86]-[87] Catchwords: BUILDING AND CONSTRUCTION — Contract – the Plaintiff (a landowner) and the Defendant (a developer) entered into a contractual arrangement by which the Plaintiff would sell her property to the Defendant for $3.5M of which $2.5M was payable in cash and which included an agreement that the Defendant would on completion of the development reconvey to the Plaintiff two lots (which later became three lots) with completed dwellings (a "House" and a "Duplex") constructed on the lots ("the Reconveyance Contract") – a "Sunset Clause" provided that the contract could be rescinded by either party "at any time" after 24 May 2017; registration of the relevant subdivision plans was achieved by May 2018. The parties then fell into a dispute concerning the dimensions of the residences required by the Reconveyance Contract to be constructed – issues which arose were: (1) whether the Defendant was in breach of the Reconveyance Contract in failing to complete the construction and reconveyance; (2) whether specific performance or an order for partial specific performance was available; (3) whether the Defendant had a contractual right of rescission pursuant to the Sunset Clause (cl 32.1.4 of the Reconveyance Contract); (4) whether the limitation on damages in cl 32 of the Reconveyance Contract was limited to rescission; (5) whether the reference in cl 30.1 of the Reconveyance Contract to 241.54m2 was a reference to the size of the Duplex or to the two residences forming part of the Duplex –Held: (1) the dimensions of 241.54m2 is a reference to the total area of the Duplex rather than a reference to each residence; (2) the Defendant was in breach of the requirement to provide a layout plan for the House and the Duplex but this breach was rectified in late 2018; (3) the Defendant was not otherwise in breach of the Reconveyance Contract. The long delay in registration of the relevant plans of subdivision was not the fault of the Defendant. The Defendant had not wilfully and deliberately failed to achieve completion of the contract and non-completion was a consequence of the dispute about dimensions; (4) the limitation on damages was not limited to rescission; (5) specific performance or partial specific performance not available because the Defendant by failing to complete was not in breach of the contract and is willing and able to complete the Reconveyance Contract. LAND LAW — Conveyancing — Contract for sale — Rescission – The Defendant cross claimed seeking permission pursuant to s 66ZS(6) of the Conveyancing Act 1919 (NSW) ("the Conveyancing Act") to rescind the Reconveyance Contract and later amended its cross claim to rely on s 66ZS which is the successor to s 66ZL (see s 66ZU).There were long delays in registration of the relevant plans of subdivision. The Reconveyance Contract contained a "Sunset Clause" which permitted either party to rescind if various "Conditional Matters" had not been achieved by a particular date, i.e. 24 May 2017 – Held: (1) cross claim dismissed – rescission by the Defendant should not be permitted pursuant to s 66ZS of the Conveyancing Act because it was not just and equitable to permit the Defendant to rescind. EQUITY — Equitable remedies — Specific performance – whether an order for specific performance or partial specific performance was available – Held: specific performance or partial specific performance not available because the Defendant was not in breach of the contract and is willing and able to complete the Reconveyance Contract. EVIDENCE — Privileges — Without prejudice privilege – whether without prejudice correspondence should be admitted – Held: (1) correspondence allowed into evidence – the status of the letter was doubtful but, in any event, if privileged a misleading impression would be created if that content was excluded. Legislation Cited: Australian Consumer Law (sch 2 of the Competition and Consumer Act 2010 (Cth)) Conveyancing Act 1919 (NSW) Conveyancing Legislation Amendment Act 2018 (NSW) Evidence Act 1995 (NSW) Cases Cited: Cherry v Steele-Park [2017] NSWCA 295 Classic Bet (NSW) Pty Ltd & anor v KRM (Vic) Pty Ltd & anor; Kay v KRM (Vic) Pty Ltd [2020] NSWCA 6 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros [2018] NSWSC 344 Electricity Generation Corp v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corp (2014) 251 CLR 640 Findex Group Ltd v Mckay [2020] FCAFC 182 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 Galafassi v Kelly [2014] NSWCA 190; (2014) 87 NSWLR 119 Hume Steel Ltd v Attorney-General (Vic) (1927) 39 CLR 455 KRM (Vic) Pty Ltd v Classicbet Pty Ltd [2019] NSWSC 1773 McIntosh v Dalwood [No 4] (1930) 30 SR (NSW) 415; (1930) 47 WN (NSW) 128 Silver Star Fashions Pty Ltd v Dal Broi [2018] NSWSC 1445 Soames v Edge (1860) John 669 Starline Drive-In Theatre Ltd v Federal Commissioner of Taxation (1964) 112 CLR 458 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279 Wolverhampton Corporation v Emmons [1901] 1 KB 515 Wright v Carter (1923) 23 SR (SNW) 555 York House Pty Ltd v Federal Commissioner of Taxation (1930) 43 CLR 427 Texts Cited: Carter, J, Contract Law in Australia (LexisNexis Butterworths, 7th ed, 2018) Davis, J.L.R (ed), Contract: General Principles: The Laws of Australia (Thomson Lawbook Co, 2006) Heydon, J.D., Heydon on Contract (Thomson Reuters, 2019) Northcote, George Russell, Fry on the Specific Performance of Contracts (Stevens and Sons, Ltd., London, 6th ed, 1921) Category: Principal judgment Parties: Carmelita Paolucci (Plaintiff) Makedyn Pty Ltd (Defendant) Representation: Counsel: Mr A Harding SC with Mr J Braithwaite (Plaintiff) Mr Knackstredt (Defendant)