BRUCE and ANOR v RYAN and ORS [1996] NSWCA 73

BRUCE v RYAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLY, CLARKE and SHELLER JJA 15 August 1996, 23 December 1996

[1996] NSWCA 73

CONTRACT FOR SALE OF LAND — LOAN FROM VENDOR TO PURCHASER — MORTGAGE

CONTRACT FOR SALE OF LAND — LOAN FROM VENDOR TO PURCHASER — SECURED BY MORTGAGE IN FAVOUR OF VENDOR — settlement of proceedings commenced on default by mortgagor — original mortgage discharged and new mortgage executed to secure a lesser amount — whether carrying out of terms of settlement constituted full repayment of moneys originally owing to the mortgagee — whether payment received by mortgagee was in settlement of obligations arising under the contract for sale or under mortgage arrangements — Held: it was the latter, and mortgagee had received repayment — appeal dismissed.

ORDERS

Appeal dismissed with costs.

Priestley JA Towards the end of 1988 Mrs Ryan wanted to sell her house at 19 Milton Avenue, Woollahra (the Milton Avenue land) and buy a house in Adelaide. Mr and Mrs Bruce. the shareholders and directors! of a company called Bristol Acceptance Corporation Pty Ltd (Bristol) which owned a house at Wentworth Street, Point Piper, (the Wentworth Street land) wanted Bristol to sell the Wentworth Street land and themselves to buy Mrs Ryan's Milton Avenue land. Mr and Mrs Troost wanted to buy Bristol's Wentworth Street land.

Contracts were exchanged for the sale of Mrs Ryan's Milton Avenue land to the Bruces (2 December 1988) for a price of $1,250,000 and for the sale by Bristol to the Troosts (4 January 1989) for a price of $2,500,000. Settlement of both contracts of sale took place in late July 1989.

In the interval between the making of the contracts and their completion, difficulties had arisen, chiefly because of problems the Troosts were having in arranging to pay the purchase price for the Wentworth Street land. The correspondence which came into existence prior to the time when the two contracts were completed and the evidence of oral negotiations show that the Bruces foresaw the possibility that Bristol might never be paid in full by the Troosts and made arrangements with Mrs Ryan having the effect that, to some extent, she would share the risk with them of the possible shortfall in payment by the Troosts to Bristol. Correspondence in June 1989 (eg a letter from Mr Meisner, the Bruces' solicitor throughout the transactions, dated 7 June 1989, to Mrs Ryan's solicitors) spoke of deferment of payment of part of the purchase price by both the Troosts and the Bruces "on a terms basis".