New South Wales District Court CITATION: Robert Gabrial Safi v James Wallace Doran [2008] NSWDC 326 HEARING DATE(S): 3/11/08 JUDGMENT DATE: 7 November 2008 JURISDICTION: Civil JUDGMENT OF: Rolfe DCJ DECISION: Verdict for the Plaintiff against the Defendant in the amount of $62,500. CATCHWORDS: Concurrent contracts for the sale of an apartment - Notices to complete and extensions of time for completion - Claim by Plaintiff for recovery from Defendant of amount equal to deposit - Consideration of whether Plaintiff was ready, willing and able to complete - Repudiation by Defendant - Whether Plaintiff required to serve notice of termination LEGISLATION CITED: Civil Procedure Act 2005 McNally and Ors v Waitzer (1981) 1 NSWLR 294 CASES CITED: Foran v Wight (1989) 168 CLR 385 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 433 Jones v Dunkel (1959) 101 CLR 298 PARTIES: Robert Gabrial Safi (Plaintiff) James Wallace Doran (Defendant) FILE NUMBER(S): 5898/06 COUNSEL: A Rogers (Plaintiff) G P McNally SC with V McWilliam (Defendant) JUDGMENT 1 On 28 November 2001 the plaintiff, Robert Gabriel Safi, entered into a contract (the "First Contract") for the purchase of apartment M804 and car space in Mountain Residential Apartments, Quadrant Off Broadway, Broadway, Ultimo ("the Property"). The purchase price was $395,700 which included a deposit of $39,570 which was paid on exchange to the vendor, College Square Residential Pty Limited ("the Vendor") a company in the Australand Group. 2 On 12 September 2003 the plaintiff entered into a contract (the "Contract") for the sale of the Property to the defendant, James Wallace Doran, for the price of $625,000 which included a deposit of $62,500. The defendant did not pay the deposit. 3 By Notice to Complete dated 12 January 2004 the plaintiff required the defendant to compete the Contract by 27 January 2004. The defendant was unable to complete the Contract and the plaintiff now claims an amount equal to the deposit from the defendant. The defendant does not dispute that, if successful, the plaintiff will be entitled to recover this amount but for the reasons set out below the defendant denies that he is liable to the plaintiff. In that respect the background of the case is as follows. 4 The Property was part of a development being carried out by the Australand Group. When the plaintiff entered into the First Contract with the Vendor, work on the development had not been finished. For practical purposes, neither the First Contract nor the Contract could be completed until work on the development finished, including registration of the strata plan. In this respect it was not until November 2003 that the Vendor was in a position to require the plaintiff to complete the First Contract. 5 On 12 November 2003 the Vendor's solicitors served on the plaintiff's solicitors a Notice to Complete expiring on 27 November 2003 (exhibit A 8.75). 6 On 26 November 2003, at the request of the plaintiff, the Vendor agreed to extend the time for completion until 5 December 2003 provided the plaintiff acknowledged that if completion should not be effected by that date the Vendor would be entitled to terminate the First Contract and forfeit the deposit (exhibit A 8.86B). 7 In the absence of any other evidence, the Court infers that the plaintiff did not provide the acknowledgement required by the Vendor. Notwithstanding, on 8 December 2003 the Vendor agreed to extend the time for completion until Wednesday 17 December 2003. The Vendor informed the plaintiff that this extension was final and the Vendor would not entertain any negotiations in the matter. If the First Contract was not settled by 17 December 2003 the Vendor informed the plaintiff that it would immediately terminate the First Contract (exhibit A 8.87). 8 The plaintiff did not complete the First Contract on 17 December 2003. Nevertheless, on 18 December 2003 the Vendor granted a further extension of time to complete the First Contract up to 24 December 2003 with time being of the essence and subject to the plaintiff paying an amount of interest in accordance with clause 37 of the First Contract in the amount of $5,824.60 on or before 22 December 2003. Further, the Vendor informed the plaintiff that if the plaintiff did not settle the matter on 24 December 2003 it would terminate the First Contract and keep the deposit. The Vendor informed the plaintiff that the extension was granted as a goodwill gesture and no further extension would be entertained (exhibit A 8.68). 9 In the absence of any other evidence, the Court infers that the plaintiff did not pay interest. 10 On 22 December 2003 in spite of what the Vendor had stated on 18 December 2003, the Vendor again extended the date for completion of the First Contract with time remaining of the essence up to 23 January 2004. As a condition of the extension, the Vendor again required payment of interest in accordance with the provisions of the First Contract. 11 On 12 January 2004 the plaintiff's solicitors issued a Notice to Complete the Contract to the defendant's solicitors requiring completion no later than 12 midday on Tuesday 27 January 2004 in which respect time was of the essence (exhibit A 8.62). 12 Although on 20 January 2004 the defendant's solicitors objected to the plaintiff's Notice to Complete "on the grounds of both substance and form" no point has been taken in these proceedings to support that contention (exhibit A 8.60). 13 On 22 January 2004 the plaintiff's solicitor Pierre Safi (no relation to the plaintiff) telephoned the defendant's solicitor, Peter Doyle, regarding completion of the Contract. The content of the conversation is set out in paragraph 11 of Mr Safi's affidavit of 27 March 2008 (exhibit A 3). "I said: Is your client in a position to settle on Monday. The notice to complete expires on Monday and I would like to book settlement with our vendor and you for Monday. Settlement has to be simultaneous. We will hand over 2 transfers to you, a transfer from our vendor to my client and a transfer from my client to you client. PD: No he is not able to settle. He might not be ready for a few days or weeks. I said: I have a notice to complete issued to me by my client's vendor. My vendor has not terminated but they have told me that they will terminate if settlement does not take place on Monday. PD: My client is not in a position to settle on Monday. You should get a further extension from your vendor. I said: I have exhausted my client's vendor's patience. I will send you settlement figures and cheque details for Monday." 14 In para 2 of his affidavit of 30 October 2008 (exhibit A 7) Mr Safi clarified what he had said in para 11 of the earlier affidavit set out above. He said: "I refer to paragraph 11 of that affidavit. In that paragraph I depose to saying to the solicitor for the Defendant that the Notice to Complete expired on Monday 27 January 2004. I am now aware that 27 January 2004 was a Tuesday. I believe that what I have said in the affidavit must be mistaken as to the day of the week. I am able to say with confidence that the solicitor for the Defendant did not at the time tell me that I was mistaken as to the day of the week which strengthens me in my view that I must have nominated Tuesday as the day." 15 In para 5 of his affidavit of 30 October 2008 Mr Safi said that because the defendant's solicitor, Mr Doyle, had advised him that the defendant would not be in a position to settle, he did not book the matter for settlement. 16 At 4:15pm on 27 January 2004 Ms Truman, an employee of Australand, sent an email to the Vendor's solicitors instructing them that as the First Contract did not complete "on 23 January as agreed, please proceed to terminate" (exhibit 8.92). 17 On 30 January 2004 the Vendor issued a Notice of Termination of the First Contract upon the plaintiff (exhibit A 8.49). 18 On 17 March 2004 the plaintiff issued a Notice of Termination of the Contract upon the defendant (exhibit A 8.22). 19 Mr McNally SC and Ms McWilliam appeared for the defendant. They submitted that before the plaintiff could rely upon the defendant's failure to comply with the Notice to Complete (requiring completion on 27 January 2004) the plaintiff had to establish that he was "ready willing and able to complete" the Contract at least by 27 January 2004: McNally and others v Waitzer (1981) 1 NSWLR 294; Foran v Wight (1989) 168 CLR 385. They submitted that the plaintiff was not ready willing and able to complete as at 27 January 2004 because he did not have title to the Property and, most importantly, the Notice to Complete served upon him by the Vendor had expired on 23 January 2004. Accordingly, the plaintiff was unable to terminate the Contract and sue the defendant for an amount equal to the deposit. 20 In support of their submissions counsel for the defendant contended that the Court should not accept Mr Safi's evidence in his affidavit of 30 October 2008 to the effect that he made a mistake in para 11 of his earlier affidavit by referring to "Monday" (which was 26 January 2004) when in fact 27 January 2004, the date of expiry of the plaintiff's Notice to Complete was a Tuesday. Counsel for the defendant submitted that, after considering Mr Safi's evidence in chief and his evidence in cross examination, the Court should conclude that the reference to "Monday" was a reference to Friday 23 January 2004 when the Vendor's Notice to Complete served on the plaintiff expired. Because there was no evidence of an extension by the Vendor beyond 23January 2004 it follows, so the argument goes, that the plaintiff cannot establish he was ready willing and able to perform the contract with the defendant as at 27 January 2004. 21 Mr Rogers of counsel appeared for the plaintiff. He correctly accepted that, in the circumstances of this case, it was necessary for the plaintiff to discharge the onus of showing, on the balance of probabilities, that the plaintiff was ready and willing to complete the Contract: Foran v Wight at 451 – 452 per Dawson J. Readiness and willingness on the part of the plaintiff is a part of his cause of action in a case like this: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 433. 22 I turn now to consider whether the plaintiff has discharged the onus. 23 First of all, I accept that Mr Safi gave his evidence honestly and to the best of his recollection. Secondly, although it is true that Mr Safi did not make a note of the conversation with Mr Doyle and made his affidavit in support of the plaintiff's claim on 27 March 2008, I am satisfied on the balance of probabilities that Mr Safi's evidence should be accepted. He remained steadfast during cross examination about the conversation taking place in the terms set out in para 11 of his first affidavit subject to correcting the mistake about "Monday" when me meant "Tuesday". In this respect, as the defendant had settled his cross claim against Mr Doyle prior to the hearing, there was no reason why the defendant could not have called Mr Doyle to give his version of the conversation. The defendant having not adopted this course, the Court infers that Mr Doyle's evidence would not have assisted the defendant's case (Jones v Dunkel (1959) 101 CLR 298). In addition, it makes sense for Mr Safi to have enquired of Mr Doyle if the defendant could settle by Tuesday 27 January 2004. It was not until that date that the plaintiff's Notice to Complete served on the defendant expired: as Mr Safi said in his cross examination, he could not compel the defendant to settle earlier than that date. As well, Mr Safi wanted to arrange simultaneous settlement of the First Contract and the Contract on 27 January 2004 because the Vendor had told him that it would terminate the First Contract if settlement did not occur by Tuesday 27 January 2004. 24 I am satisfied that the plaintiff has demonstrated that it was more likely than not that the Vendor would have settled on 27 January 2004. This is because I am satisfied on the evidence that the Vendor was content to allow completion of the First Contract to take place on 27 January 2004 not only because of Mr Safi's evidence about it but because of the Vendor's history of granting the plaintiff the earlier extensions to complete the First Contract. Consistently with this finding I have taken into account Mr Safi's evidence in para 14 of this affidavit of 27 March 2008 that on the morning of 27 January 2004 he spoke to Mr Doyle regarding completion of the Contract and was told in no uncertain terms that the defendant would not be settling on that date because he needed to sell the Property to another buyer and therefore another contract was required. Given the Vendor's zeal to give the plaintiff ample opportunity to settle, Ms Truman's email at 4:15pm on 27 January 2004 to the Vendor's solicitor fits into this context: it was sent late in the day and the Court infers it was only sent after Ms Truman learned that the settlement would not go ahead on 27 January 2004. 25 It follows by reason of the Court's findings that the plaintiff has established that he was ready and willing to perform the Contract on 27 January 2004 and that the defendant, by his action in making it clear that he was unable to settle, repudiated the Contract. 26 As a fall back submission, counsel for the defendant contended that the plaintiff could not succeed because his Notice of Termination was not served until 17 March 2004 by which time the First Contract had already been terminated. The plaintiff could not therefore terminate as he was incapable of performing his side of the bargain. 27 I reject this submission. For all intents and purposes, the plaintiff accepted the defendant's repudiation when he failed to complete the Contract on 27 January 2004. This is clear from Mr Safi's evidence that the plaintiff informed him on or about 27 January 2004 that he would sue the defendant for his losses. In those circumstances it was unnecessary for the plaintiff to serve a Notice of Termination, a step described by Deane J in Foran v Wight at 437, as involving "… the useless and futile expenditure by an innocent party of whatever time, effort or money was necessary to place himself in a position where he could positively demonstrate actual or potential ability to perform a contract in order to be able to bring it to an end on the ground that it had already been repudiated by the other party." 28 In the result there will be a verdict for the plaintiff against the defendant in the amount of $62,500. The plaintiff is entitled to interest on this amount in accordance with the provisions of the Civil Procedure Act 2005. 29 Costs should follow the event on the ordinary basis but I will entertain submissions if either party wishes to contend otherwise. 30 I direct that the exhibits be returned. 31 By way of a footnote, I should add that counsel for the defendant objected on the grounds of relevance to the documents included in exhibit A8 at pages 1 – 13 (inclusive), 15, 16, 24 – 35 (inclusive), 38 – 45 (inclusive) and 67. The documents were admitted provisionally subject to that objection. Having regard to the fact that counsel for the plaintiff did not make good the relevance of these documents I have excluded them from the evidence. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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