New South Wales Supreme Court CITATION : Crawford-Elias v R & A Developments Pty Ltd [1999] NSWSC 903 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 3266/99 HEARING DATE(S) : 30 & 31 August 1999 JUDGMENT DATE : 31 August 1999 PARTIES : Kelly Crawford-Elias (P) R & A Developments Pty Ltd (D) JUDGMENT OF : Hamilton J COUNSEL : S W Gibb (P) No appearance (D) SOLICITORS : John de Mestre & Co (P) No appearance (D) CATCHWORDS : CONVEYANCING [106] - Relationship of vendor and purchaser - Breach of contract - Declaration of right - Circumstances in which declaratory relief alone may be granted; COSTS [574] - Departing from general rule - Order for costs on indemnity basis- Relevant considerations - Defendant represented but does not appear either to oppose or consent to orders Lucas & Tait (Investments) Pty Ltd v Victoria Securities Limited NSWCA 28 November 1974 unreported Minton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671 CASES CITED : Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170 Meagher, Gummow & Lehane (3rd ed, 1992) [1924] Spry on Equitable Remedies (5th ed, 1997) 128-129 DECISION : Declaration that contract binding and enforceable and that parties are bound to perform same. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J TUESDAY, 31 AUGUST 1999 3266/99 KELLY CRAWFORD-ELIAS v R & A DEVELOPMENTS PTY LTD JUDGMENT His Honour: 1 R & A Developments Pty Ltd, the defendant in these proceedings, is the developer of a home unit development on land at Rose Bay. By contract dated 14 April 1999 it sold apartment 9 in that development to the present plaintiff for the price of $750,000. The contract contains a curious special provision to the effect that, if the contract be completed on time, the purchase price will be reduced to $500,000. There is no evidence before the Court of the present value of the apartment. The contract precluded the plaintiff from having a caveat entered upon the title to the land until the proposed plan of strata subdivision be registered, ie, she was precluded from lodging a caveat which affected the land in globo. The contract also contains a provision to the effect that if, despite the expenditure of due efforts, registration of the plan of strata subdivision be not effected by 30 September 1999 then either party may terminate the contract. That date has not yet been reached, nor has the plan of subdivision yet been registered. 2 At the date of contract the land was, and still is, subject to a registered first mortgage to Australia and New Zealand Banking Group Limited ("the Bank"). After the date of contract, the Bank appointed a Mr Lord as the receiver and manager of the land exercising its power under the mortgage. That appointment occurred on 10 June 1999. Correspondence was entered into between the plaintiff and the receiver in the course of which Le Compte Davey, acting as the receiver's solicitors, on 10 July 1999 stated: "1 The registered first mortgagee regards the sale price of $750,000.00 as well below the current market value of the property and for that reason the mortgagee is not prepared to release the property from its mortgage. 2 The alleged sale to your client was not made with the consent of the first mortgagee nor the Receiver and Manager. 3 In the circumstances, the Receiver and Manager is unwilling to complete the alleged Contract for Sale and hereby gives notice of his repudiation of the same." 3 After further correspondence, the plaintiff's reaction was, on 21 July 1999, to institute these proceedings seeking specific performance of the contract. That summons was before the Court on 10 August 1999. On that day Mr Alex Roth, solicitor, of Le Compte Davey and Mr Nell, of counsel, attended at Court on the receiver's instructions. They negotiated an adjournment with the plaintiff's representatives. When, however, the matter was called before the Registrar they did not announce an appearance, but remained at the back of the Court. The matter was adjourned by the plaintiff's representatives in accordance with the agreement. The defendant's lawyers' action in not appearing was explained as arising from the fact that it had not been decided whether or not an appearance would be entered on behalf of the defendant in the proceedings. Since then, although there has been further correspondence, it has been on a number of occasions asserted by Le Compte Davey that it had been decided by the defendant not to enter an appearance or participate in the proceedings. The matter was stood over by me from yesterday to today. The defendant was again notified that the matter was before the Court today (as it had been in relation to yesterday) and has not appeared. 4 It appears to me that none of the grounds assigned in the letter of 10 July 1999 and set out in [2] was a proper basis for repudiation of the contract on the defendant's part. The receiver's consent to the contract was not needed, as he had not been appointed as at the date of the contract. Whatever the situation between the defendant and the Bank as to the necessity of consent to such a contract, that, on the evidence in this case, does not affect the validity of the contract or the rights of the plaintiff. The assertion that the sale was at an undervalue cannot justify repudiation. The law requires people to carry out, as well as good bargains, bad bargains, unless the rules as to unconscionable transactions are breached. There is an uncertainty as to whether the Bank will or will not give such a discharge of mortgage as would permit the contract to be performed. I shall say more concerning the relevance of that matter a little later in the judgment. 5 In the absence of the defendant, the matter has proceeded before me as a final hearing upon the summons. The plaintiff asks that I make a declaration that the contract is on foot and that the parties are bound thereby. Counsel for the plaintiff has suggested further orders which ought be made at this stage by way of limited orders for specific performance. The plaintiff has sworn to her readiness, willingness and ability to carry out the contract. One suggestion that has been made is an order requiring the defendant to use or continue to use its best endeavours to have the plan of strata subdivision registered by 30 September 1999. The difficulty with this is that there is no evidence that it is not doing so. The defendant, whether acting by its directors or the receiver, has an obvious motivation to have the plan of strata subdivision registered. Furthermore, counsel for the plaintiff has frankly and properly stated from the bar table that no material is available to the plaintiff suggesting that this is not occurring. It is something which the defendant may well be proceeding to do for its own purposes quite independently of the existence or non existence of the contract. Another suggestion that has been made is that an order ought be made requiring completion in due course but subject to the possibility of rescission in the meantime. Two difficulties that may be seen in the way of making any order in the nature of specific performance are the possibility that the contract may come to naught through a right of rescission being exercised by the defendant after 30 September 1999, or may become impossible of performance by the Bank refusing to give such a discharge of mortgage as would permit completion. Those, however, are both matters for the future, and I do not think that it can be said at this time that it is clear that performance of the contract will be impossible. Those considerations do not, in my view, preclude appropriate relief in favour of the plaintiff. 6 Further, it ought be said that this is not one of those cases where the plaintiff has selected issues without the presentation of the whole picture as at the time the matter comes before the Court, or where the situation in respect of which relief is sought by way of declaration can be said to be hypothetical or the declaration itself advisory in nature: see Lucas & Tait (Investments) Pty Ltd v Victoria Securities Limited NSWCA 28 November 1974 unreported; Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170; Minton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671; and see generally Meagher, Gummow & Lehane (3rd ed, 1992) [1924]. This is a case where the defendant has unequivocally repudiated the contract. The plaintiff's response is no less unequivocal. In face of the repudiation she has elected to treat the contract as on foot, and brought these proceedings accordingly. The subject of the relief that may be given in such circumstances as the present is usefully discussed in Dr Spry's work on Equitable Remedies (5th ed, 1997) 128-129 where the following is stated: "But this is not to say that the mere anticipation of possible difficulties leads to a refusal of relief. If, on the materials before the court, performance may or may not be able to be completed, the various probabilities will be taken into account in deciding on the order that is most just in all the circumstances. Thus it may be most appropriate to order specific performance in the ordinary manner, so that if necessary the defendant may later approach the court for a modification or variation by reason of subsequent difficulties or may rely upon them in any subsequent difficulties or may rely upon them in any subsequent proceedings in relation to the enforcement of the order. Again, if at the time of the original application there is shown to be a substantial risk that performance will not be possible, it may be most appropriate to make a conditional order or else to adjourn the proceedings until the position becomes more clear." 7 However, the time has not arrived and may not arrive for completion of this contract and there is no evidence that the defendant is not carrying out, for other purposes, the activity at present most pertinent to the further performance of the contract, namely, the achievement of registration of the strata subdivision plan. In these circumstances, I do not at the moment think it appropriate to make a limited order for specific performance commanding any particular act on the defendant's part. I do, however, propose to declare not only that the contract is on foot, but that the parties thereto are bound to carry it out in accordance with its terms, to make it quite plain that the Court regards the purported repudiation as ineffective and the defendant as bound to continue performance of the contract. In granting this limited relief at the present time, the Court envisages that it may be necessary for the plaintiff to return to Court if it becomes apparent that due endeavours are not being made to obtain the registration of the plan of subdivision or that other acts necessary to the performance of the contract are not being duly carried out, so as to place the defendant in breach of its obligations. The declaration that I have outlined will therefore be coupled with a liberty to the plaintiff to apply, so that she may return to the Court for further orders in the present proceedings as the necessity arises, or as she may be advised. 8 I am asked for an order for indemnity costs of the proceedings to date. I am of the view that an order for costs on the indemnity basis is appropriate. The defendant has caused the institution of these proceedings by a repudiation which appears to be baseless, and which it has chosen not to seek to justify before the Court. It actually sent representatives to Court to discuss the course of the proceedings with the plaintiff's representatives on an earlier occasion, but without instructions to appear before the Court on that occasion. It has given subsequent instructions to its solicitors not to enter an appearance. It has declined, or failed, to agree with the plaintiff that the contract is still on foot, and to bring the proceedings by agreement to the end to which they have now come. The plaintiff is clearly entitled to her costs. It seems to me that the groundless repudiation and the lack of any cooperation to save the expenditure of money by the plaintiff, once the proceedings were brought, are a justification that the costs to which the plaintiff is clearly entitled should be on the indemnity basis. 9 The orders that I propose are: (1) I declare that there was and is a binding and enforceable contract between the plaintiff as purchaser and the defendant as vendor in terms of the "Contract for the sale of land - 1996 edition" between the parties dated 14 April 1999 relating to the land in the schedule hereto and that the parties are bound to perform and carry the same into effect according to its terms. (2) I grant liberty to the plaintiff to apply on 24 hours' notice. (3) I order that the defendant pay the plaintiff's costs of the proceedings on the indemnity basis. …oOo… Last Modified: 09/15/1999 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.