New South Wales Supreme Court CITATION : Consolidated Credit Network Pty Limited v Sonenco Apartments Pty Limited [2001] NSWSC 1000 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4720 of 2001 HEARING DATE(S) : 29 and 30 October 2001 JUDGMENT DATE : 9 November 2001 PARTIES : Consolidated Credit Network (NSW) Pty Limited (Plaintiff/Cross-Defendant) Sonenco Apartments Pty Limited (Defendant/Cross-Claimant JUDGMENT OF : Windeyer J at 1 COUNSEL : Mr W G Muddle (Plaintiff/Cross-Defendant) Mr C P George (Defendant/Cross-Claimant) SOLICITORS : Paul Bard (Plaintiff/Cross-Defendant) Warren F Ball & Co (Defendant/Cross-Claimant) CATCHWORDS : CONTRACTS - breach - specific performance - contract for the marketing of units - marketing company agreed to fixed price for units and to buy any units it could not sell - developer refused to complete contracts with purchasers found by agents employed by marketing company - whether specific performance should be ordered - EQUITY - specific performance - marketing company employed network of agents and relied on business reputation - whether damages sufficient remedy LEGISLATION CITED : Conveyancing Act 1919 Trade Practices Act 1987, s52 DECISION : See paragraph 12 - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WINDEYER J FRIDAY 9 NOVEMBER 2001 4720/01 CONSOLIDATED CREDIT NETWORK (AUSTRALIA) PTY LTD V SONENCO APARTMENTS PTY LIMITED Judgment 1 I made final orders in this action on 30 October, as there was some urgency to do this and stated I would give reasons shortly thereafter, and now do so. 2 The plaintiff sought specific performance of an agreement claimed to have been made on 26 June 2001 for the purchase of twenty units being constructed by the defendant, Sonenco Apartments Pty Limited (Sonenco) at 12 Blaxcell Street, Granville, for a price of $5,197,000, being an average price of $257,850. The arrangement envisaged that the plaintiff would market these units through a network of estate agents it dealt with. The units would be marketed on behalf of Sonenco at a price in excess of $259,850 and on settlement Sonenco would receive that figure and the plaintiff, Consolidated Credit Network (NSW) Pty Limited (Consolidated) would receive any amount in excess of that figure. Consolidated agreed to purchase direct any units not so sold within one hundred and twenty days of a particular date. 3 While this was an unusual arrangement, its terms are perfectly clear. Under the arrangement the vendor was to exchange contracts on terms provided by the vendor with purchasers obtained by Consolidated or its agents. To comply with legislative requirements an agency agreement was entered into between Sonenco as owner and Consolidated as agent so that the marketing of the units could take place. 4 Purchasers were obtained for most of the units and contracts were signed by many of these purchasers. 5 On 17 August 2001, the solicitors for Sonenco wrote to Consolidated saying that Sonenco could not complete the units for the agreed price. It claimed that the arrangement was conditional and would not proceed. 6 Consolidated claimed that it was an appropriate case to make an order for specific performance because the contract was one, in essence, for the sale of land and also because its reputation among its network of agents would be seriously diminished. 7 The defendant by further amended defence and cross-claim raised certain claims and defences but gave no evidence at all relevant to support these. I will deal with each matter briefly. 8 The agreement sued upon consists of a letter from the plaintiff dated 26 June 2001 endorsed by Sonenco as being agreed. It sets out the matters to which I have referred. It clearly sets out the price, the property, the agreement to sell to nominated purchasers and the agreement by Consolidated to purchase for the agreed price, any units unsold after one hundred and twenty days. It is first claimed the agreement is not binding because the intention was to make no agreement until a more formal agreement was negotiated. It was also claimed there was no consideration for the agreement. As to the first, there was no evidence to support it. The parties conducted themselves on the basis of a binding agreement until the vendor decided it had sold for too low a price. It was the clear intention to be bound. There was no need for a more formal document but even if there were, as I have said, the clear intention was that the parties be immediately bound. There was consideration. The plaintiff was bound to pay the price. 9 By cross-claim the defendant claimed that the agreement of 26 June 2001 amounted to an option to purchase obtained without consideration, which option was not exercised. It was not an option. I was and remain at a loss to understand that argument. At a later stage it was claimed it was an option to sell. It was not, but if it were, such an option, then the provisions of the Conveyancing Act 1919 upon which Sonenco appeared to rely would not have applied to it. 10 Next there was a claim as to uncertainty, which would have been a matter for a defence not cross-claim, but it had no basis. Next there was a claim rectification relating to the average price figures. In respect of this claim there was no evidence as to what the defendant claimed was the true agreement. Next there was a claim about GST which, while not admitted was eventually agreed. Finally, there was a claim for fraud and a claim based on misleading and deceptive conduct under s52 of the Trade Practices Act 1987. There was no evidence to support these claims. The claim of fraud should never have been brought, nor should the claims under s52. 11 The only matter raising any doubt was whether an order for specific performance should be made. Ordinarily damages for breach of contract would have been thought sufficient, as the plaintiff was not really the intending purchaser, except as a purchaser of final resort. The plaintiff argued however that its reputation with its list of supporting agents would be lost, if the defendant's obligations were not enforced. I accept that to be so. It is also, in my view, relevant that while the potential purchasers were not parties, the fact is that they had agreed to purchase on terms upon which the defendant had agreed to sell. The possibility of a multiplicity of claims, if the agreement were not enforced, was in my view, a relevant matter. 12 I ordered that the costs follow the event. As the claims for fraud and misleading and deceptive conduct were unsupported by any evidence and should not have been made, I ordered the costs of those issues be paid on the indemnity basis. ********** Last Modified: 11/09/2001 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.