Malouf v Sterling Estates Development Corporation Pty Ltd [2002] NSWSC 920

New South Wales Supreme Court

CITATION : Malouf v Sterling Estates Development Corporation Pty Ltd [2002] NSWSC 920 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3218/02 HEARING DATE(S) : 23/09/02 JUDGMENT DATE : 24 September 2002

Sam John Malouf (P1) PARTIES : Christine Malouf (P2) Sterling Estates Development Corporation Pty Ltd (D1) Dexta Corporation Ltd (D2) JUDGMENT OF : Young CJ in Eq

COUNSEL : M Pesman (P) S T White (D1) SOLICITORS : Patrick Hargraves & Co (P) Kemp Strang (D1) CATCHWORDS : CONVEYANCING [64]- Time- When notice to complete may be given- Vendor to fix special defects in building before completion- Debate whether defect special or general- Held special- Vendor's termination invalid. - WORDS & PHRASES- "Urgent". Abraham v Mallon (1975) 1 BPR 9157 Brachmanis v Columbus Property Developments Pty Ltd [2001] NSWSC 163 Dayton City v Borchers 232 NE (2nd) 437 (Ohio) (1967) Hampson v Clyne [1967] 2 NSWLR 591 CASES CITED : Jillinda Pty Ltd v McCourt (1983) NSW ConvR 55-145 McNally v Waitzer [1981] 1 NSWLR 294 Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 Spencer v Cali [1986] 2 Qd R 456 Tropical Traders Ltd v Goonan (1964) 111 CLR 41 Wilde v Anstee (1999) 48 NSWLR 387 DECISION : Orders made.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Tuesday 24 September 2002

3218/02 - MALOUF v STERLING ESTATES DEVELOPMENT CORPORATION PTY LTD JUDGMENT 1 HIS HONOUR: On 14 February 2000 the plaintiffs agreed to purchase a unit in a proposed building at Camperdown from the first defendant. The contract was in the 1996 edition of the standard form, but with a number of special conditions. The purchase price was $560,000. A deposit of $56,000 was secured by a deposit bond. 2 It was part of the contract that the building in which the unit would be part would be constructed by contractors on behalf of the vendor. The building was expected to be ready somewhere about the end of the following year. 3 Special condition 31 of the contract provided that before completion the vendor must cause the property to be finished as specified. However, the requisitions and complaints that the purchaser could make were limited by special condition 31, so that the purchaser could complain of special faults before completion, but faults and defects which were not within the category of "special faults" were to be notified not with the vendor's solicitor, but with some officer of the vendor, and could be fixed within a limited time after completion. 4 "Special faults" were defined in special condition 23 of the contract in the following terms: "Special fault means a fault or defect in the property which: (a) is structural; or (b) because of its nature requires urgent attention; or (c) may cause danger to persons in the property; or (d) make the property uninhabitable." 5 The vendor's solicitor wrote to the purchasers' solicitor on 5 February 2002 indicating that practical completion was likely to be reached about 20 February, and the strata plan would be registered shortly thereafter. This, no doubt, was to alert the purchasers that some action would be required in the near future to complete the purchase. 6 Special condition 33 made completion conditional, inter alia, on registration of the strata plan. 7 On 14 March 2002 the first plaintiff inspected the unit. On that day he wrote to the first defendant's representative noting eight defects that he said required rectification prior to settlement. I do not need to set out the eight defects, as only two are currently said to be special defects; those two being a damaged fire door and uneven floor levels in the living/dining room area. 8 However, one of the first defendant's men, a Mr Irvine, in fact found eighty-two defects, including drummy tiles which needed attention at that time. 9 On 25 March 2002 the vendor's solicitor wrote to the purchasers' solicitor informing them that the strata plan had been registered on 22 March 2002. It would seem that the other preconditions to settlement had been fulfilled before this date. 10 The completion date under term 5 on page 1 of the contract was 21 days from the date of the fulfilment of the preconditions, which seems to be 13 April 2002. Under cl 15 of the contract: "The parties must complete by the completion date and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so." 11 Under special condition 27.4 a fourteen day notice is said to be a reasonable period to allow for completion in that notice. 12 The vendors' solicitor's letter also pointed out that under special condition 31 the purchasers were not entitled to delay completion on account of general defects. 13 On 10 April 2002 the purchasers' solicitor wrote to the first defendant's solicitor alleging that there had been an informal agreement between the clients that settlement would take place when 90 percent of the defects in the earlier correspondence had been rectified. 14 On 11 April the first defendant's solicitor wrote that there was no such agreement, that completion was expected on 15 April 2002, and that if that did not occur a notice to complete would issue. 15 On 17 April 2002 the vendor's solicitor issued a notice to complete. 16 The notice read: " NOTICE TO COMPLETE TO: Samuel Malouf and Christine Malouf AND TO: YOUR SOLICITORS Patrick Hargraves & Co BY FACSIMILE 9344 5141 Sterling Estates Development Corporation Pty Ltd ACN 083 002 171 ("the Vendor") gives you notice that: 1. The Vendor is ready and willing to transfer to you the property known as Apartment 420 "Etage", City Quarter, 2-50 Pyrmont Bridge Road, Camperdown in accordance with a contract for sale of land dated 14 February 2002 (" the Contract "). 2. You are required to complete the purchase and to pay the balance of the purchase money on or before 3.00pm on Friday 3 May 2002 at the offices of Kemp Strang, Lawyers, Level 14, 55 Hunter Street, Sydney or such other place as the Vendor may nominate in writing and in this respect time is now of the essence of the Contract. 3. Unless you complete within the time specified in this Notice you will be in breach of an essential term of the Contract. 4. Unless you complete within the time specified in this Notice the Vendor will be entitled to terminate the Contract forfeit the deposit and take such other proceedings pursuant to clause 9 of the Contract as it may be advised. Dated this 17th day of April 2002 S Williams Vendor's solicitor" 17 The plaintiffs' solicitor replied that he considered the notice to complete to be invalid as to substance and time, and said that the purchasers would settle when the defects were remedied. 18 The first defendants' response to the list submitted in March, or at least the two items that are still in dispute, is set out in annexure C to Mr Elgie's affidavit: "1. The front entry Fire Door was repaired in late March 2002.