New South Wales Supreme Court CITATION : AJDJ Pty Ltd v Pacificwest Developments Pty Ltd [2002] NSWSC 842 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4811/00 HEARING DATE(S) : 05/09/02 JUDGMENT DATE : 11 September 2002 PARTIES : AJDJ Pty Ltd, David Bruce Cameron, Lachlan Paul Danckert, Terrance Paul Murphy, John Joseph Hopkins, Reginald Seva Moodley, William Geoffrey Ennis and Neville Pradeepkumar Emerson (P) Pacificwest Developments Pty Ltd (D) JUDGMENT OF : Young CJ in Eq COUNSEL : Ms H Thurai Rajah (S) (P) D Warren (D) SOLICITORS : Thurai Rajah, Lawyers (P) Macquarie Lawyers (D) CATCHWORDS : EQUITY [418]- Specific performance- Order- Purchasers' suit- Purchasers ordinarily may set off costs against purchase money. CASES CITED : Green v Sevin (1879) 13 Ch D 589 Phillips v Howell [1901] 2 Ch 773 DECISION : Direction made in favour of plaintiffs. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Wednesday 11 September 2002 4811/00 –AJDJ PTY LTD v PACIFICWEST DEVELOPMENTS PTY LTD JUDGMENT 1 HIS HONOUR: On 14 December, at the end of a three day hearing, Davies AJ ordered that there be specific performance of seven contracts entered into by the defendant with various purchasers of units at 14 Chapman Street, Werrington, NSW. The plaintiffs were the purchasers under those seven contracts. His Honour declared that the purported rescission by the defendant was invalid and of no effect. 2 The orders were duly entered on 6 May 2002. 3 After the hearing had finished, the Master was asked to consider various motions by the defendant which were dismissed by the Master in the early part of this year. 4 After that nothing happened, apart from the order being formally taken out. 5 By motion filed 30 August 2002, the defendant sought an order that the decree for specific performance be discharged. The basis for this application was that the units, the subject of the decree, were being built by the defendant and it had been informed by the company with which it thought it was insured, that it was not covered. Accordingly, it could not give the appropriate certificate in respect of the building. There is no need to be more explicit than this. 6 The motion came before me on 5 September 2002. Ms Thurai Rajah appeared for the plaintiffs, and Mr Warren for the defendant. 7 I ruled that the motion was premature. The reason why I so ruled was that unless shortly after the decree for specific performance there is agreement between the parties (as occurs in perhaps 98% of all cases), it is necessary to apply to a Master for directions as to the implementation of the decree. Then, if there is a default at any particular step, one can see whether the decree should be discharged because of impossibility or otherwise, or enforced in the appropriate way. 8 The parties accepted this ruling and then worked out a series of directions which I made on 6 September 2002. These directions involve the purchasers electing by a date fixed by a formula, whether to pursue specific performance or have the decree rescinded and an order for damages substituted. 9 One matter was left for my decision, that is, whether if the transaction proceeds to completion, the purchasers are entitled to deduct their costs from the purchase money. 10 The answer to that question is in the affirmative. 11 In Green v Sevin (1879) 13 Ch D 589 at 602, Fry J made such an order following the form that was then in Seton on Decrees. This decision was followed in principle, though distinguished on the facts because the parties were not in the same right in Phillips v Howell [1901] 2 Ch 773. 12 In the 7th ed of Seton (Stevens, London, 1912) p 2179, the standard order for a decree for specific performance on a purchaser's suit includes: "And it is ordered that the plaintiff's costs of this action be taxed by the taxing Master; and it is ordered that … the said costs when taxed be deducted from the amount of the residue of the said purchase money at interest when so computed as aforesaid; and upon the plaintiff paying to the defendant the balance … ". 13 Similarly, in Atkins Court Forms (2001 reissue, Butterworths) p 76 of Vol 37, the standard decree reads: "4. The sum for rents and profits and for the claimant's costs be deducted from the amount of the balance of such purchase money and interest." 14 It is clear from Green v Sevin and Seton that the deduction for costs applies not only to costs to date, but also future costs, and that such costs take priority over any charge subsequent to the contract of sale. 15 Accordingly the directions made on 6 September need to be amplified by inserting a further sub-paragraph (e) to order 3, viz: "3(v)(e) The plaintiffs are entitled to deduct from the purchase money the amount of their costs as assessed or if they are not assessed as at the day of settlement, as agreed or provisionally moderated by a Master or Registrar." *********************** Last Modified: 09/13/2002 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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