Montano Property Development Pty Ltd v 2-8 Property Pty Ltd [2002] NSWSC 435

New South Wales Supreme Court

CITATION : Montano Property Development Pty Ltd v 2-8 Property Pty Ltd [2002] NSWSC 435 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 2584/02 HEARING DATE(S) : 7-9 May 2002 JUDGMENT DATE : 9 May 2002

PARTIES : Montano Property Development Pty Limited (P) 2-8 Property Pty Limited (D) JUDGMENT OF : Hamilton J

COUNSEL : A McAvoy (P) R Ma, Solicitor (D) SOLICITORS : Hovan & Co (P) Ma & Company (D) CATCHWORDS : EQUITY [87] - General principles - Penalty - Relief against penalties and forfeiture - Relief against forfeiture of contract for sale of land - Evidence of unconscionability necessary. Ciavarella v Balmer (1983) 153 CLR 438 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 CASES CITED : Legione v Hateley (1983) 152 CLR 406 Newbon v The City Mutual Life Assurance Society Limited (1935) 52 CLR 723 Stern v McArthur (1988) 165 CLR 489 DECISION : Interlocutory injunction granted.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

THURSDAY, 9 MAY 2002

2584/02 MONTANO PROPERTY DEVELOPMENT PTY LIMITED v 2-8 PROPERTY PTY LIMITED JUDGMENT 1 HIS HONOUR: In this matter I yesterday granted the plaintiff interlocutory relief by way of an interlocutory injunction. By reasons of the exigencies of yesterday's list I did not have time to deliver the reasons for that decision, which I now propose to deliver. The proceedings concern a contract for the sale of a property, the location of which is variously described as Homebush West or Strathfield. The purchase price under that contract is $3 million and the deposit paid is $140,000. The defendant vendor gave a notice to complete the contract and, after non compliance with the notice to complete, at about 5 o'clock on the afternoon of Friday, 3 May 2002, had its solicitors fax a notice of termination of the contract to the plaintiff's solicitors. 2 The plaintiff claims in various ways that the sale ought proceed, and the injunction that I granted was to restrain the sale of the property otherwise than to the plaintiff until further order to permit the plaintiff's claim to be determined. The plaintiff claims that the notice to complete was defective and that the termination I have referred to was not valid. On the material before me I do not think there can be a finding that there is even an arguable case for the correctness of those propositions, but the plaintiff also moves for relief by reference to events that occurred after the transmission of the notice of termination. 3 The plaintiff's solicitors did not actually see the notice of termination until the morning of Monday, 6 May 2002. During the weekend and on the Monday various representations were made to the plaintiff or its solicitors to the general effect that the sale should be treated as ongoing, although upon some conditions. In particular, the evidence shows that on the Monday morning it was represented to the plaintiff's solicitors that the sale could continue, provided it was completed on Wednesday, 8 May 2002 and provided $20,000 was paid forthwith to the defendant. A cheque for $20,000 was delivered promptly, but it was then announced for the first time that what was required was a bank cheque, which should be available by noon. Bank cheques had to be obtained from Camden and could not be obtained by noon. It was represented that the sale could still continue, provided that they were made available later in the day. When they were brought from Camden in the afternoon the evidence appears to show that the plaintiff's representatives were kept waiting in the defendant's solicitor's office, and only after some time told that the client now for the first time said that it would not accept the bank cheques and that the property had already been resold at 3.30 pm to another purchaser. This account of events in general terms is not only deposed to on behalf of the plaintiff, but is confirmed by a note made by the defendant's solicitor's conveyancing clerk, which has been put into evidence. 4 Although the statement that contracts had been exchanged with another purchaser at 3.30 pm on the Monday were repeated in a letter from the defendant's solicitor's firm, it appeared on the hearing before me that no new contract had in fact been exchanged up to the time of the hearing. The evidence at the hearing did not reveal the identity of the proposed new purchaser, the price of any new sale, or the terms of or state of the negotiations for that new sale. 5 On the basis of these events Mr McAvoy, of counsel for the plaintiff, put to me that the plaintiff had an arguable case for relief on a number of bases. Without dealing with all of Mr McAvoy's contentions, or going into any of them in any detail, the case sought to be made out was that the defendant was in those circumstances estopped from relying upon the notice of termination. There was claimed to be an estoppel by representation or alternatively an estoppel by convention. I do not accept Mr McAvoy's submission that the entire loss of bargain was a detriment shown to flow solely from the events of the Monday, but nonetheless it seems to me that there is an arguable case in favour of both an estoppel by convention and an estoppel by representation. In the latter case it certainly seems that the facts may fall within the formulation by Starke J in Newbon v The City Mutual Life Assurance Society Limited (1935) 52 CLR 723 at 738 where his Honour said: "The representation must be made, must be clear and unambiguous …… it must be intended to induce a course of conduct on the part of the person to whom it is made and must result in some act or omission by the person to whom it is made". 6 Equally it is my view that the plaintiff has an arguable case that it is entitled to relief against forfeiture. The application of the doctrine of relief against forfeiture to contracts for the sale of land was discussed by the High Court in Legione v Hateley (1983) 152 CLR 406 and Stern v McArthur (1988) 165 CLR 489. The High Court has emphasised that, for the doctrine to apply in the case of a contract for the sale of land, there must be evidence of unconscionability: Ciavarella v Balmer (1983) 153 CLR 438. It is arguable that that is provided by the events of Monday, 6 May 2002. 7 On the front of the balance of convenience, it seems to me that the inconvenience arising from the loss of the bargain in respect of land on the part of the plaintiff and from the prevention of resale on the part of the defendant balance each other to a degree. The balance in my view is clearly tipped in favour of the plaintiff by the forfeiture of its deposit of $140,000 which would be effected by the notice of termination being available to be acted on. 8 Performing the exercise required of the Court on an application for interlocutory injunctive relief, as to which see the decision of McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535 – 536, the conclusion that I came to was that in this matter injunctive relief ought be granted. 9 The order for costs that I made was the usual order in the case of a successful application for interlocutory injunctive relief, namely, that the plaintiff's costs of the application ought be the plaintiff's costs in the proceedings.