LSR Developments Pty Limited v K & M Developments Pty Limited [2005] NSWSC 862

New South Wales Supreme Court

CITATION : LSR Developments Pty Limited v K & M Developments Pty Limited [2005] NSWSC 862

HEARING DATE(S) : 29/07/05

JUDGMENT DATE : 29 July 2005

JURISDICTION : Equity Division

JUDGMENT OF : Einstein J

DECISION : Injunctive relief refused.

CATCHWORDS : Interlocutory Injunction - Vendor - Purchaser

Conveyancing Act 1919 LEGISLATION CITED : Real Property Act

Apple v Thompson (1983) 3 NSWLR 208 CASES CITED : Lohar Corporation Pty Limited v Dibu Pty Limited (1976) 1 BPR 9177

LSR Developments Pty Limited (Plaintiff) PARTIES : K & M Developments Pty Limited (Defendant)

FILE NUMBER(S) : SC 4086/05

Mr D Allen (Plaintiff) COUNSEL : Mr MJ Cohen (Defendant)

J Kekatos Lawyers (Plaintiff) SOLICITORS : D La Rosa, Izzo & Co Lawyers (Defendant)

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Einstein J

Friday 29 July 2005 ex tempore Revised 29 August 2005

4086/05 LSR Developments Pty Limited v K & M Developments Pty Limited JUDGMENT 1 There is before the Court an application for interlocutory relief pursued by LSR Developments Pty Limited ["the vendor"] against K & M Developments Pty Limited ["the purchaser"]. 2 The amended notice of motion pursued by the purchaser seeks an injunction restraining the vendor from entering into a contract for the sale of land, being lots 12, 20, 30 and 42 in deposited plan 806499, deposited plan 843931, deposited plan 717374, deposited plan 733681 and deposited plan 843930, respectively. 3 The background to the proceedings as outlined in the many affidavits which have been filed is that the parties having executed a put and call option deed relating to the sale of the subject land back in late July 2003, the vendor exercised the put option available to it under the deed and on 3 February 2004 a form of contract for the sale of land in the 2000 edition was entered into and executed by the parties. 4 That contract was varied shortly thereafter and the position by 19 March 2004 was regulated by a deed of variation of that date and the contract as originally signed was, pursuant to the deed of variation, amended in handwriting. 5 Nothing turns on these inception events but it should be noted that the contract in its varied form ["the contract"] provided for a purchase price of $3,600,000 and payment of a deposit of $140,000. It should also be noted that the original date for completion of the 3 February 2004 contract before it was varied, was simply 42 days after the date of contract but the varied date, as agreed in the deed of variation of 19 March 2004 and as then handwritten into the contract, became 2 August 2004. As will appear from what follows, a great deal of the issues presently before the Court concern the communications between the parties in relation to completion dates. 6 There is a vast amount of evidence and a deal of it being contested as to exactly what occurred thereafter. It is not practicable on an occasion for an application for interlocutory relief for the Court to chronicle each of the events which occurred. 7 It is common ground that on an application for interlocutory relief a court cannot and will not determine disputed questions of fact. What the Court is about, on an application for interlocutory relief, is consideration of the degree of probability or likelihood of success necessary to sustain an interlocutory injunction, that being simply the likelihood of success which the Court thinks sufficient in the particular case to warrant preservation of the status quo. The guiding principle is that one looks at the question of the balance of convenience. 8 Having said that, it is convenient to note that insofar as there are conflicts on the affidavits which have been read, the Court infers that it is likely that at a final hearing the trial judge would be vastly assisted by the actual correspondence and communications in writing which passed between the parties or their respective solicitors where as here, there are many claims by the purchaser to have reached oral agreements of one type or another on particular occasions for particular expectations. Where there are, as here, many occasions where evidence is contested, the Court infers that the balance of probabilities will usually favour the version given by such deponent or witness as is most consistent with the documents of or at or about the time when disputed conversations are said to have taken place. 9 In my view that general touchstone being the materials in the affidavits here makes plain that the plaintiff, the purchaser, is likely to have considerable difficulty in persuading a court on the final hearing that the occasions in respect of which extensions are said to have been sought, and the terms in respect of which extensions are said to have been granted, in fact took place, either at all, or in the precise terms for which the plaintiff's witnesses contend. 10 A short thumbnail sketch of some of the material before the Court includes the following: · on 28 July 2004 the vendor, by their solicitor's letter, confirmed that the vendor agreed to a completion date of 21 October 2004. · on 28 October 2004 the vendor consented to the contract being completed on 13 December 2004, by their solicitor's letter of 28 October 2004. · on 1 February 2005 the vendor served a notice to complete the contract under cover of their instructing solicitor's letter, which required completion on or before 3 pm on 18 February 2005. · on 4 February 2005 the purchaser's solicitors acknowledged receipt of the vendor's notice to complete and advised that he had informed them that upon expiration of the notice to complete, the vendor was prepared to extend the settlement date by a further six weeks and sought clarification of that. · on 8 February 2005 the vendor's solicitors responded, advising that their client had not agreed to extend the settlement date. · on 8 March 2005 a letter was sent by the vendor's solicitors to the purchaser setting out some of the background facts, referring to extensions of time to complete sought by the purchasers in December and again in January and referring to a conversation which the vendor's solicitor said occurred on 21 January 2005 wherein he said that a representative of the purchaser had telephoned him and requested to pay $2.1 million and the balance over a number of months, secured by second mortgage. The vendor's solicitor said in his letter that he had advised that this was not agreed to. He said in his letter that on 21 January the purchaser had requested a further four to five weeks to obtain a further valuation and made the point that that also was not agreed to and that a notice to complete had been served dated 1 February providing for completion by 18 February, which completion had not taken place. He then added: "Our client feels he has been patient enough. Completion should have taken place but for ... numerous extensions ... and the price has been lowered $600,000 without any legal liability issue. The vendor has now instructed us to terminate this contract with you. Notice of termination will be sent to you later this week." 11 On 21 March 2005 the vendor served a notice of termination of the contract. On 21 March 2005 the purchaser purported to lodge caveat number AB361245Y upon the title. That caveat purported to indicate as a legal and equitable interest, "Contract for sale of land dated 2 March 2005." Plainly that date was incorrect and it does not seem that there is any evidence of how it could have been that the caveat claimed that form of interest. Arguably this was simply a mistake by someone in propounding the caveat. 12 The vendor gave notice of lapsing to the plaintiff in respect to that caveat and on 24 April 2005 that first caveat lapsed by operation of the vendor's application and without any application being made by the purchaser to the Court for an extension of its operation. 13 Notwithstanding the provisions of s 74 O of the Real Property Act which deals with further caveats having no effect without Court order, the purpose of the section being to prevent persons lodging a succession of bad caveats, this purchaser went about lodging a further caveat in exactly the same form and that caveat was lodged on 10 June 2005. 14 The vendor notified the purchaser that this amounted to an abuse of process and sought removal of the caveat. 15 On 1 July 2005 the Registrar General wrote to the purchaser, notifying that unless an order of a court or notice of the registered proprietor's consent to the second caveat was received within a nominated time, the caveat would be lapsed and the Court has been informed that the caveat is no longer on foot, it being believed that the caveat was withdrawn on or about 27 July, two days ago. 16 In the chronology which I have given up to this point in time it has been unnecessary to refer to the detailed affidavit evidence filed by the respective deponents concerning conversations and denials of conversations about agreed extensions. As I have said, it is unnecessary to chronicle all that in detail but a few examples may suffice. 17 Mr Pasquale Cannizzaro on 26 July 2005 in his affidavit deposed that at some time after he ascertained that there had been a notice to complete issued (which presumably is a reference to some time after 1 February 2005), he had a meeting with a solicitor, the solicitor for the vendor and Mr Zanardo, a director of the vendor. Mr Cannizzaro has deposed that he said he needed an extension of the settlement. He needed up to six to twelve weeks and that Mr Zanardo said, "We can probably go to six weeks" and that he said, "Six weeks is really not enough but if that is what it is, we will start with that," and that Mr Zanardo had said, "Six weeks at this stage." That evidence is denied by the solicitor, Mr Izzo, and it is denied also by Mr Zanardo. 18 A later occasion where there is a difference of recollection concerns Mr Cannizzaro's evidence of a conversation of 18 April 2005 which he says he had with Mr Zanardo set out in paragraph 9 of his affidavit. His version of it was that Mr Zanardo had abused him for lodging the caveat, that he had said, "I put it on to protect my interest" and that Mr Zanardo had said, "I have been losing money on the property. I have lost interest." Mr Cannizzaro then deposes that he said that the best he could do would be, "to give you $50,000 to cover some of the money you have lost. That won't come off the purchase price," and that Mr Zanardo had said, "That does not cover all of the interest" but that he said, "This is the best I can do. I need extra time with the CC and I will have a bank cheque by Friday" and that Mr Zanardo said, "Okay." 19 Mr Zanardo, in relation to that particular conversation, gives evidence that he denies so much of the conversation as includes that he said "Okay" to the proposition which was put to him. On his evidence he said he would have to speak to his solicitor. 20 In any event, there is no dispute between the parties but that in fact an additional $50,000 was actually paid to the vendors on or about this occasion. An indication of the contemporaneous documentary evidence is to be found in the letter from the vendor's solicitors to the purchaser's solicitors of 21 April 2005, only a few days thereafter, responding to a letter of 19 April from the purchaser's solicitors. The vendor's solicitors curtly said: