Ollis v Melissari [2005] NSWSC 1064

New South Wales Supreme Court

CITATION : Ollis v Melissari [2005] NSWSC 1064

HEARING DATE(S) : 4/10/05-6/10/05

JUDGMENT DATE : 1 November 2005

JURISDICTION : Equity

JUDGMENT OF : Campbell J

DECISION : Contract not validly terminated. Parties to bring in Short Minutes of Order

CATCHWORDS : CONVEYANCING - termination of contract - whether contract for sale of land validly terminated - no question of principle

Victor Warren Ollis - Plaintiff PARTIES : Mary Melissari - First Defendant Colin Coveny - Second Defendant

FILE NUMBER(S) : SC 1376/05

M.G. McHugh - Plaintiff COUNSEL : M Lawson - Second Defendant

Hussein Karimjee - Plaintiff SOLICITORS : Hancocks Solicitors - Second Defendant

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

1 NOVEMBER 2005

1376/05 VICTOR WARREN OLLIS v MARY C MELISSARI & ANOR JUDGMENT 1 HIS HONOUR: The outcome of this case turns upon whether the plaintiff has successfully terminated a contract for the sale of land to the second defendant. 2 The plaintiff is a property developer. He has been involved in developing rural land for about four years. Before the events which are central to this case occurred, he had acquired certain rights in three adjacent parcels of land on the outskirts on the township of Parkes, in central New South Wales. One of those properties was known as the Medlyn Estate. 3 The land was at the time zoned rural small holdings. It was the plaintiff's intention to have the land rezoned to an urban and village zoning, and to have a plan of subdivision approved, so that the land was ready for development. 4 The plan of subdivision which was contemplated in relation to the Medlyn Estate involved making provision for roads and other services within it, and dividing the land into 31 or 32 – the evidence is equivocal – residential lots. 5 The plaintiff had purchased that land – at a time when it was still contained in two separate titles – from its then owners, under a Contract for Sale made on 27 October 2003. On 17 February 2004 a new Certificate of Title issued for the Medlyn Estate, still showing the two vendors as registered proprietors, but showing the land as comprised in a single Certificate of Title. 6 The second defendant was a plumber by trade, who up to February 2004 worked as a hot water system service technician. On 13 February 2004 the plaintiff wrote to the second defendant offering him a position as a sales consultant. The letter offered a retainer of $50,000 pa, plus a commission of $1,000 paid on each block of land sold and $500 on each villa sold. That commission was only payable, however, if certain sales targets were met, of not less than seven exchanged contracts per calendar month. As things eventuated, the second defendant never achieved as many as seven exchanged contracts in a calendar month. 7 On 23 February 2004, after the second defendant had orally accepted the offer contained in the letter, he began working as a salesman for the plaintiff. The second defendant's employment by the plaintiff lasted until 28 July 2004. From 29 July 2004 the second defendant was employed by the Shields Family Trust, an entity associated with the de facto wife of the plaintiff. 8 Under the Contract for Sale by which he purchased the Medlyn Estate, the plaintiff agreed to pay the then owners the amount of $280,000, and also to undertake, at his own expense, the registration of a plan of subdivision. 9 On 15 July 2004 a new Certificate of Title issued for the land, this time showing the plaintiff as the registered proprietor, and that the land was subject to a mortgage to Holmes Conveyancing Pty Ltd. The stamp duty on the contract was paid on 2 July 2004. I infer that it was some time between 17 February 2004 and 15 July 2004 that the plaintiff settled his contract to purchase the Medlyn Estate. Holmes Conveyancing Pty Ltd is a company associated with Mr Stephen Holmes, solicitor, of Erina. Mr Holmes acted for the plaintiff in numerous conveyancing transactions. 10 Two to three weeks after the second defendant was employed by the plaintiff there occurred something which the second defendant described as a "national event", which made the sales target which had been set for him redundant, and changed the whole nature of the plaintiff's business. This involved the plaintiff being the subject of media focus, and led to a drop-off in the work which he provided to Austates Conveyancers. 11 Austates Conveyancers is a firm of conveyancers, which had an arrangement with the plaintiff whereby the plaintiff would refer purchasers of land from him to Austates Conveyancers, and would pay the fees of Austates Conveyancers in connection with those referrals. Between about March 2003 and August 2004 the firm had received about 99 referrals of prospective purchasers from the plaintiff. 12 Mr Tony Melissari is a conveyancing clerk with Austates Conveyancers, and was a person with whom the plaintiff often dealt in this way. In the course of those dealings, the plaintiff had introduced the second defendant to Mr Melissari, as someone who was working for him to sell property. Mr Melissari came to act for the second defendant in connection with a contract whereby the second defendant agreed to purchase the Medlyn Estate from the plaintiff. 13 In August 2005, in support of this matter continuing to be expedited (but in an affidavit which was also read at the hearing) the plaintiff said that the monies which he would have used in completing his other projects had been effectively tied up in the project relating to the Medlyn Estate, that this litigation had sterilised the land from an economic point of view, and as a result he was suffering "extreme financial hardship". I infer that he was under significant financial pressure in August 2004. 14 The Medlyn Estate was one of the properties of the plaintiff in which the defendant tried to sell lots. By 6 August 2004 the second defendant had arrangements on foot for the sale of seven of the lots in the Medlyn Estate. Those arrangements involved the sale of four of the lots to himself, and another three of the lots to two other people. 15 By 6 August 2004 the second defendant was also, at the plaintiff's suggestion, following another approach to the sale of the Medlyn Estate, which involved putting together a syndicate of investors which would purchase the whole of the Medlyn Estate, and carry out what remained to be done to finish its subdivision and development. The plaintiff had obtained, in November 2004, a report intended to provide the local council with the information needed to justify the rezoning of the Medlyn Estate and the other two adjoining parcels of land which the plaintiff owned, but the rezoning, and hence the subdivision itself, had not taken place by early August 2004. 16 The Contract for Sale which is the subject of the dispute in the present case is one whereby the plaintiff agreed to sell to the second defendant the whole of the land in the Medlyn Estate. The contract was in fact entered on 6 August 2004, at the office of Mr Melissari in Ultimo, after the plaintiff and the second defendant had had some hours of discussion there. Though entered on 6 August 2004, it was backdated to 2 August 2004. Terms of the Contract 17 The contract is in the form of the 2000 edition of the New South Wales standard form contract, with various special conditions. Its front page names the plaintiff as vendor, and the second defendant "and or nominee" as purchaser. It states that it is entered without the intervention of an agent. It nominates Mr Holmes as the vendor's conveyancer (though Mr Holmes was in fact a solicitor) and Austates Conveyancers ("ref Tony Melissari") as the purchaser's conveyancer. It states that the completion date is the sixtieth day after the date of the contract, and sets out, on its front page: Price $800,000.00 Deposit $130,000.00 Balance $670,000.00