Samuel v De Souza [2006] NSWSC 934

New South Wales Supreme Court

CITATION : Samuel v De Souza [2006] NSWSC 934 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 11/09/06

JUDGMENT DATE : 11 September 2006

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

EX TEMPORE JUDGMENT DATE : 09/11/2006

DECISION : Declarations that contract validly terminated by vendors and deposit forfeited

CATCHWORDS : CONVEYANCING - defaulting purchaser - whether plaintiff vendors validly terminated contract and are entitled to forfeit deposit - PROCEDURE - non-attendance by defendants - whether trial should proceed

LEGISLATION CITED : Uniform Civil Procedure Rules 2005, rule 29.7

Andrew Phillip Samuel - First Plaintiff PARTIES : Jonathan Mark Goodman - Second Plaintiff Daniel De Souza - First Defendant Linda Harvey - Second Defendant

FILE NUMBER(S) : SC 4286/05

COUNSEL : Mr M.A. Ashhurst/Ms T.T. Baw - Plaintiffs No appearance by defendants

SOLICITORS : Gordon & Johnstone - Plaintiffs No appearance by defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

MONDAY 11 SEPTEMBER 2006

4286/05 ANDREW PHILLIP SAMUEL & ANOR v DANIEL DE SOUZA & ANOR

JUDGMENT

1 By a summons filed on 2 August 2005, the plaintiffs, Mr Samuel and Mr Goodman, make various claims of which only three remain to be dealt with, namely, the claims in paragraphs 5 and 6 and the claim for costs. 2 The plaintiffs are the executors of the will of the late Foga Neuberger who, at the time of her death, was the registered proprietor of unit 21, 10-16 Llandaff Street, Bondi Junction. 3 On 16 March 2005, the plaintiffs entered into a contract for the sale of that property to the first defendant, Daniel De Souza who, according to his affidavit in the court file, is 21 years old (or, at least, was when the affidavit was sworn). His mother, Linda Harvey, is named in the contract as guarantor and there is a provision by which she guarantees the due performance by her son as purchaser. She is the second defendant. 4 It is the contention of the plaintiffs that, in the events which happened, they became entitled to terminate the contract and to forfeit the deposit and that they have validly and effectively taken steps in that respect. The sale price under the contract was $586,006 and the deposit was $58,000. 5 The defendants have not been represented before me this morning. They have, however, taken an active part in the proceedings at earlier stages. They have filed in the registry a notice of appearance and several affidavits. They also appeared in person – or, at least the second defendant, Ms Harvey, did – at several directions hearings, as well as at the call-over at which the hearing dates were fixed. Most recently, Ms Harvey appeared before me on 21 June 2006. She did not appear at a further directions hearing on 23 August 2006. 6 Letters were received from Ms Harvey on two occasions saying that she was ill and enclosing certificates from doctors specifying dates until which she would be "unfit for work". On 25 August 2006 I made a direction that any application by the second defendant, Ms Harvey, for an adjournment or vacation of the hearing dates was to be by notice of motion and supporting affidavit filed and served within 7 days. The direction continued,. "To the extent that Mrs Harvey's medical condition forms the ground or part of the grounds for any such application, that application is to be supported by an affidavit of a medical practitioner on the footing that the medical practitioner may, in the ordinary course, be required for cross-examination upon the hearing of the application." 7 No such application or supporting affidavit has been forthcoming. Nor has there been any application for adjournment or vacation by the first defendant, or any suggestion that he is unable to attend. 8 I have heard evidence this morning from Mr Goodman, one of the plaintiffs, who is also a solicitor, that he attended at the home address of both defendants on Friday last at 9am and left there letters, separately addressed to both of them, enclosing various pre-trial documents produced by the plaintiffs in accordance with the pre-trial directions. Mr Goodman gave evidence that he had heard nothing from either defendant in response thereto. 9 The matter was called outside court this morning. There was no appearance for either defendant. 10 In circumstances where there has clearly been service and the defendants have participated in some pre-trial hearings and are aware of the hearing dates, the appropriate course, in light of their non-attendance upon the hearing, was one of those specified in rule 29.7 of the Uniform Civil Procedure Rules, that is, to proceed with the trial in whole or in part or to adjourn the trial. 11 In view of the fact that the defendants were well and truly on notice that the matter was listed for hearing today and no application for an adjournment had been made, there was no ground on which it would have been appropriate for the court to adjourn the trial. The alternative provided for in rule 29.7 therefore applied and I proceeded with the trial, hearing evidence from the plaintiffs alone. 12 That evidence paints a simple picture. The contract, as I have said, was made on 16 March 2005. It specified 6 July 2005 as the completion date. After exchange of contracts, the first defendant, as purchaser, played his part, as it were, by tendering a stamped transfer on 4 July 2005. On that same day, Mr Goodman, one of the plaintiffs, who was acting as solicitor in the matter for the plaintiffs, had a phone call from Mr Gerard De Souza, the father of the first defendant and husband of the second defendant, asking whether settlement could be brought forward by a day to 5 July 2005. Mr Goodman indicated that that would be in order and he made preparations accordingly. 13 On 5 July 2005, however, Gerard De Souza telephoned Mr Goodman and said, "We can't settle today". He referred to some problem with the obtaining of proceeds from the sale of another property which had been delayed or had fallen through. Mr Goodman asked whether settlement could take place the following day, 6 July 2005, to which a negative answer was given. In that same conversation Mr Goodman foreshadowed the service of a notice to complete. Such a notice was in fact prepared and signed on 7 July 2005 and was served by fax and by courier. It required completion at 2.30pm on 25 July 2005 and in that respect made time of the essence. 14 A letter of 15 July 2005 from the second defendant to the vendor's agents, Raine & Horne at Double Bay, confirmed what were said to have been two oral requests by Gerard De Souza on the same day for an extension of time to complete the purchase. This letter from the second defendant made it clear that the notice to complete had been received. It acknowledged that 25 July 2005 was the date on which completion was called for by the notice to complete. The plaintiffs did not accede to the request for an extension of time and submitted settlement figures as at 25 July 2005. 15 There was another letter from the second defendant to the agents on 25 July 2005, again asking for an extension. The plaintiff vendors attended at the nominated time and place on 25 July, ready, willing and able to complete, but there was no attendance by or on behalf of the first defendant as purchaser. 16 Thereafter, also on 25 July 2005, a notice of termination was prepared and signed. It was sent to the first defendant by mail and by courier. 17 It is in these quite straightforward circumstances that the plaintiffs make the claims in paragraphs 5 and 6 of the summons, that is, a claim for a declaration that on 25 July 2005 the plaintiffs lawfully terminated the contract and a claim for a declaration that the plaintiffs are entitled to forfeit the deposit paid pursuant to the contract. 18 The matter is governed by the printed condition 9 of the contract, which deals with the case where "the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect". The clause says that the vendor "can terminate by serving a notice" and that, after termination, three courses of action are available to the vendor, including that specified in clause 9.1: "keep or recover the deposit (to a maximum of 10 per cent of the price)". 19 I am satisfied that the effect of the notice to complete dated 7 July 2005 was to require completion at 2.30pm on 25 July 2005 and to make time of the essence in that respect. The failure by the first defendant as purchaser to complete at that time and on that date activated clause 9, in that the purchaser did not comply with the contract or a notice under or relating to it in an essential respect. In terms of clause 9, therefore, there accrued to the plaintiffs as vendors a right to terminate by serving notice. They exercised that right by the notice dated 25 July 2005. In those circumstances they have a contractual right under clause 9.1 to keep or recover the deposit to a maximum of 10 per cent of the purchase price. As I have said, the deposit is $58,000 and the sale price is $586,006, with the result that the total deposit of $58,000 does not exceed 10 per cent of the price and the limit imposed in clause 9.1 does not operate. The plaintiffs are entitled to the full deposit. 20 No evidence has been led by or on behalf the defendants. On the evidence led by the plaintiffs, the plaintiffs are entitled to the relief claimed in paragraphs 5 and 6 of the summons. 21 I therefore make the declaration in paragraph 5 of the summons and the declaration in paragraph 6 of the summons. 22 I order that the defendants pay the plaintiffs' costs of the proceedings. **********