James Maxwell Cockburn & Ors v Key Urban Pty Limited (formerly known as Beachblast Holdings Pty Ltd) [2009] NSWSC 458

New South Wales Supreme Court

CITATION : James Maxwell Cockburn & Ors v Key Urban Pty Limited (formerly known as Beachblast Holdings Pty Ltd) [2009] NSWSC 458

HEARING DATE(S) : 08.04.09

JUDGMENT DATE : 29 May 2009

JUDGMENT OF : Nicholas J

DECISION : par 49

CATCHWORDS : CONTRACTS – contract for sale of property – vendor's notice to extend time for completion – notice wrongly stating date for completion – whether notice effective – whether purchasers' conduct waived right to rescind – no question of general principle

CATEGORY : Principal judgment

Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 251 ALR 322 CASES CITED : Mannai Ltd v Eagle Star Assurance Co Ltd [1997] UKHL 19; [1997] AC 749 The Commonwealth of Australia v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

James Maxwell Cockburn – first plaintiff Judith Ann Cockburn – second plaintiff Tracey Ann Lambert – third plaintiff Jacqueline Mills – fourth plaintiff PARTIES : Karen Lea Cockburn – fifth plaintiff Christian Fabian Vodicka – sixth plaintiff Albert Edward Massey - seventh plaintiff Edita Massey – eighth plaintiff Key Urban Pty Ltd - defendant

FILE NUMBER(S) : SC 2630/08

COUNSEL : J Darvall - plaintiffs D Robinson SC - defendant

SOLICITORS : Meehans Solicitors - plaintiffs Holding Redlich - defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Nicholas J

29 May 2009

2630/08 James Maxwell Cockburn & Ors v Key Urban Pty Limited (formerly known as Beachblast Holdings Pty Ltd) JUDGMENT 1 His Honour: By summons filed 5 May 2008 the plaintiff purchasers seek a declaration that notices served to extend time for completion purportedly under cl 45 of their contracts with the defendant vendor are invalid. The plaintiffs also seek a declaration that the contracts were validly rescinded pursuant to notices dated 7 December 2007, and that they are entitled to a return of the deposits paid by them. They also seek orders to give effect to the declarations. 2 The defendant (the vendor), formerly known as Beachblast Holdings Pty Ltd, is the developer of home units at Warby Street, Campbelltown. 3 On 1 October 2004 the first to fifth plaintiffs (the purchasers) entered into a contract with the vendor for the sale and purchase of unit 9 in the development for the price of $305,000, and paid a deposit in the sum of $15,250. On the same day they entered into a similar contract with the vendor for the purchase of unit 10 for the price of $295,000, and paid a deposit in the sum of $14,750. 4 On 5 October 2004 the sixth plaintiff entered into separate similar contracts with the vendor for the purchase of unit 11 for the price of $280,000, and of unit 14 for the price of $290,000, and paid deposits in the sum of $14,000, and $14,500, respectively. 5 On 22 October 2004 the seventh and eighth plaintiffs entered into separate similar contracts with the vendor for the purchase of unit 38 for the price of $337,000, and of unit 48 for the price of $330,000, and paid deposits in the sum of $16,850, and $16,500, respectively. 6 For convenience it was agreed that the questions of the validity of the vendor's certificate under cl 45 of the contract for the purchase of unit 9 (the certificate), and of the validity of the purchasers' rescission of 7 March 2007 should proceed first as their determination would govern the outcome of similar questions under the other contracts. 7 The principal question raised by the purchasers in these proceedings was whether the certificate, reasonably understood, complied with the requirements of cl 45.3 of the contract and was effective to extend the date for completion. If, as the purchasers contended, the certificate was invalid, there had been no extension of the stipulated date for completion, 1 October 2007, which entitled them to rescind the contract by their notice of 7 December 2007. 8 The vendor opposed the purchasers' claims on the ground that the certificate was valid, alternatively, that, in the circumstances, the purchasers had waived the right to rescind and remained bound by the contract. 9 It was common ground, that absent extension, the date for completion was 1 October 2007 failing which the purchasers then had the right to rescind. 10 Relevantly, the contract provided: "28.2 The vendor must do everything reasonable to have the plan registered within 6 months after the contract date, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made under legislation. 28.3 If the plan is not registered within that time and in that manner - 28.3.1 the purchaser can rescind; and 28.3.2 the vendor can rescind, but only if the vendor has complied with clause 28.2. 45 COMPLETION … 45.2 Clause 28.2 is amended from "6 months" to "36 months". 45.3 Despite Clause 45.2, the Vendor may extend the date in 45.2 by each day that the Vendor or it's [sic] builders have been delayed in completing the construction by reason of: (i) inclement weather or conditions resulting from inclement weather (ii) any civil commotion, combination of workman strikes, lock-outs of industrial disputes affecting the progress of the works or affecting the manufacture or supply of materials for construction or fit out of the property. (iii) Any matter beyond control of the Vendor. (iv) Any delay in any approval required for the construction of the units by any Government Agency 45.4 The Vendor is the sole determination of the Vendor's entitlement to extensions of time under Clause 45.3 45.5 A Certificate by the Vendor in relation to extensions of time under Clause 45.3 is final, conclusive and binding on the parties". 11 By letter of 30 March 2007 the vendor informed the purchasers' conveyancers that it was arranging refinancing to enable completion of the project. It advised that, under cl 45.3(iii) and 45.4, it would be claiming "… an extension of time from August 25th 2006 to when the building works recommence". 12 On or about 27 August 2007 the purchasers' solicitors received from the vendor's solicitors a letter from them to the purchasers dated 20 August 2007 and the certificate, which was a document entitled "Vendor's certificate under clause 45 of the contract" dated 21 August 2007. 13 The letter to the purchasers included: "Please find enclosed by way of service a Notice under special condition 45.3 of the Contact for Sale extending the date by which the Contract for Sale must be completed from 1 October 2007 to 31 March 2009. As you will be aware, construction has been stalled on the development for some time now. This delay has occurred because the finance company providing the funds for construction of the development has entered into external administration and therefore, has been unable to continue providing finance to Beachblast for the construction. Fortunately, Beachblast has now secured alternate funds for the project and construction is due to recommence within the next 10 weeks. In the enclosed Notice, the new date by which your contract must be completed is 31 March 2009. After consulting with the building company and the financiers, Beachblast does not envisage that the project will take this long to complete. However, it is a requirement of the new financier that an additional period is added to any sunset date to allow for any unforseen circumstances." 14 The relevant provisions of the certificate were the following: "2. The Vendor and the Builder have been delayed in completing the construction of the Development, including the Property, from 10 October 2006 to date, due to matters beyond the control of the Vendor. In particular, the Development Financer ceased provision of funds to the Vendor to enable the construction of the Development to continue beyond 10 October 2006. The Development Financier was subsequently placed into external administration. The Vendor has been required to source alternate funds to enable the completion of the Development. 3. The Vendor has determined that the delay referred to in numbered paragraph 2 of this certificate entitles it to extend time under clause 45.3(iii) of the Contract. 4. Pursuant to clause 45.3(iii) of the Contact, the Vendor hereby extends the date in clause 45.2 of the Contract to 31 March 2009. 5. The Vendor is presently sourcing alternate funds and expects these funds to be available in 8 weeks and the Builder will then be able to recommence the construction of the Development. 6. The Vendor may have cause to further extend the date in clause 45.2 of the Contract. If so, a further Certificate under clause 45 of the Contact will be served on you." 15 By their letter of 7 December 2007 to the vendor's solicitors, the purchasers' solicitors disputed the validity of the certificate on grounds that it was inconsistent with the terms of cl 45.3 of the contract, and that the claim that the delays had been caused by reasons beyond the control of the vendor was not accepted. It continued: "Your notice claims you have been delayed from 10 October 2006 to the date of the notice 20 August 2007 being 314 days, yet your notice seeks to extend the contract by 548 days. This is not consistent with the rights granted to extend under clause 45.3 and as such invalidates the notice. As the notice is invalid the plan registration date has not been extended and the date for registration at this time remains 1st October 2007. The purchaser now exercised their rights pursuant to clause 28.3 to rescind this contract of sale dated 1st October 2004."