New South Wales Supreme Court CITATION : Rasyid v Conrad [2010] NSWSC 134 HEARING DATE(S) : 23 February 2010 JUDGMENT DATE : 23 February 2010 JURISDICTION : Equity Division JUDGMENT OF : Rein J 1. Declaration that the agreement between the First and Second Plaintiffs, as purchasers, and the First and Second Defendants, as vendors, dated 3 June 2009 ("the Agreement") in respect of the property known as 42 Beaumont Street, Rose Bay, being all of the land and improvements in Folio identifier A/312956 ("the Property") is valid and enforceable and should be specifically performed and carried into execution. 2. Order that the agreement be specifically performed and carried into execution. 3. The matter is stood over to 2 March 2010 before the Duty Judge in Equity for the purpose of making orders for the implementation of the order for specific performance. 4. The Defendants are to file and serve, on or before 26 February 2010, any affidavit evidence which they seek to rely upon in relation to such implementation orders, including: (a) evidence as to their assets, including any valuations thereof, and liabilities; and DECISION : (b) evidence as to any steps taken or being taken to realise their assets and to discharge their liabilities. 5. Further consideration is reserved. 6. The parties have liberty to apply, including for directions for the implementation of these orders, and, if appropriate, for rescission of the decree of specific performance. 7. The Defendants are to pay the Plaintiffs' costs on an indemnity basis. 8. Service of these orders upon the Defendants is to be effected by: (a) sending a copy of these orders by fax to the office of Richard Bartelesi & Associates, fax number (02) 9363 9869, by 4pm this afternoon; (b) delivering a copy of these orders to unit 26 (also known as unit 6A) 45 Ocean Avenue, Double Bay, by 12pm (noon) on 24 February 2010. CATCHWORDS : CONTRACTS - particular parties - vendor and purchaser - sale of land - where vendor failed to complete contract - specific performance CATEGORY : Principal judgment Adderley v Dixon (1824) 1 Sim & St 607 Boyarsky v Taylor [2008] NSWSC 1415 CASES CITED : Dougan v Ley (1946) 71 CLR 142 Iambic Pty Ltd v Northwind Holdings Pty Ltd [2001] WASC 44 McIntosh v Dalwood (No 4) (1930) 30 SR (NSW) 415 Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460 TEXTS CITED : I C F Spry, The Principles of Equitable Remedies (7th ed., 2007), Lawbook Co., Sydney Abubakar Rasyid (First Plaintiff) PARTIES : Lailawaty Rasyid (Second Plaintiff) Luke Conrad (First Defendant) Natasha Grace (Second Defendant) FILE NUMBER(S) : SC 2009/326314 COUNSEL : E Finnane (Plaintiffs) no appearance (Defendants) SOLICITORS : Robert Wehbe & Partners (Plaintiffs) no appearance (Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Rein J 23 February 2010 2009/326314 Abubakar Rasyid & anor v Luke Conrad & anor JUDGMENT (EX TEMPORE) 1 REIN J: In this matter, the plaintiffs seek specific performance of a contract for the sale of land, which contract was entered into between the plaintiffs as purchasers and the defendants as vendors on 13 June 2009 in respect of a property in Rose Bay. The contract was due for completion on 15 July 2009. The deposit of 10 percent of the purchase price of $1.5 million, ie $150,000, was paid at about the time of the contract (see the affidavit of Mr Robert Joseph Wehbe dated 23 December 2009, Annexure I). The deposit was subsequently released to the vendors by the real estate agent without the purchasers' permission (see Annexures AE and AF, and paragraph 9 of Mr Wehbe's affidavit). 2 The evidence, which consists of Mr Wehbe's affidavit, to which I have referred, and an affidavit of Mr Elias Khouzame dated 22 February 2010, establishes that the plaintiffs took steps towards completion of the contract (see paragraphs 18 to 37 of Mr Wehbe's affidavit) and that the plaintiffs have at all times been ready and willing to complete the contract. 3 On 6 July 2009, the vendors' conveyancer advised the plaintiffs' solicitor that the vendors would not be in a position to discharge the mortgage on the property, and they requested an increase in the purchase price. The plaintiffs' solicitor responded by e-mail on 7 July, advising that his clients would not agree to an increase in the price, advising the conveyancer for the defendants that the plaintiffs and their mortgagee were ready to complete, and seeking confirmation of an appointment for settlement (see paragraph 40 and Annexure AB of Mr Wehbe's affidavit). 4 On 17 July 2009, the plaintiffs served a notice to complete and have continued to insist on completion of the contract, ultimately commencing these proceedings on 23 December 2009. 5 There is evidence before the Court that in addition to the property in question, the defendants own an apartment in Double Bay. 6 When the matter was called in court and outside court today there was no appearance by the defendants. A solicitor, Mr Robert Bartalesi of Robert Bartalesi & Associates, has served an appearance on the plaintiff's solicitor (see Exhibit A), although no copy of the notice of appearance is contained in the court file. Mr Finnane of counsel, who appears for the plaintiffs, informed the Court that Mr Bartalesi had contacted Mr Finnane's instructing solicitor, told him that his client would not be appearing today, and indicated a position that could be described as qualified consent, which Mr Finnane felt, correctly, in my view, did not constitute consent. If Mr Bartalesi has filed (or at least served on the plaintiffs) a Notice of Appearance, I find it surprising, in the absence of a clear and unqualified acceptance by the defendants of the orders sought by the plaintiffs, that Mr Bartalesi should regard it as appropriate that he not attend Court on the date and at the time fixed. 7 The defendants then have produced no evidence that contradicts the claim of the plaintiffs to be ready and willing to complete. Nor have they provided any evidence that would point to them being unable to complete the contract. The only material which is before the Court in that connection is the letter of 6 July 2009, which is Annexure AA to the affidavit of Mr Wehbe. 8 Mr Finnane has, in helpful written submissions, summarised the principles relevant to this area of the law, which I draw from in dealing with this matter. The general proposition is that damages will not be an adequate remedy for failure to complete a contract for the sale of land, and therefore specific performance will be available in the case of such contracts: see, for example, Dougan v Ley (1946) 71 CLR 142 at 150 per Dixon J, referring to Adderley v Dixon (1824) 1 Sim & St 607 at 610, 57 ER 239 at 610-611; and McIntosh v Dalwood (No 4) (1930) 30 SR (NSW) 415 at 418 on the issue of the adequacy of damages. 9 A most helpful discussion of this area is found in the relatively recent judgment of Brereton J in Boyarsky v Taylor [2008] NSWSC 1415. That was a case in which it was the purchaser who was claiming to be unable to complete, but I think the principles are no different where it is the vendor in default. In that case, the purchaser presented evidence of what he claimed was hardship and inability to proceed. His Honour was not satisfied that an order for specific performance could not be made, since although there was some evidence of difficulties, there was evidence of another property owned by the purchaser which had to be sold pursuant to orders made by the Family Court of Australia. 10 As Brereton J pointed out in Boyarsky, the remedy of specific performance is not something to which the party not in default is automatically entitled. It is a discretionary remedy, and that is why the Court can, in circumstances where it is satisfied that there would be significant hardship to the party in default, not grant specific performance. However, as Holland J pointed out in Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460, a case referred to and cited by Brereton J in Boyarsky at [35]: "A purchaser who pleads hardship as a defence to a vendor's claim that the purchaser be ordered specifically to perform the bargain into which he has entered has to meet and overcome the principle that specific performance is not a remedy which should lightly be refused when the vendor has established the existence of a valid contract specifically performed which the purchaser has declined to complete: Fullers Theatres Ltd v Musgrave (1923) 31 CLR 524 at 528-9; Suttor v Gundowda (1950) 81 CLR 418. On the authorities, I doubt whether difficulty confronting a purchaser in finding the purchase money could, by itself, constitute sufficient reason to deny a vendor an order for specific performance. Financial hardship generally appears as only one ingredient in a group of circumstances which would make specific performance work a clear injustice to the defendant." 11 In Boyarsky, Brereton J took the view, adopting an approach taken by Dr Spry in his The Principles of Equitable Remedies (7th ed, 2007), Lawbook Co., Sydney, that mere anticipation of possible difficulties is not a sufficient reason to refuse a decree of specific performance: see Boyarsky at [33]. 12 Mr Finnane draws attention to the case of Iambic Pty Ltd v Northwind Holdings Pty Ltd [2001] WASC 44 at [5]-[6] for the proposition that hardship is not established by the mere fact that a purchaser is reluctant to sell an asset which would need to be sold in order to raise the purchase price. I think that Boyarsky also demonstrates that approach. 13 In Boyarsky, Brereton J granted a decree of specific performance, but made no further orders or directions as to its implementation, leaving it to the parties to bring the matter back before the Court "either to obtain rescission of the decree or further directions to enforce it": see Boyarsky at [46]. 14 In my view, the plaintiffs have established an entitlement to an order for specific performance. No hardship has been demonstrated, and I propose to make the orders as sought by the plaintiffs in the draft Short Minutes of Order. 15 One of the orders which is sought, and which I make, is an order for costs on an indemnity basis. I make that order because in my view, no justification can be discerned for the failure of the defendants to complete and they have, by their failure to complete, put the plaintiffs in the position where they have had no alternative but to come to court. 16 Service of these orders is to be effected by sending a copy of these orders to the office of Richard Bartalesi & Associates by facsimile on 9363 9869 and by e-mail to richard@bartalesi.com.au by 4 pm this afternoon, 23 February 2010, and secondly, by delivering a copy of the orders to the defendants at Unit 26 (also known as 6A), 45 Ocean Street, Double Bay by noon on 24 February. 17 I grant leave to the plaintiffs to have these orders taken out forthwith. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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