District Court New South Wales Medium Neutral Citation: Siddiqui and Siddiqui v Asraf and Asraf [2012] NSWDC 117 Hearing dates: 14/04/2012 to 24/04/2012 Decision date: 17 August 2012 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (a) Judgment for the plaintiffs against the defendants in the sum of $343,043.82. (b) Cross-claim dismissed. (c) Defendants to pay the plaintiffs' costs of the proceedings, including the costs of the cross-claim. Catchwords: CONTRACT - sale of land - payment by instalments - breach of contract - measure of damages Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Commonwealth of Australia v Verwayen (1990) 170 CLR 394 Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd [2012] HCA 7 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] ALR 771; (1951) 25 ALJR 425 Category: Principal judgment Parties: Khawaja-Bahauddin Siddiqui (first plaintiff/first cross-defendant) Younus Mohiuddin Siddiqui (second plaintiff/second cross-defendant) Asraf Mohammed (first defendant/second cross-claimant) Nazmin Nisha Asraf (second defendant/first cross-claimant) Representation: Mr Brezniak (plaintiffs/cross-defendants) Defendants/cross-claimants in person T A Williams (plaintiffs/cross-defendants) Defendants/cross-claimants in person File Number(s): 2010/366267 Publication restriction: No Judgment I. Introduction 1Rizwan and Younus Siddiqui agreed to buy a residential property from Asraf Mohammed and his wife, Nazmin Nisha Asraf, by annual instalments over five years. After four years, they requested completion but Mr and Mrs Asraf refused, claiming an inability to settle, and later alleging an underpayment of the instalments. The property was subsequently sold by the mortgagee. I find that the Siddiqui brothers paid the instalments, were entitled to complete the purchase, and should be awarded damages. II. Background 2In 2003 the plaintiffs, the Siddiqui brothers, wanted to buy a home. But this was difficult as they had little capital and they refused to pay interest because of their religious beliefs. 3At the same time, Mr and Mrs Asraf owned a property at 29 Stevenage Road, Hebersham. The property was subject to a mortgage held by Westpac, Mrs Asraf's employer. Mr and Mrs Asraf signed an agreement with a real estate agency on 2 March 2003, for the home to be offered for sale at $249,950. Another agency agreement was signed on 17 May 2003, which indicated a probable selling price of $225,000 with the property to be offered for sale at $239,950. 4Mrs Asraf had discussions about the property with Mrs Haider, Rizwan's mother-in-law. On 8 July 2003, two of Mrs Haider's sons, Abdulrehman and Rehan Haider, agreed to rent the property from Mr and Mrs Asraf for $180 per week, the same rental as the previous tenants. The rental agreement stated: STATUTORY DECLARATION NSW OATHS ACT 1900 I, Nazmin Asraf and Asraf Mohammed of 3 Nyleta St, Doonside in the State of NSW do hereby solemnly declare and affirm that: - This is a RESIDENTIAL TENANCY AGREEMENT This agreement is made on the 8th of July 2003 at Doonside NSW between: Landlords Name: Mrs Nazmin Asraf and Mr Asraf Mohammed of 3 Nyleta St, Doonside 2767. Tenant Name: Mr Syed Reham Ul-Haq Haider and Syed Abdul Rehman Haider of 18 Samarai Road Whalan 2770. Premises: The Landlord gives the tenant the right to occupy the premises at 29 Stevenage Rd, Hebersham 2770. Tenant: The rent is $180.00 payable every fortnight WEEK starting on the 8th July 2003. The Tenant must pay in advance of Friday of every Fortnight. The rent must be paid to the landlords account at Westpac Bank: BSB#- 732010 Account #- 507837 The term of this agreement is 6 months beginning on the 8th July 2003 and ending on the 8th December 2003- Continuation: At the end of this term the tenant can stay in the residential premises under the same agreement. The Landlord and tenant enter into this agreement and agree to all of it's terms and conditions. And I make this solemn declaration, in accordance with the Oaths Act, 1900, and subject to the punishment by law provided for the making of any wilfully false statement in any such declaration Declared at Doonside) Mrs Asraf [sgd] Signature Landlord #1 This 8th day of) July 2003 ) Before me: ) Mr Asraf [sgd] Signature Landlord #2 Navindra Chandra [sgd] Abdulrehman Haider [sgd] JUSTICE OF THE PEACE Signature Tenant #1 Navindra Chandra Rehan Haider [sgd] Print full name (and number) of JP Signature Tenant #2 [underlining indicates handwriting] 5The Haider brothers moved into the home on the property at the commencement of the tenancy and remained in occupation until Abdulrehman Haider vacated the property on 22 June 2010. 6Later in 2003 Rizwan and Younus Siddiqui became aware that the property was for sale. They gave evidence of an initial agreement with Mr and Mrs Asraf for a purchase price of $250,000. This was disputed. But in late September 2003 the Siddiqui brothers agreed with Mr and Mrs Asraf to buy the home for $275,000 payable by five annual instalments of $55,000, concluding in October 2008, and an unsigned note to this effect was faxed between their respective solicitors. 7The Siddiqui brothers paid Mr and Mrs Asraf $25,000 as a deposit for the property on 9 October 2003. Then on 1 December 2003 Mr and Mrs Asraf and Rizwan and Younus Siddiqui signed a Contract for the Sale of Land for a price of $250,000 payable by instalments over five years with no deposit and with completion to occur by 30 September 2012. 8The written contract contained these special conditions: 17. The parties acknowledge that the Purchaser has entered into a residential tenancy agreement with the Vendor dated the 14/10/2003 (a copy of which has been received by the Purchaser). The purchaser acknowledges that they are obliged to maintain the weekly rental payments of $180.00 per week until the purchase of the Property has been completed. The parties acknowledge and agree that they are bound by all the terms and conditions of the said tenancy agreement until the sale has been completed. The Purchaser agrees to purchase the Property subject to such tenancy and the Purchaser will not delay completion or make any objection, requisition or claim for compensation with respect to the said tenancy agreement or with respect to the state of repair and/or condition of the Property on completion. 18(a) Notwithstanding any provisions to the contrary, the parties agree that the Price is payable as follows: - (i) $30,000.00 on or before 30th September 2004; (ii) $55,000.00 on or before 30th September 2005; (iii) $55,000.00 on or before 30th September 2006; (iv) $55,000.00 on or before 30th September 2007; (v) $55,000.00 on or before 30th September 2008; In this regard, time shall be of the essence of the contract. Provided however the Purchaser shall have the absolute discretion to pay the balance due at any time prior to the settlement date in which event the Vendor Purchaser shall give the Vendor 30 day Notice for Settlement. [This proviso was handwritten. It was positioned adjacent to items (iv) and (v) above]. (b) Payment by the Purchaser to the Vendor must be made by direct debt into the Vendors' account with Westpac Banking Corporation (Alexandria Branch) BSB NO: 732-101 Account No. 507837 Account Name: M & N Asraf (c) In the event that the Purchaser defaults in the timely payment of any of the aforesaid instalment payments, the Purchaser agrees to pay the Vendor interests on the late payment of any instalment payments, calculated from the due date of the instalment payment until the date of actual payment of the instalment, at the standard variable rate of interest charged by Westpac Banking Corporation from time to time on their standard home loans. In addition, the Purchaser agrees to pay the vendor an administration fee of $100.00 for the default of each instalment payment. (d) The Purchaser shall have the absolute discretion to pay the balance of the Price due at any time prior to the settlement date in which event the Purchaser shall give the Vendor a 14-day Notice for settlement. 19. The Vendor is not obliged to complete the sale until the Price and any interests payment pursuant to special condition 18(c) has been fully paid to the Vendor. 20. In the event that the Purchaser defaults in the completion of the sale after the expiration of the 14 days Notice to Complete issued pursuant to special condition 6 and making time of the essence, the parties agree that the Vendor shall be entitled to terminate the contract and refund the Purchaser the principal instalments paid to date by the Purchaser pursuant to special condition 18(a) but not the interests payable for any late payment of the instalments pursuant to special condition 18(c) PROVIDED HOWEVER, that the Vendor will only be obliged to refund the principal instalment payments, paid to date by the Purchaser pursuant to special condition 18(a), on completion of the sale of the Property by the Vendor to a third party purchaser. On termination of the contract as aforesaid, the Vendor shall do all things and sign all documents necessary forthwith to place the Property for sale through a local real estate agent at the market price recommended by the real estate agent. 21. The parties agree that following exchange the Vendor shall consent to the registration of a caveat over the Property. 9The title annexed to the contract bore a search date of 18 March 2003 and indicated a mortgage to Perpetual Trustees Australia Limited, although the property was mortgaged to Westpac as security for an "Equity Access Loan" with a credit limit of $188,000. 10By 12 October 2007, the Siddiqui brothers claimed to have paid $220,000 in instalments. Mrs Asraf admitted payments of $217,090 in her affidavit. 11Also by this time the Siddiqui brothers had obtained approval for a no interest loan of $60,000 from Islamic Co-operative Finance Australia Limited ("Islamic Co-op"). They sought to complete the purchase. In accordance with the handwritten proviso to special condition 18(a) the Siddiqui brothers by their solicitor gave notice of settlement, in the following terms: "5 November 2007 ... Alexander Lee & Associates Solicitors DX 8138 Blacktown By Facsimile: 9671 7824 Dear Sir RE: Your Clients: Asraf Mohammed and Nazim Nisha Asraf Our clients: Khawaja-Bahauddin Siddiqui and Younus Mohiuddin Siddiqui Property: 29 Stevenage Road, Hebersham Your records will confirm that we act for the purchasers and note that you act for the Vendors. Contracts for sale of land were exchanged on 1 December 2003 subject to a condition that the Purchase price be paid by instalments. We are instructed that our clients now have sum of $55,000 remaining. Pursuant to special condition 18 our clients hereby give your clients' notice to pay the balance and settle the matter within 30 days. Please confirm by return facsimile that your clients are able to complete the matter within the said period. However, our clients may be position to complete the matter as from 20 November 2007. Meanwhile, we enclose herewith Memorandum of Transfer duly stamped. Your urgent response will be appreciated. Yours faithfully HARISH PRASAD & ASSOCIATES Harish K Prasad Encls" 12At about the same time the Siddiqui brothers became aware that the Haider brothers had received documents apparently sent on behalf of Westpac, which purported to require them to vacate the property. The evidence included a document bearing a facsimile date of "06 Nov 2007 2:18PM" in the following form: MORTGAGEE'S NOTICE TO VACATE THE OCCUPIER(S) 29 Stevenage Road Hebersham NSW 2770 TAKE NOTICE that: 1. Westpac Banking Corporation ("the Lender") of 7 Laffer Drive, Bedford Park in the State of South Australia holds registered Mortgage No 9857296 over the premises contained in Certificate of Title 310/244312 ("the Premises") which you occupy. 2. The Bank is now entitled to possession and intends to exercise its power of sale in respect of the Premises. AND FURTHER TAKE NOTICE that the Lender hereby gives you twenty-eight (28) days notice to vacate the Premises. Dated October 26, 2007 Rosemary Decker Account Manager Mortgage and Estate Realisation Company 13On 12 November 2007 Mr and Mrs Asraf gave instructions to Access Business Lawyers who sent a letter in the following form: 12 November 2007 The Occupier(s) 29 Stevenage Road HEBERSHAM NSW 2770 Dear Sir/Madam RE: 29 STEVENAGE ROAD, HEBERSHAM NSW 2770 We advise that we act on behalf of Nazmin Asraf and Asraf Mohammed, the registered proprietors of the property which you are leasing. We understand that you may have recently received letters from Mortgage and Estate Realisation Company on behalf of the Westpac Banking Corporation, asserting that they have the right to possession of the property and seeking that you vacate the property. We are instructed that Westpac Banking Corporation has not issued any Notices under the Real Property Act, as they are required to do so, if they intend to obtain possession of the property. They also have not commenced any legal proceedings for possession of the property. In the circumstances, we consider that the Notice provided to you by Westpac is unlawful and should be disregarded. Whilst ever you are in occupation of the premises, you are obliged to make payments of rent to our clients and you should continue to do that until such time as you vacate the property. We have asked Westpac Banking Corporation to forward corrective letters to you, withdrawing their Notice and confirming that you may remain in the premises. Yours faithfully, ACCESS BUSINESS LAWYERS Reply Attention To: Graham Lancaster 14The Haider brothers did not vacate the home at that time. A caveat was lodged on the title on behalf of the Siddiqui brothers. 15On 16 November 2007, the Siddiqui brothers' solicitor, Mr Harish Prasad, provided a stamp transfer to the vendors' solicitor, Mr Alexander Lee, for approval, execution and exchange on settlement, as well as requisitions of title. On 23 November 2007 Mr Prasad dealt with the Islamic Co-op in preparation for settlement. 16The purchase did not settle. Correspondence was exchanged between the respective solicitors, Alexander Lee for the Asrafs, and Mr Prasad. A notice to complete was issued by Mr Prasad but completion did not occur. Nor were proceedings commenced. 17In 2009 the Siddiqui brothers changed their solicitor. On 9 October 2010 Westpac sold the property as a mortgagee in possession. III. Proceedings 18On 4 November 2010, the Siddiqui brothers commenced these proceedings. The statement of claim alleged that the Siddiqui brothers contracted to purchase the property for $250,000, that $220,000 was paid between 1 February 2004 and 12 October 2007, that $30,000 remained owing, that no representative of Mr and Mrs Asraf attended at the time and place proposed for settlement specified within a Notice to Complete served by the Siddiqui brothers, that subsequently Westpac obtained an order for possession, and that Mr and Mrs Asraf were "in breach of contract and have repudiated the contract", by reason of the failure to transfer title to the property, failure to refund moneys paid by the plaintiffs, and by borrowing against the property. Damages are alleged to include the $220,000 paid, the difference between the $250,000 purchase price and the value of the property at the time of judgment, various disbursements paid for stamp duty, conveyancing and mortgage costs, the lost value of instalments paid and interest. 19A cross-claim filed by Mr and Mrs Asraf alleged that the Siddiqui brothers were in breach of the contract. The Asrafs claimed loss of equity in the property (calculated as the difference between the mortgage payout at the date of the contract and the purchase price of $250,000), the shortfall owed to Westpac, rent of $63,360 (being 352 weeks at $180 per week), interest and administration fees on late payments of $107,199.66, and loss of use of the unpaid instalments valued at $146,500. 20The Siddiqui brothers also commenced proceedings against their solicitor, Mr Prasad. Those proceedings were heard at the same time, but are not the subject of this judgment. IV. Issues 21The issues in the proceedings appeared, on the basis of the submissions, to be as follows: (a)What amounts of rent were paid by the Haider brothers. (b)What amounts of the purchase price were paid by the Siddiqui brothers, and when were these payments made. (c)In the circumstances that occurred, what were the entitlements of the parties as defined by the special conditions and other provisions, express or implied, of the contract. V. Analysis Amount of rent and purchase price paid 22A large number of the payments made by the Haider brothers in respect of rent and by the Siddiqui brothers in respect of the purchase price were paid into the bank accounts of Mr and Mrs Asraf. It became apparent by the conclusion of the hearing that those payments were not disputed. One payment of $2,000 allegedly paid on 16 December 2005 was proved by a stamped cheque butt, but curiously did not appear on the bank account statement. It was initially disputed, although in oral evidence Mrs Asraf indicated that the dispute was in respect of the character of the payment, not whether it was made. The inconsistency between the stamped cheque butt and the statement remained unexplained by either party. This evidence indicated that somehow the payment was accepted by Westpac but not credited to the account. I have given credit to the Siddiquis for this payment. 23But payments in cash alleged to have been made by the Siddiqui brothers ($4,000 in four payments of $1,000) and the Haider brothers ($31,300 over several years) were disputed by Mr and Mrs Asraf. One further payment of $1,000 alleged to have been made by the Siddiqui brothers in January 2008 into an unidentified bank account was also disputed. 24A proper accounting of these payments was complicated because neither party provided a schedule reconciling amounts alleged and amounts conceded. It was left for the Court to do the best it could on the evidence provided in circumstances where, of the payments alleged to have been made by the Siddiquis, some were disputed, some conceded and others not alleged to have been made were nevertheless conceded by the Asrafs. 25Younus Siddiqui gave evidence that he refused a request of Mrs Asraf that instalments be paid in cash, but that Rizwan did make four cash payments. Rizwan Siddiqui gave evidence to a similar effect noting that Younus was unhappy about the cash payments he had made and they were discontinued. A record was kept of these four cash payments on the deposit stubs, with the deposit slip and the cash being handed to Mrs Asraf. 26Mrs Haider gave evidence that she passed on to Mrs Asraf $1,000 on four occasions, at the request of Rizwan. She did not claim that Mrs Asraf ever signed for these payments nor did she obtain any receipt. She kept a notebook, and wrote a note as a record of the payments. A copy of the note was annexed to Mrs Haider's affidavit. 27Mrs Haider also deposed in her affidavit that Mrs Asraf asked her to tell her sons (the Haider brothers) that the rent was to be paid in cash. When she did so, Rehan said it needed to be paid into the bank so that there was a record of the payment. This procedure was followed until March 2005. After another request from Mrs Asraf, Rehan agreed to pay cash so long as Mrs Asraf signed completed bank slips. This procedure was followed, and sometimes Mrs Asraf filled out the whole or some part of the deposit slips. Mrs Asraf did not cross-examine Mrs Haider about Mrs Haider's evidence that Mrs Asraf signed the deposit slips. 28Rehan Haider gave evidence that he gave his mother the cash for the rent following instructions by Mrs Asraf to pay the rent in cash. 29Mrs Zarini Bibi was a mother whose daughters attended Islamic Studies classes conducted at the property by Mrs Haider. She gave evidence that on many occasions she observed Mrs Haider pay cash to Mrs Asraf, and of hearing Mrs Asraf refer to the money as rent, she also testified that she saw Mrs Asraf write something, "scribble quickly", in a bank deposit book. She estimated this lasted over a period of four years. Mrs Bibi was not cross-examined by Mrs Asraf. 30Mrs Asraf gave evidence that she regularly paid $50 per week in cash to Mrs Haider for babysitting, although Mrs Haider denied there was any regularity with these payments. But it was clear that dealings between Mrs Asraf and Mrs Haider involved cash transactions. Mrs Asraf says she saw no need to get any receipt from Mrs Haider for these payments. In those circumstances, it seems unlikely that Mrs Asraf would refuse to receive rent in cash. 31Mrs Asraf gave evidence that some of the payments made to her were in repayment of loans made by her to Mrs Haider. Mrs Asraf alleged three loans of $500, $800 and $4,000 made in April, June and September 2003 respectively. Mrs Haider denied any loans or loan repayments. Mrs Haider was challenged in cross-examination about these loans and was forceful in her denial, placing her hand on the Koran as she did so. There was, however, in the evidence a handwritten note to "TENANT Haider and Family Att: Qamar and Rizwhan" dated 2 October 2003 which stated, "you still behind on the Rent Payment and also the money you borrowed". Mrs Asraf said she gave the note to Mrs Haider. Mrs Haider, in her affidavit, denied ever receiving the note. 32I was left with no written evidence of the amount of the "money...borrowed". In respect of one of the supposed loan repayments, the word "Rent" was recorded on the back of the deposit butt, and another alleged payment was a multiple of $180 a week and thus bore one indicia of rent. All of the alleged loan repayments were payments made into the account specified in the rental agreement as the account into which rent should be paid. The varied amounts of some of the early Haider payments do not assist my decision, because while the amounts are not indicative of the payment of rent, neither are they indicative of the repayment of any of the alleged loans. 33The evidence included the deposit butts allegedly signed by Mrs Asraf. The initials on many of the deposit butts bear a distinct similarity with features of her signature on her affidavits. Further, none of the initialled documents appear to be clearly not her signature. However, I am reluctant to place a lot of weight on my view of the similarity of the signatures. Certainly I could not exclude her as the signatory. The cheque butts bear the appearance of having been written on many different occasions and appear to be consistent with the evidence given by Mrs Haider about what parts she wrote and what parts Mrs Asraf wrote. 34There was also correspondence between the solicitors. Mr Prasad wrote to Alexander Lee on 5 November 2007 giving 30 days' notice of an early settlement and asserted that $55,000 remained owing. This is consistent with the Siddiqui brothers' evidence that they had paid $220,000 by that date. The evidence does not record any answer by Alexander Lee disputing that the sum of $55,000 remained payable on the purchase price. 35The Siddiqui brothers tendered evidence that Mr and Mrs Asraf had retained a handwriting expert but no report was served or relied upon. I do not regard this as probative of whether she signed the document or not. I am not satisfied that the reason for the absence of a report was that the expert concluded that Mrs Asraf had initialled the cheque butts. Other possibilities exist, such as an inability to pay the fees of the expert or that the expert was unable to assist, and I am not able to determine the likelihood of competing alternatives. The Siddiqui brothers' counsel submitted that it was for Mrs Asraf to disprove her signature. It might be thought that it is easier for Mrs Asraf to have an expert disprove her signature on the deposit butts, than it is for the Siddiqui brothers to have an expert prove that it was Mrs Asraf's signature. However, I do not regard this matter as assisting me in my decision. 36However, it would be a serious thing to hold that Mrs Haider deliberately forged or was involved in the forgery of Mrs Asraf's signature on many occasions so as to falsify the payment of rent. This was not suggested to her and therefore I do not think it would be open to me to make such a finding. I am satisfied that Mrs Haider told the truth in relation to the cash payments. 37The credit of the Siddiqui brothers was also challenged, on two bases. I do not regard this challenge as impacting at all on the cash payments for rent about which the Siddiqui brothers gave no evidence. But their evidence was of some importance in respect of the five unrecorded payments of $1,000 in respect of the purchase price. 38The first ground for challenging the Siddiqui brothers' credit was that they signed a contract that did not reflect the true purchase price of the property, but understated it by $25,000. I accept there is some force in this point. However, it applies equally to Mr and Mrs Asraf. The evidence did not enable me to conclude whether the purpose of the reduction was to avoid a small amount of stamp duty for the Siddiquis' benefit, to avoid an amount of capital gains tax for the benefit of Mr and Mrs Asraf, or for some other purpose. I do not accept that it is a reason why I should prefer Mrs Asraf's evidence to that of the Siddiqui brothers. 39The second reason is related. It is that the Siddiqui brothers signed affidavits that understated the true purchase price, but claim credit for the $25,000 payment made on 9 October 2003 prior to the execution of the contract. The effect of this evidence was to suggest that only $29,000 and not $54,000 remained payable on the purchase price. 40This issue was complicated by the circumstance, which I accept, that the parties had reached an initial informal agreement of $250,000 for the purchase price. This price is corroborated by the proposed prices indicated in the real estate agency agreement referred to at [3] above. I regard the uninitialled amendments to the second agency agreement as a post-execution addition which was never part of the agreement. Mrs Asraf was cross-examined on the matter and I found her answers unpersuasive. 41The agreed price of $275,000 was reached after a further $25,000 was added by agreement as compensation for the delayed settlement. Nevertheless, the false evidence in the affidavits of the Siddiquis about the purchase price caused me to be cautious about their evidence in the absence of independent corroboration. In respect of the four cash payments, Mrs Haider gave evidence to prove them and I accept them. In respect of the fifth payment of $1,000 to an unidentified bank account, there was no corroborating evidence and I propose to reject it. 42Mr Asraf did not give evidence although he was present in court at the bar table assisting Mrs Asraf throughout the trial. The plaintiffs made a Jones v Dunkel submission in respect of his failure to give evidence. I accept this submission and find that Mr Asraf's evidence could not assist the defendants, and I am more inclined to draw inferences in favour of the Siddiquis because of the failure of Mr Asraf to give evidence. 43Mrs Asraf gave evidence but she did not impress me as a reliable witness of truth. In her affidavits she asserted that no rent was paid before 22 October 2003, although her bank account recorded (and the Haider brothers deposed to) four payments of $360 and one of $720 (all multiples of $180, the weekly rental rate) in the period 17 June to 22 September 2003. She was unwilling to concede any entitlement in the Siddiquis notwithstanding that she admitted receiving payments amounting to almost 80% of the agreed price, and would not concede any payment not recorded in the bank statements. She sought to blame the Siddiquis for the failure to complete the purchase in November 2007, although the contemporaneous documents raised no default by them. 44One other matter of some significance in my conclusion was that at no stage did Mrs Asraf complain in writing about any late payments, or any failure to make payments, of the instalments of purchase price. I have mentioned the disputed note of late payment of rent in October 2003. That note indicated in Mrs Asraf a willingness to give a written request to the Haider family in respect of a non-payment, and an understanding that it was important to do so. Yet for the entire period of the purchase contract, from 1 December 2003 until 30 September 2008, there was not a single written note complaining of any non-payment or late payment of rent or purchase instalment. Not until 28 October 2008 did Mr and Mrs Asraf first raise any issue about underpayment of instalments, and then the letter by their solicitor, Alexander Lee, asserted amounts that were plainly wrong. This letter followed three letters from Mr Prasad in November 2007, a letter from Access Business Lawyers acting for Mr and Mrs Asraf on 12 November 2007 which sought to explain the mortgagee's Notice to Vacate served on the Haider brothers but did not raise any issue of default and which seems quite inconsistent with any chronic underpayment, a telephone call from Mr Prasad to Alexander Lee on 16 November 2007, and three further letters from Mr Prasad in August and October 2008, culminating in the service of a Notice to Complete dated 20 October 2008. Only after that Notice was served did the allegations of underpayment first emerge. 45Further, I find it impossible to accept Mrs Asraf's evidence that it was her genuine belief that the $55,000 (the precise amount of an instalment due 30 September 2007) paid within the week of 5-12 October 2007 was in respect of rent and interest. Rent was $180 per week. For the period from 8 July 2003 to 12 October 2007, the rent would total only $39,960 ($180 per week for 222 weeks) far less then the $55,000 payments made in one week, and far less then the payments totalling in excess of $100,000 which she sought to attribute to rent. 46I regard the Asrafs' position in receiving approximately 80% of the purchase price over four years, and refusing to repay any of it when their mortgagee has sold the property, as untenable and impacting adversely on Mrs Asraf's credit generally. 47Accordingly for all these reasons I find that $220,000 was paid to Mr and Mrs Asraf by the Siddiqui brothers in respect of the purchase price for the property and $47,310 was paid to Mr and Mrs Asraf by the Haider brothers in respect of the rent in accordance with the respective schedules annexed to the affidavits of Rizwan Siddiqui and Rehan Haider. 48It is unclear whether $47,310 represents the full amount of rent. From the date of the contract (1 December 2003) until the completion date (30 September 2008) is 4 years and 10 months, or approximately 251 weeks. At $180 per week that calculates to $45,180 although the Haider tenancy commenced on 8 July 2003 and some of the rent paid might be expected to relate to the period prior to the contract date. The calculation is complicated by the evidence given by Mrs Asraf that she agreed in June 2003 to allow some time before rent was to be paid, although no time period was specified. In any event, where there is no written complaint about rent throughout the four years and ten month period of the purchase contract, although rent was payable on a weekly basis, I think little evidence is needed to satisfy the Court that either the rent has been paid, or the rental obligation has been satisfied in part by some set-off (such as possibly the payment for a fence, referred to below) or the unpaid rent has been waived (such as by the concession by Mrs Asraf in June 2003). The contract 49Although an unsigned draft lease (which contained no terms other than identifying the property, the period and the parties) was part of the evidence tendered by Mrs Asraf, there was no evidence of any residential tenancy agreement entered into between the Siddiqui brothers and Mr and Mrs Asraf, contrary to special condition 17. 50The residential tenancy agreement between Mr and Mrs Asraf and the Haider brothers remained operative on 1 December 2003, the date of the purchase contract. The Haider brothers remained in possession. There was no evidence of any action taken to terminate this agreement. The letter of 12 November 2007, quoted at [13] above, indicates that Mr and Mrs Asraf were aware that the Haider brothers' tenancy continued, as they remained the occupiers of the home under the residential tenancy agreement. 51The effect of there being no tenancy agreement with Rizwan and Younus Siddiqui means that the first and third sentences of special condition 17 can have no meaning. I do not regard these sentences as imposing any additional obligation on the Siddiqui brothers. 52The second sentence of special condition 17 is not meaningless. The Siddiqui brothers accepted that they were responsible for paying $180 per week if the property became vacant or the Haider brothers failed to pay the rent. I regard this as the legal effect of the special condition: an undertaking by the Siddiqui brothers to ensure that the vendor receives $180 per week rent until completion, and a promise that they would take the property subject to the existing tenancy to the Haider brothers and forego any complaint on completion about the condition of the property. 53I accept, and it was not really in contest, that although the contract specified that there was no deposit, the $25,000 paid by the Siddiqui brothers on 9 October 2003 was a deposit in respect of the property. In my opinion, it should be treated as the deposit it was in fact, even if the written document did not so record it. At the hearing, both parties accepted that this payment of $25,000 was a payment made in respect of the purchase of the property. 54The provision in clause 18(a) that time was of the essence of the contract was not of any significance in the dispute. Although a contrary argument may be available, I regard the provision as operating on the instalment payments, not the proviso, so that a late instalment payment gave the vendors an immediate entitlement to terminate. This entitlement was never exercised. Although payment of the instalments was not made in full by the dates specified in special condition 18(a), at no stage did Mr and Mrs Asraf seek to terminate on the basis of late payment. Thus, the lateness of the instalment payments is only significant for the purpose of calculating interest. 55Clause 18(b) specified the mode of payment. The same bank account specified on the rental agreement with the Haider brothers was specified in this clause. At about the time of the execution of the contract, Mrs Asraf purported unilaterally to alter the bank account specified for the payment of instalments. The contract provided no such entitlement. In these circumstances, I do not regard the particulars of the bank account of Mr and Mrs Asraf into which the Siddiqui brothers paid the instalments as having any contractual significance. If it were of contractual significance at the time of execution of the agreement, it lost that characteristic once Mr and Mrs Asraf gave a direction that a different account should be used. 56Clause 18(c) of the special conditions entitled the vendor to interest on late payments, at the Westpac standard variable rate. There was no direct evidence of the Westpac standard variable rate. There was some evidence of the interest rate paid by Mr and Mrs Asraf: that the annual rate of interest on the 7837 account was 6.07% before 10 December 2003 and 6.57% after and on the 4802 account the rate varied between 6.12% and 7.87% in the period from 2003 to 12 October 2007. But there was no evidence of any connection between the rate paid and the "standard variable rate". I was not favoured by any table provided by the parties as to interest, and in these circumstances I propose to adopt a rate of 7% per annum. 57I have found that the first four instalments were paid in accordance with the evidence of the Siddiqui brothers. The instalment payment dates with interest at 7% are shown in the following table: Instalment amount ($) Due date Amount outstanding at due date ($) Date instalment fully paid Days of interest Interest accrued 30,000.00 30 September 2004 16,500.00 1 December 2004 62 196.19 55,000.00 30 September 2005 42,000.00 21 March 2006 172 1,385.42 55,000.00 30 September 2006 37,000.00 2 December 2006 63 447.04 55,000.00 30 September 2007 55,000.00 12 October 2007 10 105.48 Total interest 2,134.13 58This calculation of interest is inaccurate in a further respect: I have applied the rate to the outstanding balance as at the due date for the period from the due date until the instalment was paid in full. This works in favour of Mr and Mrs Asraf, as the Siddiqui brothers on this calculation would continue to pay interest as if no payment was made between the due date and the date the instalment was fully paid. 59The contract in special condition 18(c) specifies the period of interest from the date due until the date paid, but it does not specify the principle amount. The usual and reasonable construction would be that interest would accrue on the amount outstanding. Accordingly, in my view the contract contemplates interest on the outstanding daily balance of the instalment from the due date until it is paid, not, for that whole period, upon the balance initially outstanding at the due date. It is significant that in the two years of 2005 and 2006 when the largest amount of interest accrued (see table above) far more than half the amount outstanding had been paid by the date midway through the period during which interest was accruing. In these circumstances, it seems fair and appropriate that the interest calculated above be reduced by 50%. 60The evidence also established that in every year except 2007 the Siddiqui brothers made substantial payments before the due date. But the contract did not provide for any interest on early payments, or any credit for the Siddiquis toward other obligations such as interest on late payments. 61The Siddiqui brothers also argued that the vendors orally waived any entitlement to interest on late payment so long as the instalment was paid within the calendar year. In all cases except for 2006, the payments were made within the calendar year. However, Mrs Asraf denied that she had waived interest. 62Waiver requires an unequivocal renunciation of a right, see Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 474 (per Toohey J). I do not regard the evidence as establishing this. 63I accept that Mrs Asraf consented to allowing the Siddiqui brothers to pay after the due date. But this does not unequivocally amount to a waiver of interest, only that she was waiving her entitlement to rely on the "time of the essence" clause if payments were made within the calendar year. In my view, Mr and Mrs Asraf may have agreed to forgo an entitlement to terminate the agreement for late payment (which they did not exercise in any event) but they did not waive any entitlement to interest. 64In coming to this view, I regard it as significant that the interest was to compensate Mr and Mrs Asraf for the interest they were paying to Westpac. It would have been financially disadvantageous to them to waive interest on late payments. 65For these reasons, I find that the Siddiqui brothers owed a further amount of $1,067.07 in November 2007 (being half of $2,134.13 as shown in the table). To this amount must be added $100 administration fee (see special condition 18(c)) for each of the four years. Thus, the total amount of interest and fees payable to Mr and Mrs Asraf in November 2007 by reason of the late payment of instalments was $1,467.07. 66But the Siddiqui brothers are entitled to some credits. There was evidence that the Siddiqui brothers paid the rates, and paid for a fence at the property at a cost of $2,454.10. The payment for the fence was not a payment made in respect of the purchase price, nor was there evidence that Mr and Mrs Asraf accepted it to be so. Nor was there necessarily any measurable benefit to Mr and Mrs Asraf from the expense. Accordingly, I do not propose to take this amount into account as a payment in respect of the purchase price. 67Nor do I accept that the payment for the fence is a proper component of damages. There was no evidence of what value, if any, was added to the property by the fence and it appears that the Haider brothers received some benefit from the fence without being liable for any additional rent. 68The evidence established that rates in the following amounts were paid: Year Rates paid by the Siddiquis ($) 2004 408.35 2005 416.90 513.90 2006 440.45 226.00 223.00 2007 223.00 2008 486.55 Total 2,938.15 69The standard terms of the contract (clause 14.1) obliged the vendor to pay the rates until completion. The payments made by the Siddiqui brothers in respect of rates directly relieved Mr and Mrs Asraf of this obligation. These payments must be credited to the Siddiqui brothers' account. When the payment of rates is taken into account, the Siddiqui brothers were in credit in late 2007. Although they owed a small amount of interest and fees, they had paid a larger amount of rates. 70Accordingly, I find that in November 2007 the Siddiqui brothers had met all of their obligations under the contract and were entitled to completion of the agreement upon payment of an amount less than the final instalment of $55,000. 71Mr and Mrs Asraf relied upon special condition 19 to assert that payment in full must occur before the Siddiqui brothers were entitled to call for completion. I do not regard this as the proper construction of the special condition. The completion date was 30 September 2008, and standard condition 16 contemplated payment by the purchaser on completion. Special condition 19 entitled Mr and Mrs Asraf to refuse to complete until payment of the instalments in full, but it did not entitle them to payment in full prior to being ready, able and willing to immediately and simultaneously complete. Accordingly, I reject the submission that the Siddiqui brothers were not entitled to demand completion until they had paid the full purchase price and all interest: they were entitled to pay the final instalment at settlement. 72There is an inconsistency between the handwritten words opposite special condition 18(a) and special condition 18(d), the latter requiring a 14-day notice for settlement, the former a 30-day notice. The two provisions can be read together if the specified period is read as a minimum period. In any event, in the absence of some other competing consideration (and neither party submitted that there was) I would give priority to the handwritten term. For both of those reasons, in my view, the contract thus allowed for a 30-day notice. 73By late 2007, the Siddiqui brothers had secured interest-free finance from Islamic Co-op to enable them to meet the final instalment and complete the agreement. On 5 November 2007 Mr Prasad wrote to the vendors' solicitor giving the 30-day notice to settle. He referred to the sum of $55,000 remaining which, as I have found, slightly exceeded (by reason of the credit for rate payments exceeding interest due) the amount remaining to be paid by the Siddiquis under the agreement. 74I should note that I have concluded that at this date the rent was up to date. Further, no notice was given by Mr and Mrs Asraf that any rent was unpaid, and thus owing by the Siddiqui brothers, as at November 2007. Moreover, and in any event, it seems to me that the contract did not entitle Mr and Mrs Asraf to refuse to complete on account of unpaid rent. The entitlement of the vendor not to complete is specified in special condition 19, namely, the vendor is not obliged "until" the purchase price and all interest is paid. I read this as requiring the vendor to complete (subject to the notice requirement) upon payment of the purchase price and interest. There is no entitlement for the vendor to postpone settlement by reason of unpaid rent, either in special condition 17 or any other special condition, and special condition 19 provides the contrary. The printed clause 16.7 requires the purchaser to pay "any other amount payable by the purchaser under this contract" on completion. This clause seems to be inconsistent with special condition 19, and in that event the latter must prevail by virtue of special condition 16, which gives priority to the special conditions over the printed terms in the event of a conflict. This construction would leave unpaid rent to be recovered through the conventional process. 75Special condition 20 has no application to the facts as I have found them. No notice to complete was issued by the vendors, and in any event, the purchasers were not in default after 12 October 2007. Nor did the vendors purport to terminate the agreement or refund any instalments. 76In these circumstances, the purchasers are entitled to damages by reason of the failure of the vendors to complete in breach of the notice to settle. Ordinarily, the damages would be the value of the lost property less any amount still owing. But there was no valuation evidence nor evidence that the property was worth more than the purchase price on the contract. It was alleged that the property in 2010 was sold at a price of $266,000 by the bank as a mortgagee in possession but I could find no evidence of that sale price or whether it represented the fair market value. 77In these circumstances, where there is no evidence of the value of the property, and where completion cannot now occur, I am entitled to find that the damages are the wasted costs of the Siddiqui brothers in accordance with McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 414-415. 78 Accordingly, the recoverable costs are $225,957.41 comprising: (a)$220,000.00 purchase price paid (b)$1,854.26 legal costs on the conveyance (c)$1,165.00 mortgage costs for the loan to complete (d)Rates of $2,938.15. 79The Siddiqui brothers are also entitled to interest. 80I propose to award statutory interest on this sum from 21 March 2006 when the second of the four paid instalments had been fully paid, according to the following schedule (see Uniform Civil Procedure Rules 2005, Schedule 5; District Court Practice Note (DC) Civil No 15 dated 22 June 2010 and Civil Procedure Act 2005, s 100). Period Interest rate (per cent per year) Days in period Interest for the period ($) 22 March 2006 - 31 December 2006 9 285 15,878.92 1 January 2007 - 5 March 2009 10 795 49,215.38 6 March 2009 to 30 June 2010 9 482 26,854.88 1 July 2010 - 31 December 2010 8.5 184 9,682.12 1 January 2011 - 30 June 2011 8.75 181 9,804.38 1 July 2011 - 31 December 2011 8.75 184 9,966.89 1 January 2012 - 30 June 2012 8.25 182 9,295.21 1 July 2012 - 17 August 2012 7.5 48 2,228.62 Total interest 132,926.41 81Mrs Asraf submitted that because of the religious beliefs of the Siddiqui brothers I should not award interest, but I do not regard that as a relevant consideration in respect of the Siddiqui brothers' entitlement. I was not informed by the Siddiqui brothers that they sought to abandon their entitlement to interest. 82However, Abdulrehman Haider gave evidence that the rent was paid to the Siddiqui brothers from 1 October 2008 until June 2010 when he was required to move out prior to the mortgagee sale. It is inappropriate that the Siddiqui brothers receive both interest and rent for that period. Accordingly, there should be a deduction of $180 per week for the period from 1 October 2008 until 22 June 2010 when Abdulrehman Haider was compelled to vacate the property prior to the mortgagee sale. This amount is $15,840 (88 weeks by $180), and should be deducted from the interest calculated above. 83Accordingly, I propose to give judgment for the Siddiqui brothers against Mr and Mrs Asraf for the sum of $343,043.82 ($225,957.41 plus $132,926.41 of interest less $15,840 for rent received). The cross-claim 84I have dealt with the claims by Mr and Mrs Asraf for breach of contract by the Siddiqui brothers in making late payments, and I have allowed a credit of interest for the periods where instalments remained unpaid. I have also dealt with the matter of rent, having found the rent to be fully paid until 30 September 2008, and thereafter a credit has been allowed for the period until 22 June 2010 when Abdulrehman Haider was compelled to vacate the property. I have also found that as at 12 October 2007 there were no unpaid instalments, and no recovery of the final year of unpaid instalments has been allowed. 85The remainder of the matters raised in the cross-claim appear to be based on a misunderstanding by Mr and Mrs Asraf of their contractual entitlements. The contract did not oblige the Siddiqui brothers to meet the interest accruing on the Equity Access Loan taken out by Mr and Mrs Asraf. No evidence existed whether orally or in writing to support such an obligation, and I find that none existed. 86Such an obligation, it if existed, would have been extremely onerous and uncommercial since there was no restriction on the use that could be (and was) made of that loan by Mr and Mrs Asraf. The statements indicate that the 4802 account into which the Siddiqui brothers deposited most of the instalments was regularly drawn upon by Mr and Mrs Asraf. For example, on 10 October 2005, the day following the initial deposit of $25,000 into the account on 9 October 2003, Mr and Mrs Asraf withdrew $24,000. A further $31,000 was withdrawn from that account in the period from 1 December 2003, when the contract was signed, until 2 March 2004, when the first part payment of the September 2004 instalment was deposited. Indeed, the statements indicate that generally any money deposited by the Siddiqui brothers was withdrawn, either at the time of or shortly after the deposit. It would be of no surprise to Mr and Mrs Asraf that, in those circumstances, the balance on the account did not reduce, and that substantial amounts of interest accrued. 87I find that these claims maintained by Mr and Mrs Asraf have no merit and must be dismissed. 88It follows from the success of the Siddiqui brothers in the proceedings that in the absence of any special matter the Siddiqui brothers should obtain an order for costs of the proceedings against Mr and Mrs Asraf, including the costs of the cross-claim. This costs order would extend to include all costs except costs incurred solely in respect of the proceedings against Mr Prasad. Any submissions or evidence in respect of an alternative costs order should be provided to my associate within seven days. 89I note that similar orders may have been available in favour of the Siddiqui brothers in a cause of action for money had and received (based on unjust enrichment and a total failure of consideration: see eg Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd [2012] HCA 7 at [30] - [32] per French CJ, Crennan and Keifel JJ) but this action was neither pleaded nor maintained at the hearing. 90Accordingly, the orders of the Court are: (a) Judgment for the plaintiffs against the defendants in the sum of $343,043.82. (b) Cross-claim dismissed. (c) Defendants to pay the plaintiffs' costs of the proceedings, including the costs of the cross-claim. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2012