Brachmanis and 1 Ors v Columbus Property Developments P/L and 1 Ors [2001] NSWSC 163 (8 March 2001)

Last Updated: 28 March 2001

NEW SOUTH WALES SUPREME COURT

CITATION: Brachmanis & 1 Ors v Columbus Property Developments P/L & 1 Ors [2001] NSWSC 163 revised - 23/03/2001

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 1301/01

HEARING DATE{S): 8 March 2001

JUDGMENT DATE: 08/03/2001

PARTIES:

Edgar Brachmanis & Leanne Brachmanis (First Plaintiff)

Forbes Holdings (NSW) Pty Ltd (ACN 089 957 577) (Second Plaintiff)

Columbus Property Developments Pty Limited (ACN 085 581 193) (First Defendant)

Eugene Benson (Second Defendant)

JUDGMENT OF: Santow J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

L Harris (Sol.) (Plaintiffs)

Eugene Benson (In Person) (Defendants)

SOLICITORS:

M D Nikolaidis & Co (Plaintiffs)

CATCHWORDS:

CONVEYANCING -- Reinstatement of purchasers into possession pending resolution of proceedings for specific performance -- Notice to complete requires no breach of condition by party giving it -- Defects requiring rectification -- Waiver of notice to complete?

ACTS CITED:

Evidence Act s135

DECISION:

Plaintiffs entitled to have possession reinstated.

JUDGMENT:

REVISED -- 23 March, 2001

IN THE SUPREME COURT

OF NEW SOUTH WALES

IN EQUITY

SANTOW J

No. 1301/01

Edgar Brachmanis & Leanne Brachmanis

First Plaintiff

Forbes Holdings (NSW) Pty Ltd (ACN 089 957 577)

Second Plaintiff

Columbus Property Developments Pty Limited (ACN 085 581 193)

First Defendant

Eugene Benson

Second Defendant

JUDGMENT -- ex tempore

8 March 2001

INTRODUCTION

1 On 2 February 2001 Simos J dealt with a dispute concerning unit 13, 11 to 13 Pittwater Road, Manly in a written judgment.

2 Essentially the dispute concerned the reinstatement of the Plaintiffs as nominees of the purchaser under a contract of sale of the above unit.

3 The orders that Simos J made on an interlocutory basis varied during that day from the original paragraph 1(a) of his orders requiring the Defendants to be restrained from interfering with the Plaintiffs' possession until 5 February 2001 to the later discharge of that order. In his judgment, he explains his reasons, namely that an auction to be held next day should not be restrained, based upon conditions the subject of undertaking by the Defendants and in particular the vendor Columbus Property Developments Pty Limited. Those undertakings provided for payment of a sum to the purchasers based upon the price at which the property was sold and, if not sold, based upon the highest genuine bid at the auction, with in the latter case the option to the purchasers to purchase at a reduced price.

RESOLUTION OF APPLICATION

4 There is evidence before me which is essentially uncontradicted, that the "auction" which was to take place was neither advertised in advance nor genuinely carried out; see in particular the Plaintiffs' affidavit of Edgar Brachmanis of 6 February 2001 paras 29 to 35 and the affidavit of Dianne Hobbs of 28 February 2001. The latter affidavit leaves it fairly clear that the agent still treated unit 13 as available for sale, thus negating the Defendants' evidence that the sale had actually occurred in favour of an overseas purchaser from Italy, an issue to which I will return.

5 Relevantly, at paragraph 2 on page 3 of the affidavit the agent is quoted as saying "Oh the auction was called at the owner's request because of a legal issue. We didn't do any marketing for the auction so that's why it didn't sell."

6 At a final trial, there may well be dispute as to this. I simply note that there has been a subsequent exchange of correspondence dated 3 March 2001 from the agent to the Defendant which was not admitted into evidence as the agent was not available for examination. That exchange of correspondence may ultimately bear, when tested properly, upon final resolution of the matter. It suffices for present purposes that I simply state that I am satisfied that there is a prima facie case that the auction was a sham and was not what was contemplated by Simos J.

7 Evidence as to a supposed sale to a Mr Bob Miga and Mrs Noela Nna his wife was sought to be tendered in the form of two separate documents which were said to constitute one contract. These I identified as MFI 1 and MFI 2. For reasons elaborated in the transcript, I have excluded that evidence even for interlocutory purposes as unfairly prejudicial, within the parameters of s135 of the Evidence Act. These included that the document is a copy signed only by Mr Miga insofar as the apparent signature is concerned and the two parts comprising the one contract do not match. Moreover there has been a Notice to Produce which has not been answered seeking the original contract with nothing so far produced.

8 Given that the contract is so central in importance, it should not have been sought to be proved with the kind of informality here exhibited.

9 I turn now to the more difficult aspect. The Plaintiffs' case is that pending final determination of these proceedings they should be admitted back into possession in conformity with the contract noted as Exhibit A in accordance with special condition 1. The Defendant contended that the immediate access was contingent upon a Certificate of Occupancy for the development but conceded that it now existed though may not have at the time the Plaintiffs were excluded from possession. That factor does not to my mind preclude the orders the Plaintiffs seek.

10 The contract is somewhat unusual in that the deposit required to be paid is offset by payment of $220,000 by the vendor in special condition 2.

11 The more difficult aspect is that the Defendant gave a Notice to Complete on 12 December 2000 following the expiry of the completion date on 27 November 2000. That Notice to Complete could not be said to be other than in conformity with the contract so far as form and content is concerned. Nor is it controverted that on 27 December 2000 completion did not occur as required by the Notice to Complete.

12 The Plaintiffs rely in their Amended Statement of Claim on a number of grounds by way of particulars for contending that the Notice was not an effective notice in a legal sense as follows:

"(a) At the time of giving the said Notice the first defendant had not completed the work to be performed under the Contract and the plaintiffs were not in default under the Contract.

(b) The said Notice was not directed to the first plaintiffs as nominees of the second plaintiff.

(c) The first defendant was not ready willing and able to complete the Contract.

(d) The time given to complete the Contract was not reasonable in the light of the date of the purported service of the said Notice.

(e) The said Notice was not in order as to form and content in that it did not state with particularity what was required to be done under the Contract and did not state the consequences of failure to perform what was so particularised.

(f) Compliance with the said Notice was waived by the solicitors for the first defendant on a number of occasions."

13 Particulars (b), (d) and (e) have not been made out even to the level of a substantial question to be tried. I therefore need concern myself only with whether there is a substantial question to be tried in relation to the other grounds either cumulatively or individually.

14 As to particular (a), reference is made to several alleged defects in the affidavit of Mr Brachmanis of 6 February 2001 from paragraphs 10 to 18. The Contract of Sale precludes reliance upon any defects to delay settlement which are not "a Major Defect" as there defined; see clause 37(d), (e) and (f) and the definition of "Major Defect" in clause 29.1 which is in the following terms:

"29.1 Definitions

.....

'Major Defect' means a fault or defect in the property which:

(a) is structural

(b) because of its nature requires urgent attention;

(c) may cause danger to persons in the property; or

(d) makes the Property uninhabitable;"

.....

37 Construction of property and defects

.....

(d) Except as provided in paragraph (e) or paragraph (f), the purchaser may not make any requisition or objection or claim for compensation or allowance, or delay settlement or rescind or terminate this contract in respect of any defect or fault in the construction of the Building.

(e) Subject to paragraph (f), any defects or faults in the property due to faulty materials or workmanship (but excluding minor shrinkage and minor settlement cracks) which:

(i) whether occurring before or after completion; and

(ii) are notified in writing to the vendor before the expiration of 3 months after the date of completion,

shall be repaired by the vendor in a proper and workmanlike manner at the vendor's expense within a reasonable time after the expiration of the said 3 month period. The purchaser may not serve notice of such defects or faults (other than a Major Defect) on more than 3 occasions.

(f) Subject to paragraph (f) of special condition 38, the purchaser shall not notify the vendor, prior to completion, of any defect or fault in the property other than a Major Defect. The purchaser must notify the vendor of any Major Defect immediately after the purchaser become aware of the Major Defect. Subject to the preceding sentence of this paragraph (f), if the purchaser notifies the vendor of a Major Defect (which has not been caused or contributed by the purchaser or its agents or contractors) prior to completion, the vendor will, on or prior to completion, repair the Major Defect in a proper and workmanlike manner at the vendor's expense."

15 I am satisfied that the Plaintiffs have established that there is a substantial issue to be tried that the defects there identified, though apparently minor in cost to rectify (see letter of Plaintiffs' solicitor dated 31 January 2001 to the Defendants' solicitor (Exhibit H of affidavit of Ms Poore), are capable of constituting Major Defects. For example, the loose flashing is certainly capable in ordinary circumstances of causing dangers to persons in the property.

16 The Plaintiffs did not however give a written notice to the vendor prior to the letter of 31 January 2001 to which I have made reference, that is to say until after the expiry of the Notice to Complete and the purported termination on 23 January 2001. Under clause 37(e), if the term "Date of Completion" were read as meaning the completion date fixed by the contract, namely 27 November 2000, then that letter is not capable of constituting the necessary notification in writing. But if it meant the date of actual completion yet to take place it might suffice, despite the intervening notice to complete

17 Again, although the matter is arguable either way, I am satisfied that there is a serious question to be tried that either the notification was thus given in writing as required by clause 37(e), or was sufficiently given orally in the circumstances set out in Mr Brachmanis' affidavit. The latter is on the basis that paragraph (f) of clause 37 makes no mention of a requirement of writing.

18 It would follow if the earlier conclusions concerning notice are right, that when the Notice to Complete was issued the vendor was in default under a condition of the contract requiring rectification of Major Defects. Thus there is a substantial question to be tried that the Notice to Complete, given in those circumstances, could not be valid; see McNally v Waitzer [1981] 1 NSWLR 294.

19 In these circumstances I do not need to consider the question of whether compliance with the Notice was waived. However, there is evidence in the correspondence that negotiations were on foot during the period after the notice to complete had expired but before any purposed termination. Thus the Notice date having passed without demur, with negotiations still continuing thereafter, there was a basis for saying that the Notice had been waived; at the least, that there would need in the circumstances to have been prior warning before terminating negotiations and the contract. In particular no fresh date and place had been specified for completion. Thus the letter of 9 January 2001 (Annexure D to Ms Poore's affidavit) proposes that there be a particular reduction to the purchase price which was the subject of telephone communication. The last paragraph of that letter indicates a reasonable expectation that the vendor's solicitors will take instructions and communicate further, not turn round and terminate without any prior warning.

20 But the next communication was instead a Notice of Termination on 23 January 2001 which, without warning, purported to terminate the contract. I am satisfied that there is at least a substantial question to be tried on whether the Notice to Terminate was effective for the reasons earlier stated.

CONCLUSION AND ORDERS

21 I conclude that the Plaintiffs are entitled to have possession reinstated pending further order. I contemplate that that reinstatement would continue until and subject to resolution of the Plaintiffs' substantive proceedings for specific performance, assuming they are prosecuted with reasonable expedition.

22 Costs should follow the event.

23 My orders are as follows:

1. The Defendants grant to the First Plaintiff until further order possession and quiet enjoyment of the property Unit 13 11-13 Pittwater Road, Manly, pursuant to, and subject to the conditions of the contract referred to in the Plaintiffs' Amended Statement of Claim filed 2 March 2001.

2. The Plaintiffs' costs of the present application to be paid by the First Defendant with all other costs reserved.

3. Leave to apply on reasonable notice.

24 I note the Plaintiffs' undertaking to prosecute the proceedings with all due expedition.

25 I further note that the Plaintiffs have stated their willingness, if the substantive proceedings are resolved in the Plaintiffs' favour, to complete the Contract of Sale with all due expedition subject to compliance by the Defendant with its obligations thereunder.

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LAST UPDATED: 23/03/2001