Morgan v RHS Hotel Investments Pty Ltd t/as (rec and man app) as trustee for the Rushcutters Unit Trust

The plaintiff (Ms Morgan) bought a one-bedroom unit off the plan from the defendants (Vendors) in April 2022. She had a choice of two styles for the interior of her unit – essentially concerned with the colour of the marble kitchen benchtop and a wall in the bathroom. She chose Harbour Scheme (white) and not Park Scheme (green).

The unit was built with the Park Scheme installed. Ms Morgan pointed out the problem in September 2024 and several times thereafter.

Ms Morgan has refused to complete, contending that the contract is at an end by reason of her acceptance of the Vendor’s repudiatory conduct being the incorrect style being installed and the Vendors repeated refusals to install the correct style. She seeks the return of her $120,000 deposit pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW) (CA). The Vendors seek orders that Ms Morgan specifically perform the contract or damages in the alternative.

The proceedings were heard on 21 October 2025. No witnesses were required for cross-examination. Mr M W Young SC appeared for Ms Morgan. Mr C E Bannan appeared for the Vendors.

For the reasons set out below specific performance should be ordered. Ms Morgan’s claims fail.

The relevant facts can be briefly stated as follows.

Located at 100 Bayswater Road, Rushcutters Bay in New South Wales is a multi-storey building which, prior to its redevelopment, operated as the Vibe Hotel.

The Vendors purchased this property on 3 October 2003. Between 2012 and October 2024, the Vendors redeveloped the building into a seven-storey mixed use building containing 117 residential apartments (including one penthouse apartment) and a retail unit. The development is known as “Nautique”.

By contract dated 22 April 2022 (Contract), Ms Morgan agreed to purchase from the Vendors a one-bedroom unit in the development – being unit X – otherwise known as Lot X in a yet to be created strata plan (Property). The purchase price was $1.2 million and Ms Morgan paid a 10% deposit of $120,000.

Item 15 in the Contract is headed “Style Choice (Applicable for One-Bedroom or Two-Bedroom Only)” and provided for either a Park Scheme or Harbour Scheme to be chosen. Ms Morgan chose the Harbour Scheme. There appeared to be no dispute at the hearing that the relevant style choice in this regard concerned principally the colour of the marble stone to be used for the kitchen benchtop and one wall in the bathroom. No further detail was provided as to the extent of the differences between the two schemes or otherwise how significant the differences between the two were in terms of the overall Property.

I set out the relevant provisions of the Contract later in these reasons.

On 6 September 2024, Ms Morgan’s former solicitor wrote to the solicitors for the Vendors advising them that Ms Morgan had recently attended her pre-purchase inspection and observed that the apartment has “green marble” whereas she had selected “white marble”. Ms Morgan’s solicitor asked for the Vendors to urgently ensure that the issue was rectified prior to settlement and confirm once completed.

The Vendors’ solicitors responded to the effect that they would take instructions.

A follow up email was sent by Ms Morgan’s solicitor on 12 September 2024. On 4 October 2024, the Vendors’ solicitor responded to the effect that “a representative of CBRE will contact your client directly to arrange a meeting, with a view to discussing issues pertaining to the styling of the Property with your client.”

It does not appear there was any such contact and on 18 October 2024, new solicitors for Ms Morgan (being her present solicitors) wrote to the Vendors’ solicitors in the following terms:

Later that day the Vendors’ solicitors responded to the effect that the Vendors’ Project Manager would contact Ms Morgan directly. There does not appear to have been any such contact.

On 21 October 2024, Ms Morgan’s solicitor wrote requesting that correspondence be addressed to them and not Ms Morgan and requested that the matters in their email be addressed.

On 15 November 2024, the Vendors’ solicitor wrote saying that they were waiting on instructions.

They wrote again on 26 November 2024 to the same effect, and again on 2 December 2024.

On 6 December 2024, the Vendors sent an email to all purchasers in the following terms:

Later that day, Ms Morgan’s solicitors responded as follows:

On 13 December 2024, receivers and managers were appointed to the Vendors who have since taken over the sale of units in the development.

On 6 February 2025, the Vendors’ solicitors served on Ms Morgan’s present solicitors a copy of the Occupation Certificate and the registered Strata Plan. The email from the Vendors’ solicitors to Ms Morgan’s solicitors confirmed that settlement under the terms of the Contract is required on or before 27 February 2025.

Settlement did not take place on 27 February 2025. On 26 February 2025, Ms Morgan’s solicitors sent an email to the Vendors’ solicitors referring to the earlier correspondence and the colour difference in the stone items, stating that they assumed that the Vendors would not require Ms Morgan to complete the Contract.

Correspondence ensued between the solicitors for the parties and no agreement was reached.

On 6 March 2025, the Vendors’ solicitors wrote in the following terms:

On 17 March 2025, Ms Morgan’s solicitors requested the Vendors to repair the stone colour, contending that refusal to do so would amount to a repudiation of the Contract by the Vendors.

No response was provided to that email and on 19 May 2025, Ms Morgan purported to terminate the Contract by reason of the Vendors’ repudiation, and demanded return of the deposit.

On 2 June 2025, the Vendors issued a notice to complete requiring Ms Morgan to complete the Contract by 17 June 2025.

On 12 June 2025, Ms Morgan commenced these proceedings seeking a return of the deposit.

Completion, obviously enough, did not occur on 17 June 2025 and on 19 September 2025 a cross-summons was filed by the Vendors seeking specific performance of the Contract.

On the morning of the hearing, the Vendors’ solicitors wrote to Ms Morgan’s solicitors in the following terms:

The offer was not accepted.

Sales of units in Nautique have not been overly successful. One of the receivers, Mr Nicodemou, gave evidence that 25 of the 117 units have been sold and completed, 12 have been sold and not yet completed and 80 units remain unsold. Of the 25 sold and completed units, 24 were sold during the “off the plan” pre-sales campaign.

The Vendors sought to rely on an affidavit of a valuer, Mr Bill Fatouros (Mr Fatouros), as to the current market value of the Property. Mr Fatouros prepared a report dated 16 October 2025 which was served on that day.

Ms Morgan objected to the Vendors being permitted to rely on this material and, having heard argument, I refused to receive the affidavit and the attached valuation report.

It was not in dispute that the evidence was late. On 5 September 2025, I made orders by consent for such evidence to be served by 26 September 2025. It was not suggested that the report could not have been served by this time, and no other reason was provided for the late service.

Whilst it was faintly suggested that Ms Morgan should have been in a position to prepare her own valuation evidence in response, I do not accept this contention. The fact that Ms Morgan’s solicitors may have been told on 10 October 2025 that a valuation report was coming does not improve the position.

To permit the Vendors to rely on the material would cause prejudice to Ms Morgan and would likely have necessitated an adjournment of the hearing to enable the evidence to be dealt with. In these circumstances, it is not in the interests of justice that the Vendors be permitted to rely on the late evidence.

The Vendors then sought to tender one table from Mr Fatouros’ report where he purported to summarise the recent sales of units in the Nautique development. I also rejected the tender of this material. Again, prejudice would be caused to Ms Morgan if it were to be admitted in that the hearing would not likely have finished in one day if Ms Morgan was given an opportunity to check the material and respond if necessary.

Further, the table in and of itself was unlikely to be of any assistance on the current market value of the Property in the absence of further expert evidence comparing the units the subject of the recent sales to the Property. This was the evidence I had already rejected.

As ultimately advanced, Ms Morgan’s case was as follows.

The primary case advanced by Ms Morgan was that she had validly terminated the Contract for the repudiatory conduct of the Vendors in repeatedly refusing over a seven-month period to comply with the terms of the Contract by not supplying the unit with Harbour Scheme. The repudiation was in the first sense in which the High Court referred in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 (Koompahtoo) at [44] – otherwise referred to as a renunciation. It was contended that the Vendors had clearly renounced the Contract by evincing an unwillingness to fulfill the Contract save in a manner substantially inconsistent with the Vendors’ contractual obligations.

Alternatively, Ms Morgan contended that the Vendors were not entitled to specific performance because they are not ready, willing and able to complete in accordance with the terms of the Contract. In these circumstances, the Vendors also have no entitlement to equitable damages because such damages can only be ordered in circumstances where the Court would be properly entitled to make an order for specific performance. It follows, as night follows day, it was said, that an order would be made for the return of the full deposit.

The third, and innermost layer of the arguments advanced by Ms Morgan, was that the Court, in the exercise of its general discretion under s 55(2A) of the CA, would order that the deposit be returned.

The Vendors contended that there had been no renunciation of the Contract. The Vendors were permitted under the terms of the Contract to change the scheme. Further, the difference between the Harbour Scheme (as contracted) and the Park Scheme (as built) was not substantial in the relevant sense. In any event, the Vendors had offered to install the Harbour Scheme, and as such are ready, willing and able to complete the Contract.

Alternatively, if the Court was not minded to order specific performance, the Vendors contended that equitable damages should be ordered in the amount of $106,756.76 representing the costs incurred by the Vendors in holding the Property, that will be incurred in selling the Property and default interest.

Finally, it was contended that there was no basis on which the Court should order that the deposit be refunded.

The Contract took the form of the Law Society/Real Estate Institute Contract for Sale and Purchase of Land 2019 Edition, supplemented by Special Conditions which were to prevail in the event of any inconsistency.

As set out above, item 15 of the Contract dealt with “Style Choice” and Ms Morgan selected “Harbour Scheme”.

Special Condition 50 dealt with “Style Choice”. It provided as follows:

“Claim” is defined in special condition 33 to mean:

Clauses 49, 51.1 and 51.2 also have some relevance to the issues. They provide as follows:

“Finishes Schedule” is defined in Special Condition 33 to mean the “schedule of finishes comprising Attachment 3, with any changes permitted under this contract.”

Attachment 3 referred to “stone” bench in the Kitchen and “stone” walls, floor and Vanity hob in the bathroom. The Disclosure Statement also included the Finishes Scheule.

Further, “Material Particular” includes the Finishes Schedule. “Material Particular Change” is defined as a “change to one or more Material Particulars that will, or is likely to, adversely affect the use or enjoyment of the Property.”

The Vendors also placed reliance on clauses 6 and 7 of the standard conditions of the Contract which were in the following terms:

I deal first with the contention that Ms Morgan validly terminated the Contract by reason of the Vendors repudiatory conduct.

In Koompahtoo at [44], Gleeson CJ, Gummow, Heydon and Crennan JJ stated (emphasis added):

As set out above, Ms Morgan relies on repudiation in the first sense set out above – otherwise termed renunciation. The test is whether the conduct of the Vendors is such as to convey to a reasonable person, in the situation of Ms Morgan, renunciation either of the contract as a whole or of a fundamental obligation under it.

It must be remembered that repudiation is a serious matter and not lightly to be found or inferred: see Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 at 633 per Wilson J. Evidence of a sufficient absence of readiness and willingness on the part of promisor must be clear: Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 at 38 per McLelland CJ in Eq.

There was no suggestion in the present case of a renunciation of the whole of the contract. Rather the contention was that the Vendors had renunciated a fundamental obligation – namely to supply the contracted Style Scheme. In Laurinda Park Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23 at 634, Mason CJ relevantly stated the proposition as conduct evincing an intention to fulfil the contract only in a manner substantially inconsistent with the party’s obligations and not in any other way.

Three cases were principally relied on by Ms Morgan in this regard.

The first was Gold Coast Oil Co Pty Ltd v Lee Properties Pty Ltd [1985] 1 Qd R 416 (Gold Coast Oil), a decision of the Full Court of the Supreme Court of Queensland. The facts are important. Relevantly, in July 1981 the respondent agreed to grant the appellant the lease of a service station site for five years with an option for a further five years. The term of the lease was to commence upon completion of certain alterations to buildings on the site which were to be carried out by the appellant. By 1 September 1982, all necessary consents were at hand but the appellant made it clear that it was not proposing to go ahead with the alterations until the prevailing economic conditions warranted such a step. On 4 March 1983 the respondent treated the appellant as having repudiated the contract and discharged it.

It was not in dispute that there was no provision making time of the essence and as such a notice to complete could not be issued. The Full Court upheld the decision of the trial judge that the lease had validly been brought to an end.

Connolly J stated at 420-1 (emphasis added):

Second, Associated Newspapers Ltd v Bancks (1951) 83 CLR 322; [1951] HCA 24 (Bancks), which concerned an instalment contract for the provision of cartoons to a newspaper on a weekly basis. It was a condition of the contract that the cartoon be printed on the front page. The newspaper had refused to do this on three successive occasions and several more breaches were intended. In these circumstances the High Court held that the newspaper had repudiated the contract – its conduct was such as to amount to a refusal to be bound by the contract.

Third, Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2002] UKPC 50; [2004] 1 NZLR 289 (Dymocks) where the Privy Council held that a franchisee repudiated its obligations under a franchise agreement in refusing to pay franchise fees and to participate in the group buying scheme unless amendments were made to the agreement by the franchisor.

In Carter’s Breach of Contract (3rd ed, 2024, JW Carter Publishing) at [8-05], the learned author explains the decision on the following basis:

Whilst the exercise is always fact sensitive, the above cases demonstrate the type of conduct that will be found to be repudiatory.

In Cheshire and Fifoot Law of Contract (12th Aust Ed, 2022, Lexis Nexis) at [21.12], the learned authors stated that “the importance of the term in question is clearly a relevant factor, since breach of an insignificant term is less likely to show a repudiatory intention than breach of a significant term.”

I note that Ms Morgan’s case was based only on alleged renunciation by reason of repeated refusals to reinstall the contracted for Harbour Scheme. No reliance was placed on the provisions of the Contract or allied principles, including Flight v Booth.

The starting point on the renunciation argument is the proper construction of the obligations of parties under the Contract and, in particular, whether the Vendors were permitted to change the Style Scheme. The parties were at odds on this. For the reasons set out below, I am of the view that the Vendors were permitted to make the change.

The usual principles of construction apply: see, for example, 1128 CG Pty Ltd v MH Affordable Homes on Kelly Pty Ltd [2025] NSWSC 563 at [106]-[111].

I have set out the relevant provisions of the Contract earlier in these reasons.

Ms Morgan placed principal reliance on special condition 50.1.1 as indicating that the Vendors were not permitted to change the Style Choice where, as here, one had been marked in the Contract. Special Condition 50.1.1 was contrasted with 50.1.2 which provided that the purchaser could not make any Claim where no Style Choice was marked. Attention was drawn to the fact that Claim was defined in special condition 33 to include terminating the Contract.

I do not read these provisions as preventing the Vendors from altering the Style Scheme. They simply deal with the position where a Style Scheme is marked and where it is not, making it clear that in the latter case no claim can be made because of the Vendors’ decision. It does not follow, in my view, that the Vendors are not permitted to make any changes to the Style Scheme.

It is clear, from the subsequent provisions of the special conditions that the Vendors are permitted to make changes with the Contract providing a regime for dealing with these changes.

Special condition 49.1.2 requires the Vendor to construct the Building, relevantly according to the Finishes Schedule, “subject to clause 51.1”. Special condition 51.1, dealing with permitted alterations, thus applies to the Finishes Schedule.

Turning to Special Condition 51.1, clause 51.1.2 deals with finishes – and permits the vendor to “alter any manner of finish … if it is a similar manner of finish of at least equivalent quality to that specified in the Finishes Schedule.” Clause 51.1.1 makes clear that such an alternation can be done without giving notice to the purchaser, unless notice is required to be served under clause 51.2.

Clause 51.1.5 makes clear no claim can be made by a purchaser because of any such alteration – except as permitted by clause 51.2.

Alteration of finishes is thus permitted to a similar manner of finish of at least equivalent quality to that specified in the Finishes Schedule.

There was no suggestion in the present case that the finish as installed – the Park Scheme – was not of equivalent quality to the Harbour Scheme. It clearly was of equivalent quality.

I do not accept the contention advanced by Ms Morgan that this construction of clauses 49, 50 and 51 effectively reads down special condition 50.1.1 to nothing. The words of special conditions 49 and 51 are, in my view, quite clear, and permit an alteration.

The Vendors also sought to place some reliance on clause 10.2 of the standard conditions which provides that the purchaser “cannot rescind or terminate only because of a defect in title to or quality of the inclusions”. Although “inclusions” is not defined it presumably is a reference to the “inclusions” stated on the front page of the Contract: see P Butt, The Standard Contract for Sale of Land in New South Wales (2nd ed, 1998, LBC Information Services) at [10.102].

Under “inclusions” the box “other” is crossed with the statement see “Finishes Schedule”. There may be a debate as to whether it was intended by the parties to pick up everything set out in the Finishes Schedule as an inclusion or just the Appliances. In my view, it is probably only the latter.

Ms Morgan would not be completely without any remedy in respect of the colour change. Apart from special condition 51.2, it may be open to Ms Morgan to contend an error or misdescription arises under the Contract and make a claim under clause 7. Assuming the Vendors do not seek to rescind the Contract, any dispute as to compensation would be determined by an arbitrator (see clause 7.2.3).

I am thus not satisfied that the Vendors have engaged in any repudiatory conduct in refusing to change the style scheme from the Park Scheme to the Harbour Scheme.

I am not satisfied that the Vendors have engaged in any conduct which could be characterised as evincing an intention to fulfill the Contract only in a manner substantially inconsistent with the Vendors’ obligations. The Vendors have not engaged in any conduct inconsistent with their obligations.

If, contrary to what I have set out above, I formed the view that that the Contract, properly construed, did not permit the Vendors to alter the chosen Style Scheme, the issue would have arisen as to whether the Vendors’ conduct was fulfilling the Contract in a manner substantially inconsistent with the Vendors’ obligations.

Had the issue arisen, I would have inclined to the view that the Vendors had not renounced the Contract. A conclusion of renunciation is not lightly to be made and is a serious matter. This case is quite different to the cases relied on by Ms Morgan, including Gold Coast Oil, Bancks and Dymocks – each of which I have analysed above. The conduct relates to the colour of one item to be installed in the finished Property. The Property is otherwise being delivered as contracted for.

I turn now to consider the alternative arguments advanced by Ms Morgan.

The first alternative argument was that I would not be satisfied that the Vendors were ready, willing and able to complete the Contract according to its terms. This was premised on the same contractual construction as that which underlay the primary argument advanced – namely that the terms of the Contract did not permit the Vendors to alter the Style from Harbour Scheme to Park Scheme. For the reasons set out above, I reject this contention.

On the construction of the Contract that I prefer, the Vendors are ready, willing and able to complete the Contract according to its terms.

Even on the alternate construction – the Harbour Style could not be altered – the issue would arise as to whether this was a substantial defect so as to permit Ms Morgan resisting specific performance: Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1; [1973] HCA 14 at 27-8. In my view, it is not a substantial defect.

Whilst the Vendors have offered on an open basis on the morning of the hearing – to install the Harbour Scheme – this was a conditional offer and as such does not of itself overcome any issue of ability to perform.

The second alternative argument advanced by Ms Morgan was for return of the deposit pursuant to s 55(2A) of the CA.

The principles in this regard were not in dispute. I recently summarised them in Lewington v Dulyakarn [2025] NSWSC 635 at [165]-[166] and Grubisa v Zhou [2025] NSWSC 942 at [94]-[97].

In circumstances where I propose to order specific performance there is no basis, in my view, to order return of the deposit.

If I was not minded to order specific performance – whether because Ms Morgan validly terminated the Contract or otherwise – I would likely have ordered the return of the deposit.

In the case of termination, it was not in dispute that Ms Morgan would have a contractual right to return of the deposit.

If I was satisfied that the Vendors were not ready, willing and able to complete, this likely would have stood in the way of an award of equitable damages. Ms Morgan relied on The Millstream Pty Ltd v Schultz [1980] 1 NSWLR 547 at 552 per McLelland J. The Vendors did not really engage with this submission

In these circumstances, it would have been unjust or inequitable for the Vendors to retain the deposit: see Higgins v Statewide Developments Pty Ltd (2010) 14 BPR 27,293; [2010] NSWSC 183 at [122]-[135] per Barrett J; Jin Yi Construction Pty Ltd v Romeciti Eastwood Pty Ltd [2022] NSWSC 56 at [102]-[116] per Lindsay J. The conditional offer made on the morning of the hearing would not have altered this.

For these reasons, the Vendors are entitled to specific performance and the claims advanced by Ms Morgan should be rejected. I will grant liberty to apply in the event any issues arise.

Nothing was said on the question of costs. There is no reason why costs should not follow the event and Ms Morgan pay the costs of the summons and the cross-summons.

The orders of the Court are: