Ryan v UPG 322 Pty Ltd

1. [1]

   In these proceedings the plaintiff seeks orders for specific performance of a contract for the sale of a parcel of land. The contract price is $39.5 million. The plaintiff is the vendor. The first defendant is the purchaser. The second defendant has guaranteed the purchaser’s obligations under the contract. The plaintiff seeks specific performance against both the vendor and the guarantor.

2. [2]

   The land which is the subject of the contract is a large parcel at Box Hill in outer north-western Sydney. It seems that the purpose of the purchase is to subdivide and redevelop the land.

3. [3]

   The vendor (plaintiff) is Michael Carl Ryan. He is the registered proprietor of the land. The purchaser (first defendant) is a company named UPG 322 Pty Limited (“UPG 322”). It forms part of a corporate group, the holding company of which is Universal Property Group Pty Limited (“UPG”). In this judgment I will refer to UPG and its subsidiaries as “UPG Group”, and I will refer to counsel for the defendants as counsel for UPG.

4. [4]

   The guarantor (second defendant) is Mr Bhart Bhushan. He is the sole shareholder of UPG and controls the operations of UPG group, including UPG 322. He is also the sole director of UPG 322.

5. [5]

   The contract was preceded by a written agreement between the parties for the grant of put and call options of the land. The agreement was made in October 2021. The call option was exercised by UPG 322 in December 2022. The contract was entered into by way of exchange in January 2023.

6. [6]

   The contract in question consists of the Law Society standard conditions (2019) together with 28 further special conditions. The completion date under the contract was 18 April this year. Mr Ryan’s solicitors took steps on the online PEXA platform to prepare for settlement. But the conveyancing firm acting for UPG 322 did not take the steps required of it as purchaser, and the settlement date passed.

7. [7]

   On the following day, 19 April, the solicitors then acting for Mr Ryan served a notice to complete on UPG 322’s conveyancers. The notice purported to require the purchase to be completed by 5pm on 3 May 2023 and to make time of the essence. The settlement date was extended by two weeks, at the request of UPG 322’s solicitors, to 11 May. There was then a further extension to 15 May, at UPG 322’s request. But UPG failed to complete the contract on that date.

8. [8]

   It seems that by this time Mr Ryan had dispensed with the services of his conveyancing solicitors. Correspondence ensued between Mr Ryan (personally) and UPG 322’s conveyancers, but to no avail. The proceedings were commenced by way of summons filed on 23 August. The summons was likewise filed by Mr Ryan personally.

9. [9]

   At a later point, however, Mr Ryan retained a new firm of solicitors to act for him. On 20 September, that firm served a second notice to complete, without prejudice to Mr Ryan’s existing rights (an issue had arisen as to the validity of the first notice to complete). The second notice required completion by 2pm on 9 October. Again, the date passed without UPG 322 completing the contract.

Claims for determination

1. [10]

   When Mr Ryan filed the summons, it was given a return date of 22 September. A notice of appearance was filed for the defendants but otherwise nothing further happened in the proceedings until 21 September, when Mr Ryan’s newly appointed solicitors filed a notice of motion seeking expedition. A statement of claim was filed for Mr Ryan on 27 September.

2. [11]

   Mr Ryan’s principal claim is for orders for specific performance of the contract, against both UPG 322 and Mr Bhushan. His statement of claim also expressly seeks orders allowing him, in the event orders for specific performance are made but the contract cannot be completed, to terminate the contract and seek damages for loss of his bargain. Presumably loss-of-bargain damages would also be sought if the Court refused to order specific performance. The statement of claim also contained a claim for damages for delay in completing the contract.

3. [12]

   On 29 September, I ordered that there be an expedited hearing of the specific performance claim. The hearing took place on 23 October.

4. [13]

   Well in advance of the hearing, it was made clear on behalf of the defendants that they did not dispute that the contract was valid and binding upon them. An issue was raised about the validity of the first notice to complete. But this was of no significance in the expedited hearing, because it was accepted on behalf of the defendants that, on any view, the second notice to complete was valid.

5. [14]

   The defence filed on behalf of the defendants resisted the grant of specific performance against either of them. So far as UPG 322 was concerned, it was alleged that damages were an adequate remedy and relief should be refused for that reason. Two affirmative defences were also raised. It was contended that specific performance should be refused because of hardship and also because the grant of relief would be futile. The starting point for both of these defences was that UPG 322 was a special purpose vehicle which did not have the financial resources to complete the purchase.

6. [15]

   At the hearing, however, counsel for UPG announced that, although UPG 322 did not consent to orders for specific performance being made against it, it did not oppose the making of such orders either. The affidavit evidence which had been filed in support of the futility and hardship defences was not read. Counsel made no submissions in opposition to the making of specific performance orders against UPG 322.

7. [16]

   As a result of this change of position, the main issue debated at the hearing was whether orders for specific performance should be made against Mr Bhushan. There was also some debate about the form of the orders sought on behalf of Mr Ryan.

8. [17]

   In the course of the hearing there was some discussion about what remained to be decided after the specific performance application had been determined. It was common ground that if an order for specific performance was made and the contract was not completed, it would be open to Mr Ryan to apply for the discharge of the specific performance order, terminate the contract, and sue for damages. It also appeared to be common ground that if specific performance was refused, Mr Ryan would be entitled to make a claim for damages in due course.

9. [18]

   In theory, the claim for damages for delay would also have been dealt with at a later hearing. But counsel for Mr Ryan indicated that he would confine his claim to a claim for interest to be included in the purchase price, which would be dealt with at the specific performance stage. At least if specific performance was granted, there would be no need for any claim for damages for delay to be dealt with at a later hearing.

Specific performance

1. [19]

   The formal position of UPG 322 was that it neither consented to nor opposed the grant of relief. But while there appeared to be no doubt that UPG 322 lacked its own funds to complete the purchase, there was evidently at least a substantial possibility of the necessary funds being provided by other members of the UPG Group, or by Mr Bhushan himself.

2. [20]

   Hardship and futility are affirmative defences and the evidence served in support of those defences was not read. It is therefore unnecessary to say any more about those defences.

3. [21]

   The onus on the adequacy of damages point is not so clear. Furthermore, I think that the answer to the point is relevant to the grant of specific performance against Mr Bhushan as guarantor. It is therefore desirable to say something about it.

4. [22]

   Counsel for UPG accepted that the Court will almost invariably grant specific performance in aid of a purchaser who is otherwise entitled to it rather than leaving that purchaser to pursue their rights at law. For this purpose, a piece of property is seen as unique. But counsel submitted that the position is not the same when a vendor seeks specific performance. The purchaser’s obligation is simply to pay money, and, in counsel’s submission, that is something that can be achieved without an order for specific performance, by requiring the vendor to pursue an action for damages.

5. [23]

   This argument was not a new one. In a decision of the House of Lords given more than 160 years ago, Lord St Leonards said (Eastern Counties Railway Co v Hawkes (1855) 5 HL Cas 331 at 376-377; 10 ER 928 at 945-946, emphasis added):

6. [24]

   The law has been stated in the same terms in the High Court: see Dougan v Ley (1946) 71 CLR 142 at 150, per Dixon J, and Turner v Bladin (1951) 82 CLR 463 at 473, per Williams, Fullagar & Kitto JJ.

7. [25]

   It has expressly been accepted in first instance decisions in Australia that a vendor otherwise entitled to specific performance will not generally be refused specific performance on the ground that damages are an adequate remedy: Newcombe v Chapple (1985) 3 BPR 9391 at 9399; Fairborne Pty Ltd v Strata Store Noosa Pty Ltd [2009] QSC 250 at [15]. There are textbook statements to the same effect: Seddon NC, Bigwood RA, Cheshire & Fifoot Law of Contract (LexisNexis, 12th Australian Edition, 2023) at 1296-1297; Heydon JD, Heydon on Contract (Lawbook Co, 2019) at 1002-1003; Spry ICF, The Principles of Equitable Remedies (Lawbook Co, 9th ed, 2014) at 64-65.

8. [26]

   In the passage from Lord St Leonards quoted above, two different grounds can be identified for granting specific performance to vendors. One is that they should be entitled to divest themselves of the property and recover the agreed price: that is, damages would not be an adequate remedy. The other is mutuality: the same relief would be available to a purchaser.

9. [27]

   In the United States, it has been suggested that mutuality of remedy, taken on its own, is not a persuasive justification for awarding specific performance. In the latest edition of Corbin on Contracts (Perillo JM, Vol 12, 2012, LexisNexis), the editor writes (at 275-276) that mutuality is “largely discredited”, but nevertheless appears to accept that, when combined with the inadequacy of the vendor’s legal remedy, the grant of specific performance to vendors is justified. Even if it were possible to take the same view of mutuality at trial level in Australia, the inadequacy of damages for vendors would likewise remain a sufficient justification for a decree.

10. [28]

    In my view, the inadequacy of the vendor’s legal remedy is of particular significance on the facts of this case. It cannot be assumed that the value of the property in question could rapidly and clearly be determined for the purposes of assessing damages. The property is truly at the opposite end of the scale from commodities or securities for which there is a large and liquid market to which the disappointed vendor can have resort.

11. [29]

    For these reasons, I am satisfied that an order for specific performance should be made against UPG 322.

12. [30]

    The argument by counsel for the defendants relied heavily on the High Court decision in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245. That decision needs to be understood in the light of the prior decision of the House of Lords in Moschi v Lep Air Services Limited [1973] AC 331.

13. [31]

    Moschi was an action by a creditor against an individual guarantor. The principal debtor was a company controlled by the guarantor. The debt was payable by the company in instalments. The terms of the guarantee provided that the guarantor “guaranteed the performance by [the company] of its obligation to make the payments at the rate of £6,000 per week together with the final payment of £4,000”. The company defaulted in making the instalment payments; the creditor terminated the contract for breach and sued both the company and the guarantor for the full amount. The question was whether this liability fell within the terms of the guarantee. The guarantor’s argument was that, under the terms of the guarantee, he had only undertaken to pay the instalments as they fell due. He had not undertaken to pay later instalments which did not fall due until after termination, or damages arising upon termination.

14. [32]

    All the members of the House of Lords agreed that the creditor was entitled to judgment against the guarantor for the full amount. But their reasoning differed in some respects.

15. [33]

    Lord Reid said (at 344-345, emphasis added):

16. [34]

    Lord Reid considered that the guarantor’s obligation was of the latter type. The guarantor was thus in breach as soon as the company defaulted, and became liable for damages. Those damages amounted to the loss suffered by the creditor as a result of the company’s breach, which his Lordship equated with the full amount due under the contract.

17. [35]

    Lord Diplock took a different approach (at 347-349, emphasis added):

18. [36]

    Lord Simon of Glaisdale, who expressly agreed with Lord Diplock’s analysis, commented (at 177) that the guarantor’s argument would have the absurd consequence that the creditor “would lose the benefit of the guarantee at the moment he most needs it – namely, on a repudiation by the principal promisor of his obligations under the contract”.

19. [37]

    Sunbird Plaza was similarly a claim against a guarantor for judgment in debt. The underlying contract was a contract for the sale of land. The guarantors had jointly and severally guaranteed “the performance by [the purchaser] of all the terms and conditions of the Contract including the payment of all monies payable hereunder by [the purchaser]”. A decree of specific performance was made against the purchaser, but the purchaser failed to complete. The vendor then brought an action against the guarantors claiming the purchase price.

20. [38]

    Gaudron J considered that an issue of construction, or, perhaps, of implication, arose (at 271):

21. [39]

    In resolving this interpretation issue, Gaudron J placed particular emphasis on another clause in the contract (clause 11) which enabled the purchaser to nominate another purchaser in its place. In that event, the purchaser was to guarantee the new purchaser’s obligations. Her Honour stated (at 272):

22. [40]

    Mason CJ (with whom Deane, Dawson and Toohey JJ agreed) began by considering the purchaser’s liability in debt for the purchase price (at 253-254):

23. [41]

    His Honour then addressed the principles which apply to the liability of guarantors (at 254-255):

24. [42]

    His Honour referred to Lord Diplock’s “see to it” analysis in Moschi, but evidently did not accept, or wholly accept, that analysis. He commented (at 255-256):

25. [43]

    Later, Mason CJ returned to the construction of the terms of the instant guarantee (at 258):

26. [44]

    Counsel also referred me to two first instance decisions of the Supreme Court of Queensland. They were the decision of Daubney J in Fairborne (cited at [25] above) and the decision of Ann Lyons J in Sunbay Projects Pty Ltd v PR Wieland Holdings Pty Ltd [2010] QSC 368.

27. [45]

    The Fairborne case, like the present case, was an application for specific performance of a contract for the sale of land. The applicant was the vendor, and the first respondent was the purchaser. There were three individual guarantors. Under the terms of the contract, (see at [27]) they:

28. [46]

    The vendor sought decrees of specific performance against the purchaser and the individual guarantors. As against the guarantors, the form of the decree sought was that each guarantor “specifically perform the contract of guarantee … by performing all of the obligations of [the purchaser] under the contract”. Further and alternatively, a mandatory injunction was sought requiring each of the guarantors to “perform all of the obligations of [the purchaser] under the contract in accordance with the terms of” the guarantee.

29. [47]

    Daubney J summarised the decision in Sunbird Plaza and stated that similar considerations applied in the instant case. His Honour observed that if the purchaser failed to specifically perform the contract in accordance with the Court’s order for specific performance and the contract was then terminated by the vendor, the vendor would be entitled to sue the guarantors for damages. But the purchase monies under the contract only became payable upon settlement. As in Sunbird Plaza, the balance of the purchase price was not a “debt presently payable” to the vendor which could be recovered from the guarantors. And this provided “no basis for the relief sought” in the proceedings (at [36]).

30. [48]

    Daubney J acknowledged that the guarantee contained a further undertaking to “pay and perform the obligations” of the purchaser. He characterised the real question as being whether orders in the nature of specific performance or a mandatory injunction should be made, requiring the guarantors to perform the purchaser’s obligations. His Honour characterised those orders as being sought “effectively on a quia timet basis”.

31. [49]

    Daubney J appears to have accepted that the grant of such relief was possible. But he considered it to be premature. His Honour explained at ([39]-[40]):

32. [50]

    In the end, Daubney J ordered specific performance against the purchaser but dismissed the claim against the individual guarantors.

33. [51]

    The Sunbay case likewise arose out of an application for specific performance by a vendor against a corporate purchaser, whose obligations under the contract had been guaranteed by an individual officer of the company. The guarantee clause provided (see at [68]):

34. [52]

    Ann Lyons J was satisfied that a decree of specific performance should be made against the corporate purchaser. The vendor also sought an order against the guarantor, on the basis that it was highly unlikely that if an order was made only against the purchaser, it would comply with that obligation.

35. [53]

    Her Honour accepted that the evidence indicated that, historically, the purchaser had been unable to settle due to lack of finance. Her Honour also accepted that the corporate purchaser was “essentially a family company” which was controlled by the guarantor, who would for practical purposes control whether they would have the funds to settle.

36. [54]

    Nevertheless, her Honour declined to make an order for specific performance against the guarantor as well as the purchaser. She explained (at [72]-[73]):

37. [55]

    Her Honour referred to the decision of Daubney J in Fairborne, and in particular quoted from [39] and [40] (see [49] above). She stated that the guarantor should not be compelled to do something until the principal had failed to do it. Accordingly, she did not consider it appropriate to make orders against the second defendant “at this time” (at [75]).

38. [56]

    The only order made by her Honour was an order for specific performance against the purchaser. It is not clear from the published version of the judgment whether the claim against the guarantor was dismissed, as in Fairborne, or as her Honour’s language perhaps suggested, adjourned.

39. [57]

    Returning to the questions of principle involved in the present case, the distinction drawn by Lord Reid in Moschi, between the different types of guarantee, had been recognised in earlier authorities, but not necessarily in precisely the same language. Furthermore, the two classes of guarantee mentioned by Lord Reid have, in other descriptions, not been seen as completely covering the field.

40. [58]

    Of particular importance in this Court are the observations of Jordan CJ, speaking for the Full Court, in Jowitt v Callaghan (1938) 38 SR (NSW) 512. His Honour distinguished between, on the one hand, a conditional undertaking to pay if the principal debtor does not (Lord Reid’s first class), and, on the other, an unconditional undertaking to accept joint liability with the principal debtor (rather than, as Lord Reid put it, an undertaking that the principal debtor will pay). His Honour stated (at 516-517):

41. [59]

    In McGuinness v Norwich and Peterborough Building Society [2012] 2 All ER (Comm) 265, Patten LJ, who gave the leading judgment of the Court of Appeal, stated (at [7]):

42. [60]

    In this taxonomy, type (1) apparently corresponds with Lord Reid’s second class (which is equated with the “see to it” obligation identified by Lord Diplock). Type (2) corresponds with Lord Reid’s first (conditional class). Type (3) is an indemnity rather than a guarantee. But type (4) (which corresponds with the alternative to type (2) identified by Jordan CJ in Jowitt) is apparently an additional class of guarantee. And Patten LJ expressly stated (at [8]) that guarantees of types (2) and (4) both “create a liability in debt”.

43. [61]

    In McGuinness, the relevant clauses of the guarantee were clauses 2.2, 2.3, 2.4 and 4.2, which provided:

44. [62]

    Patten LJ concluded that the guarantor was under a direct obligation to the lender to pay the mortgage debt. In doing so, his Lordship appears to have seen the choice as one between types (2) and (4). He stated (at [66], emphasis added):

45. [63]

    A few years before, the decision in Sunbird Plaza had been considered by the Court of Appeal for Queensland in Wharf Street Pty Ltd v Amstar Learning Pty Ltd [2004] QCA 256. McPherson JA, with whom Williams JA agreed, referred to the passage from the judgment of Mason CJ quoted at [42] above, and stated (at [24]):

46. [64]

    Jerrard JA, the remaining member of the Court, took a somewhat narrower view of the effect of the Sunbird Plaza decision. His Honour expressed, as a matter of principle, a preference for the analysis of Lord Diplock over that of Lord Reid, but recognised that Lord Reid’s view had prevailed. His Honour stated (at [34]):

47. [65]

    The context for this body of authority is significant for present purposes. Moschi and Sunbird Plaza were both debt recovery actions in which the question was what the scope of the guarantor’s obligation was, as a matter of construction of the guarantee. Jowitt and Wharf Street were likewise debt recovery actions, but the question was whether the supervening insolvency of the principal debtor prevented the recovery of the debt from the guarantor. McGuinness was also a debt recovery action, in which the question was whether the action gave rise to a debt for the purposes of the procedural rules of the Court.

48. [66]

    In each case, therefore, the question was one as to the nature or extent of the guarantor’s personal obligations at law. None of the cases involved consideration of equitable principles (although, as I note below, Lord Diplock’s speech in Moschi briefly touched on this subject).

49. [67]

    The guarantee provision in the present case is special condition 44 of the contract. That clause provides as follows:

50. [68]

    As is frequently the case, this guarantee clause refers to various different obligations of the purchaser, some of which are clearly obligations which, if breached, would sound in damages. But that can be put aside. Attention for present purposes is confined to the undertaking to guarantee payment of “money payable by … the Purchaser”, and, in particular, the payment of the purchase price.

51. [69]

    Counsel for the defendants submitted that the present case was indistinguishable from Sunbird Plaza. Mr Bhushan’s obligation with respect to the purchase price was of the “see to it” type. Breach of the obligation, so the submission ran, only sounded in damages. In any event, there could be no obligation to pay the price until UPG 322 had failed, following the making of an order for specific performance against it, to do so. Counsel contended that, as in the Queensland cases, the application for specific performance should be dismissed, or, at the least, deferred until after the time for specific performance by UPG 322 had passed.

52. [70]

    I do not accept counsel’s contention. In my view, their arguments face three obstacles.

53. [71]

    The first point is that if the guarantor cannot be said to be liable for relevant purposes until there has been a default by the purchaser, then that condition is satisfied. In fact, UPG 322 has been in default since 18 April when the contract initially required completion. The fact that, at that stage, time had not been made of the essence seems to me to be quite immaterial. There is thus no reason why the guarantor should not be called upon to do what the purchaser has failed to do. The fact that the purchaser’s failure was not, at least initially, a breach which permitted termination of the contract does not seem to me to make any difference.

54. [72]

    Secondly, and more broadly, I am not sure that the guarantee obligation in the present case arises only upon the purchaser’s default. Even if, as McPherson JA thought, the Sunbird Plaza decision means that that is the usual effect, it is clearly a question of construction in each case.

55. [73]

    In the present case, there is no other guarantee clause in the contract which could influence the construction of the clause in question, as there was in Sunbird Plaza (see [39] above). More importantly still, the present clause provides that the guarantor’s obligation is as principal. Such a provision was not a feature of the Sunbird Plaza guarantee: cf Mason CJ’s reference to “add[ing] to the confusion”, quoted at [41] above.

56. [74]

    Considerations of business commonsense are also relevant. On the defendants’ approach, before the time for specific performance by UPG 322 as purchaser arrives, there is no obligation on the guarantor. Afterwards, the obligation arises if title is transferred, but that is meaningless because the transfer will only take place if the purchase price is paid by the purchaser, in which case there is no ongoing obligation on the part of the purchaser to which the guarantor’s obligation can attach. If, on the other hand, the purchaser fails to comply with the order for specific performance, then, on the defendant’s approach, all the vendor can do is terminate the contract and sue the guarantor (as well as the purchaser) for loss-of-bargain damages. As counsel for the defendants accepted in the course of oral argument, the effect of their argument would be that there would never be any point at which it could be said that there was an enforceable obligation on the guarantor to pay the purchase price.

57. [75]

    I would have thought that the parties, in referring to amounts payable under the contract, would have been thinking, more than anything else, of the obligation to pay the purchase price. The defendants’ approach seems to me to parallel the approach criticised by Lord Simon in Moschi, of achieving a construction under which the guarantor’s obligations become meaningless at the very point at which he is wanted.

58. [76]

    If it is relevant to consider Mason CJ’s comment in Sunbird Plaza that in the ordinary course the guarantor does not control the borrower, then that comment would not apply here. On the facts of this case, Mr Bhushan was in complete control of the affairs of UPG 322, and it was essentially up to him as to whether UPG 322 was provided with support from other members of the UPG group (or perhaps from Mr Bhushan personally) to enable it to come up with the purchase price.

59. [77]

    In my view, the critical factor in the present case is that the guarantor’s obligation is stated to be given as principal. Both as a matter of language, and as a matter of business commonsense, it seems to me that the better reading of the clause is that it creates a concurrent obligation of the type recognised by the Court of Appeal in McGuinness, and, much earlier, by the Full Court in Jowitt.

60. [78]

    The third and fundamental obstacle derives from the nature of these proceedings. I am not dealing with a claim in debt or damages, but with an equitable claim for the grant of orders of specific performance. The fact that (as Sunbird Plaza establishes) the purchase price is not currently a debt owing at law only reinforces the conclusion that relief at law is inadequate. It is a reason for granting specific performance, not for withholding it.

61. [79]

    In principle, specific performance does not depend upon a prior breach by the purchaser. Of course, in most specific performance cases there has been a refusal by the purchaser to go ahead with the contract. Specific performance as relief is granted because of the risk to the vendor (in the present case) that the other party to the contract will not comply with its obligations. In that sense, relief is granted quia timet, as Daubney J said in Fairborne. Usually, as in the present case, the refusal would give rise to a breach of contract and indeed a repudiatory breach. But this is not necessary. All that is required is a sufficient risk of non-compliance to justify a decree.

62. [80]

    Analogies with other forms of equitable relief support this conclusion. The most obvious is the guarantor’s right of indemnity against the principal debtor. This was described by Mason CJ in Sunbird Plaza as an instance of subrogation. But later authority has described it as a stand-alone equitable doctrine, often referred to as the “equity of exoneration” (see the discussion by Edelman J, speaking for the Western Australian Court of Appeal, in Ierino v Gutta (2012) 43 WAR 372 at [27]-[39]).

63. [81]

    Ascherson v Tredegar Drydock and Wharf Co Ltd [1909] 2 Ch 401, referred to by Lord Diplock in Moschi, in the passage quoted at [35] above, as an instance of specific performance, was in fact an equity of exoneration case. The plaintiffs were the executors of a surety who had provided a guarantee in support of a bank overdraft. The plaintiffs successfully applied for orders compelling the principal debtor to pay off the overdraft. There was no contract between the surety and the principal debtor and the reasoning of Swinfen Eady J makes it clear that an independent equitable doctrine was involved.

64. [82]

    Equity intervenes in such cases because it is considered unreasonable that the surety should have “a cloud hang over him”, in the form of a potential liability to the creditor which the surety may have to satisfy and then claim back from the principal debtor (see Ascherson at 407). In that sense, relief is of a quia timet nature (In re Anderson-Berry [1928] Ch 290 per Sargant LJ at 307; see also Heydon JD, Leeming ML and Turner PG, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) at [10-035] 397.

65. [83]

    In Thomas v Nottingham Incorporated Football Club Ltd [1972] Ch 596, Goff J reviewed Ascherson and subsequent decisions, and made an order for exoneration. The significance of the case for present purposes is that no formal demand had been made by the creditor for payment, and accordingly no obligation to pay the debt had arisen on the guarantor at law. This, however, was no obstacle to the grant of relief.

66. [84]

    The decision of Goff J was referred to in a later decision of the Court of Appeal for England and Wales, Stimpson v Smith [1999] Ch 340. That was an application by a surety, not for exoneration by the principal debtor, but for contribution from another surety. Again, the Court held that it was unnecessary, before relief was granted against the other surety requiring a contribution to be paid, for a demand to be made on the plaintiff guarantor. The Court expressly approved the decision of Goff J.

67. [85]

    In my view, the analogy with exoneration and contribution, in the present context, is a close one. In each case, equitable relief is granted on a quia timet basis which does not depend on any liability existing at law. I see no reason in principle why specific performance should not be granted against the guarantor on the same basis.

68. [86]

    I do not think that the Queensland decisions to which I was referred stand in the way of this conclusion. Counsel for Mr Ryan submitted, by reference to the particular wording of the clauses, that, in each case, the obligation was, as a matter of construction, conditional upon a failure by the purchaser to complete the contract. I am not sure that in the end counsel for the defendants disputed that the cases were distinguishable on that basis.

69. [87]

    In any event, with all respect to those who may consider otherwise, I do not think that the Court is obliged, in considering whether to grant specific performance, to make it a two-stage process. I respectfully agree with Daubney J that it could be confusing, or perhaps incoherent, to order both the purchaser and the guarantor to perform the same obligation. Certainly, I think that is so for the obligation to take title and register: these obligations cannot be carried out by more than one person and, at least in the usual case, they would be decreed against the purchaser alone.

70. [88]

    However, I see no difficulty at all in making an order against both the purchaser and the guarantor requiring them both, jointly and severally, to pay the purchase price, together with contractual adjustments, on settlement. The PEXA platform allows for a purchaser’s financier to participate in the settlement so as to provide the money. As I understood it, there was no dispute before me that similar arrangements could be made for the guarantor to be a party to the settlement transaction so that, if the purchaser were unable to pay, the guarantor could make up the difference.

71. [89]

    The usual order in a specific performance case provides for a declaration which identifies the contract and declares it to be subsisting, and an order that the contract, so identified, be specifically performed and carried into effect under the supervision of the Court. In some cases, this is sufficient. But the Court retains power to give supplementary orders to the parties, usually expressed as directions, as to the manner in which the settlement is to proceed, if any doubt or dispute arises. There is of course no difficulty in making the orders at this point rather than waiting.

72. [90]

    Counsel for the plaintiff propounded a number of specific directions, including a direction as to payment of the purchase price. In the end, I did not understand counsel for the defendants to dispute that such directions were appropriate if the Court were to decide to grant specific performance. I will therefore adopt them in the orders I make.

Costs

1. [91]

   Counsel for Mr Ryan sought, in the event that he was successful, an order that the defendants pay his costs of the proceedings to date. Counsel for the defendants opposed this course. They argued that there might be further steps in the proceedings (for instance, if the order for specific performance was not complied with) and that the costs of the proceedings should be dealt with when the final outcome was clear.

2. [92]

   The declaration and order for specific performance which I have described are final orders which mark the end of the controversy about the grant of equitable relief. Although the Court retains power to give supplementary directions, or to revoke the order for specific performance to allow a damages claim to proceed, these are orders which are made as part of the working out of the substantive order for specific performance: Caird Seven Pty Ltd v Attia (No 3) (2016) 92 NSWLR 457 at [17].

3. [93]

   Had Mr Ryan maintained a claim for damages for delay in settlement, then it would have been necessary to make orders reserving that claim for later determination, presumably by way of inquiry or reference. In that event, the Court would not, by making orders for specific performance, have dealt with all of the claims made by Mr Ryan in the proceedings, and there might have been an argument that no order as to costs should be made until final orders had been made disposing of the whole case. But as that damages claim is not being pursued, the order for specific performance will dispose of all substantive claims in the proceedings.

4. [94]

   In my view, it is appropriate to make an order for costs now, in the usual way. If further directions are required, or if the order for specific performance is not complied with, and there are further proceedings as a result, then the costs of those proceedings can be dealt with at the end of those further proceedings.

5. [95]

   It was not suggested that I should do otherwise than order that costs follow the event. Any application for any special costs order may be made in accordance with the Rules.

Conclusions and orders

1. [96]

   I have concluded that orders for specific performance should be made both against UPG 322 as purchaser and (so far as payment of the purchase price is concerned) against Mr Bhushan as guarantor, on a joint and several basis. The plaintiff’s claim succeeds. The orders of the Court are:

   1. (1)

      Declare that the Contract dated 18th January 2023 for sale of land at [XX] Box Hill in the State of New South Wales, being the land comprised in Folio Identifier [XX] (the Property) between the Plaintiff as vendor, the First Defendant as purchaser and the Second Defendant as Guarantor (the Contract) is valid and enforceable.

   2. (2)

      Order that the Contract be specifically performed by the Defendants and carried into execution.

   3. (3)

      Direct the First Defendant to complete the purchase of the Property at PEXA by not later than 2:00 PM on Monday, 13 November 2023 (Settlement Date) on the PEXA Settlement Platform's Electronic Workspace ID [XX] (PEXA Workspace) in accordance with clause 30.11.2 of the Contract.

   4. (4)

      Direct the First Defendant through its conveyancer/solicitor prior to the Settlement Date to attend to verifying its Stamp Duty in the PEXA Workspace.

   5. (5)

      Direct the First Defendant through its conveyancer/solicitor to submit a Settlement Statement to the Plaintiff's Solicitor (which must account for interest required to be paid by the First Defendant pursuant to clause 36 of the Contract, and the cost of the Plaintiff issuing the Notices to Complete on the First Defendant pursuant to clause 35.4 of the Contract) two business days prior to the Settlement Date.

   6. (6)

      Direct the Plaintiff’s Solicitor to confirm the Settlement Statement one business day prior to the Settlement Date.

   7. (7)

      Direct the First Defendant through its conveyancer/solicitor prior to the Settlement Date to do all things necessary in the PEXA Workspace to ensure completion can occur on the Settlement Date, including but not limited to:

   8. (8)

      Direct the Defendants to pay the balance of the monies due under the Contract at the Settlement Date, inclusive of the balance of the purchase price, interest, and adjustment for Council rates, to the Plaintiff or as the Plaintiff directs, in return for the Plaintiff conveying title to the Property to the First Defendant through PEXA.

   9. (9)

      Order the First and Second Defendants to pay the Plaintiff’s costs of the proceedings up to, and including, the date of the making of these orders.