Generosity Beverages Pty Ltd v Mare Custodian Company Pty Ltd

By a Summons filed on 3 May 2021 the plaintiff, Generosity Beverages Pty Ltd, seeks orders in the nature of specific performance of a contract for the sale of land it entered into with the defendant, Mare Custodian Company Pty Ltd. The plaintiff is the purchaser under the contract and the defendant is the vendor. The land the subject of the contract is a vineyard located in Palmers Lane, Pokolbin. It is located across the road from a property owned by the plaintiff.

The purchase price under the contract is $2,950,000. A deposit of $295,000 that was paid by the plaintiff is held by the former solicitors of the defendant as stakeholder. The plaintiff’s claim is resisted by the defendant. It claims to have validly terminated the contract on 12 April 2021 on the basis that the plaintiff failed to complete the contract by 8 April 2021. 8 April 2021 had been nominated as the last date for completion in a Notice to Complete served by the plaintiff on 25 March 2021. By its Cross-Summons filed on 29 July 2021, the defendant seeks declarations that it validly terminated the contract and that it is entitled to recover the deposit. The plaintiff disputes the validity of the termination, essentially on the basis that the defendant was in breach of the contract and not ready, willing and able to complete.

The contract takes the form of the 2019 edition of the Law Society/Real Estate Institute standard form, supplemented by a number of additional clauses. The contract is dated 5 February 2021. The completion date is expressed to be 42 days after that date (i.e. 19 March 2021). The defendant vendor is obliged to give the purchaser vacant possession on completion. The improvements included in the sale, as recorded on the front page of the contract, are “Cellar door building, vines, fences, dams”.

The vendor’s solicitor is named as O’Brien Connors & Kennett of Dee Why; the purchaser’s solicitor is named as Dunstan Lawyers of Five Dock.

The contract provides that the conveyancing transaction is to be conducted as an electronic transaction.

Clause 7 (as amended by additional clause 36.1) provides:

Clause 9 relevantly provides:

Clause 12 relevantly provides:

Clause 15 provides:

Additional clause 33 provides:

Additional clauses 37, 39 and 40 provide:

Additional clauses 49 and 50 concern certain water rights that attach to the property and a water access licence.

The title search annexed to the contract shows no mortgage or other encumbrance over the property.

The unexecuted Asset Purchase Agreement (referred to in additional clause 40) that is annexed to the contract is stated to be between Marlor Wines Pty Ltd (a company associated with the defendant) as vendor, and Waverley Estate Wines Pty Ltd (a company associated with the plaintiff) as purchaser. The various assets that comprise the subject matter of the agreement are described in the Schedules to the agreement. They include a wine inventory, items of farm equipment, a trademark and a liquor licence.

The Asset Purchase Agreement that was actually executed on 5 February 2021 also refers to another company associated with the defendant, namely, Sun Zapper (Aust) Pty Ltd. That company was added to the agreement as a vendor “for the purpose of assigning/transferring the Trademark 1830913”.

It is common ground that the contract for sale was exchanged, and the Asset Purchase Agreement entered into, on 5 February 2021.

Requisitions on title were sent by the plaintiff’s solicitors to the defendant’s solicitors on 17 February 2021.

It is apparent from text messages exchanged between Mr Guy Fens (a director of the plaintiff) and Mr Frits Mare (a director of the defendant) that issues arose concerning the plaintiff having access to the property. On 22 February 2021 Frits Mare sent a message to Guy Fens stating that he did not want him on the property any further until settlement. On 12 March 2021 the defendant’s solicitors sent a letter to the plaintiff’s solicitors in relation to the issue. The plaintiff’s solicitors responded on 16 March 2021, and the defendant’s solicitor replied to that on 18 March 2021. It is not necessary to set out the detail of these letters. It is sufficient to note that the parties remained at odds on the matter.

On 15 March 2021 the defendant’s solicitors sent a Foreign Resident Capital Gains Tax Withholding Certificate to the plaintiff’s solicitors.

On 16 March 2021 the plaintiff’s solicitors sent a letter to the defendant’s solicitors in relation to the water access licence. It was noted that a land tax clearance certificate and replies to requisitions on title were yet to be received. Also on 16 March 2021 the plaintiff’s solicitors sent a letter to the defendant’s solicitors that included the following:

The plaintiff’s solicitors sent further letters on 17 March 2021 and 18 March 2021 in relation to matters to be attended to for the proposed settlement on 19 March 2021.

An issue arose concerning the wine located at Hunter Bottling Company and First Creek Wines. Frits Mare, who is also a director of Marlor Wines Pty Ltd, objected to a proposed stocktake of the wine. The defendant’s solicitors sent a letter to the plaintiff’s solicitors on 18 March 2021 to that effect. Later on 18 March 2021 the plaintiff’s solicitors replied, querying “how a final inspection will be conducted in accordance with clause 12.3 of the contract”. The plaintiff’s solicitors also provided a settlement adjustment sheet, and noted that replies to the requisitions on title were still outstanding.

Further settlement adjustment statements were sent by the plaintiff’s solicitors to the defendant’s solicitors later on 18 March 2021 in respect of the Asset Purchase Agreement. The plaintiff’s solicitors also sent lists of matters to be attended to by each party at the settlement, which was evidently intended to occur at 2:00pm on 19 March 2021.

However, at about 9:30am on 19 March 2021, the defendant’s solicitors sent a letter to the plaintiff’s solicitors in the following terms:

Settlement did not occur on 19 March 2021.

On 24 March 2021 the defendant’s solicitors sent a facsimile to the plaintiff’s solicitors in the following terms:

On 26 March 2021 the defendant’s solicitors revised the settlement date and time accordingly.

In the meantime, on 25 March 2021, the plaintiff’s solicitors served a Notice to Complete upon the defendant’s solicitors. The Notice to Complete was relevantly in the following terms:

On 30 March 2021 the defendant’s solicitors sent an email to the plaintiff’s solicitors stating that they were in the process of finalising the matter for settlement on 6 April 2021. That email was superseded by a further email sent by the defendant’s solicitors on 31 March 2021 which included the following:

On 1 April 2021 the plaintiff’s solicitors sent a letter to the defendant’s solicitors in the following terms:

On 7 April 2021 the defendant’s solicitors sent a letter to the plaintiff’s solicitors in the following terms:

It seems that late on 7 April 2021 the settlement date and time was revised in PEXA to 2:00pm on 8 April 2021. The revision appears to have been effected by the plaintiff’s solicitors.

Contrary to the statement made in the defendant’s solicitors’ letter of 7 April 2021, the keys were not available for collection at their office on the morning of 8 April 2021. Guy Fens had arranged for his son, Mr Jordan Fens, to collect the keys from the solicitors’ office. Jordan Fens attended there, but was informed that he would need to pick up the keys from the office of Frits Mare in Dee Why. Jordan Fens arrived there at about 9:15am. Frits Mare and Jordan Fens give conflicting accounts of what occurred thereafter, in particular in relation to the handover of the keys. It will be necessary to return to this issue later in these reasons. For now, it is enough to note that Frits Mare deposed that Jordan Fens left his office with the keys at about 11:55am, whereas Jordan Fens deposed that this occurred at about 1:00pm. It is clear that a considerable amount of time was spent that morning discussing and dealing with issues relating to the Asset Purchase Agreement, such as the transfer of a domain name and social media accounts. There was also discussion about the purchase of some additional barrels of wine not included in the existing agreement.

In the meantime, at 10:41am on 8 April 2021, the plaintiff’s solicitors sent a letter to the defendant’s solicitors in the following terms:

At 1:21pm on 8 April 2021 the defendant’s solicitors sent an email to the plaintiff’s solicitors which referred to a discussion between the solicitors on that day, and attached two documents. These documents were a Request for a Full Assignment or Transmission of a Trade Mark form, signed by Frits Mare as a director of Marlor Wines Pty Ltd and as a director of Sun Zapper (Aust) Pty Ltd, and an undertaking signed by Frits Mare on behalf of Marlor Wines Pty Ltd to reimburse Waverley Estate Wines Pty Ltd if there was any inaccuracy in stocktake numbers in respect of the wines to be transferred. The email also referred to a fee of $119 for the transfer of the domain name. It was said that the purchaser had agreed to pay that fee, and that it was to be added to the settlement adjustment sheet.

It seems that the discussion between the solicitors that is referred to in the email occurred at around 12:50pm, and concerned the further agreement that had been reached between the parties for the sale of additional wine and other property that was not the subject of the Asset Purchase Agreement.

At 2:03pm on 8 April 2021 the defendant’s solicitors sent a letter to the plaintiff’s solicitors in the following terms:

At 2:08pm on 8 April 2021, the defendant’s solicitors entered a message on PEXA in the following terms:

Frits Mare and Guy Fens had a telephone conversation shortly before 2:30pm on 8 April 2021. Mr Fens was at that time in the course of driving towards the property with the keys, intending to carry out an inspection of the property. The accounts of the conversation are in conflict. In any event, at 2:52pm Frits Mare sent an email to Guy Fens in the following terms:

At 2:57pm on 8 April 2021 the plaintiff’s solicitors sent a letter to the defendant’s solicitors in the following terms:

At about the same time that letter was sent, the defendant’s solicitors entered a message on PEXA in the following terms:

At 3:34pm on 8 April 2021, Guy Fens sent an email to Frits Mare in response to his earlier email. Mr Fens’ email was in the following terms:

At 4:04pm Guy Fens sent an email to Frits Mare in the following terms:

At 4:33pm the plaintiff’s solicitors sent a letter to the defendant’s solicitors in the following terms:

The contract for sale (and the Asset Purchase Agreement) failed to complete on 8 April 2021.

The PEXA records indicate that at no stage during 8 April 2021 was the Workspace in a Ready or Locked status before the settlement cut-off time of 5:00pm.

On 9 April 2021 the plaintiff’s solicitors sent a further letter to the defendant’s solicitors. The letter was in the following terms:

There was no communication from the defendant or its solicitors until the morning of 12 April 2021 when the defendant’s solicitors served upon the plaintiff’s solicitors a Notice of Termination in respect of the contract for sale. The notice was relevantly in the following terms:

Later on 12 April 2021, the plaintiff lodged a caveat (AQ953131) against the title to the property the subject of the contract for sale, claiming an interest pursuant to the contract. On 14 April 2021, the plaintiff’s solicitors sent a letter to the defendant’s solicitors disputing the validity of the termination. The letter referred to the Notice to Complete issued on 25 March 2021 and confirmed that the defendant did not dispute the validity of the notice. The letter went on to assert that the defendant was not entitled to rely upon the Notice to Complete to terminate the contract, including because the defendant was not ready, willing and able to complete at 3:00pm on 8 April 2021 “or at any other relevant time”. The plaintiff’s solicitors stated that the purported termination of the contract amounted to a repudiation of the contract, but the plaintiff elected to affirm the contract, and appointed 3:00pm on 16 April 2021 as the time for completion.

However, the defendant has maintained the position that it validly terminated the contract and that it is thereby entitled to forfeit the deposit. The deposit of $295,000 remains in the trust account of the defendant’s solicitors pending the outcome of these proceedings.

The central issue is whether the defendant’s Notice of Termination given on 12 April 2021 was effective to terminate the contract for the plaintiff’s breach. The termination was based upon the failure of the plaintiff to complete the contract on 8 April 2021. That failure is alleged to be a breach of the contract in an essential respect because the Notice to Complete served by the plaintiff, which called for completion to occur on or before 8 April 2021, made time of the essence in that respect.

As the contract was not completed by the completion date of 19 March 2021, the plaintiff was entitled to serve a Notice to Complete (see cl 15). There is no suggestion that the plaintiff was not so entitled. The notice it served on 25 March 2021 required completion within 14 days of that date, and thus complied with Additional Clause 33 of the contract. After service of the notice, no challenge was made to its validity, and the parties proceeded in a manner consistent with the notice being valid. In these proceedings, neither party suggested that the notice was not effective to make time of the essence in respect of completion by 8 April 2021.

It is well settled that a valid Notice to Complete issued in respect of a contract for the sale of land binds both parties to the contract (see Falconer v Wilson [1973] 2 NSWLR 131 at 143; Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) 18 BPR 35,759; [2016] NSWCA 32 at [39]). Further, under a contract for the sale of land, the obligations of the parties in respect of completion are regarded as interdependent and concurrent, such that a failure to perform is not generally regarded as a breach unless the other party has itself tendered performance (see Michael Realty Pty Ltd v Carr [1977] 1 NSWLR 553 at 571; Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41 at 48; Sharjade Pty Ltd v Commonwealth (2009) 15 BPR 28,443; [2009] NSWCA 373 at [55]).

In the present case, the plaintiff apparently accepts that it failed to perform its obligations in respect of completion by 8 April 2021, but contends that the defendant was in various ways in breach of the contract or otherwise not ready, willing and able to complete by 8 April 2021.

The plaintiff contends that by failing to hand over the keys to the property in a timely fashion, the defendant breached its obligation under cl 12.3 of the contract to enable the plaintiff to make an inspection of the property in the 3 days before the time appointed for completion. The plaintiff further says that this conduct of the defendant was a default that materially contributed to the failure of the plaintiff to complete within the stipulated time (see Abourjaily v Parkview Estate Pty Ltd [2017] NSWSC 1256 at [21]-[28]; see also Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (supra) at [58]). It was thus submitted that it was not open to the defendant to rely upon that failure to exercise the right of termination under cl 9 of the contract (see Sentinel Orange Homemaker Pty Ltd v Davis Investment Group Holdings Pty Ltd (in liquidation) (2021) 20 BPR 41,487; [2021] NSWSC 550 at [65]-[67]).

The plaintiff further contends that the defendant, by its conduct, showed itself not to be ready, willing and able to complete. In this regard, the plaintiff pointed to:

I will deal first with the conduct of the defendant concerning the handing over of the keys to the property. As mentioned earlier (at [33]), Frits Mare deposed that Jordan Fens left his office with the keys at about 11:55am, whereas Jordan Fens deposed that this occurred at about 1:00pm. In cross-examination, Jordan Fens said that the keys were given to him between about 12:30pm and 12:50pm. He further said, by reference to his telephone records, that at 12:50pm he was in his car after having left Mr Mare’s office in Dee Why. He said that he was travelling toward North Sydney.

I think it is likely that Jordan Fens left the office with the keys at about 12:45pm as he said, rather than at about 11:55am as claimed by Mr Mare. Jordan Fens was in frequent telephone contact with Guy Fens throughout the day, and I note that Guy Fens stated in an email sent to Mr Mare at 3:34pm that the keys had been handed over at 1:00pm. I infer that Guy Fens had been informed by Jordan Fens that the keys had been handed over around that time. In any event, I do not think that much turns on whether Jordan Fens left with the keys at about 11:55am or at about 12:45pm.

By cl 12.3 of the contract, the defendant was obliged to do everything reasonable to enable the purchaser to conduct an inspection of the property in the three days before a time appointed for completion. On 1 April 2021, the plaintiff’s solicitors informed the defendant’s solicitors that the plaintiff proposed to undertake a final inspection of the property at 12 Noon on 8 April 2021. That date had, by then, been appointed for completion to occur. The defendant’s solicitors’ letter of 7 April 2021 indicated that the keys to the property would be made available to the plaintiff on the morning of 8 April 2021 at the solicitors’ office for the purpose of undertaking a final inspection. However, the keys were not at the solicitor’s office when Jordan Fens attended there early on the morning of 8 April 2021. He was directed to instead collect the keys from Mr Mare’s Dee Why office. Jordan Fens arrived there at about 9:15am.

Had Jordan Fens obtained the keys and left with them at about that time, he could have had the keys at the property well in time for an inspection to occur at Noon. However, Jordan Fens remained at the office and engaged in various discussions with Mr Mare until about 12:45pm. The discussions ranged across numerous subjects, including the effecting of transfers of a domain name and social media accounts, and the negotiation of a further agreement to transfer property that was not the subject of the Asset Purchase Agreement.

The general tenor of Jordan Fens’ account is that these discussions occurred at the insistence of Mr Mare, who was not prepared to part with the keys until various matters were resolved to his satisfaction. Mr Mare, on the other hand, suggests that these matters (in particular the transfer of a domain name and social media accounts, and the negotiation of a further agreement) were raised by Jordan Fens. I do not think it is necessary to resolve that particular controversy. I am satisfied that, whoever initiated the various discussions, they were freely and voluntarily engaged in by both Mr Mare and Jordan Fens. It is further apparent that Guy Fens, who had a number of telephone conversations with Jordan Fens (including a 7 minute conversation from 10:44am and a 14 minute conversation from 11:45am), was aware that such discussions were taking place. In these circumstances, I do not accept the suggestion that Jordan Fens only participated in the discussions because it was necessary to do so in order to obtain the keys to the property. It was to the plaintiff’s benefit to deal with the practicalities involved in the transfers of the domain name and social media accounts, and it is evident from the discussion about the purchase of additional vats of wine that the plaintiff wanted to reach an agreement to that effect. Guy Fens accepted in cross-examination that he wanted to have those additional vats. It was open to the plaintiff to terminate the discussions at any time and, if necessary, demand the keys in order to facilitate the carrying out of the final inspection. I infer that the plaintiff chose, in its own interests, not to do so. As I have said, at the conclusion of the various discussions, the keys were made available to Jordan Fens, who left the Dee Why office with them at about 12:45pm.

I am not prepared to find that the defendant’s conduct concerning the handing over of the keys amounted to a breach of cl 12.3 of the contract. The delay in the actual handing over of the keys on 8 April 2021 was not the result of a refusal on the part of the defendant to make the keys available; it was the result of the intervention of the discussions between Mr Mare and Jordan Fens, which were freely engaged in by both parties. Moreover, whilst the handing over of the keys at about 12:45pm rendered it practically impossible to employ the keys as part of an inspection to be carried out before the then scheduled settlement time of 2:00pm, it remained possible to employ the keys as part of an inspection to be carried out well prior to 5:00pm. That is demonstrated by what actually occurred on 8 April 2021.

Jordan Fens drove to Ourimbah and there gave the keys to his father shortly after 2:00pm. Guy Fens gave evidence that he arrived at Palmers Lane, Pokolbin at about 3:15pm. He and others proceeded to conduct an inspection of the property. It appears from emails sent by Guy Fens to Mr Mare that the inspection was in progress at 3:34pm, and by 4:04pm the inspection had “just now” been completed.

It seems that the inspection may have in fact been completed by about 3:45pm. The plaintiff’s solicitors’ letter sent at 4:33pm contains a statement to that effect. Guy Fens accepted in cross-examination that the letter had been written on his instructions. The statements contained in the emails and letter sent on the afternoon of 8 April 2021 are likely to be reasonably accurate. I note further that in his affidavit of 2 May 2021, Guy Fens stated that he sent his 4:04pm email after having conducted the final inspection of the property.

I do not accept the evidence given by Guy Fens in cross-examination that the inspection was only partially complete by 4:04pm. I note in this regard that the letter sent by the plaintiff’s solicitors at 10:41am on 8 April 2021 suggests that only about half an hour may have been required for the final inspection. I also note that no request was made for any additional time to complete the inspection.

It is clear from the email sent at 4:04pm that Guy Fens, based on the inspection that occurred, was not prepared to settle unless the defendant attended to certain matters first. He conceded in cross-examination that this was his view at the time. Furthermore, it is evident from the plaintiff’s solicitor’s letter sent at 4:33pm that the plaintiff, having stated that it had completed the final inspection, considered that the defendant was “still not ready, willing and able to complete the sale”. In that regard, the plaintiff was relying upon the matters stated in the 4:33pm letter as well as the matters stated in the earlier letter sent at 2:57pm. In his affidavit of 11 June 2021, Guy Fens deposed that on the basis that the defendant was apparently not ready, willing and able to settle, he instructed the plaintiff’s solicitors “not to sign off on the PEXA workstation to be completed pending the vendor advising that it was ready, willing and able to settle”.

The evidence does not reveal any reason why the plaintiff could not have proceeded to complete the contract for sale by the PEXA settlement cut-off time of 5:00pm on 8 April 2021. It seems that the necessary funds (including those required for stamp duty) were available. Guy Fens said in cross-examination that “he” was ready, willing and able to settle on that day.

However, the plaintiff’s solicitors did not respond to the defendant’s solicitor’s PEXA message sent at 2:08pm, and thereafter maintained that the defendant was not ready, willing and able to complete. Consistently with the plaintiff’s instructions, they did not take steps to “sign off on the PEXA workstation”. In my opinion, the failure of the plaintiff to complete the contract for sale on 8 April 2021 was the result of the plaintiff’s deliberate decision not to proceed to completion. It was not the conduct of the defendant concerning the handing over of the keys. I do not think that it can be said that such conduct materially contributed to the plaintiff’s failure to complete. The conduct did not deprive the plaintiff of a substantial chance to complete the contract for sale on 8 April 2021.

I turn now to consider the matters referred to at [56] above, which are relied upon by the plaintiff as showing that the defendant was itself not ready, willing and able to complete the contract for sale on 8 April 2021. For convenience, I will set those matters out again as follows:

The matter in (a) above can be dealt with briefly. The assignment of the trademark was the subject of the Asset Purchase Agreement, not the contract for sale of land. It was not shown that execution of a Deed of Assignment, as sought by the plaintiff, was required under the Asset Purchase Agreement. Nor was it shown that what was proposed by the defendant, namely, a Request for Assignment of Trademark form which has a Letter of Assignment attached, was not in accordance with that agreement. Moreover, in circumstances where Additional Clause 40 of the contract for sale states that the items the subject of the Asset Purchase Agreement do not form part of the contract for sale, and where the parties to the two contracts differ, I do not think that any breach of the Asset Purchase Agreement can itself amount to a breach of the contract for sale. That is so even if it was contemplated that settlement of both contracts would occur at the same time, with payment pursuant to the Asset Purchase Agreement also to occur on PEXA.

As for the matter in (b) above, it is true that Mr Mare, in his email to Guy Fens at 2:52pm on 8 April 2021, stated that he wanted $10,119 transferred into an account “prior to settlement which is to occur at 3pm”. That sum consisted of:

However, it is clear from Mr Mare’s email that he regarded the agreement made earlier that day as a “side agreement” that would not “disrupt and/or delay the property and asset purchase settlement”. In that regard, I accept the evidence given by Mr Mare in his affidavit to the effect that he told Jordan Fens that it was “a totally separate side deal from the settlement today”. I also accept his denial, given in cross-examination, that unless the $10,119 was paid he was not going to allow settlement to go through. In these circumstances, I do not see how the demand for $10,119 can be considered to be in any way contrary to the defendant’s obligations under the contract for sale, or indicative of a lack of readiness, willingness or ability to complete that contract.

As for the matter in (c) above, it is clear that the email sent by the defendant’s solicitors at 1:21pm on 8 April 2021 referred to a fee of $119 that would be payable by the defendant upon transfer of a domain name to the plaintiff. It was further stated that the plaintiff had agreed to pay the charge, and that the amount was to be added to the settlement adjustment sheet. Shortly thereafter, the defendant’s solicitors added $119 to the FSS in PEXA. This was referred to in the message entered on PEXA at 2:08pm.

When regard is had to the documents attached to the email sent at 1:21pm, and to the earlier correspondence between the solicitors, it is likely that the $119 fee referred to related to the domain name (www.waverleyestate.com.au) which was the subject of the Asset Purchase Agreement, rather than the additional domain name (www.waverleywines.com) which was the subject of the further agreement reached on 8 April 2021. If that is so, and if the plaintiff had agreed to pay the fee, it would have been appropriate for the amount to be added to the FSS. As already mentioned, Additional Clause 40 contemplated that payment pursuant to the Asset Purchase Agreement would occur on PEXA at the time of settlement of the contract for sale of land.

If the plaintiff had not agreed to pay the fee, and was not prepared to do so, it would have been open to the plaintiff’s solicitors to respond to the defendant’s solicitors accordingly. However, as was made clear by the evidence of the defendant’s solicitor, Ms Nicole Davis, the plaintiff’s solicitors did not respond to her on 8 April 2021 in relation to the $119 fee or to her request to balance the FSS for settlement. In these circumstances, the addition of the $119 to the FSS cannot be considered either a breach of the contract for sale or indicative of a lack of readiness, willingness or ability on the part of the defendant to complete that contract.

It also follows from the above that the complaint made by the plaintiff, as referred to in (d) above, cannot be sustained.

I turn to (e) above. The plaintiff complains that the inspection on 8 April 2021 revealed that a mirror and counter had been removed from the “cellar door” area of the vineyard. Both items are claimed to be fixtures, and hence part of the subject matter of the contract for sale. Guy Fens deposed, in relation to the mirror, that the “fixture holes” were poorly repaired. In relation to the counter, he deposed that a residue of “glue marks” remained on the floor. These matters are referred to in the email sent by Guy Fens at 4:04pm on 8 April 2021 and the plaintiff’s solicitors’ letter sent at 4:43pm. The plaintiff also complains that the cellar door area was filthy, that considerable rubbish and waste had been left on the property, and that a grassed area near the cellar door had been damaged. Most of the abovementioned matters are depicted at least to some extent in photographs that accompanied the letter sent by the plaintiff’s solicitors on 9 April 2021.

Mr Mare deposed:

Mr Mare further deposed:

I accept the evidence given by Mr Mare that is referred to above. I also accept his evidence in cross-examination about those matters. This includes: his evidence concerning the counter (referred to as the “cellar bar”) and his denial that it had been glued to the tiles; his evidence concerning the cleanliness of the cellar door area; and his evidence about items left at the property.

I conclude that neither the mirror nor the counter was a fixture. As neither was stated to be an inclusion in the sale, the defendant was entitled to remove those items.

Further, even assuming that the plaintiff was entitled to complain about the state of cleanliness, items of rubbish, or the state of the grassed area, the extent of such deficiencies was not shown to be anything other than relatively minor. Those matters plainly did not amount to an inability on the part of the defendant to give, or a failure on the part of the defendant to provide, vacant possession of the property. The deficiencies were not such as to give rise to a substantial prevention or interference with the enjoyment of the property or a substantial part of it (see Cumberland Consolidated Holdings Ltd v Ireland [1946] 1 KB 264 at 271; Point Glebe Pty Ltd v Lidofind Pty Ltd (1988) 5 BPR 11,427). In my view, the state of the property as at the time of the final inspection on 8 April 2021 was not such as to indicate any lack of readiness, willingness or ability on the part of the defendant to complete the contract for sale on that day.

It should be added that it would have been open to the plaintiff to make a claim under cl 7 of the contract in respect of the mirror and counter, and the other matters complained of. For claims not exceeding 5% of the price (i.e. not exceeding $147,500), cl 7 contains a procedure whereby the contract is completed, with the amount claimed held by the depositholder pending the determination of the claim. The plaintiff instead chose to rely upon the matters complained of as a reason not to proceed to completion.

The final matter to consider is (f) above, namely, the failure of the defendant to respond to the plaintiff’s solicitors letters sent at 2:57pm and 4:33pm on 8 April 2021.

The earlier letter is mainly directed to issues arising under the Asset Purchase Agreement, but does refer to cl 12.3 of the contract and the final inspection which was still to occur. The later letter is directed to matters said to arise from that inspection. As I have found, those matters did not in fact indicate a lack of readiness, willingness or ability on the part of the defendant to complete the contract on 8 April 2021. Moreover, in circumstances where the plaintiff, through its solicitors, had not responded to the requests made by the defendant’s solicitors (at 2:08pm and 2:57pm) to balance the FSS for settlement, and urgently attend to settlement, the mere failure of the defendant to respond to the plaintiff’s solicitors letters does not indicate that the defendant was not ready, willing and able to complete the contract.

In my view, the various matters relied upon by the plaintiff, whether viewed individually or cumulatively, do not establish that the defendant, by its conduct, showed itself not to be ready, willing and able to complete the contract on 8 April 2021. Indeed, I am satisfied on the whole of the evidence, including the evidence given by Ms Davis, and the evidence given by Mr Peter Rosier concerning the operation of the PEXA system, that the defendant was relevantly ready, willing and able to complete the contract on 8 April 2021 (see Psaltis v Schultz (1948) 76 CLR 547 at 560). I accept the evidence of Ms Davis, including her evidence to the effect:

The defendant was not obliged to do more than it actually did in preparation for settlement of the contract for sale. The $119 added to the FSS by Ms Davis was not an amount that would be payable under the contract for sale, so even if the plaintiff had not agreed to pay it, or if the plaintiff was unwilling to pay it, a dispute about the payment would not be a reason why completion of the contract for sale should not proceed. The evidence of Mr Rosier was clear that it was not uncommon for issues in relation to the FSS to be resolved quite close to an agreed settlement time. Had the plaintiff engaged with the defendant about the FSS following completion of the final inspection, there would have been ample time to deal with the matter to enable a settlement to occur at either 4:30pm or 5:00pm. However, the plaintiff did not engage with the defendant about the FSS, taking the erroneous position that the defendant was required to attend to certain matters before the plaintiff would settle.

For the above reasons, it is my opinion that the failure of the plaintiff to complete the contract on 8 April 2021, the time for which was made essential by the plaintiff’s Notice to Complete, was a breach of the contract in an essential respect. The defendant was therefore entitled under cl 9 of the contract to terminate the contract by serving a notice. The defendant did that on 12 April 2021.

The plaintiff submitted that the Notice of Termination was itself invalid because it referred in its recitals to the Asset Purchase Agreement which, it was submitted, is neither part of the contract for sale nor related to the contract for sale. Whilst it was not necessary for any reference to be made to the Asset Purchase Agreement, I do not think that the references to it in the recitals renders the notice invalid. The notice, read as a whole, makes it clear that the defendant was terminating the contract pursuant to cl 9 by reason of the plaintiff’s failure to complete the contract within the period nominated for completion by the Notice to Complete (i.e. by 8 April 2021). The notice was a valid notice for that purpose.

Upon the exercise of the right of termination pursuant to cl 9, the defendant became entitled to recover the deposit of $295,000 (see cl 9.1). The defendant should have declaratory relief to that effect as sought in its Cross-Claim. The plaintiff’s claim for specific performance of the contract must be dismissed, and an order will be made for the withdrawal of its caveat. The Court will further order that the plaintiff/cross-defendant pay the defendant/cross-claimant’s costs of the proceedings.

I should note that the plaintiff, in its closing submissions, sought to raise an argument that if it were unsuccessful on its claim for specific performance, an order should be made for relief against forfeiture or, in the alternative, an order should be made under s 55(2A) of the Conveyancing Act 1919 (NSW) for the return of the deposit. The plaintiff made an application to introduce a claim under s 55(2A) of the Conveyancing Act at the commencement of the hearing. That application was opposed by the defendant and was refused. I agree with the submission made by the defendant that it was too late in closing submissions to seek to reintroduce such a claim, and to seek to introduce a claim for relief against forfeiture. Accordingly, the submissions made in support of such claims have not been entertained.

The Court will make the following orders: