Sandpiper Kooragang Pty Ltd v Fortis Products Pty Ltd

By its Amended Statement of Claim filed in Court on 1 September 2020, the plaintiff, Sandpiper Kooragang Pty Ltd, seeks orders in the nature of specific performance of a contract for the sale of certain land at Kooragang owned by the defendant, Fortis Products Pty Ltd. The contract was entered into on 17 January 2020 when a call option granted by the defendant was exercised. The plaintiff was nominated to be the purchaser under the terms of the call option.

The central issue for determination is whether the defendant’s purported termination of the contract on 24 March 2020 is valid. The defendant served a Notice of Termination on that day based upon the failure of the plaintiff to comply with a Notice to Complete. The defendant had served the Notice to Complete on 4 March 2020. It called for completion of the contract to occur on the PEXA platform by no later than 2:00pm on 20 March 2020.

The plaintiff contends that the Notice to Complete was itself invalid on the basis that at the time of service the defendant was neither free of relevant default, nor in a position to perform its obligations as and when required to be performed up to and including the time fixed for completion. The plaintiff contends that even if the Notice to Complete was valid, and thus effective to make time of the essence for completion of the contract, the defendant was not ready, willing and able to perform its obligations under the contract at the time fixed for completion. It was further contended that the defendant, by its conduct, should be taken to have waived any right to insist that the time for completion was essential. It was submitted that for these reasons the defendant was not entitled to terminate the contract for the plaintiff’s failure to complete within the time stipulated by the Notice to Complete. It is not in dispute that the plaintiff was not itself in a position to complete the contract on 20 March 2020.

In brief, the plaintiff challenges the validity of the Notice to Complete on grounds:

The plaintiff contends that the defendant was not ready, willing and able to perform its obligations on 20 March 2020 in the following respects:

The defendant contends that the Notice to Complete it served was valid and effective to make time of the essence for completion. The defendant submitted that even if the contract contained the prescribed warranty, and even if it was breached, it was not relevant to completion and hence did not prevent the defendant from serving a Notice to Complete. The defendant submitted that the fact that the land tax in respect of the property had not been paid did not preclude service of a Notice to Complete as the land tax could be paid on settlement. The defendant denied that it was not ready, willing and able to complete on 20 March 2020. It was submitted that the defendant could have settled on that day, and that any failures to comply with the contract were the result of failures by the plaintiff to so comply. It was contended that by its conduct the plaintiff impliedly intimated that it would be useless for the defendant to tender performance. It was further denied that there was any waiver of essentiality in respect of time for completion. The defendant submitted that it validly terminated the contract due to the failure of the plaintiff to complete on 20 March 2020, and is thus entitled to recover the deposit.

Against that, the plaintiff also advanced a claim for relief against forfeiture, and a claim under s 55(2A) of the Conveyancing Act 1919 (NSW) for the return of the deposit.

The contract was made upon the exercise of a call option pursuant to a Call Option Deed between the defendant as Grantor and Painted Steel Technologies Pty Ltd (“PST”) as Grantee. The plaintiff was nominated by PST to be the purchaser. By cl 4.3 of the Call Option Deed the relevant contract for sale of the property was formed, and became binding on the parties, on the valid exercise of the option. Clause 4.4 provided that upon exercise of the call option the defendant was obliged to provide an executed copy of the contract to PST or its solicitor within 14 days.

The Contract for Sale consists of the 2018 edition of the Law Society/Real Estate Institute standard form, together with a number of Special Conditions. By Special Condition 1.1 it is provided that in the event of any inconsistency between the Special Conditions and the printed clauses, the Special Conditions apply to the extent of the inconsistency.

The purchase price for the property is $3 million, with a deposit of $300,000. The deposit was paid and is held by the defendant’s solicitors, Marsdens, as stakeholder. Kain Lawyers was named in the contract as the purchaser’s solicitors.

The date for completion is stated to be “One (1) month”. This should be read as providing for completion to occur 1 month from the making of the contract. Whilst the contract has been dated 14 January 2020, the contract was not made until the option was exercised on 17 January 2020 by the service of the required documents. It appears that the documents were served by facsimile to the Grantor’s solicitors, as permitted by the Call Option Deed (see cll 4.2 and 7.1). In these circumstances, the contractual date for completion was 17 February 2020. Clause 15 of the contract provides that:

By Special Condition 12.1 it is provided that:

The contract provides that it is a proposed electronic transaction, such that the provisions of cl 30 apply. It is further provided that land tax is adjustable. Adjustments are dealt with in cl 14, which relevantly provides:

Clause 16 relevantly provides:

Clause 24.4 relevantly provides:

Special Condition 2.1 provides:

Clause 30 relevantly provides:

Clause 31 of the contract provides:

Marsdens, as solicitors for the vendor, created a workspace on the PEXA platform on 11 February 2020. On the same day, Marsdens issued an invitation to Kain Lawyers to join the workspace for the “Incoming Proprietor”.

On 12 February 2020 Marsdens sent a land tax certificate to Kain Lawyers. The certificate, issued under s 47 of the Land Tax Management Act 1956 (NSW), stated that the property had a taxable land value of $1,050,000. The certificate (both the Purchaser Copy and the Vendor Copy) included the following:

The Vendor Copy also included the following:

The Important Information sections of the certificate included the following:

The contractual date for completion, namely 17 February 2020, came and went.

On 18 February 2020 Marsdens sent a letter to Kain Lawyers that enclosed the contract for sale executed by the defendant. Kain Lawyers had earlier made it known that the plaintiff’s financiers would not be able to proceed without that signed contract.

On 27 February 2020 Kain Lawyers joined the PEXA workspace as Incoming Proprietor.

Marsdens had suggested in their letter of 18 February 2020 that settlement take place on 28 February 2020. Marsdens also stated that if settlement did not occur by then, the defendant reserved the right to issue a Notice to Complete.

Settlement did not take place by 28 February 2020, and on 4 March 2020 Marsdens served a Notice to Complete upon the plaintiff. The notice included the following:

Earlier on 4 March 2020 Kain Lawyers had sent a letter to Marsdens in which a complaint was made about the form of the signed contract that had been provided on 18 February 2020. It was stated that the plaintiff reserved the right to seek an extension of time to settle “until 30 days after receipt of a validly signed and dated Contract of Sale”. It was further stated that the plaintiff should be able to settle by 27 March 2020.

On 13 March 2020 the plaintiff retained new solicitors, SWS Lawyers, to act on the purchase. By letter to Marsdens dated 13 March 2020, but not sent until 16 March 2020, SWS Lawyers challenged the validity of the Notice to Complete and requested that it be withdrawn immediately. It is not necessary to set out the details of the letter.

Marsdens responded by letter on 17 March 2020, maintaining that the Notice to Complete was valid, and reserving the defendant’s rights “to enforce the Notice to Complete which we note requires settlement on 20 March 2020 (time being essential)”.

By letter dated 17 March 2020, but not sent until the morning of 18 March 2020, SWS Lawyers responded. Their response included the following:

On 19 March 2020 (at 4:24pm) SWS Lawyers sent a letter to Marsdens which included the following:

Ms McDonald of SWS Lawyers sent an email to Mr Wong of Marsdens at 4:38pm on 19 March 2020 in the following terms:

Mr Wong deposed that on 19 March 2020 he had a telephone conversation with Ms McDonald in the course of which he told her that he had requested Kain Lawyers to withdraw and would invite SWS. Mr Wong made a note of the conversation. It is evident from the note that there was also some discussion about the Notice to Complete and whether the plaintiff would be settling on 20 March 2020. The note does not record the exact time the conversation occurred.

A few minutes after Ms McDonald had sent her email at 4:38pm, Marsdens issued an invitation to SWS Lawyers to participate in the PEXA workspace as Incoming Proprietor, and requested that Kain Lawyers withdraw accordingly. It seems that SWS Lawyers joined the workspace at 4:45pm, and Kain Lawyers withdrew at 5:12pm. (The PEXA record in evidence shows the times in AEST, but AEDT was the standard applicable at all relevant times.)

Ms McDonald deposed that at about 5:00pm on 19 March 2020 she had a telephone conversation with Mr Wong which included words to the following effect:

There is no dispute that there was a telephone discussion concerning such a clearance certificate. However, Mr Wong deposed that he said words to the following effect:

Mr Wong gave evidence that after his discussion with Ms McDonald he had one of his staff make an application to the Australian Taxation Office for a clearance certificate. The clearance certificate was received on 25 March 2020.

At 6:38pm on 19 March 2020 Ms McDonald uploaded a letter to the Revenue NSW portal requesting an urgent assessment of stamp duty in light of the fact that a Notice to Complete had issued “requiring settlement at 2:00pm tomorrow”. Ms McDonald made strenuous efforts to obtain a stamp duty assessment over the course of 20 March 2020, but notification of the assessment decision was not received by her until 5:09pm on that day. That was just after the “settlement cut-off time” in the PEXA platform.

Ms McDonald was also very busy dealing with many other aspects of the transaction. In the very early morning of 20 March 2020 (at 12:14am) she sent a letter to Marsdens in the following terms:

At 7:18am on 20 March 2020 Mr Wong sent an email to Ms McDonald in the following terms:

Ms McDonald replied at 7:30am as follows:

At 10:03am Ms McDonald sent an email to Mr Wong which attached certificates under s 603 (of the Local Government Act 1993) and s 47 (of the Hunter Water Act 1991). The email included the following:

At 10:23am Mr Wong sent an email to Ms McDonald in the following terms:

At 10:30am Ms McDonald sent an email to Mr Wong which attached a settlement statement. The email was in the following terms:

At 12:26pm Ms McDonald sent an email to Mr Wong in the following terms:

It will be recalled that the Notice to Complete stipulated that completion must occur by 2:00pm on 20 March 2020. At 1:34pm Mr Wong sent an email to Ms McDonald in the following terms:

Almost simultaneously, at 1:35pm, Ms McDonald sent a lengthy email to Mr Wong which included the following:

At 1:41pm Ms McDonald responded to Mr Wong’s 1:34pm email. Her response was in the following terms:

Ms McDonald sent another email at 1:53pm in which she queried the accuracy and basis of the defendant’s interest calculation.

At 2:06pm (after the expiry of the time fixed by the Notice to Complete) Ms McDonald sent an email to Mr Wong in the following terms:

Mr Wong responded at 2:35pm by email in the following terms:

At 3:15pm Ms McDonald sent an email to Mr Wong stating that she would seek instructions.

At 3:50pm Ms McDonald sent an email to Mr Wong in the following terms:

At 4:14pm Mr Wong sent an email to Ms McDonald that attached a copy of the front page of the contract. Mr Wong stated that that was all he had.

The last email of the day was sent at 5:34pm by Ms McDonald to Mr Wong. This was after the settlement cut-off time in the PEXA platform. Ms McDonald confirmed that stamp duty had been assessed. Her email continued:

As already mentioned, it was not disputed that the plaintiff was not itself in a position to settle on 20 March 2020. Apart from the stamp duty issue, it is clear that at least part of the funds it required to settle did not become available on that day.

On 23 March 2020 Ms McDonald sent an email to Mr Wong requesting a response to the email she sent at 5:34pm on 20 March 2020. It appears that there was no response to that email.

On 24 March 2020 Marsdens served a Notice of Termination upon the plaintiff in the following terms:

Clause 15 of the contract provides that the parties must complete by the date for completion and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so. It is clear that the parties did not complete by 17 February 2020. It was thus open to the defendant to issue a Notice to Complete on 4 March 2020 if it was “otherwise entitled to do so”.

A party to a contract for sale is generally entitled to serve a Notice to Complete after the contractual date for completion has passed provided the party is an innocent party not relevantly in default, and ready, willing and able to perform its obligations as and when they are required to be performed up to and including completion (see McNally v Waitzer [1981] 1 NSWLR 294 at 296-7 and 303-304; Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202 at [20]-[27]; Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) 18 BPR 35,759; [2016] NSWCA 32 at [33]-[35]). In Carrapetta v Rado (supra) Barrett JA (with whom Beazley P and Hoeben JA agreed) stated at [27]:

In the present case, the plaintiff contended that the defendant was relevantly in default or in breach as at 4 March 2020 because it was in breach of a warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Conveyancing (Sale of Land) Regulation 2017 (“the Regulation”). The plaintiff further contended that the defendant was not as at 4 March 2020 ready, willing and able to proceed to completion because it was not in a position to comply with its obligations in relation to the removal of the charge for land tax and the provision of a certificate to that effect.

Before dealing with those contentions it is necessary to say something about the onus of proof. Each party submitted that the other bore the onus of proof. The plaintiff submitted that the defendant had the onus of showing that its Notice to Complete was valid; the defendant submitted that the plaintiff, as a party asserting a claim for specific performance, had the onus.

In my opinion, the defendant bears the onus of showing that the requirements for the service of a valid Notice to Complete were met. It is true that the plaintiff is the moving party seeking to enforce the contract for sale. It asserts the existence of a contract (which both parties accept was made) of a type that is susceptible of specific enforcement, and says that in the circumstances orders in the nature of specific performance should be made. However, in opposing the claim, the defendant alleges that it exercised a right to terminate the contract based on the plaintiff’s failure to comply with the Notice to Complete it served. That allegation rests in part upon the assertion that the Notice to Complete was validly served, and thus effective to make time for completion of the contract essential. As a matter of principle, a party seeking to rely upon the validity of a Notice to Complete (whether as a plaintiff or as a defendant) bears the onus of establishing that fact. That conclusion is in accordance with established authority including McNally v Waitzer (supra) at 296 per Reynolds JA (which has been followed, for example, in Lavery v Nelson (1983) 3 BPR 9211 and K & K Real Estate Pty Ltd v Adellos Pty Ltd (in liquidation) [2010] NSWSC 1212 at [16]) and HG & R Securities Pty Ltd v Sayer [2009] NSWSC 427 at [104]. Moreover, it is consistent with the statements made in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 640 (Mason CJ) and 647 (Brennan J) in relation to proof that the time fixed by a Notice to Complete is reasonable.

The first matter to consider is whether the defendant was relevantly in default or breach at the time it served the Notice to Complete. In that regard, the plaintiff claims that the defendant was in breach of the warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Regulation. The warranty is in the following terms:

There is no dispute that the land the subject of the contract for sale contains some buildings that were erected without planning approval. It further appears that that fact was not disclosed in the contract for sale.

An issue arises at the outset as to whether the prescribed warranty is included within the contract for sale. The prescribed warranty does not apply in relation to certain types of contract (see Conveyancing Act, s 52A(5)(b), and cl 11(1) of the Regulation). In particular, the warranty does not apply to contracts of the type that fall within Parts 1 and 2 of Schedule 4 of the Regulation.

In the present case, I am of the view that, as submitted by the defendant, the contract falls within cl 9 of Part 2 which concerns certain contracts arising from the exercise of an option. The plaintiff submitted that the contract did not fall within that exclusion because not all of the prescribed documents were attached to the option; in particular, a copy of a plan for the land issued by the Registrar-General (see cl 3 of Schedule 1 of the Regulation), and a copy of Deposited Plan 1109907 which is a plan of proposed easements (see cl 4 of Schedule 1 of the Regulation). However, a copy of Deposited Plan 771353 showing the relevant lot (Lot 116) was attached to the option, and Deposited Plan 1109907 is not an instrument that creates or purports to create any easements so as to fall within cl 4 of Schedule 1. Accordingly, I am not satisfied that the warranty prescribed by cl 1(d) of Schedule 3 Part 1 of the Regulation formed part of the contract between the plaintiff and the defendant.

In any event, it seems to me that even if the contract contained the warranty, and even if the defendant was in breach of the warranty, any such breach or default would not be of a character that would disentitle the defendant from issuing a Notice to Complete.

Notwithstanding the seemingly unqualified nature of the statement made by Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at 299, it is well-established that not every breach of contract by a party will preclude the party from issuing a valid Notice to Complete. Breaches that are minor or trivial, or are not connected with the securing of completion of the contract, will not so preclude the party in breach (see McNally v Waitzer (supra) at 300-301 per Hutley JA; Collingridge v Sontor (1997) 141 FLR 440 at 447-8; HG & R Securities Pty Ltd v Sayer (supra) at [98]).

In my opinion, a breach of the warranty prescribed by cl 1(d) of Schedule 3 Part 1 is not a breach that is relevantly connected with the securing of the completion of the contract. First, completion of the contract is not expressed to be conditional upon whether the warranty was breached; secondly, the warranty does not oblige the vendor to do anything on or prior to completion; and, thirdly, by reason of the operation of ss 52A(6) and 52A(7) of the Conveyancing Act and cl 17 of the Regulation, the only remedy given to the purchaser for breach of the warranty is rescission of the contract.

In Szanto v Bainton [2011] NSWSC 278 White J (as his Honour then was) considered the similar warranty prescribed by the Conveyancing (Sale of Land) Regulation 2010 (NSW). After noting (at [39]) that the mere possibility that a statutory power to enter and do work on the property would not be a defect in title, his Honour stated in relation to the warranty (at [44]):

That part of his Honour’s judgment was cited by Sackar J in Raphael Shin Enterprises Pty Ltd v Waterpoint Shepherds Bay Pty Ltd [2014] NSWSC 743 at [147]-[150].

I respectfully agree that breach of a warranty of this kind does not have the consequence that the vendor is unable to proceed to completion. Moreover, it is not a breach that relevantly bears upon the obligations of the parties with respect to proceeding to completion of the contract. In my opinion, the existence of such a breach does not preclude the vendor from serving a valid Notice to Complete.

Before leaving this topic it should be noted that a deal of evidence was adduced going to the question of whether, prior to contract, the sole director of the defendant (Mr Fitch) made it known to the plaintiff (through its managing director, Mr Easling) that there were unauthorised structures upon the land. However, the terms of the warranty are such that it is disclosure in the contract, not pre-contractual disclosure, that is relevant to any question of breach of the warranty. Also, no question of rescission arises in this case where the purchaser seeks specific performance. In these circumstances I do not propose to deal with the question of what disclosure was made by Mr Fitch to Mr Easling about the existence of unauthorised structures.

The next matter to consider is whether the defendant, at the time the Notice to Complete was issued on 4 March 2020, was ready, willing and able to comply with its obligations in relation to the removal of the charge for land tax and the provision of a certificate to that effect.

Land tax is stated in the contract to be adjustable. So, where land tax has been paid or is payable for the year current at the adjustment date (as defined in the contract), it is to be the subject of an adjustment on completion in accordance with cll 14.2 and 14.4. More fundamentally, as the land tax legislation gives rise to a statutory charge on the land, the defendant must remove any such charge on or before completion so as to comply with its obligation under cl 16.3 to cause the legal title to pass to the plaintiff free of any mortgage or other interest. In addition, because the defendant served a land tax certificate on 12 February 2020 showing a charge on the land, the defendant was obliged by cl 16.6 to give the plaintiff on completion a land tax certificate showing that the charge is no longer effective against the land.

As at 4 March 2020 the land tax in respect of the property had not been assessed. However, a land tax assessment notice issued on 20 March 2020 shows that the amount of land tax due by the defendant was $5,078.65. Having regard to the evidence given by Mr Wong to the effect that on 20 March 2020 it was proposed that the defendant would pay the land tax on completion, it can be inferred that $5,078.65 was the amount of land tax that was unpaid as at 4 March 2020.

In order for the defendant to thereafter comply with its obligations under the contract, it would need to pay the outstanding land tax and obtain a certificate showing that there was no longer a land tax charge effective against the land. Those matters would need to be done by the time of completion which, if the Notice to Complete was valid, would be 2:00pm on 20 March 2020. A period of about 16 days would thus be available.

Evidence was adduced in the form of extracts from the Revenue NSW website. It seems that once an entity is registered for land tax a land tax assessment notice can be obtained online to facilitate the payment of any outstanding land tax. It further appears that once payment is made, an updated land tax certificate showing that the land is clear of land tax (referred to as a “clearance certificate”) can be obtained online. The website indicates that payments generally take 48 hours to process “before the certificate status can be updated”.

As at 4 March 2020, there was more than ample time for the defendant to make arrangements for the payment of the outstanding land tax and the obtaining of a clearance certificate by 20 March 2020. There was little evidence of the defendant’s financial position in March 2020 other than that it was the owner of the property the subject of the sale, and that the property was unencumbered by any mortgages or other securities held by lenders. I am prepared in the circumstances to infer that the defendant had the ability to pay the modest amount of $5,078.65 so as to be in a position to obtain a clear land tax certificate by 20 March 2020. I note that it was not suggested to Mr Fitch that the defendant lacked the wherewithal to make such a payment.

I have therefore concluded that, as at 4 March 2020, the defendant was in a position of readiness, willingness and ability to proceed to completion of the contract in accordance with its terms. I do not think that this case is one where there is a real doubt about the ability of the vendor to comply with its obligations in relation to land tax by the date fixed for completion (see Wilde v Anstee (1999) 48 NSWLR 387 at [54]; HG & R Securities Pty Ltd v Sayer (supra) at [161]).

For the above reasons, I consider that the Notice to Complete served by the defendant on 4 March 2020 was valid and effective to make time of the essence for completion of the contract.

The Notice to Complete, which of course binds both parties (see Falconer v Wilson [1973] 2 NSWLR 131 at 143; Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (supra) at [39]), called for completion to occur no later than 2:00pm on 20 March 2020. Completion did not occur by that time, or indeed at any time on 20 March 2020. As already noted, it is accepted by the plaintiff that it was not in a position to settle on that day. The issue is whether the defendant was ready, willing and able to perform its obligations on 20 March 2020. Unless the defendant was in such a state, it would not be open to the defendant to rely upon the plaintiff’s failure as a breach of the contract that entitled the defendant to terminate (see Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (supra) at [33] and [48]; Jeppesons Road Pty Ltd v Di Domenico [2005] QCA 391 at [29] and [34]-[38]). Under a contract for the sale of land, the obligations of the parties in respect of completion are regarded as interdependent and concurrent, so 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]).

The plaintiff alleges that in numerous respects the defendant was not ready, willing and able to perform its obligations on 20 March 2020. These are set out above at [5]. I turn now to consider those matters, and also the defendant’s contention that the plaintiff, by its conduct, impliedly intimated that it would be useless for the defendant to tender performance. To the extent that such an intimation was given, and acted upon, the defendant would be excused from performance and treated as if performance had occurred, in accordance with the principles stated by Dixon CJ in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 246-7).

The first matter raised by the plaintiff is that the defendant failed to remove the charge for land tax, and failed to provide a land tax certificate showing that the charge was no longer effective against the land. It is clear that by cll 16.3 and 16.6 of the contract, the defendant was obliged to do those things on or before completion. The obligation to provide a clear land tax certificate arose because the defendant had on 12 February 2020 served a land tax certificate showing a charge on the land the subject of the contract.

By her email sent at 12:14am on 20 March 2020, Ms McDonald noted that the defendant had not yet provided a clear land tax certificate. By her email sent to Mr Wong at 10:03am, Ms McDonald sought details of the amount of the land tax assessment. At 10:30am Ms McDonald sent an email to Mr Wong which contained a request that the land tax assessment be provided urgently, and a request that he urgently advise the position in relation to a clear land tax certificate. At 12:26pm Ms McDonald sent an email to Mr Wong seeking urgent confirmation as to whether “the land tax certificate has been cleared”.

Mr Wong did not respond in relation to these matters until 1:34pm. He stated in his email sent to Ms McDonald at that time that the land tax was to be paid “from settlement proceeds” and that he was waiting for a bpay reference number to put onto the PEXA platform. I infer that this would facilitate the payment of the tax on settlement out of the funds to be provided by the plaintiff.

It is not clear from Mr Wong’s email when the defendant formed the intention to pay the land tax on settlement in that fashion. However, the intention was not made known to the plaintiff until Mr Wong’s email sent at 1:34pm.

Whilst dealing with land tax in that way may have been sufficient to remove the charge for land tax, it is inadequate to discharge the obligation under cl 16.6 to provide a clear land tax certificate on or before completion. Moreover, as the outstanding land tax had not yet been paid, and as it seems that payments generally take 48 hours to process before an updated land tax certificate can be obtained, it was not possible for the defendant to discharge its obligation under cl 16.6 by the time fixed for completion. In this respect, the defendant was not ready, willing and able to perform.

I do not accept that the defendant was excused from performance of that obligation or indeed any of its other obligations in relation to completion of the contract. At least up until Ms McDonald’s email sent at 1:35pm on 20 March 2020, no conduct on behalf of the plaintiff could be said to amount to an intimation that it would be useless for the defendant to perform. Neither the communications sent by SWS Lawyers up to that time, nor the position of the plaintiff insofar as it was revealed on the PEXA platform, would lead to that conclusion. Those communications were consistent with the plaintiff taking the steps necessary in order to complete the contract by 2:00pm on 20 March 2020. Whilst the PEXA platform did not show that the plaintiff was in a positive state of readiness (for example, because there was no verification that stamp duty had been assessed and that all the required funds were available), the position it revealed was not inconsistent with the plaintiff getting into a state of readiness fairly promptly. In cross-examination, Mr Wong said that he appreciated that “sometimes the mortgagee would jump in [at the] last minute, and then it could settle”.

Ms McDonald’s email sent at 1:35pm on 20 March 2020 included a complaint that delays on the part of the defendant meant that the plaintiff would not be ready for a settlement at 2:00pm. That could be regarded as an intimation that it would be useless for the defendant to continue to take steps towards a settlement at that time. However, the defendant was already in a position where it could not comply with its own obligations in respect of completion. In any case, it does not appear that the defendant acted upon any such intimation. Mr Wong accepted in cross-examination that after that time the parties continued to work in good faith towards a settlement on 20 March 2020. He agreed that even as late as 4:14pm he thought there was still a possibility that the contract might settle on that day.

That is reflected in the later communications on 20 March 2020 which included topics such as settlement figures and calculations, and how adjustments might be dealt with. I note that in her email sent at 2:06pm, Ms McDonald stated that the plaintiff would want to see a clear land tax certificate on completion. Her query about whether that would be possible if the tax was paid out of settlement funds effectively went unanswered.

The second matter raised by the plaintiff in relation to the defendant’s readiness, willingness and ability to perform is that it failed to give a notice of attornment in relation to the lease of the land that had been entered into by PST. By her email sent at 12:14am on 20 March 2020, Ms McDonald had sought confirmation as to whether the notice of attornment required on completion would be provided via the PEXA workspace. Ms McDonald stated in her email sent at 1:35pm that no confirmation had been given that a notice of attornment would be provided on settlement. There was no response from Mr Wong on 20 March 2020 in relation to this matter.

Mr Wong gave evidence to the effect that it was his understanding that unless there was an express agreement to do so, there was no requirement to provide a notice of attornment prior to completion. He said that in his experience the notice is usually provided after settlement.

The obligation under cl 24.4.3 is for the vendor to give the purchaser a proper notice of transfer (an attornment notice) addressed to the tenant. The opening words of cl 24.4 operate so that the obligation arises if the property “is subject to a tenancy on completion". It is therefore correct to say that there is no obligation to provide the notice in advance of settlement. Nonetheless, having regard to the function of the notice, which is to notify a tenant that the property has been conveyed to a new landlord, I consider that the obligation upon the vendor under cl 24.4.3 is to provide the notice of transfer to the purchaser upon completion so as to enable the purchaser to promptly give the notice to the tenant.

The failure of the defendant to provide a notice of attornment (or upload such a notice to the PEXA website) in advance of settlement was not a breach of the contract. Neither does it show that the defendant was not ready, willing and able to comply with its obligations in that respect. A notice of that type is ordinarily a simple document that can be quickly produced. Over the course of 20 March 2020 the parties were in communication about various matters concerning settlement. These matters included discussion about settlement figures and calculations, and how adjustments might be dealt with. Had those matters been resolved such that it appeared that completion could occur, I have little doubt that Mr Wong would have been able to prepare a notice of attornment to be provided on completion. As he said in cross-examination, once those “core issues” were sorted out, the documents Ms McDonald requested could be uploaded.

The third matter raised by the plaintiff was that the defendant remained in breach of the prescribed warranty. For the reasons given earlier, I do not think that the warranty was included in the contract for sale. Even if it was included, and even if the defendant was in breach, the breach would not mean that the defendant was not ready, willing and able to perform its obligations in respect of completion. The warranty does not oblige the vendor to do anything on or prior to completion, or indeed at all; a breach of the warranty would only give the purchaser a right of rescission.

The fourth matter raised by the plaintiff is that the defendant proposed arrangements in relation to adjustments that departed from the terms of the contract. That is true, but I do not think that this supports a conclusion that the defendant was not ready, willing and able to comply with its obligations. There was no breach of contract involved in the making of the proposals. The proposals made by Mr Wong were evidently advanced on the basis that they may be convenient for both parties. Ms McDonald stated (at 1:34pm) that she would discuss the proposals with her client. Later (at 2:06pm) she stated that she expected that there would be “no issue in removing the adjustment for water, council and land tax for simplicity reasons”. At 3:50pm, Ms McDonald indicated that she thought Mr Wong’s proposal that there be no adjustment for rent “will be ok” subject to obtaining confirmation from the plaintiff’s accountant. It is clear from Mr Wong’s cross-examination that he appreciated that Ms McDonald could have said no to his proposals at any time. It was not suggested to Mr Wong that had his proposals been rejected, the defendant would not have been willing or able to complete on the basis of adjustments made in accordance with the contract.

The fifth matter raised by the plaintiff is that the defendant failed to take certain steps on the PEXA platform such as the signing of documents necessary to effect completion, and the provision of payment details. It was submitted that Marsdens did not in the PEXA workspace sign either the Cord Holder Consent or the Financial Settlement Schedule, and did not populate the workspace with payment details. It was submitted that these failures amounted to a breach of cl 30.10 of the contract.

One difficulty with that submission is that the plaintiff was apparently in breach of its own obligations under cl 30. The plaintiff was required by cl 30.9 to provide the defendant with adjustment figures at least two business days before the date of completion. The clear purpose of that obligation is to enable timely completion of the Financial Settlement Schedule.

The plaintiff complained that it was hampered in its preparations for settlement because Marsdens only belatedly invited SWS Lawyers to join the PEXA workspace. However, the defendant had invited the plaintiff’s former solicitors, Kain Lawyers, to join the workspace on 11 February 2020. The plaintiff did not retain SWS Lawyers until 13 March 2020, well after service of the Notice to Complete. On the morning of 18 March 2020 Ms McDonald stated that Marsdens should invite SWS Lawyers to join the workspace. As it turned out, SWS Lawyers did not join the workspace until 19 March 2020, shortly after Marsdens had issued an invitation for SWS Lawyers to join.

The evidence is not altogether clear as to whether action on the part of Marsdens was required in order for SWS Lawyers to join the workspace, or whether that could have been effected by action on the part of SWS Lawyers and/or Kain Lawyers. Mr Wong suggested that it would have been possible for SWS Lawyers to join without having received an invitation from Marsdens. Ms McDonald did not share that understanding. I am not prepared to find that the rather late joining of the worksite by SWS Lawyers was due to any default on the part of Marsdens in issuing an invitation.

In my opinion, that Marsdens did not sign documents in the PEXA workspace, or populate the workspace with payment details, does not lead to the conclusion that the defendant was not ready, willing and able to perform its obligations. Those circumstances are a reflection of the reality that on 20 March 2020 the parties were attempting to resolve various issues concerning completion, in particular in relation to settlement figures and calculations, but did not achieve resolution of those matters in the available time. Had the various issues been resolved a reasonable time before 5:00pm on 20 March 2020, both parties would have been able to attend to the tasks of inserting the payment details and signing the necessary documents in order to facilitate a settlement taking place before the 5:00pm PEXA cut-off time.

The provisions of cl 30, which apply when the contract for sale is to be conducted as an electronic transaction, are intended to regulate an orderly and timely progression towards completion. Clause 30.10 requires the parties to ensure that at least one business day before the date for completion all the required documents are populated and signed, and everything else done that must be done to enable the sale to proceed. That did not occur in this case. The parties left themselves little time to perform the requisite tasks. The responsibility for this situation lies just as much with the plaintiff as it does with the defendant.

The sixth and final matter raised by the plaintiff is that the settlement figures proposed by the defendant included an erroneous calculation of interest. The error that was pointed out in Ms McDonald’s email sent at 1:53pm on 20 March 2020 was minor. It was that the calculation should have been made on the basis of a 366 day year rather than a 365 day year. Mr Wong has since calculated the difference as a mere $33.96.

Again, in circumstances where the parties failed on 20 March 2020 to resolve a range of issues concerning settlement figures and adjustments, the fact that the defendant advanced an incorrect calculation and did not later correct it, does not lead to the conclusion that the defendant was not ready, willing and able to perform its obligations. Had the parties reached a point where the other matters were resolved, it is highly likely that this minor matter of calculation would also have been resolved.

In summary, I have concluded that in one respect the defendant was not ready, willing and able to perform its obligations on 20 March 2020. The defendant was not ready, willing and able to discharge its obligation under cl 16.6 to provide a clear land tax certificate on or before completion. Having not paid the outstanding land tax, intending that payment be made on settlement out of the funds to be provided by the plaintiff, it was not possible for the defendant to provide a clear land tax certificate by the time fixed for completion. That is not a minor matter, particularly in circumstances where the plaintiff was not made aware of the amount that was charged on the land for land tax. The defendant accepted that it did not at any time provide any assessment of land tax to the plaintiff.

As the defendant was not ready, willing and able to perform its obligations in respect of completion, it is not open to the defendant to rely upon the plaintiff’s failure to complete as a breach of the contract that entitled the defendant to terminate the contract. It follows that the defendant’s purported termination of the contract on 24 March 2020 was ineffective, so the contract remained on foot.

The above conclusion renders it unnecessary to deal with a further argument advanced by the plaintiff which is that the defendant, by its conduct, waived any right to insist that the time for completion was essential. However, it is appropriate that I deal with one aspect of that matter, which does not rest upon the written communications that passed between the solicitors.

Part of the conduct relied upon in this regard is an assurance said to have been given by the defendant that it would provide a Foreign Resident Capital Gains Withholding Clearance Certificate. Clause 31.4 of the contract provides that if the vendor serves such a certificate, the purchaser does not have to complete earlier than 7 days after that service. The plaintiff alleges that the assurance was given by Mr Wong to Ms McDonald in a telephone conversation on 19 March 2020. The conversation is referred to above at [36]-[37], where the respective versions are set out.

Whilst I accept that, as a result of the conversation, Ms McDonald formed a belief that the defendant was going to provide a certificate, I do not think that Mr Wong made any unqualified statement to that effect. Ms McDonald’s later communications on the topic do not refer to any such statement. I think it is likely that Mr Wong, in response to Ms McDonald’s query, said something to the effect that he would send the certificate if it was available. I accept that when he had the conversation with Ms McDonald he did not know whether such a certificate had in fact been obtained. Mr Wong gave evidence that he had many conveyancing matters to deal with, and that he is not the person who applies for such certificates. This particular conveyance was being handled by a senior conveyancer, subject to Mr Wong’s oversight. In these circumstances, it is unlikely that he would have given an unqualified undertaking to provide a certificate, even if he thought it likely that such a certificate would have been obtained.

My conclusion that the contract remains on foot also renders it unnecessary to deal with the plaintiff’s fall-back arguments for relief against forfeiture and the return of the deposit.

The defendant’s purported termination of the contract on 24 March 2020 was ineffective, so the contract remained on foot. A declaration to that effect should be made.

The defendant did not suggest that if the Court so concluded, orders in the nature of specific performance should not be made. It seems to me that it is appropriate that orders for specific performance be made.

The plaintiff seeks, in addition, damages pursuant to s 68 of the Supreme Court Act 1970 (NSW). There is evidence that the plaintiff, after serving its own Notice to Complete on 9 April 2020 that called for completion by 1 May 2020, was in a position to complete by 1 May 2020, but the defendant failed to complete, maintaining that the contract had been validly terminated. In these circumstances, the plaintiff alleges that completion has not occurred due to the defendant’s breach, and claims damages for the rental income it would have received had the breach not occurred and the contract completed on 1 May 2020.

There is evidence that the plaintiff would have received rent from PST at the rate of $23,466.66 per month. The defendant did not in submissions challenge this claim for damages. In my view, it is appropriate for damages to be awarded to the plaintiff as claimed in respect of the period from 1 May 2020 to the date when completion actually occurs.

There seems to be no reason why costs should not follow the event. Accordingly, the Court will make an order that the defendant pay the plaintiff’s costs of the proceedings.

I direct that the parties confer and, within 7 days, submit a form of Short Minutes of Order to give effect to these reasons.