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  • Unreported Judgment

Tunguska Pty Ltd v Mango Lagoon Palm Cove Pty Ltd

 

[2005] QSC 72

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Tunguska Pty Ltd v Mango Lagoon Palm Cove Pty Ltd  [2005] QSC 072

PARTIES:

Tunguska pty ltd

as trustee of the Sandcastle Noosa Property & Investment Trust

 

(Applicant)

 

v

 

mango lagoon palm cove pty ltd

 

(Respondent)

FILE NO:

S2281/2005

DIVISION:

Trial Division

DELIVERED ON:

12th of April 2005

DELIVERED AT:

Brisbane

HEARING DATES:

11th of April 2005

JUDGE:

Dutney J

ORDERS:

  1. That the application for specific performance and the cross application for declarations and removal of caveat be adjourned to a date to be fixed;
  2. That unless Brendan John Wenke files the usual undertaking as to damages in the court registry by 4.00PM on 19th of April 2005, the caveat number 708455611 over land described as Lot 18 on SP 174182 County of Nares, Parish of Smithfield, Title reference 50540849 be removed.

CATCHWORDS:

PRACTICE – SUMMARY PROCEEDINGS – whether matter should be referred to trial

VENDOR AND PURCHASER – SPECIFIC PERFORMANCE – where breach of contract by applicant – whether relief against forfeiture available

COUNSEL:

Mr P. Hackett for the Applicant

Mr A. Lyons for the Respondent

SOLICITORS:

Schultz Toomey O’Brien Lawyers for the Applicant

Gadens Lawyers for the Respondent

 
  1. The applicant seeks an order for specific performance of a contract to purchase a property described as Unit 18, Mango Lagoon Resort, Palm Cove.  The contract was a “sale off the plan” entered into on 14 March 2003.
  2. For some time the respondent vendor has sought to avoid the contract.  A notice of termination was given on 4 July 2003 alleging breach by the applicant of clause 8.1 of the contract.  Clause 8.1 of the contract required a directors’ guarantee where the purchaser was a company.  It is now conceded by the respondent that there was no basis to terminate the contract under clause 8.1.  Mr Wenke, the only director had in fact provided such guarantee when the contract was signed.
  3. On 8 December 2003, the applicant’s solicitors lodged a caveat on behalf of their client over the whole land on which the project was being developed.  The respondent’s solicitors immediately demanded removal of the caveat on the grounds, inter alia, that the applicant did not have a caveatable interest in the as yet undivided property and on the grounds that the presence of the caveat prejudiced the ongoing financing of the project.  The caveat was withdrawn on 16 December 2003.
  4. On 4 November 2004, the applicant’s solicitors wrote to the respondent’s solicitors enquiring about settlement of the contract.  On 1 December 2004 the respondent’s solicitors responded by acknowledging the contract but giving a further notice of termination relying on misrepresentation.  No argument was advanced at the hearing of this application supporting this ground of purported repudiation and it appears to be unsustainable.  Despite this the respondent’s solicitors, by letter dated 14 December 2004 affirmed that their client regarded the contract as at an end.
  5. On 14 February 2005, the plan of survey was registered and Lot 18 was created.
  6. On 22 February, the applicant lodged a caveat over Lot 18 to protect its interest as purchaser under the contract.
  7. The present application for specific performance was filed and served on 21 March 2005.
  8. On 7 April 2005, the respondent’s solicitors wrote to the applicant’s solicitors maintaining a valid termination of the contract.  It purported to rely, inter alia, on clause 3.12 of the contract.  To avoid doubt about the respondent’s position the letter concluded, “Should my client’s prior termination be ineffective for any reason my client hereby terminates the contract.”
  9. At the hearing of this application only one basis for termination was argued by the respondent.  This was under clause 3.12 of the contract.  Clause 3.12 provides: 

“The seller may, at any time, mortgage or charge the Scheme Land.  The buyer must not lodge a caveat against the Lot or the Scheme Land.”

  1. Clause 7.1 of the contract provides:

“If the buyer fails to comply with any obligation under this Contract, the Seller may:

terminate the Contract and do all or any of the following …”

  1. The respondent submits that lodging the caveat on 22 February 2005 constituted a breach of the contract entitling it to rescind and forfeit the applicant’s deposit.
  2. In response to the respondent’s submission the applicant submitted that the prohibition on the lodgement of a caveat was not an obligation because it was essentially negative in character.  I disagree.  The term “obligation” is defined in the Shorter Oxford English Dictionary as “the action of binding oneself by oath, promise or contract to do or forbear something.”  This seems to me to be plain that an obligation can be either positive or negative and a contractual promise not to lodge a caveat can properly be regarded as an obligation.
  3. Faced with my reaction to this submission, the applicant sought relief against forfeiture. 
  4. The principles on which a contracting party may be relieved against the consequences of a breach of contract were discussed by the High Court in Tanwar Enterprises Pty Ltd v Cauchi.[1]  The joint judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ rejects what they described as the five “subsidiary questions” identified by Mason and Deane JJ in Legione v Hately[2] as providing a necessary answer to the question of whether it would be unconscientious for a party to rely on its strict contractual rights.  In this case there is a proper basis to argue that it would be unconscientious in the relevant sense even if the basis for the argument is most conveniently demonstrated by reference to the rejected “subsidiary questions”. 
  5. The caveat was lodged as a response to the respondent’s earlier unlawful repudiation of the contract.  No consequence has been said to flow from the lodgement which is adverse to the respondent.  In contrast, although no amounts have been placed before me it is difficult to ignore the enormous publicity given to the extraordinary rise in real estate values during 2003 and 2004, the benefit of which will go to whichever party ultimately holds the property.  Apart from this, in the event no relief is given the applicant will forfeit a deposit of $33,800.  Since it is the vendor which has delayed settlement, specific performance will secure to the vendor everything to which it would have been entitled had the contract been punctually performed.
  6. In stating these matters, I am minded that because of the way in which the issue argued came to be identified and the lateness thereof the parties may wish to place further evidence before the Court addressing these matters.  It thus seems to me that beyond identifying an arguable basis for the application it would not be appropriate to finally resolve this issue.
  7. This leaves the issue of the removal of the caveat.  The first basis for removal argued by the respondent was that the present caveat is a caveat lodged on the same grounds as the caveat withdrawn in December 2003.  Under s129 of the Land Titles Act 1994 its lodgement was incompetent in the absence of leave which was not granted.  The short answer to this submission is that the caveat was not lodged over the same lot.  The section thus has no application.
  8. Secondly it was argued that I should remove the caveat on discretionary grounds on the basis that the applicant has no identifiable means to meet any call on its undertaking as to damages.  The applicant is a trustee company which has given two charges over its assets.  Against this there is no suggestion that there is any great likelihood that the respondent will suffer significant damage by reason of the presence of the caveat even if the respondent is ultimately successful.  Mr Wenke is the sole director of the applicant.  He has guaranteed performance of the contract.  The respondent accepted that guarantee.  It seems to me that if he is prepared to give a personal undertaking as to damages I should accept that in this case.
  9. In all the circumstances, I am satisfied that there is a serious issue to be tried.  I am not persuaded that it is a matter which is appropriate for summary determination.  In the event that Mr Wenke provides an undertaking as to damages I will allow the caveat to stand.
  10. The formal orders will be that the application for specific performance and the cross application for declarations and removal of caveat are adjourned to a date to be fixed.  I will give directions to ensure a speedy trial.  Unless Brendan John Wenke files the usual undertaking as to damages in the court registry by 4 pm on 19 April 2005 I order that caveat number 708455611 over land described as Lot 18 on SP 174182 County of Nares, Parish of Smithfield, Title reference 50540849 be removed.

 

Footnotes

[1] (2003) 77 ALJR 1853.

[2] (1983) 152 CLR 406 at 449.

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Editorial Notes

  • Published Case Name:

    Tunguska Pty Ltd v Mango Lagoon Palm Cove Pty Ltd

  • Shortened Case Name:

    Tunguska Pty Ltd v Mango Lagoon Palm Cove Pty Ltd

  • MNC:

    [2005] QSC 72

  • Court:

    QSC

  • Judge(s):

    Dutney J

  • Date:

    12 Apr 2005

Litigation History

No Litigation History

Appeal Status

No Status