- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Olohan v Robinson & Anor  QSC 410
MARGARET JOHN OLOHAN
BS 5941 of 2007
Supreme Court at Brisbane
18 December 2009
8 December 2009
The applicant is to bring in minutes of order
DEED OF SETTLEMENT – SPECIFIC PERFORMANCE – CONTRACT FOR SALE OF LAND – DEFENCES – Where parties entered deed of settlement – Where deed of settlement provided for transfer of interest in land from applicant to respondent – Where deed requires respondent to pay stamp duty on transfer – Where respondent did not settle – Where respondent did not pay stamp duty – Where applicant brings application for specific performance – Where respondent argues applicant unready to settle – Where respondent pleads defence of impossibility or financial hardship – Whether the applicant’s failure to pay stamp duty on behalf of the respondent renders the applicant unready to settle – Whether it would be impossible for the respondent to settle – Whether an order for specific performance would cause the respondent undue financial hardship – Whether any financial hardship caused by an order for specific performance is attributable to the applicant – Whether an order for specific performance should be made.
Ireland v Leigh  Qd R. 145
Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671
Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460
M. Eliadis for the applicant
S.R. Lumb for the respondent
Cooper Grace Ward for the applicant
Taylors Solicitors for the respondent
The applicant (“Colin”) and the respondent (“John”) in this matter are brothers and are the executors of the estate of their late father, Robert Haynes Robinson (“Mr Robinson”). The estate of Mr Robinson consisted largely of 3 properties, referred to in these proceedings as “Robinson House”, “Home Farm” and “Rocky Knob”.
Mr Robinson died on 17 March 2007 and on 7 November 2007 Margaret Olohan, the sister of Colin and John, filed an application seeking orders for further provision from the estate for her proper maintenance and support, pursuant to Part 4 of the Succession Act 1981 (Qld).
The application was settled and the terms of the agreement were recorded in a Deed of Settlement (“the deed”) of 2 March 2009.
Apart from making provision for Margaret Olohan, the deed was designed, by a number of provisions, to result in Colin holding a 100% interest in Robinson House and Home Farm and John holding a 100% interest in Rocky Knob.
All the terms of the deed have now been satisfied except those relating to the transfer of Rocky Knob to John.
The terms of clause 6, which govern the transfer of Rocky Knob to John and the obligation to pay stamp duty, are:
“6.1 John agrees to pay Colin the Settlement Sum on or before 4:00pm on 31 July 2009 by bank cheque make payable to the trust account of Colin’s solicitors, Cooper Grace Ward.
6.2 Subject to clause 6.1, Colin’s interest in “Rocky Knob” will be transferred to John with effect from the Probate Date.
6.3 Each party must do all things necessary to give effect to the transfer specified in this clause 6.
6.4 John’s solicitors must prepare and deliver to Colin’s solicitors not less than 14 days before 31 July 2009 a form of transfer under the Land title Act 1994 (Qld) and any other document necessary for stamping or registering the transfer of his interest in “Rocky Knob” to John.
6.5 Subject to John paying Colin’s reasonable expenses and producing a bank cheque payable to the Office of State Revenue for the appropriate stamp duty, John’s solicitors may require Colin’s solicitors to produce the transfer documents to the Office of State Revenue for stamping.
6.6 Simultaneously with the payment referred to in clause 6.1 Colin and/or his solicitors must hand to John or his solicitors the stamped transfer documents referred to in clause 6.5.”
By clause 1.1 of the deed, “Settlement Sum” was defined as follows:
“Settlement Sum means the sum of $1,290,000 which has been calculated as follows:
a) $200,000 to reflect the fact that the Estate’s interest in ‘Rocky Knob’ (which under this document is being transferred to John) exceeds the Estate’s interest in Robinson House and Home Farm (which under this document is being transferred to Colin); and
b) $1,090,000 to reflect the fact that Colin’s interest in ‘Rocky Knob’ (which under this document is being transferred to John) exceeds John’s interest in Home Farm (which under this document is being transferred to Colin.”
The settlement as contemplated by clause 6 of the contract did not take place. There was some discussion between the parties’ solicitors regarding a month’s extension of the settlement date at an interest rate of 10% but, ultimately, no satisfactory conclusion was reached.
On 17 August 2009, Colin filed an application for an order that John pay the settlement sum and interest.
On 9 October, the application was amended to seek orders for specific performance of the settlement deed.
There are two issues which arise in this case:
1) First, whether the applicant is ready, willing and able to perform his obligation under clause 6 – in particular, whether Colin is in a position to hand to John a stamped transfer document pursuant to which Colin’s interest in Rocky Knob may be transferred to John.
2) Secondly, if Colin is ready, willing and able to settle, whether John can resist an order for specific performance on the bases of impossibility and hardship.
Ready, willing and able
On the first question, it was submitted for John that the terms of the deed impose simultaneous obligations upon Colin and John, which neither party is ready to perform. The relevant transfer document has not been stamped and Colin has refused to pay the stamp duty on the basis that cl 6.5 requires John to produce “a bank cheque payable to the Office of State Revenue for the appropriate stamp duty”. In evidence, Colin agreed that if he had a legal obligation (aside from the terms of the deed) to pay the stamp duty, then he would do so.
It was argued for John that, as cl 6.6 requires that Colin hand to John the stamped transfer documents simultaneously with the payment of the settlement sum, Colin’s refusal to pay the stamp duty evidences an unwillingness to complete. That argument overlooks John’s obligation to pay the stamp duty which is set out in cl 14.2(b) of the Deed. In any event, the question is theoretical only. John was not in a position to complete as he had not arranged his finances in a manner which would allow him to pay the settlement sum.
Ireland v Leigh is authority for the proposition that, where a party to a conveyance makes it clear that it would be futile to tender performance, the other party is relieved of the obligation to do so. In this case, Colin did all that he was able to do to facilitate the transfer. Pursuant to the terms of the deed and the directions of the respondent’s solicitors, he signed the transfer documents and caused them to be lodged at the Office of State Revenue, together John’s submissions, for assessment. Despite this, John’s solicitors wrote to the Colin’s solicitors on the day before settlement was due to take place to advise that “in any event, our client instructs us that he will not be in a position to settle tomorrow”.
Colin’s understandable reluctance to pay the stamp duty does not, though, lead ineluctably to a finding that, at the date of hearing, he was not ready, willing and able to complete. It is the date of hearing which must be considered. As Brereton J said in Carydis v Merrag Pty Ltd:
“ However, absence of readiness, willingness and ability to complete at some earlier time while the contract is on foot is not fatal to an application for specific performance. The judgments of Barwick CJ and Windeyer J in Mehmet v Benson (1965) 113 CLR 295, which enjoyed the concurrence of McTiernan J, make that clear: see also the judgment of the Court of Appeal in Sommers v Pearse. I accept that ultimately the time at which a purchaser must establish readiness, willingness and ability to perform is the date of hearing, although readiness, willingness and ability at earlier times may be a relevant discretionary consideration.”
If John has the funds to settle but still refuses to pay the stamp duty, Colin will have to pay the duty if he wishes to have the transfer registered. It will then be open to him to commence proceedings to recover the amount paid. A party’s willingness need not be a happy one. A party can, through gritted teeth, accept that a certain state of affairs exists and that adaptation to those circumstances is necessary. I find that, at the date of hearing Colin was ready, willing and able to settle.
Would ordering specific performance cause undue financial hardship for the respondent to complete?
In relation to financial hardship, John argues that:
he is unable to obtain the funds necessary to complete the transaction at the present time, or, in the alternative,
requiring him to obtain those funds would cause him such significant and unjustified financial hardship that he should not be forced to do so.
Colin, however, contends that the assets of the respondent far outweigh his liabilities under the deed, that he could obtain a loan for the required amount with ease and, if did could not, that he has other properties which he could sell to raise those funds., Should John want to settle immediately, it is well within his power to do so. Colin argues that it is only John’s unwillingness to forfeit a grander plan to develop Rocky Knob in stages, a scheme which will itself require the respondent to take out a multi-million dollar loan, that stand in his way.
“A purchaser who pleads hardship as a defence to a vendor's claim that the purchaser be ordered specifically to perform the bargain into which he has entered has to meet and overcome the principle that specific performance is not a remedy which should lightly be refused when the vendor has established the existence of a valid contract that equity ordinarily decrees to be specifically performed which the purchaser has declined to completes [sic] Fullers Theatres Ltd v Musgrove (1923) 31 CLR 524 at pp 548–5491 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at p 438. On the authorities, I doubt whether difficulty confronting a purchaser in finding the purchase money could, by itself, constitute sufficient reason to deny a vendor an order for specific performance. Financial hardship generally appears as only one ingredient in a group of circumstances which would make specific performance work a clear in-justice to the defendant.” [emphasis added]
In Pasedina, Holland J relied on the judgment of Barwick CJ, Mason and Jacobs JJ in Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd. In that case, their Honours jointly rejected the defence of financial hardship on the ground that the defendant’s financial problems could not be attributed to any unconscionable conduct on the part of the vendor. Rather, they and arisen from a risk of a kind which a purchaser might expect to encounter in the execution of a commercial contract.
In this case, there is no evidence, nor was it the submission of the respondent, that the respondent’s hardship was in any way attributable to the applicant’s conduct. Rather, as was the case in Pasedina, the hardship experienced by John arises entirely from his decision to take a commercial risk, being the risk that he would not be able to raise the funds necessary to settle with ease. As noted in the letter from his solicitors to Colin’s solicitors dated 20 August 2009:
“1. John entered the Deed in good faith.
2. At the time [John] entered the Deed he had a reasonable expectation that as at the 31st July, 2009 he would have in place the necessary funding to pay Colin the $1.29 million.
3. No one could have anticipated the extent or duration of the credit drought.
4. The problem that has arisen is that the Bendigo Bank … which bank had earlier given a verbal indication that it would fund the payment to Colin has now lost its “appetite” for funding secured by residential sub-division land…”
In signing a contract, the respondent took a gamble. This risk was accepted in exchange for an opportunity to own and develop the land for profit in the future. The result was not in John’s favour, but I can see no reason why the applicant should be disadvantaged as a result. Change of economic circumstances was rejected by the court in Pasedina as a basis for refusing specific performance and, in the absence of any fault on the part of the applicant, I see no reason for accepting it as a ground for defence here.
Even if the defence of impossibility or hardship was available in the absence of improper conduct on the part of Colin, I still would not find in John’s favour. He, by his own affidavit evidence, deposes to owning several parcels of real property with a total value of approximately $2,266,000, aside from Rocky Knob. Against these properties, the respondent has approximately $547,000 in liabilities.
The respondent has made much of his inability to obtain loans for amounts necessary to settle the deed. However, it was not until October of this year that any attempt was made to borrow an amount sufficient to settle the deed and nothing more. Earlier applications for funds were always for amounts exceeding the settlement sum, and the evidence reveals an intention to use the extra funds sought to be raised for the development and subdivision of other land.
Through his evidence, both written and oral, the respondent has revealed a general preoccupation with his ambitions to develop Rocky Knob and other properties for subdivisional purposes. It is apparent that, through these activities, the respondent hopes to realise substantial profits in the future. In the meantime, however, the respondent has shown a continuing reluctance to take any action which would require him to compromise his plans for redevelopment, in order to raise sufficient funds to settle the deed.
I accept that to force the respondent to settle on the deed may cause him some financial stress. Further, I accept that an order for specific performance may require him to sell certain property or take other actions which he is presently unwilling to take for reasons both personal and financial. However, I do not accept that it would be “impossible” for him to settle or that, to do so, would cause him any financial stress beyond that which could be reasonably managed with some compromise on his part with regard to his future redevelopment and investment plans. He willingly entered into the deed, he has benefited in part from its terms and he should be made to comply with all its terms.
I intend to order that Robert John Robinson specifically perform and carry into execution the deed of settlement executed on 2 March 2009 between Anthony Colin Robertson and Robert John Robinson in respect of the real property situated at Lot 2 on RP 720619 County of Carlisle Parish of Greenmount.
Given the time of year, it may take longer than it would otherwise take for the respondent to reorganise his financial affairs in order to comply with the order. I intend, therefore, that the time for settlement of the conveyance will be extended until no later than the end of March 2010.
The applicant is to bring in appropriate minutes of order. I will hear the parties on costs.
- Published Case Name:
Olohan v Robinson & Anor
- Shortened Case Name:
Olohan v Robinson
 QSC 410
18 Dec 2009
No Litigation History