Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QDC
  3. 2014
  4. Bakers Creek Developments Pty Ltd v Pacific Homes (Mackay) Pty Ltd - [2014] QDC 237

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Bakers Creek Developments Pty Ltd v Pacific Homes (Mackay) Pty Ltd[2014] QDC 237

Bakers Creek Developments Pty Ltd v Pacific Homes (Mackay) Pty Ltd[2014] QDC 237

DISTRICT COURT OF QUEENSLAND

CITATION:

Bakers Creek Developments P/L atf for Bakers Creek Trust v Pacific Homes (Mackay) P/L & Anor [2014] QDC 237

PARTIES:

BAKERS CREEK DEVELOPMENTS PTY LTD ACN 118 020 581

 

ATF THE BAKERS CREEK TRUST

 

(Plaintiff)

and

PACIFIC HOMES (MACKAY) PTY LTD ACN 078 000 718

 

(First Defendant)

and

PAUL DINGLE

 

(Second Defendant)

FILE NO/S:

Mackay D45/2014

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Mackay

DELIVERED ON:

16 October 2014

DELIVERED AT:

Townsville

HEARING DATE:

04 August 2014

JUDGE:

Durward SC DCJ

ORDERS:

1 Application by plaintiff for summary judgment on its claim against the first defendant and the second defendant is granted.

2 Specific performance of the three contracts, for lots 217, 288 and 213 is decreed.

3 The first defendant and the second defendant are ordered to complete the three contracts for lots 217, 288 and 213 within sixty (60) days.

4 The first defendant and the second defendant to pay to the plaintiff its costs of the application and of the claim.

5 The parties have liberty to apply on seven (7) days notice.

CATCHWORDS:

LEGISLATION:

CASES:

PRACTICE & PROCEDURE – CONTRACTS – BREACH – SPECIFIC PERFORMANCE – whether first defendant in breach of three contracts as buyer of residential land – failure to complete in time – whether willing or able – alleged oral terms prior to execution of written contracts that are contrary to written terms – both parties legally represented at material times – no allegation by first defendant of any misleading or deceptive conduct by plaintiff – no equitable defence – no hardship made out – where second defendant on behalf of first defendant has not fully disclosed financial circumstances – where plaintiff has shown prima facie that first defendant and arguably second defendant had financial resources not disclosed – where onus of proof of hardship not discharged – whether specific performance should be granted

PRACTICE & PROCEDURE – SUMMARY JUDGMENT APPLICATION – whether any real prospect of first defendant successfully defending all or part of plaintiff’s claim – whether there is a need for a trial of the claim or part of the claim – where first defendant in clear breach of the contracts – we know defence made out – whether summary judgment appropriate to bring dispute to finality.

Rules 5 and 292 Uniform Civil Procedure Rules 1999; s 68 District Court Act 1967.

Equuscorp Pty Ltd & Ors v Glengallan Investments Pty Ltd & Ors (2004) 218 CLR 471; Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61; Hope v R.C.A. Photophone of Australia Pty Ltd (1937) 59 CLR 348; Fairborne Pty Ltd v Strata Store Noosa Pty Ltd [2009] QSC 250; Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232; George’s & Anor v Peter Wyeland & Ors [2010] NSWSC 1378 at [25]; Hamdan v Widodo [No 2] [2010] WASC 6; Morrow v Tucker (No 2) [2006] NSWSC 1358; Bradshaw v Henderson & Anor [2009] QDC 14; Dowsett v Reid (1912) 15 CLR 695; Tamplin v James 15 ChD 215; Boyarsky v Taylor [2008] NSWSC 1415; Evans & Anor v Robcorp Pty Ltd & Anor [2014] QSC 26; Lindaning Pty Ltd (M&RA) v Goodluck & Anor [2011] QSC 266.

COUNSEL:

A. O'Brien of counsel for the Plaintiff

P. Cullinane of counsel for the Defendants

SOLICITORS:

McKays Solicitors for the Plaintiff

Taylor’s Solicitors for the Defendants

  1. [1]
    The plaintiff is a developer of a subdivision known as ‘The Waters Ooralea’ (“the subdivision”). It is a multi-stage subdivision, which comprises in excess of 2,500 homes. Land is purchased off the plan. The first defendant is a builder of residential homes. The second defendant is the principal of the first defendant and trustee of the Pacific Homes Trust, which operates the business of the first defendant.

The contracts

  1. [2]
    On 5 September 2012, the first defendant contracted with the plaintiff to purchase three lots of land in the subdivision, namely lots 217, 288 and 213. There were three separate contracts. The contracts have common content, save for property description and sale price. There was in each case a deposit of $5,000.00. Each contract was made subject to finance.
  1. [3]
    The critical clauses in the contracts are as follows:
  1. (a)
    the plaintiff was the seller;
  1. (b)
    the first defendant was the purchaser;
  1. (c)
    settlement was to take place 90 days from the later of the contract date or the date of the “survey plan having registered and separate titles issued and written notice of registration been given by” the seller to the buyer;
  1. (d)
    if the survey plan registration did not occur within 18 months of the contract date, either party could elect to terminate the contract.  This is what is commonly referred to as a ‘sunset clause’;
  1. (e)
    time was of the essence;
  1. (f)
    the contract was a commercial contract;
  1. (g)
    the contract contained provisions about sewerage and water supply, in a generic sense, requiring those things to be provided on the date of settlement or on completion;
  1. (h)
    telephonic and IT services (National Broadband Network) and electricity supply were specifically said to depend upon the exercise of control by third parties and therefore might not be available at the date of settlement or completion; 
  1. (i)
    there was provision for a substitute buyer to stand in the shoes of the first defendant provided there was a contract between it and the buyer. The plaintiff accepted the risk that the substitute buyer might not complete the contract;
  1. (j)
    there was a separate deed of guarantee and indemnity in respect of the performance by the first defendant of its contractual obligations, executed by the second defendant in favour of the plaintiff.

Post contractual events

  1. [4]
    The first defendant had not satisfied the finance condition by the agreed time on 26 September 2012 and the plaintiff gave notice of termination of the contracts. However, the plaintiff agreed to re-instate the contracts subject to the first defendant’s confirmation, to its satisfaction, of the finance clause or alternatively its waiver of the finance clause, by 5pm on 27 September 2012.
  1. [5]
    The first defendant, in correspondence to the plaintiff’s solicitors later that day – and before the deadline for re-instatement - expressly waived the benefit of the finance condition on each of the contracts and unequivocally stated that the “proposed allotments are therefore unconditional in this regard”.
  1. [6]
    On 16 January 2014 separate titles for lots 217, 288 and 213 were issued. The requisite notice was given to the first defendant on 17 January 2014. Pursuant to the contracts the settlement date was therefore 14 April, 2014.
  1. [7]
    The first defendant failed to settle on the settlement date. The plaintiff says it was and still is willing, ready and able to settle each of the contracts on their written terms.

The proceedings

  1. [8]
    The plaintiff commenced proceedings against the first defendant and the second defendant by Claim and Statement of Claim filed on 05 May 2014. The plaintiff sought, inter alia, orders for specific performance of the contracts or, alternatively, damages.
  1. [9]
    The defendants in their Defence admit the written contracts but the second defendant says on behalf of the first defendant that there were oral terms which the defendants have relied on which do not form part of the written contracts; and assert that the oral terms were made between the second defendant and a representative of the plaintiff ( a Mr O'Riely, of the sales agency of the plaintiff, and a Ms Booth, an employee of the plaintiff or an associated entity) at a date prior to the execution of the written contracts. Those oral terms are said in the Defence to have applied in the same terms to each of the three lots that were purchased.
  1. [10]
    Whilst Mr Cullinane, for the defendant, submitted that the oral terms were agreed after the execution of the 3 written contracts, I reject that as being in error. The evidence and pleadings, to which I will refer shortly and in more detail, is to the contrary. The alleged oral terms of agreement, if they were made, were made before the execution of the written contracts.
  1. [11]
    The defendants raise the issue of unfairness and/or hardship, in the event that breaches of the contracts are established, such as would disentitle the plaintiff to specific performance of any or all of the contracts, due to the impecuniosities of the first defendant (as the buyer) and the second defendant (as guarantor) and/or the inability of either or both of them (in their respective capacities) to secure finance in order to complete the purchase of the lots.
  1. [12]
    Significantly, the defendants do not assert in the pleadings or otherwise any complaint that there has been any misleading or deceptive conduct by the plaintiff or that there is any other equitable defence to the plaintiff’s claim.

The alleged oral terms

  1. [13]
    The oral terms alleged by the second defendant, on behalf of the first defendant, are to the following effect:
  1. (a)
    the plaintiff was informed by the second defendant, on behalf of the first defendant, that the first contract was being entered into in order for substitute buyers to be found for the first proposed lot to be completed;
  1. (b)
    the plaintiff was informed by the second defendant, on behalf of the first defendant, that substitute buyers would only be found for the first proposed lot, upon services, including sewerage, telecommunications and electricity, being connected to the first proposed lot in order for a residence to be constructed on that lot; and
  1. (c)
    it was an oral term of the agreement entered into by the plaintiff and the second defendant, on behalf of the first defendant, that the services be connected to the first proposed lot, and a residence constructed on that lot, prior to settlement of the first contract taking effect. 
  1. [14]
    The defendants say that the settlement date has not yet arisen because the plaintiff has failed to complete, or satisfactorily complete, the connection of services referred to in the alleged oral agreements. Hence any breach of each of the three contracts is denied by the defendants and the right of the plaintiff to sue for specific performance or damages is denied.

The application

  1. [15]
    On 14 July 2014, the plaintiff brought an application seeking summary judgment on it’s claim; and a order for specific performance of each of the three contracts, as against each of the first defendant and the second defendant; and interest and costs on the indemnity basis.
  1. [16]
    The first defendant and the second defendant oppose the application, firstly on the ground that the date for settlement or completion has not been finalised because the oral terms alleged by the defendants have not been met by the plaintiff; and secondly, in so far as specific performance alone is concerned, on the ground that the plaintiff cannot succeed because of the alleged ground of hardship and unfairness.

Submissions

  1. [17]
    The plaintiff submitted that if the oral terms were in fact agreed upon, which it does not admit, it would render the written agreement completely unenforceable and would destroy the efficacy of what is on its face a sophisticated commercial contract. Consequently, it is submitted that such a result would be contrary to the accepted commercial and business considerations which rely upon and are dependent on the enforceability of written agreements in the commercial context.
  1. [18]
    Further, it was submitted on behalf of the plaintiff that the parties were represented at all material times throughout the contractual negotiation and execution process by lawyers; and that the alleged oral terms are completely at odds with the subsequent written terms. In so far as the latter are concerned the plaintiff’s submission is that the written terms constitute the whole of the contract, to the exclusion of any alleged oral terms, even if they were in fact made.
  1. [19]
    In other words, the plaintiff’s submission is that the allegation of oral terms (as I have outlined above) is not able to be made out by the defendants; and even if they were, they were superseded by the specific written terms of the contracts and are therefore immaterial.
  1. [20]
    It is submitted on behalf of the plaintiff that this is a case in which the first defendant has no reasonable prospects of defending the claim and therefore summary judgment for the plaintiff should be entered against the first defendant.
  1. [21]
    Hence it is submitted that the first defendant is bound by the express written terms of the contracts and that it is in breach, not having settled in accordance with the contracts. Subject to issues of unfairness or hardship, which the plaintiff says are not made out on any sworn or admissible documentary material, the first defendant cannot resist an order for specific performance.
  1. [22]
    In so far as the alleged oral terms are concerned, it is clear that the parties were each represented by lawyers prior to and at the time of the execution of the written contracts. The contracts are commercial contracts and are comprehensive. They deal specifically in written and contrary terms with the matters said to have been the subject of the oral terms alleged to have been made at a time prior to the execution of the written contracts.
  1. [23]
    In respect of contractual obligations, I find that the plaintiff has done all that is required of it to give effect to the completion of its contractual obligations and that the date of settlement has been fixed by reason of the survey plan having been registered, separate titles issued and written notice of registration given by the plaintiff to the defendants.
  1. [24]
    I do not need to determine whether or not the oral terms alleged by the defendants were made because even if they were, those terms are immaterial having been superseded by the written terms of each of the contracts. There is no question here of the first defendant (or second defendant for that matter) having been misled or otherwise deceived about the contracts or their terms because the defendants were represented by lawyers at all material times.
  1. [25]
    The alleged oral terms are plainly inconsistent with the terms of the written contracts between the parties and the court would be obliged to give effect to the written terms over any alleged oral terms, in the circumstances that I have described in this case.

Discussion

(a) The alleged oral terms

  1. [26]
    The precedence of written terms over oral terms in contract has been the subject of significant authority. In Equuscorp Pty Ltd & Ors v Glengallan Investments Pty Ltd & Ors (2004) 218 CLR 471 at 483, the Court delivered a joint judgment and wrote the following:

“The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. … Yet fundamental to the respondents’ case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.

There are reasons why the law adopts this position. First, it accords with the ‘general test of objectivity [that] is of pervasive influence in the law of contract’. The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.

Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time‑consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside.

The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement), but that has never been the respondents’ case. In another case it may leave open the possibility that the contract is partly oral and partly in writing. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties’ agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each respondent.”

  1. [27]
    The second defendant asserts that ‘he told the plaintiff’s representative(s) certain things’, which falls short of asserting any kind of ‘agreement’ between any two or three of them.
  1. [28]
    There is an inconsistency between the initial finance clause, subsequently waived, and an unconditional contract which, if the second defendant is correct, was really conditional upon it finding a subsequent purchaser.
  1. [29]
    The oral terms are commercially highly unlikely to be have been agreed to and the evidence does not explicitly refer to any agreement. The oral terms create and introduce uncertainty into an otherwise comprehensive commercial contract.

(b) The “whole agreement” clause in the contracts

  1. [30]
    The defendants in the written agreements and the written contracts have agreed to special conditions which provide that the contract stands alone as the whole of the agreement between the parties. In the general provisions of the special conditions in Annexure A to each of the contracts, clauses 2.3 and 2.8 provide as follows:

“2.3 This contract supersedes all prior representations, arrangements, understandings and agreements (whether written and/or verbal) between the parties relating to the subject matter of this contract and sets forth the entire and exclusive agreement and understanding between the parties relating to the subject matter of this contract.”

and

“2.8 The Buyer acknowledges that in entering into this contract the Buyer has not relied on any written or oral statements or representations made by the Seller or on the Seller’s behalf, other than those set out in this contract and the terms and conditions of this contract constitute the whole agreement between the parties.”

  1. [31]
    In Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61, Miles CJ wrote at p 105:

“In Codelfa, Mason J further observed (at 370) that the more detailed and comprehensive the contract, the less ground there is for supposing that the parties have failed to address their minds to the question at issue. To the observation of Mason J, it might be added with respect, that when a contract in complex terms, entered into at arms length after lengthy negotiation between parties of experience, expressly provides that it constitutes the whole of the agreement between the parties, then there can be very little ground indeed for any supposition that the parties have simply omitted to insert the agreed term into the written contract. In Johnson and Mathey indeed, McClelland J stated at 196 that a provision in a contract that it constitute the whole of the agreement itself raises an estoppel which in the absence of fraud or some overriding statutory provision prevents both parties going behind the terms of the agreement.”

  1. [32]
    In Hope v R.C.A. Photophone of Australia Pty Ltd (1937) 59 CLR 348, Latham CJ at pp 357-8 wrote:

“… when a right to adduce extrinsic evidence is claimed for the purpose of showing that the equipment referred to in the agreement in this case was new equipment, an attempt is being made, not to explain or to apply a contract, as in the special cases when such evidence is admissible, but to vary it by adding a new term. This is just what the law does not allow. When parties express their agreement in writing they do so for the purpose of securing certainty and preventing disputes. They may choose to leave their arrangements to the risks and chances of verbal evidence. But if they have recourse to writing for the purpose of recording their agreement, they cannot afterwards change their attitude and, by seeking to give parol evidence, introduce the very element of uncertainty which the adoption of writing was intended by both parties to exclude …

It is true that there are exceptional cases where the parties to a contract have not expressed all the terms of their contract in writing, and, accordingly, parol evidence is admitted to complete the written contract. In the present case, however, the parties have made an agreement in express terms which prevents either of them supplementing the written terms. Clause 27 of the agreement provides that the agreement as set forth in the document ‘contains the entire understanding of the respective parties with reference to the subject matter hereof and there is no other understanding agreement warranty or representation express or implied in any way binding extending defining or otherwise relating to the equipment or the provisions hereof on any of the matters to which these presents relate.’ The presence of this clause makes it unnecessary to discuss whether the defendant might, upon some amendment of his plea, be allowed to allege and prove the existence of a supplementary term that the equipment was to be new equipment.”

  1. [33]
    It follows that the written contracts in this case constitute the whole of the agreement between the parties and it is immaterial as to whether there had been any discussion between the second defendant and the plaintiff’s representative about contractual terms, because even if that had occurred such terms do not form part of the contract, have been superseded by the relevant parts of the contracts that were made in writing and what is enforceable in this case are the written contracts, to the exclusion of any alleged oral terms.
  1. [34]
    It is the written terms of the contracts which are to be given effect and which constitute the whole of the agreements between the parties and the contractual responsibilities of each of them.
  1. (c)
    Is the first defendant in breach?
  1. [35]
    Accordingly, I find that the first defendant is plainly in breach of each of the three contracts. Further, I find that the first defendant is unable to assert that it’s obligations are other than as set out in the written contracts, or to assert that it is not in breach of the contracts.
  1. [36]
    That being so, it seems to me that on the face of the written contracts and on my findings in respect of them, the contracts are enforceable and the first defendant does not have any basis upon which it could resist an enforcement of them.
  1. [37]
    Further, I find that the second defendant is bound by the terms of the contract of guarantee to indemnify the plaintiff for any loss or damage occasioned by the breaches of contract and default by the first defendant.
  1. [38]
    The findings that I have made on the face of the material, for the purposes of the application, arise from a careful construction of the written contracts. Those findings would on their face support an application for specific performance or damages, on a summary judgment application, subject to any issues of hardship or unfairness upon either or both of the defendants; or alternatively for summary judgment for damages in favour of the plaintiff.

Jurisdiction

  1. [39]
    This court has jurisdiction to make an order for specific performance of a contract in respect of land: s 68(b)(iii) District Court Act 1967.

Specific performance

  1. [40]
    Firstly, is a decree for specific performance impossible on the part of the first defendant to be complied with? The court will not order to be done that which cannot be done. However, if there is a possibility that specific performance can be complied with then such an order may be appropriate. On the other hand, if such a possibility is so remote so as to cast substantial doubt on the possibility of performance, then no order should be made and the plaintiff remedy would lie in damages.
  1. [41]
    Secondly, is an order for specific performance an exercise in futility? In the circumstances of this case, where it appears that the first defendant may have the means through distribution of trust assets – depending on the unencumbered equity that may be available – to meet an order for specific performance, utility does not really arise for consideration.
  1. [42]
    On the other hand, the issue of hardship has been raised on behalf of the first defendant, albeit not presented in evidence in my view in a compelling or complete way, which creates a real doubt as to whether the first defendant has discharged the onus of proof in respect to the issue of hardship.
  1. [43]
    Mr Cullinane submitted a distinction between legal and evidentiary proof. There is a difference I some circumstances as to where the burden of each falls. However, ‘hardship’ requires an evidentiary proof and it is the patent inadequacy of the evidence, or circumstances of factual matters otherwise prima facie established, in this case that is the issue.
  1. [44]
    I will deal with each of those issues, starting with hardship because the evidence about that matter is relevant to the other two issues.

Hardship

  1. [45]
    The first defendant carries the onus of proof. The plaintiff is not bound to require the second defendant for cross-examination on the hearing of an application such as this, as Mr Cullinane seemed to suggest.  Mr Cullinane says the evidence relied on by the defendants about hardship is therefore uncontroverted.  That may well be the case, to the extent of what has been disclosed by the second defendant, but it is nevertheless challenged by the plaintiff, in effect, on the basis that it is insufficient to discharge the onus of proof and fails to show hardship or unfairness. 
  1. [46]
    Whilst the Defence does allege hardship, it does not assert impossibility to complete. So much is apparent from paragraph 28(a) of the Defence.
  1. [47]
    The plaintiff sought further and better particulars in relation to paragraph 28(a) of the Defence in the following terms:

“10.1 How are the first defendant and second defendant impecunious? What are the material facts that are relied upon to support this conclusion?

10.2 How are the first defendant and second defendant unable to secure finance?

10.3 What attempts have been made by the first and second defendants to secure finance?

10.4 When was each such attempt made by each of the first and second defendants to secure finance?

10.5 With whom was each such attempt made by the first and second defendants to secure finance?”

  1. [48]
    The request was made under cover of a letter from the plaintiff’s solicitors to the solicitors for the defendants, dated 18 June 2014 and made it clear that the plaintiff did not accept that the first defendant and the second defendant were impecunious or unable to secure finance to perform their contractual obligations. There were no particulars provided by the solicitors for the defendants and in their letter in reply dated 23 June 2014 it was said that:

“Our clients’ Defence clearly provides that our clients are impecunious in the sense that our clients do not have sufficient cash to complete the three (3) Contracts and further, our clients cannot secure finance for these three (3) Contracts.”

  1. [49]
    The reference in the letter to the clients’ not having ‘sufficient cash’ is clearly a reference to the balance of the purchase price outstanding on the three contracts, namely $649,000.00.
  1. [50]
    The second defendant in an affidavit filed on 30 July 2014 swore that the first defendant had less than $70,000.00 in its bank account; that the Pacific Homes Trust, as operator of the first defendant, in the financial year ending 30 June 2012 made a net profit of $53,083.40; and in the financial year ending 30 June 2013 made a net loss of $242,997.93. He also swore that the first defendant in the past three financial years had built only 33, 13 and 7 residential dwellings respectively in the financial years ending 30 June 2012, 30 June 2013 and 30 June 2014. He swore that first defendant did not own any land in its own right or as trustee for the Pacific Homes Trust and did not carry on any business in its own right.
  1. [51]
    Insofar as his own financial position was concerned, the second defendant swore that he owned with his wife a residential property in Mackay which was subject to a registered mortgage from a lending institution. He swore that he had only one personal bank account, the balance being less than $5,000.00. He swore that he had contacted his financial institution on a number of occasions to request that any existing loan facility be extended to provide him with additional funds and had recently made an application to the bank in an attempt to secure finance approval to purchase the remaining lots.
  1. [52]
    At the time of the filing of the affidavit there had been no response from the bank. However, in an affidavit deposed by solicitor Mr Cunningham and filed by leave on 4 August 2014, a letter from Westpac Bank to the second defendant, in his capacity as director of the first defendant, was exhibited. The letter is not expressed particularly eloquently, but states the following:

“RE: Finance request

I refer to a recent request for finance to assist with completion of contracts in relation to land at ‘The Waters, Ooralea’ – purchased from Bakers Creek Developments Pty Ltd (lots 213, 217 and 288).

Further to my earlier letter, I have now received the Management Profit & Loss accounts for 2013/2014 year and ATO Portals for the Pacific Homes Trust.

Business performance does not provide for any level of additional financial assistance, and ATO position is of concern to the Bank given the increasing level of debt with no clear reduction strategy or arrangements in place, and outstanding lodgements evident.

Regrettably, on this basis we are unable to assist.

Should you have any queries, please do not hesitate to contact me.”

  1. [53]
    Mr Cullinane relies on that letter and the affidavit of the second defendant to discharge his client’s onus of proof.
  1. [54]
    The plaintiff has submitted that that material in respect of hardship or unfairness is insufficient to establish those two matters and discharge the onus of proof..
  1. [55]
    In Fairborne Pty Ltd v Strata Store Noosa Pty Ltd [2009] QSC 250, Daubney J wrote:

“[20] In Patel v Ali ([1984] 1 Ch 283), Goulding J said that ‘only in extraordinary and persuasive circumstances can hardship supply an excuse for resisting performance of a contract for the sale of immovable property’.”

  1. [56]
    His Honour continued (at [21]):

“[21] In Pasedina (Holdings) Pty Ltd v Khouri ((1977) BPR 9460), Holland J analysed the distinction between the defence of impossibility and the defence of hardship in cases of specific performance. He pointed out that the defence of impossibility was exemplified by a case such as Sewell v Webster ((1859) 29 LJ Ch 71), in which an order that the defendant specifically perform his promise to pull down a party wall would have required him to act contrary to a statute which governed the matter. This presented a case of ‘legal impossibility’. His Honour also referred to the case of Ferguson v Wilson ((1866) 2 LR Ch at 77) as an example of ‘factual impossibility’, being a case in which a plaintiff had sought specific performance of a promise to allot part of an issue of company shares, but before the plaintiff began his proceedings all of the issue had been allotted to others.

[22] The case with which I am now concerned does not present issues of either legal impossibility or factual impossibility. Rather, the first respondent relies on the defence of hardship. In that regard, Holland J in Pasedina (Holdings) Pty Ltd said:

‘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 complete: Fullers Theatres Ltd v Musgrove (1923) 31 CLR 524 at 548-9; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418at 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 injustice to the defendant.’”

  1. [57]
    The plaintiff submitted that the situation in Fairborne was similar to the situation in this case.  Further, the plaintiff submitted that the second defendant had not sworn in his affidavit that he or the first defendant could not complete the contracts for reasons of impecuniosity; that there had been no evidence provided as to the equity which the second defendant may have in the residential property owned by his wife and himself; that the builders license of the first defendant had been renewed in May 2014 (which he said carried an implication that the first defendant was sufficiently financially fit to trade); that no financial documents were been provided at the time of the hearing (although the second defendant says that they had not been received from the accountant, albeit the bank had clearly received some documentary material that had not yet found its way to Court); and that the second defendant’s affidavit was silent as to whether he had interests in any other assets. 
  1. [58]
    The plaintiff submitted that the second defendant was the beneficiary of a discretionary trust. Indeed, in the affidavit material of the plaintiff’s lawyer Ms Lauren Webster there is a series of exhibited documents describing the assets of the Pacific Place Property Trust (“the PPPTrust”). The second defendant and one Shaun Dingle, as trustees, are registered owners of four lots of real property in Mackay. Each lot is encumbered by mortgage. However, there is no evidence about the PPPTrust or about any equity held by it in the four lots.
  1. [59]
    In his affidavit the second defendant did not disclose the PPPTrust or his interest in it. He disclosed his joint ownership with his wife of their family home in Mackay, but rather disingenuously swore that “I do not own any other property in my own name”.  As a beneficiary of the PPPTrust, that is not strictly correct, subject to the exercise of discretion with respect to distributions.
  1. [60]
    The correspondence from Westpac, to which I have referred, does not refer to the PPPTrust. Further, the mortgages over the trust properties are not held by Westpac. They are held by two individuals with respect to one property and by St George Bank Limited in respect of the other three properties.

Discussion: Specific Performance

  1. [61]
    On behalf of the plaintiff, Mr O'Brien submitted that the plaintiff was entitled to have the contracts specifically performed and that the orders sought in that regard ought to be made by the Court.
  1. [62]
    Mr Cullinane opposed any order for summary judgment and submitted that an order for specific performance should not be made. If summary judgment was ordered by the court, he submitted that it should be confined to an assessment of damages in lieu of specific performance.
  1. [63]
    It is open to the court to order specific performance and grant further relief to address a circumstance where the defendant fails or refuses to complete the contract, by rescinding the order and substituting alternative relief: George’s & Anor v Peter Wyeland & Ors [2010] NSWSC 1378 at [25] per Brereton J. 
  1. [64]
    Thus Mr Cullinane’s submission that such a course of action was available in this case, as proposed by the plaintiff, to the effect that such an order was not regular, is not sustainable.
  1. [65]
    A further illustration of an order that contemplates a failure or refusal to perform is in Hamdan v Widodo [No 2] [2010] WASC 6, per Johnson J at paragraphs 92, 93 and 97. 
  1. [66]
    His Honour referred to a judgment of Biscoe AJ in Morrow v Tucker (No 2) [2006] NSWSC 1358.  His Honour Biscoe AJ discussed a number of authorities with respect to a decree of specific performance and the consequence of its making.  So far as is relevant, his Honour wrote:

“(4) Where an order for specific performance is obtained by the vendor, the vendor is entitled to apply to the court in the same proceedings and obtain an order for enforcement of the order or may apply to the court to dissolve the order and ask the court to put an end to the contract by discharging the order for specific performance and terminating the contract. An order discharging the contract may even be obtained where, before the order could be carried out, the vendor’s mortgagees sold the property and title could not be passed …”

  1. [67]
    Johnson J wrote:

“94 The common thread to all of these propositions is that the supervisory role of the court and the need to obtain leave to bring either the order for specific performance or the contract to an end;”

and

“97 … Once an order for specific performance has beenmade the contractual rights of the parties are not superseded but the future exercise of the right and performance of obligations under the contract, or the working out of the order for specific performance, is under the control of the court.”

[68]Mr O'Brien submitted for the plaintiff that if there was a genuine case of impecuniosity, not made out on this application by the second defendant, then making an order for specific performance would clarify the obligations on the defendants to make good a case of hardship if that were able to be done.  If they were able to do so, Mr O'Brien submitted that they could thereafter apply to be discharged from the orders or raise them to defend further enforcement proceedings.  Mr O'Brien referred to the authorities to which I have discussed above and to Spry on Equitable Remedies, 8th Edition, at page 128.

  1. [69]
    Specific performance, being a discretionary remedy, will not be granted if it is inappropriate so to do. Hardship is one basis upon which an order may be inappropriate, if it is made out on the evidence. Where specific performance is not ordered, the alternative is to revert to an award of damages upon an assessment as at the date upon which specific performance is refused: see the discussion in Bradshaw v Henderson & Anor [2009] QDC 14 for Allan Wilson SC DCJ (as he then was).
  1. [70]
    The issue of hardship and the potential inappropriateness of an order for specific performance has been the subject of other authority: Griffith CJ wrote in Dowsett v Reid (1912) 15 CLR 695 that “it is a well established doctrine that the court will not enforce the specific performance of a contract, the result of which would be to impose great hardship on either of the parties to it, and this although the party seeking specific performance may be freed from the least impropriety of conduct; and in Tamplin v James 15 ChD 215 Lord Cotton observed that if specific performance was refused the court would be bound to consider the question of damages.
  1. [71]
    The question of hardship involves an exercise of balance as between the rights of the applicant for specific performance and the position of the party who asserts hardship. However, “hardship will only be a reason for declining specific performance if there is, in substance a disproportionate hardship to the [party asserting hardship] when that balancing exercise is undertaken”: Boyarsky v Taylor [2008] NSWSC 1415 at paragraph 31.
  1. [72]
    I was referred to Evans & Anor v Robcorp Pty Ltd & Anor [2014] QSC 26. That case is distinguishable. The hardship issue was well supported by evidence. That is not the case here. I have also read the observations of Byrne SJA in Lindaning Pty Ltd (M&RA) v Goodluck & Anor [2011] QSC 266 in arriving at my view that a decree of specific performance is appropriate in this case.

Impossibility and Futility

  1. [73]
    For the reasons expressed above in the review of evidence of hardship and the discussion following, I do not consider that a decree of specific performance would be futile in this case. I do not consider that such an order would be impossible for the first and second defendants to comply with.

Summary judgment

  1. [74]
    The application is made pursuant to r 292 UCPR:

“292 Summary judgment for plaintiff

(1) A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the Court under this part for judgment against the defendant.

(2) If the Court is satisfied that –

(a) the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and

(b) there is no need for a trial of the claim or the part of the claim;

the Court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the Court considers appropriate.”

Discussion: summary judgment

  1. [75]
    Summary judgment should only be given in the clearest of cases. There should be no real dispute of material fact. The Court customarily proceeds cautiously and summary judgment is not given “as a matter of course”. The onus in the first instance is on the applicant to show that summary judgment ought to be given. However, the respondent has an evidentiary onus of showing that he has a defence or that there is a serious question for trial. See Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232.
  1. [76]
    Mr O'Brien in his written submission set out a list of general principles drawn from recent cases concerning circumstances where summary judgment is appropriate. It seems to me, that his summary is a simple way of expressing the position supported by authority:

“(a) summary judgment should only be given in the very clearest of cases where there is high degree of certainty about the ultimate outcome of the proceedings if they went to trial;

(b)the principle is that issues raised in proceedings are to be determined in a summary way only in the clearest of cases;

(c)summary judgment will not be obtained as a matter of course;

(d)the exercise of powers to summarily terminate proceedings must always be attended with caution;

(e)it is for the applicant to show that ‘there is no real disputed material fact, not that the allegations are implausible or admit of no reasonable argument’; and

(f)the court must look ‘at the evidence to see … whether there is any ambiguity, contradiction, or other divergence with respect to a material fact such as to require a full trial’.”

  1. [77]
    Mr O'Brien had footnoted the authorities from which he drew those statements of principle, in his written submission and his summary adequately expresses the current state of authorities.

Conclusion

  1. [78]
    In my view, as I have expressed in the course of this judgment, the defendants have no prospect of successfully defending the claim and specific performance in my view is appropriate in all the circumstances. It follows that the plaintiff’s application for summary judgment should be granted and the plaintiff should have an order for specific performance of the contracts.

Costs

  1. [79]
    I do not consider that this is a matter where costs on the indemnity basis are justified. In that circumstance, the general rule would apply and the first and second defendants should pay to the plaintiff its costs of the application and the claim on the standard basis.

Orders:

 1 Application by plaintiff for summary judgment on its claim against the first defendant and the second defendant is granted.

 2 Specific performance of the three contracts, for lots 217, 288 and 213 is decreed.

 3 The first defendant and the second defendant are ordered to complete the three contracts for lots 217, 288 and 213 within sixty (60) days.

 4 The first defendant and the second defendant to pay to the plaintiff its costs of the application and of the claim.

 5 The parties have liberty to apply on seven (7) days notice. 

Close

Editorial Notes

  • Published Case Name:

    Bakers Creek Developments P/L atf for Bakers Creek Trust v Pacific Homes (Mackay) P/L & Anor

  • Shortened Case Name:

    Bakers Creek Developments Pty Ltd v Pacific Homes (Mackay) Pty Ltd

  • MNC:

    [2014] QDC 237

  • Court:

    QDC

  • Judge(s):

    Durward DCJ

  • Date:

    16 Oct 2014

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Boyarsky v Taylor [2008] NSWSC 1415
2 citations
Jump To
Cite 1 - [2008] NSWSC 1415
Cite 2 - [2008] NSWSC 1415
Bradshaw v Henderson [2009] QDC 14
2 citations
Jump To
Cite 1 - [2009] QDC 14
Cite 2 - [2009] QDC 14
Deputy Commissioner of Taxation v Salcedo[2005] 2 Qd R 232; [2005] QCA 227
2 citations
Jump To
Cite 1 - [2005] 2 Qd R 232
Cite 2 - [2005] 2 Qd R 232
Dowsett v Reid (1912) 15 CLR 695
2 citations
Jump To
Cite 1 - (1912) 15 CLR 695
Cite 2 - (1912) 15 CLR 695
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471
2 citations
Jump To
Cite 1 - (2004) 218 CLR 471
Cite 2 - (2004) 218 CLR 471
Evans v Robcorp Pty Ltd[2015] 2 Qd R 111; [2014] QSC 26
2 citations
Jump To
Cite 1 - [2014] QSC 26
Cite 2 - [2014] QSC 26
Fairborne Pty Ltd v Strata Store Noosa Pty Ltd [2009] QSC 250
3 citations
Jump To
Cite 1 - [2009] QSC 250
Cite 2 - [2009] QSC 250
Cite 3 - [2009] QSC 250
FERGSUON V. WILSON (1866) 2 LR Ch 77
1 citation
Jump To
Cite 1 - (1866) 2 LR Ch 77
Fullers Theatres Ltd v Musgrove (1923) 31 CLR 524
1 citation
Jump To
Cite 1 - (1923) 31 CLR 524
Georges v Peter Wieland [2010] NSWSC 1378
2 citations
Jump To
Cite 1 - [2010] NSWSC 1378
Cite 2 - [2010] NSWSC 1378
Hamdan v Widodo (No 2) [2010] WASC 6
2 citations
Jump To
Cite 1 - [2010] WASC 6
Cite 2 - [2010] WASC 6
Hope v RCA Photophone of Australia Pty Ltd (1937) 59 CLR 348
2 citations
Jump To
Cite 1 - (1937) 59 CLR 348
Cite 2 - (1937) 59 CLR 348
Lindaning Pty Ltd (Receivers and Managers Appointed) v Dean Goodlock [2011] QSC 266
2 citations
Jump To
Cite 1 - [2011] QSC 266
Cite 2 - [2011] QSC 266
Morrow v Tucker (No 2) [2006] NSWSC 1358
2 citations
Jump To
Cite 1 - [2006] NSWSC 1358
Cite 2 - [2006] NSWSC 1358
Pasedina (Holdings) Pty Ltd v Khouri (1977) BPR 9460
1 citation
Jump To
Cite 1 - (1977) BPR 9460
Patel v Ali (1984) 1 Ch 283
1 citation
Jump To
Cite 1 - (1984) 1 Ch 283
Seawell v Webster (1859) 29 L.J. Ch. 71
1 citation
Jump To
Cite 1 - (1859) 29 L.J. Ch. 71
Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61
2 citations
Jump To
Cite 1 - (1995) 126 FLR 61
Cite 2 - (1995) 126 FLR 61
Suttor v Gundowda Pty Ltd (1950) 81 C.L.R., 418
1 citation
Jump To
Cite 1 - (1950) 81 C.L.R., 418
Tamplin v James (1880) 15 Ch. D. 215
2 citations
Jump To
Cite 1 - (1880) 15 Ch. D. 215
Cite 2 - (1880) 15 Ch. D. 215

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.