Plaintiff Seeks Specific Performance for Sale of Land

Northside Veterinary Property Pty Ltd v Dalmacija Sydney Croatian Club Ltd [2022] NSWSC 589 (16 May 2022)

The plaintiff seeks relief in the nature of specific performance in respect of a contract for the sale of land it claims was entered into with the defendant.  The defendant claims that lapse of time and protracted negotiations should defeat plaintiff’s claim for specific performance.  The Court, in resolving this dispute, assessed lapse of time, trickiness, great hardship, and damages as appropriate alternative remedy. 

Facts:

The plaintiff, Northside Veterinary Property Pty Ltd (“Northside”), seeks relief in the nature of specific performance in respect of a contract for the sale of land it claims was entered into on 23 June 2021 with the first defendant, Dalmacija Sydney Croatian Club Ltd (“the Club”). 

The contract is for the sale of a property at 16 Myoora Road, Terrey Hills for a price of $5,170,000 (including GST).  The sale is expressed to be subject to the grant of a lease back to the Club for a term of 5 years.  The relevant land is the land contained in Lot 100 in DP709585.  The registered proprietor of the land is recorded as Dalmacija Sydney Social Club Ltd.  That is the former name of the Club. 

The Club denies that a binding contract for sale came into existence.  It contends that there is disconformity between the counterparts of the contract that were exchanged.  It further contends that the persons who signed the contract for the Club lacked either actual or ostensible authority to bind the Club to the contract.  In the event it is held that a binding contract was made, the Club also raises a number of discretionary defences to the claim for specific performance, including “trickiness” on the part of Northside, and hardship.

In the present case, the Club raises various matters it says should lead the Court to decline the equitable remedy in its discretion: 

1. lapse of time;
2. trickiness;
3. great hardship; and
4. damages are an appropriate alternative remedy.

Issue:

Whether or not it is appropriate in this case to grant relief in the nature of specific performance.

Applicable law:

Corporations Act 2001 (Cth), s 127(1), s 128 - provides (subject to the qualification contained in s 128(4)) that a person having dealings with a company is entitled to make certain assumptions in relation to such dealings; and the company is not entitled to assert (in proceedings in relation to the dealings) that the assumptions are incorrect.

Registered Clubs Act 1976 (NSW), s 41E - provides that a registered club must not dispose of any core property of the club unless--

(a) the property has been valued by a qualified valuer, and

(b) the disposal has been approved at a general meeting of the ordinary members of the club at which a majority of the votes cast supported the approval, and

(c) any sale is by way of public auction or open tender conducted by an independent real estate agent or auctioneer. 

Adderley v Dixon [1824] EngR 376; (1824) 1 Sim & St 607; 57 ER 239 - provides that the contract, being a contract for the sale of land, is of a species for which it is commonly appropriate to grant equitable relief in the nature of specific performance.

Australia and New Zealand Banking Group Ltd v Frenmast Pty Ltd (2013) 282 FLR 351; [2013] NSWCA 459 - where by its conduct, the board of the Club permitted Tom Bosnic and Veljko Bosnic to conduct negotiations over a lengthy period with Mr Buffa concerning a possible sale or lease of the property.

Caratti v Mammoth Investments Pty Ltd (2016) 50 WAR 84; [2016] WASCA 84 - relied upon in holding that it has not been established that, at the time of the dealings, Mr Buffa actually knew or actually suspected that the Club’s constitution had not been complied with. 

Longtom Pty Ltd v Oberon Shire Council (1996) 7 BPR 14,799 - provides that in considering hardship as a defence to an order for specific performance, the focus is the effect that a decree of specific performance would have upon the defendant.

Morris v Kanssen [1946] AC 459 - provides that it is not necessary to consider whether the same conclusion would be reached applying the general law principles concerning the so-called “indoor management rule”.

Norton v Angus [1926] HCA 35; (1926) 38 CLR 523 - where the relevant contract for sale was not rendered illegal by the applicable legislation, but completion of the conveyance in a manner that would not offend the legislation was problematic for the purchaser, who faced a risk of forfeiture of the land.

Sindel v Georgiou (1984) 154 CLR 661 - relied upon in holding that the exchange of the counterparts, effected by Cameron Legal on 23 June 2021, evinced an intention that the parties would thereby be bound by a contract on the terms (other than the form of guarantee) that were common to each counterpart.

Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068 - provides that the qualification contained in s 128(4) is that a person is not entitled to make an assumption in s 129 if, at the time of the dealings, they actually knew or actually suspected that the assumption was incorrect.

Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 - provides that the remedy is not one that should lightly be refused in a case, such as this, involving a contract for the sale of land. 

Analysis:

The Club asserts that Mr Buffa engaged the Club in protracted negotiations over an extended period (from about early-2018 to 2021), yet the purchase price offered to the Club remained largely the same throughout.  It was further put that the sale was effected without a public marketing campaign or auction, and without the obtaining of any independent valuations of the property. 

However, that the negotiations continued, sporadically, over a number of years, indicates that the Club had ample time to undertake whatever enquiries (including the obtaining of valuations) it considered prudent in considering whether to agree to sell the property.  It was submitted by the Club that in various ways Mr Buffa behaved in a tricky or less than forthright manner.

However, it does not appear that there was any misrepresentation concerning the value of the property as alleged.  It appears that at Mr Buffa’s first meeting with Veljko Bosnic in January 2018, Veljko Bosnic already had an idea that the property had a value in the vicinity of $5 million, but that a lower price might be acceptable if the Club was allowed to continue at the premises rent-free for a period.  

The contract was concluded after a lengthy period of negotiation that was conducted on the Club’s side by the two directors to whom the commercial management of the Club was essentially left, and following the resolution passed at the Annual General Meeting on 6 December 2020.  Of course, even if the purchase price is in fact below the true market value of the property, that does not in and of itself establish relevant hardship. 

Conclusion:

The Club has failed to establish either of the matters it says should lead to the conclusion that no binding contract came into existence.  A binding contract for the sale of the Myoora Road property came into existence when Cameron Legal effected the exchange of contracts on 23 June 2021.  Orders to be made in the nature of specific performance.