Boyarsky v Taylor

[2009] NSWSC 468

CITATION:	Boyarsky v Taylor [2009] NSWSC 468
HEARING DATE(S):	1 May 2009
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	1 May 2009
DECISION:	Defendant to pay interest plus costs.
CATCHWORDS:	CONVEYANCING – penalty interest for delay – where charge for land tax arises after contractual completion date – whether purchaser’s failure to complete caused by inability of vendor to complete
CATEGORY:	Consequential orders
CASES CITED:	Boyarsky v Taylor [2008] NSWSC 1415
PARTIES:	Andrew David Boyarsky (plaintiff) Andrew Peter Taylor (defendant)
FILE NUMBER(S):	SC 5969/08
COUNSEL:	Mr R Bellamy (plaintiff) Mr P Walsh (defendant)
SOLICITORS:	Morgan Lewis Attorneys (plaintiff) C P White & Hetherington (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Friday 1 May 2009

5969/08 Andrew David Boyarsky v Andrew Peter Taylor

JUDGMENT (ex tempore)

1 HIS HONOUR: The background in this matter is described in my judgment of 19 December 2008 [[2008] NSWSC 1415], pursuant to which I declared that the terms of a Contract for Sale between the plaintiff as purchaser and the defendant as vendor of a property at Bellevue Hill ought to be specifically performed and carried into execution, and made an order for specific performance, reserving liberty to both parties to apply – including for further directions to appoint a date for completion and, if appropriate, a decision for the decree. The Contract was ultimately completed on 3 March 2009.

2 Special Condition 6 of the Contract provided as follows:

Purchaser Delay

(a) If for any reason other than default on the part of the vendor, the purchaser does not complete this contract on or before the contract completion date, then on completion the purchaser must pay the vendor (by bank cheque at completion) interest calculated at the default rate on the price payable under this contract in respect of the period commencing on the day after the completion date and ending on completion. It is agreed that this interest calculation represents a genuine pre-estimate of the vendor’s losses and damages if completion is delayed otherwise than by vendor default.

(b) Despite paragraph (a), the purchaser need not pay interest under this paragraph in respect of any period during which the purchaser’s failure to complete is caused by the inability of the vendors to complete or, if the vendor is able to complete but fails to do so, by the vendor’s failure to complete.

(c) The purchaser is in default and cannot require the vendor to complete this contract unless the interest payable under this contract is paid to the vendor on completion.

3 The default rate of interest was defined in Special Condition 1.1 as 13 percent per annum, simple interest calculated on a daily basis.

4 Clause 16.6 of the Contract provided as follows:

If the purchaser serves a land tax certificate showing a charge on any of the land, on completion the vendor must give the purchaser a land tax certificate showing the charge is no longer effective against the land.

5 The Completion Date under the Contract was 25 November 2008. The defendant did not settle on that date, asserting that he could not do so until he had received the proceeds of sale of his former matrimonial home at Mosman. In respect of the 2008 year land tax had been paid, and the defendant was in a position to give clear title in respect of land tax as at the date fixed for completion under the Contract and indeed, up to and including 31 December 2008. However, because the property remained in the ownership of the vendor on 31 December 2008, additional land tax become payable by 31 March 2009.

6 On 16 February 2009, the defendant’s solicitors wrote to the plaintiff, indicating that, having made efforts to obtain alternative finance:

Our client in those circumstances is now able to complete at the purchase price of $3,331,000. Our client instructs that his finances will be exhausted by settlement on this basis together with payment of stamp duty and other costs. In a true spirit of compromise insofar as the penalty interest is concerned our client is prepared to offer as an adjustment the sum of $30,000 in full and final settlement of that Contract adjustment ... .

7 This was, therefore, an offer to settle for a sum less than the plaintiff’s entitlement upon completion – since the plaintiff was entitled to the full amount, and not a compromise amount, of the penalty interest on completion.

8 In the same letter, the defendant’s solicitors served a section 47 Certificate, showing that there was an outstanding charge for land tax for the 2009 tax year, they requested removal of that charge.

9 The plaintiff having, on 16 February, indicated that it would take some time to obtain a clear land tax certificate, the defendant’s solicitors asserted that their client was ready, willing and able to complete as from 18 February, and supplied cheque details by 2pm on 17 February. There is – apart from bare assertion – no evidence that the defendant was in a position to complete at the price properly payable under the Contract, including interest, and the proper inference is that it was not, having regard both to its inability to do so on 16 February and its inability to do so just a couple of days later, once the plaintiff had obtained a clear land tax certificate that the defendant remained unable to do so. The plaintiff paid the land tax on 20 February 2009.

10 The defendant submits that, in circumstances where the land was subject to a charge for land tax – from 1 January 2009 until 20 February 2009 – the plaintiff is not entitled to interest for that period.

11 Clause 16.6 requires only that a land tax certificate be provided on completion. Special Condition 6(b) requires consideration of whether the purchaser’s failure to complete is caused by the inability of the vendor to complete. It is not satisfied merely if the vendor is unable to complete; it is dependent on the vendor’s inability to complete being the cause of the purchaser’s failure to complete.

12 The purchaser failed to complete during 2008 because of insufficiency of funds. The purchaser remained unable to complete until 3 March 2009 because of insufficiency of funds. The purchaser’s failure to complete was at no time caused by the inability of the vendor to complete due to the existence of any charge for land tax.

13 Accordingly, the plaintiff has made out its case for interest up to and including the date of completion. I make order 1 in the Notice of Motion filed 25 March 2009. I give judgment that the defendant pay the plaintiff $20,864.78. I order that the defendant pay the plaintiff’s costs.

14 I do not think the defendant can be criticised for choosing this forum rather than the private arbitration as the appropriate forum for the resolution of the outstanding interest. Although the defendant’s case was a weak one, I am not asked to take into account any offer that has been made, whether under the rules or otherwise in respect of the costs issue. In those circumstances, although the plaintiff has succeeded, it seems to me that – with the exception of the costs of the adjournment – the costs order should be on the ordinary basis. I decline to make an indemnity costs order.

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