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The Facts
Property buyer to provide form of transfer of property
On 23 October 2014, two companies entered into a standard NSW
contract for the sale of land with a sale price of close to $2
million. The contract specified a fixed completion date of 30
January 2015 and a paper-based settlement. The contract required
that the buyer prepare and provide the seller with the form of
transfer of the property at least 14 days before the completion
date.
Property seller issues buyer with Notice to Complete
As the completion date approached, the buyer's solicitor
advised that the buyer would not be ready to settle on that
day.
The seller issued a Notice to Complete to the buyer, advising
the buyer that it must complete the contract "on or before 3pm
Tuesday 17 February 2015", adding that "in this respect
time is of the essence of the contract."
The buyer provided the seller with the form of transfer of the
property. However, it was not in the correct form and the seller
could not execute it as a company. The director for the seller
instead executed the transfer in his personal capacity as an
individual.
Defect in transfer document spotted at settlement
conference
The parties agreed to complete the contract on 16 February 2015.
At the settlement conference, the buyer's agent pointed out
that the transfer had not been properly executed. The parties
decided to reschedule completion for the next business day, 17
February 2015.
However, the mortgagee for the seller later advised that it
would not be able to effect settlement on 17 February 2015 as, due
to an internal policy, it required three clear business days to
reschedule a settlement. Nevertheless, the buyer's solicitor
advised that it remained "ready, willing and able" to
complete the contract the next day.
The contract was not completed on 17 February 2015 and on 26
February 2015 the seller served a notice of termination of contract
on the buyer, advising the buyer that the contract was terminated
and that the 10% deposit paid by the buyer was now forfeited.
The property buyer commenced proceedings against the seller to
recover the deposit.
case a - The case for the seller
case b - The case for the buyer
The buyer provided an incorrect form of transfer on three
occasions. It was the buyer's responsibility under the contract
to supply the correct form of transfer at least 14 days before the
completion date.
Our only obligation was to execute the form of transfer
submitted by the buyer.
The buyer should have advised well ahead of the completion date
that the transfer was not in the correct form for execution by a
company. We were not required to bring this defect to the
buyer's attention.
The settlement did not occur on 16 February 2015 because of the
incorrect form of transfer supplied by the buyer, so the sale
falling through is entirely the buyer's fault.
The buyer defaulted on the contract by failing to complete in
accordance with our Notice to Complete.
As a result of this default, the court should find that we were
entitled to terminate the contract and retain the 10% deposit paid
by the buyer.
It was the seller's responsibility under the contract to
produce at the settlement conference all documents necessary for us
to be able to effect registration of the transfer with the Land
Titles Office.
The seller failed to fulfil this condition by incorrectly
executing the transfer as an individual, instead of as a
company.
The settlement could still have taken place on 16 February 2015
as the transfer could easily have been amended by hand at the
settlement conference itself. That option was acceptable to us,
however the signatory for the seller was not present or contactable
by phone.
We indicated to the seller's legal clerk that if she was
prepared to stay at the settlement conference, the matter could
easily be rectified. However, she had to leave because she was
"busy".
We were ready, willing and able to complete the transaction on
16 February but the seller was not. When settlement did not take
place that day, we were again ready, willing and able to complete
the transaction on the following day, but again, the seller was
not.
Because the seller was not ready to complete the transaction,
it should have withdrawn its Notice to Complete. The court should
find that we are not in default and that the seller is not entitled
to terminate the contract or retain the 10% deposit.
So, which case won?
Cast your judgment below to find
out
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