AAN MP Pty Ltd as trustee for the AAN MP Unit Trust v Camilleri [2023] NSWSC 737

Catchwords: CIVIL PROCEDURE — Summary disposal — Judgment for plaintiff — Whether summary judgment should be ordered in favour of plaintiff — W hether no defence reasonably arguable on facts — W he re arguable defence that statutory right of rescission can be waived or contract for sale can be affirmed — Where not appropriate to make such a determination on summary judgment motion CIVIL PROCEDURE — Separate determination of questions — Where appropriate — Where pleadings had not closed — Where separate hearing would not narrow issues for trial — Where separate hearing could lead to extra delay and expense — Where separate hearing is not appropriate in the circumstances LAND LAW — Conveyancing — Contract for sale — Rescission — Where purchaser exercised call option to purchase residential property — Where purchaser seeks to exercise statutory right of rescission — Where basis for rescission turns on absence of swimming pool certificate — Whether there was a “swimming pool” under s 3 of the Swimming Pools Act 1992 ( NSW) — Where vendors contend the purchaser waived the right to rescind — Where vendors contend the purchaser elected to affirm the call option and exchange contracts Supreme Court New South Wales Medium Neutral Citation: AAN MP Pty Ltd as trustee for the AAN MP Unit Trust v Camilleri [2023] NSWSC 737 Hearing dates: 15 June 2023 Decision date: 29 June 2023 Jurisdiction: Equity - Real Property List Before: Peden J Decision: (1) The applicant ’ s notice of motion is dismissed with costs. (2) Stands the matter for directions in the Real Property List on 7 July 2023. Catchwords: CIVIL PROCEDURE — Summary disposal — Judgment for plaintiff — Whether summary judgment should be ordered in favour of plaintiff — W hether no defence reasonably arguable on facts — W he re arguable defence that statutory right of rescission can be waived or contract for sale can be affirmed — Where not appropriate to make such a determination on summary judgment motion CIVIL PROCEDURE — Separate determination of questions — Where appropriate — Where pleadings had not closed — Where separate hearing would not narrow issues for trial — Where separate hearing could lead to extra delay and expense — Where separate hearing is not appropriate in the circumstances LAND LAW — Conveyancing — Contract for sale — Rescission — Where purchaser exercised call option to purchase residential property — Where purchaser seeks to exercise statutory right of rescission — Where basis for rescission turns on absence of swimming pool certificate — Whether there was a “swimming pool” under s 3 of the Swimming Pools Act 1992 ( NSW) — Where vendors contend the purchaser waived the right to rescind — Where vendors contend the purchaser elected to affirm the call option and exchange contracts Legislation Cited: Conveyancing Act 1919 (NSW) ss 52A, 66ZI Conveyancing ( Sale of Land) Regulation 2017 ( NSW) reg 4(1) , Sch 1, cl 15(1) Evidence Act 1995 (NSW) s 138 Swimming Pools Act 1992 (NSW) ss 3 , 4, Pt 3A Unform Civil Procedure Rules 2005 ( NSW) rr 13.1 , 28.2 Cases Cited: AAI Ltd ( t/as Vero Insurance) v Solarus Projects Pty Ltd ( Receivers and Managers appointed) ( in liq) [2014] NSWCA 168 Allianz Australia Insurance Limited v Delor Vue CTS 39788 [2022] HCA 38 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 602 Chalak v G & G Mikhael Pty Ltd [2022] NSWCA 116 Eurobodalla Council v K & R Baron ( Land and Environment Court ( NSW), 7 December 1994, unrep) Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 Molotu Pty Ltd v Solar Power Ltd (1989) 6 BPR 13,460 O’Brien v Bank of Western Australia [2013] NSWCA 71 Sidebottom v Cureton ( 1937) 54 WN (NSW) 88 Spencer v Commonwealth (2010) 241 CLR 118 Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 Tepko Pty Ltd v Water Board ( 2001) 206 CLR 1 Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited [2019] NSWCA 262 Young v Hones [2014] NSWCA 337 Texts Cited: Practice Note SC EQ 12 Category: Principal judgment Parties: AAN MP Pty Ltd ACN 654 923 547 as trustee for the AAN MP Unit Trust (First Plaintiff/First Cross-Defendant/First Applicant) Adam Arash Naebkhil (Second Plaintiff/Second Applicant) Joseph Camilleri (First Defendant/First Cross-Claimant/First Respondent) Josephine Camilleri (Second Defendant/Second Cross-Claimant/Second Respondent) Angelo Margiotta (Second Cross-Defendant) One Law Group Pty Ltd (Third Cross-Defendant) Representation: Counsel: D Meyerowitz-Katz (Plaintiffs/First Cross-Defendant/ Applicants) P Barham (Defendants/Cross-Claimants/ Respondents) P Sharp (Second and Third Cross-Defendants) Solicitors: William Boxsell Georgas Lawyers (Plaintiffs/First Cross-Defendant/Applicants) Hammond Law Firm (Defendants/Cross-Claimants/ Respondents) Moray & Agnew (Second and Third Cross-Defendants) File Number(s): 2022/358349 Publication restriction: Nil Judgment By notice of motion filed 19 April 2023, t he applicant s seek orders for summary judgment or for the hearing of a separate question. The applicants are plaintiffs and purchasers of land in proceedings in which they seek an order declaring that they validly rescinded a contract for the sale of land in Marsden Park pursuant to s 66ZI Conveyancing Act 1919 (NSW) . The applicants ’ substantive case rests on the failure of the defendant vendors to annex to the contract a valid certificate issued under the Swimming Pools Act 1992 (NSW) ( SP Act ) . T he applicants say that such failure gives them a right to rescind under s 66ZI. Section 66ZI relevantly provides: 66ZI Annexure of proposed contract for sale of land (1) If an option to purchase residential property is granted and the required documents are not attached to the option document at the time it is granted, either party may serve a written notice to the effect that the party rescinds the option or (if the option has been exercised) the contract resulting from the exercise of the option. (2) For the purposes of this section, the required documents are-- … (b) the documents required by section 52A to be attached to the contract before signature by the purchaser. … Section 52A(2)(a) requires a vendor to attach any documents or copies of documents as prescribed. For the purposes of that provision, the Conveyancing (Sale of Land) Regulation 2017 (NSW) requires the attachment of a valid certificate of compliance where such a certificate is required by the SP Act : reg 4(1) and Sch 1, cl 15(1). A compliance certificate is required where a “ swimming pool ” is situated on premises on which a residential building is located : SP Act s 4 . The contract for sale of land had been attached to a call option deed dated 23 November 2021. On 3 November 2022, t he option was exercised and the contract formed . On 4 November 2022, the plaintiffs served a notice of rescission. It is common ground that the option was an option to purchase residential property and the contract did not annex the requisite certificate. The defendants defend the plaintiffs ’ claim primarily on the basis that at the date of the formation of the option, there was no requirement to attach a certificate, because there was no longer a “ swimming pool ” as defined by s 3 of the SP Act : Swimming pool means an excavation, structure or vessel – (a) that is capable of being filled with water to a depth greater than 300 millimetres, and (b) that is solely or principally used, or that is designed, manufactured or adapted to be solely or principally used, for the purpose of swimming, wading, paddling or any other human aquatic activity, and includes a spa pool, but does not include a spa bath, anything that is situated within a bathroom or anything declared by the regulations not to be a swimming pool for the purposes of this Act. However, on 3 June 2023 the defendants served a proposed amended defence that raises a defence to the effect that the plaintiffs waived the right to rescind the contract (or elected to affirm the option or contract) , by not exercising the s 66ZI right to rescind during the life of the option deed, despite having knowledge that there was no certificate. The plaintiffs ’ position is that there is no arguable defence whether in the form of the amended defence or at all and summary judgment is appropriate. The defendants have also cross-claimed against the plaintiffs, seeking declarations that the issuing of the rescission notice amounted to a repudiation of the contract and seeking damages. The defendants have also filed a second cross-claim against their former solicitors acting on the negotiation of the option deed and contract. If summary judgment is refused, the plaintiffs seek an order for a separate hearing of the following question before all other issues: Whether on or about 23 November 2021 there existed on the [relevant property] a “swimming pool” within the meaning of the Swimming Pools Act 1992 (NSW) to which that Act applied. The defendants do not oppose a separate hearing. The cross-defendants do not consent to such a separate hearing. I refuse to order summary judgment or a separate question for the following reasons. Summary judgment Unform Civil Procedure Rules 2005 (NSW) (UCPR) r 13.1 empowers the Court to “ give such judgment for the plaintiff, or make such order on the claim or that part of the claim ” if the plaintiff can establish “ evidence of the facts on which the claim or part of the claim is based ” , and “ evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed ” . The principles relating to summary judgment and UCPR r 13.1 are well known. For example, Macfarlan JA, by reference to the High Court decision in Spencer v Commonwealth (2010) 241 CLR 118, in O’Brien v Bank of Western Australia (2013) 16 BPR 31,705; [2013] NSWCA 71 at [3] stated : On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]). The critical question can be expressed as whether there is more than a “fanciful” prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the court to allow the action to go forward (at [54] in the judgment of the plurality). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success (ibid). Powers to summarily terminate proceedings must be exercised with exceptional caution (ibid at [55]; see also French CJ and Gummow J at [24]). Summary disposal is inappropriate where there is any serious conflict as to any matter of fact: Sidebottom v Cureton (1937) 54 WN (NSW) 88. In Chalak v G & G Mikhael Pty Ltd [2022] NSWCA 116 at [16] , Basten JA ( Ward P and Simpson AJA agreeing) stated: The High Court in Webster v Lampard , found that the trial court must determine whether it is “inevitable that [the evidence relied upon] would ultimately be so accepted”. Further, where there is contradictory evidence, that evidence must also be obviously unacceptable and incapable of acceptance by a trial judge. Here, there are two issues that would need to be determined on the evidence in favour of the applicant in order to make the orders sought: That on 23 November 2021 (when the option deed was executed) the old pool on the defendants ’ property was a “ swimming pool ” within the meaning of the S P Act ; and A defence based on alleged waiver of the right of rescission (or affirmation) granted to the applicant pursuant to s 66ZI had only “ fanciful ” prospects of success, or as the applicant put it , was not arguable. “Swimming pool” I consider there is a triable issue of fact as to whether , at the relevant time, there was a swimming pool on the property as defined by the SP Act . I do not accept that it is significant to this application that the defendants “ do not admit ” the old pool was capable of holding at least 300 millimetres of water in depth . That pleading requires the plaintiffs to prove that fact. The applicants accepted that the Court would consider the defendants ’ evidence at its highest for the purpose of the summary motion. I note that the applicants originally sought to rely on evidence that was challenged on the basis that it was illegally or improperly obtained and therefore inadmissible pursuant to s 138 Evidence Act 1995 (NSW). However, the applicants did not read that evidence on the application . Therefore, the totality of the evidence to be considered when determining whether it is appropriate to order summary judgment ( because the Court is persuaded by the defendants ’ own evidence ) , is that of Mr Frank Hammond, solicitor for the defendants, given on information and belief from his clients and some documents relied upon by the plaintiffs . Mr Hammond ’ s evidence is to the following effect: A development consent was granted for the installation of a swimming pool in 1992, allowing an excavation of no more than 600 millimetres . That year a swimming pool was constructed with an excavation of no more than 400 millimetres . From 2017 the swimming pool ceased to be used. From that time , it has fallen into disrepair, including tears in the fabric . P art of the sides had f allen over. D irt and plants could be seen in the excavated space . In 2017 the defendants installed a pump that sat at the deepest part of the old pool on about 100 millimetres of silt and operated so that the level of water could not exceed 200 millimetres . At no time prior to November 2022 did the defendants observe the water level to be above 200 millimetres. In early November 2022 the defendants completely filled in the pool . To date , no first - hand evidence of the state of the old pool at the time of entry into the option deed in November 2021 has been served . At that time, the swimming pool remained on the NSW S wimming P ool R egister pursuant to Part 3A of the SP Act . However, even a completely dismantled pool could remain on the register if an owner had failed to remove it, and I do not consider the fact of registration is conclusive. On 8 December 2021 t he defendants notified the local council that the “ swimming pool is no longer in use and in time it will be dismantled ” . Photos were attached to that letter showing very little water in the deepest part of the old pool and a pump sitting on top of watery mud. That letter was sent in response to the council ’ s notification dated 2 December 2021 to the defendants that it w as undertaking a “ S wimming P ool I nspection P rogram ” and “ we understand that there is a pool registered at your property that has not yet received a certificate of compliance ” . No further correspondence between the council and the defendants was in evidence. The defendants submitted that they would seek to lead further evidence at a final hearing, includ ing from experts as to the nature and state of the old pool. The applicants submitted that the Court would inevitably conclude on the available evidence that the old pool was a “ swimming pool ” when the option deed was exchanged because it was capable of holding water of at least 300 millimetres , and that the applicant was entitled to rescind the contract . The defendants submit that it is not an obvious conclusion , either as a matter of fact or law , and referred to a decision of Bignold J in Eurobodalla Council v K & R Baron (Land and Environment Court (NSW), 7 December 1994, unrep ) ( Eurobodalla ) . There his Honour concluded that a decommissioned in-ground, fibre glass construction pool was not a “ swimming pool ” within the meaning of the SP Act relying on expert evidence, including that there was a “ hole in the floor ” of the old pool which meant it was “ not capable of holding water to a level exceeding 300m m ” . Further there was a “ submersible fixed pump ” that worked to “ empty out any build up of rain waters ” . Th ose finding s were expressed by his Honour as finding s of “ fact ” , from which he determined that the swimming pool structure was “ not capable of holding water to a level exceeding 300mm ” . The applicant s submitted that the facts in Eurobodalla were distinguishable , in particular, because the pump in that case was “ fixed ” and there was a hole in the base of the pool , and neither of those features are present here. I do not accept that by reason of those differences it is not possible for the finding at a final hearing to be made that the old pool was not a “ swimming pool ” . In Eurobodalla , for example, there was expert evidence led at a final hearing , upon which his Honour relied. Expert evidence may be compelling here, if led . I also do not accept the alternative submission that Bignold J was “ plainly wrong ” in his conclusion that the decommissioned pool did not fall within the meaning of the statutory definition. The facts that are currently before the Court do not demonstrate with sufficient certainty that the applicant s ought to be granted summary judgment. That conclusion does not require a final determination of the proper construction of the operation of all provisions of the S P Act and Conveyancing Act , to which the applicants referred . Further , as noted above the defendants already have served some evidence supporting the factual conclusion they assert and have indicated they will serve further evidence . Is it arguable that a right of rescission under s 66ZI can be waived? Based on the above conclusion it is not strictly necessary to consider the second element of the applicant ’ s summary judgment application concerning the proper construction and operation of s 66ZI . However , for completeness I explain the dispute briefly below . While not currently pleaded, the defendants submitted that they would seek to amend their defence to expressly rely upon the doctrine of waiver, election or affirmation , such that the Court could conclude at a final hearing that the p laintiffs had elected not to exercise the right to rescind , or had waived that right, or had elected to continue , when becoming aware that the contract did not attach the relevant certificate . It is said that the plaintiffs therefore affirmed the option deed and thereafter continued to exercise the option and enter into the contract and pay the next instalment of the purchase price. The defendants and cross-defendants submitted that the common law doctrine of waiver, election or affirmation was not excluded from operating in the context of the particular s 66ZI statutory right of rescission , and relied upon the obiter remarks of Young J in Molotu Pty Ltd v Solar Power Ltd (1989) 6 BPR 13,460 . The applicant s submitted that such a construction was not available, and instead s 66ZI ought to be read as providing a purchaser with two rights to rescind . The first, a right to rescind an option deed, if an attached contract failed to contain the relevant documents, and second, a right to rescind the contract within five days of formation under s 66 ZI( 4) . Further, it was said that the High Court in Allianz Australia Insurance Limited v D e lor Vue CTS 39788 [2022] HCA 38 has “ cautioned against extending the doctrine of election ” . The practical effect of the applicant ’ s submission is that from the time an option agreement is signed until 5 days after a contract has been formed, after exercise of the option, the parties retain a right to rescind either the option or the contract, irrespective of their prior knowledge of the failure to attach relevant documents to the contract . I do not accept it is appropriate to determin e , on a summary judgment application , whether that construction is correct, nor whether a defence based on election, affirmation or waiver could be successful. Instead, those matters ought to be determined at a final hearing. I consider there is sufficient “ doubt ” as to whether the applicants ’ construction is correct . Generally, as outlined in the Practice Note SC EQ 12 (Real Property List) , interlocutory applications are to be sparingly engaged. Here, the applicant relied upon a large lever arch file of evidence and 725 pages of authorities and 26 pages of single-spaced written submissions. The respondents ’ submissions totalled 34 pages. While the hearing was allocated 2 hours, the oral submissions exceeded that time. Such detail and volume of material tells against an obvious case for summary judgment, particularly where the defendants identify factual matters in dispute . Separate question UCPR r 28.2 empowers the Court to “ make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings ” . The principles concerning the ordering of a separate question pursuant to UCPR r 28.2 are well known and need not be repeated: see , eg Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 ( Tallglen v Pay TV Holdings ) at 141-142 (Giles CJ Comm D ) , as adopted by Leeming JA (Barrett JA agree ing ) in AAI Ltd (t/as Vero Insurance) v Solarus Projects Pty Ltd (Receivers and Managers appointed) (in liq ) [2014] NSWCA 168 at [9] . I do not consider it appropriate to order a separate hearing of the question sought for the following reasons. First, as noted above , the defendants have served a proposed amended defence and g enerally, a separate question ought not be heard prior to the close of pleadings: see , eg Young v Hones [2014] NSWCA 337 at [5] (Bathurst CJ), [154] (Ward JA, as the President then was ) . Secondly, I do not accept that a determination of that question would contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the proceedings: Tallglen v Pay TV Holdings at 141-142 ( Giles CJ Comm D ) nor contribute to the settlement of the litigation : CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 602 at 607 ( Kirby P ) ; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334, at [45] and [51] ( Gleeson CJ, Gaudron , McHugh, Gummow , Hayne and Callinan JJ ). The defendants and cross-defendants do not oppose a separate hearing. T he attitude of the parties is a relevant consideration : Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited [2019] NSWCA 262 at [94]-[96] (McCallum JA) . However, it is not conclusive and the Court must make the determination as to whether the exercise of UCPR r 28.2 is appropriate in the circumstances. While the applicants submitted there would be a time saving, it was not possible to make that conclusion in circumstances where the scope of the pleadings and evidence is currently unknown. I also do not accept the submission that the remainder of these proceedings are so complex that a separate question would be comparatively narrow and more efficiently determined . Thirdly, the experience of the Equity D ivision suggests that separation of parts of proceedings often does not result in the quicker or cheaper resolution of proceedings, but in fact can have the opposite effect and lead to delay, extra expense, appeals and uncertainty of outcome which it is intended to avoid: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7] ( Einstein J ) ; Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at [168] ( Kirby and Callinan JJ ) . Orders The applicant ’ s notice of motion is dismissed with costs. Stands the matter over for directions in the Real Property List on 7 July 2023. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 June 2023