Bowman Development Corporation Pty Ltd v Young Forever Property Pty Ltd (No 2) [2020] QDC 77

DISTRICT COURT OF QUEENSLAND CITATION: Bowman Development Corporation Pty Ltd v Young Forever Property Pty Ltd (No 2) [2020] QDC 77 PARTIES: BOWMAN DEVELOPMENT CORPORATION PTY LTD ACN 161 471 067 (Plaintiff) v YOUNG FOREVER PROPERTY PTY LTD AS TRUSTEE FOR THE MACQUARIE CUSTODY TRUST ACN 612 194 402 (First Defendant) and DAVID MARK YOUNG (Second Defendant) and JEANETESS RELOVA ALMIRANTE (Third Defendant) FILE NO/S: BD453 of 2019 DIVISION: Civil PROCEEDING: Trial DELIVERED ON: 7 May 2020 DELIVERED AT: Brisbane HEARING DATE: 5 May 2020 JUDGE: Barlow QC DCJ ORDER: THE JUDGMENT OF THE COURT IS THAT the second and third defendants specifically perform, carry into execution and complete the contract of sale made on 25 August 2016 between the first defendant and the plaintiff, with the second and third defendants as guarantors to the contract, in respect of the real property comprising Unit 23, Block 47, Section 50, division Macquarie, on deposited plan 11172 in the Australian Capital Territory and also known as Unit 23, 2 Henshall Way, Macquarie in the Australian Capital Territory (the contract), by complying with their obligations under the guarantee of the contract in exchange for the plaintiff complying with its obligations under clause 3 of the contract and, in particular, -- 1 of 4 -- 2 transferring to the second and third defendants jointly the title to the lease defined in the contract. THE COURT ALSO ORDERS THAT: 1. The plaintiff and the second and third defendants perform the contract on the basis that the date of completion is 26 May 2020. 2. No later than seven business days before 26 May 2020, the plaintiff notify the second and third defendants at their address for service in this proceeding of the time for settlement at the place specified in clause 66.2 of the contract or such other place as the plaintiff and the second and third defendants agree in writing. 3. The second and third defendants pay the plaintiff’s costs of the proceeding as against them on the standard basis. 4. There be liberty to apply generally, on at least three business days’ notice, in respect of any matter arising out of these orders. CATCHWORDS: CONVEYANCING – BREACH OF CONTRACT FOR SALE AND REMEDIES – VENDOR’S REMEDIES – SPECIFIC PERFORMANCE – plaintiff as vendor agreed to sell real property to first defendant as purchaser – earlier judgment entered against first defendant specifically to perform, execute and complete contract – first defendant did not complete contract – plaintiff seeks order for specific performance against second and third defendants as guarantors – second and third defendants submit they do not have the financial resources to complete the contract – whether evidence of second and third defendants’ inability to complete the contract is adequate – whether an order for specific performance would be futile Lindaning Pty Ltd (Receivers and Managers Appointed) v Goodlock [2011] QSC 266, applied COUNSEL: M Hickey for the plaintiff MD Martin QC for the defendants SOLICITORS: Robinson Locke Litigation Lawyers for the plaintiff Whitehead Crowther Lawyers for the defendants [1] This is a sequel to a judgment given by me on 14 February 2020, in which I made an order that the first defendant (Young) specifically perform a contract between it and the plaintiff for the sale to Young of a unit in a development in Canberra.1 My discussion of the law and the facts in those reasons applies equally here. 1 Bowman Development Corporation Pty Ltd v Young Forever Property Pty Ltd [2020] QDC 73. -- 2 of 4 -- 3 [2] Young did not complete the contract. The plaintiff now seeks an order for specific performance against the second and third defendants (to whom I shall refer as the guarantors) pursuant to their guarantee of Young’s obligations under the contract. [3] The guarantors oppose an order for specific performance on two bases: first, that the evidence demonstrates that they would not be able to complete the contract as they do not have the financial resources to do so and therefore such an order would be futile;2 and secondly, that in any event, damages would be an adequate remedy. I shall deal with each of those bases, but in reverse order. [4] In my earlier reasons, I concluded that damages were not an adequate remedy.3 It is not open to the guarantors now to submit to the alternative, as that was a finding made by me as one of the reasons why I was prepared to order specific performance, at that stage, against the contracting party, Young. It was also relevant to the relief then (and now) sought against the guarantors. The proceeding as against the guarantors has not been finalised, but nevertheless the finding was relevant to the application as it concerned the guarantors. It is true that, when a decree for specific performance is made, the court may grant further relief at a later stage, including by vacating that order and making an alternative order (including for damages).4 But that finding was final as regards all defendants. In any event, there is no evidence to demonstrate anything to the contrary. Indeed, the plaintiff has provided additional evidence that confirms the facts upon the basis of which I made that finding. Therefore, I continue to be satisfied that damages are not an adequate remedy. [5] In support of the proposition that an order for specific performance could not possibly be complied with and would be futile, the guarantors rely upon an affidavit by Mr Young, in which he deposes to having made several applications to a mortgage broker for loans to enable Young to complete the contract or alternatively for the guarantors themselves to provide the resources for Young to do so or to complete it themselves. He has deposed to his and Ms Almirante’s ownership of some properties and other assets, about which he also purports to give evidence of their value. He also deposes to their liabilities and particularly deposes that he owes approximately $220,000 to various lenders and that he is being sued for over $1,000,000 by the liquidator of a company of which he was the director. However, he gives little detail of the particular assets and debts, he does not exhibit any documents demonstrating the amounts of the debts nor the value of the respective items of property, nor does he exhibit anything demonstrating the basis of the liquidator’s claim nor how far advanced it is. [6] The plaintiff’s counsel did not cross-examine Mr Young, but says that his affidavit is so deficient in detail that it should not be accepted by this court as demonstrating an inability on the part of the guarantors to raise sufficient funds to complete the contract if they were personally ordered to do so. I should therefore not accept that an order for specific performance would be futile. [7] Although Mr Young was not cross-examined on his affidavit, the affidavit suffers similar defects to those in the affidavits of the guarantors in Lindaning Pty Ltd (Receivers and Managers Appointed) ACN 099 727 223 v Goodlock.5 As Byrne SJA 2 As to futility, see Lindaning Pty Ltd (Receivers and Managers Appointed) v Goodlock [2011] QSC 266, [30]-[33], which I adopted at [2020] QDC 73, [19]. 3 [2020] QDC 73, [16]. 4 Georges v Wieland [2010] NSWSC 1378, [25], [34]. 5 [2011] QSC 266. -- 3 of 4 -- 4 said in that decision, a purchaser resisting specific performance on the basis of an inability to pay the price bears the burden of establishing that state of affairs. His Honour concluded that there was a striking deficiency in propounding a defence of impossibility in that case. Even though the deponents’ assertions must be taken to represent the truth because they were not cross-examined, they made a distinctly less than persuasive case before his Honour that, if put to the test, at least one of them could not raise the funds. His Honour was not satisfied in those circumstances that the respondents had demonstrated that there was a “very substantial probability” that they could not find the money to pay the balance price and so they had not made out a case of impossibility, nor of futility. [8] His Honour pointed out that, although the buyers may end up being unable to pay the price and the seller might eventually seek vacation of the specific performance order in order to facilitate a termination of the contract and to allow a damages claim to proceed, in its own commercial judgment the seller had decided nevertheless to pursue an order for specific performance against the purchaser.6 [9] Similarly here, even accepting the evidence given by Mr Young, it is vague in his descriptions of the guarantors’ assets and liabilities. He is not an expert qualified to express opinions as to the values of the various assets referred to, nor does he state clearly (nor with any documentary proof) the amounts of the debts owed by him and Ms Almirante, nor the total value of their assets. Even the applications for finance appear to have been devoid of substantial substance and give the impression of simply going through the motions. His evidence is inadequate to demonstrate that it is impossible for the guarantors to comply with an order for specific performance or that such an order would be futile. When faced with the possibility of being in contempt of the court for not complying with such an order, they may well find the wherewithal to comply with it. [10] In the circumstances, I will make the orders sought by the plaintiff. 6 Lindaning at [25]-[33]. -- 4 of 4 --