Patel v Sengun Investment Holdings Pty Ltd

Patel v Sengun Investment Holdings Pty Ltd [2023] VSCA 238
Court of Appeal of Victoria
Emerton P, Walker, & Kaye JJA
Sale of land – the parties executed a document titled Heads of Agreement to the Purchase of Land in relation to the purchase by the applicant from the respondent of land at St Leonards for $4.1million – the applicant paid $50,000 towards that purchase price – shortly thereafter, the respondent, through its agents, advised the applicant that it no longer wished to proceed with the transaction, and it maintained that the document was not a binding agreement for the sale of the property – the applicant insisted that the respondent’s solicitor prepare a contract of sale in accordance with the Heads of Agreement – the applicant later commenced proceedings in the County Court seeking specific performance of the Heads of Agreement – the primary judge held that the Heads of Agreement did not constitute a binding contract between the parties, but that, if he had found otherwise, he would have made an order for specific performance of such an agreement – the applicant sought leave to appeal, and the respondent sought to cross-appeal against the finding that the Heads of Agreement could be enforced by an order for specific performance – held: the question whether the parties, by signing the Heads of Agreement, thereby intended to enter into a legally binding contract, was to be determined objectively, from the text of the document, construed in the context of the surrounding circumstances in which each of the parties signed it – although the applicant contended for a particular legal characterisation of the Heads of Agreement for the first time on appeal, the case concerned the construction of a document, in light of facts proved at trial, and it was therefore expedient in the interests of justice that the question should be argued and decided – the question was therefore whether, by executing the Heads of Agreement, the parties thereby entered into a binding legal contract by which the respondent, in effect, bound itself to execute a contract of sale of the property if called upon to do so by the applicant – the form of the Heads of Agreement, and the terminology employed in the document, weighed in favour of the conclusion that the document did constitute a binding contract – the fact that two clauses contemplated, and indeed required, the formulation and execution of a contract of sale, did not preclude a conclusion that the Heads of Agreement constituted a legally binding contract between the parties in respect of the sale of the property – the Heads of Agreement did constitute a legally binding contract – as to whether an order for specific performance could be made, the applicant had sufficiently established that he intended to purchase the property for personal reasons, and not simply for the purpose of redevelopment and sale at a profit – the authorities made it clear that, ordinarily, damages are not an adequate remedy for the breach by a vendor of a contract of sale of land, and in such a case an order should be made for specific performance, unless special facts are established which would justify the withholding of such relief – an appropriate order for specific performance should be made – leave to appeal granted, appeal allowed, and respondent ordered to forward to the applicant a notice under s27(3) of the Sale of Land Act 1962 (Vic) and a contract for sale of the property containing the terms required by the Heads of Agreement, any other terms necessary to give effect to the sale of the property consistently with the Heads of Agreement, and any other terms agreed by the parties.
Patel