Mehmet v Carter overturned: the discovery of Aboriginal artifacts can now constitute a “defect in title” for sale of land contracts. [article update: case overturned again].

“(UPDATE: the decision Mehmet v Carter [2020] NSWSC 413 outlined below has been overturned by the decision of Carter v Mehmet [2021] NSWCA 286. The reasons for the appeal are slightly nuanced (e.g. the items in question did not constitute an “Aboriginal Object” for the purposes of s5 of the National Parks and Wildlife Act 1974, and even if they did they were not “material or substantial”.) The appeal still leaves open the possibility that undisclosed ‘Aboriginal Objects’ can give a buyer the right to terminate.

“The test is whether, objectively, a reasonable person in the position of the purchasers would have taken the view that he or she was not getting substantially the property which he or she contracted to obtain” – para [145].)”

Litigation is notorious for being time consuming and expensive. The Mehmet v Carter series of litigation does nothing to dispel that understanding.

This article should be read in conjunction with our prior article of 31 Oct 2017 in relation to the first case in the Mehmet v Carter series:

https://www.maclarens.com.au/News-1422-Does-the-discovery-of-Aboriginal-artefacts-constitute-a–22defect-in-title-22-for-a-sale-of-land-contract.aspx

Since that article, there have been two further cases in the Mehmet v Carter series, with the history of litigation now reading as follows:

1. Mehmet v Carter [2017] NSWSC 1067: Darke J held that the discovery of Aboriginal artifacts after exchange of contracts and before settlement did not amount to a defect in title.

This meant that the buyer was held to have wrongfully attempted to terminate the contract, and therefore repudiated the contract.

• Mehmet v Carter [2018] NSWCA 305:

The Court of Appeal determined there was a problem with the first case. The first case did not involve the Court establishing the fact that there were indeed Aboriginal artifacts on the property, but rather proceeded in an ‘Agreed Set of Facts’ between the parties.

The Agreed Set of Facts and the first question the parties had proposed in the first case (the question being “whether the existence of the alleged Aboriginal objects were capable of constituting a defect in title”) were deemed by the Court of Appeal to be both “hypothetical and vague” [e.g. the Agreed Facts vaguely set out at one point that there were ‘lots of other burials/remains’].

The Court of Appeal held that the first decision should be set aside, and the case remitted back to the Equity Division of the Supreme Court for a new trial.

• Mehmet v Carter [2020] NSWSC 413

The latest case involved a seven-day hearing.

Her Honour Ward CJ in Eq, decided the case in favour of the purchasers.

First, Her Honour determined that the vendors had “[failed] to address the purchaser’s objection as to the defect in title issue, coupled with the vendors’ insistence on an invalid notice to complete (there having been no valid appointment to settle and the vendors having insisted upon an invalid claim for default interest)”.

In the alternative, Her Honour also held that this case invoked the ‘rule of Flight v Booth‘, where there was a misdescription of land (which whilst not fraudulent, was nonetheless material and substantial). The test here is would the buyer have entered the contract ‘but for the promise of a title free of interest in the Aboriginal objects’.

This series of litigation is a classic example of how expensive and time-consuming litigation can be. While the vendor did obtain a Cost Order for the initial case, that cost order was overturned with the purchaser obtaining Costs Orders for the first case and the third case (no cost order was made for the Appeal Case). Accordingly, even though the purchasers currently have succeeded overall, they still have to pay their own costs for the Court of Appeal proceedings, and the Costs Orders in the other two matters where ‘party/party’ costs, which while representative of a significant portion of the overall costs, do not amount to the whole costs of the first and third cases.

It could be argued that the litigation in this instance involved a novel point of law, and was unavoidable. On the other hand, in other cases generally it is always recommended to obtain proper legal advice to minimise the risk of litigation in the first place.

For professional legal advice, contract Maclarens Lawyers on 96823777.