Balog v Crestani [1975] HCA 16;

Balog v Crestani [1975] HCA 16; - HCA 1975 case summary — Zoe

[28]

"WHEREAS by Contract dated 20th December, 1972

ANTONIO CRESTANI agreed to sell and TIBOR BALOG agreed

to purchase for the sum of Ninety five thousand dollars

($95,000.00) the freehold property situate in the Municipality of

Fairfield, Parish of St. Luke and County of Cumberland being

Lot 3 in Section D in Deposited Plan No. 6934 and being the

whole of the land comprised in Certificate of Title Volume 5386

Folio 170 AND WHEREAS the said Contract provided for

completion to take place on or before the 30th March, 1973

AND WHEREAS the said TIBOR BALOG did not complete by the

said date AND WHEREAS by Notice to Complete dated the 23rd

July, 1973 and the said ANTONIO CRESTANI required the said

TIBOR BALOG to complete the said Contract by the 7th August,

1973 AND WHEREAS the said TIBOR BALOG did not so complete

AND WHEREAS by Notice to Complete dated 24th October,

1973 the Vendor further required the said TIBOR BALOG to

complete the said Contract by the 13th November, 1973 AND

WHEREAS the said TIBOR BALOG did not so complete AND

WHEREAS by a further Notice to Complete dated 13th

November, 1973 the Vendor required the said TIBOR BALOG to

complete the said Contract by the 4th December, 1973 AND

WHEREAS the said TIBOR BALOG failed to so complete AND

WHEREAS the said TIBOR BALOG despite numerous requests for

completion made by the Vendor's Solicitor on his behalf has

neglected to complete the said Contract and to pay the balance

purchase monies as is provided in the said Contract THEREFORE

TAKE NOTICE that the Vendor requires the said TIBOR BALOG

to tender a Transfer complying with the said Contract and to

pay the balance of purchase monies by 12.00 noon on the 4th

day of January, 1974 and in this respect time shall be of the

essence AND FURTHER TAKE NOTICE that the Vendor appoints

Friday, 4th day of January, 1974 at 12.00 noon at the offices of

the Commercial Banking Company of Sydney Limited, Branch

Securities, 343 George Street, Sydney as the date, time and

place of completion AND FURTHER TAKE NOTICE that if the said

Contract is not fully and finally completed by the said time, then

the Vendor will exercise his power under the Contract without

further notice." (at p292)

[38]

2. The deposit was duly paid, but the contract was not completed on or before 30th March 1973. Eventually, the respondent's solicitors began to press the appellant for completion and gave no fewer than three notices - dated respectively 23rd July 1973, 24th October 1973 and 13th November 1973 - requiring the contract to be completed. It is unnecessary to refer to the form of the earliest notice; the two later notices were in similar terms - they recited that the respondent was ready, willing and able to complete the contract and required the appellant to complete the contract, tender a transfer complying with the contract and pay the balance of purchase moneys within twenty-one days from the date of the notice, and stated that "in this respect time is hereby made of the essence of the aforementioned Contract". Each of these notices concluded by stating that if the appellant failed to comply with the notice and complete the purchase by the date mentioned "the vendor will then forfeit the moneys paid by you as deposit pursuant to the said Contract or resell the property as owner and claim from you the deficiency (if any) arising on such resale and all expenses incidental to such resale or attempted resale in accordance with Clause 16 of the said Contract and seek such other relief as he may be entitled to by Law". This was a confused and inaccurate statement of the rights of the respondent under cl. 16, but the notices nevertheless ought to have conveyed the intention of the respondent to treat the contract as at an end if they were not complied with. After the latest of these notices was given, the parties and their solicitors met, on 20th November 1973, and reached agreement on certain matters which were recorded in a document described as "Heads of Agreement". They resolved that the existing contract be rescinded and that such rescission should take place contemporaneously with the settlement of a new contract of sale. This new contract was to be for the sale of the land for a consideration of $105,000. They agreed that the notice to complete dated 13th November 1973 be rescinded and that exchange and settlement of the new contract of sale be effected on 4th December 1973. It was held by the learned primary judge that the agreement reached on 20th November 1973 amounted to a waiver of the notice given on 13th November 1973, but was not intended to affect the contract of 20th December 1972 unless and until a further formal document was executed. This finding is not challenged. In fact no new contract was ever executed. On 3rd December 1973 the respondent's solicitors forwarded a new form of contract for execution by the appellant, and suggested that settlement take place on 11th December; having received no reply they telephoned the appellant's solicitors on 10th December 1973, and in the course of a discussion the latter solicitors said: "Our client does not wish to proceed with the purchase and he wishes to break the contract." On 20th December 1973 the respondent gave to the appellant a further notice to complete. This notice read as follows:

[39]

"WHEREAS by Contract dated 20th December, 1972

ANTONIO CRESTANI agreed to sell and TIBOR BALOG agreed

to purchase for the sum of Ninety five thousand dollars

($95,000.00) the freehold property situate in the Municipality of

Fairfield, Parish of St. Luke and County of Cumberland being

Lot 3 in Section D in Deposited Plan No. 6934 and being the

whole of the land comprised in Certificate of Title Volume 5386

Folio 170 AND WHEREAS the said Contract provided for

completion to take place on or before the 30th March, 1973

AND WHEREAS the said TIBOR BALOG did not complete by the

said date AND WHEREAS by Notice to Complete dated the 23rd

July, 1973 the said ANTONIO CRESTANI required the said

TIBOR BALOG to complete the said Contract by the 7th August,

1973 AND WHEREAS the said TIBOR BALOG did not so complete

AND WHEREAS by Notice to Complete dated 24th October, 1973

the Vendor further required the said TIBOR BALOG to complete

the said Contract by the 13th November, 1973 AND WHEREAS

the said TIBOR BALOG did not so complete AND WHEREAS by a

further Notice to Complete dated 13th November, 1973 the

Vendor required the said TIBOR BALOG to complete the said

Contract by the 4th December, 1973 AND WHEREAS the said

TIBOR BALOG failed to so complete AND WHEREAS the said

TIBOR BALOG despite numerous requests for completion made

by the Vendor's Solicitor on his behalf has neglected to

complete the said Contract and to pay the balance purchase

monies as is provided in the said Contract THEREFORE TAKE

NOTICE that the Vendor requires the said TIBOR BALOG to

tender a Transfer complying with the said Contract and to pay

the balance of purchase monies by 12.00 noon on the 4th day of

January, 1974 and in this respect time shall be of the essence

AND FURTHER TAKE NOTICE that the Vendor appoints Friday,

4th day of January, 1974 at 12.00 noon at the offices of the

Commercial Banking Company of Sydney Limited, Branch

Securities, 343 George Street, Sydney as the date, time and

place of completion AND FURTHER TAKE NOTICE that if the said

Contract is not fully and finally completed by the said time, then

the Vendor will exercise his power under the Contract without

further notice."

[44]

Similar words appear in many cases, and it is usual to describe a notice given for this purpose as a notice limiting the time at the expiration of which the party giving it "will treat the contract as at an end" if the notice has not been complied with: see, e.g., Taylor v. Brown [1839] EngR 1058; (1839) 2 Beav 180, at p 183 (48 ER 1149, at p 1150) ; Green v. Sevin (1879) 13 Ch D 589, at pp 599-600 ; Stickney v. Keeble (1915) AC 386, at pp 418, 423 ; Ajit v. Sammy (1967) 1 AC 255, at p 258 ; Perry v. Sherlock (1888) 14 VLR 492, at pp 507-508 ; and Lenneberg v. McGirr (1919) 19 SR (NSW) 83, at p 86 . Of course it is not necessary that the notice should use any particular form of words; it is the substance of what it conveys that matters. For example, it will obviously be sufficient to state that if the notice is not complied with, the party giving the notice will treat the contract as abandoned (Stickney v. Keeble (1915) AC 386 ) or will rescind it (Canning v. Temby [1905] HCA 45; (1906) 3 CLR 419, at p 431 ) or will put an end to it (Wendt v. Bruce [1931] HCA 9; (1931) 45 CLR 245, at p 257 ), and there is no reason to doubt that it will be sufficient for a vendor, under a contract similar in form to that in the present case, to give notice that upon non-compliance he will terminate the agreement and either sue the purchaser for breach of contract or resell the property as owner and recover the deficiency, if any, arising on such resale. However, it must be regarded as doubtful whether a notice would be effective if it stated that upon non-compliance the party giving it might treat the contract as at an end, but might on the other hand seek to have it specifically performed. Since the object of the notice is to limit the time for performance, and to indicate to the party in default that he will be in breach of an essential obligation if he delays further, it is understandable that it should be thought to be an objection to the validity of a notice that it suggests that, notwithstanding a failure to complete within the specified time, the party giving the notice might still perform the contract. That an ambiguous notice of this kind would be bad is suggested by the manner in which the rule is generally stated, and by two decisions on the words of particular notices. In Reynolds v. Nelson [1821] EngR 237; (1821) 6 Madd 18 (56 ER 995) , a notice given by the vendor asked the purchaser to complete within a specified time and went on to say, "if you make default in the premises, I shall consider you as refusing to perform your agreement, and act accordingly". As to this, Sir John Leach V.C. observed (1821) 6 Madd, at p 26 (56 ER, at pp 998-999) :

[54]

6. The notice given in the present case concludes by stating that if the contract is not completed within the stipulated time, the respondent "will exercise his power under the Contract without further notice". It was submitted on behalf of the appellant that this simply meant that the respondent intended to exercise whatever power the law might give him in relation to the contract, and that it would be consistent with the notice that he intended to seek specific performance of the contract. An alternative submission made was that even if the power referred to was one expressly given by the contract itself, the notice did not make it clear what power was intended to be referred to; eventually, however, it had to be conceded that this argument was untenable because the only power expressly conferred by the contract that would be applicable in the circumstances would be that conferred by cl. 16. The meaning of the notice must, of course, be determined upon a consideration of all its provisions; it would be wrong to consider what its concluding words, standing alone, would convey. The notice commences with a recital of the previous notices which did indicate with sufficient clarity an intention on the part of the respondent to rescind upon a failure to comply with them. The notice then proceeded to require the appellant to tender a transfer and pay the balance of purchase moneys by a specified time and to state that "in this respect time shall be of the essence". The only purpose of including those words could be to confer on the respondent a right to rescind the contract if the appellant did not tender the transfer and pay the balance within the time mentioned. Viewed in this context the concluding words could not reasonably be understood as an intimation of an intention to seek specific performance. If that was all that the respondent sought it was unnecessary for him to give the notice at all. The words "his power under the Contract" suggest that it is intended to refer to a particular power controlled or governed by the contract and available to be exercised by the respondent. The reference to one power, rather than to all the rights, under the contract, conveys a meaning different from that attributed to the notice in Smith v. Hamilton (1951) Ch 174 . When the concluding words of the contract are considered in the context provided by the whole of the notice it sufficiently appears that the power mentioned is that which is given by the contract to the respondent in the event of a default by the appellant in the performance of his contractual obligations - that is, the power conferred by cl. 16. On the whole, therefore, I have reached the conclusion that upon a fair reading of the notice its concluding words could only reasonably be understood as an intimation of an intention to exercise the powers given by cl. 16 of the contract, or in other words to treat the contract as at an end. Once this conclusion is reached it follows that the notice was effective and that the respondent was entitled to rescind the contract. (at p300)

At a glance

Court

Decision date

Before

Source

Judgment (56 paragraphs)

Balog v Crestani [1975] HCA 16; (1975) 132 CLR 289 (22 May 1975)

Parties

Cases Cited (5)