Braidotti v Queensland City Properties Ltd [1991] HCA 19;

Braidotti v Queensland City Properties Ltd [1991] HCA 19; - HCA 1991 case summary — Zoe

[48]

2. Division 4 of Pt VI of the Act contains a number of special provisions (ss.71-76) dealing with "Instalment sales of land". Those provisions were, one would think, directed towards providing protection for the special vulnerability of some purchasers of land under contracts which provide that title does not pass until the whole of the purchase price has been paid by instalments. The traditional example of such contracts in this country has been the case where an ordinary couple acquires a lower-priced block of residential land from a land developer on extended terms of payment on the basis that they are entitled to possession under the contract pending completion and that they assume responsibility for all outgoings in respect of the land pending completion (see, e.g., Stern v. McArthur [1988] HCA 51; (1988) 165 CLR 489, at p 528). In such cases, it has been commonplace for the purchasers to build their home on the land being purchased with the consequence that rescission by the vendor for some subsequent breach of the contract by the purchasers could have devastating consequences for them. Uninstructed by authority, I would have thought that there was a great deal to be said for the view that the reference to a purchaser being "bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor" in the definition of "instalment contract" in s.71(2)(b) should, in a context where it is envisaged that a "sum of money ... payable under the contract" may not be an "instalment" (see s.72(1)), be read as referring only to instalments of purchase price. The result of that construction would have been that the complicated provisions of Div.4 would be applicable only to protect a purchaser under a genuine terms contract, that is to say, a contract under which the purchase price is payable by instalments over a period of time (see, e.g., Bradbrook, MacCallum and Moore, Australian Real Property Law, (1991), pp 244-245; Petrie v. Dwyer [1954] HCA 75; (1954) 91 CLR 99, at p 109). That construction of the definition of "instalment contract" was, however, unambiguously rejected by the Court in Wacal Developments Pty. Ltd. v. Realty Developments Pty. Ltd. [1978] HCA 30; (1978) 140 CLR 503. For the reasons given by Mason C.J., Brennan and Dawson JJ. and by Gaudron J., Wacal compels the conclusion that the contract in the present case was an "instalment contract" for the purposes of Div.4. It follows that the effect of s.72(1) of the Act was that the contract was not "determinable", and could not be "determined", by reason of default on the part of the purchaser in payment of any instalment or sum of money (other than the deposit) under the contract until after the expiry of a period of thirty days after service of a notice in conformity with the requirements of the section.

[53]

6. Completion of a contract for the sale of land is a mutual process. It normally culminates in a physical meeting but completion can take place without any direct personal contact between vendor or his agent and purchaser or his agent. It ordinarily encompasses a number of steps which can be taken either over a period of time or contemporaneously. Those steps may include the finalization of accounts between the parties in respect of such matters as adjustment of rents, rates and other outgoings. In some cases, they could involve either the purchaser or the vendor producing evidence of compliance with statutory requirements in circumstances where lack of such compliance would have the result that the conveyance was unlawful. Where the deposit paid by the purchaser has been held by a stakeholder, they will also include the authorization of the stakeholder to pay the deposit to the vendor and, if the deposit has been invested, to account to the party or parties entitled for any interest earned. The above-mentioned matters may properly be seen as peripheral to the essential steps involved in the actual completion of the contract. They are nonetheless (where necessary) part of the overall process. The essential steps - i.e. the matters which lie at the heart of completion of such a contract - are those pertaining directly to title, conveyance, payment and possession. In the absence of contrary contractual provision, the vendor must make a good title to the estate contracted for in the land sold, deliver (either actually or notionally) a duly executed conveyance of that estate and deliver up the actual possession or enjoyment of the land. Subject again to contrary contractual provision, the purchaser must accept the vendor's good title and the conveyance of the estate, pay the balance of the purchase price and accept possession of the property. While the most important obligation or function to be discharged or performed by the purchaser is ordinarily the payment of the balance of purchase price, it is apparent that that is not the purchaser's only obligation or function on completion. In that regard, there has been no suggestion, let alone evidence, in the present case to the effect that the purchaser's default was other than a failure to participate in the overall process of completion of the contract in accordance with the requirements of the notice to complete.

[57]

8. If the provisions of s.72 of the Act were applicable only to a terms or instalments contract for the purchase of a residential block of land, there would be much to be said for the view that they should be given a generous and non-technical construction in order to give effect to a presumed legislative intent to provide real protection for the particularly vulnerable class of purchasers under such contracts. On that approach to the construction of s.72(1), it would be a small step to say that the failure to complete the contract by the purchaser in the present case involved, among other things, a failure to pay the balance of purchase price and that a rescission of a contract by reason of repudiation consisting of failure to comply with a valid notice to complete was, as a matter of substance, determination of the contract "by reason of default on the part of the purchaser in payment of" that balance of purchase price even though the technical basis of the rescission was the purchaser's repudiation or renunciation of the contract. The provisions of s.72 are not, however, confined to residential blocks of land. The effect of court decisions is that they are not even confined to contracts under which the purchase price is payable by instalments. They extend to any contract for the sale of land under which the purchaser is "bound to make payments, other than the deposit, without entitlement to conveyance in exchange" (see per Stephen J., Wacal, at p 512). For the purposes of Div.4, it matters not that, in the circumstances of a particular case, the vendor may be in a much more vulnerable position and may be much less likely to have the benefit of commercial knowledge or informed advice than the purchaser. Thus, in the present case, the protection which Div.4 was intended to provide to a vulnerable purchaser has been invoked by a land development corporation which seeks to recover damages for breach of contract on the basis that it was immune from being required to complete a contract for the purchase of a small farm until the owners had complied with the technical requirements of s.72. All that is necessary to attract the technical and, to some extent, obscure provisions of s.72 is that the contract provide for some interim payment by the purchaser (e.g. interest, rent, compensation). Given the indiscriminate applicability of the section, it is impossible to discern in it any coherent legislative policy or intent. Nor is it possible to formulate any acceptable reason why the provisions of s.72 should be generously construed. They were certainly not so construed by this Court in Sibbles v. Highfern Pty. Ltd. [1987] HCA 66; (1987) 164 CLR 214.

[88]

18. It is strictly unnecessary to deal with the alternative argument made on behalf of the vendors that a notice of rescission which is ineffective only because of s.72(1) of the Act cannot, of itself, constitute repudiation. However, in light of the way in which the matter was approached at first instance, it is appropriate to observe that not every ineffective rescission will ground an inference of repudiation. See D.T.R. Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. [1978] HCA 12; (1978) 138 CLR 423. Repudiation is not lightly to be found or inferred: see Ross T. Smyth and Co. Ltd. v. T.D. Bailey, Son and Co. (1940) 3 All ER 60, per Lord Wright at p 71. See also Laurinda, per Deane and Dawson JJ. at p 657. A notice of rescission might be ineffective merely because of failure to comply with s.72(1) of the Act. And that might occur because there is a real issue whether the contract is an instalment contract or whether s.72(1) is applicable in the particular circumstances. In that situation an ineffective notice of rescission might reveal no more than an erroneous belief that, for one reason or another, s.72(1) has no application. If that is all that is revealed, the notice would not, of itself, support an inference of the kind identified by Dixon C.J. in Rawson v. Hobbs [1961] HCA 72; (1961) 107 CLR 466, at p 481, namely, an inference of "substantial incapacity or definitive resolve or decision against doing ... what the contract requires". Nor, if there be a difference, would it, of itself, support an inference of an intention of the kind described by Gibbs C.J. in Shevill v. Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620, at pp 625-626, namely, an intention "to fulfil the contract only in a manner substantially inconsistent with (the) obligations". Unless one or other of those inferences is reasonably to be drawn, an ineffective rescission will not support a finding of repudiation. See Laurinda, per Brennan J. at p 647. See also D.T.R. Nominees, at p 430.

At a glance

Court

Decision date

Before

Source

Judgment (90 paragraphs)

Braidotti v Queensland City Properties Ltd [1991] HCA 19; (1991) 172 CLR 293 (30 May 1991)

Parties

Legislation Cited (1)

Cases Cited (12)