Canning v Temby [1905] HCA 45

Canning v Temby [1905] HCA 45 - HCA 1905 case summary — Zoe

[43]

J, who tried the case, was of opinion that, under the circumstances, the first of September was not a reasonable time, so that. the contract could not be construed as a contract to pay the purchase money on or before Ist Septembe that the contract alleged was not proved, and for these reasons he gave judgment for the defendants. The case was then brought tothe Full Court, where judgment was delivered by Parker J., with whom Burnside J. concurred. Parker J. agreed that, under the cireumstances, it could not be said that the first of September was a reasonable time in the sense that an action would lie for damages for mere non-payment by that date. He was also of opinion that in this ease time was not of the essence of the contract; and he applied the equitable doctrine that, when time is not originally of the essence of a contract, notice must be given by one party to the other fixing a reasonable time for completion, which had not been done. The appeal was therefore dismissed. 'The equitable doctrine is under the Judicature Act to be applied in common law actions as well as in proceedings for equitable relief. Atcommon law it was said that, in the case of the sale of land, time was of the essence of the contract. That doctrine, however, only applied when adateforcompletion was named inthe contract. It was held that when a date is so mentioned, there are mutual promises to complete on the appointed day, and that, on failure of either party todo his part on that day, he lost all rights under the contract, and became himself liable to an action for damages. The Equity Courts, on the other hand, treated a failure to complete on the appointed day as a failure in a collateral matter, analogous to failure to pay off a mortgage upon the due date, in which event the mortgagee's title would at law become absolute. At eommon law, if an action were brought for damages for failure to complete on the prescribed date, the party in default had no answer to the claim; but it was a complete answer to the action to say that the plaintiff was, himself, not ready and willing to perform the contract upon that date. In equity, however, that would not be an answer to a claim for specific performance by a party who had not been ready to complete on the appointed da: unless it appeared to the Court that it would be unjust not

[45]

failure. The doctrine, therefore, that time is not of the eseng of a contract is a doctrine applied in relief of a patty who i himself technically, but not substantially, in default, so as to alloy him to claim specific performance in a proper case, although at law he could not maintain an action. 'The Courts of Eauiy never held that a party who had made default in performanes of his contract was not liable for damages for the breach, but they treated the stipulation as to time not as a condition, but as an independent term of the contract, the breach of which might be compensated for by damages. Of course, a party asking specie performance of a contract, notwithstanding that he was himself in default, could only obtain that relief on doing what was fair to compensate the other party for any loss by reason of his default. When time was not originally of the essence of the contract, either party desiring to fix a definite time for completion, so as to entitle himself to rescind the contract on failure to com plete within the time, was required to give notice to the other party to complete by a named day, which was required to he reasonable, i.¢., at not too short an interval. The effect of this notice, however, was not to confer an offensive right or complete a cause of action, but to confer a defensive right in equity as well as at law to take advantage of the other party's default. I donot think, therefore, that the plaintiff's failure to give a notice appoint- ig a day for payment of the purchase money is material to her claim for damages for breach of contract except so far as sucha notice, if given and not attended to, would have been an element in considering whether the purchaser had failed to perform hiscon- tract within a reasonable time. In one sense, of course, time is always of the essence of a contract to be performed within a reason- able time. But that is not the sense in which the term "of the essence" is used. In my opinion the only question in this case is whether the plaintiff has made out a case at law. 'The learted Judges were, as I have already said, of opinion that, under the circumstances, it could not be said that the Ist of September was a reasonable time for completion in the sense that the defend- ants by mere non-payment upon that date committed a breach of contract: What is a "reasonable time" must depend upon cireum- stances. In the ease of a contract for the sale of mining shares of

[63]

OCoxxor J. Lalso am of opinion that the Supreme Court of Western Australia arrived at a right conclusion in this matter. 'The plaintiff in stating her cause of action alleges that John 'Temby specially agreed with her that the purchase money should be paid on or before the Ist of September, 1902, so that the plaintiff could prevent an order for foreclosure over the land in question being made absolute. 'he plaintiff on that statement of claim cannot succeed unless she proves that such a contract was entered into by John Temby. The contract is in writing, and the only reference to payment are these words: "Payment to be made on delivery of title deeds and transfer." Although the time mentioned by the plaintiff, the Ist September, was not specified in the contract, she endeavours to maintain that it was a term of the contract by showing that it is an implied term of the contract that payment should be made within a reasonable time, and she contends that, under the circumstances proved, the Ist Sep- tember was a reasonable time; in other words, that there could be no completion within a reasonable time, unless on or before the 1st September. As it is admitted there was no completion on or before the Ist September, she insists therefore that the defendant has failed to carry out the contract. Before I refer to the expres- sion "reasonable time" I wish to make some observations as to the contention that time was of the essence of this contract. There are only two sets of circumstances in which that doctrine can be applied; one, where a specific date for completion is stated in the contract; the other, where, although no specific date is mentioned in the contract, a notice has been given by the party who wishes to insure completion within a specified time that the completion must take place within the period notified otherwise the contract will be rescinded. In Macbryde v. Weekes (1) there was contract of the latter kind under the consideration of the Court, and it was there held that, although there was no time for com- pletion stated in the contract, it would be taken that the completion must be within a reasonable time, and that it was open to the

[72]

rill a Court of Law ; the case therefore stands in the same position asif this were an action at common law for failing to complete a contract within a reasonable time, The plaintiff has failed, in my opinion, to establish that, under all the circumstances of the ease, 'reasonable time for completion means on or before the Ist Septem- jer. Both parties no doubt were aware of the vital importance of completing the matter by the Ist September, but both parties 'ako knew that the money had to be arranged for in England, and that the payment was to come from England, and they must have Teen aware that the time of the remittance of that money was uncertain, and the evidence taken altogether would appear to show that, although it was of the utmost importance that this purchase should if possible be completed on the 1st September, oth parties were aware of circumstances which might, without default on either side, make the completion on the exact date impossible, 'Then again, look at the conduct of the parties - and we may look at their conduct after the making of the contract as well as before in order to determine what was in their minds as to date of completion when the contract was made, and what was their view at that time of completion by the Ist September being essential to a reasonable compliance with the contract. We find, all through from the time of the making of the contract, Temby indicating by correspondence and conduct that he was doing his test to get the money by the Ist September, and that he would complete by that date if possible, whilst on the part of the plain- tiffthere was no expression of surprise or protest as to delay in completion, nor did she at any time in the correspondence after that date take up the position that the contract had been broken by failure to complete on the Ist September. She seemed rather to hope and expect that the money would arrive, although after that date, in time to save the property from the threatened foreclosure. Indeed, when we look at the plain- tiff's letter of the 5th September, it is quite evident that, so far from insisting that the purchase should have been completed on the Ist of September, she was expecting relief under some different arrangement which was then guiding the actions of both partic 'The plaintiff then writes : "If I can save the property now . . .

At a glance

Court

Decision date

Before

Source

Judgment (75 paragraphs)

Cited By (10)