Interpretation Act 1984 (WA), s 61

Property Law Act 1974 (Qld), s 72(1)

Sale of Land Act 1970 (WA), s 5, s 6, s 7, s 11, s 19A

(2) The sellers are entitled to the contractual deposit of $105,000 held by the deposit holder

1 Kwai Seong Chan and Chiew Wah Chan (the sellers) apply for declarations that:

(1) the contract dated 3 September 2012 for the sale and purchase of the property known as 52 Henry Lawson Walk, East Perth (the property) made between the sellers and Louis JeanMic du Buisson Perrine and Mercedes du Buisson Perrine (the buyers) has been terminated; and

(2) the sellers are entitled to the contractual deposit of $105,000 held by Birman & Ride, as deposit holder, pursuant to the terms of the contract.

I will refer to the sum specified in the contract as being the deposit as the contractual deposit to distinguish it from a statutory deposit, being a deposit as defined in the Sale of Land Act 1970 (WA) (the Act) s 5.

2 The application was heard on the affidavit material as the facts are not in dispute.

(2) if the contract was a terms contract, was there nonetheless valid termination of the contract by the sellers.

4 On 3 September 2012, the sellers and the buyers entered into a contract for the sale and purchase of the property. The contract incorporated the 2011 Joint Form of General Conditions for the Sale of Land which were published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (the 2011 General Conditions). The relevant terms of the contract provided as follows:

(3) Contractual Deposit - $150,000, comprised of $5,000 to be 'paid now' (the date of execution of the contract), $45,000 to be paid within three days of finance approval and $100,000 to be paid by 15 October 2012.

The latest time for approval of finance was 4.00 pm on 21 September 2012.

5 The contract was varied in writing on 13 October 2012. The variation had the following effect:

(2) Contractual Deposit - reduced to $105,000, comprised of $5,000 paid on 3 September 2012, $10,000 to be paid by 19 October 2012, $30,000 to be paid by 30 November 2012, $30,000 to be paid by 28 December 2012 and $30,000 to be paid by 31 January 2013.

6 The contract was again varied in writing on 30 December 2012. The variation had the effect that the contractual deposit remained at $105,000, comprised of $5,000 paid on 3 September 2012, $10,000 paid on 19 October 2012, $30,000 paid on 12 December 2012 and $60,000 to be paid by 31 January 2013.

7 The parties entered into a further written variation of the contract on 1 February 2013. The variation provided that the 'final part' of the contractual deposit was to be paid by 15 February 2013. It noted that $45,000 had been paid and $60,000 was still to be paid.

8 Finally, on 27 February 2013 the contract was varied in writing so as to provide that the 'final part' of the contractual deposit was to be paid by 1 March 2013. This written variation also noted that $45,000 had been paid and $60,000 was still to be paid.

9 In accordance with the contract as finally varied, the buyers paid the contractual deposit. Since 11 March 2013 the $105,000 has been held in the sellers' lawyer's trust account.

10 Settlement did not occur on or before 7 March 2013 in accordance with the contract, as varied on 13 October 2012.

11 On 21 March 2013, the sellers served a Default Notice on the buyers which asserted that the buyers were in default of their obligations under the contract in that they had 'failed to complete Settlement on 7 March 2013, in accordance with clause 3.5 of the 2011 General Conditions'.

12 The Default Notice required the buyers to remedy the default specified within 11 business days after the date the Default Notice was given to the buyers. It further stated that if the default was not remedied within the time specified, the contract may be terminated.

13 The default was not remedied and settlement did not take place within the time specified, or at all.

14 On 16 April 2013, the sellers served a Termination Notice on the buyers which provided that the buyers had failed to remedy the default specified in the Default Notice dated 21 March 2013 and the sellers terminated the contract.

15 On 23 April 2013, the sellers served a Deposit Holder Notice on the buyers which contended that the contract had been terminated on the basis set out in the Termination Notice dated 16 April 2013 and that the deposit holder was required to pay the contractual deposit to the sellers.

16 On 29 April 2013, the buyers served a Response to Deposit Holder Notice. Although I have not seen the Response, the parties are in agreement that it disputed the sellers' right to be paid the contractual deposit.

17 As a consequence, there is a dispute between the parties as to what should happen to the $105,000 paid under the contract. The purpose of these proceedings is to resolve that dispute.

18 The parties are in agreement that, if the contract is not a terms contract, the sellers did all that was required under the contract to lawfully terminate it. Further, it is agreed that if the sellers lawfully terminated the contract the sellers were entitled to elect to exercise the forfeit of the contractual deposit (the 2011 General Conditions cl 24.3). It is also the general law principle that it is the intent of the parties to a contract for the sale of land that, if the contract goes off by default of the purchaser, the vendor shall retain the contractual deposit: McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 470 (Starke J), 478 (Dixon J).

19 However, the buyers assert that the contract was a 'terms contract' as defined in the Act s 5 and that the sellers did not lawfully terminate the contract because the Default Notice did not give the buyers 28 days to remedy the default, as required by the Act s 6(2)(a).

20 The sellers dispute that the contract was a terms contract but say that, even if it was, the Act s 6(2)(a) did not apply as the contract was not terminated for 'failure to pay a sum of money'.

Sale of Land Act 1970 (WA)

(1) Notwithstanding any stipulation to the contrary, a terms contract shall not be determined or rescinded on account of a breach by the purchaser of any term of the contract unless and until the vendor has served on the purchaser a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach within the time mentioned in subsection (2) and the purchaser has failed to do so.

(2) The time referred to in subsection (1) within which the purchaser is required to remedy a breach is -

(a) where the breach consists of a failure to pay a sum of money - a date stipulated by the vendor being a date not less than 28 days from the date of service of the notice; and

(b) in any other case - a reasonable time from the date of service of the notice.

terms contract means an executory contract for the sale and purchase of land under which the purchaser is -

(a) obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land; or

(b) entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land,

and for the purpose of this interpretation deposit includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract.

23 For the Act s 6(2)(a) to apply to the contract, it must be a terms contract as defined in the Act s 5. That is the first issue for my determination.

Construction of the statutory definition of 'terms contract'

24 In order for the contract to be a terms contract for the purpose of the Act, the following matters must be satisfied:

(2) the contract must be for the sale and purchase of land; and

(3) the buyers must be obliged to make two or more payments to the sellers, over and above any statutory deposit, before the buyers are entitled to a conveyance or transfer of the land.

25 The parties are in agreement that the contract was an executory contract for the sale and purchase of land. As the parties are also in agreement that the contract obliged the buyers to make two or more payments to the sellers, the sole question for determination before I can determine whether this is a terms contract is whether at least two of those payments were over and above any statutory deposit? The answer to this question, in turn, depends on the meaning of the statutory definition of 'deposit'.

26 Before I decide whether the contract was a terms contract, it is important to identify the terms of the contract and the date of its execution. Those matters are complicated in this case because of the number of variations of the contract and their effect on the payment schedule.

27 The buyers submit that the contractual deposit was payable by four instalments, only one of which was payable within 28 days of the date of the contract. The buyers say that as a consequence of the Act s 5, those parts of the contractual deposit payable on 19 October 2012, 30 November 2012 and 28 December 2012 and 31 January 2013 cannot be included as part of the statutory deposit. The buyers also refer to the date of 3 September 2012 as being the date of execution of the contract.

28 It is not clear to me why the buyers have only referred to payments due up until 31 January 2013. The variations of 1 and 27 February 2013 obliged the buyers to complete payment of the contractual deposit on 15 February and 1 March 2013, respectively.

29 The sellers' written submissions are drafted on the basis that the date of execution of the contract was also 3 September 2012. However, they have not made any submissions concerning the way the contract is to be construed in light of the subsequent variations.

30 In Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd [1994] VicRp 70; [1994] 2 VR 463, Hedigan J construed a contract for the sale and purchase of land which was subject to two later agreements which varied the payment schedule. His Honour referred to the High Court's decision in Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93 on the phenomenon of successive and subsequent agreements and their effect on an existing agreement. His Honour said that the parties to a subsequent agreement may, by it, discharge an earlier agreement, vary it in whole or in part or adopt it and confirm it. In Tallerman, Kitto J said:

[A]n agreement which deals with subsisting rights and obligations of the same parties under an earlier contract may vary that contract without terminating it, and that whether it effects a variation on the one hand or a discharge on the other is a question depending upon the intention of the parties as appearing from the new agreement. As Lord Hanworth observed in Royal Exchange Assurance v Hope (1928) Ch 179, 191, a variation may be in strict logic a new contract, but the discharge of an old contract is a matter of intention (135).

31 The High Court affirmed the approach in Tallerman in Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520 [23] [24].

32 In Australian Horizons, Hedigan J concluded that, in the case before him, the parties intended that those parts of the first two agreements which were not inconsistent with the third agreement formed part of their contractual arrangements. He acknowledged that the agreements had changed the number of payments and the times at which they were to be made, as well as the settlement date. He concluded that:

The parties did not intend that the contracts be discharged. By October 1990, they intended them, as a whole and read together, to represent their bargain. They intended that all payments made were payments under the contracts (473).

33 I consider that the law and the intention of the parties is the same in this case. Thus, by the variations the parties intended to substitute a different contractual deposit and payment schedule but otherwise the contract as executed on 3 September 2012 remained intact.

34 My conclusions are that the contract was executed on 3 September 2012 and it obliged the buyers to make four payments to the sellers. The first three of these comprised the contractual deposit. The first payment of $5,000, forming part of the contractual deposit, was obliged to be paid on execution of the contract. The second payment of $45,000 was to be paid within three days of finance approval. As the last time for finance approval was 21 September 2012, this payment was obliged to be made within 28 days of execution of the contract. However, the last two payments, being the final $100,000 forming part of the contractual deposit and the balance of the purchase price due at settlement, were obliged to be paid after 28 days from the execution of the contract.

35 If, as the sellers assert, the whole of the contractual deposit referred to in the contract executed on 3 September 2012 was the statutory deposit for the purpose of the Act s 5, the contract as signed on 3 September 2012 was not a terms contract as there was only one payment which was required to be paid to the sellers, over and above the deposit. On the other hand, if, as the buyers assert, that portion of the contractual deposit which was not obliged to be paid within 28 days of execution of the contract ($100,000 to be paid by 15 October 2012) was not part of the deposit for the purpose of s 5 of the Act, the contract as executed on 3 September 2012 was a terms contract. This is because it obliged the buyers to make two payments (the $100,000 balance of the contractual deposit and the settlement figure), over and above that part of the purchase price which the contract specified as being a deposit and which was payable within 28 days of execution of the contract.

36 If the buyers' construction of the contract is correct, none of the variations of the contract altered the characterisation of the contract as a terms contract. They only reduced the total contractual deposit from $150,000 to $105,000 and gave the buyers more time to pay the contractual deposit.

37 The variation of 13 October 2012 obliged the buyers to pay the contractual deposit of $105,000 in five instalments and the balance of the purchase price at settlement. As a consequence of the final variation, the contractual deposit was to be paid in four instalments, only one of which was within 28 days of the execution of the contract on 3 September 2012. On the buyers' construction, the contract remained a terms contract because the buyers were obliged to make four payments (three instalments of the contractual deposit and the balance of the purchase price) after 28 days from the execution of the contract, being 3 September 2012.

38 Taking into account the variations, the sellers' position has not changed either. This is because the sellers say that all of the payments which the buyers were obliged to make, apart from the balance of the purchase price at settlement, comprised part of the contractual and statutory deposit, even though only one of them was to be paid within 28 days after execution of the contract.

39 The sellers assert that the reason why the division of the contractual deposit into two or more payments, at least two of which were to be made in excess of 28 days of execution of the contract, did not bring the contract within the statutory definition of a terms contract is because the statutory definition of deposit is inclusive. That is, the sellers say that, the Act s 5 defines a deposit as having its ordinary definition and expands or extends the definition to include any part of the purchase price which the contract specifies as being a deposit and provides is to be paid within 28 days of the execution of the contract. The sellers submit that part payments of the purchase price, which are payable 28 days or more from the date of execution of the contract, are within the statutory definition of deposit, as long as they are regarded by the contract and by ordinary usage as being part of the deposit. The sellers submit that it is a matter for the parties and, if there is a dispute, for the court to decide whether any part of the purchase price is a statutory deposit and, in turn, whether the contract is a terms contract.

40 The buyers submit that the contract is a terms contract because 'includes' in the statutory definition of deposit should be read as meaning means. Thus, the buyers submit that the statutory definition of deposit is an exhaustive, rather than an inclusionary, definition. On this construction a payment made under a contract must meet two criteria in order to be a statutory deposit or part of a statutory deposit. They are:

(1) the contract must specify the payment as a deposit; and

(2) the payment must be payable within 28 days of execution of the contract.

Meaning of the statutory definition of 'deposit' - principles of statutory construction

41 I now turn to the main issue which is the meaning of the statutory definition of 'deposit'. The determination of this issue will then decide what other matters have to be decided in the case.

42 The general principles of statutory construction are wellknown and have been stated in many cases. For example, in Broadwater Hospitality Management Pty Ltd v Primewest (Lot 4 Davidson Street Kalgoorlie) Pty Ltd [No 2] [2010] WASCA 174, the Court of Appeal described those principles in the following terms:

A statutory provision is to be construed so as to give it the meaning the legislature is taken to have intended it to have. Ordinarily, the words of a statutory provision are to be construed according to their literal or grammatical meaning, but that principle is not to be applied inflexibly. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute, or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 [78]. A construction of the statute which would promote its purpose and objects is to be preferred to a construction that would not: s 18 Interpretation Act 1984 (WA) [32].

43 In Capper v Thorpe [1998] HCA 24; (1998) 194 CLR 342, the High Court said that in considering a case involving the construction of the Act s 6, it was important to keep in mind the objects of the section. The court said:

Those objects appear, clearly enough, from the language of the section. Contracts of the specified kind may not be determined or rescinded unless a notice in writing has been served on the purchaser. The parties cannot, by their contract, agree to exclude the operation of this requirement. Its object is plainly to afford the recipient of the notice time within which to secure advice and to attempt to cure the default. Quite often the default will have arisen from an inability to raise funds. In that context, each day of the period of notice may be important to the purchaser in default. The provision is a protective one. It should not be construed in a way that would undermine or frustrate the achievement of the clear legislative purpose. The requirement of service of a notice on the purchaser must be understood, and the section construed, in the context of the achievement of that purpose [4].

44 It is similarly important to keep in mind those objects when construing the definition of deposit and a terms contract in the Act s 5.

45 On the other hand, it is also important not to extend the remedial or protective effect of the statutory provisions to purchasers who the legislature did not have in contemplation when it enacted the Act.

46 The definitions of a terms contract in corresponding Acts of other States have also been construed by the High Court. The relevant cases include McDonald v Dennys Lascelles (Victoria); Petrie v Dwyer [1954] HCA 75; (1954) 91 CLR 99 (Queensland); Wacal Developments Pty Ltd v Realty Developments Pty Ltd [1978] HCA 30; (1978) 140 CLR 503 (Queensland) and Braidotti v Queensland City Properties Ltd [1991] HCA 19; (1991) 172 CLR 293 (Queensland). Those cases reveal the difficulty which legislatures have had in defining the type of contracts which warrant the protection identified in Capper v Thorpe.

47 The cases generally provide that a court must give the words of the Act or its interstate counterparts their natural and ordinary meaning: Braidotti [15]. A court is only entitled to depart from the natural and ordinary meaning of the statutory words if that meaning fails to reflect the remedial object of the legislation. In Australian Horizons, Hedigan J said that the High Court's scrutiny of one aspect of corresponding Acts had 'led to a wide, even benign construction' (474), favouring purchasers.

Meaning of the statutory definition of 'deposit' - Grover v Taylor and other cases

48 At the commencement of the hearing, counsel for the buyers brought to the attention of the court the decision of Grover v Taylor (Unreported, WASC, Library No 8901, 6 June 1991) in which Wallwork J considered the statutory meaning of deposit in the Act s 5.

49 The issue in Grover was whether the contract for the sale of land entered into by the parties (the Grover contract) was a terms contract within the Act s 5.

50 The Grover contract provided for the payment of a contractual deposit of $20,000, of which $1,000 was to be paid on execution, $9,000 was to be paid within seven days of acceptance and $10,000 was to be paid some three months later.

51 After considering the terms of the Act and the decided cases, Wallwork J determined that the definition of deposit in the Act s 5 does not exhaustively or exclusively define the meaning of that word. That is, his Honour's construction is the same as the sellers. His Honour held that:

[A] court can decide whether a sum of money is a genuine deposit in any particular case. Once that has been done, providing there are two or more payments to the vendor to be made over and above that deposit, the protection of the Act remains. There is no need to exclusively define what is to be regarded as a deposit in a terms contract (15).

52 The relevant matters which his Honour took into account in coming to his conclusion are as follows:

(1) as a general rule, the use of the word includes in a definitions section does not limit the ordinary meaning of the word to which it applies so that the defined word must be given its ordinary meaning (which is not defined) and the special meaning which the statute says is to be included: Deeble v Robinson [1954] QB 77, 81;

(2) 'includes' is susceptible of another construction which may become imperative if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to mean and include and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to those words or expressions;

(3) it will be more readily apparent that the definition is not exhaustive where that which is included goes beyond the natural import of the word;

(4) the question whether a particular provision is exclusive although 'includes' is the only verb employed is a question of the intention to be gathered from the provision as a whole;

(5) in other provisions of the Act, for example s 7, s 11 and s 19A, 'includes' is used to enlarge the ordinary meaning of its subject;

(6) the enlarged definition of deposit extends the meaning of the word deposit to include a very large part payment of a purchase price made in two or more payments as long as the money is paid within 28 days, even though such a contract may otherwise be validly interpreted as an instalment or terms contract;

(7) the cases accept that when determining the nature of a deposit in a contract for the sale of land and the circumstances in which relief may be granted against its forfeiture, all the circumstances of the bargain are examinable to see whether what is called a deposit is so in reality: Tropical Traders Ltd v Goonan (No 2) [1965] WAR 174, 176;

(8) a deposit has been variously described as 'an earnest to bind the bargain', a guarantee that the purchaser means business, and as a security arranged to ensure the due performance of the contract: Yardley v Saunders [1982] WAR 231, 236;

(9) in speaking to the amendment of cl 5 of the Sale of Land Bill (the Bill) in the Legislative Council on Thursday, 12 November 1970, the Hon I G Medcalf said:

I pointed out (during the Second Reading) that a deposit is sometimes broken up and because the purchaser may not immediately have the total funds required for the deposit, which would normally be in the vicinity of 10 per cent, he might pay something which is treated as being an initial or part deposit and then subsequently pay a further deposit, thus making the full deposit.

This is frequently availed of so that the parties can in fact sign a binding contract even though the purchaser does not have, immediately, the cash available to make up the deposit (Western Australia, Parliamentary Debates, Legislative Council, 12 November 1970, 2096 2107 (Mr IG Medcalf).

Thus, the definition of deposit was inserted into the Bill to protect a 'purchaser [who] does not have, immediately, the cash available to make up the deposit'. It was to remove any doubt as to whether a second payment made after execution of the contract was part of a deposit that the words were inserted; and

(10) if the draftsmen of the Act had wanted to statutorily define deposit to mean only those payments made within 28 days of the execution of the contract, that could have been achieved by using the word means. Alternatively, other words could have been used to indicate clearly that payments outside the 28 days could not be regarded as part of the deposit. This was not done.

53 The buyers submit that Wallwork J construed the meaning of the statutory definition of deposit incorrectly by failing to find that s 5 should be interpreted as meaning means or means and includes.

54 The buyers rely on the authoritative statement in Dilworth v Commissioner of Stamps [1899] AC 99, which says:

The word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the Statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word 'include' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to 'mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions (106).

55 The buyers say that I should decide that 'includes' in the Act s 5 has the alternative construction referred to by their Lordships.

56 The buyers also rely on Kitto J's dicta in YZ Finance Co Pty Ltd v Cummings [1964] HCA 12; (1964) 109 CLR 395, where his Honour said:

Unlike the verb 'means', 'includes' has no exclusive force of its own. It indicates that the whole of its object is within its subject, but not that its object is the whole of its subject. Whether its object is the whole of its subject is a question of the true construction of the entire provision in which the word appears. The wellknown statement of Lord Watson in Dilworth v Commissioner of Stamps [1899] AC 99, at pp 105, 106 should not be taken so literally as to reduce the inquiry in a case like the present to an inquiry into the meaning of the word 'includes'. Strictly speaking, that word cannot be equivalent to 'means and includes'. But a provision in which it appears may or may not be enacted as a complete and therefore exclusive statement of what the subject expression includes. A provision which is of that character has the same effect as if 'means' had been the verb instead of 'includes'. The question whether a particular provision is exclusive although 'includes' is the only verb employed is therefore a question of the intention to be gathered from the provision as a whole (401 402).

57 It is relevant to note that Kitto J's judgment in YZ Finance was not the leading judgment of the majority. On the same issue, McTiernan J (Taylor & Windeyer JJ agreeing) simply applied Lord Watson's dicta from Dilworth.

Meaning of the statutory definition of 'deposit' - the Parliamentary Debates

58 Wallwork J's considered decision in Grover on the construction of the statutory definition of deposit in the Act is strong, persuasive authority, even though it is not binding on me. I ought to follow it unless I am satisfied that it is wrong: Mustac v Medical Board of Western Australia [2007] WASCA 128 [38].

59 The buyers submit that Wallwork J was wrong because reference to the Parliamentary Debates show that the 28 day time period for the payment of the statutory deposit was intended to delineate the outer time limit in which a payment under a contract could be regarded as being a statutory deposit.

60 In order to examine this proposition it is necessary to have regard to the debates themselves. This is permissible as stated recently in Barker v Midstyle Nominees Pty Ltd [2014] WASCA 75. When construing another section of the Act, Buss JA said [27]:

At common law (that is, independently of s 19 of the Interpretation Act 1984 (WA)), a court is permitted, in construing a legislative provision, to have regard to the words used by Parliament in their legal and historical context and, if appropriate, to give them a meaning that will give effect to any purpose of the legislative provision which can be deduced from that context. See CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey & Gummow JJ); Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85, 112 113 (McHugh J).

61 The Bill was the result of the 1969 Report on Protection to Defaulting Purchasers by the then Law Reform Committee (the Report). The Report included a draft Bill which contained the following definition of terms contract:

'terms contract' means an executory contract for the sale and purchase of land under which the purchaser is -

(a) obliged to make two or more payments to the vendor (over and above any deposit paid on or in connection with the execution of the contract) before he is entitled to a conveyance or transfer of the land; or

(b) entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land.

62 The Bill was first introduced into the Legislative Council. It was read for a second time on 3 November 1970 by the Hon A F Griffith, the then Minister for Justice. Mr Griffith referred to the effect of the then cl 6 (now s 6) but he did not refer to the definition of a terms contract.

63 The debate was adjourned to the following day when the leader of the opposition spoke in support of the Bill. He did not say anything about the Bill's definition of a terms contract. The second reading of the Bill was then adjourned to 5 November 1970.

64 On that date, the Hon I G Medcalf, a member of the government, said that the definition of a terms contract in the Bill was a restrictive definition. However, as he expanded on his argument, it is clear that what he meant was that it was a wide definition of a terms contract, which would have the restrictive effect of making a contract which he said 'most people' would consider 'a cash sale' subject to the provisions of the proposed Act. That is, under the proposed definition of a terms contract, a contract which provided for payment of a contractual deposit over time and after execution of the contract would be a terms contract. Mr Medcalf considered that to be undesirable. Mr Griffith agreed to speak to the Law Reform Commission about the issue.

65 On 12 November 1970, when the Bill was in the Committee stage, Mr Medcalf moved an amendment to delete the requirement that the deposit be 'paid on or in connection with the execution of the contract'. In moving the amendment Mr Medcalf said:

The proposal in the first portion of the amendment is to ensure that the deposit need not be paid immediately upon execution of the contract. If a deposit is paid partly on execution and partly later, it may still be treated as a deposit, provided the payments are specified as being the deposit and are paid within 28 days of execution of the contract. That is what it really boils down to. It allows a little leeway for the payment of the deposit (2096 2097). (my emphasis)

66 Mr Griffith then noted that he, the Law Reform Committee and the Parliamentary Draftsman were satisfied with the proposed amendments.

67 Mr Medcalf immediately moved a further amendment so as to insert the current definition of deposit after the end of the proposed definition of terms contract. The amendments were put and passed without any further discussion of their meaning or effect.

68 The Bill was sent to the Legislative Assembly and read for a second time there on 18 November 1970. The second reading speech in the Legislative Assembly did not mention the definition of terms contract or the changes which had been made to the definition when the Bill had been in the Legislative Council.

69 It is clear from the second reading speeches that the Bill resulted from the then government's adoption of the recommendation of the Law Reform Committee that legislation be enacted to ensure that under a terms contract the purchaser is given a right of notice before the vendor can act against him for his default, in particular for default of payment of an instalment. The problem, which was sought to be rectified by the relevant provisions of the Bill, was the hardship caused to a purchaser who through an oversight or temporary financial hardship, did not pay an instalment on the due date. Prior to the passing of the Bill, if a contract made time the essence, a vendor could immediately rescind the contract for failure to pay an instalment. The Report [15] said that this hardship could not arise if the purchaser was given reasonable time to make arrangements to rectify the default.

70 By changing the definition clause from that originally contained in the Bill, Parliament's intention was to narrow the definition of a terms contract so that contracts which provided for the purchase price to be paid in two or more instalments over and above a deposit would not be caught by the definition, 'provided the payments are specified [in the contract] as being the deposit and are paid within 28 days of execution of the contract'.

71 The inevitable conclusion to draw from Mr Medcalf's explanation given at the time he made the amendment was that it was intended to broaden the statutory definition of deposit from a payment or payments identified as a deposit and made on or in connection with the execution of the contract to a payment or payments identified as a deposit and made within 28 days of execution of the contract.

Meaning of the statutory definition of 'deposit' - conclusion on statutory construction

72 Although I am mindful of the desirability of maintaining consistency between the decisions of single judges of this court, I am unable to follow Wallwork J's decision in Grover. Having regard to the Parliamentary Debates, I am satisfied that Parliament intended to stipulate a definition of a terms contract which, in turn, contained an exclusive or exhaustive definition of deposit.

73 The definition of a terms contract, in part, means an executory contract for the sale and purchase of land under which the purchaser is obliged to make two or more payments to the vendor (over and above any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract) before he is entitled to a conveyance or transfer of the land.

74 I consider that this construction is consistent with the objects of the Act to protect purchasers under contracts which provided for payment on extended terms. It would be unlikely that Parliament inserted a definition of a terms contract and a deposit which, essentially, leaves it to the parties to determine whether a contract is or is not a terms contract which obtains the protection of the Act. Given that the Act resulted from concerns that vendors were abusing their bargaining powers to insert clauses in terms contracts which enabled the vendor to terminate contracts and forfeit deposits or instalments of the purchase price immediately if purchasers failed to make a scheduled payment on a due date, it would not give effect to the purpose of the relevant provisions in the Act to interpret the definition of deposit in a way which enabled the abuse to continue, subject only to the right of the purchaser to have recourse to a court to decide whether the relevant contractual deposit was, in truth, a deposit or not. Such a position would have barely improved the position of purchasers. Vendors could avoid the immediate effect of the Act by calling instalment payments part of the contractual deposit.

75 For the above reasons, I find that the contract was a terms contract.

Did the sellers validly terminate the contract?

76 The second issue for my determination is given that the contract was a terms contract, did the sellers validly terminate the contract by serving on the buyers the Default Notice which required the buyers to remedy the default specified within 11 business days? The default specified was the failure 'to complete settlement on 7 March 2013, in accordance with clause 3.5 of the 2011 General Conditions'.

77 The 2011 General Conditions define a business day to mean any day except a Saturday, Sunday or public holiday in Western Australia.

78 In 2013, Good Friday on 29 March and Easter Monday on 1 April were public holidays which had to be excluded when calculating the 11 business days within which the buyers had to remedy the default specified.

79 Thus, under the Default Notice the buyers were required to remedy the default specified before 9 April 2013. Having regard to the Interpretation Act 1984 (WA) s 61, it gave the buyers 18 days from the date of service of the Default Notice to remedy the default. This can be otherwise expressed as 19 days within which to remedy the default.

80 The Act s 6(1) prohibits a vendor under a terms contract from rescinding the contract on account of a breach by the purchaser unless and until the vendor has served on the purchaser a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach by a date not less than 28 days from the date of service of the notice, where the breach consists of a failure to pay a sum of money or within a reasonable time from the date of service of the notice, in any other case, and the purchaser has failed to remedy the breach within the time stipulated.

81 If the buyers' breach consisted of a failure to pay a sum of money, the time allowed by the Default Notice to the buyers to remedy the breach did not satisfy the 28 day period in the Act s 6(2)(a).

82 This means that the only way in which the sellers could be held to have validly terminated the contract after service of the Default Notice is if the default specified did not consist of a failure to pay a sum of money and the buyers were given a reasonable time to remedy their breach.

83 In two cases, the High Court has considered the meaning of a similar provision in the Queensland counterpart of the Act. The first case is Sibbles v Highfern Pty Ltd [1987] HCA 66; (1987) 164 CLR 214 and the second case is Braidotti. In Queensland, the relevant statutory provision was the Property Law Act 1974 (Qld) s 72(1) which provided:

An instalment contract shall not be determinable or determined because of default on the part of the purchaser in payment of any instalment or sum of money (other than a deposit or any part of a deposit) due and payable under the contract until the expiration of a period of 30 days after service upon the purchaser of a notice in the approved form.

84 In Sibbles the purchasers agreed to purchase a strata title unit by instalments. After making a number of payments, the purchasers advised the vendors that they could no longer afford to make the payments due under the contract. The vendors pressed for 'complete settlement' of the contract and when the purchasers did not settle, the vendors elected to rescind the contract on the basis of the purchasers' 'refusal to complete'. The vendors relied on cl 11 of the contract which provided that if the purchasers should neglect or fail to pay the deposit, pay the balance or any instalment of purchase money or part thereof, pay any interest or comply with any agreement contained in the contract, then the vendor was at liberty to rescind the contract.

85 In the High Court, the argument advanced on behalf of the purchasers was that the purported rescission by the vendors was pursuant to that part of cl 11 which conferred upon the vendors a right to rescind for failure on behalf of the purchasers to pay monies due under the contract. It was said, therefore, that before the contract could be determined for nonpayment of monies due under it, a notice which complied with s 72(1) had to be given, and it was not.

86 In the joint judgment of the majority (Mason CJ, Dawson, Toohey & Gaudron JJ), their Honours noted that the power of termination given by cl 11 of the contract could be exercised not only for default in the payment of monies due, but also for failure to comply with any agreement contained in the contract. Further, the vendors' contemporaneous justification for rescinding the contract was the continuing failure of the purchasers to complete the contract. Their Honours found that the vendors, as a basis for rescission of the contract, relied upon the purchasers' repudiation of, or refusal to be bound by, the contract, rather than the failure to pay any instalment or sum of money due under it. The default in the payment of monies constituted evidence of this refusal to be bound by the contract but it was not the only evidence of the purchasers' rejection of any further obligations on their part under the contract. Their Honours noted that the learned trial judge had found that the purchasers had repudiated the contract by demonstrating their intention no longer to be bound by it and that the finding was amply justified by the evidence.

Perhaps if the repudiatory conduct alleged had been no more than default in the payment of moneys due under the contract, then there may have been some foundation for the contention that non-compliance with a properly served notice under s 72(1) of the Property Law Act was required before [the vendor] was entitled to rescind. But the repudiation found by the trial judge went beyond default in the making of payments. He found that the 'continuing failure of [the purchasers] to complete the contract, and their persistence in wrongfully contending that they had rescinded the contract in answer to the vendor's claim for specific performance, "amounted to an intimation of their intention to have no more to do with the purchase" ' (226 227).

88 In Braidotti, the vendors had issued a notice of rescission which was 'for failure to comply with the proceeding notice to complete' (301). The statutory notice was not served and the notice to complete which was served did not provide the purchaser the prescribed 30 days to complete the contract.

89 In Braidotti, after issues relating to the rezoning of the land were resolved, the parties agreed on the date for completion. The vendors were not in a position to complete the contract on that date but two to three weeks later the vendors' solicitor issued a notice to complete to the purchaser and various executed transfer documents were delivered to the purchaser's solicitors. The notice to complete specified 26 July 1989 as the date for completion. On 12 July 1989 the solicitors for the purchaser informed the vendors' solicitors that the purchaser did not consider the notice to complete valid or effective. On 27 July 1989 the vendors' solicitors issued a notice of rescission and on 7 August 1989 sought a declaration that the contract had been validly rescinded.

90 In a joint judgment Mason CJ, Brennan and Dawson JJ recited the vendors' argument which was that the notice to complete made time of the essence so that failure to comply with that notice constituted a repudiation of the contract on the part of the purchaser. Their Honours held that, for the purpose of s 72(1), it was plainly a rescission for default in payment of a sum of money, notwithstanding that it was also a rescission for repudiation. Their Honours held that there was 'no dichotomy between a purchaser's default in paying the balance of the purchase price on completion and a purchaser's failure to complete' (302).

91 Their Honours distinguished Sibbles on the basis that it 'was an altogether different case on its facts'. This was because in Sibbles the trial judge found that the repudiation went beyond default in the making of payments. Whereas, in Braidotti there was no evidence that the purchaser's default consisted of anything more than default in the payment of monies due under the contract.

92 Gaudron J, in dissent, held that the notice of rescission given by the vendors was based on failure to comply with the notice to complete and there was no additional feature to the failure to comply with the notice to complete which could be said to constitute a default by the purchaser in the payment of an instalment or sum of money. Further, there was no assertion of any such default. Her Honour held that there was no basis on which it could be said that the vendors purported to terminate the contract 'by reason of default in payment of any instalment or sum of money (other than a deposit or part thereof)' and, thus no basis on which it could be held that s 72(1) of the Act prevented termination of the contract by the notice of rescission given on 27 July 1989 (316 317).

93 Deane J on this aspect agreed with Gaudron J. His Honour noted that completion of a contract for the sale of land ordinarily encompasses a number of steps which can be taken either over a period of time or contemporaneously with settlement. Those steps may include the finalisation of accounts between the parties in respect of such matters as adjustments 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. His Honour referred to other steps which he said may properly be seen as peripheral to the essential steps involved in the actual completion of the contract but which were nonetheless (where necessary) part of the overall process. His Honour said that there was no suggestion or evidence 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.

94 After referring to Sibbles his Honour found that the reasoning in the majority judgment in Sibbles was applicable to Braidotti. Thus, the vendors' rescission could not properly be seen as being by reason of default in payment of the purchase price for the purposes of s 72(1). Rather, the alleged repudiation was constituted by the purchaser's refusal and failure to comply with the requirements of the vendors' notice to complete and s 72(1) was inapplicable to it.

95 The default specified in the Default Notice was the buyers' failure to complete settlement on 7 March 2013 in accordance with cl 3.5 of the 2011 General Conditions.

96 Clause 3.5(a) states that each party must complete settlement on the date for settlement specified in the contract. Settlement is defined in the 2011 General Conditions to mean:

The completion of the sale and purchase of the Property in accordance with clause 3.

97 Clause 3 of the 2011 General Conditions places obligations on both the buyer and the seller. In respect of a buyer's obligations, it provides that a buyer must arrange for the transfer to be prepared, signed and delivered to the seller a reasonable time before the settlement date. Where the contract is liable to be assessed in respect to stamp duty the buyer must arrange for an assessment of stamp duty on the contract, pay the stamp duty and arrange endorsement by State Revenue of the transfer to the effect that stamp duty has been paid on the contract, before the transfer is delivered to the seller. Clause 3.7 provides that the buyer must, on settlement, pay to the seller the balance of the purchase price and any other money payable by the buyer at settlement, less any deduction allowed under the contract.

98 The evidence establishes that the buyers failed to complete settlement by failing to comply with the obligations in cl 3. Further, the buyers' counsel advised me from the bar table that the buyers' position was that the contract was at an end and that they did not wish to complete it.

99 I conclude that the buyers' breach which was relied on by the sellers and which they required the buyers to remedy within the time specified in the Default Notice was not a breach which consisted of 'a failure to pay a sum of money'. It was a failure to comply with the obligations involved in settlement, in accordance with cl 3.5 of the 2011 General Conditions, which incorporated all the obligations in accordance with cl 3 of the 2011 General Conditions. As in Sibbles, the sellers relied on the buyers' refusal to be bound by the contract, rather than their failure to pay a sum of money. Thus, the Act s 6(2)(a) did not apply and the sellers were not required to stipulate a date being a date not less than 28 days from the date of service of the Default Notice in order to validly rescind the contract.

100 As the breach complained of by the sellers was not a failure to pay a sum of money, in order to validly rescind the contract pursuant to the Act s 6 the sellers' Default Notice had to require the buyers to remedy their breach within 'a reasonable time from the date of service of the notice': the Act s 6(2)(b). The Act does not give any indication as to what constitutes 'a reasonable time'.

101 However, the Parliamentary Debates show that there was a strong view amongst some government members that the 28 days provided for in the Act s 6(2)(a) was too long and that a reasonable period of time even in the case of a failure to pay a sum of money was 14 days.

102 As stated earlier in these reasons, the 11 business days stipulated in the Default Notice in fact gave some 18 days for the buyers to remedy the breach. Given the 2013 calendar, the 11 business days were spread over a fourweek period.

103 Reasonableness must be determined not only having regard to objective features but also to the subjective or particular circumstances of the relevant contract. In this respect, I note that the contract was originally executed on 3 September 2012 and it allowed for settlement on or before 31 January 2013. This allowed for over four months between execution of the contract and settlement. Due to the various variations in the contract this period was extended so that there was a period of some six months between execution of the contract and the stipulated settlement date. There was then a further 14 days before the sellers served the Default Notice.

104 Given these circumstances, I am satisfied that the 11 business days provided by the Default Notice, which was 18 clear days, was a reasonable time from the date of service of the Default Notice within which the buyers could remedy the breach. It is not disputed that they failed to do so.

105 For the above reasons, I would declare that the contract has been lawfully terminated and that the sellers are entitled to the contractual deposit of $105,000 held by the deposit holder, pursuant to the terms of the contract.