Mr Cooper's Alternative Claim
84Mr Cooper claimed, in the alternative to his loss of bargain case, that the respondents were liable under the Deed of Guarantee for the monthly payments (whether by supplying stock or otherwise) that Redrock should have made under the Loan Agreement after April 2005, but did not. The alternative claim proceeded on the basis that the Loan Agreement remained on foot at all material times.
85It will be recalled that cl 1.3.3 of the Loan Agreement provided that Redrock would repay the loan and that Mr Cooper would accept payment in the manner specified therein: that is,
"by delivery to or to the direction of Cooper ... monthly and each and every month of the term of the loan:
... such Redrock stock-in-trade as may be ordered by or on behalf of Cooper up to the value of [$4,000, $7,000 or $6,000 per month, depending on the month]."
It is common ground that Mr Cooper placed no orders after his email of 26 July 2005.
86The question that then arises is whether Redrock became liable to make the monthly repayments in the manner specified in cl 1.1.3 of the Loan Agreement notwithstanding Mr Cooper's failure to submit any further orders after July 2005. If so, Mr Cooper can claim damages against Redrock for its breaches of the Loan Agreement after that date (the Loan Agreement not having been terminated) and the respondents would be liable to Mr Cooper under cll 1 and 2.1 of the Deed of Guarantee for Redrock's default. If not, Redrock would not be liable under the Loan Agreement for its failure to make any further repayments and the respondents would incur no liability to Mr Cooper under the Deed of Guarantee.
87As Hodgson JA has observed, the answer to this question depends on the principles stated in Peter Turnbull . In that case, the High Court held that the conduct of one party to a contract may, in certain circumstances, relieve the other party from the obligation to perform a condition precedent specified in the contract. The parties in the present case did not address Peter Turnbull in their initial written submissions but did so in supplementary written submissions.
88In Peter Turnbull , a buyer under a contract for delivery of oats to be loaded onto a ship in Sydney sued the seller for damages for non-performance of the contract. The buyer was obliged to nominate the ship to receive delivery of the oats in February and was required to give fourteen days notice of the vessel and shipping date. The vendor did not do so because the buyer stated that it could only deliver the oats in Melbourne. The buyer elected to keep the contract on foot, so the damages claim was for actual, not anticipatory breach. The High Court held that the seller had dispensed with fulfilment of the condition requiring nomination of the vessel and that the buyer was entitled to damages for non-delivery of the oats.
89Dixon CJ pointed out (at 245-246) that the case was not one of a mere declaration of inability to perform, but involved an additional element. The seller had sought the buyer's help in substituting delivery in Melbourne for delivery in Sydney and had:
"clearly intimated to the [buyer] that it was useless to pursue the conditions of the contract applicable to shipment in Sydney and that the [buyer] need not do so."
The buyer would have had time to arrange a vessel in Sydney but, because of the seller's intimation, did not take the necessary steps.
90Dixon CJ said (at 246-247) that:
"long before the doctrine of anticipatory breach of contract was developed it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof ... But a [buyer] may be dispensed from performing a condition by the [seller] expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the [buyer] acts upon the intimation it is just as effectual as actual prevention."
91Kitto J posited (at 250-251) a case where A communicates a refusal to B to carry out the contract between them, B elects not to terminate the contract and A persists in refusing to perform:
"I am supposing, of course, a case like the present where in all the circumstances the refusal necessarily conveys to B that he need not trouble to fulfil a condition to which A's obligations under the contract are subject, because even if he does A will still not perform his obligations. Is it true in such a case to say that A's continued refusal must not be allowed any significance in an action by B against A, in which B seeks damages for not getting what he bargained for and A seeks to defend himself by relying upon the condition which he has all along shown that he was not concerned to have fulfilled? What does it matter for the purposes of that action that the refusal was not treated as ending the contract and as founding an action for anticipatory breach? The damages claimed are not for loss of the contract by premature termination, but for loss of the benefit which performance of the contract in accordance with its terms by both parties would by now have produced to B but for the fault of A. It is a cause of action which the facts I have assumed make out, unless the non-fulfilment of the condition is an answer to it; and as to that the inescapable fact is that A's refusal was a continuing intimation that the condition need not be observed, and it did not become any the less an intimation to that effect because B chose not to determine the contract before its time. The intimation having continued until the time came when A would certainly have been in default if the condition had been fulfilled, the law, as I understand it, treats A's obligation as absolute, and holds B entitled to damages for not having got what A promised he should have in the event of the condition being fulfilled."
92Kitto J said (at 253) that the buyer had to show, in order to succeed in the action, that it was ready and willing to perform the contract. The authorities indicated that:
"although a party who has been absolved from doing an act by the refusal of the other party to carry out the contract 'may defend an action against him, by merely shewing he was so absolved, yet, if he sues the other party whose refusal he relies on, he must show he was ready and willing to perform his part, had he not been absolved from actual performance.'" (Citations omitted.)
93The principles stated in Peter Turnbull have been frequently applied, particularly in cases involving concurrent mutually dependent obligations of vendor and purchaser where one party has intimated that it is useless for the other to proceed to completion of the contract of sale: see, for example, Mahoney v Lindsay (1980) 33 ALR 601; Foran v Wight [1989] HCA 51; 168 CLR 385, at 410-411, per Mason CJ; 419-422, per Brennan J; at 433-434, per Deane J; at 456-457, per Gaudron J; Austral Standard Cables v Walker ; Amaya v Everest Property Holdings Pty Ltd [2010] NSWCA 315. It seems to be accepted that, despite Dixon CJ's reference to a " request " in Peter Turnbull , a request to refrain from conduct is not necessary. It is enough that there has been an intimation that conduct would be futile and that intimation is acted upon by the other party: see Foran v Wight , at 420, per Brennan J.
94In conveyancing cases involving concurrent and mutually dependent obligations, Foran v Wight has been interpreted as basing the " dispensation ", which results from an intimation by one party to the other that performance will be nugatory, on the doctrine of estoppel. The elements of the dispensation were identified by Clarke JA in Austral Standard as (at 533):
"an intimation by one party that it would not perform its obligations thereby rendering nugatory any attempt by the innocent party to do so and an acting on that intimation by the innocent party to its detriment ..."
His Honour noted, however, that (at 534):
"In many cases the fact that the innocent party relied upon the intimation will be apparent from its non-performance of its contractual obligations."
See also Amaya v Everest , at [98], [109]-[110], per Young JA (with whom Beazley and Campbell JJA agreed.
95The present case is not one of mutually dependent concurrent (or simultaneous) obligations. Redrock's obligation under the Loan Agreement to supply stock each month did not arise until Mr Cooper placed an order for that month. The placement of the order was therefore a condition precedent to Redrock becoming liable to supply stock.
96It is not entirely clear whether the principles of estoppel apply in a case of this kind as they do to cases involving mutually dependent concurrent obligations: cf Asia Television Ltd v Yau's Entertainment Pty Ltd [2003] FCA 720, at [8]-[11], per Gyles J. If they do, a party seeking dispensation from a condition precedent must show that it did not satisfy the condition precedent because it relied on the other party's intimation that performance was futile.
97The better view would seem to be that proof of reliance is required but that, as Clarke JA observed in Austral Standard, at 534, in many cases of non-performance of a condition precedent reliance will not be difficult to establish. I am prepared to accept for present purposes, without finally deciding, that reliance is required.
98The evidence in this case supports findings that Redrock intimated to Mr Cooper that it did not propose to fulfil any orders placed by Mr Cooper and that Mr Cooper relied on that intimation in not placing any orders after 26 July 2005. Redrock, through its representatives at the meeting of 18 March 2005, stated that it was not in a position to make further payments. No further payments were in fact made and Mr Cooper's order of 26 July 2005 went unfulfilled. In the letter of 7 September 2005, Redrock's solicitors put forward a spurious justification for Redrock not filling any order placed by Mr Cooper and made it quite clear that it had no intention of filling any orders that might be placed. By 7 September 2005, at the latest, Redrock had intimated to Mr Cooper that it did not propose to fill any order that he might place thereafter and that it would be futile for him to do so.
99Mr Cooper, in his affidavit, did not specifically state that he placed no further orders after 26 July 2005, because he had formed the view, based on Redrock's conduct, that it was futile to do so. However, his solicitors, in their letter of 17 October 2005, noted that Redrock had made it clear that its present intentions were to make no further payments in reduction of the amount due. The inference is plainly open that Mr Cooper placed no orders after September 2005 (if not earlier) because Redrock had made it clear that it did not propose to fill the orders.
100I would therefore infer that Mr Cooper's non-compliance with the condition precedent in the Loan Agreement was the consequence of Redrock's intimation that compliance would be futile. On this basis, Mr Cooper is entitled to claim damages from Redrock for its breach of the Loan Agreement in each month from September 2005 onwards when it failed to repay the specified amount of the loan, whether by supplying stock or otherwise.