_Davidson & Anor v Bucknell & Anor_

[1]

CONTRACT - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS - where the plaintiff and the defendant had entered into two interdependent contracts for the sale of the land - where each of the contracts contained a special condition making it subject to and conditional upon the contemporaneous completion of the other contract - where one contract included house and land and the second contract was for commercial land - where each contract was in the standard form approved by the Real Estate Institute of Queensland and the Queensland Law Society with additional special conditions.

[2]

Land Title Act 1994 s 127

[3]

Property Law Act 1974 s 71, s 72

[4]

Consolidated Holdings v Ireland [1946] 1 KB 264

[5]

Dainford Ltd v Yulora Pty Ltd [1984] 1 NSWLR 456

[6]

Foran v Wight [1989] HCA 51; (1989) 168 CLR 385

[7]

Ireland v Leigh [1982] QdR 145

[8]

Jeppesons Road Pty Ltd v Romeo di Domenico & Anor [2005] QCA 391

[9]

Lohar Corporation Pty Ltd v Dibu Pty Ltd [1976] BPR 97014

[10]

Lowe v Evans [1989] 1 QdR 295

[11]

Mehmet v Benson [1965] HCA 18; [1964-5] 113 CLR 295

[12]

Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418

[13]

Jones & Anor v Millward & Anor [2005] QCA 76

[14]

[1] On 15 June 2007, the parties entered into two separate contracts, which give rise to this proceeding. By the first contract, the first plaintiff (hereinafter, without disrespect, referred to by his surname "Davidson") agreed to purchase from the first defendants (similarly "the Bucknells") a house and land situated on Lot 142 on SP 154473 County Cardwell, Parish Woodley, for a price of $450,000. By the second contract, the second plaintiff Davidson Cattle Company Pty Ltd ("DCC") agreed to purchase from the second defendant Rass Farming Pty Ltd ("Rass") commercial land which, after a subdivision and survey was identified as Lot 152 on Plan 206165 for a price of $1,150,000.

[15]

[2] There was a third contract by which Rass sold to DCC other land created by the said subdivision. This contract was duly settled on 17 August 2007[1]. No issue arises in respect of this third contract and no further reference needs be made to it.

[16]

[3] By this proceeding, the plaintiffs seek orders that each of the first and second contracts be specifically performed and the defendants seek declarations that each contract has been lawfully terminated.

[17]

[4] Each of the subject contracts contains a special condition making it subject to and conditional upon the contemporaneous completion of the other contract.[2]

[18]

[5] Each contract provided for completion on 3 March 2008 at Mareeba. The date for completion was by consent extended on two occasions resulting in an agreed completion date of 7 October 2008 with time being of the essence.

[19]

[6] Each contract provided that settlement shall occur between the hours of 9.00 am and 5.00 pm on the settlement date.[3]

[20]

[7] Relevant to the first contract, the provisions relating to the giving of possession of the property are found in the Standard Conditions as follows:-

[21]

"5.5 Possession of Property and title to Included Chattels

[22]

On the Settlement Date, in exchange for the Balance Purchase Price, the Seller must give the Buyer vacant possession of the Land and the Improvements except for the Tenancies. Title to the Included Chattels passes at settlement.

[23]

(1) The Seller must remove the Reserved Items from the Property before the Settlement Date.

[24]

(2) the Seller must repair at its expense any damage done to the Property in removing the Reserved Items. If the Seller fails to do so, the Buyer may repair that damage.

[25]

(3) Any Reserved Items not removed before settlement will be considered abandoned and the Buyer may, without limiting its other rights, complete this contract and appropriate those Reserved Items or dispose of them in any way.

[26]

(4) the Seller indemnifies the Buyer against any damages and expenses resulting from the Buyer's actions under clauses 5.6(2) or 5.6(3)."

[27]

Special Condition No. 4 identified the included chattels which were to pass on settlement. The "Reserved Items" is defined by Standard Condition 1.1(2)(o) to include all chattels other than Included Chattels.

[28]

[8] Relevant to the issues concerning the second contract, the contract provided as follows:-

[29]

The balance of the Purchase Price shall be paid on the Date for Completion in exchange for:

[30]

(a) possession of the Property (such possession to be vacant except for any Lease);

[31]

(b) a property executed transfer for the Land in favour of the Purchaser capable of immediate registration (after stamping) in the appropriate office free from Encumbrances (other than those set out in Item L) and title to the property (other than the Land) free from Encumbrances (other than those set out in Item L) but subject to the conditions of this Contract;

[32]

(c) any declaration required, by the Stamp Act 1894, to be furnished to procure the stamping of the transfer;

[33]

Item L identified that the property was sold free from encumbrances.

[34]

[9] It is common ground that the deposit required by each contract was duly paid. It is common ground that as at 7 October 2008 neither Davidson nor DCC had the financial capacity to complete the contracts in accordance with their respective obligations. In fact, it was not until 3 November 2008 that they had finalised their application for finance and it was not until 14 April 2009 that they had the financial capacity necessary to complete the transactions.[4]

[35]

[10] On 1 October 2008, the defendants' solicitors provided to the plaintiffs' solicitor a settlement statement for each contract and confirmed the date for completion as being 7 October 2008. The defendants' solicitors also nominated the place of settlement being at their offices at Mareeba at the time of 10.00 am.[5] The plaintiffs' solicitors responded that day seeking a further extension of time for the settlement to 17 October 2008 but that request was rejected by letter dated 6 October 2008. On the afternoon of that day, the plaintiffs' solicitors made a further request for extension this time to 10 October 2008 but that request was also rejected.[6]

[36]

[11] On 7 October 2008, the defendants' solicitors at 9.20 am sent further letters to the plaintiffs' solicitors again proposing the settlement time at 10.00 am.[7] There is no evidence of any action at this time, but at 1.00 pm the plaintiffs' solicitors dispatched a letter asserting that the second contract was an "instalment contract" as defined by s 71 of the Property Law Act and that the second contract could not be terminated until the expiration of 30 days after a notice had been duly served in accordance with s 72 of that Act.[8] The accuracy of this assertion was not tested in argument before me because the second defendant did not purport to terminate the second contract on the ground of DCC's failure to pay the balance purchase price but rather terminated on the basis of the second contract's interdependence upon the first contract. No reference was made to the first contract in the letter but at 4.00 pm on that day both plaintiffs lodged caveats asserting that the respective contracts remained on foot.

[37]

[12] The evidence does not disclose any further contact between irrespective solicitors until 5.25 pm on 7 October 2008 when the defendants' solicitors with respect to the first contract wrote:-

[38]

"Given that your client (Davidson) has defaulted by failing to effect settlement when our clients were ready, willing and able to effect settlement, we are instructed to terminate the contract pursuant to clause 9.1."[9]

[39]

At 5.30 pm the defendants' solicitors wrote with respect to the second contract:-

[40]

"We confirm that the contract of sale from Robert William Bucknell and Susan Rosemary Bucknell to your client William James Alexander Davidson dated 15 June 2007 for Lot 142 on SP 154473 has been terminated.

[41]

Accordingly, this contract is unable to be completed due to the requirement contained in Special Condition 6, and accordingly is at an end."[10]

[42]

[13] I infer from the foregoing that neither Davidson nor DCC had agreed to the settlement time of 10.00 am and that they did not attend at the appointed time. That being the case each of the vendors had to allow the purchasers the opportunity to complete the respective contracts until 5.00 pm that day. Accordingly, in the absence of any agreement to do so, the vendors were not bound to be ready, willing and able to complete at that nominated hour. Lowe v Evans.[11]

[43]

[14] Davidson now challenges the Bucknells' right to terminate the first contract on the grounds that they were not ready, willing and able to complete the contract because they could not give vacant possession in accordance with the terms of the contract - Conditions 5.5 and 5.6 above. Davidson further argues that in those circumstances he was not obliged to tender the balance purchase price.

[44]

[15] Whether the Bucknells were ready, willing and able to give vacant possession of Lot 142 falls to be determined on the evidence contained in the Bucknells' affidavit filed on 16 February 2009. Davidson has not adduced any evidence as to the relevant circumstances on this issue. In the Further Amended Statement of Claim he asserts by way of particulars that the Bucknells could not gives vacant possession of the property because -

[45]

(i) A quantity of Bucknells' furniture and personal effects remained in the house;

[46]

(ii) A shipping container was situated on the land.

[47]

[16] The Bucknells denied that they were not able to give Davidson vacant possession on the day of settlement asserting that by 1.00 pm on that date all personal effects had been removed from the house and that arrangements were in place for the removal of the shipping container. I set out in full the relevant evidence which sufficiently describes what is depicted in the photographs exhibited to the Bucknells' affidavit.

[48]

"15. As at the settlement date of 7 October 2008, we were, in all respects, ready willing and able to complete the sale of Lot 142 to the first plaintiff.

[49]

16. In late August 2008 we had signed a contract to purchase a farming property and residence. We negotiated that the finance date would be 14 October 2008, a week after the settlement date of the First Contact and Second Contract. Settlement of our purchase was due on 14 November 2008.

[50]

17. We arranged to rent a homestead and paddock at Pembroke farm near Ravenshoe ("Pembroke") from 7 October 2008 until the settlement of our purchase on 14 November 2008.

[51]

18. On 6 October 2008 we moved some of our furniture, personal belongings and machinery to Pembroke.

[52]

On 7 October 2008, VIP Furniture & Removals ("VIP") removed more of our furniture and personal belongings from Lot 142 to their depot in Atherton.

[53]

After the removalists had finished, a few boxes, cleaning equipment, and a telephone remained. We cleaned the house and packed those remaining boxes into our car.

[54]

Exhibit B5 is a photograph taken by Robert's brother Jeffery Bucknell at 12.25 pm on 7 October 2008 of VIP's truck packed and ready for departure.

[55]

Exhibit B6 is a true copy of the tax invoice of VIP for the furniture removal. The invoice notes that the truck reached the depot with our furniture at 1.30 pm.

[56]

Exhibit B7 is a photograph taken by Jeffery Bucknell at 12.53 pm on 7 October 2008 of our car packed for departure.

[57]

Exhibit B8 are photographs of the inside of the house taken by Jeffery Bucknell shortly after 5 pm on 7 October 2008 showing that it was empty. Those photographs are an accurate representation of the premises at and from 1 pm on 7 October 2008.

[58]

Situated on the south eastern corner of Lot 142 is a shipping container in which are stored some of our belongings.

[59]

Exhibit B9 is a photograph of the shipping container taken by Jeffery Bucknell with a camera which records GPS points.

[60]

Exhibit B10 is an aerial photo of the area, marked with the GPS point location of the container as recorded by the camera.

[61]

We engaged Mr Neville Kelso to remove the shipping container on 7 October 2008. He was booked to come at 4 pm. At approximately 3 pm Robert telephoned Mr Kelso and told him that the sale had not yet settled and asked him to remain on standby to collect the container when we telephoned again. Robert finally telephoned Mr Kelso at 5.30 pm on 7 October 2008 and cancelled the removal of the container."[12]

[62]

[17] Based on that evidence Davidson contends that the Bucknells were in breach of both Standard Conditions 5.5 and 5.6 requiring them to give vacant possession of the premises.

[63]

[18] Davidson concedes that he was unable to pay the balance price on the settlement date in accordance with his contractual obligations. This forms the basis upon which the Bucknells rely to terminate the contract. But their right to terminate depends upon them being ready, willing and able to perform their "concurrent and mutually dependent obligations in the sense that they are 'simultaneous acts to be performed interchangeably'". Foran v Wight[13] Bucknells' performance of this obligation was clearly made essential by the terms of the contract.

[64]

[19] On behalf of Davidson, counsel contend that the standard conditions read together require the removal of the reserved items prior to the settlement date rather than progressively throughout the course of the settlement date. The argument suggests that the proper construction of these conditions requires an integrative approach with the result that condition 5.6(1) qualifies and gives content to the sellers' obligation defined in condition 5.5. This approach, it is suggested, gives effect to established rules of construction; gives rise to a sensible commercial result devoid of uncertainty; produces congruent operation to constituent parts of the contract; and, relieves the purchaser of the inconvenience of having to monitor during the course of the settlement day whether vacant possession has been achieved.

[65]

[20] I do not accept that the two conditions are to be construed so as to lead to a result that the premises are to be brought to a state of vacant possession prior to the settlement date. Rather, the provisions are to be construed according to their separate terms but having regard to the terms of the contract as a whole. In my view, the condition 5.5 and condition 5.6 have functions which are quite separate and distinct. Condition 5.5 identifies the sellers' concurrent and mutually dependant obligation to the buyers' obligation to pay the balance purchase price. Condition 5.6 reserves certain rights to the buyer in the event the buyer accepts possession of the property, notwithstanding the breach of the seller's obligation pursuant to 5.5. I do not see any basis for the contention that the terms of condition 5.6 in any way qualifies the sellers' obligation identified in 5.5. The time at which the sellers' obligation must be fulfilled, or be capable of fulfilment, is the agreed time for the settlement or, in the absence of agreement, no later than 5.00 pm on the settlement day. In Lowe (supra) McPherson J said at p 298):-

[66]

"The question here is whether some such agreement on the time for settlement was, within the meaning of cl.22, made by the parties, so as to displace the other general provisions of that clause by which the time for completion is left at large between 9.00 am and 5.00 pm on the date for settlement. It may be accepted that, in order to attract the application of the first sentence of cl.22, mere advice by one conveyancer or party to the other of a convenient time is not sufficient. What is required is that the time for completion be "agreed upon", for it is "in the absence of agreement" that the more general 9.00 am to 5.00 pm prescription is to prevail."

[67]

[21] The cases to which I have been referred proceed on this basis. The plaintiffs did not refer to any authority which held that vacant possession was required at any earlier time. Nor do I find any warrant for construing the terms of condition 5.6(1) as requiring the removal of reserved items before the beginning of the settlement date. The terms are equally open to the interpretation that the items be removed before the end of the settlement date subject to any obligation that might arise by agreeing to completion at an earlier time.

[68]

[22] Davidson did not attend at the time appointed for settlement and as has already been observed, was not at any time on settlement date capable of fulfilling his obligation as buyer, and thus entitled to demand vacant possession of the subject premises. It is Davidson who now bears the onus of proving that the Bucknells were unwilling or unable to fulfil their obligation.

[69]

[23] I am satisfied on the uncontested evidence that the Bucknells had completely vacated the house by 1.00 pm on the settlement date and that arrangements were in place for the shipping container to be removed by 3.00 pm that day. The Bucknells cancelled those arrangements at a time when they knew that because of Davidson's failure to attend the settlement appointment and by DCC sending a letter at 1.00 pm contesting its obligation to complete the second contract, Davidson had no intention of completing the first contract.

[70]

[24] The Bucknells approach Davidson's contention on two bases - firstly, that they were justified in those circumstances in allowing the container to remain on the premises and secondly, that the container was not an impediment which "substantially prevents or interferes with the enjoyment or right of possession of a substantial part of the property". Consolidated Holdings v Ireland[14]. Whilst there is considerable merit in the suggestion that the presence of a shipping container in an area of 1.137 hectares would not constitute such an "impediment", I have come to the view that the Bucknells succeed on the first basis.

[71]

[25] The Court of Appeal of New South Wales considered a similar situation in Lohar Corporation Pty Ltd v Dibu Pty Ltd[15] where a solicitor in the expectation that the settlement would not proceed attended the settlement appointment without lease documents and notices which were to have been handed over at settlement. The solicitor was however in a position to produce the documents within a very short time if required. Hutley JA observed as follows:-

[72]

"Even if [the solicitor] had not been ready to settle, I am of the opinion that it would not avail the respondent in that the appellant's solicitor had already received notice that there was to be no settlement because the respondent had not obtained money to enable it to settle, and such notice justified him in not going through the laborious and expensive processes involved in an abortive settlement."[16]

[73]

"The governing principle is that the party alleging contractual default must show that it was ready and willing to perform its obligations under the contract (Peter Turnbull & Co Pty Ltd v Mundus Trading Company (Australasia) Pty Ltd [1954] HCA 25; (1954) 90 CLR 235 at 253-4) except to the extent that it was absolved from performance by the conduct of the defaulter. His Honour quite properly took the view that the plain indications that the purchaser's solicitors would for the third time fail to show up at the appointment exempted the vendor's solicitor from bringing along documents of subordinate importance which could be quickly procured. But, absolution apart, it is in my view a mistake to believe that when time for the completion of a contract for the sale and purchase of land becomes essential, nothing less than strict and literal performance of every obligation is acceptable. It matters not whether the court is judging the failure of the defendant to perform or the failure of the plaintiff to be ready and willing to perform. The answer to both questions must depend on all the circumstances practically viewed and upon the nature of the obligation in question. The tenor of some contractual duties is such that exact performance is required to avoid default. With others, substantial compliance is sufficient. (Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 642). There is no universal rule that conveyancing performance is to be "measured out by coffee spoons".[17]

[74]

[26] I am satisfied that the cancellation of the removal of the container was a practical step taken in mitigation damages and only when it was obvious that the settlement would not occur that day. I am satisfied that the Bucknells were ready, willing and able to provide vacant possession in fulfilment of their obligations under the first contract. Accordingly, the Bucknells were entitled to, and validly did, terminate the contract at 5.25 pm on 7 October 2008.

[75]

[27] The interdependence of the two contracts is expressed in similar terms in each contract. The relevant terms are those found in Special Condition 6 in the second contract as follows:-

[76]

"6. This contract is subject to and conditional upon the contemporaneous completion of the sale of Lot 142 on SP 154473 by Robert William Bucknell and Susan Rosemary Bucknell to William James Alexander Davidson herein."

[77]

[28] Though the subject phrase "subject to and conditional upon" has the sense of being a condition precedent it has the effect of rendering the second contract voidable at the option of either DCC or Rass. Suttor v Gundowda Pty Ltd.[18] The situation is that neither DCC nor Rass by their conduct caused or contributed to the non-completion of the first contract. The consideration of Special Condition 6 arises by reason of circumstances beyond the control of either of them. Such circumstances were referred to in Suttor in the following passage:-

[78]

"The effect of contractual provisions of this character was discussed and explained in New Zealand Shipping Co. Ltd v Société des Atelliers et Chantiers de France (1919) A.C.1). Lord Atkinson said:- "It is undoubtedly competent for the two parties to a contract to stipulate by a clause in it that the contract shall be void upon the happening of an event over which neither of the parties shall have any control, cannot bring about, prevent or retard. For instance, they may stipulate that if rain should fall on the thirtieth day after the date of the contract, the contract should be void. Then if rain did fall on that day the contract would be put to an end by this event, whether the parties so desire or not. Of course, they might during the currency of the contract rescind it and enter into a new one, or on its avoidance immediately enter into a new contract. But if the stipulation be that the contract shall be void on the happening of an event which one or either of them can by his own act or omission bring about, then the party, who by his own act or omission brings that event about, cannot be permitted either to insist upon the stipulation himself or to compel the other party, who is blameless, to insist upon it, because to permit the blameable party to do either would be to permit him to take advantage of his own wrong, in the one case directly, and in the other case indirectly in a roundabout way, but in either way putting an end to the contract." ((1919) A.C., at p 9).

[79]

Where the event in question is one which cannot occur without default on the part of one party to the contract, the position is clear. The provision is then construed as making the contract not void but voidable: only the party who is not in default can avoid it, and he may please himself whether he does so or not. In the present case the happening of the event (not obtaining the Treasurer's consent) may be brought about by failure on the part of either party to take certain necessary steps (provision of particulars by the vendor or making of application by the purchaser) to obtain the Treasurer's consent, or it may be brought about without any default on the part of either party. In fact, although there was some argument to the contrary, it was, we think, brought about without any default on the part of either party... But we are of opinion that the New Zealand Shipping case ((1919) A.C.1) requires the same construction to be given to the contract in both classes of case. The provision in question is to be construed as making the contract not void but voidable... If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him."

[80]

[29] DCC has established that the land to be conveyed was part of Rass assets which were subject to a fixed and floating charge in favour of Suncorp Metway Limited. This charge arose after the contracts had been entered into for the purpose of securing and advance for the purchase by Rass of an unrelated property. Mr Drewett, Regional Manager of Suncorp, gave evidence that such security was no longer required by his company but the charge was still in existence a the relevant time. DCC relies upon that fact to argue that Rass could not fulfil its obligations to DCC on the settlement date.

[81]

[30] The Bucknells and Rass contend that no enquiry is therefore necessary as to whether the parties to the second contract were able to fulfil their respective concurrent mutually dependent obligations under that contract.

[82]

[31] Davidson and DCC contend that because of the interdependence of the two contracts the Bucknells cannot exercise their right to terminate unless at the material time Rass also was able to fulfil its concurrent dependent obligations under the second contract. In both their written and oral submissions, the plaintiffs contend that the effect of Special Condition 6 is to impose interdependent obligations upon persons who are not parties to the subject contract. They contend that because of the rights of the parties to the first contract will be constrained by the acts or omissions of the unrelated parties to the second contract. No direct authority was identified for this proposition.

[83]

[32] The terms of special Condition 6 do not create obligations but rather relate to a factual outcome. These terms do not impose obligations on the contracting parties much less on persons who are not parties to that particular contract. The interdependence is upon the contemporaneous completion of the contracts - a factual matter which does not require an examination of the causes of the non-completion of a contract entered into by the different parties. The consequence of non-completion of one contract is simply to leave the other contract on foot but voidable at the option of either party.

[84]

[33] By its solicitor's letter on 7 October 2008, Rass elected to end the second contract thus restoring the parties to their respective positions before entering into the contract but subject to any specific term altering that position. Rass has not purported to terminate on the grounds of any failure on the part of DCC even though DCC conceded that it lacked the financial capacity to complete the second contract. In my view, it is not necessary for Rass, who is not seeking performance by DCC of its obligation, to show that it was ready, willing and able to fulfil its concurrent and mutually dependent obligations. I find that Rass was entitled to, and validly did, terminate the second contract.

[85]

[34] Having come to this view, it is not necessary for me to consider whether Rass was required to be ready, willing and able to fulfil its obligations under the second contract. However, in deference to the arguments raised by counsel I should indicate that I regard the failure by Rass to have available a letter of exclusion of the subject property from the Suncorp charge as falling within the category of a minor defect which was capable of being rectified on the day of settlement, had DCC raised the issue at a reasonable time on that day. This observation is in the nature of a value judgment made in consideration of the competing views as to whether complete fulfilment of a contractual obligation is required or whether substantial compliance is sufficient. In Dainford Ltd v Yulora Pty Ltd[19] Mahoney JA:-

[86]

"There is, of course, no principle so formulated. What constitutes a failure to discharge the concurrent obligations which arise for discharge on settlement was discussed in Michael Realty Pty Ltd v Carr. If the parties come together for settlement and the performance which one is able to tender is defective in a matter which, on the same day and within an appropriate time, can be rectified, the fact that the performance initially tendered has to be rectified does not constitute a breach for this purpose. Similarly, there may, in some cases, be an appropriate excuse for the tender of a defective performance if the tender has been induced by, for example, representations or misrepresentations by the other party. And it may be, although I express no opinion upon this, that a minor defect in the performance tendered may not constitute a relevant breach for this purpose if the party tendering it can, and offers to, rectify that breach within a short time."[20]

[87]

[35] To similar effect are the observations of Hutley and Glass JJA in Lohar (supra) as set out in paragraph 25 hereof.

[88]

[36] Those passages were referred to by Keane JA in Jeppeson (supra) who, in that case, had to draw a distinction between defects which could be remedied easily and those that could not. After citing Dainford he said:-

[89]

"Putting to one side the question of whether anything less than complete fulfilment of a contractual obligation should be taken as fulfilling the obligation in question, the difficulty the respondents face in seeking to rely upon this approach is that there had been no compliance, substantial or otherwise, with the obligation contained in [the relevant clause] as at the time of settlement. This was not a case, for example, where 25 of the 26 relevant notices were available: none of them were."[21]

[90]

[37] The evidence of Mr Drewett makes it clear that the provision of a letter of exclusion was little more than a formality had a request been made by Rass. I find that had DCC raised a concern about the unavailability of such a letter that it would have been available within a short time. The fact that DCC did not attend at the appointed time for settlement and showed no interest in testing, on the settlement day, whether Rass could meet its concurrent obligations should not be cause for Rass to be put to the strictness of showing complete compliance which would not have arisen in ordinary circumstances. Relevant also is the fact that even if the letter of exclusion was not available lodgement of the transfer would have given DCC priority over the charge.

[91]

[38] Having come to the view expressed above I find that the Bucknells were entitled to terminate the first contract by reason of Davidson's default. As a consequence, I will make a declaration to this effect. I find that the second contract was lawfully terminated and is no longer of any force in effect. The plaintiffs' claims therefore must fail.

[92]

[39] On the hearing of the deferred argument on costs, the plaintiffs sought payment of their costs incurred in resisting the defendants' application for summary judgment made in February 2009. By consent the application was aborted and the costs of the application were reserved to the trial judge. The material filed by the defendants in support of the application suggested quite clearly there was a triable issue which meant that the application was bound to fail. The plaintiffs did not file any material in opposition to the application nor did they, in a timely way, respond to the defendants' offer to abort the application.[22] But what emerged at trial was the fact that neither of the plaintiffs at the time of instituting these proceedings, nor at the hearing of the application, had the ability to complete the respective contracts of which they were seeking specific performance.

[93]

[40] The obligation to be ready, willing and able to complete when a litigant seeks specific performance of a contract, was considered by Windeyer J in Mehmet v Benson[23] he said (at p 314):-

[94]

"It is necessary that the plaintiff in an action for specific performance should allege in his pleading an prove at the hearing his readiness and willingness to perform a contract on his part: and readiness involves an ability to perform it...At the date when the suit is commenced the plaintiff must then be in a position to say that he is ready and willing to do at the proper time in the future whatever in the events that have happened the contract requires that he do: see Fullers Theatres Ltd v Musgrove."

[95]

[41] The evidence before me on trial rather indicated that the plaintiffs were not, at the time of institution of these proceedings, ready, willing and able to do at the proper time what the contract required them to do. This, it seems to me, is a relevant consideration in whether the plaintiffs should benefit from an exercise of discretion in their favour. I have determined that they should not and I therefore refuse their application for costs thrown away by the aborted application. As I take the view that the application should not have been made, the defendants are not entitled to recover from the plaintiffs the costs which they have incurred.

[96]

[42] As to the general costs of the proceedings, the plaintiffs seek costs on indemnity basis as from 18 February 2009 when they made an offer to compromise the action in a form which asserted reliance upon chapter 9 Part 5 of the UCPR.

[97]

[43] As at the date of this offer the defendants had not filed any counterclaim and were simply resisting the claims for specific performance. Consequently, the costs issue falls to be considered under the general discretion and not under Chapter 9 Part 5. At a later time the defendants filed a counterclaim which sought the declarations which they have now been granted. The proposed compromise did not go to that particular issue, there was simply an offer to reduce any entitlement to costs by 5%.

[98]

[44] The question of a litigant's right to seek indemnity costs when the proceeding concerns an "all or nothing" outcome was discussed by the Court of Appeal in Jones v Millward[24] where Holmes J (McMurdo P and Jerrard JA concurring):-

[99]

"A defendant can be taken to know when he receives the claim and statement of claim that it is open to him to consent to judgments in its terms. It does not advance resolution to repeat the same demand in the guise of an offer under the Rule, and it is open to question whether what amounts to demand for absolute satisfaction can be correctly characterised as an offer...

[100]

It is always open to a plaintiff in that situation to offer some concession as to costs or, perhaps, in a specific performance case such as this to agree to accept something less than the contracted purchase price; and a plaintiff who faces an utterly spurious case is not obliged to make any offer. He may still seek indemnity costs in the exercise of the court's discretion, entirely independent of Rule 360."

[101]

[45] It cannot be said that the plaintiffs' claim in this case was entirely spurious or that the circumstances in which the offer was made and the relatively minor concession that was proposed, took the offer to a level where it would be regarded as a serious compromise of the claim such as to put the plaintiffs at risk of indemnity costs by their non-acceptance of the offer. Having regard to all the circumstances, I decline the request for indemnity costs and order simply that the plaintiffs should pay the defendants' costs to be assessed on the standard basis.

[102]

[46] I therefore make the following formal orders:-

[103]

1. The plaintiffs' respective claims are dismissed.

[104]

2. I declare that the contract between the first plaintiff and the first defendant dated 15 June 2007 for the sale of Lot 142 on SP 154473 County of Cardwell, Parish of Woodleigh was lawfully terminated by the first defendant.

[105]

3. I declare that the contract between the second plaintiff and the second defendant dated 15 June 2007 for the sale of Lot 152 on SP 206165 County of Cardwell, Parish of Woodleigh was lawfully terminated.

[106]

4. I order that the caveats numbered 711971317 and 711971314 be removed from the title of Lot 142 on SP 154473, County of Cardwell, Parish of Woodleigh, title reference 50572308 and removed from the title of Lot 152 on SP 206165, County of Cardwell, Parish of Woodleigh, title reference 50675311 pursuant to section 127 of the Land Title Act 1994

[107]

5. I order that the plaintiffs pay the defendants' costs of the proceeding other than their costs of the application for summary judgment. In respect of the reserved costs of that application each party should bear his, her or its own costs.

[108]

[1] Statement of Claim paras [13] and [14], Defence [1]

[109]

[2] First contract Special Condition No. 1; Second contract Special Condition No. 6.

[110]

[3] First contract Standard Condition 5.1; Second contract Standard Condition 25.1

[111]

[5] Exs B11 and B20 to the affidavit of first defendants filed 16 February 2009

[112]

[6] Exs B2, B3, B4, B5; B10, B11, B12, B13 to affidavit of defendants filed 29 April 2009

[113]

[11] [1989] 1 QdR 295/298

[114]

[12] Affidavit of the Bucknells filed 16 February 2009

[115]

[13] [1989] HCA 51; (1989) 168 CLR 385 per Mason CJ at 396; See also Jeppesons Road Pty Ltd v Romeo di Domenico & Anor [2005] QCA 391 at paras [21] and [34]; Ireland v Leigh [1982] QdR 145 at pp 151-152

[116]

[14] [1946] 1 KB 264 at 271

[117]

[18] [1950] HCA 35; (1950) 81 CLR 418 at 440-442

[118]

[19] [1984] 1 NSWLR 456

[119]

[22] Ex 2 affidavit of Melanie Husband filed 2 July 2009

[120]

[23] [1965] HCA 18; [1964-5] 113 CLR 295

[121]

[24] [2005] QCA 76