Gardiner v Orchard [1910] HCA 18

Gardiner v Orchard [1910] HCA 18 - HCA 1910 case summary — Zoe

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the sole object of the clause it would have been merely necessary to provide that in such cases the vendor should make compensa- tion, but the prohibition against annulling the contract on the grounds mentioned is directed against both parties, and with reference to compensation the words used are " made or given as the case may require." The expression "or given as the case may require " cannot be treated as meaningless, and the only way in which it can have effect is to read it as conferring correlative rights on both parties. The form of expression is exceedingly condensed, and necessarily elliptical. It would not be easy, perhaps, to determine in what way the expression "made or given as the case may require" could be made applicable to all controversies of the kind mentioned in the clause. But this, at least, is clear, that the clause carries on the face of it an intention to confer on the purchaser in the case of error or misdescription the same right of insisting upon a transfer and payment of com- pensation which it confers on the vendor of insisting on the property being accepted by the purchaser on payment of com- pensation. If, however, the vendor's interpretation of clause 8 is to be adopted the correlative operation of clause 5 is merely illusory. It will always rest with the vendor to say whether the purchaser is to be allowed to exercise any right under clause 5. Immediately the claim for compensation is made the vendor may treat it as an objection he is unwilling to remove, and rescind the contract. Such an interpretation of a contract as will by one clause confer an independent right on both parties, and by another clause render the right as to one of them entirely depen- dent on the will of the other, will not be adopted by the Court unless no other meaning can reasonably be found for the language the parties have used. In my opinion clause 8 is reasonably capable of the construction for which the purchaser is contending. Taken in its ordinary meaning the word "objection" is not appropriate to describe a claim for compensation which is put for- ward not as an obstacle to completion, but as a step towards com- pletion in terms of the contract. Again : it is in my opinion more consonant with the provisions of the contract as a whole to construe the word " objection" as applying only to objections of

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the class dealt with in clauses 2 and 4, rather than to every or any objection which could arise in the carrying out of such a contract to completion. The several clauses of the contract cover, speaking generally, all the matters about which differences in such transactions are likely to arise. The narrower interpretation confers the right of rescission on the vendor under circumstances clearly indicated to both parties on the face of the contract. The wider interpretation confers on the vendor a right to rescind which has no defined limits, and which any chance difficulty in the completion of the transaction may bring into operation. The most important of all rules in the interpretation of a contract is to give full effect to all its provisions, and that can be done in this case only by holding that the claim made by the purchaser under clause 5 was not an objection within the meaning of clause 8, the making of which entitled the vendor to rescind the contract. It was also contended by the vendor's counsel that the claim was in reality an objection to title which, if made within time, would have come within clause 8, and which, whenever made, if insisted on, under the circumstances entitled the vendor to rescind. In considering that question it is necessary at the outset to ascertain what was really the subject matter of the contract. It is not at first sight easy to determine whether the subject matter is a piece of land occupied by the bank and other buildings estimated to cover a frontage of 26 feet 2 inches to George Street, or simply a piece of land having a frontage of 26 feet 2 inches to George Street measured from the properly aligned junction of George Street and Valentine Lane, the occupation of the land by build- ings being merely one of its incidents. But after looking at the document from every point of view I have come to the conclusion that the subject matter about which both parties intended to contract was the block of land on which the bank and other buildings stood, both parties then believing that the building on the George Street frontage extended to the corner of that street and Valentine Lane and not beyond it. It is to that pro- perty as both parties so understood it the vendor undertook to establish title. After the date when it must be taken that the title could no longer be objected to under the contract, the purchaser finds from his surveyor's report of November 1908 that

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the frontage along George Street to the corner of Valentine Lane, duly aligned, measured 25 feet 9 inches instead of 26 feet 2 inches, a deficiency of 5 inches. It being still believed by both parties that the corner of the building stood on the duly aligned point __ where George Street and Valentine Lane intersected. All parties _ being under that impression the purchaser by his letter of 5th _ April 1909 made his claim for compensation demanding that the ~ eontract should be carried out with compensation to him for the _ 5 inches deficiency in the frontage. In his letter of 10th August of the same year he insisted on the claim. The defendant, in his reply of the next day, notified that he rescinded the con- _ tract. On Ist September following the purchaser took out the _ originating summons, the judgment on which is the subject of this appeal, and on the 16th of the following month the pur- chaser's surveyor made an affidavit for use on the hearing. A few days before the latter date the surveyor in making a check 'survey, no doubt for the purposes of the affidavit, discovered that the City Bank building extended two inches beyond the corner as aligned, in other words, that it encroached 2 inches on _ Valentine Lane. It was then for the first time discovered that _ the encroachment existed. It may,no doubt, be conceded, now the ~ encroachment has been discovered, that as to 2 out of the 5 inches short the vendor cannot in fact make out a title. And if that state of facts had been present to the minds of the parties when the purchaser's claim for compensation was made, or even when the contract was rescinded, it would have been difficult to treat the claim as not involving a demand in respect of title. But I am unable to understand how the claim made as it was under the circumstances related can be so regarded, especially as the purchaser's counsel has from the time when the discovery was made protested that he has never made a claim for a deficiency arising out of a defective title, and that he did not intend to press before the arbitrator any portion of the claim which could in fact involve that basis. Cases were cited from which it would, no doubt, appear that in cer- tain forms of conditions a demand for compensation, although purporting to be founded on misdescription, would if it involved an objection to title, even in part only, be treated as an objection

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he would be bound to submit to arbitration in all circumstances, _ because he has not expressly said so. If the objection were, for instance, to a very large part of the land, and involved a serious proportion of the purchase money, or the arbitration would be

attended with unusually arduous consequences, then, as there are _ no terms in clause 5 pledging the parties to arbitration whatever the circumstances might be, the element of reasonableness with ard to it might still be open. But this case falls far short of any such formidable departure from reasonable expectation as I have supposed. The amount claimed, viz., £150, so far beyond _ the contract rate, is still only one-fortieth of the total price, and might be reduced on arbitration, and no special circumstances _ are suggested to augment the anticipated difficulty or expenses of arbitration. I have therefore come to the conclusion that, having egard to the specitic terms of the contract, and the cireum- es of the claim for compensation, the case is not one which _ justly or reasonably falls within the ambit of the rescission clause. For these reasons I agree that the appeal should be allowed. _ It is unnecessary, in the view I have taken, to state any con- eluded opinion upon the question whether the word "objection" clause 8 extends beyond an objection to title or conveyance. I _ ean only say I am not prepared to say it does not. The word "objection" is sometimes used, and apparently without any 'straining of signification, to express objections of a wider character in Wood v. Machu (1); In re Terry and White's Contract (2). I think the phrase "which the purchaser shall be entitled to take under these conditions" means "which the purchaser is not pre- dluded from taking by these conditions," and, having regard to . the purpose of the clause as already indicated, I am inclined to the belief that confining it to objections to title and conveyancing _ would deprive it of some of its intended efficacy. But as these _ conditions are of very general use, I reserve any final expression _ of opinion upon that point until it becomes necessary to decide it.

At a glance

Court

Decision date

Before

Source

Judgment (93 paragraphs)