J Boag & Son Brewing Ltd v Bridon Investments, Gough, Donald Douglas and Downs, Brian John [1999] TASSC 48

J Boag & Son Brewing Ltd v Bridon Investments, Gough, Donald Douglas and Downs, Brian John [1999] TASSC 48 - TASSC 1999 case summary — Zoe

[20]

7 The vendor company did not contemporaneously execute its counterpart of the agreement. The seal of the company was affixed on 13 February and it was thereafter signed by two of the directors, but neither of them could remember on what date. It bears date 5 February 1997 but was not despatched to the plaintiff's solicitors until on or a little before 25 February 1997. Although at the commencement of the hearing the plaintiff sought and obtained leave to amend its pleading from an allegation that the parties entered into the agreement on or about 5 February 1997, to one alleging that the agreement was constituted by an exchange of counterparts, one being executed by the defendants and delivered by them to the plaintiff on 6 February, and the other being executed by the plaintiff and delivered by mail to the defendants on 25 February 1997, counsel for the plaintiff, in his final address, abandoned that contention and reverted to the contention originally pleaded. Leave for him to do so was given in the course of the final address of counsel for the defendants. The latter did not concede that there was a contract between the parties as ultimately contended for by counsel for the plaintiff, whose position was that the contract came into existence by the acceptance of the vendor's offer constituted by the agreement sent on 4 February 1997 by the execution of the document bearing date 5 February 1997 and its despatch on that or the following day by the plaintiff's solicitors to the vendor's solicitors. Mr Weld for the defence pointed out that on 7 February an amended page to be inserted in the list of chattels was despatched by facsimile. In my view, it is not necessary to determine the precise process by which the contract came into existence and whether the last mentioned document constituted a variation to it. I find that the agreement dated 5 February 1997 put in by the plaintiff as exhibit P2 evidences the terms of the contract agreed upon. I find that it was the intention of the parties that it speak from this date and that the 14 days for the fulfilment of the condition precedent in respect of finance ran from that date to 19 February 1997. On the latter date, finance had not been confirmed. It was not "available" within the meaning of cl 5.2(b), the proposed financier not having committed itself to making the sum in question available. On that day, Miss Nguyen, I find, telephoned Miss French and told her (in terms of a file note made by Miss French):

[74]

29 Second, the plaintiff claims that by requesting, on 6 March 1997, an extension of time for the date of settlement, the defendant, by implication, represented that the condition precedent was satisfied. That request was made in circumstances where Miss French knew full well that finance was still not arranged, as Miss Nguyen told her at the time that the purchaser was seeking alternative finance. Then it is said that in reliance on the representation of Miss Nguyen on 21 February the plaintiff "on 25 February 1997 completed the exchange of counterpart contracts". This is not so. It was not in reliance upon the representation that this was done. The vendor's executed copy was sent after the representation of 21 February had been corrected by Miss Nguyen and after instructions had been given to Miss French to "take a hard line" on the contract. Without intending criticism, I am of the view that the sending of the counterpart was more of a tactic seeking to prevent Miss Nguyen from repairing the position she had created by her erroneous representation of 21 February. The plaintiff also claims that by giving the extension of 7 March, it relied on the representations that finance had been approved. As it then knew full well that finance was not approved, this claim has no substance. The giving of the Notice to Complete is also pleaded as a basis for estoppel because by doing so, the vendor relied on those representations. Because it knew finance still was not approved, this cannot be sustained. The plaintiff also claims an estoppel based on the proposition that it acted to its detriment by refraining from putting the property back on the market between 21 February and 28 July 1997 and as a result lost the chance of selling to another purchaser. I have already commented on the vendor's omission to place the property on the market between 21 February and 25 February 1997. So far as any later period of time is concerned, the vendor deliberately refrained from putting the property back on the market in the knowledge that finance was not available to the purchaser. Initially it did so in the hope that the sale might still be effected and that expectation may have continued until the Notice to Complete expired; but whether it did or simply thought its legal position might be enhanced by not putting it on the market and insisting upon settlement, its decisions were not based on any representation of the purchaser. That it was put to further expense by way of solicitor's costs and real estate agent's costs was similarly occasioned.

[76]

31 Next, the plaintiff pleads that "as a result of the matters" pleaded in respect of the claim of estoppel, the first named defendant waived the operation of the condition precedent in cl 5.2(b). In argument, Mr Blow confined his submission to the proposition that the clause was waived by Miss Nguyen's communications by telephone on 21 February 1997, that is by her advising the vendor's solicitors that finance had been approved. He submitted that if finance had not been approved, the condition was not self-executing, but should be construed as making the contract voidable at the instance of the purchaser, provided that it had used reasonable endeavours to procure the finance. As to the last matter, I find that the defendants did use reasonable endeavours to procure finance and cannot be criticised for the failure of the condition being fulfilled. Mr Blow referred to Zieme v Gregory [1963] VicRp 34; [1963] VR 214, especially at 222 - 223. I note, however, that the "subject to finance" condition in that case was not expressed, as it is here, as a condition precedent. Mr Blow's submission continued to the effect that the purchaser, having a right to avoid the contract because of the non-fulfilment of the condition, could waive its right to do so, and in fact did so by Miss Nguyen's conduct on 21 February. If the condition was merely resolutive within the meaning of Zieme v Gregory (supra), by seeking and obtaining an extension of the date of settlement (in turn an extension of the time within which to obtain finance), the plaintiff no doubt would have waived its right to immediately avoid the contract by reason of the non-obtaining of finance at the time specified in the contract, but it would not have lost all its rights under the clause. As Jessell MR said in Barclay v Messenger (1874) 43 LJ (Ch) 449 at 456, "a mere extension of time, and nothing more, is only a waiver to the extent of substituting the extended time for the original time, and not an utter destruction of the essential character of the time". (See also Holland v Wiltshire [1954] HCA 42; (1954) 90 CLR 409 at 415 and Tropical Traders Ltd v Goonan (1963 - [1964] HCA 20; 1964) 111 CLR 41 at 52). Hence, had finance become available within the extended time, purported avoidance by the purchaser could have been resisted by the vendor on the basis of the purchaser's waiver, but once the extended time had elapsed without fulfilment of the condition, the right to avoid would have revived (cf, Charles Rickards Ltd v Oppenheim [1951] KB 616). However, it is not the extensions upon which Mr Blow relies, but the erroneous representation that finance had in fact become available. It has been said that "a right is waived only when the time comes for its exercise and the party for whose sole benefit it has been introduced knowingly abstains from exercising it" (per Brennan J (as he then was) in Commonwealth v Verwayen (1990) 170 CLR 394 at 427). The necessity for knowledge of the existence of the right is stressed in Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305 at 326, Grundt v The Great Boulder Proprietary Mines Limited [1937] HCA 58; (1937) 59 CLR 641 and Kammins Company Ltd v Zenith Investments Ltd [1971] AC 850 at 883. The purchaser and its agent, Miss Nguyen, were ignorant of the existence of the right to avoid the contract in the circumstances as they existed on 21 February because they believed the condition had been fulfilled. They were ignorant therefore of facts which could have given rise in law to a right to rely on the non-fulfilment of the condition. The representation that it had been fulfilled may have created an estoppel if the vendor had altered its position in reliance upon it, but it does not constitute a waiver of the purchasers' right to avoid the contract by reason of a fact the plaintiff did not then know. To constitute a waiver, the purchasers would have to have known that the condition was not fulfilled, thus making the contract voidable at its instance and to have intentionally acted to forego that right. That is not the case here. The purchasers did not intentionally abandon any right to rely on non-fulfilment of cl 5.2(b) by mistakenly indicating through its agent that that clause had been fulfilled.

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Judgment (108 paragraphs)

J Boag & Son Brewing Ltd v Bridon Investments, Gough, Donald Douglas and Downs, Brian John [1999] TASSC 48 (7 May 1999)

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Legislation Cited (3)

Cases Cited (5)