Jessup v Fremder [2001] VSC 100

11. On 25 July 2000 the plaintiffs Suzanne Jane Jessup and Julian Craig Brown entered into a contract with the defendant whereby they agreed to purchase allotment No. 2 from the defendant for $600,000. That same day they paid to Marshall White Pty. Ltd. a deposit of $60,000.

14. The contract contains in it a copy of the proposed plan of sub-division and the following provisions.

(b) or within 14 days of the title being issued by the Registrar of Titles whichever is the later

2. Performance by the vendor of his obligations pursuant to the contract is subject to the grant by the Stonnington Council of a permit to subdivide the property known as 22 Kooyong Road in accordance with the attached plan.

20. Shortly after the contract was executed the defendant made application to the City of Stonnington for a permit to sub-divide the property into the two allotments.

23. On 31 August 2000 the City of Stonnington notified the defendant that it had decided to grant the permit but that the permit had not been issued and could not be issued until after the period within which an objector might lodge an application for review or if after an application was made within that period, until the application for review had been determined by the Victorian Civil and Administrative Tribunal (VCAT).

26. Certain of the owners of neighbouring properties then objected to the issue of the permit and the objections were referred to VCAT.

29. At the end of October 2000 VCAT listed the matter for hearing on 14 December 2000.

32. On 3 November 2000 the defendant's solicitors sent the following letter to the solicitors for the plaintiffs:

"3 November 2000 Deacons Lawyers Level 24 385 Bourke Street MELBOURNE, 3000. Dear Sirs, FREMDER TO JESSUP AND BROWN UNIT 2, 22 KOOYONG ROAD, ARMADALE We refer to previous correspondence concerning this matter. We note that the contract of sale is subject to a special condition to the following effect 'performance by the vendor of his obligations pursuant to the contract is subject to the grant by the Stonnington Council of a permit to subdivide the property known as 22 Kooyong Road in accordance with the attached plan'. We note that the City of Stonnington has not issued such a permit. On 31 August, 2000 it issued a notice of decision to grant a permit and this notice is now the subject of an appeal to VCAT against Council decision to grant such permit. The contract does not specify whether non-fulfilment of the contract renders the contract void or voidable. We are of the view that non-fulfilment voids the contract and consider that the contract is now at an end. In the event that this is not the case and the contract is voidable our client hereby exercises his rights to avoid the contract. We are further instructed by our client that he was at the time that the contract was entered into suffering from clinical depression and is presently undergoing psychiatric treatment in hospital. The extent of his depression was such that he attempted suicide. We are therefore instructed that our client did not have the mental capacity to enter into the transaction at the time of contracting and that this fact was known to the agent at the time. We have therefore also been instructed in the alternative to end the contract on this basis. We will now contact the agent and instruct the agent to refund the deposit paid to your client. Would you please arrange for your clients to withdraw the caveat which has been lodged over our client's property. Yours faithfully MULCAHY MENDELSON & ROUND ERMINIO R. RINALDO."

36. By letter of 6 November 2000 from the plaintiffs' solicitors to the defendant the plaintiffs' solicitors disputed the defendant's right to avoid the contract.

39. VCAT heard the objections in relation to the permit on 14 December 2000. It then affirmed the decision of the City of Stonnington to grant the permit and directed that a permit be issued.

42. On 22 February 2001 the City of Stonnington issued the appropriate permit to sub-divide the property into two allotments.

45. Since that time the defendant has refused to take any further step in the matter.

48. On 9 March 2001 the plaintiffs filed this proceeding in the Court whereby they seek an order for specific performance of the contract.

51. The case for the defendant is that the contract of sale in respect of the property fixed a specific date for completion of the sale, namely 23 October 2000, and that as the permit was not granted before that day the defendant was entitled to rescind the contract. In support of that proposition counsel for the defendant relied upon A.M.P. v. Lamdsa[1], Perri & Another v. Coolangatta Investments Propriety Limited[2] and Aberfoyle Plantations Ltd. v. Khaw Bian Cheng[3].

54. It will be sufficient for present purposes to refer to the judgment of Lord Jenkins in Aberfoyle. At p.124 his Lordship said:

"Their Lordships may now return to the question exhaustively debated before them and in the court below: Within what period of time did the agreement (read in conjunction with the purchaser's solicitors' letter of May 4, 1956) require the condition contained in clause 4 to be performed? The answer to that question must plainly depend upon the true construction of the agreement, or in other words, upon the intention of the parties as expressed in, or to be implied from, the language they have used. But, subject to this overriding consideration, their Lordships would adopt, as warranted by authority and manifestly reasonable in themselves, the following general principles: (i) Where a conditional contract of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date; (ii) where a conditional contract of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time; (iii) where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles."

58. The case for the plaintiffs is that there were no valid grounds for the defendant to rescind the contract; that it was clearly within the contemplation of the parties that the permit might not be granted prior to 23 October 2000 and it was to take account of that eventuality that the parties specifically provided the alternative date for settlement of the contract namely "or within 14 days of the title being issued by the Registrar of Titles whichever is the later".

61. In my opinion there were no valid grounds for the defendant to rescind the contract.

64. In the events which occurred settlement was to take place within 14 days of the title being issued by the Registrar of Title.

67. The City of Stonnington having issued the appropriate permit on 22 February 2001 it was then incumbent upon the defendant to take the necessary steps to ensure that the certificate of title in respect of allotment No. 2 was issued by the Registrar of Titles.

70. Those steps involved the preparation of the actual plan of subdivision, submission of the plan to the Council for certification, the obtaining of a statement of compliance from the Council and finally the lodgment of the certified plan at the Office of Titles for registration. See s.s.5(3) of the Subdivision Act 1988.

73. In a letter of 15 November 2000 from the defendant's solicitors to the plaintiffs' solicitors the defendant's solicitors say:

"Our client is not obliged to wait beyond the due date for the satisfaction of this condition (i.e. the grant by the Stonnington Council of a permit to subdivide the property). To allege otherwise would imply that our client may have to wait years for the condition to be satisfied."

77. I make the following observations concerning those statements:

1. In my opinion their client was obliged to wait beyond 23 October 2000 for the permit to issue. That is precisely what the parties agreed at the time the contract was executed.

2. It cannot be said in the circumstances of this case that the permit did not issue within a reasonable time.

82. In Rudi's Enterprises Pty. Ltd. & Another v. Jay & Others[4] Samuels, J.A. in dealing with the question of what is a reasonable time said at p.575:

"In Australian Blue Metal Ltd. v. Hughes [1963] AC 74, the Privy Council held that the length of a reasonable notice is 'the time that is deemed to be reasonable in the light of the circumstances in which the notice is given' (at 99). We are not concerned here with the giving of a reasonable notice but with a rather different inquiry. Nonetheless, it seems to me that analogically the principle in Hughes applies. That conclusion is reinforced by what is said in Halsbury's Laws of England, 4th ed, vol 45 par 1147 at 552 viz: 'Where anything is limited to be done within a 'reasonable time' ... the question what is a reasonable time ... must necessarily depend on the circumstances, and is therefore a question of fact.' As Mr. Walker, for the purchaser, pointed out, the question must be decided at the point when the lapse of time is said by the party seeking to rely upon the provision to have occurred. It cannot be determined at the date of execution of the contract. What is reasonable must necessarily be affected by external events. Thus the quality of a period of time must be influenced by what occurs as it elapses. To determine it when time starts to run would be to exclude considerations of major importance."

See also Etna v. Arif[5] per Batt, J.A. at p.370.

87. At the time the defendant's solicitors wrote the letter of 3 November 2000 to the plaintiffs' solicitors they knew that at the end of October 2000 VCAT had listed the review of the decision of the City of Stonnington to grant the permit for hearing on 14 December 2000.

90. To allege therefore that thier client "may have to wait years for the condition to be satisfied" is to my mind a contention without merit.

93. It must surely have been within the contemplation of the parties that before the permit issues they may have to survive the objection to its issue by adjoining neighbours.

96. I order that there be specific performance by the defendant of the contract entered into by the plaintiffs and the defendant on 25 July 2000 in respect of the sale and purchase of Lot 2, 22 Kooyong Road, Armadale.

99. In my opinion there was no justification for the defendant to adopt the attitude he did in the matter and to refuse to complete the contract; further that his defence of his proceeding was unmeritorious. In that situation I order that the defendant pay the plaintiffs' costs of the proceeding including any reserved costs on an indemnity basis.

[1] (1997) 1 V.R. 564

[2] [1982] HCA 29; (1982) 149 C.L.R. 537

[3] 1960 A.C. 115

[4] (1987) N.S.W.L.R. 568

[5] [1999] VSCA 99; (1999) 2 V.R. 353