Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd

Clause 6.1 of the deed provided that Capalaba would grant and Laurinda would accept a lease of the demised premises for the term and with and subject to the covenants and provisions set forth in the form of lease being annexure "B" to the deed. Annexure "B" specified a term of six years but it did not specify the dates of commencement and termination, which were left blank, as indeed were other particulars in the form of lease such as the annual rental and the monthly instalments of rental. The deed itself made provision for ascertaining the date of commencement of the lease which, as events transpired, was 1 December 1985.

The Lease and two counterparts thereof shall contemporaneously with the execution hereof be executed by the Lessee and delivered to the solicitors for the Lessor Messrs. Flower & Hart and the Lessee hereby irrevocably authorises empowers and directs such solicitors upon the date of commencement of the Lease pursuant to Clause 6.1 hereof or so soon thereafter as is practicable to complete the Lease by -

(a) inserting therein the said date of commencement and the date of termination;

(b) inserting therein a plan of the Demised Premises in a form acceptable to the office of the Registrar of Titles (such plan to be prepared by the Architect or a surveyor appointed by the Lessor) and delineating the Demised Premises in red on such plan;

(c) inserting therein the yearly rental and the monthly instalments thereof calculated in accordance with Clause 16 hereof;

(d) any necessary formal matters or description of the Land or the Demised Premises or references to dealing or plan numbers;

(f) signing the Lease correct for the purpose of registration on behalf of the Lessee.

The Lessee shall pay to the Lessor upon demand all legal costs and all other costs disbursements and expenses of and incidental to the preparation execution and stamping of these presents (including the Schedules and annexures hereto) and all stamp duties and taxes hereon together with the Lessor's costs of and incidental to the preparation of the plan referred to in Clause 6.2(b) hereof.

The obligations of the Lessor and the Lessee are not conditional or in any way dependent upon the preparation and execution of the Lease and are not affected by any default or delay in or waiver or extension of time for the preparation and execution of the Lease, but despite the non-completion of the Lease, from and after the date of commencement and throughout the term of the Lease, the Lessor will be bound to perform all its obligations and the Lessee will be bound to perform all its obligations in each case as set out in this Deed and the Lease.

The deed acknowledged that Capalaba could mortgage or charge the land and Laurinda agreed to accept and be bound by the terms and conditions of any necessary consent to the lease by the mortgagee or chargee (cl. 10). The deed incorporated a guarantee by the second appellants of performance by Laurinda of the terms, covenants and conditions on its part under the deed (cl. 13.1) and it was made a condition precedent to Capalaba's obligation to grant the lease that the second appellants should execute and deliver a guarantee of the performance by Laurinda of its obligations under the lease (cl. 13.2). Such a guarantee was executed and delivered.

On or about the date of execution of the deed, Capalaba and Laurinda executed a lease which also contained a number of blanks, namely the commencement and termination dates and the amounts of the annual and monthly rental. The lease did not incorporate a sketch plan delineating the demised premises in red, as contemplated by cl. 6.2 of the deed. The lease provided that such a sketch plan so delineating the demised premises was to be annexed, but it was not made an annexure.

Laurinda entered into possession of shop 79 on or before 3 December 1985 and continued thereafter to carry on business there. Laurinda paid to Capalaba the rental provided for by the deed and the lease. On 3 January 1986 Laurinda paid $2,317 to Capalaba's solicitors pursuant to cl. 15.1 of the deed. It may be that the payment was also made with an eye to cl. 1.55 of the executed form of lease. That clause, which partly mirrored cl. 15.1 of the deed, contained a wider description of the work for which Laurinda was to bear the burden of costs. For example, cl. 1.55 mentioned the negotiation and registration of the lease, the obtaining of any necessary consent to the lease from the local authority or mortgagee of the land and the stamp duty and registration fees payable on the lease and any counterpart, as well as other costs, charges and expenses.

Laurinda remained in occupation of shop 79 until 5 September 1986 when it vacated the premises and the appellants purported to rescind the agreement for lease on the ground that Capalaba had repudiated the agreement or was in breach of essential conditions of that agreement as a result of Capalaba's failure to register the lease or to deliver a lease in registrable form. Capalaba treated the appellants' rescission as a wrongful repudiation of the agreement. On 3 October 1986 Capalaba re-entered the premises, the appellants having ceased to pay rent in respect of the premises.

The blanks in the executed form of lease had not been filled in by the solicitors for Capalaba by 3 October 1986 and so it was incapable of operating as a lease. In January 1987, after Laurinda had commenced the proceedings which have given rise to this appeal, Capalaba's solicitors filled in the blanks. However, the solicitors did not incorporate in the lease the sketch plan identifying the demised premises. In the result the filling in of the blanks did not convert the document into an effective lease. So much is now common ground between the parties.

On 31 October 1986 the appellants commenced an action inter alia for a declaration that "the Lease dated in or about October 1985" had been validly determined by Laurinda on or about 5 September 1986, an order for the return of the sum of $2,317, damages and interest. The appellants claimed that it was a term of the deed that Capalaba would grant and complete the lease by the date on which Laurinda opened shop 79 for business and that Capalaba failed to comply with this term of the deed. The appellants also claimed that it was a term of the agreement for lease that Capalaba would expeditiously procure the registration of the lease or, alternatively, procure registration of it within a reasonable time and that Capalaba had failed to comply with this term of the agreement.

By its defence Capalaba disputed that the terms alleged by the appellants were terms of the deed or of any agreement for lease. And Capalaba denied that it was guilty of any unreasonable delay in completing the transaction. Capalaba contended that the appellants' rescission was no more than a wrongful repudiation, that Laurinda owed $3,318.22 by way of unpaid rent from 1 September 1986, that this amount had not been paid by Laurinda or the second appellants and that it was entitled as against the first and second appellants to payment of that amount, damages and interest. Other issues arose on the pleadings. However, having regard to the points argued in this Court, I need not refer to them or to the conclusions reached by the courts below in relation to them.

At trial Connolly J. concluded that the subject-matter of the contract contained in the deed was a lease capable of registration under the Real Property Act 1861 Q.. Connolly J. also concluded that it was the obligation of Capalaba at least to bring into existence a lease in registrable form. The performance of this obligation entailed the production of the executed forms of lease to its solicitors to enable them to complete the form on the date of commencement, namely 1 December 1985, or so soon thereafter as was practicable. At all material times the executed forms of lease were in Melbourne. But there was no reason why they could not have been made available to the solicitors had Capalaba decided to make them available. Moreover, Connolly J. considered that, in order to produce a lease in registrable form, Capalaba required the consent of the mortgagee. Indeed, the form of lease annexed to the Deed contained a form of consent to the lease by Citicorp Australia Ltd., the mortgagee of the land. Again Capalaba could have obtained the consent of the mortgagee promptly had it chosen to do so. In addition to finding that there was an express obligation to bring into existence a lease in registrable form, Connolly J. was disposed to find that there was an implied obligation to do so.

His Honour then proceeded to determine the issue of repudiation in favour of the appellants. He found that a reasonable time had expired long before September 1986. He reviewed the correspondence between the solicitors for the parties and the oral evidence. He rejected the appellants' contention that a letter dated 21 August 1986 from their solicitors to Capalaba's solicitors constituted a notice requiring performance which entitled the appellants to rescind without more when performance did not take place as required. However, his Honour found that Capalaba was not prepared to complete the agreement by delivering a lease in registrable form until it suited Capalaba to do so. Capalaba was contemplating a reorganization of its finances with the possibility that the existing mortgage might be paid out and a new mortgage substituted. Capalaba's solicitors considered that considerable work and expense might be involved if a fresh mortgage were to be substituted when leases of the shops in the Centre were already registered. Capalaba's non-performance in this situation, in his Honour's view, amounted to repudiation entitling the appellants to terminate the agreement.

Connolly J. therefore declared that the agreement for lease was validly determined by Laurinda on or about 5 September 1986 and gave judgment for Laurinda for $2,152.25, being the amount of costs paid by Laurinda less an amount which was refunded, and judgment for the appellants on the counterclaim. Capalaba was ordered to pay the costs of the action and counterclaim.

On appeal the Full Court (Matthews, Carter and Dowsett JJ.) came to a different conclusion. They thought that, because the term of the contract on which the decision depended (cl. 6.1 of the deed) was a promissory condition, the appellants, as the parties requiring performance, were bound, in the circumstances of the case, to give an effective notice stating that in the event that the delay continued they would no longer be bound by the agreement. In their Honours' view, the letter of 21 August 1986 was not such a notice. They pointed out that the trial judge had found that Capalaba had no intention of denying registered leases to lessees of shops in the shopping centre. The Full Court inferred that this finding must be taken to apply to Laurinda as the lessee of shop 79. Moreover, they noted that it could be inferred that Capalaba, which had experienced difficulty in securing tenants, was anxious to maintain such tenancies as it had of shops in the Centre. In the result the Full Court allowed the appeal with costs, set aside the declaration and orders made at the trial and ordered that judgment be entered for Capalaba for such sums by way of damages or other sums owing as might be assessed by the Master.

In this Court it was common ground between the parties that the deed required Capalaba to register the lease or, if not, to deliver a registrable lease to Laurinda. It seems to have been assumed that cl. 6.1 of the deed created this obligation, though Capalaba did not actually identify the precise source of the obligation. The obligation to grant a lease created by cl. 6.1 carries with it an obligation to deliver a lease in registrable form. But, absent other circumstances, the clause would not require Capalaba to register the lease. The notion that Capalaba was bound to register the lease arises from cl. 1.55 of the form of lease which required Laurinda to pay the costs of registration and, as I have already mentioned, from the fact that Laurinda paid $2,317 to Capalaba on 3 January 1986. The appellants assert that the payment covered the costs of registration of the lease. This assertion is not denied by Capalaba. Any obligation on Capalaba to register the lease was an equitable obligation arising from the form of lease itself rather than from the agreement for lease constituted by the deed.

Clause 6.2 contemplated that Capalaba's solicitors would fill in the blanks in the executed form of lease upon the date of commencement of the lease (1 December 1985) or so soon thereafter as was practicable. It was not suggested that the solicitors' authority to fill in the blanks in the lease terminated at some time after it became practicable to complete the lease, though I have some difficulty in reading the clause as conferring an authority on the solicitors which continued indefinitely whilst the agreement remained on foot. That, however, is not how the parties seem to have treated the clause. In these circumstances the presence of cl. 6.2 throws little, if any, light on the time within which Capalaba was obliged to perform the obligation now in question.

Clause 15.7 has more significance. The first part of the clause specifically provides that the obligations of Capalaba and Laurinda (a) are not conditional or in any way dependent upon the preparation and execution of the lease and (b) are not affected by any default or delay in the preparation and execution of the lease. The second part of the clause provides that, despite non-completion of the lease, from and after the date of commencement and throughout the term of the lease, each party will be bound to perform all its obligations in the deed and the lease. The effect of the provision referred to as (b) above is that the obligations of Laurinda under the deed continue unaffected, notwithstanding any delay on the part of Capalaba in preparing or executing the lease. The second part of the clause plainly imports that non-completion of the lease is not in itself a legitimate ground or justification for Capalaba or Laurinda refusing to perform its obligations under the deed or the lease. Laurinda submits that those obligations necessarily include the obligations imposed on Capalaba by cl. 6 which, according to the argument, extend to the registration of the lease or at least the delivery of a registrable lease. But the obligations mentioned in the second part of cl. 15.7, which were to continue to bind the parties, are those which bind the parties in their character as lessor and lessee respectively. They do not include the obligation to complete the lease (which extends to the delivery of a registrable lease) under cl. 6. As the object of the provision is to ensure that the lessor-lessee relationship between the parties is to continue to subsist for such time as the lease remains uncompleted, the provision does not incorporate in the obligations to which it refers the obligation to complete the lease. The word "non-completion" is not defined and there is no basis for confining it or, for that matter, "delay" in the first part of the clause, to circumstances beyond the control of Capalaba. Indeed, it may be that the second part of cl. 15.7 was inserted in the deed with a view to preserving to Capalaba some flexibility in completing the formal lease. Be that as it may, cl. 15.7 recognized that, notwithstanding non-completion, the agreement constituted by the deed continued to be binding so as to create an equitable lease, the agreement being capable of specific performance: York House Pty. Ltd. v. Federal Commissioner of Taxation [1] ; see also Moore v. Dimond [2] .

1. (1930) 43 C.L.R. 427, at pp. 435-436, 439. 2. (1929) 43 C.L.R. 105, at pp. 123-124.

However, it is necessary to read cll. 6 and 15.7 together. When the two clauses are read together, it would not be legitimate to read cl. 15.7 as conferring an option on Capalaba to dispense with the completion of the lease. In other words, the obligation to complete the lease under cl. 6 remains, though no time for completion is fixed. Mere delay on the part of Capalaba in performing a non-essential contractual obligation cannot justify a refusal by Laurinda to perform its obligations. Something more - whether it be conduct amounting to a clear repudiation by Capalaba of the requirement to complete or failure to comply with a valid notice given by Laurinda fixing a time for completion and making time of the essence in that respect - would be required.

This conclusion disposes of any suggestion that Capalaba's failure to register the lease or to deliver a registrable lease was a breach of an essential condition of the agreement constituted by the deed. The deed did not make time of the essence in any relevant respect. Nor did the deed fix a time within which registration or delivery of the lease was to take place. On the contrary, as I have explained, the deed contemplated that Laurinda's obligations would continue to subsist despite any delay in completion of the lease.

The appellants' principal submission is that Capalaba's conduct amounted to a repudiation of the agreement entitling Laurinda to treat the agreement as at an end. The appellants submit that Connolly J. was correct in holding that Capalaba's failure to procure registration or deliver a registrable lease demonstrated that Capalaba was not prepared to carry out its part of the agreement until it suited it.

It is evident that Connolly J., in reaching his conclusion upon this point, had in mind the observations of Fullagar J. in Carr v. J. A. Berriman Pty. Ltd. [3] where his Honour said with reference to the facts of that case:

It is in this state of affairs that the building owner announces that he has engaged another contractor to carry out a large part of the work comprised in the contract. A reasonable man could hardly draw any other inference than that the building owner does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him. Fullagar J. went on to say that the intention evinced was "an intention not to be bound by the contract" and that, upon that intention being shown to exist, the other party was entitled to treat the contract as at an end [4] . What his Honour said in this respect accords with later statements upon the topic by members of this Court. In Shevill v. Builders Licensing Board [5] , Gibbs C.J. stated that: a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way See also Progressive Mailing House Pty. Ltd. v. Tabali Pty. Ltd. [6] . 1. (1953) 89 C.L.R. 327, at p. 351. 2. (1953) 89 C.L.R., at pp. 351-352. 3. (1982) 149 C.L.R. 620, at pp. 625-626. 4. (1985) 157 C.L.R. 17, at pp. 33, 40.

There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way.

It is necessary to review the correspondence. On 28 November 1985 Capalaba's solicitors informed Laurinda's solicitors that the deed and the lease had been executed and would be sent shortly by Capalaba to its solicitors. On 14 March 1986 a firm of accountants who appear to have been acting for all the appellants requested Capalaba's solicitors "to forward a copy of the above lease at your earliest opportunity". The letter continued:

They consider that four months is a reasonable time for you to have complied with their request particularly as they were under pressure by you to execute the lease without adequate time to study the provisions of such lease. It seems to have been assumed in the courts below that this was a request for the delivery of a registrable lease pursuant to Capalaba's obligation under cl. 6 of the deed. I do not read the letter in this way. The request was not that the lease be registered or that a registrable lease be delivered. The terms of the letter suggest that a request of a like nature to that made on 14 March 1986 had been made four months earlier. Perhaps the letter of 28 November 1985 was sent in response to such a request. However, the fact that the letter of 14 March was not sent by the appellants' solicitors lends some additional force to the notion that this letter called for a copy of the documentation rather than a performance by Capalaba of its obligation to register the lease or deliver a registrable lease. Be that as it may, the letter of 14 March assumes that the lease documentation has been completed and asserts that a reasonable time has already elapsed for the delivery of a copy of the lease.

Capalaba's solicitors replied on 25 March 1986 in these terms:

The lease documents were forwarded to Melbourne for execution by the Lessor in October last year. They have not been returned. However, we have been advised that they have been executed by the Lessor. We expect that they will be returned in the not too distant future. We will provide your client with its stamped parts of the documents as soon as we are able to.

At about this time Laurinda was seeking a buyer for the business which it was conducting on the leased premises. On 21 April 1986 the manager of the shopping centre acknowledged that it had received advice to this effect and warned that the approval of Capalaba was required before an assignment could be made and that Laurinda would remain responsible for the payment of rent and outgoings in the event that it vacated the premises until the premises were re-let.

Subsequently on 21 August 1986 the appellants' solicitors wrote to Capalaba's solicitors. After stating that the appellants were concerned that the lease had not been registered despite the fact that the documentation had been executed and should have been completed over ten months before, the letter continued:

It is clearly of critical importance to our clients that the Lease be registered immediately to safeguard their rights of tenure.

To that end our clients have already paid to your firm on 6th January this year sufficient funds to allow registration of the Lease to be effected by your client.

In such circumstances, and in view of the unexplained and lengthy delay, it appears reasonable that our clients require your client to complete registration within fourteen days from the date hereof.

If the registration is not completed within that time then our clients naturally reserve their rights in respect of your client's default.

Capalaba's solicitors responded by letter dated 3 September 1986 stating merely that they had referred the letter of 21 August to Capalaba for its instructions which would be communicated as soon as they were received. It appears that even at this stage Capalaba had taken no steps to obtain the mortgagee's consent to the lease, to complete the lease in accordance with cl. 6 or to make arrangements for stamping the lease.

The correspondence culminated in the letter dated 5 September 1986 from the appellants' solicitors to Capalaba's solicitors which asserted:

In the circumstances, this failure to respond adequately in the time limit by our letter of 21st August 1986 can only be treated as a repudiation of the implied undertaking by your client to secure registration of the lease within a reasonable period. The letter went on to advise that the appellants no longer regarded themselves as bound by the lease and guarantee with the consequence that the relationship between the parties was at an end.

If for the moment we put to one side the question whether the letter of 21 August 1986 validly fixed a time for registration of the lease, this correspondence demonstrates an attitude on the part of Capalaba which was not only dilatory but also cavalier and recalcitrant. Capalaba was remiss in failing to respond in a more positive way to the appellants' requests, especially after the letter of 21 August. More than that, Capalaba's solicitors had on two occasions made incorrect statements about the progress of the matter. There was the incorrect statement in the letter of 28 November 1985 that the lease had been executed and would be sent "shortly". Then there was the statement in the letter of 25 March 1986 that the lease documents would be returned by Capalaba to its solicitors "in the not too distant future" and that the stamped parts of its documents would be provided to Laurinda "as soon as we are able to". Moreover, in the face of the letter of 21 August 1986, Capalaba's solicitors only say on 3 September that they have referred the letter for instructions. And this correspondence needs to be read in the light of Capalaba's failure to take steps to obtain the mortgagee's consent to the lease, to complete the lease in accordance with cl. 6.2 and to make arrangements for stamping the lease. Although the matter is finely balanced, the unjustified delay on the part of Capalaba between March and 3 September 1986, accompanied by incorrect statements and unfulfilled assurances sustained the inference of repudiation drawn by Connolly J. Based on Capalaba's unwillingness to deliver a registrable lease to Laurinda, it seems to me that Capalaba's intention was only to perform the contract in a manner substantially inconsistent with its obligations, such as would allow Laurinda to treat Capalaba as having repudiated the contract.

The Full Court appears to have reached the opposite conclusion on the footing that the case against Capalaba amounted to no more than a case of delay and that mere delay is never a sufficient foundation for inferring an intention to repudiate. Whether the statement that mere delay can never support an inference of intention to repudiate can be sustained as a universal proposition may be put to one side because cl. 15.7 specifically deals with the situation in this case. However, the short answer to the approach taken by the Full Court is that the circumstances, as I have outlined, amount to more than a case of mere delay. Capalaba's delay was accompanied, as Connolly J. found, by an intention not to complete the contract until it suited it.

Although my conclusion on the issue of repudiation makes it unnecessary to deal with the appellants' submission that the letter of 21 August validly fixed a time within which Capalaba was bound to complete the agreement by registering the lease, it is as well that I should deal with the question in view of its general importance. Capalaba does not now dispute that there had been unreasonable or unnecessary delay on its part in completing the agreement before 21 August 1986 such as would entitle Laurinda to give notice to complete, fixing a reasonable time within which completion was to take place: see Louinder v. Leis [7] ; Green v. Sevin [8] ; Smith v. Hamilton [9] . But Capalaba submits that the notice given on 21 August was defective because it failed to notify Capalaba that in the event of non-compliance the appellants would treat the agreement as at an end and because the time limited for completion was not reasonable.

1. (1982) 149 C.L.R. 509. 2. (1879) 13 Ch. D. 589. 3. [1951] Ch. 174.

The first point, found against the appellants by the Full Court and Connolly J., was discussed by Gibbs J. in Balog v. Crestani [10] . There his Honour pointed out [11] that the authorities that relate to contracts for the sale of land:

very strongly suggest, even if few of them actually decide, that to be effective the notice requiring performance must inform the party to whom it is given that the party giving it will treat the contract as at an end if the notice is not complied with. Later his Honour went on to say [12] : Today, when adherence to form is not generally much esteemed, it may be thought that it ought to be enough that a party requires performance within a specified reasonable time, and indicates that he will rely on his rights if the other party fails to comply with his requirement, although a prudent solicitor may prefer to use the accepted formula rather than face the prospect of litigation. 1. (1975) 132 C.L.R. 289, at pp. 296-300. 2. (1975) 132 C.L.R., at p. 296. 3. (1975) 132 C.L.R., at p. 298.

For my part I agree with the suggestion made by Gibbs J. that it is not necessary that the notice should state that the party will treat the contract as at an end in the event of non-compliance with the requirement stated in the notice and that it is sufficient if the notice indicates that the party giving it may choose to rely on his rights in that event. However, the notice must convey a definite and specific intent to require strict compliance with the terms of the contract within a reasonable time, so that the recipient will be made aware that the party giving the notice may elect to treat the contract as at an end at the conclusion of such reasonable time unless compliance is forthcoming. In the present case Capalaba was aware that Laurinda wished to dispose of its business and regarded the matter as urgent. The surrounding circumstances were not only sufficient to found an inference of repudiation by Capalaba in the face of the demands of Laurinda; they are also clearly capable of demonstrating that, given the expiry of a reasonable period, Laurinda would regard the contract as at an end. In these circumstances, it can scarcely be suggested that the notice did not alert Capalaba to the possibility that non-compliance might result in termination of the contract. Accordingly, I would not hold that the notice given on 21 August was ineffective on this ground.

I turn now to the question whether the time limited by the notice was reasonable. The time limited was thirteen days because the notice was not received until 22 August. In judging whether the time allowed was reasonable the Court must consider all the circumstances of the case, including any unnecessary delay on the part of the party to whom the notice is given before it is given: Stickney v. Keeble [13] . There Lord Parker of Waddington observed [14] :

In considering whether the time so limited is a reasonable time the Court will consider all the circumstances of the case. No doubt what remains to be done at the date of the notice is of importance, but it is by no means the only relevant fact. The fact that the purchaser has continually been pressing for completion, or has before given similar notices which he has waived, or that it is specially important to him to obtain early completion, are equally relevant facts It would be unjust and inequitable to allow the vendor to put forward his own unnecessary delay in the face of the purchaser's frequent requests for expedition as a ground for allowing him further time or as rendering the time limited by such a notice as that to which I have referred an unreasonable time. See also pp. 398, 415 and 426; Ajit v. Sammy [15] . McMurray v. Spicer [16] , which held that time before the service of a notice to complete is to be excluded in computing whether delay is a defence to a suit for specific performance of a contract for sale of land [17] has no application to the computation of what is a reasonable time for completion for the purposes of a notice to complete. In saying this I am not to be taken as necessarily endorsing what was said in McMurray v. Spicer. 1. [1915] A.C. 386. 2. [1915] A.C., at p. 419. 3. [1967] 1 A.C. 255, at p. 258. 4. (1868) L.R. 5 Eq. 527. 5. (1868) L.R. 5 Eq., at pp. 537-538.

The notice to complete rested the right of the appellants to rescind the contract upon Capalaba's failure to secure registration. The adequacy of the time limited by the notice must be considered in that light. On the view which I have expressed earlier as to the effect of the letter of 14 March 1986, there is no clear evidence that the appellants were pressing Capalaba before 21 August 1986 to complete performance of the agreement and the notice given that day constitutes the first express demand made by the appellants for performance of the agreement in the relevant respect. In computing the reasonableness of the time limited by that notice it is relevant to take account of the time which Capalaba already had to complete performance of the agreement but it is necessary to bear in mind that there was no explicit pressure from the appellants during that time to do so. The appellants had pressed without success for completion pursuant to cl. 6, but this was a demand of a more limited nature.

Capalaba called evidence from Mr. Lockhart, a solicitor, with a view to establishing that the time limited was inadequate for the purpose of having the lease stamped and registered. Mr. Lockhart stated that in his experience it would be unlikely that a shopping centre lease would be stamped and registered within fourteen days, though he agreed that documents could be stamped and registered on an urgent basis.

I am far from persuaded that the contract could not have been stamped, endorsed with the mortgagee's consent and tendered within the 14 days limited. It must be remembered that when this notice was given, those advising the first plaintiff [Laurinda] could have had no knowledge that the lease had not been completed by the defendant's solicitors before it was despatched to Melbourne for execution by the defendant. That completion was, as has been seen, a purely mechanical exercise. Nor had the first plaintiff's advisers any way of knowing that the consent of the mortgagee, though freely available, had not been obtained. Nor had they been told that the contract, although executed, had not been stamped, although they might have conjectured as much from the fact that it had not been brought, in its fully executed form, into Queensland. The problem with his Honour's approach, viewed from the appellants' standpoint, is that the onus must rest with the party giving the notice of showing that the time limited by the notice is reasonable judged as at the time the notice is given. Consequently, the primary judge's observations do not amount to a finding that the time fixed by the notice was reasonable.

The question is one of fact and it falls to be determined by reference to evidence which, as one might expect on an issue of this kind, is rather indefinite. However, the evidence of Mr. Lockhart is sufficient to raise a serious doubt in my mind as to the prospect of having the lease stamped and lodged for registration within the period of thirteen days limited by the notice. Of course this is not a decisive consideration because it is relevant to have regard to the opportunity which Capalaba had to attend to these matters before the notice was given.

Although in Ajit v. Sammy the Privy Council held that a six day notice to complete was reasonable in the circumstances of that case, it is our view that strong circumstances must be shown to justify the giving of a notice to complete which allows less than fourteen days for completion. In my view, no such circumstances have been shown to be present in this case. The time allowed by the notice was therefore insufficient. 1. (1984) 154 C.L.R. 661, at p. 670.

But there is strictly no need to decide this point. The finding of repudiation by Capalaba necessitates the allowing of the appeal and the restoration of the orders of Connolly J.

The Chief Justice has set out the facts and identified the relevant provisions of the agreement for lease between the first appellant ("Laurinda") as lessee and the respondent ("Capalaba") as lessor. Although Laurinda did all that was reasonably necessary on its part towards obtaining a stamped and registered lease or a stamped lease in registrable form and although Capalaba had had a reasonable time in which to stamp and to procure registration of the lease or in which to deliver to Laurinda a stamped and registrable lease, Capalaba failed to do so. It was common ground that Laurinda had purportedly rescinded the agreement on the ground of Capalaba's failure. Two questions arise: (1) was Capalaba's failure a breach of a term of the agreement for lease? if so, (2) was it a breach which entitled Laurinda to rescind?

On the appeal, it was conceded that Capalaba was under an implied obligation "to effect registration and to effect it within a reasonable time". A covenant by a registered proprietor of land under the Real Property Act 1861 Q. to grant a lease of the land for a term exceeding three years is not performed until an appropriate instrument of lease is registered: see ss. 43 and 52 and cf. the Real Property Act 1877 Q., s. 18. Though the intending lessee be put into possession under an agreement for lease, he has no legal title to the agreed term until an appropriate instrument of lease is registered: see Taylor v. Land Mortgage Bank of Victoria [19] ; Ahern v. L. A. Wilkinson (Northern) Ltd. [20] ; National Trustees, Executors and Agency Co. of Australasia Ltd. v. Boyd [21] . Therefore a covenant to grant a legal lease of such land for a term exceeding three years necessarily implies that an appropriate instrument of lease will be registered. Otherwise the lessor would be unable to confer on the lessee the title to the leasehold interest to which the lessee is entitled under the covenant. The lessor's obligation comprehends at least the delivery to the intending lessee of an appropriate instrument capable of registration and, in my opinion, comprehends also the procuring of its registration. The time to be implied for performance of the intending lessor's obligation is a reasonable time: see Reid v. Moreland Timber Co. Pty. Ltd. [22] ; Louinder v. Leis [23] . Time was not of the essence of Capalaba's implied promise to procure registration of an appropriate instrument of a six-year lease from Capalaba to Laurinda.

1. (1886) 12 V.L.R. 748, at p. 755. 2. [1929] St. R. Qd 66. 3. (1926) 39 C.L.R. 72, at p. 82. 4. (1946) 73 C.L.R. 1, at p. 13. 5. (1982) 149 C.L.R. 509, at p. 530.

A right in one party to rescind a contract will arise when the other party repudiates a contract generally, but it may also arise when the other party repudiates a term of the contract. A right to rescind depends on the importance of the term repudiated. Here, the subject of the agreement was the granting of a legal lease for a term of six years. The implied promise by Capalaba to procure registration of an appropriate instrument was thus at the heart of the agreement. It was a promise of such importance to the promisee that it would not have entered into the contract unless it had been assured of substantial performance and this ought to have been apparent to the promisor. It answered the criterion of an essential promise in the sense that an outright repudiation of the promise would have entitled Laurinda to rescind. The criterion of an essential promise which I have stated in terms relevant to the present case is derived from the criterion expressed by Jordan C.J. in Tramways Advertising Pty. Ltd. v. Luna Park (N.S.W.) Ltd. [24] and frequently adopted in this Court, most recently in Ankar Pty. Ltd. v. National Westminster Finance (Australia) Ltd. [25] , but I have modified it by using the term "substantial performance" rather than the usual formula of "a strict or a substantial performance". The modification is necessary when, no day for performance being stipulated and the subject matter of the promise not being such as to require strictly timeous performance, time is not of the essence of the promise either in law or in equity: Canning v. Temby [26] ; Louinder v. Leis [27] . When time is not of the essence, the promisee must have been willing to enter into the contract without an assurance that the promise would be performed strictly, albeit with an assurance that the promise would be performed substantially. Thus, Laurinda would not have been entitled either at law or in equity to rescind the contract as soon as a reasonable time for procuring registration had elapsed. As Griffith C.J. said in Canning v. Temby [28] :

In one sense, of course, time is always of the essence of a contract to be performed within a reasonable time. But that is not the sense in which the term "of the essence" is used. Where an essential term - in the sense defined - is to be performed within a reasonable time, there being no stipulated day for performance, and that time passes without performance, the innocent party does not acquire a right to rescind unless the defaulting party repudiates or has repudiated his obligation to perform. Barwick C.J. and Jacobs J. observed in Neeta (Epping) Pty. Ltd. v. Phillips [29] : Contracts for the sale of land, creating as they do equitable interests in the land, do not easily go off except pursuant to an express condition of the contract or pursuant to an express repudiation or a repudiation clearly to be inferred. The same observation may be applied to agreements for lease. More than a mere failure in timeous performance is necessary to warrant an inference of repudiation, but delay may be so serious as to amount to a refusal to perform and in such a case an innocent party has a right to rescind: see De Soysa v. De Pless Pol [30] ; Holland v. Wiltshire [31] . 1. (1938) 38 S.R. (N.S.W.) 632, at pp. 641-642. 2. (1987) 162 C.L.R. 549, at p. 556. 3. (1905) 3 C.L.R. 419, at p. 425. 4. (1982) 149 C.L.R., at p. 533. 5. (1905) 3 C.L.R., at p. 426. 6. (1974) 131 C.L.R. 286, at p. 306. 7. [1912] A.C. 194, at pp. 202-203. 8. (1954) 90 C.L.R. 409, at p. 420.

The difference between a contract which contains a stipulated day for performance of an essential term and a contract which, expressly or impliedly, requires performance within a reasonable time is important when the question is whether, on failure to perform within the time limited by the contract, the innocent party is entitled to rescind. In the former case, a right to rescind arises at law when the stipulated day passes; in the latter, that right does not necessarily arise when the reasonable time expires but only when repudiation is clearly to be inferred from the circumstances in which the delay occurs. Delay will amount to repudiation if the defaulting party "evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way": Shevill v. Builders Licensing Board [32] ; Progressive Mailing House Pty. Ltd. v. Tabali Pty. Ltd. [33] . If the inference to be drawn from the circumstances is that the defaulting party intends to perform an essential promise after some minor delay, repudiation cannot be inferred; but if the inference is that the defaulting party intends so to delay performance that the promisee will be substantially deprived of the benefit of the promise, repudiation can be inferred. The inference is not lightly drawn: Progressive Mailing House Pty. Ltd. v. Tabali Pty. Ltd. [34] .

1. (1982) 149 C.L.R. 620, at pp. 625-626. 2. (1985) 157 C.L.R. 17, at pp. 33, 40. 3. (1985) 157 C.L.R., at p. 32.

However, a reservation on the part of the promisor that he may perform the promise if it suits his convenience to do so is not inconsistent with repudiation of the contract or promise. Thus Fullagar J. was able to say in Carr v. J. A. Berriman Pty. Ltd. [35] :

it is correct to say that a failure to remedy the breach might continue so long and in such circumstances as to evince an intention on the part of the building owner no longer to be bound by the contract. In other words, the only legitimate inference might be that he is saying: "Not only have I broken my contract by not doing the thing on the due day, but I am not going to do the thing at all", or "I am not going to do the thing at all unless and until I find it convenient to do it". 1. (1953) 89 C.L.R. 327, at p. 349.

When delay in performance is prolonged, the point at which repudiation might be inferred is necessarily uncertain. The promisor and promisee are likely to regard the circumstances differently. To provide a firm foundation for the inference of repudiation, it is prudent for the promisee to give a notice to complete. In Louinder v. Leis [36] , Mason J. said:

Unreasonable delay in complying with the stipulation in substance amounting to a repudiation is essential to justify rescission. It is to this end that, following breach, the innocent party gives notice fixing a reasonable time for performance of the relevant contractual obligation. The result of non-compliance with the notice is that the party in default is guilty of unreasonable delay in complying with a non-essential time stipulation. The unreasonable delay amounts to a repudiation and this justifies rescission. That was said in reference to delay beyond a stipulated date. It does not follow that delay beyond the stipulated reasonable time necessarily amounts to repudiation. But if, the stipulated reasonable time having elapsed, a notice to complete allowing a further reasonable time is given, a failure to comply provides a firm foundation for an inference of repudiation. 1. (1982) 149 C.L.R., at p. 526.

A right to rescind is one thing; fairness in the exercise of that right is another. In some circumstances, equity asserts a jurisdiction to restrain the exercise of a right to rescind. As I attempted to explain in Louinder v. Leis [37] , a notice to complete does not make time of the essence of the contract when the contract itself does not do so, but it is a step towards lifting an equitable restraint on the exercise of a right to rescind which arises aliunde. Therefore, when a contract requires performance of an essential promise within a reasonable time and a valid notice to complete on or before a specified day is given by the innocent party, the significance of the notice is twofold: primarily, it fixes a day when, if the default is not remedied, the party in default will be held to have repudiated the promise; and, secondarily, it will show that, for equity's purposes, it is fair for the innocent party to exercise that right: see per Fry J. in Green v. Sevin [38] , and per Isaacs J. in Maynard v. Goode [39] . Where a contract contains a promise to be performed within a reasonable time, a notice to complete does not insert the time it prescribes into the contract and make that time of the essence, but the notice is evidence which may support the inference of repudiation, from which the innocent party's right to rescind arises and it clears the way for the exercise of that right.

1. (1982) 149 C.L.R., at pp. 532-536. 2. (1879) 13 Ch. D. 589, at p. 599. 3. (1926) 37 C.L.R. 529, at p. 538.

When a reasonable time is prescribed for performance of an essential term of a contract, a notice to complete requiring performance of that term by a specified day can be given only if the party to whom it is given is already in breach of his contractual obligation: Neeta (Epping) Pty. Ltd. v. Phillips [40] . But it would be futile to give a notice if, in the event of the default complained of persisting beyond the time limited by the notice, repudiation were not to be inferred from the circumstances then existing. Therefore, in considering whether the time limited by a notice is reasonable in such a case, it is necessary to consider whether an inference of repudiation would be drawn from non-performance if that were to persist beyond that time.

The Shopping Centre opened on 1 December 1985. That was the commencing date of the term of the proposed lease. Capalaba's solicitors had written on 28 November 1985 to advise that Capalaba had executed the lease and a copy would be sent "shortly". On 3 January 1986 Laurinda paid to Capalaba's solicitors the costs of and incidental to stamping and registration. On 14 March 1986 Laurinda asked for a copy of the lease and, by reply dated 25 March 1986, Capalaba's solicitors advised that the lease had been executed by Capalaba, that the solicitors expected it to be returned "in the not too distant future" and that they would provide Laurinda "with its stamped parts of the documents as soon as we are able to". The solicitors' expectation was not realized. Laurinda heard nothing further from them, despite Capalaba's learning in April 1986 that Laurinda wished to dispose of its business. Then the letter of 21 August 1986 required Capalaba "to complete registration within fourteen days from the date hereof". The letter was delivered to Capalaba's solicitors on 22 August. There was no evidence that Laurinda had earlier demanded or been refused performance by Capalaba of its obligation to stamp and register the lease. Laurinda had been put into and left in peaceful possession of the premises. Clause 15.7 of the agreement for lease kept the obligations of lessor and lessee on foot despite any default or delay in the preparation or execution of the lease. In these circumstances, delay in the stamping and registration of the lease long after a reasonable time has expired is not as indicative of repudiation as would be a delay in completing a contract of sale of land. At the time when the letter of 21 August 1986 was written, it could not reasonably have been inferred from Capalaba's delay in stamping and registering the lease that it did not intend to be bound by its promise to register the lease. Does its failure to stamp and register within the fourteen days allowed by the letter of 21 August tip the balance? The answer depends on whether the letter was an effective notice to complete, and there were two reasons advanced for holding that it was not.

The first found favour before the trial judge and before the Full Court. Connolly J. held that the letter of 21 August was not an effective notice to complete because it did not inform Capalaba that Laurinda would treat the contract as at an end if the notice was not complied with. In Balog v. Crestani [41] , Gibbs J. raised but did not answer the question whether it was essential to the validity of a notice to complete that it should notify the giver's intention to rescind in the event of non-compliance. As the purpose of a notice is to fix a day for the completion of a contract or the performance of a term of a contract so that the parties' respective rights will be ascertained thereafter as though the contract had stipulated for that day to be of the essence, it must be sufficient that the party giving the notice makes it clear that the terminal day specified in the notice is thereafter to be treated as of the essence for the performance of the contract (or of the relevant term of the contract, as the case may be). The reasons advanced by Deane and Dawson JJ. for this view are, in my respectful opinion, compelling. The letter of 21 August 1986 stated that, in the event of non-compliance "our clients naturally reserve their rights in respect of your client's default". Although this is an intimation that Laurinda is contemplating the exercise of rights which it contends will arise by reason "of your client's default", it falls short of communicating Laurinda's intention to treat the end of the fourteen-day period as of the essence for performance of Capalaba's obligation to complete registration. For this reason, I would agree with the conclusion of Connolly J. and the Full Court that the letter of 21 August 1986 was not an effective notice to complete. This conclusion led Connolly J. to hold that he was constrained to reject the letter "as a notice requiring performance non-compliance of which, without more, entitled [Laurinda] to rescind".

His Honour did not have to decide whether the time limited by the letter of 21 August was unreasonably short. That is the second reason advanced for holding that the letter was not an effective notice to complete. Connolly J. said: "as to sufficiency of time I am far from persuaded that the contract could not have been stamped, endorsed with the mortgagee's consent and tendered within the 14 days limited."

The onus to establish that the time was reasonable rested on Laurinda. The only evidence was that of Capalaba's solicitor who said that "it would be unlikely to expect that you could get a shopping centre lease stamped and registered within 14 days" although application for expedited stamping and expedited registration could be made to the relevant authorities. Having regard to this fact and the factors earlier mentioned, I should think that the thirteen days effectively allowed for registration was unreasonably short. I would not draw an inference merely from Capalaba's non-performance in registering the lease, which continued until the time limited by the letter had expired, that Capalaba had repudiated the contract.

However, his Honour found that Capalaba simply declined to perform its obligation "until it suited it" and that Laurinda "was entitled to regard the conduct of [Capalaba] as repudiatory in a relevant sense and to treat the contract as discharged". The finding was based in part upon facts which emerged at the trial, showing that Capalaba had deliberately delayed in executing the lease, securing the mortgagee's consent, stamping and registering the lease (or tendering a registrable lease) because Capalaba's commercial interests were better served by delay.

Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. In Freeth v. Burr [42] , Lord Coleridge C.J. spoke of acts or conduct which "do or do not amount to an intimation of an intention to abandon and altogether to refuse performance of the contract" or of acts and conduct which "evince an intention no longer to be bound by the contract". This was followed by the Earl of Selborne L.C. in Mersey Steel and Iron Co. v. Naylor, Benzon & Co. [43] :

I am content to take the rule as stated by Lord Coleridge in Freeth v. Burr, which is in substance, as I understand it, that you must look at the actual circumstances of the case in order to see whether the one party to the contract is relieved from its future performance by the conduct of the other; you must examine what that conduct is, so as to see whether it amounts to a renunciation, to an absolute refusal to perform the contract, such as would amount to a rescission if he had the power to rescind, and whether the other party may accept it as a reason for not performing his part. And in Carswell v. Collard [44] , Lord Herschell L.C. stated the question precisely: Of course, the question was not what actually influenced the defender, but what effect the conduct of the pursuer would be reasonably calculated to have upon a reasonable person. Forslind v. Bechely-Crundall [45] is in accord with this view, though Lord Shaw of Dunfermline [46] may be thought to go beyond Lord Herschell's test in emphasizing the effect of the defaulting party's conduct on the mind of the innocent party. 1. (1874) L.R. 9 C.P. 208, at p. 213. 2. (1884) 9 App. Cas. 434, at pp. 438-439. 3. (1893) 20 R. (H.L.) 47, at p. 48. 4. 1922 S.C. (H.L.) 173. 5. 1922 S.C., at pp. 191-192.

The question whether an inference of repudiation should be drawn merely from continued failure to perform requires an evaluation of the delay from the standpoint of the innocent party. Would a reasonable person in the shoes of the innocent party clearly infer that the other party would not be bound by the contract or would fulfil it only in a manner substantially inconsistent with that party's obligations and in no other way? Different minds may easily arrive at different answers. If one looks merely at Capalaba's conduct in the circumstances known to Laurinda when the letter of 21 August 1986 was written, Capalaba's failure to register the lease did not amount to repudiation. The shortness of the time for registration limited by that letter and the absence of an intimation in the letter that that time would be regarded as of the essence deprive the letter of 21 August of the effect which a valid notice to complete would have had. Looking solely at Capalaba's delay in registering the lease, the position was analogous to that which Dixon J. found to exist in Dimond v. Moore [47] where, in a dissent which turned on the facts, he said:

But if they wished to rely upon the lessor's failure to perform her contract within a period of time as distinguished from some refusal by her to observe the obligations imposed upon her, it was necessary for the lessee to name some time by which performance was demanded, and in doing so to fix a period sufficient to enable her solicitors to receive her instructions. I would not infer repudiation merely from non-registration within the time limited by the letter. However, I am unable to agree with the Full Court who, accepting that the notice was ineffectual, held that "until an effectual notice was given the delay continued but that alone was insufficient to make evident any intention on the part of [Capalaba] that it would not be bound by the contract". Repudiation may be established without proof of an effective notice to complete. The absence of an effective notice means that the other evidence must be examined to determine whether a clear inference of repudiation should be drawn, but it does not preclude the drawing of that inference. 1. (1931) 45 C.L.R. 159, at pp. 179-180.

If the evidence showed no more than fourteen days of continued non-registration of the lease after 21 August 1986, I would not draw the inference of repudiation. But the letter of 21 August was followed by Capalaba's solicitors' letter of 3 September 1986. After assurances that the lease had been executed and the costs of stamping and registration had been paid, advice was given in March 1986 that the lessee's stamped parts of the lease would be provided as soon as the lease was available after its return from Melbourne expected "in the not too distant future", but there was no further communication from Capalaba or its solicitors. Then, stimulated by Laurinda's letter of 21 August 1986, Capalaba's solicitors, on the eve of the expiration of the time limited, advise merely that they have referred the letter to their client "for its response", undertaking to advise their "client's instructions". The long and unexplained delay from March to September 1986 ending with a letter stating that the solicitors required further instructions with respect to completing what had been promised over five months earlier is sufficient foundation for the drawing of an inference of repudiation. It is the inference which Laurinda drew and, although it cannot be said that no other reasonable inference is open, it is a reasonable inference which can be clearly drawn. I have vacillated in arriving at this conclusion but, having arrived at it, I would allow the appeal and restore the judgment of Connolly J.

The background facts and the relevant provisions of the Deed of Agreement for Lease ("the contract") between the respondent ("the lessor") and the first appellant ("the lessee") are set out in the judgment of the Chief Justice. Except to the extent necessary for the purposes of discussion, we shall avoid repetition of them.

The primary object of the contract was the grant by the lessor to the lessee of a legal lease of the subject premises for a term of six years commencing, in the events which occurred, on 1 December 1985. The due discharge of the lessor's obligation to grant such a lease involved, at the least, the production to the lessee of an executed lease in registrable form. It was an implied term of the contract that the lessor would discharge that obligation within a reasonable time after the commencement date of the lease. In that regard, we agree with the Chief Justice that cl. 15.7 of the contract, when read with cl. 6.1, did not excuse the lessor from performance of the obligation to grant a registrable lease. The effect of cl. 15.7 was to confirm what would have been the position in any event, namely, that mere delay in performance of that obligation would not affect the existence of a binding equitable lease or entitle the lessee to terminate the contract: see Real Property Act 1877 Q., s. 51. As the Chief Justice points out, something more - whether failure by the lessor to comply with a notice making time of the essence or conduct constituting repudiation by the lessor - was required to justify the lessee's purported termination of the contract.

On the appeal to this Court, the lessor did not dispute that, by 21 August 1986 which was more than eight months after the commencement date of the lease, the lessee was entitled to give to the lessor an appropriate notice making time of the essence for the performance by the lessor of its obligation under the contract to produce to the lessee a lease of the subject premises in registrable form. If the letter of 21 August from the solicitors for the lessee constituted such an appropriate notice, the lessee was entitled, upon non-compliance with its terms, to terminate the contract. In circumstances where the lessor had obtained the fees for stamping and registering the lease from the lessee, the lessor does not suggest that that letter was necessarily ineffective to make time of the essence of the contract for the reason that it went further than requiring the production of a lease in registrable form and required the lessor "to complete registration" of the lease. The dispute between lessor and lessee about the form and contents of the letter is now confined to the significance of the failure of the letter to state that the lessee would, in the event of non-compliance, treat the contract as at an end and to the question whether the period of time which the notice allowed for compliance was, in all the circumstances, adequate. Nothing turns in the present case upon whether the letter should be seen as a notice to complete the contract or as a notice to perform a fundamental obligation under it and it is convenient to treat it as a notice to complete.

At first instance in the Supreme Court of Queensland, Connolly J. regarded himself as constrained by authority to hold that the failure of the letter of 21 August to make clear that the lessee would, in the event of non-compliance, treat the agreement as being at an end prevented it from being effective to make time of the essence. The Full Court indicated agreement with his Honour's conclusion in that regard. While there are statements in the cases which lend considerable support for that view (see, e.g., Fry J.'s reference to "rescission sub modo" in Green v. Sevin [48] ; Ajit v. Sammy [49] ; Lenneberg v. McGirr [50] ; and the cases referred to by Gibbs J. in Balog v. Crestani [51] but cf., e.g., per Lord Langdale M.R. in Taylor v. Brown [52] and in King v. Wilson [53] and per Romilly M.R. in Pegg v. Wisden [54] ), the overall weight of actual decisions to that effect is less clear (see Balog v. Crestani [55] , and the discussion and cases mentioned in Butt, The Modern Law of Notices to Complete Australian Law Journal, vol. 59 (1985) 260, at pp. 270-272 ). Certainly, there is no decision of this Court that a notice is ineffective to make time of the essence of the contract unless it states that the party giving it will treat the contract as at an end if the notice is not complied with.

1. (1879) 13 Ch. D. 589, at p. 599. 2. [1967] 1 A.C. 255, at p. 258. 3. (1919) 19 S.R. (N.S.W.) 83, at pp. 86-87. 4. (1975) 132 C.L.R. 289, at pp. 296-297. 5. (1839) 2 Beav. 180, at p. 183 [48 E.R. 1149, at p. 1150]. 6. (1843) 6 Beav. 124, at p. 126 [49 E.R. 772, at p. 773]. 7. (1852) 16 Beav. 239, at p. 244 [51 E.R. 770, at p. 772]. 8. (1975) 132 C.L.R., at pp. 297-298.

While law and equity stood apart and unqualified by statutory provisions about the effect of contractual stipulations as to time, the lessor's breach of an implied term requiring that it discharge a fundamental obligation within a reasonable time would have entitled the lessee to terminate the contract at law. That right at law was, however, a barren one since equity would intervene, at the suit of the party in default, to grant relief against the loss of the contract by ordering specific performance or, in some cases, by restraining proceedings at law. In that sense and speaking generally, it could be said that express or implied contractual stipulations about the time for the completion of a contract or the performance of a fundamental term were of the essence of the contract at law but were not of the essence in equity unless there was an express or implied contractual provision to that effect. If, however, the innocent party gave an appropriate notice to the party in default requiring completion or performance within a reasonable time fixed by the notice, equity would not, in the event of continued default after the expiry of that further time, intervene to preclude the effective exercise of the common law right to terminate. The continued default in the face of the notice disentitled the party in breach to such equitable relief because it would not be inequitable for the innocent party to terminate the contract after due warning had been given of the consequence of continued default. In a real sense, the effect of the notice was to make the reasonable time which it fixed for performance of the essence in equity as well as at law and it has traditionally been so described (see, e.g., King v. Wilson [56] ; Pegg v. Wisden [57] ; Stickney v. Keeble [58] ; Neeta (Epping) Pty. Ltd. v. Phillips [59] ; Balog v. Crestani [60] ). As Brennan J. commented in Louinder v. Leis [61] :

A notice to complete is thus a step in securing the lifting of the equitable restraint upon the legal right to rescind. A notice to complete is sometimes said to make time of the essence. That is a convenient description of its effect, though it may be misunderstood. A valid notice makes time of the essence in that a consequence of non-completion within the time specified by the notice is to enable rescission by the promisee to be given effect in equity as well as in law, equity taking the day specified in the notice to be the essential time for completion. But a notice to complete does not make the time fixed by the contract of the essence; it makes the time fixed by the notice of the essence With the fusion of law and equity and the prevalence of rules of equity as to contractual stipulations about time (see, e.g., Property Law Act 1974 Q., s. 62) it is ordinarily unnecessary to describe the effect of a valid notice to complete otherwise than in the traditional terminology of making time of the essence. Nevertheless, in identifying the requirements of a valid notice to complete or perform, it may be important to bear in mind that the purpose and operation of such a notice must be explained by reference to equitable doctrine and that the rules regulating the requirements of such a notice reflect the traditional equitable notions of fairness and good conscience. It is so in the present case. 1. (1843) 6 Beav., at pp. 126-127 [49 E.R., at p. 773]. 2. (1852) 16 Beav., at p. 244 [51 E.R., at p. 772]. 3. [1915] A.C. 386, at p. 418. 4. (1974) 131 C.L.R. 286, at pp. 298-299. 5. (1975) 132 C.L.R., at p. 299. 6. (1982) 149 C.L.R. 509, at pp. 532-533.

The innocent party who makes time of the essence of a contract by an effective notice to complete within a nominated time is bound by the notice in the sense that the time nominated for completion becomes of the essence for him as well as for the defaulting party: see, e.g., Quadrangle Development and Construction Co. Ltd. v. Jenner [62] ; Balog v. Crestani [63] . If - where completion involves action on his part - the innocent party himself fails to complete within that time, the other party will be able to take account of the then existing circumstances in determining whether to rescind the contract or to institute proceedings for its enforcement. The party giving the notice enjoys the like advantage since he may waive his right to terminate the contract for non-compliance with the requirements of the notice and bring proceedings for specific enforcement of the contract. This mutuality of the respective positions of the parties accords with equitable principle and the interdependent character of the contractual obligations involved. That being so, it would be anomalous if equity were to require that a notice to complete should unequivocally state that the party giving it will, in the stipulated circumstances, treat the contract as at an end in a context where it is unnecessary that he have any such unequivocal intention at the time of giving the notice and where, even if he had such an unequivocal intention at that time, he might subsequently waive the right to treat the contract as at an end and bring proceedings for its enforcement. Moreover, it is somewhat difficult to see why, as a matter of bare principle, a notice fixing a time for completion or performance does not, in the absence of other grounds for termination, constitute a repudiation of the contract if it unequivocally states that the party giving the notice will, on the expiry of what is subsequently held to be an unreasonably short period, act on the basis that the contract is at an end. True it is that these difficulties will be avoided or overcome if such an unequivocal statement in a notice to complete or perform is read as not meaning what it says but as being subject to an implied qualification that the party giving the notice will not treat the contract as at an end at all unless he both desires and is entitled to rescind at the expiry of the time which the notice fixes (cf. Woodar Investment Development Ltd. v. Wimpey Construction U.K. Ltd. [64] ). However, such distortion of the ordinary meaning of words serves only to illustrate the undesirability and potentially misleading consequences of a requirement that a notice to complete contain such an unequivocal statement. The notions of fairness and good conscience which inspire the traditional doctrines of equity point strongly against any such inflexible requirement.

1. [1974] 1 W.L.R. 68, at p. 71; [1974] 1 All E.R. 729, at p. 732. 2. (1975) 132 C.L.R., at p. 298. 3. [1980] 1 W.L.R. 277; [1980] 1 All E.R. 571.

It is important that courts tread warily in disturbing current perceptions about the effect of conveyancing precedent or practice. Notwithstanding that need for caution, the weight of past authority is debatable and clearly inadequate to justify this Court in insisting upon a requirement that a notice to complete must unequivocally state that, in the event of non-compliance, the party giving the notice will treat the contract as at an end. That is not, of course, to suggest that a notice will be effective to make time of the essence of a contract with the consequence that the party giving the notice will be entitled to rescind in the event of non-compliance if it is inadequate to convey to a reasonable person in the position of the recipient that that is its purport and effect. The whole point of equity's intervention in relation to stipulations as to time was that, in the absence of express or implied contractual provision to the contrary, it regarded it as inequitable or unconscionable for a party to a contract to rescind for breach of a time stipulation without having given reasonable warning to the party in default. It seems to us, however, that, in modern circumstances, a notice will be adequate to convey such a warning if, but only if, it conveys either that the time fixed for performance is made of the essence of the contract or that the party giving the notice will, in the event of non-compliance, be entitled (or regard himself as entitled) to rescind. A notice, particularly one between solicitors, can convey those matters by implication.

The letter of 21 August 1986 from the lessee's solicitors contained no mention of termination of the contract. Nor did it state that time was being made of the essence or that the lessee would, in the event of non-compliance, be, or regard itself as being, entitled to rescind. After referring to the lessor's unexplained and lengthy past delay and the importance to the lessee that a lease be registered "immediately" to safeguard its "rights of tenure", the letter merely stated that "it appears reasonable that our clients require your client to complete registration within fourteen days from the date hereof" and that "[i]f the registration is not completed within that time then our clients naturally reserve their rights in respect of your client's default". We have found the question whether those statements, in a letter between solicitors, were adequate to make time of the essence of the contract a difficult one. It may be that, in some circumstances, a requirement of completion within a nominated time and a reservation of "rights in respect of default" would be adequate to convey that time was being made of the essence of the contract or that the person giving the notice would regard himself as entitled to rescind in the event of non-compliance. On balance, however, it appears to us that they were inadequate to convey either of those matters in the circumstances of the present case. It follows that the letter was ineffective to make time of the essence of the contract.

It is strictly unnecessary that we consider the question whether the letter of 21 August 1986 was ineffective to make time of the essence for the further reason that it failed to allow a reasonable time for the procuring of registration (and, necessarily, stamping) of the lease. We have, however, formed a firm view on that question and it would seem appropriate that we express it. We agree with the Chief Justice that the evidence in the present case failed to establish that the effective period of thirteen days allowed by the notice as the time in which the lessor was required "to complete registration" was, in the circumstances, such a reasonable time. We would add that that period would, in our view, have been a reasonable one in the circumstances of the present case if all that the notice had required had been the production of an executed lease in registrable form.

There remains for determination the question whether, even accepting that the letter of 21 August 1986 was inadequate to make time of the essence of the contract, the lessee was, by 5 September 1986, entitled to rescind the contract by reason of repudiation by the lessor. That question was resolved in the lessee's favour by Connolly J. at first instance and in the lessor's favour by the Full Court. It can be said at once that we are in substantial agreement with the reasoning of Connolly J. in relation to it.

It is not suggested on behalf of the lessor that it was ever envisaged that the arrangement between the lessor and the lessee should be allowed to remain indefinitely as an executory agreement to grant a lease for the stipulated term of six years. Indeed, in circumstances where the contract expressly provided for the form, content and execution of an actual lease and where the lessor had obtained from the lessee the fees for stamping and registering such a lease, it is difficult to see how such a suggestion could plausibly have been made. It is true that, in a case such as the present, the practical significance of the existence of a legal demise for the agreed term is reduced by the fact that equity will, where specific performance of the agreement for lease would be ordered, treat the promised lease as subsisting. None the less, the grant of the actual leasehold estate for the agreed term was, as has been said, the primary object of the contract. The existence of a registered lease can be of critical importance particularly in circumstances where, as here, there is a mortgage of the legal estate or where, again as here, the lessee is desirous of disposing of his leasehold interest. As will be seen when reference is made to the correspondence between their respective representatives, the importance which the lessee placed upon the grant of a legal demise was made plain to the lessor. Indeed, it is reasonable to infer, as Connolly J. did, that the lessor's solicitors' letter of 28 November 1985 was in response to a request made on behalf of the lessee for the executed lease.

By cl. 6.2 of the contract, the lessee irrevocably authorized, empowered and directed the lessor's solicitors "upon the date of commencement of the Lease or so soon thereafter as is practicable" to complete the lease by inserting therein the dates of commencement and termination, the yearly rental and the monthly instalments, any necessary formal matters or descriptions and "a plan of the Demised Premises in a form acceptable to the office of the Registrar of Titles". The lessee executed a form of lease which was required to be completed by the insertion or addition of the above specific matters. No step was taken by the solicitors for the lessor to complete the form of lease. By their letter of 28 November 1985, the lessor's solicitors advised that the contract and the lease had been executed by the lessor and would be sent "shortly" to the lessor's solicitors. They were not so sent. On 14 March 1986, the lessee's accountants wrote to the lessor's solicitors asking that a copy of the "lease" be forwarded "at your earliest opportunity". It matters not whether that letter is read as a demand for a copy of the document which constituted the executed lease or as a demand that a lease in registrable form be produced. Either way, it was a demand that the stage be at least reached where an executed lease in registrable form was brought into existence.

The reply of the lessor's solicitors to the letter of 14 March 1986 took the matter backwards rather than forwards. The information that the lease would be sent "shortly" which had been contained in the letter of 28 November 1985 became, some four months afterwards, a bland statement of expectation that the lease would be returned, by the lessor to its solicitors, "in the not too distant future", whatever that might mean. No explanation was advanced as to why the lessee still could not be given a copy of an executed lease. The lessee was told that it would simply have to wait until the lessor's solicitors were "able to" provide "its stamped parts of the documents", whenever that might be. The plain fact was that, unknown to the lessee, the form of lease had not even been completed by the insertion of the material which, under cl. 6.2 of the contract, the lessor's solicitors should have inserted in the form executed by the lessee as soon as was "practicable" after the commencement of the agreed term. The reason why the formal lease had not been completed, registered or made available to the lessee was that it suited the commercial interests of the lessor to refrain from producing the registrable lease while it negotiated new financial arrangements.

It is in the above context that one must examine the effect of the letter of 21 August 1986 from the lessee's solicitors. That letter stressed the importance to the lessee, which had (to the lessor's knowledge) been seeking to dispose of the business carried on on the premises, that a formal lease be registered immediately. It pointed out that the lessee had paid the necessary registration fees some eight months earlier. It also pointed out that the lessor's delay was both "unexplained and lengthy". Even though that letter was ineffective to make the time allowed "to complete registration" of the essence of the contract, it plainly drew the lessor's attention to the unreasonableness of its past approach and to the need for prompt action to bring about a situation in which an executed lease in registrable form existed to be stamped and registered. The lessor's response was its solicitors' letter which was not posted until 3 September 1986, that is, the day before the last day allowed by the notice. That response bordered on the contemptuous. It conveyed no explanation of past failure to honour either contractual obligation or subsequent assurances. It contained no assurances at all as to the future. It merely advised that the letter of 21 August had been referred to the lessor for its "response" and that the lessor's "instructions" would be communicated when they were "received". In fact, the lessor was, even at that stage, still deliberately refraining, for its own commercial purposes, from performing its contractual obligation. It had still not sought the mortgagee's consent, which was necessary before any lease could be registered. Indeed, there still did not exist a completed form of lease capable of being registered.

The question which must now be answered is whether the lessor's conduct up to and including the letter of 3 September 1986 was such as to constitute repudiation of the contract.

Lord Wright's oft-quoted admonition that "repudiation of a contract is a serious matter, not to be lightly found or inferred" (Ross T. Smyth & Co. Ltd. v. T. D. Bailey, Son & Co. [65] ) is, no doubt, a wise one. It should not, however, be allowed to cloud the fact that an allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations. Thus, it is of little assistance in the present case to identify reasons why the lessor was unlikely to have subjectively desired to repudiate its agreement to grant a lease. An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the lessor's conduct "would be reasonably calculated to have upon a reasonable person" (per Lord Herschell L.C., Carswell v. Collard [66] ; Forslind v. Bechely-Crundall [67] ). It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it.

1. [1940] 3 All E.R. 60, at p. 71. 2. (1893) 20 R. (H.L.) 47, at p. 48. 3. 1922 S.C. (H.L.) 173, at p. 190.

In the present case, the alleged repudiation by the lessor was of the fundamental obligation to produce a lease of the subject premises in registrable form. Clearly, there was unreasonable delay on the part of the lessor in the performance of that obligation. That delay was deliberate and was for the lessor's own commercial purposes. Its significance, from the viewpoint of a reasonable person in the position of the lessee, was heightened by an absence of explanation in the face of the lessee's requests and complaints and by the dishonouring of assurances given as to future conduct. Indeed, even the assurance that the lease had been executed by the lessor was misleading since it now appears that no completed form of lease had even been brought into existence. The letter of 21 August 1986 from the lessee's solicitors served to bring matters to a head. The totally unresponsive reply of 3 September 1986 seems to us to have taken the matter to a stage where the combined effect of dishonoured assurances, continued failure to produce a lease in registrable form and continued refusal properly to address the lessee's legitimate requirements and complaints was, to adapt words used by Fullagar J. in Carr v. J. A. Berriman Pty. Ltd. [68] , such that a reasonable man could hardly draw any other inference than that the lessor was not prepared to take its primary obligation under the contract seriously.

It is not necessary for repudiation of a contract that the repudiator make plain that he will never perform his contractual obligations at all. What Lord Dunedin described (Forslind [69] ) as the assumption of "a shilly-shallying attitude in regard to the contract" and what Lord Shaw of Dunfermline [70] called "procrastination persistently practised" can, in some circumstances, reach the stage of repudiation even though accompanied by assurances of ultimate performance at some future time. In that regard, the law was correctly stated by Lord Shaw in the following extract from his judgment in Forslind [71] which is directly in point to the circumstances of the present case:

If, in short, A, a party to a contract, acts in such a fashion of ignoring or not complying with his obligations under it, B, the other party, is entitled to say: "My rights under this contract are being completely ignored and my interests may suffer by non-performance by A of his obligations, and that to such a fundamental and essential extent that I declare he is treating me as if no contract existed which bound him." In business over and over again it occurs - as, in my opinion, it occurred in the present case - that procrastination is so persistently practised as to make a most serious inroad into the rights of the other party to a contract. There must be a stage when the person suffering from that is entitled to say: "This must be brought to an end. My efforts have been unavailing, and I declare that you have broken your contract relations with me." Lord Shaw [71] went on to point out that "the question whether the stage has been reached when procrastination or non-performance" constitutes repudiation is essentially one of fact. That question will, as has been said, only be properly answered in the affirmative when procrastination or non-performance has marked the stage of conveying to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it. It was, in our view, correctly resolved by the learned trial judge in the lessee's favour in the present case when he held that the lessor's conduct constituted repudiation of the contract which entitled the lessee to terminate it. 1. 1922 S.C., at p. 190. 2. 1922 S.C., at p. 192. 3. 1922 S.C., at pp. 191-192. 4. 1922 S.C., at pp. 191-192.

It follows that we would allow the appeal, set aside the orders of the Full Court of the Supreme Court and restore the orders made by the learned primary judge. The respondent should pay the costs of the appeals to the Full Court of the Supreme Court and to this Court.

The question raised in this appeal is whether the first appellant, Laurinda Pty. Ltd. ("the lessee"), has rescinded an agreement for lease between it and the respondent, Capalaba Park Shopping Centre Pty. Ltd. ("the lessor"). The lessee's obligations were guaranteed by its directors, the second appellants, John Ahern, Elizabeth Joan Ahern, John Norman Holdway and Suzanne Jann Holdway ("the guarantors"). If the lessee rescinded the agreement it is entitled to judgment and orders as made at first instance by the Supreme Court of Queensland (Connolly J.). If it did not, the lessor is entitled to the judgment and orders, the subject of the present appeal, made by the Full Court of the Supreme Court consequential upon the allowing of an appeal by the lessor from the decision and orders of Connolly J.

It is necessary to refer in some detail to the facts and the terms of the agreement. The agreement is embodied in a deed of agreement executed on 31 October 1985 by the lessor, the lessee and the guarantors. The deed of agreement recites that the lessor then proposed to construct or was then in the course of constructing a retail centre upon certain land at Capalaba and that the lessor had agreed to grant and the lessee had agreed to take a lease of certain premises forming part of the centre, those premises being identified on a plan annexed to the deed. Clause 6.1 of the deed is in these terms:

The Lessor will grant and the Lessee will accept a lease of the Demised Premises for the term and with and subject to the covenants and provisions set forth in the form of lease annexed hereto marked "B" ("the Lease") to commence on the earlier of the two following dates namely -

(b) the date on which the Lessee opens the Demised Premises for business.

Annexure "B" (hereafter called "the lease") is a document in form which, if properly completed, is capable of registration as a lease under the Real Property Act 1861 Q. and Real Property Act 1877 Q.. By cl. 1.55 of the lease, provision is made for the payment by the lessee of, inter alia, "stamping and registration of this Lease and any necessary consent hereto from any mortgagee of the Land ". The term of the lease is specified as six years. As events transpired, the official opening date was 1 December 1985 and the lessee opened for business on 3 December 1985.

Clause 6.2 of the deed provides for the annexed lease and two counterparts to be executed by the lessee contemporaneously with the deed and to be delivered to the lessor's solicitors who are thereby irrevocably authorized, empowered and directed "upon the date of commencement of the Lease or so soon thereafter as is practicable to complete the Lease " (emphasis added) by inserting the date of commencement and termination, a plan of the demised premises in a form acceptable to the office of the Registrar of Titles, the yearly rental and monthly instalments, any necessary formal matters and the date, and by signing the lease correct for the purpose of registration on behalf of the lessee. The lease was executed by the lessee and delivered to the lessor's solicitors as provided.

Clause 13 of the deed is a guarantee by the guarantors of "the due observance and performance of all the terms covenants and conditions on the part of the Lessee herein". The guarantors also executed a separate deed of guarantee, bearing date 8 October 1985, guaranteeing the lessee's obligations set forth in the lease annexed to the deed.

Pausing at this point, the terms of cl. 6.2 of the deed, the form of the lease annexed to the deed and the terms of cl. 1.55 of the lease make it clear that performance by the lessor of its obligation under cl. 6.1 involved, at the very least, the execution and delivery to the lessee of a registrable lease. The time of performance and the respective rights of the lessor and lessee pending performance were elaborated in cl. 15.7 of the deed in the following terms:

The obligations of the Lessor and the Lessee are not conditional or in any way dependent upon the preparation and execution of the Lease and are not affected by any default or delay in or waiver or extension of time for the preparation and execution of the Lease, but despite the non-completion of the Lease, from and after the date of commencement and throughout the term of the Lease, the Lessor will be bound to perform all its obligations and the Lessee will be bound to perform all its obligations in each case as set out in this Deed and the Lease.

Clause 15.7 has the effect that "default or delay in the preparation and execution of the Lease" and "non-completion of the Lease" (which expression, having regard to the authorization in cl. 6.2 "to complete the Lease", would seem to refer to the insertions and signings necessary to render the lease registrable) do not of themselves constitute grounds for the non-performance of the obligations contained in the deed. However, cl. 15.7 does not relieve the lessor from the obligation to execute and deliver a registrable lease for it expressly provides that the lessor remains "bound to perform all its obligations as set out in [the] Deed and the Lease". This last consideration and the general rule that reasonable time will be implied when none is expressly provided (see Reid v. Moreland Timber Co. Pty. Ltd. [72] ) require that cl. 15.7 be construed as permitting default and delay in the execution of the lease and non-completion of the lease only for a reasonable time after the agreed commencement date. In this Court, it was accepted by the lessor that the agreement obliged the lessor to deliver a registrable lease within a reasonable time. That position approximates, but is not precisely the same as, the one I would adopt as the proper meaning of cl. 15.7.

As earlier mentioned, the lessee commenced business in that part of the centre the subject of the agreement and the intended lease on 3 December 1985. On 3 January 1986 the lessee paid to the lessor's solicitors $2,317 being the fees and outlays estimated by the solicitors for the registration of the lease. It seems that at some time a request was made to the lessor's solicitors for a copy of the lease, for on 14 March 1986 a letter was forwarded on behalf of the directors of the lessee (as previously noted, they also being the guarantors) to the lessor's solicitors requesting a copy of the lease and observing that the directors "consider that four months is a reasonable time for you to have complied with their request particularly as they were under pressure by you to execute the lease without adequate time to study the provisions of such lease".

The letter of 14 March elicited a reply dated 25 March: the documents had been forwarded to Melbourne for execution by the lessor in October 1985 and had not yet been returned; advice had been received that they had been executed; it was expected that they would be returned in the not too distant future. The reply concluded with an assurance that the lessee's stamped parts would be provided "as soon as we are able to".

By 21 April it had come to the attention of the lessor's agent that the lessee was interested in assigning its lease if a purchaser for its business could be found. However, nothing further was heard from the lessor or its solicitors as to the steps being taken to render the lease registrable. On 21 August 1986 a letter was forwarded by the solicitors acting for the lessee and its directors/guarantors to the lessor's solicitors stating that searches revealed that the lease had not been registered. The letter noted that ten months had elapsed since the documentation was completed, that registration was of critical importance for the safeguarding of rights of tenure, and that sufficient funds had been paid to allow registration to be effected by the lessor. The letter then stated: "In [the] circumstances, and in view of the unexplained and lengthy delay, it appears reasonable that our clients require your client to complete registration within fourteen days from the date hereof." The letter proceeded to assert that in the event registration was not completed within the fourteen days the lessee and the guarantors "reserve their rights in respect of your client's default". The letter was received by the lessor's solicitors on 22 August. On 3 September (the twelfth day following receipt of the letter of 21 August) the lessor's solicitors responded acknowledging receipt, and indicating that they had forwarded a copy of the letter to the lessor for its response and that they would advise of their client's instructions when received.

On 5 September the solicitors for the lessee and guarantors replied to the letter of 3 September, noting (correctly, in my view) that the letter of 3 September was totally unresponsive to the justifiable concern of their clients about registration and that the long delay was unexplained. The letter proceeded to characterize "this failure to respond adequately in the time limit [sic] by our letter of 21st August 1986" as "a repudiation of the implied undertaking by your client to secure registration of the lease within a reasonable period". The letter concluded by advising that the lessee and the guarantors "no longer regard themselves as bound by the Lease and Guarantee".

The present proceedings were instituted by the lessee and guarantors on 31 October 1986. During the hearing it was ascertained that the lessor's solicitors filled in the blanks in the lease form in January 1987, but did not, even at that late stage, insert the plan identifying the demised premises as was required for registration. Nor was the consent of the lessor's mortgagee, also necessary for registration, by then endorsed on the lease. The only explanation ever proffered for the delay in completion of the lease was proffered in the course of the hearing: the lessor was giving consideration to a reorganization of its finances involving the discharge of the existing mortgage over the shopping centre and the registration of a new mortgage.

At first instance Connolly J. held that the letter of 21 August 1986 did not constitute an effective notice to complete entitling the lessee to rescind for breach of a term thereby made essential as to time. His Honour considered the letter defective in so far as it failed to indicate the course of action intended to be taken by the lessee in the event of default: see Balog v. Crestani [73] . His Honour added that he was "far from persuaded" that it was insufficient as to time. However, his Honour held that the lessee was entitled to regard the lessor's conduct as repudiatory and to treat the contract as discharged. On appeal, the Full Court (Matthews, Carter and Dowsett JJ.) found both these issues in favour of the lessor. Their Honours held that the delay of the lessor did not constitute repudiation and that an effective notice to complete (which Connolly J. found had not been given) was necessary to entitle the lessee to rescind.

It may at once be noted that the letter of 5 September did not assert that the lessor's delay amounted to repudiation. Instead, it asserted that the "failure to respond adequately in the time limit [sic] by our letter of 21st August 1986" constituted repudiation. Of course, if the delay of the lessor is itself a matter entitling rescission, the letter of 5 September effected that result: Shepherd v. Felt and Textiles of Australia Ltd. [74] .

Although there is much criticism of the terms used (see, e.g., Jane Swanton, Discharge of Contracts for Breach, Melbourne University Law Review, vol. 13 (1981), p. 69) and suggestions that the terms may give expression to distinctions lacking any real difference (see, e.g., Kirby P. in J. & C. Reid Pty. Ltd. v. Abau Holdings Pty. Ltd. [75] ) the generally accepted formulation of the relevant law is that a party to a contract may elect to bring the obligations arising under that contract to an end in the event of repudiation, fundamental breach or breach of an essential term by the other party to the contract: see Shevill v. Builders Licensing Board [76] ; Stern v. McArthur [1] ; J. W. Carter, Breach of Contract (1984), pp. 60-61. For reasons founded in equitable principle, failure to perform an obligation which is otherwise fundamental or essential on a stipulated date or, if no date be stipulated, within a reasonable time does not entitle the other party to bring the contractual obligations to an end unless the time of performance is expressly or impliedly made essential by the contract or is made essential by an effective notice to complete: Carr v. J. A. Berriman Pty. Ltd. [2] ; Louinder v. Leis [3] ; Stern v. McArthur [4] . Given the difficulty inherent in the idea that a notice to complete can add to or alter the effect of a contractual stipulation, there is much to be said for the view that failure to comply with a notice to complete (whether that failure is on the part of the giver or the recipient) is properly to be seen as evidence of unwillingness or inability to perform the contract and hence as amounting to repudiatory conduct: see Louinder v. Leis [5] , per Mason J.; per Brennan J. [6] . See also Stern v. McArthur [7] , per Brennan J. If that be so, requirements as to form and time for an effective notice to complete are no more than those which are necessary in the particular circumstances of the case to constitute non-compliance with the notice evidence of unwillingness or inability to perform the contract, a view which seems to be implicit in Balog. Because I have formed the view that the lessor's delay coupled with failure to make adequate response to the letter of 21 August constitute repudiation entitling the lessee to terminate the obligations under the agreement, it is unnecessary to decide whether that letter constitutes an effective notice to complete. However, I should say that, in my view, neither the failure to effect registration of the lease nor the failure to tender a registrable lease within the time limited by that letter could be characterized as repudiatory conduct. Put in other words, the time limited by the letter was not sufficient to constitute failure to register the lease or failure to tender a registrable lease within that time evidence of unwillingness or inability to perform the contract.

1. [1988] N.S.W. Conv. R. 55-416. 2. (1982) 149 C.L.R. 620, at pp. 625-626. 3. (1988) 165 C.L.R. 489, at pp. 509-511. 4. (1953) 89 C.L.R. 327, at pp. 348-349. 5. (1982) 149 C.L.R. 509, at pp. 512, 519-520, 529, 532-533. 6. (1988) 165 C.L.R., at pp. 509-511, 520-521. 7. (1982) 149 C.L.R., at p. 526. 8. (1982) 149 C.L.R., at pp. 533-536. 9. (1988) 165 C.L.R., pp. 520-521.

The present matter has at all stages been conducted on the basis that the agreement between the lessor and the lessee did not make time essential for the delivery of a registrable lease. That assumption is open to question. In Perri v. Coolangatta Investments Pty. Ltd. [8] Mason J. pointed out that "[t]here is a natural reluctance on the part of courts to classify a provision which looks to the happening of an event within a reasonable time as one which makes time of the essence, more particularly when that time is implied and is not expressed". As his Honour then pointed out "it is undesirable that the rights of the parties should rest definitively and conclusively on the expiration of a reasonable time, a time notoriously difficult to predict". The force of these observations is obvious, but the observations do not deny the possibility of a provision being so construed, including by resort to necessary implication. In the context of the construction I would adopt of cl. 15.7 of the deed one particular factor suggests that such an implication might properly be made in the present case. The lessee's obligations contained in the deed were the subject of a guarantee embodied in that deed. Clause 15.7 of the deed imported the obligations of the lessee set out in the annexed form of lease, and those obligations are thus the subject of the guarantee contained in the deed, although, it seems, they would on execution and completion of the lease, become the subject of the separate guarantee in the deed of guarantee bearing date 8 October 1985. While the lease remained unregistered - as it must if there were delay or default in execution or if it remained uncompleted - the guarantors' rights of subrogation were limited to those rights of the lessee flowing from the deed. In the event of registration those rights would extend to the lessee's rights flowing from the registered lease. This consideration and the special nature of the relationship between creditor and surety (as to which see Ankar Pty. Ltd. v. National Westminster Finance (Australia) Ltd. [9] ) are persuasive indications of the essentiality of the delivery of a registrable lease within a reasonable time of the commencement date specified in cl. 6.1 of the deed. The fact that these matters were not advanced in support of the essentiality of delivery of a registrable lease within a reasonable time does not deprive them of all significance: they provide part of the context in which the lessor's conduct falls for characterization as repudiatory or otherwise.

1. (1982) 149 C.L.R. 537, at pp. 554-555. 2. (1987) 162 C.L.R. 549.

There is no very precise formulation of the necessary import of conduct before it will be characterized as repudiatory. In Carr [10] Fullagar J. (with whom Dixon C.J., Williams, Webb and Kitto JJ. agreed) expressed the issue in terms of the only legitimate inference being that the party in breach was not going to perform the contractual obligation at all or was not going to perform it unless and until convenient so to do. His Honour characterized the conduct under consideration in that case as such that "[a] reasonable man could hardly draw any other inference than that the building owner does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him" [11] . The thrust of the observations in Carr is that for conduct to be characterized as repudiatory it should either convey an intention not to be bound at all or give rise to uncertainty as to whether the contractual obligation will be performed. But a less restricted view has developed. In Shevill [12] Gibbs C.J. (with whom Murphy and Brennan JJ. agreed) referring, inter alia, to the decision in Carr, identified the manifestation of an intention "to fulfil the contract only in a manner substantially inconsistent with [the] obligations and not in any other way" as conduct constituting repudiation. That statement was accepted as correct in Progressive Mailing House Pty. Ltd. v. Tabali Pty. Ltd. [13] . It was expressly recognized in Carr [10] that breach which did not itself entitle the other party to rescind might remain unremedied for so long and in such circumstances as to constitute repudiation: see also Associated Newspapers Ltd. v. Bancks [14] ; Tabali [15] , per Brennan J.

1. (1953) 89 C.L.R., at p. 349. 2. (1953) 89 C.L.R., at p. 351. 3. (1982) 149 C.L.R., at pp. 625-626. 4. (1985) 157 C.L.R. 17, at pp. 33, 44. 5. (1953) 89 C.L.R., at p. 349. 6. (1951) 83 C.L.R. 322, at pp. 339-340. 7. (1985) 157 C.L.R., at p. 40.

In the present case breach occurred as soon as a reasonable time for delivery of a registrable lease had expired. At first instance Connolly J. held that by 21 April 1986 "[t]he situation had gone beyond one of dilatoriness on the part of the lessor which could cause no real prejudice to [the lessee]". From this I infer that his Honour was also holding that a reasonable time for performance had then expired. In any event, there is nothing in the materials to suggest that delivery of a registrable lease could not have been effected within that period, even if matters had proceeded with no more than leisurely dispatch. Accordingly, in my view, there was a breach not later than 21 April.

Mere failure to deliver a registrable lease within a reasonable time of the agreed commencement date could not itself amount to the manifestation by the lessor of an intention to render performance only in a manner inconsistent with its obligation. But in the present case the relevant considerations extend far beyond the mere breach. The breach remained unremedied for a very substantial period of time in circumstances which did not themselves suggest any explanation for the failure to remedy, in which explanation was never proffered and in which performance was never offered. The failure to proffer explanation or offer performance occurred in circumstances in which the lessor's agent knew or ought to have known that failure to remedy the breach had the potential to cause serious prejudice to the lessee and in which the lessor must have known that the guarantors' rights of subrogation to a registered lease would be held in abeyance until registration was effected. By 21 August the only inference reasonably available to the lessee was that the lessor intended to perform the contract only in a manner inconsistent with its obligation.

The letter of 21 August was sufficient to alert the lessor to the fact that the lessee and its guarantors were insisting upon performance by the lessor of its contractual obligation, an obligation which, although it has been treated as non-essential as to time, was otherwise the very essence of the contract. Failure to respond to that letter with either an explanation for the delay or an offer of speedy performance was all that was further necessary to convey to the lessee, as the only reasonably available inference, that the lessor intended to render performance only in a manner substantially inconsistent with its obligation. The lessor's conduct constituted repudiation which the lessee was entitled to and did accept.