Lombok Pty Ltd v. Supetina Pty Ltd & Anor [1987] FCA 79

3. The cross-appeal be dismissed. 4, The appellants Supetina Pty. Limited and Avionne

Joy Vincent pay the respondent's costs of and incidental to the appeal to be taxed.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

CONTRACT - whether repudiated by institution of proceedings - party rescinding while in breach of contract - both sides' rescissions

ineffectual - contract abandoned - recovery of deposit and "interest" paid.

COSTS - appeal - costs of issues on which successful party failed. VENDOR AND PURCHASER - Queensland - "instalment contract" - statutory

restriction on rescission - recovery of money paid under uncompleted contract.

Property Law Act 1974 (Qld.) ss. 71, 72 Trade Practices Act 1974 (Commonwealth) s.52 & 53A

CORAM: FISHER, LOCKART & PINCUS JJ. BRISBANE 27 FEBRUARY 1987

) ) QUEENSLAND DISTRICT REGISTRY ) No. G 78 of 1986 ) )

GENERAL DIVISION QN APPEAL FROM_A SINGLE JUDGE QF THE FEDERAL COURT OF AUSTRALIA

27 FEBRUARY 1987 Fisher J.: In this matter I have read in draft the reasons for

judgment of Lockhart J. and Pincus J. and I agree with the

conclusion of each of them that the appeals should be dismissed.

Iam indebted to them for their statements of the facts and

The most contentious issue in this matter was whether, the contract of sale having been abandoned, the interest which had been paid in accordance with the terms of the contract should be repaid by the vendor to the purchaser. The trial judge was of

opinion that ait should be refunded and inmy opinion he was

"There remains only the claim for the return of the 25 rounds deposit. That having heen deposited on the special terms of the written contract and that contract having been in law terminated, not by virtue of any provision contained therein but by virtue of tacit mutual abandonment, the abandonment must include abandonment of the right to retain the 25 pounds any longer. This, then, belongs to one of the plaintiffs... I may add that unless the contract is terminated the claim for the 25 pounds must fail."

Three members of the High Court in D.T.R. Nominees Pty.

Ltd. v Mona Homes Pty. Ltd. (1978) 138 C.L.R. 423 said on page 434:

"Thus the contract in the present case was still on foot on and after 25th July 1974. Neither party had effectively rescinded. But there can be no doubt that by Sth December 1974, when these proceedings were commenced, neither party, whatever may have been their reasons, regarded the contract as being still on foot. Neither party intended that the contract should be

further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract. The position is similar to that with which Isaacs J. dealt in Summers v The Commonwealth (1918) 25 C.L.R. 144. The plaintiff did not succeed in his action for damages for breach of contract, but on the other hand the defendant had not rescinded. Time passed during which neither party took any steps to perform the contract. It was held that the parties had so conducted themselves as mutually to abandon or abrogate the contract.

A consequence of this abandonment and abrogation was held by Isaacs J. (1918) 25 C.L.R. at p.153 to be that the deposit was returnable. Likew1se the deposit is returnable by the appellant to the resondents in the Present case."

In my opinion that decision applies a fortiori to the return of the deposit in this matter. The further question 15 whether 1t requires that the interest paid under the terms of the contract should be refunded, that contract having ex hypothes1

Neither Isaacs J. nor the members of the Court in the D.T.R. case found it necessary to identify the principle of law in accordance with which the deposit vas returnable. This principle, if identified, could be applicable to the interest. Certainly there was no indication that 1t was the principle which enables a Court of Equity to grant relief against forfeiture of instalments (other than the deposit) which on default by the purchaser the vendor is, under the terms of a contract, entitled

to retain. (See Pitt v Curotta (1931) 31 S5.R. (N.S.W.) 477 per

In McDonald v Dennys Lascelles Ltd (1933) 48 C.L.R. 457

the majority of the High Court granted such relief in circumstances where the contract was determined by the vendor's election to treat the purchaser's default as a discharge. In the present case however the contract was determined by mutual

Dixon J. (as he then was) at p.477 of that case referred

inferentially to mutual determination when he cited extracts from

"'The very idea of payment falls to the ground when both have treated the bargain as at an end; and from that moment the vendor holds the money advanced to the use of the purchaser' (Palmer v Temple (1839) 9 Ad. & E. at pp.529, 521; 112 E.R., at p.1309). In Laard v Pim (1841) 7 M. & W., at p.478; 151 E.R., at p.854) Parke E. says: 'It 1s clear he cannot have the land and its value too'';..."

It 1s self evident that the repayment of the deposit in Summers case and the D.T.R. case was not pursuant to a contractual obligation, there being no such term in the contracts. In any event, the contracts were no longer on foot. The obligation to refund would appear to be an application of the

concept of unjust enrichment and thus would lie, in the words of

Lord Wright 1n Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe

Barbour, Ltd. £1943] A.C. 32 at page 61, "within a third category of the common law which has been called quasi-contract or

restitution". In Chitty on Contracts 25th Edit. para 10 the

authors cite from Goff and Jones, The Law of Restitution (2nd ed.) p.l as follows:

"The law of restitution is the law relating to all claims, quasi-contractual or otherwise, which are founded upon the principle of unjust enrichment."

The authors continue with this sentence: "Such claims are not dependent upon the existence of any

contract, express or aimplied, between the person enriched and the person at whose expense the enrichment

obligation to repay under the principle of restitution or unjust

enrichment in Brooks' Wharf and Bull Wharf Limited v Goodman

Brothers £19373 1 K.B. 534 at 545 as follows: "These statements of the principle do not put the obligation on any ground of implied contract or of constructive or notional contract. The obligation is

amposed by the Court simply under the circumstances of

the case and on what the Court decides is just and reasonable, having regard to the relationship of the

parties. It 1s a debt or obligation constituted by the act of the law, apart from any consent or intention of the parties or any privity of contract."

In the present matter the decisions in Summers case and the D.T.R. case are exactly on point i1n respect of the deposit and conclusive authorities for its return to the purchaser. By ordering its return the decisions are examples of the application of the law of restitution. The vendor has in consequence of the abandonment been relieved of its obligation to sell and transfer

the land, the possession of which, to the exclusion of the

purchaser, it retained at all times. The vendor now having the

land unencumbered by the contract, 1t can be said that it is not just or reasonable for it to retain any benefit which it acquired pursuant to the terms of the contract. The reasoning which requires repayment of the deposit 1s equally applicable to the interest, the retention of which "unjustly enriches" the vendor. So long as the contract was on foot the vendor had, in accordance with its terms, the benefit of the use of the purchaser's deposit and the interest. There now being no contract on foot, it is

appropriate for the parties to be returned to their original

Furthermore there is no reason in principle why the

interest should not, along with the deposit, be repaid. It is, as Pancus J. says, unusual for a vendor to have poth possession

(of rents and profits) of the subject land and interest on the

balance purchas® money. The author of Voumard, The Sale of Land

"... the general principle of equity being that a vendor 1s net at the same time to have possession of the land and anterest on any outstanding balance of the purchase Money"

This principle 1s also referred to in Fry on Specific Performance 6th Edit. at p.640 para.1399 as follows:

"Now 1t is obviously inequitable, ain the absence of express and distinct stipulation, that either party to the contract should at one and the same time enjoy the benefits flowing from possession of the property and those flowing from possession of the purchase money. The estate and the purchase money are things mutually exclusive. 'You cannot,' said Knight Bruce (then) V.C. in a case arising out of some siob lands in Chichester Harbour 'have both money and mud'. And so neither

party can at the same time be entitled both to interest and to rents."

As acknowledged, the principle is subject to an express stipulation to the contrary in the contract. Both the author of Voumard and of Fry on Specific Performance insist that this

stipulation be express and distinct. The contract in the present

aunstance having been abandoned by the parties and the vendor

retaining and having at all times retained the "mud", there 15 no ground in my opinion for it also to retain either the deposit or the interest, which amounts were only paid pursuant to the terms

the 6 preceding pages are a true copy of the Reasons for Judgment of Mr Justice

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN : LOMBOK PTY. LIMITED Appellant AND: SUPETINA PTY. LIMITED and

BETWEEN : SUPETINA PTY. LIMITED and AVIONNE JOY VINCENT Appellants AND: LOMBOK PTY. LIMITED Respondents COURT: FISHER, LOCKHART and PINCUS JJ. DATE: 27 FEBRUARY 1987

This appeal and cross-appeal from the judgment of a single Judge of this Court (Spender J.) primarily concerns the question whether the commencement of proceedings in this Court's original jurisdiction by the purchaser of land constituted in all the

circumstances a repudiation of two contracts for the sale of the land,

entitling the vendor to rescind. Questions as to the return of

payments of interest made under the contracts and costs also arise.

The trial was concerned not only with these questions but

also with alleged misrepresentations under s. 52 of the Trade

Practices Act 1974, a claim for negligent mis-statement and questions of agency. The respondent, Supetina Pty. Limited ("Supetina"), the purchaser of the land, alleged that the appellant, Lombok Pty. Limited ("Lombok"), the vendor of the land, had made certain misrepresentations through its agents to Supetina which constituted

misleading or deceptive conduct under s. 52 of the Trade Practices Act

and negligent mis-statements under the general law.

Kenneth Cyril Guy is a real estate agent at Maroochydore trading under the name "Ken Guy Real Estate". John Ronald Bryant is a real estate salesman employed by Mr. Guy. The statement of claim alleged, in the alternative, that Mr. Bryant was the agent of Lombok or Mr. Guy; that Mr. Guy was engaged by Lombok to sell the land; that he was authorised by 1t to make certain representations in relation to the sale of the land; and that he was authorised by Lombok and/or Mr. Guy to make representations concerning the land. Avionne Joy Vincent, a respondent, was described by the learned trial Judge as "the

controlling force behind" Supetina and the person to whom it was

alleged the representations were made concerning the land.

The land 1s industrial land at Maroochydore on the Sunshine

Coast of Queensland. Two contracts of sale for separate parcels of

land were executed by Lombok and Supetina. Each contract is dated 6 August 1981 and provides for a purchase price of $375,000 and contains a clause for payment of a deposit of $3,750. The date for completion of the contract 1s stated as "5th day of October, 1985 or such earlier

The $3,750 1s really an initial payment of a larger deposit of $37,500. Special Condition 24 provides that Supetina shall pay to Lombok $33,750 on 5 October 1981 in payment of the balance of the deposit payable and 1n part payment of the purchase price. In order to secure payment of the balance of purchase moneys payable to Lombok the parties agreed to execute a "Letter of Escrow" authorising Lombok's solicitor to hold the title deed and memorandum of transfer duly executed by Lombok in favour of Supetina together with certain other documents for the benefit of Lombok. Special Condition 24

further provided that Supetina shall pay interest only on the unpaid

settlement moneys at the rate of 16 per cent per annum payable by equal quarterly payments of $13,500 each on 5 January, April, July and October each year commencing on 5 January 1982 and continuing

thereafter until 5 January 1985 whereupon the whole of "the principal

sum" together with interest shall become payable in full.

Notwithstanding the provisions of Special Condition 24 Supetina may, pursuant to Special Condition 25, give notice to Lombok in writing of its election to pay a further 5 per cent of the purchase moneys on certain dates in any year up to and including 5 January 1985

whereupon Supetina shall hand to Lombok a Bill of Encumbrance duly

executed by Supetina together with personal guarantees executed by Miss Vincent and a Mr. Vincent to secure payment of the balance of

Also on 6 August 1981 two forms of "guarantee and indemnity" each directed to Lombok were signed by Miss Vincent as guarantor guaranteeing Lombok the due and punctual performance and observance of all the obligations, agreements and stipulations of Supetina under the contracts for sale including the payment of all moneys payable

Although the obligations of the guarantor are expressed in the plural and the documents are in a form which assumes the existence of two guarantors as joint and several guarantors, in fact each guarantee was executed only by Miss Vincent. Nothing appears to turn

Also on 6 August 1981 two forms of guarantee were executed by Rodney Parry and Diana Margaret Parry. Mr. and Mrs. Parry were directors and shareholders of Lombok. Each of them guaranteed to Supetina jointly and severally the due and punctual performance and observance of all of Lombok's obligations, agreements and stipulations under the contracts for sale and guaranteed and indemnified Supetina 1n relation to substantially the same kind of matters that were

covered by the guarantees in favour of Lombok executed by Miss

On 5 January 1983 the contracts were varied, inter alia, by

Following the intention of the Main Roads Department to acquire part of the land, Lombok and Supetina entered into a deed in respect of the two properties dated 4 May 1983. The deed was the result of an agreement reached concerning the investment of compensation moneys. It provided, inter alia, that the date by which Supetina was to pay Lombok the balance of purchase moneys and interest thereon was extended to 5 January 1986 (clause 7); that interest in arrears on the unpaid balance of the purchase price was to be calculated on quarterly rests at the rate of 10 per cent per annum (clause 8(1)) and for the making of certain other interest payments

and payments akin or equivalent to interest (clause 3(11)).

Supetina farled to make some of the payments under the contracts. On 17 September 1982 Lombok issued a Notice of Default in respect of an instalment due on 6 July 1982. Supetina subseguently paid that instalment and payment was accepted by Lombok. Other payments were not made by Supetina, but no notice of default was given. Supetina argued that the failure to make those further

payments was explicable because 1t had a cross-claim or set off.

The learned trial Judge held that each of the contracts was an "instalment contract" as defined by s. 71(2)(b) of the Property Law

"an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to recelve a conveyance in

That finding was in accordance with the decision of the High Court in

Wacal Developments Pty. Limited v. Realty Developments Pty. Limited

(1978) 140 C.L.R. 503. Section 72 of the Property Law Act restricts a vendor's right .to terminate a contract "by reason of default on the part of the purchaser in payment of any instalment or sum of money (other than a deposit or any part thereof) due and payable under the contract" until thirty days after service of a notice in the prescribed form. His Honour found that this statutory restriction on the vendor's right to terminate had no application in the present case because Lombok did not purport to determine the contracts by reason of Supetina's failure to pay. Lombok purported to rescind the contracts on the ground that Supetina''s action in Dringing 1ts application in this Court was sald to repudiate the contracts. Lombok's purported rescission of the contracts was made by letter dated 2 March 1984 from Lombok's solicitors to Supetina's solicitors which, so far as

"We refer to your client's application dated 13 January 1984, and in particular the relief sought

contracts dated 6 August 1981 between the first applicant and the first respondent and we hereby give you notice that the first respondent has

We enclose request for further and better particulars of the amended statement of claim by way of service on you."

Supetina's solicitors replied to Lombok's' solicitors by

letter of 28 May 1984 (incorrectly dated 28 May 1983) which provided:

unlawfully repudiated the above contracts. Since that date your client has continued to assert that 1t has lawfully terminated the contacts [sic] and has made it clear that 1t would not perform in

accordance with their terms 1f 1t should be called upon to do so,

Our client hereby accepts your client's repudiation and rescinds the contracts."

The learned trial Judge found against Supetina in so far as

its case was based on misrepresentations in contravention of s. 52 of

the Trade Practices Act and under the general law. His Honour found

that Lombok purported to rescind the contracts because of Supetina's action in instituting these proceedings in this Court. He held that Lombok was not justified ian taking this course in view of the decisions of the Court of Appeal of the United Kingdom in Spettabile

Consorz10 Veneziano di Armamento E Navigazione v. Northumberland

Shipbuilding Co. Limited (1919) 121 L.T. 628 and the later decision of

the House of Lords in Woodar Investments Development Limited v. Wimpey

Construction U.K. Limited (1980) 1 W.L.R. 277. His Honour distilled

from those cases a general rule that the commencement of proceedings cannot be taken to be an absolute repudiation of a contract unless the proceedings are commenced in such circumstances as to make 1t plain that the party commencing them evinces an intention not to be bound

"in any event" and regardless of an adverse decision of the Court.

His Honour found that Supetina''s conduct did not satisfy this test.

H1s Honour held that Lombok was not justified in treating the application to this Court as a repudiation of the contracts as 1t maintained in the letter from its solicitors of 2 March 1984 and that this conduct constituted a repudiation of the contracts. His Honour then considered the question whether Supetina was entitled to rely upon Lombok's ineffective rescission of the contracts as itself an act of repudiation entitling Supetina to rescind as 1t purported to do by the letter of 28 May 1984. His Honour held that Supetina was not entitled to rescind because on 28 May 1984 1t was in breach of some of 1ts obligations under the contracts, namely, non-payment of interest due thereunder for July and October 1983 and January 1984. His Honour found that the conduct of the parties showed that by the time the matter came to trial neither party intended that the contracts should

Supetina claimed recovery of moneys paid as deposit and interest under the contracts. His Honour said that this guestion was

governed by Summers v. The Commonwealth (1918) 25 C.L.R. 144 where the

High Court said that the parties so acted in relation to each other as to abandon or abrogate the contract. His Honour found that in consequence the deposit moneys were returnable. His Honour followed

the course adopted by the High Court in D.T.R. Nominees Pty. Limited

v. Mona Homes Pty. Limited (1978) 138 C.L.R. 423 (where a deposit was

involved) and ordered the return of the instalments of interest, but made no order for payment of interest thereon. He found that, if

contrary to his findings, Supetina had repudiated the contracts and

Lombok had thereupon lawfully rescinded, Supetina would have been entitled to the return of the instalments of interest paid subject to any claim for damages by Lombok. He relied in that regard upon

McDonald v. Dennys Lascelles Limited (1933) 48 C.L.R. 457 at pp.

477-8. His Honour held that a fortiori Supetina would be entitled to those moneys 1f 1t had not repudiated the contracts but the contracts

had terminated for some reason other than its default.

His Honour made the following orders and declarations:

A declaration that the two contracts are "at an end";

An order that, subject to certain conditions, Lombok pay to

Supetina the sum of $221,563.37 being the total of the deposits paid and the interest payments under the contracts;

An order that Supetina and Miss Vincent pay the costs of Mr. Guy and of Mr. Rryant and one-half of the costs of Lombok;

An order, pending taxation of the various costs of the respondents, that Supetina pay into Court the sum of $221,563.37 to be invested by the Registrar in an interest bearing deposit account in a bank or building society of his choosing; and

An order that, upon taxation of the various respondents' costs, the costs of Lombok be first paid out of the moneys paid into Court and thereafter the costs of Mr. Guy and Mr. Bryant be paid out of the balance thereof and thereafter any

balance remaining be paid out to the solicitors for Supetina.

Lombok appealed to this Full Court against his Honour's orders 2 and 4 above and so much of order 5 as related to the costs of

By 1tsS cross-appeal Supetina and Miss Vincent appealed against the order of the trial Judge that they pay one-half of Lombok's taxed costs of the proceedings and the fa1lure of his Honour to order that Lombok pay to them interest on the sum of $221,563.37

I turn to the primary question whether the commencement of

proceedings in this Court by Supetina constituted a repudiation of the

Although the letter from Lombok's solicitors to Supetina's solicitors of 2 March 1984 expressed the basis of Lombok's purported rescission as Supetina's application to this Court, in particular the relief sought in paras. (a) to (g) thereof, the application was filed together with a statement of claim of the same date and it appears that each was served at the same time. The opening words of the application state that the grounds upon which the relief 1s sought appear in the accompanying statement of claim. The statement of claim

"AND the Applicants claim the relief specified in the Application."

ll. It 1s clear from the terms of the letter of 2 March 1984 itself that the statement of claim had by then been amended pursuant to an order of the Court made on 13 February 1984, the amended statement of claim having been filed on 20 February 1984; and it should be noted that Supetina's defence and cross-claim was filed on 5 March 1984. A further amended statement of claim was filed on 23 March 1984 pursuant to leave granted by the Court on 8 March 1984. Hence, on 2 March 1984 1t 1s obvious that what Lombok was asserting as uts ground for rescission was the wrongful repudiation of the contracts by Supetina's commencement of the proceedings and that the terms of the allegations and relief sought were to be gathered from the application, the original statement of claim and the statement of claim as first amended on 20 February 1984. This is how I think the matter must be approached and how I propose to consider the questions that arise in

In Spettabile (supra) Atkin L.J. said at pp. 634-5:

"AK repudiation has been defined in different terms

• by Lord Selborne as an absolute refusal to perform a contract; by Lord Esher as a total refusal to perform 1t; by Bowen L.J. in Johnstone v. Milling as a declaration of an intention not to carry out a contract when the time arrives, and by Lord Haldane in Bradley v. H. Newsum, Sons & Co., Ltd. as an intention to treat the obligation as altogether at an end. They all come to the same thing, and they all amount at any rate to this, that 1t must be shown that the party to the contract made quite plain his own intention not to perform the contract."

In Woodar Investment Development Limited Vv. Wimpey

Construction U.K. Limited (supra) Lord Wilberforce said at p. 283:

"Repudiation 1s a drastic conclusion which should only be held to arise in clear cases of a refusal,

in a matter going to the root of the contract, to perform contractual obligations."

These principles have been considered and applied in many

cases, I need refer only to Heyman v. Darwins Limited [1942] A.C.

356; James Shaffer Limited v. Findlay Durham Brodie [1953] 1 W.L.R.

106; Sweet & Maxwell Limited v. Universal News Services Limited

[1964] 2 ©0.B. 699 and Tsoa-Lee & Anor. v. Urban Real Property

An examination of the cases shows general acceptance of the same principles, though differently expressed, but marked differences in the facts of the cases on which they turned. The question whether Supetina manifested an intention to abandon or to refuse future performance of or to repudiate the contracts is essentially one of fact, so citation of other decided cases on other facts when the

Whether the commencement of the proceedings constituted repudiatory conduct by Supetina must be determined in the light of the circumstances. Supetina had failed without explanation to pay three quarterly amounts of interest (due on 6 July and 6 october 1983 and 6 January 1984) and totalling $50,625. Those failures followed earlier failures to pay interest on time, though some of them had been

rectified after Lombok issued a notice of default on 17 September

In about mid 1983 Miss Vincent learnt that the value of the land was considerably less than she had paid for 1t. The trial Judge noted as a notorious fact that after the date on which the contracts were signed in this case there was a sharp decline in the value of land on the Sunshine Coast of Queensland and that this state of

affairs continued at the time of the relevant events in this case.

The application and the statement of claim came out of the blue, unheralded by the correspondence, assertion and counter

assertion that customarily precedes the issue of legal process.

The allegations in the amended statement of claim were that Mr. Bryant, on behalf of Lombok, made various representations to Supetina in connection with the price of the land, the existence of approved development plans and the progress with which construction of buildings on the lands could proceed; that Supetina relied on the various representations and advices which had been made and given to at in entering into the contracts and was induced thereby to enter into them. The representations were alleged to have been false. It was asserted that there was a duty upon Lombok to exercise reasonable care and skill in and about the giving of the relevant advice and that Mr. Bryant and Mr. Guy failed to exercise reasonable care and skill. In all the circumstances the conduct of Lombok was said to be false, misleading and deceptive. Mr. Bryant and Mr. Guy were alleged to be, directly or indirectly, knowingly concerned in the contraventions

alleged against Lombok. Supetina was said to have suffered loss and

14, damage. The claim for damages was formulated in the alternative. Some of the claims proceeded on the assumption that the contracts would remain on foot whereas other claims were particularised on the

basis that the contracts were or would be at an end.

When the application, statement of claim and amended statement of claim are read (whether together or separately) they do not in the light of all the relevant circumstances (or in isolation from them for that matter) evince plainly an intention by Supetina not to perform the contracts. In substance, what Supetina sought in those documents were rulings from the Court:, (1) whether the conduct alleged against Lombok, Mr. Guy and Mr. Bryant avoided the contracts or rendered them voidable at the option of Supetina; (2) whether the deeds of guarantee signed by Miss Vincent are void or voidable; (3) whether the moneys paid by Supetina to Lombok under the contracts should be repaid; (4) whether damages are payable by Lombok pursuant to the Trade Practices Act (presumably s. 82); (5) whether the contracts and the guarantees should be declared void or should be rescinded; (6) ancillary relief pursuant to s. 87 of the Trade Practices Act; and (7) damages for breach of duty or misrepresentation

or negligence against Mr. Guy and Mr. Bryant. Some of these claims are framed in the alternative. The documents do not tell Lombok, Mr.

Guy or Mr. Bryant that, whatever 1s the result of the case, Supetina will not perform the contracts, The date for settlement had been extended to 5 January 1986, nearly two years distant from the date when the contracts were said to have been repudiated by Supetina. It

1s true that Supetina was seriously in arrears with interest payments

in substantial sums and covering a long period, but 1t was open to Lombok in those circumstances to do what 1t had done before in similar circumstances, namely, to serve a notice of default upon Supetina pursuant to s. 72 of the Property Law Act 1974 (Qld) and, 1f not complied with, to rescind the contracts. This course was not taken by Lombok. Spender J. held that he was unable to conclude that in any event and regardless of an adverse decision of the Court Supetina intended not to perform the contracts, and I see no ground for

It was submitted by counsel for Lombok that, if conduct of the kind involved here does not constitute repudiation, then 1t 1s in effect a licence to disgruntled purchasers and their advisers to place vendors 1n an intolerable position by writing no letters of demand and simply commencing proceedings on the basis that they are submitting the questions for consideration to the Court and forcing vendors to hold their hand for years until the Court decides the merits of the complaints of the purchaser. I see no substance in this contention. If such tactics were engaged in for improper purposes by purchasers then rules of Court, including the rules of this Court, provide

The question now arises as to the correctness of the trial Judge's finding that Supetina was not entitled to rely upon Lombok's ineffective rescission of the contracts as itself a repudiation of

them and thereupon to rescind, as it purported to do by its

His Honour held, in reliance upon the decision of the High

Court in D.T.R. Nominees (supra) that Supetina was not entitled to

rescind based on Lombok's repudiation of the contracts because, at the time Supetina purported to rescind, 1t was in breach of its obligations under the contracts, namely, its obligations to pay interest from July 1983 to January 1984, His Honour rejected Supetina's contention that 1t was not in breach of the contracts and held that, when Supetina purported to rescind the contracts, it was not willing to perform them according to their terms and that the time for performance of some of its obligations under the contracts had passed without performance. He said that, at the highest for Supetina at that time, was the possibility that, on being told that the contracts were binding on it, it would then perform its obligations that Supetina''s application to the Court was without a proper basis, that 1ts attempt to avoid the contracts stands in the same category as the insistence on a wrong interpretation by the appellant in D.T.R. Nominees and that Supetina was seeking to avoid having to perform the contracts according to their terms. His Honour found, however, that 1t could not be concluded that Supetina intended not to perform if its

contentions were rejected by the Court and the contracts were held to

The facts of D.T.R. Nominees were very different from those

of the present case; but some of the statements of the majority (Stephen, Mason and Jacobs JJ.), with whose reasons for judgment Aickin J. agreed, are apt for present purposes. The majority said at

"A party in order to be entitled to rescind for anticipatory breach must at the time of rescission himself be willing to perform the contract on its proper interpretation. Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach, and indeed could profit from his misinterpretation of the contract, as the appellant seeks to do in this case when it claims forfeiture of the deposit and damages."

Reference to the innocent party appears in various cases

including the judgment of Jordan C.J. in Tramways Advertising Pty.

Limited v. Luna Park (NSW) Limited (1938) 38 S.R. (N.S.W.) 632 at pp.

641-2. Although his Honour's decision in that case was reversed by the High Court ((1938) 61 C.L.R. 286), Dixon J. dissenting, the test which his Honour expounded received the unanimous approval of the High

Court in the later case of Associated Newspapers Limited v. Bancks

(1951) 83 C.L.R. 322 at p. 337. A breach automatically terminates a contract only where its effect 1s to render the contract impossible of

future performance: Harbutt's "Plasticine" Limited v. Wayne Tank &

Pump Co. Limited [1970] 1 Q.B. 447. In other cases, where the breach 1s sufficiently serious, the party not in breach 1s given an option either to insist upon performance or to accept the breach as a repudiation of the contract. If the contract 1s specifically enforceable, as in the case of a contract for the sale of land, the innocent party may apply for a decree of specific performance without walting for the date appointed for performance. Such a decree does not direct immediate performance; but when the agreed date arrives the

Court will give directions relating to performance: Khatiljabal Jiwa

Hasham v. Zenab [1960] A.C. 316; Fullers' Theatres Ltd. v. Musgrove

At the date of purported rescission by Supetina it had failed without explanation to pay three quarterly amounts of interest totalling $50,625 over the period from July 1983 to January 1984. Miss Vincent had not purchased the properties for investment, but as an opportunity to make substantial profits in the short term by resale. She never had any serious intention of developing the property. His Honour rejected her evidence that she purchased the properties for investment, intended to develop them and to enjoy the income from them. He rejected her denial that she was a speculative buyer who became financially burdened because of a downturn in what had been a boom market. He described her evidence concerning her financial capacity as vague in the extreme and said that she made no attempt to explore what avenues of finance, 1f any, were available to her. In about mid 1983 Miss Vincent learnt that the value of the property was considerably less than she had paid for it. It was notorious, as I said earlier, that properties in the Sunshine Coast fell dramatically in value after the date on which Supetina had agreed

to purchase the properties in question in this case.

His Honour found that Supetina was seeking to avoid having to perform the contracts notwithstanding that 1t could not be concluded that it intended not to perform the contracts 1f its contentions were rejected by the Court and the contracts were held to be binding. His Honour's findings of fact in this case with respect to Miss Vincent and to Supetina illustrate the unlikelihood of Supetina's having

sought specific performance of the contracts when confronted with the

letter from Lombok''s solicitors of 2 March 1984, thus giving added emphasis to the point that, not only was Supetina not desirous of performing the contracts, but it was also seeking to avoid performance of them, thereby distancing itself further from the notion that it was the innocent party. In my opinion his Honour's finding that Supetina was not willing to perform the contracts on thelr proper interpretation at the time 1t purported to rescind and that 1t was not

in that sense an innocent party 1S one which should not be disturbed.

Although it was clearly in issue between the parties whether the two guarantees signed by Miss Vincent in favour of Lombok should be declared void or voidable it was common ground before us that the Court should not rule on this question, so I shall say nothing about

The trial Judge held that the conduct of the parties showed that by the time the matter came to trial neither party intended that the contracts should be performed. He held that the position fell to be resolved un accordance with Summers v. The Commonwealth (supra) where the parties were found to have mutually abandoned or abrogated the contract and the consequence of the abandonment and abrogation was that the deposit was returnable. A similar view was taken by the High

Court in D.T.R. Nominees. The trial Judge held that in respect of the

instalments of interest which were paid by Supetina the same principles applied and he ordered the return of those moneys as sought

by Supetina but made no order for interest thereon.

In adjusting rights as between vendor and purchaser in these circumstances the Court will act on the general principle that the vendor cannot have both the land and its value, otherwise a double

benefit will be conferred on him; Donaldson v. Gray [1920] V.L.R. 379.

A deposit 1S a guarantee by the purchaser that the contract shall be performed. Where the sale goes off, as it did here by mutual abandonment, the deposit 1s generally refundable; but the position 1s different 1f it 1s the default of the purchaser that brings the contract to an end. In those circumstances the vendor 1s entitled to retain 1t unless the contract provides that it 1s to be repaid to the

purchaser: Howe v. Smith (1884) 27 Ch. D. 89 at pp. 95-98. The mere

fact that a payment under a contract is called a deposit does not of itself exclude the Court's jurisdiction to relieve the purchaser in appropriate circumstances from forfeiture of the amount paid. If the contract provides for the payment of an unreasonably large sum under the guise of a deposit the Court may go behind the language of the contract and consider the true nature of such a stipulation. If 2t concludes that forfeiture of that sum would constitute a penalty

relief will be given: Ward v. Ellerton [1927} V.L.R. 494,

Instalments of purchase price are also returnable by the vendor to the purchaser where the contract has gone off by mutual abandonment on the

Interest may be, however, in a different position. If a

provision in a contract for the payment of interest on the outstanding

purchase price 1s in truth a provision for payment of instalments of

the purchase price then the vendor will receive double benefit if the contract 1s mutually abandoned by the vendor and purchaser. The vendor cannot have both the land and its value. If payments of interest are in truth payments of instalments of purchase price ina different guise then generally the vendor should refund them to the purchaser where the contract 1s abrogated. Interest, properly so called, is fundamentally different in character from instalments of purchase price. Interest by 1ts nature accrues from day to day and 1s generally required to be paid at specified intervals of time. A periodical payment of interest 1S not an instalment of the purchase price or, for that matter, an instalment of anything. See the

judgment of Aickin J. on a related question in Wacal Developments Pty.

Limited v. Reality Developments Pty. Limited (supra) at pp. 529 and

There 1s some support in the evidence for the view that the interest which Supetina promised to pay Lombok under the contracts as varied by later documents was in essence the price paid by Supetina as purchaser for obtaining both a_= substantially extended time for settlement (from 6 August 1981 to 5 January 1986) and the right to enter the land and bring substantial guantities of f111 onto it so that 1t could prepare for 1ts proposed development of the sites. But the evidence concerning the true nature of Supetina''s interest obligations is sparse and the contractual provisions with respect to it elliptical. Supetina's obligations with respect to interest are of more than one kind: see, for example, Special Condition 24 of each contract (as varied by the deed of January 1983) on the one hand and

clause 8(i) and (11) of the deed of 4 May 1983 on the other.

Although certain payments of interest may have been used in reduction of the unpaid balance of purchase moneys (clause 4A of the deed of 4 May 1983 and paragraph 1(f) of the First Schedule thereto), interest payments of other kinds could not. As I read the contracts and deeds of variation the interest with which this case 1s concerned could not be so used. No submission to the contrary was made by

Generally, upon termination, interest payments, whether in conjunction with payments of instalments of the principal or not, are retained by the vendor where the purchaser has been in possession of

the law: Voumard on Sale of Land, 3rd. ed., at po. 421-22. It was

not suggested in this case that Supetina was ever in possession of the land. If it had been established that Supetina was in possession then perhaps, Lombok could have been entitled to some, 1f not all, of the

In my opinion, the relevant payments of interest, having been made pursuant to the special conditions of the contracts as varied and by the later deeds and those contracts having been in law terminated by mutual abandonment, the abandonment must include abandonment of the right of Lombok to retain the interest. Those payments belong to Supetina. The parties should be restored as closely as possible to the positions in which they were placed before the contracts were

made: see Summers v. The Commonwealth (supra) at p. 153 and D.T.R.

Supetina sought interest in its cross-appeal on the amounts to be refunded by Lombok. The precise basis on which Supetina put its claim for interest at the trial 1s not very clear; but it seems that it was finally formulated as a claim for damages in the nature of interest at the rate of 14% on the moneys which Lombok was obliged to

pay Supetina. It appears that the trial Judge did not accede to that

Ordinarily a purchaser is entitled to interest from the vendor on the deposit if its return is ordered by the Court; see

Williams on Vendor and Purchaser, 4th ed., at p. 1005 and cases there

cited and Voumard on Sale of Land, 3rd ed., p. 410. But there is no

rule of universal application to that effect. D.T.R. Nominees 1s an 1llustration of a case where the deposit was held to be refundable,

but no interest thereon was ordered. Entitlement to interest on

moneys repayable to a purchaser following the mutual abandonment of a contract is essentially for the Court to determine in the exercise of 1ts discretion when adjusting the rights and obligations of the parties. I am not persuaded that Supetina is entitled to interest on the moneys to be refunded by Lombok. No error by the trial Judge has

There remains the question of the costs of the proceedings below. The trial Judge was fully aware of the issues before him when he considered costs. He was mindful of who had won or lost particular

1ssues and as to the time taken before him both in evidence and

address. Costs are essentially a matter for determination by the trial Judge in the exercise of his discretion unless it 1s shown that there 1S some clear or manifest error on his part. He heard argument on costs after the matter had been restored to the list for judgment and then ordered that Supetina and Miss Vincent pay one-half of Lombok's taxed costs of the proceedings and the costs of Mr. Bryant and Mr. Guy. As these gentlemen are not parties to the appeal no variation to the orders in their favour has been sought. It is the order in favour of Lombok that was the subject of dispute before us. In my opinion no case has been established for disturbing his Honour's

In my view both the appeal and cross-appeal should be

| certify that this and the LO X-Fi es) preced.ng > r@ a tus cory of the

QUEENSLAND DISTRICT REGISTRY ) QLD G78 of 1986 GENERAL DIVISION )

BETWEEN: SUPETINA PTY. LIMITED and AVIONNE JOY VINCENT

Appellants AND: LOMBOK PTY. LIMITED Respondent CORAM: FISHER, LOCKART & PINCUS Jd. 27 FEBRUARY 1987

PINCUS J.: This is an appeal from a judgment relating to two

contracts for sale of land made on 6 August 1981; there is alisoa

Before the learned primary judge, the first respondent (the purchaser) and the second respondent (the guarantor) claimed

relief under ss.52 and 53A of the Trade Practices Act 1974 and

under the general law in respect of those contracts, against the present appellant (the vendor) and others. The basis of the application was that statements had been made which were alleged to be misleading, to constitute misrepresentations and to give rise to a claim in damages for negligence. The learned primary

judge rejected all these allegations, and his having done so is

Each party claimed to have effectively rescinded the contracts. The learned primary judge held that there were no effective rescissions, but that the purchaser was entitled to the return of what it had paid under the contracts, and it is those views which are now principally the subject of attack. Further, the purchaser claims by way of cross-appeal interest on the sums for which his Honour gave judgment. Lastly, there is a dispute

Each of the contracts in question provided for the sale of a block of land at Maroochydore, north of Brisbane, at a price of $375,000. Under each contract, a deposit of $3,750 was paid immediately, and a further deposit of $33,750 was made payable on 5 October 1981. It was provided that executed transfer documents were to be held in escrow and that the purchaser should pay interest on the "unpaid settlement moneys" at 16 per cent per annum by equal quarterly payments until 5 January 1985, whereupon the whole of the "principal" sum together with interest should become payable. There was provision for the purchasers paying an additional 5% of the purchase price on one of the quarterly dates,

executing a bill of encumbrance and thereby obtaining possession;

the purchaser, however, was not obliged to make that additional payment and did not do so. Guarantees were executed to secure

Each of the further sums of $33,750 just mentioned was paid, as were the first two interest payments, but the third interest payment, due on 6 July 1982, was paid late; the payment which was eventually made was apparently prompted by a notice of

default, given under provisions of the Property Law Act 1974 which

In January 1983, agreements were made between the parties, varying the interest payable and making another change which it is unnecessary to discuss. On 4 May 1983, there was a further agreement between the parties under which the purchaser undertook to pay $64,391.64 "being all but $10,000 of the monies payable by Supetina to Lombok pursuant to the said contracts of sale, for the period ending April 5 1983". The agreement went on to say that the $10,000, together with certain interest, was to be paid within six months of the date of that agreement, or released to the vendor from certain compensation moneys. The $10,000 was never paid. There was provision for deferral of interest payments due and the date on which the balance of the purchase price was finally payable was extended to January 5 1986. Under clause 8 of the agreement of 4 May 1983, interest was to be paid on the 5th days of January, April, July and October in each year until

payments were made "since May 1983", according to the evidence, which apparently means that the last payment made was that due in

April 1983. Thus the payments due in July 1983, October 1983 and January 1984 were all overdue when, on 13 January 1984, the purchaser and the guarantor filed in this Court the application referred to above. The vendor treated that as a repudiation and

gave notice of rescission on 2 March 1984, as follows:

"We refer to your client's application dated 13 January 1984, and in particular the relief sought in paragraphs (a) to (g) thereof.

Your client has, by its action, repudiated the contracts dated 6 August 1981 between the first

give you notice that the first respondent has rescinded both contracts."

The principal point taken by the vendor's counsel on the appeal was that in all the circumstances the filing and service of

the application, together with the statement of claim, constituted a repudiation of the purchaser's obligations; the learned primary

The only circumstances additional to the Court documents to which reference need be made in considering this submission are

the failures to make the three interest payments and the payment

Under clause 22 of the original contracts it was provided that "Time shall in all cases and in every respect be

deemed to be of the essence of the contract". It is not clear

whether that provision survived the two variations which have been referred to, but it does not appear to be necessary to decide whether it did or not. That 1s so because, under Queensland law, it would in any event have been necessary for the vendor to give the purchaser a notice of its intention to rescind for non-payment of the interest or of the $10,000. Under s.71(2) of the Queensland Property Law Act 1974 as amended, the expression

"an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance and exchange therefor;".

In Wacal Developments Pty. Ltd v. Realty Developments Pty. Ltd.

(1978) 140 C.L.R. 503, it was held that interest payments of the

sort here in question are such payments as are mentioned in the

"An instalment contract shall not be determinable or determined by reason of default on the part of the purchaser in payment of any instalment or sum of money (other than a deposit or any part' thereof) due and payable under the contract until the expiration of the period of thirty days after service upon the purchaser of a notice in a Form 2 of the Second Schedule."

The form in the schedule gives notice of the nature of the default and warns the purchaser that unless the amount of it is paid

within 30 days, the contract will be determined without further

The vendor's counsel accepted that, not having given the statutory notice, it could not rely upon the failure to pay the interest or the $10,000 as in itself justifying rescission. They argued, however, that the earlier failure could be taken into account in determining the effect of the filing and service of the application and statement of claim, which were said to constitute the repudiation. The question may be said to be whether the words "wholly or partly", or on the other hand the word "solely", should be read in before "by reason of default" in s.72(1) quoted above. Although the point is not an easy one, the latter appears to me the more natural construction. It should be noted that the statutory form of notice does not cover instances in which breaches in addition to non-payment are relied on. Further, such a construction harmonizes, in its application to cases of the present kind, with the established position that a breach of contract Which has become unavailable as a ground of rescission (by reason of a subsequent affirmation) may still be taken into

account in determining whether a later breach may ground

rescission: Carr v. J.A. Berriman Pty. Ltd. (1953) 89 C.L.R. 327

at 351. Here, the claim is not that the rescission on the part of the vendor was made lawful by the purchaser's defaults, but that it was lawful because of the institution of the present

proceedings, considered against the background of the defaults.

The question whether the institution of the proceedings constituted a repudiation against that background requires some analysis of the claims made. The statement of claim underwent a

number of amendments, of which only one was made before 2 March

1984, the date on which the vendor purported to rescind.

The purchaser's application claimed declarations that the contracts were "void and/or voidable at the instance of the First Applicant" (i.e. at the instance of the purchaser) and that the guarantee was "void or voidable at the instance of the Second

Respondent"; that seems to be a mistake; the second applicant is

"Repayment by the First Respondent to the First Applicant of all moneys paid by the First Applicant to the First Respondent under the said contract;".

Further claims were for an award of damages under the

Trade Practices Act, claims that the contracts and guarantees "be

delcared ECsicl] void or be rescinded", for relief pursuant to s.87

of the Trade Practices Act, and for "damages for breach of duty

The damages claimed appear to be of some significance. The damages for negligent misstatement are made up of the purchase price of the land ($750,000) less "market value of the said land on settlement under the said contract $300,000", plus an interest claim and "additionally or alternatively" all moneys "paid or payable at the Contract dated 6 August 1981 and the Deed of Variation of same as and from 6 January 1983", being $339,668.37. It is seen that the primary damages claim under this heading 1s based on the assumption that the contract will be settled. A similar claim is made, in the statement of claim, for damages

under ss.52 and 53A of the Trade Practices Act - i.e. the primary

claim is the purchase price of the land less its value.

The strongest point in favour of the vendor as to the content of the application is that claim (c), quoted above, seeks to recover all moneys paid under the contract. However, that claim stands with others which are more equivocal. In particular, claims that the contract be declared "void and/or voidable" or "be declared void or be rescinded" are more consistent with the view that the purchaser was not taking it upon itself immediately to repudiate the contract, but rather seeking an order from the Court entitling it to withdraw. The pleading is not quite in the class

of the one described by Duke L.J. in Spettabile Consorzi1o

Veneziano di Armamento E Navigazione Vv. Northumberland

"{T will not say that it faces two ways, because it faces every way."

That was a decision of the English Court of Appeal relied on heavily by the learned primary judge. The Court there had before it a claim brought by the purchasers of ships against shipbuilders., The purchasers claimed rescission of contracts for the construction of the ships and "alternatively, a declaration that the contract was null and void, or had been frustrated, and was at an end". The Court held that what the purchaser wanted, in substance, was to have the Court determine the parties' rights, and that there was no repudiation. If that case is right, then it is difficult to see how the application and statement of claim here could constitute a repudiation, because the latter are more susceptible of the construction that the purchaser has not finally

The Spettabile case was referred to with approval in

Woodar Investment Development Ltd. v. Wimpey Construction U.K.

Ltd. £19803 1 W.L.R. 277 at pp.283, 295, 296 (House of Lords). It also appears to be consistent with the general approach to

questions of repudiation evinced by the High Court in D.T.R.

Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. (1978) 138 C.L.R. 423.

These cases seem to evince an important change in attitudes towards those who purport to rescind or repudiate, substantially

Discussion of this whole topic is bedevilled by terminological difficulties; for example, there is no word, technical or otherwise, for a party to a contract who makes a pronouncement which may be called a repudiation or a rescission; perhaps he should be called the "initiator", 1f there 1s a

In the Woodar case, the purchaser under a contract of sale of land sent a notice in writing purporting to rescind on the ground of an express power, given by a clause in the contract, to do so. The clause did not, in truth, apply. The question was whether the giving of the notice was a repudiation, being an unjustified rescission. A majority of the House of Lords held it was not and they said the same of a counter-claim made by the purchaser (in proceedings instituted by the vendor) for a

declaration that the contract had been rescinded by their notice.

It is difficult to see how, consistently with the Woodar decision, it could be held that the claim here in question was a

repudiation. The two holdings in Woodar were interconnected; the

majority thought that the purchaser's notice and claim should not be taken to be announcements that the purchaser would not complete "in any event" - i.e. that it would not complete even if it lost the case. The Woodar decision implies that there cannot be a repudiation, absent a stated intention not to complete whether or not there is an obligation to complete; 1t is not easy to reconcile with earlier decisions in which the contrary has been at least assumed: see for example the decision of the Privy Council

in Clausen v. Canada Timber and Lands Ltd. (1923) 3 W.W.R. 1072.

reflect a different view from that expressed in Federal Commerce

and Navigation Co. Ltd. v. Molena Alpha Inc. [19791 A.C. 757, the

facts in which it is unnecessary to analyse. A suggested reconciliation of the two cases is that 1n the earlier one the consequences of what the shipowners (the repudiators) "had threatened to do would have been disastrous for the charterers and a construction summons was clearly not the appropriate way to deal with the parties' dispute" - Lindgren et al. "Conract Law in Australia" p.605. Perhaps the recipient of a simple notice of rescission cannot take it at face value, but must construe it in the light of such factors as mentioned by the learned authors, in

order to determine whether the notice really means "I hereby rescind, but my rescission is to be deemed never to have occurred if the Court holds I am not entitled to rescind"; if so, that

Presumably, if the contingent rescinder is held to have

been entitled to rescind, when the matter comes before the Court,

his rescission (which then becomes absolute) dates back to the time of his pronouncement. It appears that pending the resolution of the dispute, the party to whom the pronouncement is made cannot act on it; he has not the ordinary privilege of acceptance of the repudiation. The new principle encourages repudiation, by making it possible to repudiate without the risk formerly attaching to that course, viz. that the other party may immediately accept it

In D.T.R. Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. (above), which was decided before either of the House of Lords decisions just mentioned, there were three stages. Firstly, the vendor under a contract for sale of land asserted to the purchaser that 1t was entitled to settlement on a basis which, as the Court held, was contrary to the true construction of the contract. That was held not to be repudiation. Secondly, the purchaser purported to rescind, on19 July 1974, on the basis of what it thought (wrongly) to be a repudiation by the vendor; the purchaser's rescission was of course held to be ineffective. Thirdly, the

vendor rescinded on 25 July 1974 on the basis of the purchaser's

In holding that the vendor's rescission of 25 July was

"The actions of the parties must now be considered in the light of the true interpretation of the contract. The purported rescission of 19th July did not evince an intention not to proceed with the contract correctly interpreted; it did no more than evince an intention not to proceed with the contract on the basis of the incorrect

appellant. That cannot be regarded as a repudiation which would entitle the appellant to rescind when it was itself the party in error."

The D.T.R. case assists the purchaser here, because it

is authority for the view that in some circumstances what is on the face of it an unqualified rescission or repudiation, as that of 19 July mentioned by the Court was, must be read merely as a

pronouncement of the type discussed above. That is, such a

repudiation may have to be read down as merely provisional even if

not stated to be so; see also Green v. Sommerville (1979) 141

C.L.R. 594 at 611. It is true that in the D.T.R. case the Court's view depended partly on the fact that the appellant there "was itself in error", but even if it is to be read as confined to instances in which the party alleging repudiation is able to be described in that way, the case at least accepts the possibility

If an unqualified purported rescission may have to be read as being merely provisional, that reading down process must be available, a fortior1, where the alleged repudiation is constituted by the commencement of legal proceedings in an equivocal form. Here, the vendor has support from an additional factor, namely the purchaser's defaults referred to above, but

It should be added that we were referred to authorities old and new in favour of the view that the institution of the

proceedings was an election to avoid the contract; for example,

Clough v. The London and North Western Railway Company [1871] L.R.

7 Ex. Ch. 26, especially at 36; Nicholas v. Thompson [£1924] V.L.R. 554, especially at 582; and Academy of Health etc. v. Power [1973]

V.R. 254, especially at 259. See also Perri v. Coolangatta Investments Pty. Ltd. (1982) 56 A.L.J.R. 445, especially at 459.

However, in my opinion the learned primary judge was clearly correct, on the basis of the more recent authorities, in his conclusion that the purchaser's proceedings did not constitute a

The reasoning then proceeds just as in the D.T.R case: the letter of 2 March, 1984 from the vendor must be held to have been intended to have been merely provisional - i.e. effective only if the ground stated in it should be made out. After that, the purchaser in turn purported to rescind on the basis of the vendor's letter and for reasons like those given in relation to

the third stage in the D.T.R. case, that was ineffective also.

It was argued that the learned primary judge, in coming

to the last conclusion just mentioned, misinterpreted the D.T.R. decision. Although the detailed facts of that case differ from those of the present case, i1n principle the two cases are remarkably similar. His Honour's conclusion that the purchaser had no right to rescind 1s amply supported by the High Court's view of the third stage in the D.T.R. case; the vendor's purported

rescission here must be taken to have been provisional.

However, there is room for debate about the significance of a reference to the purchaser's not being an "innocent party,"

made by the learned primary judge. Insofar as his conclusion that

the purchaser was not entitled to rescind rested on that view, it should not (in my opinion) be taken to imply that a party in breach can never accept a repudiation by the other party. If one party repudiates by saying: "I regard this contract as terminated," the other can surely accept that, bringing the contract to an end consensually, subject of course to the repudiation's not being read as merely provisional, on the Woodar

principle. But the second party cannot rescind so as to be able

to claim damages, if he would not himself have performed the contract; that is so simply because in such a case no damage is

These considerations appear to me to be relevant here. Whether the vendor's rescission of 2 March 1984, quoted above, was wrongful or not, the purchaser's response put anend to the

His Honour held that in the circumstances there was no effective rescission, but both parties had abandoned the contract, following the D.T.R. case. It was not disputed that that consequence flowed from his Honour's views of the purported

The only other substantive point taken on behalf of the vendor was as to the relief granted. The learned primary judge ordered repayment not only of the deposits, but also of interest paid. It was said, on behalf of the vendor, that it should keep

the interest, because the land was made available during the whole

of the relevant period. It 1s a little unusual to find a contract

of sale of land which provides for payment of interest by the

purchaser before the transaction is settled or the purchaser gets possession. It is not clear what, ina commercial sense, the

I have read the reasons of Lockhart J. and agree with his Honour's views as to the interest payments and the reasons

The cross-appeal sought interest on the amounts to he

The statement of claim, as amended, included a claim for interest by way of damages and some evidence was led about

interest rates. When the learned primary judge published his

reasons on 6 June 1986, he referred to the D.T.R. Nominees case

and the fact that there was no order made in that case for payment of interest on the deposit which had to be returned. His Honour

referred to the fact that "instalments" of interest had been paid

"I am content to follow the course adopted in D.T.R. Nominees and simply to order the return of those monies, as sought by Supetina. I make no order for interest thereon. No basis was outlined in argument upon which any award of interest on these sums should be made."

On 11 June 1986, at his Honour's invitation, counsel made submissions as to the form of the orders which should be made. In the course of discussion, counsel for the purchaser

asked to amend the application to claim "damages ... being

interest at the rate of 14% on the moneys ... which the first

respondent 1s now obliged to pay to Supetina". The learned primary judge made no response to that application and must be

It was argued on behalf of the purchaser that ordinarily a vendor is obliged to pay interest on a deposit ordered to he returned. That the rule is not universal is illustrated by the order made by the High Court in the D.T.R. case. It appears clear that the learned primary judge did not think this an appropriate case in which to order the payment of interest. No substantial reason is put forward in support of the contention that his Honour was wrong; the question of payment of interest in such circumstances appears to be one for the exercise of a judicial

The only other question raised on the appeal was' the matter of costs. The trial was a long one, and nearly all the

time taken related to the purchaser's unsuccessful assertion that it was induced to enter into the contracts by misleading statements and the like. However, the purchaser was ordered to pay only one-half of the vendor''s costs, and it was said that that did not fairly reflect the degree of the vendor's success on the

The purchaser cross-appealed on the question of costs and said that, as the successful party, the purchaser should not

Section 43 of the Federal Court of Australia Act 1976 gives the Court jurisdiction to award costs and makes such awards discretionary. Neither the Act nor the Rules (0.62), however, provide any guidance relevant to the present case as to the way in which the discretion is to be exercised. The learned primary

judge relied upon Laguillo v. Haden Engineering Pty. Ltd. £1978] 1

N.S.W.L.R. 306 in which Reynolds J.A., in whose judgment the other members of the Court of Appeal concurred, referred at p.308 to the "cardinal principle ... that, except in special circumstances, a successful defendant who has been brought to Court at the suit of the plaintiff should have his costs". Reynolds J.A. also said, however, that "Another principle of importance is that, as a

general rule, a party is entitled to the costs of an issue on

which he succeeds". Obviously, these two principles cannot both be given effect to, in some cases. Here, the purchaser was successful, although not on the ground 1t pleaded and litigated; the vendor obtained no order in its favour except for costs. Application of the first principle mentioned by Reynolds J.A. might tend to suggest that no order for costs should have been made, or that the purchaser should have had an order for costs in its favour; application of the second principle alone would have

supported an order for costs in favour of the vendor ina larger

In Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. (1979) 28 A.L.R. 201, reliance was placed upon the remarks of Bray C.J. in Cretazzo v. Lombardi (1975) 13 S.A.S.R. 4 at p.11 in support of principles stated somewhat similarly to

those set out in the New South Wales case just mentioned. It was

said that there was jurisdiction to order a successful party to pay costs, but only in "the most exceptional circumstances" (p.208). That statement, however, must be taken to be subject to the undoubted power of the Court to make orders for the payment by

a successful party of the costs of issues on which he has failed.

In this Court, an appeal lies against an order for costs embodied in a final judgment without leave, but is, of course, one

against the exercise of a discretion: Alltrans Express Ltd. v.

CVA Holdings [19841 1 W.L.R. 394; even where leave is required, however, the appellate Court is in the same position as it is in

on any appeal against the exercise of discretion (Alltrans Express

Here, 1t was not suggested that the learned primary judge erred in principle. The argument was that if his Honour had ignored the vendor's success on those of the issues which took most time to litigate and had simply let the costs follow the event, the vendor would have done better; that was so, counsel argued because the purchaser failed entirely in its claim, and obtained judgment only in respect of a matter which was not pleaded. The argument has some force and there is much to be said for the view that at the worst for the vendor, it should have got the costs of the issues on which it succeeded. That course would have obtained for the vendor a more favourable order than that

In the end, however, the better view would appear to be

that the case is not one in which this Court should interfere with

Honour may well have placed more weight, in considering his

other judges might have done, his order was not such as to warrant

Both the appeal and cross~appeal should be dismissed,