Neeta (Epping) Pty Ltd v Phillips

Neeta (Epping) Pty Ltd v Phillips - [1974] HCA 18 - HCA 1974 case summary — Zoe

[51]

Next there are the insistence on the prior registration of the surrender of the lease and the insistence upon the assent of the Dairy Industry Authority to the reallocation of the milk quota. These were the same matters which had been raised by the purchaser before the notice to complete was given on 11th July and which thereafter remained outstanding. One was an objection to conveyance and the other was not dissimilar in that there was no question raised as to the entitlement of the purchaser under the contract to have the quota reallocated. All that was in question was the proper course to be taken by the vendor in order to enable the purchaser to perfect that right. Thus neither of the matters related to the primary subject matter of the contract. Both related to the way in which that subject matter should pass to the purchaser. We have already dealt with the question arising under cl. 26. There remains the question whether the purchaser was entitled to the registration before settlement of the surrender of lease. Associated with this was the necessity felt to ensure that after the surrender the lessee had not remained in possession at will so that he had become a tenant within the meaning of the Agricultural Holdings Act, 1941, s. 24. It is little wonder that throughout the period after the exchange of contracts the purchaser's solicitors were concerned concerning the position of Mr. Tate and the need to ensure that after completion he would have no rights in the land. The existing lease, it is true, would come to an end on the day of its surrender once it was registered but if the lessee Tate remained in possession of the land for any time after the surrender took effect with the assent of the lessor he would become a tenant at will and as such could claim the protection of the Agricultural Holdings Act, 1931, s. 24. See the definition of contract of tenancy in s. 4(1). It was therefore necessary to be sure that either the surrender had not been made before the lessee vacated the premises or that, if this were so, any tenancy which might thereby have been created had itself been surrendered by the lessee having physically vacated the premises and having thereby given up possession of them. If Tate remained in possession as tenant at will registration of the transfer would not protect the purchaser. It would have notice of Tate's occupation or possession and of any tenancy rights flowing therefrom which fell within the Real Property Act, 1900 (s. 42(d)).

[52]

The vendor relied for her claim that prior registration of the surrender of lease was not necessary upon the decision in Jonray (Sydney) Pty. Ltd. v. Partridge Bros. Pty. Ltd. [1] , where it was held that a purchaser of land under the Real Property Act, 1900 N.S.W. could not insist upon the prior registration of a discharge of a mortgage registered on the title but that the sale could be effectively completed by the vendor if he handed over to the purchaser on settlement a registrable discharge of mortgage. The New South Wales Court of Appeal discussed the question whether the transferee was put at any appreciable risk by such a course and concluded that it was not. On settlement the transferee would obtain the protection against notice of equitable interests given by ss. 42 and 43A of the Act. However, in Jonray (Sydney) Pty. Ltd. v. Partridge Bros. Pty. Ltd. [2] the Court was dealing with the usual case where the mortgagee was to be represented on settlement and where the discharge of mortgage would be handed over in present payment of the mortgage debt either to the transferee or to a further distinct party, such as a new mortgagee from the proposed transferee. What was offered in the present case was something different. The surrender of lease was to be handed over but there was no suggestion that any representative of the lessee was to be present in order to receive present payment of the consideration for the surrender. The execution of the surrender had clearly been an execution conditional upon receipt of the consideration and if that consideration were not paid either before or at the time of settlement the surrender would not be effective on settlement even though it might be made so by lodgment and registration. On all these matters the purchaser was in the dark, and in these circumstances it was entitled to claim that the certificate of title be clear. If that did not suit the vendor then it was for her to suggest some other effective mode of settlement such as representation of the lessee on settlement so that the consideration could be paid over in return for delivery of the surrender or possibly settlement at the office of the Registrar-General and immediate lodgment for registration. But certainly the mere offer from the possession of the vendor of a form of surrender of lease purporting to be signed by the lessee, when it was known that the lessee was still in possession of the land, was not a sufficient protection to the purchaser.

[56]

Even if this were not so and if on both the disputed questions the vendor's claims were sound and the purchaser was mistaken, we still do not think that the vendor was entitled to give notice of rescission. A contract for the sale of land does not go off in this manner, particularly where time is not of the essence of the contract. There are cases where a purchaser may be held by anticipatory breach to have repudiated such a contract by something less than an express statement that he will not perform it but they are rare. The situation which here existed seems to us exactly the kind of situation where in a contract for the sale of land where time is not of the essence a notice to complete is necessary. Whatever may have been the strict legal position on these questions the vendor could not merely state in respect of one of them that vacant possession would be handed over on completion and in respect of the other that the application for reallocation of the milk quota would be handed over on settlement and then because the purchaser did not accede to that statement and without any effective prior notice rescind or terminate the contract. Otherwise objections to title and objections to conveyance stoutly maintained change from being shields of the purchaser to swords of the vendor. Such objections however stoutly maintained do not amount to anticipatory breaches of contract. If a purchaser is raising objections to title or objections to conveyance or is claiming that some step should be taken under the contract which the vendor declines to take, the vendor must expressly warn the purchaser that if he does not withdraw his objection or his claim and complete the contract or take the next necessary step by a named day a reasonable time ahead then the vendor will regard the contract as terminated. 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. Unless the purchaser had made it clear that it absolutely refused to be bound by its contractual obligations the purchaser must in terms of cl. 15 of the contract have defaulted in the observance or performance of an obligation imposed under or by virtue of the contract. The obligation here referred to is an obligation which is of the essence of the contract. Times stated in the contract were not of the essence of this contract and no notice had effectively made them so. By 19th July the memorandum of transfer had been delivered. What then remained outstanding was completion. If the vendor required completion by a particular day (assuming on this approach that the vendor was entitled to completion on the basis which she was claiming) then she was obliged to fix that day and in respect of it to make time of the essence unless it was quite plain that the purchaser had communicated a clear resolve not to perform the contract according to its terms. Holland J. concluded that by 27th July the vendor was entitled to take the view that the purchaser would not complete unless unjustifiable demands by the purchaser's solicitors were met. But with respect we do not think that in the circumstances this conclusion was open. If on the objections which were being taken by the purchaser the vendor wished to bring matters to a head but did not wish to make use of the curial processes designed to deal with such disputed questions, then she was bound to give notice to the purchaser so that the purchaser might have the opportunity of waiving the objections and of completing on the vendor's terms or of itself submitting the dispute to the Court in a suit for specific performance or on what would previously have been called a vendor and purchaser summons. Both are flexible processes which do not overcome breaches of contract where a party is insisting on substantive rights relating to the subject matter of the contract which he does not possess but which do overcome differences and difficulties on the appropriate way in which the subject matter should be transferred to him.

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Before

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Judgment (71 paragraphs)

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Cases Cited (1)