Parissis v Etna [1998] VSC 124

Parissis v Etna [1998] VSC 124 - VSC 1998 case summary — Zoe

[42]

By letter dated 24 September 1997 Telstra wrote to the City of Port Philip consenting to the issue of a statement of compliance. On 29 September 1997, City Power advised the defendant that the original statement of compliance had been sent to the wrong Council and that it would forward a copy to the City of Port Philip. On 29 October 1997 the defendant was advised by Mr Carlisle of the City of Port Philip that all requirements had been satisfied in relation to the plan of sub-division save and except for the payment of the Council's open space requirement of $26,000.00. On 6 November 1997, the defendant received from Esanda various cheques including a cheque for $26,000.00 made payable to the City of Port Philip to meet the open space requirement. The defendant instructed his solicitors to place the $26,000.00 cheque into their trust account where it remained until 8 May 1998. The defendant claims in his Affidavit of 1 July 1998 that he was under the belief that the plan of sub-division could not be registered until he had entered into a s. 163 agreement under the Building Act 1993 with the City of Port Philip and that that was not entered into until December 1997. He deposes that it has since been explained to him by Hugh MacCann of Phillips Fox, Solicitors, that that agreement was required for the grant of a certificate of occupancy and not for the registration of the plan of sub-division. I think that account of events is unlikely. But in any event, it would appear that, if absence of such an agreement was seen by the defendant as an obstacle to registration of the plan of sub-division, it had been removed by December 1997. All that then remained to enable certification and registration to take place thereafter was payment of the open space fee of $26,000.00, which sum was being held by his solicitors. On the 8th May 1998, the day after the purported rescission of the above three contracts, a cheque was drawn on the solicitor's trust account and delivered by the defendant to the City of Port Philip.

[92]

In support of the argument, he makes the point that the contract provided for a two year period in which to secure registration of the plan of sub-division and that this was a generous time in which to do that and then execute the project. He argues that it was understandable that the parties wanted to keep their options open in the event that the project was not completed within that time. He points to the possibilities of unforeseen events (as happened) and the real possibility of price and interest changes and unforseeable events in the lives of the vendor and the purchasers. He argues that, bearing that in mind, it is not surprising that the parties would have wanted a clause such as cl.2.5.1 and would not have wanted a contractual arrangement such as that advanced for the plaintiffs. He argues that it would contradict express terms of the agreement if it was to be construed so as to impose an obligation upon the vendor to use best endeavours after the expiry of the Plan Registration Date in view of the express clause imposing that obligation and linking it to that date. He argues that it was not the intention of the parties that, for example, as from 1 September 1997 the vendor was under a promise to complete the project or to do so within a reasonable time and was to be amenable to an action for damages if he did not. The intention of the parties was that after the Plan Registration Date had passed either might terminate at any time and the vendor was not obliged to pay compensation to the purchaser and the purchaser got his or her deposit back. He submits that this was a fair and sensible arrangement. It is put that after the expiry of the Plan Registration Date, each could terminate the contract or wait and see. Each could ask the other for an extension of commitment but the other was not obliged to agree. The defendant compares the situation with that of an offer capable of acceptance only by tender of performance on a future date. In such a situation the offeror could withdraw the offer at any time before such acceptance and the offeree was not obliged to tender performance if he decided not to do so. He argues that the construction he advances is perfectly understandable because the parties were dealing with an item of future property over the occurrence of which the vendor did not have total control and the project might not be completed within the two years. The defendant relies upon the same considerations to support the argument that the term requiring the use of best endeavours or all reasonable efforts should not be implied because those considerations point to the parties having a contrary intention.

[102]

As I see it, after the expiry of the Plan Registration Date in each contract, the contract remained on foot and the vendor and purchasers were obliged to complete the contracts within a reasonable time so long as the contract remained on foot. If either party elected to affirm the contract, that party lost the right to rescind the contract under cl. 2.5.1. The other, however, had the right to rescind at any time prior to registration of the plan of sub-division or to elect to affirm. In the event that both parties had elected to affirm the contract, they both continued to be obliged to complete the contract within a reasonable time. As a result the vendor had a reasonable time in which to register the plan of sub-division. The defendant, being the party selling the proposed units would, so long as the contracts continued on foot, be obliged to use not "best endeavours", but reasonable endeavours to obtain certification and registration of the plan of subdivision. (Zieme v. Gregory [1963] VicRp 34; [1963] V.R. 214; Secured Income Real Estate (Australia) Ltd v. St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 C.L.R. 596 at 607 & Perri above). While the parties had agreed that each should have the right to rescind the contracts, they had also agreed that the contracts would continue subject to the vendor or purchaser electing to exercise the power to rescind prior to certification and registration of the plan of subdivision. It is consistent with and complementary to such agreement that there be implied the usual terms as to reasonable efforts and reasonable time for completion, terms which would operate up and until a valid exercise of the power to rescind. They are necessary for a continuing contractual relationship. The defendant's construction creates a contractual vacuum. The attempted analogy with an open offer is flawed in that we are concerned with a contract not an offer. Rather the attempted analogy highlights the difficulty facing the defendant that the defendant is a party to a contract to sell units to the plaintiffs. I do not accept that the parties intended that the purchasers' rights would depend on the "will or whim " of the defendant "irrespective of what his conduct might be" (Zieme v. Gregory, above at 223).

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Judgment (212 paragraphs)

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