Perri v Coolangatta Investments Pty Ltd

Perri v Coolangatta Investments Pty Ltd - [1982] HCA 29 - HCA 1978 case summary — Zoe

[6]

In Aberfoyle Plantations Ltd. v. Cheng [4] , where a contract of sale was expressed to be conditional on the vendor obtaining a renewal of certain leases, it appears from the judgment of Lord Jenkins that it was thought that the condition was one on whose fulfilment the formation of a binding contract of sale depended. If that view of the condition was correct, it can only be because of particular provisions peculiar to the contract there considered. However, the correctness of what Lord Jenkins said on this point was doubted in Property and Bloodstock Ltd. v. Emerton [5] , and I respectfully share those doubts. It seems to me that the condition was one on which the performance of the relevant obligations under the contract depended rather than a condition precedent to the formation of a binding contract. On the other hand in Maynard v. Goode [6] the contract of sale contained the words "And providing that the transfer of purchaser's block goes through in reasonable time". Knox and Isaacs JJ. held that this was a condition subsequent [7] . Higgins and Rich JJ., with, I think, more accuracy, said that the completion of the transfer was not a condition precedent to the operation of the agreement [8] . If it was right to say that the condition was a condition subsequent, that may have been because the contract provided for possession being given on a date which might arrive before the condition had been performed [9] . However as Isaacs J. pointed out [10] , in one sense the stipulation might be a condition precedent to the performance of a particular term of the contract, while in another sense it was a condition subsequent in relation to the whole contract, since the failure of the stipulation would have entitled the vendor to retire from the transaction altogether. There are other authorities which illustrate the difficulty of attaching a label to conditions of this kind. In Zieme v. Gregory [11] and Tait v. Bonnice [12] conditions making the contract conditional upon the purchaser obtaining a loan were held to be conditions subsequent, whereas in Scott v. Rania [13] a similar condition was held to be a condition precedent to the formation of a binding contract. The latter case accepted the view taken in Aberfoyle Plantations Ltd. v. Cheng that no binding contract came into existence until the condition was fulfilled. That view must, as I have indicated, depend on particular terms of the contract; on the other hand, the description of the condition as a condition subsequent may be a mere matter of terminology, and may reflect an unwillingness to describe a condition as a condition precedent unless the formation of a binding contract depends on its fulfilment. Nevertheless, it probably does not matter in the present case whether the condition is described as "precedent" or "subsequent", provided that it is understood that its non-fulfilment did not prevent a binding contract from coming into existence but did have the effect that the respondent was under no obligation to complete the sale unless the condition was fulfilled or waived.

[11]

Although by September 1978 a reasonable time had elapsed, the condition had not then been fulfilled. The question then arises whether the respondent was entitled to terminate the contract without first giving to the appellants a notice requiring them to fulfil the condition, or to perform the contract, within a reasonable time. Aberfoyle Plantations Ltd. v. Cheng is authority that no notice is necessary when the contract, expressly or by implication, fixes a date by which the condition is to be fulfilled. Their Lordships laid down the rule applicable to such a case as follows [16] : "where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles." Their Lordships did not explain why equitable principles are inapplicable. The explanation given by Professor Treitel, in his work on The Law of Contract 4th ed. (1975), p. 570, is that the equitable principle that time is not of the essence of the contract does not apply, because "until the condition is performed the whole existence of the contract remains in doubt". However, their Lordships went on to say that if they had accepted counsel's argument that the vendor was entitled to a reasonable time to fulfil the condition, they would have been disposed to agree that time, not being originally of the essence of the contract, could not be made so by service of a notice when the vendor had not been guilty of any delay or default such as had to be shown in order to entitle the purchaser to serve such a notice [17] . Those observations, as Cooke J. said in Hunt v. Wilson [18] "certainly tend towards the view that, if no time is fixed for completion and a condition is to be satisfied within a reasonable time, the equitable requirements as to notice apply". Again, however, their Lordships did not explain why the equitable principles might apply in the one case but not in the other.

[17]

Suttor v. Gundowda Pty. Ltd. and Gange v. Sullivan are consistent with Aberfoyle Plantations Ltd. v. Cheng, and support the view that where a conditional contract fixes the date by which the condition is to be fulfilled the contract may be terminated if the condition has not been fulfilled when that date arrives, and that it is unnecessary to give any prior notice to the other party. The question is whether a similar conclusion should be reached when no time for fulfilment of the condition is fixed by the contract, and it accordingly must be performed within a reasonable time. There is little authority on the question, and it must be approached from the standpoint of principle. The condition with which we are concerned is not one which it was entirely in the power of the appellants to fulfil. Although they might use their best endeavours to find a buyer and complete a sale, it still remained necessary for them to find someone prepared to buy. Although, in fact, the appellants did not make reasonable efforts to satisfy the condition, it is impossible to say that they must have effected a sale within a reasonable time if they had made all reasonable endeavours to do so. It seems inappropriate that one party to a contract should be able to give a notice requiring the other to complete a sale, when that other party has not promised to do so (his promise only being to do all that was reasonable) and when it is not necessarily within his power to do so. The doctrines of equity enable a party to a contract to obtain specific performance notwithstanding his failure to carry out his obligations within a stipulated time, when that time is not of the essence of the contract. The party not in default has a corresponding power to limit a particular time within which the other contracting party is to perform his obligations. These principles have recently been discussed by this Court in Louinder v. Leis [26] . They apply, in my opinion, only where the party to whom a notice may be given is under a contractual obligation to act. In the present case no doubt the appellants might have been given a notice requiring them to make reasonable efforts to sell, but they could not have been required to make a sale, for that was beyond their power. Moreover, a notice can only be given when the party to whom it is addressed is either in breach of contract, or guilty of unreasonable delay. A purchaser might have made all reasonable efforts but yet have been unable to complete a sale, and in that situation the vendor would not be able to give a notice to complete, and would, if the appellants' argument is correct, be bound indefinitely to a contract that might never result in a sale. For these reasons I consider that when the time has elapsed for performance of a condition which is not a promissory condition, but a condition precedent to the obligation to complete a contract of sale, either party, if not in default, can elect to treat the contract as at an end if the condition has not been fulfilled or waived, and that it is not necessary first to give a notice calling on the party in default to complete the contract or fulfil the condition. What I have said is, of course, subject to any sufficient indication of a contrary intention in the words of the contract itself. The conclusion that I have reached is supported by the judgment of Lord Keith in T. Boland and Co. Ltd. v. Dundas's Trustees [27] , with whose reasoning I respectfully agree. It accords also with the judgment of Cross J. (as he then was) in In re Longlands Farm [28] , a decision whose authority on this point is weakened by the fact that a notice to complete had in fact been given. A contrary view was taken in Hunt v. Wilson [29] by Cooke J., who considered that a notice making time of the essence is necessary. Although in Aberfoyle Plantations Ltd. v. Cheng [30] an erroneous view may have been taken of the nature of the condition there considered, nevertheless, in my respectful opinion, it was correct to hold that the time fixed by the contract for performance of the condition was not to be extended by reference to equitable principles, and the same conclusion should be reached when the condition is to be performed within a reasonable time.

[106]

If that is right, the legal and the equitable standard is the same. If, however, a more rigid legal standard is to be applied to the construction of the words, something further may be necessary. If, for instance, as urged, Goode must be regarded as the only contemplated transferor and, therefore, unable to call in aid the minority of John Edgar Evel Goode as a valid element in the measure of reasonable time, then the contention becomes a claim for strict time limit. In that case the equitable doctrine of time not being primarily of the essence would apply, because there are no reasons for displacing it (Tilley v. Thomas [12] ). Whichever way this point is viewed, it fails. It is not necessary in this case to consider whether equitable rules will give relief to either party when a fixed time for the fulfilment of a contingent condition expires. Neither Maugham J. in In re Sandwell Park Colliery Co.; Field v. The Company [13] nor the Judicial Committee in Aberfoyle Plantations [14] thought that they did. Of present relevance is the observation of Isaacs J. that there is no conflict between law and equity as to the measure of time which is reasonable for the fulfilment of a contingent condition. In Tilley v. Thomas [15] , Lord Cairns L.J. said: The legal construction of the contract is, and must be, in equity the same as in a Court of law. A Court of equity will indeed relieve against, and enforce, specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for the steps toward completion, if it can do justice between the parties, and if (as Lord Justice Turner said in Roberts v. Berry [16] ), there is nothing in the "express stipulations between the parties, the nature of the property, or the surrounding circumstances," which would make it inequitable to interfere with and modify the legal right. This is what is meant, and all that is meant, when it is said that in equity time is not of the essence of the contract. This passage was cited with approval by Lord Edmund-Davies in Raineri v. Miles [17] . Whether one adopts a strict or an equitable construction - to adopt the dichotomy in the judgment of Isaacs J. - the time for fulfilling the contingent condition expires when further extension would be inequitable. 1. (1926) 37 C.L.R., at p. 539. 2. (1926) 37 C.L.R., at pp. 539-540. 3. (1867) L.R. 3 Ch. 61. 4. [1929] 1 Ch. 277, at p. 282. 5. [1960] A.C., at p. 125. 6. (1867) L.R. 3 Ch., at p. 67. 7. (1853) 3 D.G.M. & G. 284 [ 43 E.R. 112]. 8. [1981] A.C. 1050, at p. 1082.

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