There is a further and perhaps fuller statement by Mason J at 655-656 and there are extensive observations in Immer (No 145) Pty Limited v Uniting Church in Australia Property Trust (NSW) (1992) 182 CLR 26 at 30 (Brennan J) and at 41-42 (Deane, Toohey, Gaudron and McHugh JJ). The present case involves no more than the simple core of the doctrine, whether there is an inconsistency and a need for choice.
37 In my opinion the doctrine of election does not apply to the situation of the purchaser before and after 31 July because the purchaser did not have rights which were inconsistent the one with the other and could not concurrently exist. This was so both before the alteration of Special Condition 42 and 44.2 was agreed, and after the alteration was agreed. Before the alteration there was no inconsistency between the purchaser potentially having a right to rescind under Special Condition 42.5, which was to exist for no later than seven days after refusal of development consent, whenever that was given, and the purchaser also having the right of rescission conferred on both parties by Special Condition 43.4 if finance approval had not been obtained, as it had not been, by 30 June 2008. There would have been no such inconsistency if 31 July 2008 had passed without alteration of the dates referred to in Special Condition 42; both rights to rescind would have continued to exist until the seven days available under Special Condition 42.6 had passed. The purchaser's being a party to the alterations agreed on 31 July 2008, and the rights arising under the altered term were in similar ways not inconsistent with the continued existence of the right of rescission in Special Condition 43.
38 Although the purchaser's counsel gave very extended attention to her contentions on election, she did not ever demonstrate what inconsistency there was. The co-existence, if times and circumstances allowed, of two rights of rescission was clearly a contemplated possibility on the terms of the contract from the beginning. There is, in my opinion, no inconsistency, and no anomaly at all in the purchaser's having had two different rights of rescission, differing from each other in significant details but both capable of existing concurrently; and also, in the case of the right under Special Condition 43, capable of continuing to exist after the time available under Special Condition 42 in any of its forms had run out.
39 The vendors' counsel did not explain and did not embark on explaining why making the arrangements of 31 July 2008 and the alteration to Special Condition 42 and 44.2 involved the exercise of a right which was in any way inconsistent with the continuing existence of an unexercised right of rescission created by Special Condition 43. The inconsistency is the foundation of any discussion of election; but the foundation was not laid. In my opinion to affirm the altered and otherwise continued operation of the contract was to affirm the continued operation of the whole of the contract, including whatever rights of rescission it conferred.
40 At one point the vendors' counsel contended to the effect that to seek the alteration of Special Condition 42 and 44.2 (or perhaps it was to seek and also to obtain the alteration) was to elect against the continued existence of the right of rescission in Special Condition 43. Counsel sought to support this contention by referring to Byers & Ors v Dorotea Pty Limited (1986) 69 ALR 715 at 722 (Pincus J). In that case the applicants had agreed to purchase a home unit and among other claims, claimed a right to rescind the agreement for misrepresentations about the size of the units made before the building was constructed. There were several grounds upon which Pincus J held that the claim for rescission for innocent misrepresentation could not succeed, and they included that the applicants had affirmed the contract by requesting an extension of time for completion at a time when they knew that there had been misrepresentation. In my opinion there is no relevant analogy; the purchaser does not rely on the general law relating to rescission for innocent misrepresentation, but relies on an expressly conferred contractual right of rescission which was one of the terms of the contract which was to be continued in effect by the agreed alterations. What was to be continued in effect with the alterations was the whole of the existing contract, including Special Condition 43 and its rights of rescission.
41 The high point of the vendors' contention is the reference to election in the purchaser's solicitors' letter of 31 July 2008. On the correct view, indeed on any rational view of the meaning of that letter, what is spoken of as an election refers to a decision not to rescind under the first form of Special Condition 42.6 within seven days after 31 July 2008. The word "elect" as used in that letter does not refer to a decision to take one and not another of inconsistent rights, but to a decision not to rescind by 7 August 2008 under the first form of Special Condition 42.6: nothing inconsistent with the continued existence of the right of rescission in Special Condition 43 about that.
42 The contention was to the effect that because the right to rescind under Special Condition 43 had accrued by 31 July 2008, but the right to rescind under Special Condition 42 had not, the reference to election in the letter of 31 July must be understood to refer to the right to rescind in Special Condition 43. In development of this submission it was contended to the effect that the statement about election applied to whatever right to rescind then existed, whether or not the letter of 31 July 2008 was intended to refer to a different right to rescind.
43 I reject this contention because to treat the reference to election in the letter of 31 July 2008 as applying to anything but the prospective right to rescind which would come into existence on the following day would be to disregard the context both within the letter of 31 July 2008 itself and also in the correspondence of which it was part; there can be no doubt which election was intended, and which election the recipient of the letter could reasonably regard the letter as referring to. In the letter and in this correspondence the right of election in Special Condition 43 was not mentioned, and not alluded to in even the most distant way.
44 It was further contended that the purchaser had, by the letter of 31 July 2008, waived the right to rescind under Special Condition 43.4, or had waived Special Condition 43. The basis of this included a submission "the clear and unequivocal expression in the 31 July letter leaves the receiver in no doubt that the purchaser intends not to rely on her right to rescind." This contention is based on a wrong view of the meaning of that letter. It was further contended that there was an estoppel and that "the 31 July letter communicated to the vendors a representation by the purchaser, which was relied upon by the vendors and caused the vendors to alter their position, to their detriment." The basis of this is a contention that the letter communicated a clear and unambiguous representation that the purchaser would not exercise her right to rescind the contract if the vendors agreed to vary the contract in the specified manner. In my interpretation of the letter, and of the events, there was no such representation. It was also contended that the alteration agreed on 31 July 2008 had the effect of writing any right of rescission out of the contract. However, the arrangements of 31 July 2008 had no such meaning or effect.
45 The reference in Special Condition 43 to a right of waiver which was to exist until rescission is or includes reference to rescission under the other provision of the contract expressly referring a power of rescission, that is, Special Condition 42. The effect of Special Condition 43.3 is that the purchaser may waive the benefit of Special Condition 43; after the purchaser had done so neither party could take the benefit of it, and if the purchaser had not done so then Special Condition 43.4 applied, and either party could take the benefit of it, until there was a rescission or a waiver by the purchaser. Until 1 July 2008, it was not possible that either party should be entitled to rescind under Special Condition 43, but the purchaser would waive the benefit of Special Condition 43 before or after that date.
46 The vendors' counsel contended that the purchaser had elected not to exercise a right of rescission in Special Condition 43.4 by a number of steps later than 31 July 2008. Counsel referred to an extensive array of facts including the negotiations for further alterations, and steps taken after receipt of development consent including notifying development consent, seeking execution of an application for a liquor licence transferral, obtaining quotations for restaurant construction, communicating with the Commonwealth Bank, agreeing to partial release of the deposit, negotiating for a concession on interest and other negotiations directed to extending the dates for completion and contract alterations. Counsel referred to the whole array of facts and in particular to the two later negotiated alterations of Special Condition 42 as unequivocal conduct, communicated to the vendors, affirming the continued existence of the contract.
47 There were many acts by the purchaser consistent with the continuing existence of the contract and impliedly affirming it, but the conduct and affirmation can only have related to the whole contract and all the purchaser's rights in it, in the absence of any expression of an intention to forego some part of it. To keep the contract on foot was not inconsistent with continuing to have the right of rescission which the contract conferred. It is correct that the purchaser continued to act as if the contract was still on foot until her notice of rescission was delivered; and so she should have, as it undoubtedly was still on foot until that event. None of her conduct was inconsistent with the continued existence of her entitlement to rescind which had accrued with the expiry of 30 June 2008.
48 The vendors' counsel also contended that the purchaser had been in default in respect of what she was required to do by Special Condition 43.2, and referred to the obligation to do all things reasonably necessary to secure performance, stated in Secured Income Real Estate (Australia) Limited v St Martin's Investments Pty Limited (1979) 144 CLR 596 by Mason J at 607.
49 It may well be the correct reading of Special Condition 43 that Special Condition 43.2 is not a contractual promise to perform acts, but states acts default in performance of which produces results indicated later in Special Condition 43. In support of this reading, Special Condition 43 is for the benefit of the purchaser, and Special Condition 43.2 lists circumstances in which if they are fulfilled the purchaser has advantages including the advantage in Special Condition 43.4. The time at which those acts were to be performed and default in which was to defeat the right of rescission expired on 30 June 2008; after that, each party had the right of rescission so conferred.
50 It was contended that it appears from the bank's letter of 16 October 2008 that there had been default in that a copy of the development approval and other documents had not been available. First I observe that there had been no default in not making the development consent available by 30 June 2008 as it did not then exist and the other documents to which the bank referred could not reach a completed form without it. Secondly, the bank's letter makes no statement about when the delay referred to began and ended, or about when the documents had become available; if there were a contractual requirement for the purchaser to provide them promptly after the development consent was available there is no evidence that there was a failure in that respect and in particular the bank's letter does not state that there was a failure in that respect.
51 There were also complaints that the purchaser had only made one application for finance; the terms of Special Condition 43 show plainly that it was contemplated that there would be only one application. No doubt the purchaser could make as many others as she wished, but none of the contractual machinery turned upon her making more than one.
52 In my opinion, maintaining an existing application which has already reached the stage of a highly tentative letter of approval was a compliance with the requirement to apply for finance; maintaining an existing application was just as much applying for finance as making a fresh original application.
53 For the reasons stated I am of the opinion that the notice of rescission was effective. Accordingly, it is not necessary to address arguments about the effectiveness of the termination, or about whether the vendors were ready willing and able to complete at 5.00 pm on 31 October 2008. Nor is it necessary to address arguments which were put to me, in considerable detail, in support of the vendors' claim for damages. In my opinion the claim for damages was excessive in some respects, but it is not necessary to examine the claim in detail.
54 Nor is it necessary to examine the purchaser's claim for relief under s 55(2A) of the Conveyancing Act. I would not have upheld that claim, as the vendors did not contribute to the purchaser's difficulties in obtaining finance; nor to any difficulty. On the whole they were quite accommodating. So too was the purchaser, who agreed to the release by the stakeholder of a large part of the deposit. The contract for sale and the events relating to it, and the expenses and losses involved for both parties, have constituted an all-round economic disaster. The purchaser put a great deal of effort and expense into the proposal, including her legal costs relating to the purchase, her trouble and expense relating to the application to the bank and large expenses for the work done by Geolyse Pty Limited; the development consent which she was successful in obtaining is of no value. The vendors incurred much expense and lost the advantages which completion of the contract would have brought to them, including entitlement to balance of purchase money and to interest relating to extension of the time for completion. They had great difficulty in selling the property and sold it by auction only after many months at a price very significantly less than the amount the purchaser had agreed to pay. There have been large losses all round. It cannot be said that the vendors in any way contributed to the purchaser's difficulties and inability to obtain bank finance and inability to complete the purchase. If the purchaser's notice to complete and notice of termination were found to be effective, I would not regard this as a case where there was any significant ground of relief against forfeiture of the deposit under s 55(2A); such relief is not granted as a matter of indulgence. The unavailability of bank finance was quite foreseeable and forfeiture of the deposit was the ordinary contractual outcome, and would not in any way be unjust.
55 The purchaser has a clear right to return of the deposit, confirmed by express language in the contract with a deduction of $500. The vendors' counsel suggested that the release of part of the deposit, with the concurrence of the purchaser, by the stakeholder to the vendors themselves, in some way adversely affected her rights to its return. In my opinion there is no reason why this should be so; the deposit remains the deposit and her entitlement to recover it exists no matter who has received it. By permitting the vendors to receive part of the deposit the purchaser gave up security which protected her potential right to receive it back, but her right to receive it back was not affected. $20,000 of the deposit remained with the stakeholder, the vendors' solicitors. I was surprised to be told by counsel that the vendors' solicitors had accounted for the remaining $20,000 to the vendors, and no longer held any part of the deposit. This was a perilous thing to do, in the absence of its being clearly established that the rescission was not effective. The vendors' solicitor has placed himself at risk of personal liability for that $20,000 in the event that it is not recovered from the vendors.
56 For these reasons I propose to give judgment for the plaintiff and to make orders giving effect to the plaintiff's substantial claims and entitlement to the deposit.
Orders