Plaintiff v Defendant [2005] VSC 362 | Case summary

Plaintiff v Defendant [2005] VSC 362 | Case summary | Zoe

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INTRODUCTION

1 In this proceeding, the plaintiff, Aussie Invest Pty Ltd, seeks, inter alia, an order for specific performance of a contract dated 7 October 2003 pursuant to which it agreed to purchase land situated at 1581-1583 Point Nepean Road, Rosebud West from the defendant, Pulcesia Pty Ltd, for a purchase price of $730,000.

2 Following entry into the contract, a dispute developed between the parties over whether a "permit" within the meaning of the contract (the securing of which triggered liability to pay the deposit) had been granted. The plaintiff contended that it had not obtained a complying permit, but paid the deposit under protest. A term of the contract required payment of the balance of the purchase price within 30 days of the payment of the deposit. The plaintiff did not pay the balance of the purchase price within the stipulated period and the defendant served a rescission notice dated 8 February 2005 requiring completion within 14 days, expiring on 22 February 2005. On 21 February 2005, the plaintiff unsuccessfully sought interlocutory relief in this Court, arguing that the rescission notice was invalid on various bases, including the alleged deterioration of the property and chattels since the date of the contract, which, under the contract, entitled the plaintiff to hold settlement until their condition was restored. Kaye J considered that there was a serious issue to be tried, but denied the plaintiff interlocutory relief on the balance of convenience.

3 On 22 February 2005, the plaintiff's solicitor made an appointment to settle the contract at 4.00pm at the defendant's solicitor's offices, which he attended accompanied by a business associate of the plaintiff and that person's solicitor. It was proposed that the business associate would advance the funds to enable the plaintiff to settle. Negotiations occurred by telephone between the plaintiff's director, Mr Alan Burlock, who was interstate, and his business associate. By 6.00pm (the usual closing hour of the vendor's solicitor), the settlement moneys had not been tendered. The vendor's solicitor required the purchaser's representatives to leave.

4 On 16 March 2005, the plaintiff again unsuccessfully sought injunctive relief from this court.

THE PARTIES' MAIN CONTENTIONS

5 The plaintiff contends that the rescission notice dated 8 February 2005 is invalid on several bases.

6 First, it contends that it is entitled to withhold settlement unless and until a permit as defined in the contract has been secured. Although a permit was issued on 25 November 2004, it does not include endorsed plans, which the plaintiff contends fall within the scope of the contractual definition of a permit.

7 Secondly, the plaintiff contends that, pursuant to the contract, it is entitled to withhold settlement if the property and the chattels are not in the same condition (fair wear and tear excepted) as at the date of the contract. It alleges that the property and the chattels have significantly deteriorated and have not been restored.

8 Thirdly, the plaintiff contends that the rescission notice was not served by a method stipulated in the contract.

9 Alternatively, the plaintiff contends that if the rescission notice were valid, it is entitled to relief because, in substance, it was ready, willing and able to complete, but its attempt to do so was thwarted by the defendant's solicitors. Although the settlement moneys were not tendered at the meeting on 22 February 2005, the plaintiff argues that they would have been tendered had the vendor's solicitor allowed it an additional half hour, whereas instead, he prematurely terminated the settlement meeting at 6.00pm and failed to deliver to the plaintiff's solicitor a facsimile essential to completion, which had arrived at the offices of the vendor's solicitor at about 5.54pm.

10 Alternatively, the plaintiff argues that it is entitled to relief against forfeiture, on the basis that it has expended over $100,000 in obtaining the permit to develop the property, which has substantially increased its value.

11 Although the plaintiff contends that it is not obliged to settle, it now seeks to do so.

12 The defendant contends that the rescission notice dated 8 February was valid. It contends that a permit within the contractual definition does not include endorsed plans. It argues that there has been no significant deterioration in the condition of the property or the chattels. Further, it argues that the rescission notice was validly served. It denies that the conduct of the defendant's solicitor caused or contributed to the plaintiff's failure to tender the purchase price and argues that the contract was terminated upon the plaintiff's failure to complete on 22 February 2005. By counterclaim dated 30 June 2005, the defendant seeks, inter alia, an order for the removal of a caveat lodged by the plaintiff to protect its interest as purchaser under the contract.

SUMMMARY OF FACTS AND EVIDENCE

13 By contract of sale dated 7 October 2003 ("the contract"), the plaintiff, Aussie Invest Corporation Pty Ltd ("Aussie Invest"), agreed to purchase from the defendant, Pulcesia Pty Ltd ("Pulcesia"), a property situated at 1581-1583 Point Nepean Road, Rosebud West ("the property") for a price of $730,000.

14 Situated on the property were a disused large building with several small cabins and a small unit to the rear. The chattels were not identified by the contract, but were stated to have "an agreed value of $50,000 which sum is included in the price."

15 The contract was executed on behalf of Pulcesia by its director, Tania Pozzer, and on behalf of Aussie Invest by Alan Burlock.

16 The contract provided for a deposit of $73,000, being 10% of the purchase price (which, save for the part deposit of $1,000 acknowledged to be already paid) was payable upon the meeting of the conditions. The residue of $657,000 was to be paid in accordance with Special Condition 5.

17 By Special Condition 3.1, the deposit was payable at the expiration of 14 days from the date on which the plaintiff obtained or secured a permit.

18 By Special Condition 5, the balance of the purchase price was to be payable within 30 days of the payment of the deposit.

19 Prior to the execution of the contract, Mr Greg Numa, a consultant to the plaintiff, conducted an external inspection of the property. On 13 September 2003, Alan Burlock, a director of the plaintiff, and his son, Adam Burlock of Group Management Pty Ltd, also inspected the property from the outside. Mr Numa and the Messrs Burlock gave evidence that the property and the chattels were in good condition at the date of the contract, but according to the plaintiffs' witnesses, they have deteriorated significantly since that time. That assertion was disputed by the defendant.

20 Ms Pozzer and Constable O'Connor, a police officer stationed at the Rosebud Police Station, gave evidence on behalf of the defendant that the property and the chattels were in very poor condition from the outset and had not significantly deteriorated. That issue is discussed in detail below.

21 The plaintiff lodged a caveat to protect its interest as purchaser under the contract.

22 The plaintiff applied to the Mornington Peninsula Shire Council ("council") for a permit to build seven townhouses on the property. The council refused to issue the permit.

23 A dispute arose over whether the plaintiff had applied for the permit within 60 days of the date of the contract, and was therefore entitled to the benefit of the "permit extension period" under clause 10.1 of the contract to seek a review by VCAT of the council's determination.

24 The parties agreed to resolve the dispute on the terms set out in a written agreement dated 29 January 2004 ("variation agreement").

25 The variation agreement relevantly stated:

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26 The plaintiff applied to VCAT for a review of the council's determination to reject its application for a permit. On 11 November 2004, VCAT ordered that a permit be granted for the development of the land for the purposes of nine dwellings. The council issued a permit on 25 November 2004. The plaintiff, however, contended that the permit granted by the council did not constitute "obtaining a permit" within the terms of the contract, as the plaintiff was required to submit various plans to be approved and endorsed by the council before the development could commence. The plaintiff claimed that the obligation to pay the deposit was thus not enlivened. The defendant disputed that and served a rescission notice dated 14 December 2004 on the plaintiff.

27 Following further correspondence between the parties, on 7 January 2005, the plaintiff paid the deposit of $72,000 under protest. The letter of its then solicitor, Frank A. Sanna, to the defendant's solicitors, Rigby Cooke, dated 7 January 2005, denied that liability to pay the deposit had arisen, and maintained that the rescission notice of 14 December 2004 was invalid.

28 The defendant's solicitors, by letter to Mr Sanna dated 10 January 2005, acknowledged receipt of the deposit, but disputed the plaintiff's contentions concerning the rescission notice and the permit. The letter stated that the defendant now regarded "the contract of 7 October 2004 (as varied by the document dated 29 January 2004)" to be unconditional, and the balance of settlement moneys to be due and payable on 7 February 2005.

29 Around this time, the plaintiff instructed a builder, Mr Nino Mino of Pearl Hill Developments Pty Ltd, to inspect the property externally. Mr Sanna, by a letter to Rigby Cooke dated 28 January 2005, stated that the inspection had revealed the removal of bathroom fixtures and fittings and floorboards, together with damage to ceilings. The letter stated that as the damage had occurred after the signing of the contract, the vendor was responsible for it and the matter must be resolved prior to settlement.

30 On or about 4 February 2005, the plaintiff requested access to the property. The letter of Mr Sanna to Mr Wyatt (the partner principally responsible for handling the matter) of Rigby Cooke dated 4 February 2005, expressed the plaintiff's dissatisfaction with the particulars provided by the defendant under s.27 of the Sale of Land Act. The letter asserted that the plaintiff's request for access to inspect the property had been denied.

31 The plaintiff did not pay the balance of the purchase price on 7 February 2005, as required by the defendant.

32 The letter of Mr Sanna to Mr Wyatt dated 8 February 2005, enclosed a report entitled "Rosebud Deveopment Condition Report" (sic), which referred to inspections carried out by Group Project Management Pty Ltd and Mr Nino Mino. The plaintiff again requested access to the property. It asserted that settlement could not proceed until the damage to the building and chattels had been addressed. The letter stated that, as the defendant could not deliver the property in the same condition as when sold, it was not entitled to serve a rescission notice.

33 The defendant served a "notice of rescission or termination" dated 8 February 2005 ("rescission notice") on the plaintiff and on the plaintiff's solicitors by facsimile transmission on 8 February 2004, and also by ordinary pre-paid post. The rescission notice required completion by 22 February 2005. It asserted that the plaintiff had made default under the terms of the contract by failing to pay the balance of the purchase price within 30 days after payment of the deposit moneys on 7 January 2005. The rescission notice stated that the vendor "specifies the said default and intends to exercise the vendor's rights and remedies under the contract unless:

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34 By a further letter to Rigby Cooke also dated 8 February 2005, the defendant's solicitors contended that the defendant was entitled to serve the rescission notice. Requesting a copy of the report by Group Project Management Pty Ltd, the letter stated that in the absence of "information ... that can be sensibly given to the Vendor to obtain instructions the sale will just proceed."

35 By originating motion dated 14 February 2005, the plaintiff sought a declaration that the rescission notice was invalid on the ground that the defendant's failure to allow for an adjustment of the purchase price on account of damage to the building and chattels in was breach of general conditions 2.1, 2.2 and 2.3 of the contract, and thus entitled the plaintiff to withhold performance. Alternatively, the plaintiff claimed that the defendant's refusal to allow the plaintiff to inspect the land and chattels was (if not in contravention of Special Condition 12 of the contract or Table A of the Seventh Schedule of the Transfer of Land Act 1958), unconscionable.

36 The plaintiff, by summons filed 14 February 2004, sought interlocutory relief restraining the plaintiff from treating the rescission notice as valid.

37 Kaye J, sitting in the Practice Court on 21 February 2005, noted that there was a serious question to be tried whether the condition of the chattels had deteriorated between the sale date and the present, and found that there was "an arguable case that the plaintiff was deprived of its right to inspect the property" under the relevant clause of the contract.[1]

38 On the basis of the balance of convenience, however, he did not grant the plaintiff of a declaration that the defendant was not entitled to serve the rescission notice.

39 Kaye J expressed the view that the plaintiff could settle the following day (that is, 22 February 2005) and reserve its rights to compensation.

40 Following Kaye J's refusal of interlocutory relief on 21 February 2005, Mr Sanna contacted Mr Wyatt and made an appointment to settle the contract at 4.00pm on 22 February 2005 at the offices of Rigby Cooke.

41 Mr Sanna, Mr Wayne Mailing (a business associate of Mr Alan Burlock) and Mr Mailing's solicitor, Ms Wolveridge, attended at Rigby Cooke on the afternoon of 22 February 2005. All had arrived by 4.20pm. Mr Mailing had agreed to Mr Burlock's request that he advance the funds to enable the plaintiff to settle, provided that satisfactory arrangements to protect his interests were concluded with Mr Alan Burlock, who was in Queensland. Negotiations between Mr Burlock and Mr Mailing continued by telephone between 4.00pm and 6.00pm. It is not disputed that by 6.00pm, the purchase moneys had not been tendered and Mr Wyatt then requested Messrs Sanna, Mailing and Ms Wolveridge to leave. They did so without tendering the settlement moneys. The defendant, by letter of Rigby Cooke to Mr Sanna dated 23 February 2005, terminated the contract.

42 There is conflicting evidence about much of what occurred at the offices of Rigby Cooke on the afternoon of 22 February 2005. It is discussed in detail below.

43 The plaintiff again applied for interlocutory relief by summons dated 9 March 2005 seeking, inter alia, an order:

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49 The plaintiff did not allege that it delivered an executed substituted contract and an authority to the defendant. It merely alleged that Mr Sanna made oral requests in a telephone discussion that Mr Wyatt arrange the execution of a transfer to a third party, which circumstances do not constitute nomination or substitution pursuant to General Condition 5.

50 The plaintiff did not claim that any funds were tendered, or that there was any attempt to tender them on 22 February 2005. Rather, it claimed that Messrs Sanna and Mailing attended the offices of the defendants solicitors "for the bona fide purpose of completion of the contract" but the meeting was "prematurely terminated" and they were required to leave.

51 I took the view at the hearing on 16 March 2005 that on the material before the Court, the plaintiff had not established a serious question to be tried in relation to whether it had proffered a substituted purchaser pursuant to its contractual and general law entitlements. I dismissed the plaintiff's summons.

52 The settlement moneys remain unpaid. By a contract dated 1 February 2005, the plaintiff has sold its interest in the property to Pearl Hill Developments Pty Ltd for a purchase price of $1,080,000.

53 Mr Alan Burlock gave evidence that the plaintiff expended approximately $114,632 in securing the permit. Mr Anthony Bishop, a real estate agent and valuer, gave evidence that, with the permit, the value of the property as at 29 March 2005 was $1,200,000-$1,300,000.

WHETHER RESCISSION NOTICE INVALID DUE TO FAILURE TO OBTAIN PERMIT WITH ENDORSEMENTS

54 The plaintiff contended that the rescission notice dated 8 February 2005 was invalid because the purchaser had not, at that date, obtained a "permit" within the definition of that term in the contract and was therefore not obliged to pay the deposit (although it had done so under protest on 7 January 2005) or to settle the contract.

55 The plaintiff contended that "permit" within the definition of special condition 1.1(v) of the contract means a permit including plans endorsed by the council. The plaintiff had applied for a permit to build seven townhouses on the property in late 2003 or January 2004. The council refused its application. In February 2004, the plaintiff applied to VCAT for a review of the council's decision. VCAT handed down a decision on 11 November 2004 and ordered that a permit be issued. On 25 November 2004, the council issued a planning permit.

56 It is not disputed that the planning permit issued on 25 November 2004 did not include endorsed plans and that endorsed plans have still not been obtained.

57 The plaintiff's argument based on the failure to obtain a permit with endorsed plans was not, in my view, coherently, consistently or precisely articulated.

58 The amended statement of claim pleads that it was a term of the contract that "the sale was subject to a permit being obtained by the plaintiff to enable the property to be developed for the construction of townhouses on the land". It pleads that, following execution of the contract, the plaintiff commenced an application for planning approval for a townhouse development on the land, and that on 29 January 2004, the defendant agreed to vary aspects of the contract ("the variation contract") by, in particular, extending the time for its completion. It further pleads that on 7 January 2005, the plaintiff paid the deposit under protest. The particulars state that "the deposit was paid under protest on the ground that the plaintiff had not yet obtained a planning permit of the kind defined in the contract."

59 There is no specific allegation based on the failure to obtain the permit with endorsed plans in the amended statement of claim, which, (although amended by leave granted on the first day of trial) provides no indication of the plaintiff's argument on that issue.

60 At trial, Mr Heaton, senior counsel for the plaintiff, argued that, on a proper construction of the contract, the plaintiff's failure to obtain a permit including endorsed plans entitled it to withhold settlement.

61 The plaintiff argued that because it had not obtained a permit with endorsed plans, it was not in default at the date of the rescission notice. It was not obliged to pay the deposit (although it had done so under protest) or to settle by paying the balance of the purchase price until a permit with endorsements had been obtained. The plaintiff contended that special condition 9 of the contract inured solely for the benefit of the purchaser and could be waived by it. On that view, following the issue by the council of a permit (by order of VCAT, following its review of the council's decision) the plaintiff had an unlimited period to apply for, and obtain endorsements to, the permit. It would not be liable to pay any part of the purchase price (other than the $1,000 part deposit paid on signing) unless and until such endorsements were obtained.

62 Although counsel for the plaintiff did not expressly so submit, it would appear that, on the plaintiff's construction, there is no obligation on the plaintiff to apply for the endorsements and no time limits imposed on the application for, or securing of, such endorsements.

63 Although the amended statement of claim alleges that the contract contains a term that the contract was subject to a "permit" being obtained, there is no such express term in the contract. Nor, in my opinion, does that alleged term accurately or fully represent the combined effect of its relevant terms, as varied or confirmed by the variation agreement.

64 By special condition 9 of the contract, the contract is "subject to and conditional upon the purchasers obtaining and/or securing the permit during the Permit Period and/or the Permit Period". The contract is, therefore, subject to the purchaser obtaining a permit within a specified period.

65 By Special Condition 1.1(v):

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66 By Special Condition 1.1(viii) "'the Permit Period' shall mean the period commencing on the Day of Sale and extending for a period of four months there from".

67 By Special Condition 1.1(ix) "'the Permit Extension Period' shall mean the period commencing on the day immediately following the expiration of the Permit Period and extending until at least the day fourteen days after the receipt in writing of the Appeal Decision".

68 By Special Condition 1.1(vi) "'the Appeal Decision shall mean the receipt in writing of a decision of VCAT or a decision of an Appeal there from in respect of the Application of the Purchaser for the Permit".

69 In the present case, the permit period expired on or about 8 January 2004. The permit extension period expired "at least" 14 days after the receipt of the VCAT decision dated 11 November 2004, that is, on or about 25 November 2004. (The term "at least" in the definition in special condition 1.1(ix) is, in my view, meaningless verbiage. It relates to no specified or discernable criteria and is therefore severable.) There was no appeal from the VCAT decision.

70 The variation agreement does not alter the relevant definitions contained in the special conditions of the contract. Rather, its effect was to confirm that the plaintiff was still entitled to the benefit of specified contractual provisions which incorporate the defined terms. The variation agreement resolved a dispute over whether the plaintiff had failed to satisfy the precondition of its entitlement to a permit extension period, which, pursuant to clause 10.1, applied only if the purchaser had lodged an application for a permit within 60 days from the date of the contract.

71 It follows from the above that if, as it contends, the plaintiff failed to obtain a permit within the meaning of the contract by late November 2004, the requirements of special condition 9 were not satisfied. The failure of a condition subsequent would ordinarily result in the avoidance of the contract.

72 The plaintiff, however, contended that when special condition 9 was read in conjunction with special conditions 10.2 and 16 of the contract, it was clear that the failure to satisfy special condition 9 would not automatically determine the contract, and further, that the plaintiff could at any time waive the relevant condition, which inured for its sole benefit.

73 Special condition 10.2 provides that,

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75 Special Condition 1.1(x) is a definition. It is not clearly expressed, and while the last phrase does not follow from the preceding statement, it purports to entitle the purchaser to proceed to purchase the property by paying the deposit.

76 The meaning of the phrase "the Purchaser may proceed to purchase the property by paying the deposit pursuant to the Contract at any time during this termination notice period" is unclear. It assumes that the commencement of the contract termination process pre-dates the payment of the deposit. If it permits the purchaser to resist termination of the contract pursuant to a written notice given by the vendor under Special Condition 10.2, the purchaser's entitlement to do so is conditional upon it taking action to purchase the property within the "contract termination period" that is, the 14 days after service of the notice.

77 On any view, special condition 9 does not inure for the sole benefit of the purchaser. It imposes a time limit for the purchaser to obtain the permit (whatever the permit entails). The failure to satisfy the deadline enlivens the rights conferred on the vendor under clause 10.2 to serve a notice, which may result in the termination of the contract.

78 In my opinion, if, as the plaintiff contends, it failed to obtain a permit within terms of special condition 1.1(viii) within the time stipulated by special condition 9, the vendor was entitled, at any time 14 days after 25 November 2004, to serve a notice of its "intention to terminate this contract".

79 No particular form of notice is prescribed in special condition 1.1(x).

80 The rescission notice dated 8 February 2005 expresses the vendor's intention to rescind the contract within 14 days of service, as contemplated by special condition 10.2, although it refers to the purchaser's failure to pay the balance of the purchase price, rather than the failure to obtain a complying permit

81 The plaintiff sought, in this context, to rely on special condition 16, which provides that the purchaser may at any time advise the vendor that it wishes to make the contract unconditional and proceed to settlement.

82 Condition 16 would entitle the purchaser to resist the vendor's termination of the contract pursuant to clause 10.2, on the basis of a failure to satisfy special condition 9. It would also appear to permit the purchaser to waive other conditions which entitle it to withhold settlement, such as deterioration in the condition of the chattels.

83 Special condition 16, however, requires the purchaser to notify the vendor that it wishes to make the contract unconditional. Further, it must "proceed to settlement". No time limits are specified, but the purchaser's waiver of securing the permit would logically render the deposit payable forthwith or, if it had already been paid, the balance of purchase price would become payable within 30 days.

84 As at the date of service of the rescission notice, the purchaser had not advised the vendor that the contract had become unconditional. On the contrary, the letter of Mr Sanna, the then solicitor for the purchaser, to Rigby Cooke dated 7 January 2005, insisted that "AIC maintains that the payment of the deposit under the contract of sale is still conditional upon the obtaining of a planning permit with endorsed plans".

85 As the time prescribed for the satisfaction of condition 9 had elapsed in late November 2004, the purchaser was, as at 8 February 2005, entitled to serve a notice of its intention to terminate the contract within 14 days, pursuant to clause 10.2 if the purchaser had not obtained a complying permit. It follows that if the "permit" requires the inclusion of endorsed plans, as the plaintiff contends, the failure to secure them does not provide any basis for invalidity of the rescission notice as at 8 February 2005. The failure to secure the "permit" (whatever its meaning) within the stipulated time merely entitles either party to terminate the contract upon service of a notice, although, on one view of the definition in clause 1.1(x), the purchaser is entitled to resist termination by the vendor, if it gives notice that it will not insist upon conditions and proceeds to settle. The failure to obtain the permit within the specified time is not a valid basis for the purchaser to resist settlement. Rather, it is a basis for termination of the contract, which the purchaser may resist only by settling.

86 If the above analysis be incorrect, I am nevertheless satisfied that a "permit" within special condition 1.1(v) does not require the inclusion of endorsed plans, or any other approval or consent obtained outside the time frames established by the definitions in special condition 1.1(viii) and (ix). The planning permit granted by the council on 25 November 2004 states, inter alia, that conditions apply to the permit, including that "before the development starts, amended plans must be submitted to and approved ... when approved, the plans will be endorsed and will then form part of the permit". The permit's status as such is independent of the plans.

87 The definition of "permit", although broad and inclusive, does not include a reference to plans, endorsed plans or endorsements.

88 The reference to the "permit as amended, varied, substituted or replaced ... and any further planning permits ... required to be issued by the purchaser from the council ... such permit to be on terms and conditions satisfactory to the purchaser" in terms imposes no time limits. The definition of "permit" must, however, be construed within the context of, and subject to, other relevant definitions and the terms of the contract as a whole. The definition of "permit" is subject to the time frames in special conditions 1.1(viii) and (ix) which expressly apply to securing it. Any contrary construction would render nugatory and meaningless the express terms of the contract, which must be construed in such a way as to give it a sensible and rational operation.

89 It follows that, in my opinion, the rescission notice was not invalid due to the plaintiff's failure to obtain a permit including endorsed plans.

WHETHER RESCISSION NOTICE VALIDLY SERVED

90 The plaintiff contends that the special condition 13 of the contract required service of the rescission notice by registered post or by courier and that the rescission notice is invalid due to failure to satisfy either of those requirements.

91 It is not disputed that the rescission notice was not served by registered post or by courier. It was served on the plaintiff by facsimile on 8 February 2005 and by prepaid post and on the plaintiff's solicitor by facsimile on 8 February 2005 and by prepaid post.

92 General Condition 9.1 of the contract provides:

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96 Special condition 13 prevails over condition 13 of Table A only to the extent of any conflict. Special condition 13 requires service "on the other party by forwarding the same by Registered Post or courier to the address of that party as contained herein or to that party's solicitor". Its requirements for service of a notice on another party are, in my opinion, clearly in conflict with those of condition 13 of Table A. In my opinion, however, there is no clear inconsistency between the two provisions in relation to service of a notice on a party's solicitor. The phraseology of special condition 13 requires, in terms, service on the other party by forwarding the notice by registered post or courier to that party's address as "contained herein".

97 The requirements of forwarding the notice by registered post or courier do not expressly or clearly apply equally to service on the solicitor, thus excluding the permitted methods of service on a solicitor set out in condition 13 of Table A of the Seventh Schedule. Not all elements of the preceding phrase could logically apply to the party's solicitor, as that would produce the absurd result that the solicitor must be served at "the address of that party as contained herein".

98 The terminology of special condition 13 is in contrast to that of condition 13 of Table A of the Seventh Schedule which, by specifying delivery or posting "either to the party to be served or his legal practitioner at their respective addresses as named in the contract" clearly establishes that the means apply to both the party and the legal practitioner and stipulates a different place of service for each of them.

99 If, as the plaintiff argues, special condition 13 requires service on a solicitor by registered post or courier, it is either incomplete, because no place for service is specified, or it imposes an illogical requirement of service on the solicitor at the party's address. In order to give effect to the plaintiff's construction of special condition 13, it would be necessary to disregard its literal terms and to infer and specify an appropriate place for service on the solicitor.

100 An alternative construction of special condition 13 is that it specifies requirements only for service on a party, while leaving open, as an alternative, service on a solicitor by the methods permitted under condition 13 of Table A of the Seventh Schedule.

101 Special condition 13 should be construed in the context of the contract as a whole, including the terms incorporated by reference from Table A of the Seventh Schedule. The Court should not be astute to detect inconsistency between the provisions. In that context, a literal reading of special condition 13, which preserves the alternative means of service on a solicitor established by condition 13 of Table A of the Seventh Schedule, is preferable to the plaintiff's construction, which (even if the ambiguity of expression is resolved in its favour) leaves the operation of the provision either irrational or incomplete.

102 It is preferable to ascribe to special condition 13 a meaning which gives it a literal and rational operation in the context of the contract as a whole, rather than a meaning which necessitates curial redrafting of its terms.

103 I am not persuaded that special condition 13 is in conflict with, and excludes, the permitted methods of service on a solicitor set out in condition 13 of Table A of the Seventh Schedule.

104 In the present case, as the rescission notice was served on the defendant's solicitor by both prepaid post and facsimile transmission, the requirements of condition 13 of Table A of the Seventh Schedule were satisfied.

105 In my opinion, the plaintiff has not established that the rescission notice was invalid due to non-compliance with a prescribed method of service.

106 Given my construction of special condition 13 of the contract, it is, strictly speaking, unnecessary to consider whether, if it required service on a solicitor by registered post, a failure to comply would invalidate the rescission notice, although it was indisputably received by the purchaser's solicitor and the mode of service was not relevant to an issue of substance, such as a deemed date of receipt.

107 It is well established that notices of rescission must "be clear in their terms" and "must in fact comply with the requirements of validity prescribed by the condition of the contract which authorises them".[2]

108 In Chapman v Larrescy,[3] Helsham CJ observed, by way of obiter, that he would be bound to hold that a rescission notice was invalidated by a failure to comply with the prescribed requirement of service by registered post, but noted that reliance on that ground was without merit.[4] In Kennedy v Collings Construction Company,[5] Giles J referred to authority in which contractual provisions for the service of a notice by registered post had been held to stipulate permissible, rather than obligatory, means of giving notice.[6] His Honour held that a condition in a building contract requiring service of a dismissal notice by registered post should be seen as merely facultative, rather than excluding other methods, such as personal service. He considered that there would be sufficient compliance with the condition if the notice were given by any other means which was shown to have resulted its receipt.[7] He observed that the argument based on non-complying service was "wholly unmeritorious".[8]

109 In the present case, the plaintiff's argument based on the failure to serve the rescission notice by registered post is unmeritorious not only because the notice was undoubtedly received, but because the argument was raised only on the first day of trial. Nevertheless, in my opinion, special condition 13 is not merely facultative in so far as it specifies more onerous methods of service than those permitted in condition 13 of Table A of the Seventh Schedule. Compliance with the methods specified in special condition 13 would, in my view, be required. If Giles J's liberal construction were generally applied, it would render nugatory the specification of particular methods of service.

110 Given my construction of special condition 13, the service on the vendor's solicitor did not fail to comply. If that construction be wrong, as the purchaser had failed to pay the balance of the purchase price with 30 days of the deposit moneys being paid on 7 January 2005, the rescission notice, even if invalid pursuant to the contract, was, in my view, nevertheless, effective to make time of the essence. In consequence, the purchaser's failure to pay within the prescribed 14 days (which was a reasonable period in the circumstances) constituted a repudiation, entitling the vendor to rescind, as recognised in Burke and Riversdale Road Pty Ltd v Gemini Investment Pty Ltd[9] and Nund v McWaters.[10]

CONDITION OF PROPERTY AT TIME OF EXECUTION OF CONTRACT

111 General condition 2 of the contract stated:

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112 The plaintiff alleged that between the time of execution of the contract of sale (in October 2003) and January 2005, the condition of the premises and the chattels substantially deteriorated and that it was and is entitled to hold settlement.

113 The defendant maintained that the property was in a severely damaged and dilapidated state at the date of sale, and has not significantly deteriorated.

114 The defendant alleged that all negotiations were conducted on the basis that the plaintiff would demolish the existing building and redevelop the site. Mr Alan Burlock conceded that the plaintiff intended to demolish the existing premises but contended that it intended to construct a sales office and display premises, within the existing building. Further, he testified that the plaintiff intended, in the event of delay in redevelopment, to let the existing premises as budget holiday accommodation.

115 The plaintiff first complained about the condition of the property by the letter of Mr Sanna to Rigby Cooke dated 28 January 2005. At trial, there was conflicting evidence as to the condition of the property and chattels at the date of sale in October 2003

The plaintiff's evidence

116 By affidavit dated 14 February 2005, Mr Alan Burlock stated that around October 2003, he inspected the property on several occasions with his son, Mr Adam Burlock, Project Manager of Group Project Management. He stated that the property, which he described as "an unused motel consisting of one large building and several small cabins", was in "reasonable condition" and "nearly serviceable". He further stated that "[a]ll chattels such as furniture and bedding, were in good condition" and "all floors, doors, light fittings, plumbing fittings and ceilings" were present.

117 Although his affidavit gave the impression that Mr Alan Burlock had assessed the property himself, at trial, he conceded that he had not personally undertaken an internal inspection of the property. Nor, he stated, had he "peer[ed] in the windows" or made "notes of the furniture and chattels". His knowledge of the internal condition of the property was based solely on information received from Adam Burlock and Greg Numa.

118 Mr Adam Burlock gave evidence that between October 2003 and the present, he had visited the property at least 20 times. He described it as "an unused motel....which retained a number of one bedroom apartments that had been used for holiday lettings and some cabins". Adam Burlock also conceded that he had not inspected the interior of the property, as it was securely locked on every visit. His opinion of the condition of the property was derived from "...other members of the company that had been through and done all the fire inspections", who were not identified.

119 Adam Burlock stated that when he undertook an external inspection with his father on 13 September 2003, the building was in "average" condition with all windows, doors, walls, floors and ceilings intact, and that he was able to see by looking through the windows "various carpets, drapes and blinds, shower screens and curtains, light fittings, sanitary fittings and tap ware, kitchen cabinets with cooking appliances and bathroom cabinets, which all appeared to be in fair and useable condition". He further stated that "there were no missing floorboards, all the doors and windows were in place and the premises had complete drapes and light fittings". He indicated that at that time, no windows had been boarded up.

120 During the inspection, Adam Burlock took diary notes which relevantly state:

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121 Adam Burlock stated that in his opinion, the property could have been "rehabilitated for budget rental purposes, at the lower end of the market, on an economic basis". On the basis of his inspection on 13 September 2003, he valued the chattels at $50,000.

122 At trial, Adam Burlock testified that he recalled carpet tiles and carpets in most of the rooms and light fittings.

123 During the inspection on 13 September 2003, Adam Burlock took photographs of the outside of the property ("the October 2003 photographs"). Eight photographs were tendered in evidence. Although undated, the presence of an estate agent's billboard marked "sold" suggests that they were taken around the time of the sale in October 2003.

124 The photographs show the property from two angles: the front angle facing Point Nepean Road; and a side angle from Miriam Street. Those showing the front of the property appear to have been taken from the other side of Point Nepean Road. They do not include sufficient detail to permit any conclusions as to the condition of the doors, windows or curtains. At trial, the defendant tendered an enlargement of one section of the front of the property, from which it appears that some windows to the front left of the property may have been boarded up at the time the October 2003 photographs were taken.

125 The photographs of the Miriam Street side of the property clearly show curtains hanging in several windows. Some curtains appear to cover the windows completely, although at least one is slightly drawn. Vegetation either lodged, or growing, in the roof guttering is visible.

126 Mr Greg Numa, who was a consultant property manager to the plaintiff in 2004, by affidavit sworn 3 August 2005 stated that, prior to the purchase of the property, he carried out inspections on "at least two occasions with the agent". Mr Numa's affidavit gave the impression that he had conducted internal inspections. At trial, he conceded that he had conducted only one inspection before the purchase and that, due to the presence of a "caretaker" at the property, he had been unable to inspect the property internally.

127 Despite the failure to make an internal inspection, Mr Numa stated that the property was "habitable" and in "reasonable" condition: "[t]he floor boards and windows were intact, as were the fixtures, fitting and chattels. There were light fittings doors, curtains, blinds and carpet. There were bits and pieces of furniture, and a kitchen stove". He provided no details of the condition of the fixtures, fittings and chattels, but said that they were generally intact.

128 Both Mr Numa and Adam Burlock testified to a severe deterioration in the condition of the property from October 2003 to early 2005. Their later assessments were again based solely upon external inspections. Mr Numa inspected the property in January 2005. He stated that at that time, "[t]he interior (as can be seen looking through the window)has been severely damaged with the floor boards removed, doors and windows broken, fixtures fitting and chattels damaged and removed, ceilings have been pulled down".

129 Adam Burlock inspected the property again on 8 February 2005. He testified that he observed that:

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The defendant's evidence

135 Ms Tania Pozzer, a director of the defendant, gave evidence that at the time of the sale of the property, it was in a severely damaged and dilapidated condition At that time, Pulcesia had owned the property for approximately two years. Ms Pozzer stated that the property was previously a nursing home and consisted of a main building and one small brick veneer unit to the rear. The main building "had no running water to it; had no power connected to it; had broken windows, broken appliances and damaged internal walls through out; and had floorboards missing and floorboards that had been taken away"

136 She further stated " ....the walls, windows and doors to the building were smashed and badly damaged. There was a lot of graffiti. The floor was mainly bare concrete, but where there were wooden floorboards, they were either missing or badly damaged. The building was putrid".

137 Her attempts to insure the building were unsuccessful.

138 Ms Pozzer stated that the property had been vacant for approximately ten years. Between October 2001 and October 2003, police were required to attend the property on a regular basis to remove squatters.

139 Ms Pozzer denied that there were any carpet tiles at the property at the time of sale. All had been removed by the previous owner in October 2001. She stated that the carpet remaining in some of the bedrooms was in very poor condition. There were no blinds, no light fittings except battens, and all remaining curtains were in very poor condition. The only furniture consisted of several mattresses.

140 In early 2002, the defendant leased the rear cabin for a reduced rental, on the basis that the tenant would provide security to ensure that squatters did not move in. Ms Pozzer testified that the tenant was not a caretaker and was not required to undertake repairs. He departed during 2004 and left no forwarding address.

141 In February 2001, the council issued a Building Notice addressed to the previous owners of the property which stated that the property posed a safety risk and that "the building has significant defects that make the building unsuitable for habitation in its current condition". The Notice required the owner to evacuate the building within 14 days of receipt and to undertake works bringing the building into compliance with the relevant regulations.

142 Constable Trevor O'Connor of the Victorian Police Force gave evidence of the condition of the property. Constable O'Conner was stationed at the Rosebud Police Station over the relevant period from 2001 -2005.

143 By affidavit dated 6 April 2005 Constable O'Connor stated that the property:

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144 At trial, Constable O'Connor stated that he had attended the property at least four to five times in the four years, from 2001. Two inspections had taken place during 2005. Constable O'Connor stated that the property was familiar to the majority of the Rosebud Police Force as a squatter site, and a place where persons of interest to the police force might be found.

145 He conducted a full internal inspection lasting 15-20 minutes on each visit, gaining entry via an unlocked side door. Constable O'Connor recalled seeing several old mattresses and bed frames at the property and curtains in a "very poor state". The windows to the front of the property had been boarded up for some time.

146 Although the majority of his inspections were carried out at night, in cross-examination, Constable O'Conner denied that visibility was poor. He testified that he inspected the property thoroughly by torchlight. Whilst the primary purpose of the inspections was to search for intruders, he was "quite observant" as to the condition of the property.

147 In his opinion, the property was uninhabitable and beyond repair. He emphasised that the condition of the property had not altered substantially during the relevant period, stating that "[i]t still looked pretty much the same as it did....from the initial inspection.....I couldn't say that there was any extra damage done because the state of the place initially when I saw it was that bad".

148 Constable O'Connor gave evidence that Ms Pozzer, around mid-2004, had contacted the police requesting they attend the property, due to concerns about the risk of injury to squatters as a result of the condition of the premises.

Conclusion on condition of the property and chattels

149 Mr Heaton submitted that the evidence of Mr Numa and Mr Adam Burlock, and the latter's contemporary diary note, should be preferred over that of Ms Pozzer and Constable O'Connor. He argued that the valuation of the chattels at $50,000 in the contract of sale was inconsistent with the defendant's evidence on the severely damaged state of the property and chattels at the time of sale. He also argued that the presence of a caretaker at the property suggested that the property was being maintained.

150 Mr Heaton further contended that the deterioration in the property was the recent result of occupation by squatters.

151 The plaintiff provided no identification or list of the chattels at the property in October 2003. There are no sufficiently detailed photographs from that period against which to compare the photographs taken in February 2005, which, in any event, do not comprehensively depict the same subject matter. It is not possible to compare like with like. The October 2003 photographs show that at least some windows were completely covered by curtains, suggesting that it would have been impossible to view all the internal rooms. That accords with the lack of consistency amongst the plaintiff's witnesses on the layout of the property and the existence and state of the alleged furniture, fixtures and other chattels.

152 None of the plaintiff's witnesses inspected the property internally at the time of the purchase in October 2003. Mr Numa inspected the property only once, and both he and Adam Burlock undertook only external inspections. Neither Mr Cherrie nor Mr Mino of Pearl Hill Developments visited the property prior to January 2005. The Report written by Adam Burlock, after discussions with Mr Cherrie and Mr Mino, was based solely on his external inspections.

153 In contrast, both Ms Pozzer and Constable O'Connor inspected the interior of the property on numerous occasions over the period 2001 to 2005. Both live locally. Both were credible witnesses. Constable O'Connor was a particularly compelling witness, clear, consistent, detailed and independent. His evidence is consistent with the Building Notice issued in 2001.

154 While the value of $50,000 ascribed to the chattels is inconsistent with the evidence of Ms Pozzer and Constable O'Connor, it does not outweigh it.

155 In my opinion, the plaintiff has not established that there was any significant deterioration in the property or the chattels between the time of the execution of the contract and February 2005.

156 It follows that plaintiff was not entitled to withhold settlement on the ground that the defendant was in breach of general condition 2, and the rescission notice was not invalid on that basis.

WHETHER PLAINTIFF'S ATTEMPT TO SETTLE PREMATURELY TERMINATED BY VENDOR'S SOLICITOR

157 It is not disputed that the plaintiff was not in a position to pay the balance of the purchase price from its own funds at the settlement meeting on 22 February 2005. Mr Alan Burlock, a director of the plaintiff, conceded that, despite his assertion in an affidavit sworn 17 February 2005 (in support of the application made before Kaye J on 21 February 2005) that the plaintiff "had the funding to complete the purchase and was ready and willing to do so", in fact, the plaintiff did not have the funds. Its finance provider required 48 hours' notice to draw down funds. As at 21 February 2005, no arrangements had been made with the finance provider and it was not possible for the plaintiff to obtain the funds from it in time for settlement on 22 February 2005.

158 Mr Alan Burlock, his wife, Mrs Teagan Burlock (the co-director of the plaintiff), and his son, Dean Burlock, were in Queensland on 21 and 22 February 2005. They were unable to return to Melbourne due to an emergency closure of an airport.

159 Mr Alan Burlock conceded that the plaintiff's only means of obtaining the sum of approximately $750,000 necessary to settle the contract on 22 February 2005 was to secure funding from his business acquaintance, Mr Wayne Mailing, whom he contacted by telephone from Queensland on 21 February 2005 for that purpose.

160 Messrs Mailing and Burlock discussed by telephone the proposed provision of funds by Mr Mailing or his company, Melbourne Contractors Pty Ltd, on various possible bases, including a loan to the plaintiff, the nomination or substitution of Mr Mailing or his company as purchaser under the contract, or an "on sale" of the property by the plaintiff to Mr Mailing or his company.

161 Mr Mailing gave evidence that on 22 February 2005, he obtained bank cheques to the total amount of about $750,000 required for settlement. He stated that he would have been prepared to advance the funds on the most expedient basis, "based on getting the correct paperwork we required". He agreed that he relied on his solicitor's opinion and advice in relation to the risks and the paperwork, although he would ultimately make a commercial decision whether or not to proceed with the transaction. He confirmed that "until we got the faxes that we required I wasn't prepared to proceed".

162 On 22 February 2005, Frank Sanna, the plaintiff's solicitor, made an appointment with Mr Wyatt of Rigby Cooke, for settlement to occur that day at 4.00pm at the offices of Rigby Cooke. Mr Sanna arrived at the offices Rigby Cooke at about 4.00pm on 22 February 2005.

163 On Mr Sanna's arrival, Mr Wyatt was called to reception. He attended with Ms Pamela Morton, a solicitor employed by Rigby Cooke, who had checked the statement of adjustments for the settlement. It is undisputed that the vendor had clear title and was in a position to settle. Mr Sanna informed the Rigby Cooke solicitors that he was not ready to settle, as the money had not arrived and he was waiting for other people to attend.

164 At about 4.10pm, Ms Wolveridge, Mr Mailing's solicitor, arrived, but she was not introduced to Mr Wyatt or Ms Morton at that point. As neither Mr Sanna nor Ms Wolveridge had the funds to settle, Mr Wyatt and Ms Morton returned to their respective offices to await developments. Ms Wolveridge and Mr Sanna were shown to a conference room where they awaited the arrival of Mr Mailing.

165 Although Mr Mailing stated in his affidavit that he arrived at the offices of Rigby Cooke at about 4.00pm, it is clear that he arrived somewhat later, at about 4.20pm, and was not present during the initial contact with Mr Wyatt and Ms Morton. Ms Wolveridge deposed that Mr Mailing did not have the settlement moneys when he first arrived at Rigby Cooke but took steps to obtain the bank cheques at a time prior to 5.00pm.

166 Whilst in the conference room, Messrs Mailing and Sanna and Ms Wolveridge discussed the arrangements between Messrs Burlock and Mailing in relation to the provision of finance by Mailing or his company.

167 Ms Wolveridge advised that Mr Sanna should obtain a power of attorney to enable him to execute to her satisfaction an instrument of transfer (which she had prepared) by the plaintiff of the property to Mailing's company, Melbourne Contractors Pty Ltd. A transfer of the property to Mailing or his company was envisaged at that stage, as there was no time to prepare the documentation for a secured loan.

168 Mr Sanna discussed matters with Mr Alan Burlock by mobile telephone.

169 According to Ms Wolveridge, Mr Sanna stated that Mr Burlock would not agree to transfer the property to Mr Mailing or his company. At a certain stage, a short and barely-legible handwritten document purporting to confer authority on Mr Sanna to sign documents on behalf of the plaintiff ("the short authority") was received by facsimile transmission at the offices of Rigby Cooke. It would appear that Rigby Cooke personnel provided it to Mr Sanna.

170 The barely legible document stated:

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171 Ms Wolveridge perused the short authority and was not satisfied with its form or terms. She continued to advise that a power of attorney should be provided and sought that Mr Sanna give a personal undertaking that he was authorised to sign documents for the plaintiff. Mr Sanna was not willing to provide such an undertaking.

172 In his third affidavit sworn 2 August 2005, Mr Alan Burlock, for the first time stated that during the course of the afternoon of 22 February 2005, he had prepared a handwritten document embodying the terms of his agreement with Mr Mailing ("the handwritten agreement") and had arranged for it to be transmitted by facsimile to the offices of Rigby Cooke from Queensland at 4.00pm. Mr Burlock's son, Dean Burlock, stated in his affidavit that, at Alan Burlock's request, during the afternoon of 22 February 2005, he handed certain documents to the receptionist at an apartment complex to be sent by facsimile transmission and had waited for the transmission reports. In his affidavit, which was cast in general terms, Dean Burlock did not specifically refer to the handwritten agreement.

173 The handwritten agreement is dated 22 February 2005 and is executed by Alan Burlock and the plaintiff as borrowers and Wayne Mailing as lender. It recites that the borrower entered the contract of sale dated 7 October 2003 to purchase the land and has entered a contract of sale to sell the land to Pearl Hill Developments Pty Ltd, due for settlement on 1 March 2005.

174 It refers to the lender's agreement to provide bridging finance "this day" of $700,000 for a 90 day term, to enable the purchaser to settle the purchase contract. It provides, inter alia, for the borrowers' equity in the property to pass to the purchaser should the purchaser fail to repay the loan within 90 days.

175 At trial, Dean Burlock identified the handwritten agreement as one of the facsimiles he had caused to be sent on 22 February 2005 "to the people that I understand Dad was buying the property off". He stated that it was sent to the same facsimile number as the other documents he had delivered to be sent by facsimile. On cross-examination, Dean Burlock conceded that the handwritten agreement might have been sent to Wayne Mailing. He stated that because the time of sending was so important, he had observed the sending of the relevant facsimiles and had timed them by his watch. That assertion appeared inconsistent with the fact that he did not take any steps to ensure that the facsimiles were marked to any person's attention or included a cover sheet. Mr Sanna, Ms Wolveridge and Ms Morton did not refer to the handwritten agreement. Mr Wyatt gave evidence that there was no record of its reception at the offices of Rigby Cooke on 22 February 2005, although the office system recorded all incoming facsimiles.

176 Neither Mr Dean Burlock nor Mr Mailing made any reference to the handwritten agreement in their affidavits. Mr Mailing initially stated at trial that he received the handwritten agreement on 21 February 2005. Although he appeared to retract that statement, his evidence did not constitute a clear and independent assertion that he received it during the course of the meeting at Rigby Cooke. Mr Dean Burlock did not transmit the facsimiles himself, and despite his assertion that he timed their sending, he took no records to identify what was sent and did not affix a cover sheet. The copy facsimile in evidence at trial bore an imprint of the date 2 August 2005.

177 I considered Mr Wyatt to be a clear, consistent and credible witness who presented a detailed account of events. I prefer the evidence of Mr Wyatt to that of Messrs Dean or Alan Burlock or Mr Mailing, to the extent of any inconsistency. I do not consider that the handwritten agreement was received at the offices of Rigby Cooke on 22 February 2005.

178 At about 5.30pm, Ms Wolveridge wrote out a form of authority which would be satisfactory to her as "some evidence" of the agreement between Messrs Burlock and Mailing, although it did not, in her view, eliminate all risk to her client. Mr Sanna dictated it over the telephone to Alan Burlock, so that he could write it out, and he and Mrs Teagan Burlock could sign and return it.

179 Mr Mailing, in his affidavit, stated that by 5.30pm, all security matters had been resolved, with the exception of the appointment by the plaintiff of Mr Sanna to act as the plaintiff's agent.

180 At about 5.30pm, Mr Wyatt and Ms Morton were recalled to join Messrs Sanna, Mailing and Ms Wolveridge for a short time in the conference room. Mr Wyatt brought the settlement documents with him. It was apparently only at that point that Ms Wolveridge identified herself to Mr Wyatt and Ms Morton, although she did not state that she was a solicitor. Mr Mailing introduced himself only as "Wayne". His role in the transaction and his relationship to the purchaser were not explained to Mr Wyatt or Ms Morton.

181 Mr Wyatt and Ms Morton, who were clear, consistent and conscientious witnesses, testified that Mr Sanna stated that he, Mr Mailing and Ms Wolveridge were finalising a few matters. They needed further material or information from Mr Burlock, but had the cheques and would settle shortly. Mr Wyatt stated that the offices of Rigby Cooke closed at 6.00pm and he advised Mr Sanna that if the settlement had not occurred by that time, his party would be asked to leave the office.

182 According to Mr Wyatt, he was present in the conference room from 5.31pm to 5.34pm on this occasion.

183 Mr Wyatt and Ms Morton left the room, but attended again at 5.52pm. Mr Sanna again raised the question of the condition of the chattels. Mr Wyatt said that the situation was unchanged. Mr Sanna stated that therefore, the vendor was not in a position to settle.

184 In his affidavit, Mr Mailing deposed that he stated, "If Wyatt insists that it transfer to AIC then we must await the Agency Appointment fax Burlock was sending to us". He deposed that, at about six o'clock, in response to Wyatt's question, "Why don't you settle", he stated, "We are waiting on a fax from Mr Burlock" and described it as an agency appointment fax. He did not, in terms, depose that he or Mr Sanna advised Mr Wyatt that the expected facsimile transmission was crucial to settlement or would enable them to settle very shortly, or that they requested Mr Wyatt to extend office hours in order to await its arrival. In re-examination, Mr Mailing stated that "everyone was telling" Wyatt that "[someone] was waiting on [something] to be faxed through from Queensland", but did not state that Mr Wyatt was informed of the significance of such a facsimile. Mr Sanna, in his affidavit, did not depose that either he or Mr Mailing advised Mr Wyatt that they were expecting a facsimile to arrive very shortly at Rigby Cooke's offices which would enable them to settle immediately thereafter, or would play a part in settlement. However, at trial, he stated, "I believe I mentioned that we were waiting on a fax ... on the balance of probabilities". He did not assert that he informed Mr Wyatt of what the facsimile was, or that it would enable settlement to occur. He conceded that Mr Wyatt and Ms Morton were not aware of the role to be played by the facsimile or of the dealings between Messrs Mailing and Burlock.

185 Mr Wyatt deposed that at no stage during the various meetings with Mr Sanna, Mr Mailing and Ms Wolveridge

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186 At trial, Mr Wyatt again denied that he was informed that Messrs Sanna and Mailing were awaiting a facsimile which would allow settlement to occur.

187 Mr Wyatt conceded that at some stage, he saw the short authority, but stated that he had nothing to do with it and had not directed his staff to hand it to Mr Sanna.

188 Ms Morton, who was present with Mr Wyatt at the meetings, was not aware "of any facsimiles coming through" to Rigby Cooke. She did not hear Messrs Sanna or Mailing state that they were awaiting a facsimile to enable settlement to occur. She stated that "there was no suggestion of any fax coming through".

189 Ms Wolveridge did not recall either Messrs Mailing or Sanna stating to Mr Wyatt or Ms Morton that they were awaiting a facsimile.

190 Mr Sanna's evidence was vague and was not included in his affidavit. Mr Mailing was not, in my opinion, generally speaking, a clear, precise or impressive witness. To the extent of the conflict, I prefer the clear, consistent testimony of Mr Wyatt, supported by the testimony of Ms Morton and Ms Wolveridge, that no-one informed him that a facsimile was expected.

191 At the meeting in the conference room at a time after 5.50pm, Mr Mailing placed the bank cheques on the table in a position where they were clearly visible to Mr Wyatt. Mr Wyatt asked whether Mr Mailing was tendering the settlement moneys unequivocally. It is undisputed that, although Mr Mailing initially replied, "Yes", immediately upon Ms Wolveridge explaining to him that "unequivocally" meant "without conditions", Mr Mailing retracted his assent and made clear that he was not tendering the money unconditionally.

192 Mr Mailing or Mr Sanna, then, at a time after 5.50pm, asked Mr Wyatt whether various alternatives to settlement of the contract could be pursued, including an adjournment until the next day, and whether, if Mailing proffered the purchase moneys, he could purchase the property himself, or have a direct transfer from the vendor to Melbourne Contractors Pty Ltd. Mr Wyatt rejected all of those proposals.

193 It was then observed that six o'clock had arrived. Mr Wyatt had on more than one occasion warned the visiting party that the office closed at that time.

194 Ms Wolveridge gave evidence that she advised Mr Mailing that he was not secure to tender the moneys and that Mr Burlock had done nothing to help himself, or to secure Mr Mailing's money. According to Ms Wolveridge, Mr Mailing, as they were leaving, agreed with her comments and although Mr Sanna stated that Alan Burlock was sending the awaited facsimile, responded, "Let's forget it". At trial, Mr Mailing, however, stated that he had expressed a continued willingness to settle and only left the offices of Rigby Cooke under protest, when Mr Wyatt threatened to call security. Ms Wolveridge presented as a credible witness and I prefer her testimony to that of Mr Mailing.

195 Mr Sanna deposed that Mr Wyatt merely told them that the offices would close at 6.00pm and they were all asked to leave. Ms Wolveridge deposed that Mr Wyatt stated at about 6.00pm, "Well, I would ask you to leave."

196 Mr Wyatt denied that he threatened to call security and stated that the parties left peaceably.

197 At a time between 6.10 and 6.20pm after the departure of Messrs Sanna and Mailing and Ms Wolveridge), Mr Wyatt became aware of the handwritten authority sent by facsimile at the behest of Alan Burlock. The facsimile had arrived at (or shortly after) 5.54pm. Mr Wyatt recognised from perusing it that it related in some way to the plaintiff and the contract, despite the absence of a cover sheet or other indication of the intended recipient, but he had no means of ascertaining its precise significance. He took no further steps in relation to it.

198 Mr Wyatt testified that the offices of Rigby Cooke were locked after 6.00pm, but a sign adjacent to the door provided instructions for making after hours contact. The purchaser made no attempt to contact the vendor or the vendor's solicitors later on the evening of 22 February 2005, to arrange a further appointment or to tender the purchase moneys that evening. The purchaser did not attempt to arrange a further appointment or to tender the purchase moneys during the following days.

Summary of Findings

199 I conclude that the balance of purchase moneys was not, at any stage during the course of the meetings on 22 February 2005, unconditionally tendered in settlement of the contract.

200 I conclude that neither Mr Wyatt nor Ms Morton were, at any stage, informed that Messrs Mailing, Sanna or Ms Wolveridge was expecting a facsimile to arrive shortly at the offices of Rigby Cooke, the receipt of which would enable settlement of the contract to be concluded immediately or soon thereafter.

201 I conclude that the handwritten agreement was not received by facsimile transmission at the offices of Rigby Cooke on 22 February 2005.

202 I conclude that the short authority was received at Rigby Cooke and was passed to Mr Sanna by staff, without any involvement by, or direction from, Mr Wyatt.

203 I conclude that Mr Mailing was not willing to provide the funds to settle unless an authority in a form satisfactory to his solicitor was received. I am not persuaded that the authority document which arrived at Rigby Cooke's offices at about 5.54pm or shortly after would have been satisfactory to Ms Wolveridge, as it was not signed by Mrs Burlock as Ms Wolveridge had contemplated in drafting it.

204 I am satisfied that at about 6.00pm, Mr Sanna, Mr Mailing and Ms Wolveridge left the offices at the request of Mr Wyatt, without any protest, and that Mr Wyatt requested them to depart civilly, in accordance with several forewarnings. I am satisfied that none of them requested Mr Wyatt's permission to remain any longer and did not state that only a short delay was required to receive a facsimile or to await the occurrence of any other development which would permit settlement immediately to occur. I am satisfied that no person advised Mr Wyatt that the plaintiff wished for an opportunity to settle at some time later that evening or requested him to make arrangements for such a settlement.

205 I am satisfied that Mr Mailing made a comment indicating that he did not intend to persist any longer with the attempt to participate in a settlement that day.

206 I am satisfied that, as he testified, Mr Wyatt became aware of the handwritten authority sent at the behest of Alan Burlock some time after the departure of Messrs Sanna and Mailing and Ms Wolveridge. He had not been advised that it was expected. He recognised that it related to the plaintiff and the contract, but could not ascertain its significance. He took no further steps in relation to it.

Relief against Forfeiture

207 Mr Heaton, senior counsel for the plaintiff, argued that if the rescission notice were valid, the plaintiff was entitled to relief against forfeiture on the basis of the principles enunciated by the majority in Tanwar Enterprises Pty Ltd v Cauchi ("Tanwar").[11] He did not contend that the purchase moneys were tendered on 22 February 2005. Rather, he argued that "as at about 6.00pm the plaintiff was 99 per cent there to be able to settle" and that even if Mr Sanna or Mr Mailing did not tell Mr Wyatt that they were expecting a facsimile shortly which would enable them to settle, in circumstances where the cheques were available and internal dealings appeared to be occurring between Mr Mailing and Mr Sanna, there was such a likelihood that settlement would occur that the conduct of the defendant vendor's solicitor, Mr Wyatt, in requiring the parties to leave at 6.00pm, amounted to a premature termination of the settlement. In consequence, time ceased to be of the essence, and another rescission notice would be required.

208 Mr Heaton submitted that the plaintiff had until midnight to tender moneys in settlement, but realistically, settlement could only occur at the offices of the vendor's solicitor, Rigby Cooke. He argued that it was incumbent on Mr Wyatt to take some action after he became aware of the facsimile transmission at about 6.10-6.20pm, and realised that it was relevant to the dealings relevant to the settlement of the contract.

209 The plaintiff contended that the conduct of the vendor's solicitor had caused or contributed to the plaintiff's breach of the essential time condition. Further, the plaintiff had expended over $100,000 in obtaining the permit, resulting in an increase of approximately $500,000 in the value of the land, which would represent a windfall to the defendant if relief were not granted. In such circumstances, Mr Heaton argued that the plaintiff was entitled to relief against forfeiture and specific performance of the contract, pursuant to the principles endorsed in Tanwar. Alternatively, the plaintiff sought the return of the deposit pursuant to s.49(2) of the Property Law Act.

Relief against Forfeiture or Specific Performance - Relevant Legal Principles

210 The nature, availability and relationship of the remedies of relief against forfeiture and specific performance where a contract for sale of land is terminated due to the purchaser's breach of an obligation to pay under an essential time stipulation, were analysed extensively by the High Court in three successive decisions: Legione v Hateley ("Legione"),[12] Stern v McArthur ("Stern")[13] and Tanwar.

211 In Legione, the earliest of the three cases, the High Court diverged from two Privy Council decisions, Steedman v Drinkle ("Steedman")[14] and Brickles v Snell ("Brickles")[15] which, as binding authority, had precluded lower Australian courts from granting specific performance of a contract for sale of land cancelled due to the purchaser's breach of an essential time stipulation.

212 In Legione, the purchasers under a contract of sale, after paying a deposit, moved onto the land and built a residence. They subsequently failed to complete the contract on the date specified in a rescission notice. At first instance, the purchasers unsuccessfully claimed that the vendors were estopped from treating the contract as rescinded before the date for completion, on the ground that the vendors' representative conveyed the impression that the vendors would not, without further notice, insist on their legal right to treat the contract as rescinded if the purchasers failed to pay on the due date. On appeal, the Full Court of the Supreme Court of Victoria dismissed the vendors' appeal, holding that they were estopped from rescinding the contract. The vendors appealed to the High Court.

213 The High Court, by a majority (Gibbs CJ, Murphy, Mason and Deane JJ) dismissed the appeal. Brennan J dissented. Gibbs CJ and Murphy J delivered a joint judgment, as did Mason and Deane JJ. Gibbs CJ and Murphy J considered that the vendors' conduct gave rise to an estoppel, but Mason and Deane JJ did not. Both joint judgments recognised that relief against forfeiture was an available remedy in the circumstances, but the reasoning for that conclusion differed.

214 Due to the binding authority of Steedman and Brickles, the purchasers did not seek relief against forfeiture or specific performance of the contract below, but raised that claim for the first time before the High Court.

215 Gibbs CJ and Murphy J considered that the vendors were estopped from treating the contract as rescinded. They found that the statements of the vendor's representative had induced a belief that the vendors would not enforce their strict legal rights without further notice, which, coupled with their failure promptly to communicate any change of attitude, had contributed to or caused the purchasers' failure to pay by the due date.

216 Mason and Deane JJ did not consider that the vendors were estopped from treating the contract as rescinded. They did not find any representation that unless they were advised to the contrary, the purchasers could, with impunity, disregard the expiry of the time fixed by the rescission notice.

217 Gibbs CJ and Murphy J, in their joint judgment, rejected the view that equity cannot relieve against forfeiture of a purchaser's interest under a contract of sale terminated due to breach of an essential time stipulation.

218 They referred[16] to the observations of Lord Wilberforce in Shiloh Spinners v Harding ("Shiloh Spinners"),[17] in which his Lordship recognised that the equitable jurisdiction to relieve against forfeiture had not been confined to any particular type of case, and whatever its limits, clearly applied to cases where the object of the transaction was to secure payment or where the heads of fraud, accident, mistake or surprise justified equity's intervention.

219 Their Honours took the view that if the remedy were confined to penal conditions, the forfeiture of the interest of a purchaser who has defaulted in the payment of purchase moneys due under a contract for sale of land could be seen as "penal" in the relevant sense.[18]

220 They also considered that the cases predating Steedman and Brickles, in which equity had, (subject to conditions), relieved against the forfeiture of a purchaser's interest in land despite failure to comply with a condition of which time was of the essence, should be preferred.[19]

221 Their Honours adopted the broader principle that "A court of equity will grant specific performance, notwithstanding a failure to make a payment within the time specified by the contract if there is nothing to render such an order inequitable".[20] They recognised that the inclusion of a time stipulation in a contract would generally render such relief inequitable, but stated that there was no reason to distinguish in principle between relief against forfeiture of payments made under the contract, and relief against forfeiture of the purchaser's interest under a contract of sale. While they considered that relief against forfeiture as a preliminary to an order for specific performance would be "exceptional", they stated that there was no reason in principle "why such an order should not be made if it will not cause injustice but will, on the contrary, prevent injustice."[21]

222 Their Honours considered that, in the case before them, the forfeiture of the purchasers' interest could be unjust because the vendors would gain, as a windfall, the valuable house erected on the land, and the purchasers' breach in paying only four day's late, was neither "wilful nor serious", so that "to enforce the legal rights of the vendors in these circumstances would be to exact a harsh and excessive penalty for a comparatively trivial breach".[22]

223 Mason and Deane JJ, in their joint judgment, recognised that Steedman and Brickles were "daunting obstacles" confronting the purchasers, standing "seemingly as authority for the proposition that specific performance, even by way of relief against forfeiture, is never ordered when a stipulation as to time, which is of the essence of the contract, has not been observed."[23]

224 Their Honours also preferred the expansive view of the equitable jurisdiction to relieve against forfeiture adopted in earlier authority, such as Kilmer v British Columbia Orchard Lands Ltd,[24] which conformed to "the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct.[25]

225 According to one established view, the equitable jurisdiction to relieve against penalties and forfeitures where the true object of the penalty was to secure money, was based on recognition that the payment of the money would sufficiently satisfy the obligee's legitimate expectations.

226 Mason and Deane JJ emphasised that, although the distinction was often blurred, the forfeiture of a purchaser's estate or interest in land due to breach of an essential term was conceptually distinct from a penalty.[26] A penalty provision operated punitively by imposing an additional or different liability on breach. It exceeded the damage the vendor suffered by reason of the purchaser's default. In contrast, forfeiture involved the loss or determination of an estate or interest in property due to failure to perform a covenant. They considered that the forfeiture of a purchaser's interest in land pursuant to a contractual stipulation regulating the vendor's common law right to rescind lacked the essential character of a penalty.

227 Nevertheless, they did not consider that the rationale for relief against forfeiture in the penalty cases applied to all cases of relief against forfeiture. They stated,

[56]

234 They concluded that in the case before them, the vendors' conduct, while not sufficient to ground an estoppel, created an impression that further time to pay might be allowed. In consequence, the purchasers' breach was not wilful. It was also clear that unless relief were granted, the purchasers would lose the value of the dwelling house they had erected. It was not clear, however, what the vendors' gain would be, or whether specific performance without conditions would adequately safeguard the vendors.

235 Although the majority in Legione concluded that there was jurisdiction to grant relief against forfeiture in the circumstances, they remitted the case to the Supreme Court for the determination of relevant issues on which no evidence had been led.

236 Brennan J dissented. He took the view that there was "no ground for relieving the defaulting purchaser against forfeiture of her interest in the land rather than against forfeiture of the payments of instalments of the purchase price."[33] His Honour concluded that the purchasers' equitable interest in the land depended on the contract. On failure to pay within the stipulated time where time was of the essence, the purchasers lost the right to enforce the contract and thus the interest in the land. Consequently, there could be no interest in land nor relief against its forfeiture, independent of the right to decree to enforce the contract. Brennan J stated "The relief to which a defaulting purchaser is entitled if he loses his right to specific performance is relief against the forfeiture of the purchase price other than a reasonable deposit."[34]

237 While the High Court majority in Legione rejected the earlier view that relief against forfeiture of a purchaser's interest under a contract of sale of land was necessarily precluded by the failure to pay the purchase price according to an essential time stipulation, much remained unclear. While in their joint judgment, Mason and Deane JJ characterised such relief as "exceptional", a literal application of the five subsidiary questions they appeared to recognise as ultimate determinants would negate an essential time stipulation in many cases where a purchaser had effected some improvements and tendered payment only slightly late. Further, the relative importance of relevant factors was not conclusively stated. Although they considered that most cases would ultimately be resolved by reference to the five questions at an earlier point in the joint judgment, their Honours appeared to emphasise the conduct of the vendor in causing or contributing to the purchaser's breach, which is but one of the five subsidiary questions. They also recognised that the unconscientious conduct of a vendor in seeking to take advantage of fortuitous benefits would fortify the case for relief, but did not make clear the precise relationship of that factor to the other grounds.

238 Similarly, it was unclear how "the special heads of fraud, mistake, accident or surprise or some other element which would render it unconscionable or inequitable to insist on forfeiture",[35] which Mason and Deane JJ appeared to approve at one point, related to the five subsidiary questions.

239 Further, the view (tentatively adopted by their Honours) that a purchaser's interest in land under a contract was commensurate with its entitlement to specific performance involved a circularity, in that the existence of the proprietary interest depended upon the availability of remedies which themselves depended on the existence of the interest.

240 The relationship of relief against the vendor's reliance on a valid rescission under the contract, to the availability of specific performance of the contract, was not clarified. It would appear that some antecedent relief in relation to a valid rescission notice would be required, in circumstances where it was determined that a defaulting purchaser was nevertheless entitled to specific performance.

241 As Brennan J in Stern subsequently stated, "it can be accepted that the means by which equity protects a purchaser's estate in land in a Legione case and relieves against its forfeiture is by denying validity to the vendor's act of rescission. In principle, that must be so."[36]

242 Gaudron J, in Stern, also acknowledged, "It is convenient to remark at once that there is some uncertainty as to what is involved in cases such as the present in the remedy or relief against forfeiture".[37]

243 Her Honour further observed that, "There was reason to accept that if, at law and in equity, a contract has been rescinded, it may be necessary to reinstate the contract as a preliminary to the grant of specific performance".[38] She stated that "the issue raised by a purchaser who seeks specific performance of a contract is not whether relief should be granted against the forfeiture of the interest arising under the contract, but whether specific performance remains an available remedy notwithstanding rescission."[39]

244 In Stern, purchasers under a terms contract providing for purchase by instalments over 14 years, took possession and built a house on the land. After some years, the purchasers, a married couple, separated. Thereafter some instalments were not paid when due, without the knowledge of the wife, who remained on the property. During 1978, the wife was informed that some arrears of instalments were payable. She sought to ascertain the amount due and attempted unsuccessfully to arrange finance to pay it. In 1979, she failed to comply with a notice to complete, making time of the essence.

245 The vendors did not seek to retain the instalments already paid under the contract (save for the deposit) and were prepared to give the purchasers credit for the value of the improvements they had made.

246 At first instance, the purchasers were refused relief against forfeiture, but the Court of Appeal allowed it because, inter alia, the vendors' rights under the instalment contract were in the nature of security for payment of the purchase price.

247 The High Court by majority (Brennan, Deane, Dawson and Gaudron JJ) dismissed the appeal.

248 Gaudron J took the view that the circumstances justifying specific performance were not limited to unconscionable conduct on the part of the vendor. She considered that where the contractual stipulation involving termination of the instalment contract was, in essence, security for the payment of the purchase price, the vendors' insistence upon their legal rights amounted to unconscionable conduct.[40]

249 Mason CJ (dissenting) stated that Legione established that equity would relieve against an unconscionable insistence on rescission and forfeiture of the purchaser's interest under a contract, but emphasised that only in "exceptional circumstances", based on unconscionable conduct by the vendor, would relief against forfeiture of a purchaser's interest under a validly rescinded contract be granted. [41]

250 His Honour observed that the doctrine of unconscionability in that context was

[64]

260 The joint judgment broke free from the circularity of reasoning arising from the proprietary analysis referred to above. It concluded that relief against forfeiture was not available where, as in Tanwar, the vendor validly terminated the contract due to the purchaser's failure to tender the purchase price by the specified date, where time was of the essence. That conclusion was apparently underpinned by a recognition that the termination of the contract pursuant to a valid rescission notice had extinguished both the contract and the purchaser's interest in land, so that neither could be the basis for relief. It was therefore not fruitful to explain the availability of relief by reference to rights under a terminated contract. In that context, although their Honours rejected Gaudron J's broader statement of principles in Stern, they adopted her recognition that the real issue in such cases is not relief against forfeiture, but whether specific performance is available notwithstanding rescission.

261 They recognised that where a valid termination of contract had occurred, a defaulting purchaser could nevertheless seek specific performance of the contract on the basis of the vendor's unconscientious reliance on its contractual right to terminate.

262 Their Honours' observations suggest that although they endorsed the result in Legione, they did not consider it properly characterised as a case of relief against forfeiture, as "the forfeiture" was simply that brought about by the notice of rescission, rather than by exercise of the vendor's right to forfeit the purchaser's property or payments to which the vendor otherwise had no title. The majority preferred the term "unconscientious" to "unconscionable" because it directed attention to "the question why the vendors ought not to be heard to assert the exercise of their legal right to terminate in answer to the claim by the purchaser for specific performance."[51]

263 Further, the term "unconscientious" would avoid potentially misleading connotations of the term "unconscionable", which encouraged "the false notions that there is a distinct cause of action, akin to an equitable tort" and "an equitable defence to the assertion of any legal right where it had become unconscionable for the plaintiff to rely on it ... ".[52] Moreover, it accorded with the fact that the vendors' legal rights may not have been acquired by conduct contrary to conscience, although subsequent reliance upon them at the time of attempted enforcement was unconscientious.

264 Finally, their Honours considered that a reference to "unconscionable conduct" could wrongly suggest that hardship or unfairness could be a sufficient foundation for equity's interference.

265 They stated:

[66]

266 While recognising that the circumstances meriting equitable intervention were not exhaustively stated, their Honours made clear that they need not be exceptional. Rather, equity would act to relieve against unconscientious conduct where it was necessary to avoid injustice, although the court would be reluctant to negate an essential time stipulation. Their Honours did not consider that the vendor's reliance on its legal rights in circumstances which involved hardship or unfairness to the purchaser would, in itself, justify curial intervention to prevent the exercise of those contractual rights.

267 They discussed, in broad terms only, the circumstances or conduct which could render the vendor's insistence on termination unconscientious in the relevant sense. They stated that "at least where accident and mistake are not involved, it will be necessary to point to the conduct of the vendor as having, in some significant respect, caused or contributed to the breach of the essential time stipulation."[54] Such conduct could include lulling the purchaser into a false sense of security that a later payment would be accepted, which could be a manifestation of "surprise".

268 Further, although the joint judgment did not consider the heads of "accident" and "mistake" in any detail, it made clear that they did not necessarily involve activity by the vendor, and would not apply to "an event for which provision could have been made but was not sought or agreed to, where to relieve against its consequences after it has occurred would deprive the other party to the contract of an essential right."[55] In particular, equity would not grant relief where "the possibility of the accident may fairly be considered to have been within the contemplation of the contracting parties".[56]

269 In Tanwar, the contractual obligation to complete on the specified date was not subject to the purchaser obtaining finance. It was unqualified and "that there might be a failure by a third party to provide finance was reasonably within the contemplation of [the purchaser]".[57]

270 Although in Tanwar there was no valuation evidence to establish the increase in the value of the land attributable to the development approvals obtained by the purchaser's expenditure, it was clear that the vendor would obtain the benefit of the development approvals. The joint judgment indicated that such a windfall, of itself, would not ordinarily be sufficient to deny the vendors' right to rescind, in circumstances where the improvements were made "at risk of the operation of the contractual provisions for termination".[58]

271 In separate judgments, Kirby and Callinan JJ also dismissed the appeal, but both assumed that the remedy of relief against forfeiture was properly invoked on the facts of Tanwar.

272 Kirby J referred to Union Eagle Ltd v Golden Achievement Ltd,[59] a case relied upon by the vendor. There the purchaser had failed to complete by a time that was stipulated in the contract to be of the essence. A courier arrived ten minutes late with the balance of the settlement moneys. The vendor rescinded the contract and forfeited the deposit. On appeal to the Privy Council, the purchaser's application for relief was refused. Lord Hoffman, delivering the judgment of the Board, stated:

[70]

275 In Romanos v Pentagold Investments Pty Ltd,[63] the purchasers under the contracts for the sale of land where time was of the essence did not pay the deposit by the specified date, which was the date of approval of certain planning permits. The vendor sought to terminate the contracts. The purchasers succeeded in the New South Wale Court of Appeal, but the High Court allowed the vendor's appeal. Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ confirmed that the question to be asked was "whether the conduct of the vendors caused or contributed to a circumstance rendering it unconscientious for them to insist on their legal rights to terminate the contracts".[64] They observed that there were no supervening events whereby time ceased to be of the essence in equity: "no estoppel, lying by, lulling to sleep or other such conduct of the vendors bearing upon the matter".[65]

276 Their Honours rejected the Court of Appeal's finding that inadvertence in paying the deposit (which would secure land of probably enhanced value) was sufficient to make out a case of "accident".

277 It is unnecessary, in the present context, to address the many difficult questions of the nature and relationship of the remedies of relief against forfeiture and specific performance arising from the joint judgment in Tanwar.[66] The principles enunciated by the High Court in Tanwar will apply in circumstances, where, as in the present case, the rescission notice was valid and the contract was terminated due to the plaintiff's failure to tender payment on the day prescribed by an essential time stipulation.

278 It is necessary, however, to consider to what extent the principles in Tanwar accord with those of decisions on which the plaintiff also relied.

279 The plaintiff placed much reliance upon Frankome v Foster Investments Pty Ltd.[67] In that case, a vendor had agreed, on several occasions, to extend the time for completion of a contract for the sale of land. Ultimately, he gave the purchaser a notice requiring completion on 26 July 1974. An appointment was made for 12 noon on that day. The vendor's solicitor brought the documentation to the scheduled settlement meeting in anticipation of concluding the settlement.

280 The purchaser's solicitor did not bring, or offer to tender, any purchase moneys, but instead brought a certificate indicating that the land was subject to a charge for land tax and sought a land tax clearance. The vendor's solicitor did not have a land tax clearance but offered to obtain the vendor's undertaking to pay any land tax outstanding. The purchaser's solicitor refused to proceed with the settlement.

281 Later that day, the vendor provided the undertaking, but the purchaser, by notice dated 26 July 1997, purported to rescind the contract from midnight on that day, and sought the return of the deposit, on the ground that the vendor was in breach of contract because it was unable to complete on 26 July 1974.

282 Holland J held that the purchaser was not entitled to rescind. Its purported rescission constituted a wrongful repudiation. He found the defendant purchaser

[78]

289 Frankome is not directly relevant to relief against forfeiture. The case determined that a purchaser which itself fails to tender performance by payment at settlement is not entitled to rescind the contract on the basis of any failure by the vendor to tender its obligations, as the parties' obligations on settlement are dependent and concurrent. Consistently with established authority, Holland J also held that a party could be ready, willing and able to complete, despite a minor and inadvertent degree of non-compliance in non-essential contractual obligations.

290 As such, Frankome has no direct application to the case of failure by a purchaser to tender payment by the due date where time is of the essence under the contract. Such cases are governed by the principles of Tanwar. To the extent to which the obiter in Frankome suggests that a purchaser cannot validly rescind in reliance on its own unreasonable or mala fides refusal to afford the vendor an opportunity to tender its performance within the time stipulated under the contract, it accords with the reasoning in Tanwar.

291 Although each case will turn on its own facts, a vendor's obstruction of the purchaser's performance, whether by an unreasonable or unfair refusal to afford an opportunity to tender it within the time stipulated or other relevant conduct, would usually render it unconscientious to insist on termination of the contract in reliance on the purchaser's breach. Such conduct would exemplify substantial causation of, or contribution to, the purchaser's breach which, as Tanwar established, may justify equitable relief.

Settlement after normal business hours

292 The plaintiff contended that, as no particular hour was specified in the completion notice, it had until midnight on 22 February 2005 to complete. In essence, it argued that the conduct of the vendor's solicitor in requiring the purchaser's party to leave at the expiration of ordinary office hours, coupled with the solicitor's failure to pass on a necessary facsimile, thwarted the purchaser's tender of its performance.

293 In Raco v Grove Homes Pty Ltd,[76] a contract for sale of land provided for completion on or before 22 May 1973, with time to be of the essence. A solicitor acting for the substituted purchaser (as agent for his city solicitor), unsuccessfully attempted to contact the vendor's solicitor on the day before settlement was due. On the day of settlement, he spoke to the vendor's solicitor, who was surprised to learn of the intention to settle that day, as he had not yet received the required transfer. The vendor's solicitor declined to fix a time for settlement. The purchaser's solicitor stated that he expected the purchaser to arrive from Sydney at 3.30 or 4.00pm with the money to settle.

294 The proposed purchaser's solicitor again telephoned the offices of the vendor's solicitor between 4.00 and 4.30pm and advised that the proposed purchaser was delayed, but would arrive about 5.00pm. On being told that the office closed at 5.00pm, he said that they would be there shortly after 5.00pm, if not before.

295 The vendor's solicitor waited at his office until 5.10pm. The proposed purchaser and his solicitor arrived at about 5.20pm, and found the office closed. They left a draft transfer, bank cheques and a letter under the door.

296 The vendor served a notice of rescission, rejecting the purported tender on the basis that it had arrived after the closure of the office on the day fixed for settlement. The purchaser contended that the vendor's rescission was invalid because completion was prevented by the vendor's solicitor's failure to keep his office open, which was unreasonable in the circumstances.

297 Helsham J rejected the purchaser's contentions. The purchaser delivered only a draft transfer, which was a sufficient reason to reject his claim. Further, Helsham J did not consider that it was unreasonable of the vendor's solicitor not to remain in attendance.

298 His Honour stated:

[82]

301 His Honour observed that whilst general guidelines were relevant, the question ultimately depended on the terms of the notice in each particular case. He concluded that in the case before him, "ordinarily times, as opposed to dates, are nominated for purposes of convenience". "Whilst the date was essential the time was merely one of convenience. Accordingly, the purchaser had up until the last moment of [the nominated day] ... to complete the transaction." [84]

302 That approach was approved by Santow J in SA Mearns v Parras Holdings Pty Ltd,[85] in which his Honour held that the specified hour of the day was ordinarily, in the absence of an expression to the contrary, a matter of convenience. Further, to find otherwise could sometimes result in the abridgment of the full number of days specified in a rescission notice.

303 In Ex parte Robertson,[86] a date for completion was nominated and the vendors appointed 3.30pm at their offices for the time and place. They were ultimately unable to complete at that time, due to difficulties in obtaining certain title documents. The purchaser's solicitors tendered the funds. They refused the vendors' request to attend again for settlement at 6.00pm that day, and purported to rescind the contract. By 6.00pm, the vendors had secured the necessary title documents.

304 Kelly J found that the vendors' solicitors made clear that whilst they were not in a position to settle at 3.30pm, they would be in a position to do so at 6.00pm.[87]

305 His Honour observed that time was of the essence, but as the time for completion was the date of settlement, and the hour was nominated only as a matter of convenience, the purchaser's solicitors were premature in giving notice as "The fact that one party is unable to settle at that instant" did not mean "that then and there the other party has a right to rescind".[88]

306 On appeal, Douglas J (with whom Connolly and Macrossan JJ agreed) affirmed that the nomination of the hour was not contractual, but constituted "merely words advising one solicitor as to the convenience of the other. Clearly it was open to the parties to settle the contract at any time on that day."[89]

307 Douglas J declined to determine whether "on its true construction it was an implied term of the agreement that settlement take place during normal business hours" as there was no evidence of what the "normal business hours" were and the matter had been raised for the first time on appeal.[90]

308 In Imperial Brothers Pty Ltd v Ronim ("Ronim"),[91] a notice to complete required completion between the hours of 9.00am and 5.00pm on the date of completion. The parties agreed on a time of 12.30pm for completion, to take place at the vendor's solicitor's offices. On the date of completion, the articled clerk acting for the purchaser was unable to complete a search of the vendor's title, because the Land Titles Office computer was not functioning. The articled clerk sought to adjourn the settlement until the following day, but when that was refused, she travelled to the vendor's solicitor's offices with a view to settling at 5.00pm. Her journey was delayed by severe thunderstorms and she arrived a few minutes after 5.00pm. The vendor rescinded the contract. The Supreme Court of Queensland Court of Appeal endorsed the strict approach to compliance with the time specified for settlement enunciated in Union Eagle Ltd v Golden Achievement Ltd,[92] in preference to the more elastic approach of Bryson J in Smilie Pty Ltd v Bruce,[93] in which his Honour contemplated that a short delay occasioned by traffic or being stuck in a lift for ten or 15 minutes might not be inconsistent with substantial performance.

309 De Jersey CJ, Pincus and Thomas JJA concluded that the parties had contracted in clear terms and "their apparent intent must be respected. It is not part of the court's role, in such a case, to engraft what it may see as a generally desirable criterion of fairness onto what the parties have agreed. If, as here, the parties have created an apparently rigid framework, then the court must respect, not disregard, the underlying intent."[94] They accepted that on a proper construction of the notice to complete, the parties intended minutes to be critical to completion. The express words of the notice excluded completion at any time before 9.00am or after 5.00pm, and did not allow for an extension of the period.

310 The Court of Appeal nevertheless concluded that the contract implicitly assumed that the vendor must be in a position to demonstrate good title, or that the purchaser was able to make the relevant search, so that if the Land Titles Office computer were inoperative on the date fixed for completion, the purchaser was not obliged to settle, and time ceased to be of the essence. The Court of Appeal upheld the trial judge's decision that the contract remained on foot, despite the vendor's purported rescission.

311 In Jeppesons Road Pty Ltd v Di Domenico,[95] a contract for sale of land provided that time was of the essence and that settlement must occur between 9.00am and 5.00pm on the settlement day. The purchaser's representative did not arrive to settle on the last available day until 5.05pm, because the funds necessary for settlement had initially been transferred to the wrong bank account. The time necessary to rectify that error and to obtain the cheques for settlement led to the late arrival. The vendor terminated the contract. The value of the land had markedly increased, due to the approval of the purchaser's application for a planning permit. The purchaser sought specific performance of the contract.

312 Atkinson J applied the principles of Ronim and Tanwar to hold that the vendor was entitled to rescind due to the failure to settle by 5.00pm and that the purchaser was not entitled to specific performance. Her Honour found that the vendor had not caused or contributed to the purchaser's breach. The breach was caused by the negligent wrong direction of funds by the buyer's financier's solicitors, which was neither a mistake nor an accident in the relevant sense. The occurrence could have been provided for by the contract.

313 The above authorities recognise that, although it is ultimately a matter of construction of the particular documents in each case, ordinarily where only a date is specified, the hour fixed for settlement is a matter of convenience, and the purchaser (or the vendor, as the case may be) is entitled to settle at any time during the final day. If, however, a particular hour or period is specified by which completion must occur, the stipulation will be given effect.

314 They do not establish that, (in a case where only a date is specified) a vendor's solicitor is necessarily obliged to remain open after ordinary business hours. In particular, the vendor's solicitor is not required to remain open on the mere "off chance" that the purchaser might seek to complete after business hours. The cases suggest that the extent of the vendor's (or its solicitor's) obligation will be governed by a determination of what is reasonable in all the circumstances of the case.

315 They also indicate that a purchaser who requires the opportunity to settle outside ordinary business hours (which must be established by evidence) bears some onus in relation to arranging it, on sufficient notice.

316 In my opinion, a purchaser's entitlement to settle at any time until midnight on the final day nominated does not (in the absence of an express stipulation in the contract or subsequent agreement) oblige the vendor to ensure that it, or its solicitor, is available to complete outside ordinary business hours. Nor does the purchaser's entitlement, of itself, require the vendor's solicitor to keep the office open outside ordinary business hours.

317 An unreasonable refusal by the vendor or the vendor's solicitor to afford the purchaser the opportunity to complete outside ordinary business hours may lead to a finding that the vendor was responsible for, or contributed to the purchaser's breach of the essential time stipulation, thereby justifying equitable intervention on the basis of the principles endorsed in Tanwar.

318 The time fixed for the commencement of the appointment to settle does not ensure the time of its completion. The reasonableness of the time of either the commencement or the conclusion of the settlement meeting may be relevant to reasonableness. It is impossible to state exhaustively the circumstances in which it would be unreasonable, unfair or culpable to refuse to remain open outside ordinary business hours in order to afford an opportunity to settle or to extend a settlement meeting which had already commenced during ordinary business hours.

319 A variety of circumstance which would render a refusal unreasonable or unfair may be envisaged.

320 For example, a refusal by a vendor or its solicitor to provide an opportunity to settle somewhat later in the evening, after ordinary business hours, may be unreasonable where a purchaser who is contractually entitled to a deadline of midnight, gives adequate notice of the requirement, and it can be satisfied without undue prejudice or difficulty.

321 It may be prudent, for the avoidance of doubt, that rescission notices fix an hour, as distinct from a day, by which completion must be accomplished. (It would be necessary, of course, to ensure that the number of days fixed for compliance with the notice was not thereby abridged.)

Return of Deposit and Property Law Act s.49(2)

322 Although the purchaser seeks the return of the deposit pursuant to s.49(2) of the Property Law Act as an alternative claim, that issue was not addressed in submissions. The authorities indicate that although the court's discretion under s.49(2) is unfettered, its exercise is "the exception rather than the rule" and will not be justified merely because the vendor will obtain a windfall. In Mallett v Jones[96] the Full Court of the Supreme Court of Victoria observed that the express terms of the parties' agreement governed their respective rights on default, and stated that "in any event the matter is in the court's discretion which, in most cases where the vendor has rescinded by reason of the purchaser's default, would probably not order the return of the deposit."[97] That approach was followed in Poort v Development Underwriting (Victoria) Pty Ltd[98] and Bantick v Boss Properties.[99] In Mulkearns v Chandos Developments Pty Ltd (No. 4)[100] Young CJ in Eq extensively discussed the equivalent New South Wales provision equivalent to s49(2). His Honour noted that "In Romanos v Pentagold Investments Pty Ltd[101] ... the High Court reiterated the importance of a deposit as security for the due performance of a contract and reversed Windeyer J's decision that the deposit ought to be refunded to a purchaser under the sub-section. Again, the purchasers were developers and the contract failed through no fault of the vendors."[102]

323 His Honour was influenced by "the string of authorities which say that ordinarily where the vendor has not been guilty of unconscionable conduct and the purchaser is a developer or a person in commerce well aware of his obligations under a contract, the purchaser is not entitled to return of the deposit, even if the property has had a marked increase in value ... ".[103]

324 In the present case, the plaintiff was a developer. The vendor was neither responsible for the purchaser's breach nor otherwise guilty of unconscionable conduct. The plaintiff has not, in my opinion, established exceptional circumstances or any other ground to justify the exercise in its favour of the court's discretion under s.49(2) of the Property Law Act.

CONCLUSION

325 In some circumstances, a refusal by a vendor or its solicitor to afford a purchaser the opportunity to complete outside business hours on the last day of settlement may render a vendor's subsequent assertion of legal title unconscientious. That is not this case.

326 In the present case, the rescission notice did not specify a time for completion, so the purchaser was entitled to complete at any time during 22 February 2005. By the appointment of the purchaser's solicitor, the purchaser's solicitor and its proposed financier attended the vendor's solicitors' offices for settlement at the "eleventh hour" of the business day on the last available date for completion. The purchaser did not tender the purchase price at any stage during a prolonged appointment, which lasted for about two hours. The purchaser's representatives did not, prior to their departure, inform the vendor's solicitor that they would be in a position to tender shortly, or at any time prior to midnight that day. Further, they did not, at the vendor's solicitor's ordinary closing time (of which they were forewarned), request to remain longer at the office, or inquire about, or seek, a further appointment to complete later in the evening. Rather, they acquiesced in the vendor's solicitor's request to leave, conveying the impression that the attempt to settle had concluded and would not be renewed that day.

327 In such circumstances, the conduct of the vendor or its solicitor did not cause, or in any way contribute to the purchaser's breach of the essential time stipulation requiring completion by, at the latest, midnight on 22 February 2005. The breach was caused by the purchaser's failure to secure the necessary funding to settle. Further, the purchaser obtained the planning permit, as in T_anwar,_ "at risk of the operation of the contractual provisions for termination". There was no fraud, surprise, accident or mistake in any relevant sense. Mr Heaton ably advanced all possible arguments on behalf of the plaintiff. There are, however, in my opinion, no circumstances, which render unconscientious the defendant's assertion of its legal title upon the plaintiff's failure to complete within the time stipulated. Further, no ground to justify the return of the deposit pursuant to s.49(2) of the Property Law Act has been established.

328 It follows that the plaintiff's claim should be dismissed. The defendant is entitled to judgment on the counterclaim for removal of the plaintiff's caveat.

Plaintiff v Defendant

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