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,