Plaintiff v Defendant

Supreme Court of Victoria|2010-06-17|Before: HARGRAVE J

Vendor and purchaser - Contract for sale of land - Failure by purchaser to settle on date appointed - Whether time remained of the essence or whether vendor had waived entitlement for strict compliance - Whether rescission notice effective to terminate contract on purchaser's failure to comply - Whether notice sufficient to re-establish essentiality of time as a consequence of unreasonable delay and/or breach of obligations of purchaser - Whether time stipulated by notice reasonable time for performance - Greydae Pty Ltd v Malilane Pty Ltd [2003] VSCA 27 applied.

2 The plan of subdivision was approved on 10 July 2009. Notice of this was given to the defendant's solicitors on 14 July 2009. Accordingly, settlement of the sale was due on or about 29 July 2009.

3 The defendant did not settle on the due date. Instead, the defendant sought a number of extensions of time to settle, whilst finance was arranged.

4 On 11 September 2009, the plaintiff's solicitors informed the defendant's solicitors that the plaintiff was giving consideration to serving a notice of rescission. Following this letter, there was discussion between the solicitors for the parties, in which the defendant's solicitors sought further extensions of time and asked that the plaintiff's solicitors refrain from issuing a notice of rescission.

5 There were numerous further telephone calls from the plaintiff's solicitors to the defendant's solicitors seeking updates as to when the defendant would be in a position to settle the sale. On 6 October 2009, the plaintiff's solicitors again threatened a notice of rescission unless the matter was settled forthwith.

6 By a letter dated 13 October 2009, the defendant's solicitors advised the plaintiff's solicitors that the defendant's loan had been unconditionally approved and stated that settlement 'is anticipated to take place by the 30th October 2009'.

7 When settlement did not take place by 30 October 2009, a representative of the plaintiff's solicitors telephoned the defendant's solicitor and informed her that a rescission notice would be issued. Later on the same day, the defendant's solicitors sent a facsimile to the plaintiff's solicitor stating that the finance broker had advised that mortgage documents were in the course of preparation 'and it is expected that settlement take place on the 20th November 2009 and may perhaps be earlier'. A request for a further extension of time was included in this facsimile.

8 By this time, the plaintiff's patience had worn out. On Monday 2 November 2009, the plaintiff's solicitors posted a rescission notice to the defendant's solicitor. Allowing two days for service by mail, settlement was due by no later than 20 November 2009.

9 The defendant did not endeavour to settle within this period. Instead, by letter dated 13 November 2009, the defendant's solicitor asserted that the rescission notice was invalid because the plaintiff had 'failed to remake time of the essence prior to issuing the rescission notice'. The letter continued:

We furthermore confirm our client is making arrangements to settle this matter and those arrangements are imminent and the purchaser hopes to be able to book in a settlement time shortly with you.

10 In fact, no settlement time was ever sought by the defendant. Instead, on 17 November 2009, the defendant's solicitors lodged a caveat on his behalf asserting an interest under the contract of sale.

11 At no time since has the defendant sought to settle the sale.

12 The defendant has issued proceedings to support its caveat, but has not served those proceedings on the plaintiff.

14 By letter dated 19 April 2010, the defendant was informed of the plaintiff's intention to seek the removal of the caveat.

15 This proceeding was issued on 13 May 2010 by originating motion, seeking removal of the defendant's caveat.

16 The defendant wishes to maintain his caveat. He has sworn that he intends to complete the purchase of the land, but has given no evidence as to his ability to do so.

17 It was submitted on behalf of the defendant that the application to remove the caveat should be dismissed. Three grounds were relied upon. First, because the time for payment of the balance of the purchase price ceased to be of the essence when the plaintiff gave extensions of time to the defendant, and the plaintiff has not acted so as to again make time of the essence. Second, because the time specified in the rescission notice (14 days) was unreasonable in all the circumstances. Third, because the rescission notice was misleading.

18 I do not accept these submissions. The relevant law was stated by Winneke P in Greydae Pty Ltd v Malilane Pty Ltd.[1]

19 In that case, Winneke P explained and applied the decision of Pape J in Thornton v Bassett.[2]

20 The following principles emerged from the judgment of Winneke P in Greydae:

(1) A vendor under a contract of sale which incorporates Table A of the Transfer of Land Act 1958 may waive the requirement that time is of the essence of the purchaser's obligation to pay the purchase price. If so, the vendor will have elected to waive the right to rescind the contract for the failure to pay on the specified date.

(2) However, it is open to a vendor in such circumstances to again make time of the essence, by fixing a reasonable time for payment after the purchaser has been guilty of unnecessary or unreasonable delay.[3]

21 In this case, I am satisfied that the delay by the defendant in completing the transaction had, by the time the rescission notice was served on 2 November 2009, become unreasonable. The plaintiff had threatened the issue of a rescission notice on a number of occasions, and the defendant can have been in no doubt that the plaintiff was insisting on timely settlement of the sale. The fact that the plaintiff was prepared to extend some leniency to the defendant did not make the defendant's conduct reasonable. Further, it would appear that the defendant misled the plaintiff about the state of his ability to obtain finance and the timeframe within which such finance would be obtained. It would appear that finance still has not been arranged, as the defendant has failed to tender the balance of the purchase price at any time, and the settlement day nominated in the contract has now passed by nearly one year.

22 Accordingly, the plaintiff was entitled to again make time of the essence of the contract.

23 I reject the submission that the 14 day period specified in the rescission notice was not a reasonable time. In all the circumstances of the case, especially having regard to the indications by the defendant's solicitor that finance had been obtained, a 14 day period was reasonable. Furthermore, the following factors support the conclusion that a 14 day period was reasonable in all the circumstances of the case:

(1) the leniency extended by the plaintiff to the defendant over a three month period after settlement was due;

(2) the lack of any complaint by the defendant about the 14 day period. The defendant said only that the plaintiff had failed to again make time of the essence;

(3) the absence of any evidence from the defendant as to why the period was unreasonable in all the circumstances;

(4) the fact that 14 days is the time fixed in Table A of the Transfer of Land Act.

24 In all the circumstances, the defendant cannot complain about the lack of a reasonable opportunity to settle the transaction once the plaintiff acted to again make time of the essence. Indeed, reading between the lines, it would appear that the plaintiff would have accepted settlement if an appointment to settle had been made within a reasonable time after the expiration of the 14 day period. However, as appears above, the defendant made no attempt to settle and has never offered any concrete evidence of his ability to settle.

25 It was submitted on behalf of the defendant that, nevertheless, there is no evidence that the plaintiff has accepted the repudiation constituted by the failure to settle within the 14 day period specified in the rescission notice. I reject that submission. If a further notice accepting a repudiation was necessary, it was given by the commencement of this proceeding. Counsel for the defendant rightly acknowledged that there was no conduct on the part of the plaintiff which amounted to a waiver of its right to accept any repudiation arising from the failure to settle.

26 The other matter raised on behalf of the defendant, that the rescission notice was materially misleading, was abandoned in the course of argument. Counsel for the defendant rightly acknowledged that the defendant could have been left in no doubt as to what was required. The rescission notice required him to complete the purchase within 14 days of the service of the rescission notice.

27 For the above reasons, I will order that the caveat be removed.

[3] Greydae v Malilane [2003] VSCA 27, [20]; citing Thornton v Bassett [1975] VicRp 41; [1975] VR 407 at 423-7.

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