(i) Failure to settle on the due date
84 This is dealt with partly above. Given the view I have formed as to the specified completion date, there can be no repudiation arising out of a failure to settle on 20 June 2007. Moreover, the completion date itself had not been made of the essence, so breach of the obligation to complete on 21 June 2007 (even assuming that was not caused or excused by breach on the part of the Vendors) would not evince an intention by the Purchasers not to be bound by or honour the Contract.
85 As to the assertion as to lack of finance, while a party can terminate without prior notice to complete if it can prove that the other party would have been unable to comply with the notice allowing reasonable time to complete (Rian Financial Services v Alfred Investments Properties Pty Limited (1988) NSW Conv R 55 400 at 57 699), the evidence does not enable a finding that performance of the Contract would have been impossible.
86 There is no doubt that the Purchasers, through their solicitors, had communicated to the Vendors problems in relation to arranging finance by 20 or 21 June 2007. The solicitor for the Purchasers, Mr Presbury, admitted candidly in the witness box that the Purchasers did not have the finance to complete on the completion date or, indeed, at any time.
87 However, as at 20 June 2007 the Purchasers were still taking active steps to obtain finance and it cannot be said that it would have been impossible for them to procure finance had the Contract not been terminated on 6 July 2007.
88 The statement contained in Mr Presbury's letter dated 6 July 2007 (to the effect that it appeared settlement was not feasible that day) is equally referable to the then dispute as to compliance by the Vendors with clause 57. At no time did the Purchasers evince an unequivocal intention not to complete the Contract.
(ii) Failure to send a transfer
89 Professor Butt (para 4.15) recognises the possibility that the purchaser's conduct in failing to serve a form of transfer, when viewed in the context of the purchaser's conduct as a whole, may evince an intention entirely to repudiate the contract, citing Neeta, (but noting that repudiation is rarely to be found in contracts for sale of land). Where the purchaser's failure to send a form of transfer would be a breach, but that obligation would not necessarily be of the essence, Professor Butt suggests that the vendor should first issue a notice to perform.
90 The Purchasers say that they were not obliged to send a transfer until they knew what property they were purchasing; that there was an implied obligation on the part of the Vendors to notify them accordingly; and that they were entitled to reasonable time after they were so notified in order to submit the transfer. The Purchasers say that it was not until they knew which of the two alternative lots they were in fact obliged to purchase that they were able to finalise arrangements for the purchase; including, as would have been necessary in the circumstances, upstamping the Contract and the transfer; and arranging additional finance for the additional purchase price. I have considered those matters above.
91 The failure of the Purchasers to send the transfer until shortly before the completion date nominated in the notice to complete does not seem to me to evince an intention not to be bound by the Contract. The fact is that, when the Vendors pressed for a transfer, one was prepared and sent under cover of a letter dated 4 July 2008. Moreover, the Purchasers rely upon Fekala v Castle Constructions Pty Ltd (2003) NSW Conv R 50-042, per Hodgson JA at 58,597 (and, at first instance, Windeyer J in Castle Constructions Pty Ltd v Fekala Pty Ltd (2002) NSW Conv R 56-020 at 58,379) as authority for the proposition that, by issuing a Notice to Complete without stating that compliance with clause 4.1 was required, the Vendors waived the requirement for submission by the Purchasers of a transfer.
(iii) Failure to inspect/raising of allegedly trivial issues re Special Condition 57.1
92 There was no express obligation on the part of the Purchasers to inspect the land prior to completion. Failure to inspect until shortly before settlement does not, in my view, amount to repudiation, whether alone or in combination with the other matters raised by the Vendors. It was Mr Presbury's evidence, which I accept, that it was Mr Presbury's practice to carry out such an inspection shortly before completion. This is logical; since it is only as at the completion date that the works must be complete.
93 Further, while some of the matters raised may well have been characterised as trivial, the dispute as to stormwater pipe connections was clearly not so, and, the Purchasers were entitled to raise issues with the works if there was a bona fide basis to do so. The evidence was that they did so on the basis of advice from an independent building consultant.
Conclusion as to repudiation
94 Taking all the conduct particularised by the Vendors into account, I am not satisfied that the Purchasers repudiated or renounced the Contract.
95 It is clear that if a party wrongfully terminates for non-compliance with a notice to complete (because the notice to complete is invalid) that conduct of itself can constitute repudiation, see Collingridge v Sontor Pty Limited (1997) 141 FLR 440.
96 It follows that the Vendors themselves repudiated the Contract on 6 July 2007 and the Purchasers were entitled to, and did, accept that repudiation and thereby brought the Contract to an end.
Issue 5 - Even if there had been a repudiation by the Purchasers, was there an affirmation by the Vendors of the Contract such that the right to terminate the Contract was lost?
97 In view of my findings on the fourth issue, this question does not arise.
98 A notice to complete given following one party's repudiation does not necessarily constitute an election by the giver of the notice never to accept repudiation. The Vendors relied on Holland v Wiltshire (1950) 90 CLR 409 as authority for the proposition that such a notice does no more than evince an intention to treat the contract as subsisting but only for the period up until the time stipulated for completion in the notice and that it is conditional on compliance with the notice.
99 If, as I have found here, the notice to complete is invalid but (which I have not found) the notice giver would otherwise be entitled to terminate for the recipient's repudiation, the mere giving of the notice does not preclude termination for repudiation (see Taylor v Raglan Developments [1981] 2 NSWLR 117 at 134 and Professor Butt, para 15.50 and cases cited in footnote 221 including Holland v Wiltshire).
100 Therefore, if I had found repudiation then the service by the Vendors of the invalid notice to complete would not of itself preclude later reliance on repudiation.
101 The notice of 6 July was predicated on a failure to complete not a repudiation per se. Where a party has purported to terminate upon an invalid ground, that termination will not necessarily be ineffective if a separate (valid) ground does exist (Shepherd v Felt & Textiles (1931) 45 CLR 759). Therefore, had I been satisfied that the Purchasers had repudiated or renounced the Contract by 6 July 2007, (and subject to any issue which might arise by reason of the Vendors' possible awareness of and non-reliance upon a ground of termination; see Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract 9th Aust. Ed at [21.24]) I would have considered the Vendors' communication on that date as effective acceptance of the Purchasers' repudiation.
Issue 6 - Were the Vendors unable due to their own default to rely on any otherwise valid notice to complete?
102 The second of the requirements for a valid notice to complete is that the giver must be free of relevant default. The nature of a breach which disentitles the issuer of notice to complete is one which is relevant to or connected with the securing of completion (Neeta). In Collingridge v Sontor it was said that a party's breach disentitles that party from giving a notice to complete only where it goes to time or to completion.
103 I was referred also to Lindgren, Time in the Performance of Contracts (2nd ed) for the proposition that a party's breach will not preclude that party from giving a valid notice to complete where it has ceased to be of any operative effect in the progress towards completion or cannot reasonably be said to be the cause of the other party's failure to complete.
104 The Purchasers contended that breach of the Vendor's obligation under clause 4.2 of the Contract to provide information needed for the form of the transfer in relation to the identity of the property to be purchased was a default which went to their inability to comply with the notice to complete within time, because otherwise they could not practically achieve the steps necessary for completion by the completion date. So, for example, it was submitted that, as a practical matter, it is unlikely that the Land Titles Office would accept the stamping of two transfers.
105 However, given the deemed waiver of the Purchasers' obligation to provide a transfer (arising from issue of the Notice to Complete) I am not satisfied that this is a relevant breach. In those circumstances, however, the Vendors would be obliged to prepare their own transfer (and they did so).
106 The Purchasers also relied in this context on the alleged breach of clause 57 (principally the failure to connect new downpipes to stormwater pipes) and the alleged failure of the Vendors to refer the dispute between them as to this matter for determination in accordance with that clause.
107 The evidence before me from various builders suggested that any breach of clause 57 (other than in relation to the stormwater pipes) was not substantial and was more likely than not to have been cured by the completion date or by the dated fixed for completion in the notice to complete.
108 The real dispute was as to that last bullet point item. There were no stormwater pipes. Therefore, insofar as the requirement to install new downpipes to provide for discharge to stormwater pipes is concerned, the Purchasers say the Vendors were obliged first to install stormwater pipes.
109 I was taken to pre-contractual documents which it was said would assist in the construction of this clause. In particular, it was said that the pre-contractual communications showed the importance attached by the Purchasers to (and acceptance by the Vendors of) the requirement that this work be done. However, pre-contractual negotiations and evidence of a party's subjective interests are inadmissible in construing a contract, even if there is ambiguity (Codelfa Constructions Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337). There is no claim here for misrepresentation or for rectification. I do not consider that regard can properly be had to that material for the purposes of construing this clause.
110 If the parties had intended that there be an obligation to install stormwater pipes, the Contract could easily have been drafted to have so provided. The Contract did not do so in express terms and I do not consider there is a basis on which to imply such an obligation. There is still some operation that can be accorded to this last bullet point without the need to imply such an obligation. For example, that bullet point would oblige the Vendors to install new downpipes and probably also to ensure that they be capable of connection to any future stormwater pipes. Nevertheless, if there are no stormwater pipes to which the drainage downpipes can presently be connected then, logically, there can be no breach by reason of a failure to do so.
111 The next alleged breach was the failure to refer (what was acknowledged to be) a dispute between the parties for determination under clause 57. The Contract places an obligation on both parties in that regard and there was equally no referral by the Purchasers of the dispute for determination. I do not accept that any such breach would ordinarily disentitle the Vendors from issuing a notice to complete (since a claim for damages would still be preserved even if it were later found that there had been a breach of the obligation to carry out the works prior to completion). It is arguable that in some cases a breach of that kind might go to completion; for example where completion was conditional upon those (since until a dispute in relation thereto was determined, it may be impossible for a party to know if it was obliged to complete). However, clause 57.1 does not make completion conditional on this work being done and, on balance, where neither party chose to invoke the procedure for determination of disputes in my view it would not have been a disentitling factor.
112 Therefore had it been necessary to determine this issue I would not have found that the Vendors were precluded, by reason of the alleged breaches, from relying on the notice to complete.
Issue 7 - Was the Vendor ready, willing and able to complete?
113 The third requirement for a valid notice to complete is that the vendor be ready, willing and able to complete. This is a matter of fact.
114 Here, the evidence showed that as at the time fixed for completion the Vendors had no cheque for 1/11th of the purchase price (as the Purchasers contend was required pursuant to standard condition 13.9); had not made arrangements for any adjustments in favour of the Purchasers; and, most relevantly, had not made arrangements in relation to land tax.
115 Pursuant to clause 13.9, the Vendors were obliged to pay to the Purchasers on completion 1/11th of the purchase price if, first, the Contract stated that the sale was a taxable supply and did not say that the margin scheme applied to the property, and, secondly, if either the sale was not a taxable supply or the margin scheme applied to the property.
116 The Contract clearly stated that the sale was a taxable supply.
117 By reference to the fact that no box was ticked in respect of the relevant item of GST information on page 2 of the standard form of contract, it also stated the margin scheme did not apply. Therefore for the purposes of standard condition 13.9, the Contract did not say the margin scheme applied to the property.
118 Therefore the first limb of clause 13.9 was satisfied. Nevertheless, before any obligation to pay the 1/11th sum arises, either 13.9.1 or 13.92.2 must apply. It was submitted for the Purchasers, in effect, that even if the wrong box had been ticked on the cover page in relation to the margin scheme, nevertheless it was for the Vendors on settlement to pay the 1/11th sum because there was a promise in special condition 13.6 that the margin scheme did apply.
119 The Purchasers pointed out that no claim for rectification of the Contract in this regard had been made. It did not seem to me that this was a particularly meritorious submission if, as I apprehend is the case, the reality is that as a matter of law the margin scheme did not apply to this sale and the wrong box had been ticked.
120 In any event, clause 13.6 does not in its terms say that the margin scheme applies. It merely promises that if (which the Contract does not) the Contract says the margin scheme applies then the Vendors promise it will apply. Nowhere in the Contract does it say the margin scheme applies. Nor was there evidence that the margin scheme did apply.
121 The Purchasers also rely on clause 13.10 which obliges the Vendors to give the Purchasers a tax invoice for any taxable supply by the Vendors by or under the Contract and say that if clause 13.9 did not apply there was a requirement to hand over a tax invoice on settlement. No such tax invoice was available at settlement.
122 I note, in this regard, that in Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 Hutley JA considered that there, where the appellant's solicitor had already received notice that there was to be no settlement (because the respondent had not obtained the money to settle) the appellant was justified "in not going through the laborious and expensive processes involved in an abortive settlement". There, however, there seemed to have been a more definitive statement of inability to complete than in this case where the Purchasers' solicitor had simply stated that settlement on 6 July did not appear to be feasible.
123 Therefore, while I am inclined to the view that the fact that a tax invoice had not been prepared before settlement would not be decisive, there is some doubt as to the Vendors' readiness to settlement in that regard.
124 The real difficulty in relation to the Vendors' readiness to complete on 6 July 2007 is in relation to the land tax.
125 Austin J gave a comprehensive analysis of the land tax provisions and their effect in this context in Wilde v Anstee. Reference was made by Austin J to the requirement that the giver of a notice must be ready, willing and able to proceed to completion (as stated by Dankwerts J in Re Barr Contract [1956] Ch 551 at 556; this being the third of the requirements listed by Professor Butt for a valid notice to complete). The link between this requirement and the traditional equity pleading in a suit for specific performance was referred to by Austin J, citing McNally v Waitzer [1981] 1 NSWLR 294 per Reynolds JA at 296 and Hutley JA at 303.
126 In McNally, the obligation on the Vendor to remove the charge for land tax (which arises pursuant to s 47 of the Land Tax Management Act 1956 (NSW) was said to be an obligation which arises on completion. Hutley JA said (at 303-304):
The vendor has to get rid of the charge for land tax, but only at the latest on completion and there is no objection to him giving a valid and effective notice to complete if at the time he gives it the property is still subject to land tax. … The correct rule, in my opinion, is simply that a vendor who is in default in respect of things which up until then should have been done cannot give a notice to complete, but he can give notice to complete prior to performing all those other things which he has to perform in order to complete the contract. The vendor does not have to satisfy the purchaser prior to completion that the land is not subject to a charge for land tax. He has, at the most on completion, to provide satisfactory evidence to the purchaser that either the land is not subject to land tax, or, if it is, that liability has been discharged in the course of completion itself.
127 The difficulty for the Vendors here, is that, in the absence of a certificate available on completion that the land tax had been cleared or the arrangements for completion being such as to enable land tax to be cleared at settlement, on an application of the principles outlined in Wilde v Anstee it could not be said that the Vendors were ready, willing and able to complete in accordance with the Contract at the time specified in the Vendors' notice to complete.
128 It was said that the Vendors would have been prepared to offer an undertaking on completion and that this was in accord with normal conveyancing practice. However, in Dainford v Yulura (1984) NSW Conv R 55-184, Rath J held that, when land was subject to a land tax charge but the amount of tax had not been assessed, the purchaser was not required to accept at completion the vendor's undertaking to pay the land tax when assessed. That holding was not affected by the matter on appeal, since there the parties assumed that the vendor was obliged to have land tax removed as at settlement by payment of the assessed tax and not having done so was not able to settle.
129 Austin J made it clear in Wilde v Anstee that in his view the vendor's obligation to give good title on completion would be discharged if, on completion, the purchaser and persons acquiring interest under the purchaser had protection conferred by s 47(1c) by virtue of the issue at or prior to completion of a certificate that no land tax is charged on the land procured by release and payment of an amount estimated by the Office of State Revenue. However, no such procedure was invoked by the Vendors in this case.
130 Austin J considered the question whether the law required that the vendor must put in place arrangements with the Office of Statement Revenue for the issue of a clear certificate on completion before the notice to complete was served, or whether it was sufficient that those arrangements were made and notified to the Purchaser in time for completion on the day on which the notice fixed for completion. Austin J considered that the notice to complete would be ineffective unless it was true, on the facts that existed at the time when the notice was given, that the Vendor was able to make arrangements with the Office of State Revenue for the issue of the clear certificate and was ready, willing and able to do so. His Honour considered that perhaps notice would be effective if the evidence showed that the Office of State Revenue had adopted the practice of releasing land on payment of an estimated amount routinely or in normal circumstances. His Honour said (at [54]):
But where there is a real doubt at the time of service of the notice as to whether the Vendor is in a position to obtain the land tax clearance by the date for completion as stated in the notice, the Vendor is not able, ready and willing to proceed to completion and conversely the Purchaser cannot be said to have defaulted by not completing at the Contractual time for completion.
131 Whether or not, as at the time the notice to complete was issued in this case - 21 June 2007 - the evidence would have supported such a conclusion as to the Office of State Revenue's practice is not necessary for me to determine at this stage. Here, it does not appear that any such arrangement had been made.
132 The Vendors cannot, in my opinion, rely upon an assumption that the Purchasers would have accepted an undertaking on completion whatever may be the standard conveyancing practice in that regard. It would have been open to the Purchasers to rely upon their strict legal rights and refuse to accept an undertaking on completion.
133 Accordingly, by reason of the position in relation to land tax, the Vendors were not in a position to give title clear of any charge for land tax and hence were not in a position to complete.
Damages
134 I should note that there was, finally, an issue as to whether or not any, and if so what, damages could be recovered. It was asserted that there was no basis on which to ascertain the appropriate damages because it was said that the evidence of resale was unreliable (given the criticisms made by the Purchaser of the marketing process).
135 The valuation expert relied upon by the Vendors, Mr Rich, in his report suggested that the requisite time for marketing was three to six months. It is accepted that there was no marketing period of that length in this case. However, in cross-examination the expert explained that what he meant by this was that this was how long, in his experience, it was likely to take to sell a property of that kind. He said that in the ordinary course the commencement of the process by way of an auction (as happened here) would be the way in which to proceed.
136 It was accepted that this was a heritage listed property for which there would be a limited range of purchasers. I am not prepared on the evidence to make a finding that the marketing of the property was inadequate or that the purchase price obtained for the property was below market value.
137 In particular I note that the sole difference between the valuers in this regard was whether or not any value could properly be put on the so called "additional" land being land which Mr Simm (for the Purchasers) assumed could be used to generate further revenue on the basis that there had been an earlier DA which had provided for the building of town houses on the site. The valuation methodology was otherwise accepted by both valuers as being the same and they achieved a similar value for the main property at $2 million. I am not satisfied that a value could properly be placed on the additional land in light of the constraints in relation to the development of heritage land. Mr Simm seemed to base his conclusion in this regard on an assumption drawn from an expired development application.
138 Therefore, other than some adjustments which would have to be made in the Purchasers' favour (in relation to agents' commission - which would have been less on the resale - and legal costs of the mortgage which could not have been recouped), had the Vendors otherwise succeeded I would have been prepared to fix damages at the difference in the purchase price on resale.
Conclusion
139 I find that the notice to complete issued on 21 June 2007 was not valid and effective. It was issued prior to the Purchasers being in breach of the obligation to complete, the completion date as I have found being 21 June 2007.
140 I do not find that there was any repudiation or renunciation by the Purchasers of the Contract or that the Vendors were otherwise entitled to terminate the Contract as they did on 6 July 2007. In any event the Vendors were not ready, willing and able to settle as at the nominated date for completion (6 June 2007), at the very least because they had not procured or made arrangements in relation to the discharge of land tax.
141 Accordingly, the wrongful termination by the Vendors on 6 July 2007 constituted a repudiation by them which it was open to the Purchasers to accept, and they did so. That determines the matter in favour of the Purchasers.
142 I find for the Purchasers and dismiss the Vendors' claim with costs. I order the repayment by the Vendors to the Purchasers of the deposit, with interest.