Sandra Investments Pty Ltd v Booth

Sandra Investments Pty Ltd v Booth - [1983] HCA 46 - HCA 1981 case summary — Zoe

[17]

The fact that under the express terms of the contract the date of settlement could be determined only by reference to the date on which the council gave approval (see cll. 1 and 27) is no necessary obstacle to acceptance of the view that the purchaser was entitled to insist on completion notwithstanding that the approval was not obtained. On the date of settlement the vendor was obliged to give possession (cl. 1), and the purchaser was obliged to make payment of a further sum of $75,000 (cl. 28) and to grant a bill of mortgage (cl. 28); moreover the apportionment of rates, taxes, rents and profits had to be made as at that date (cll. 12 and 13). Those matters merely serve to emphasize what is obvious, that if the date of settlement cannot be ascertained the contract cannot be enforced. It was submitted on behalf of the vendor that no term that settlement should be made within a reasonable time could be implied, because that would be to imply a term inconsistent with the express provisions of the contract and would materially alter its effect. Further, reliance was placed on the provisions of cl. 27, which, by providing that settlement shall take place within thirty days from the date of the vendor's receipt of the council's approval, suggest that the obtaining of the council's approval is an essential condition precedent to completion of the contract. However the express provisions of cl. 24, which give the purchaser the option to cancel the contract if the approval is not obtained, and which plainly imply that the purchaser may choose to carry out the contract in that event, would be rendered ineffective if the contract could not be completed in the absence of the council's approval. The overriding intention of the parties must be found in its express provisions, rather than in inferences to be drawn from cl. 27. Once it is decided that the purchaser can choose to allow the contract to remain on foot, notwithstanding that the council's approval is not obtained, there is no difficulty in holding that completion shall take place within a reasonable time from the date on which the purchaser exercises its option - in the present case, 3 August 1981. There is no provision in the contract which fixes the date for completion in the absence of the council's approval, and accordingly when the contract is to be performed notwithstanding the absence of that approval it should be implied that completion will take place within a reasonable time.

[22]

This Contract is subject to the purchaser obtaining development approval from the Warringah Shire Council for the following purposes The purchaser agrees to make application to the Warringah Shire Council for such approval within seven (7) days of the date hereof and in the event of the said Council not granting such approval for the purpose aforesaid by the 31st day of May 1965, then this Contract shall be deemed to be at an end and all moneys paid by the purchaser to the vendor shall be refunded but in the event of Council granting the approval aforesaid then the purchaser will complete the contract within twenty days of the granting of such consent. The council's approval was not obtained but the purchaser received a letter over the typed signature of the town clerk stating that the rearrangement of the existing use of the land was approved in principle subject to specific conditions. It was maintained by the purchaser's solicitor that the letter was not an approval and this attitude was continued by him in conversations with the vendor's solicitor at the end of May and on 1 June. By telephone statement on 1 June and by letter of 2 June the vendor's solicitor stated that no extension of time would be given except on terms which the purchaser's solicitor intimated were unacceptable. The purchaser later unsuccessfully sued for specific performance. It was held that the legal effect of the actions of the solicitors for the parties was that the contract had come to an end. In those circumstances it may not have been strictly necessary to decide whether the condition was for the benefit of the purchaser so that it could be waived by him but the Court did consider that question. Barwick C.J. and Windeyer J. were clearly of the opinion that the condition was for the benefit of the purchaser and could be waived by him [7] . The other members of the Court, Taylor, Menzies and Owen JJ. said [8] : The purchaser's solicitor, for his part, whilst maintaining his stand that the letter of 2nd April was not an approval from the council fulfilling the condition of the contract, did not forego the purchaser's right under the condition and insist upon performance of the contract of sale regardless of the condition or its fulfilment. They went on to say that nothing which then occurred "amounted to a decision on the part of the purchaser to complete notwithstanding his right under the condition". These observations indicate that their Honours agreed with Barwick C.J. and Windeyer J. in thinking that the purchaser had a right to waive the condition. Later their Honours said [9] : As a first step to deciding this decisive question, it is necessary to understand the condition and its significance to the parties. Without doubt, it was intended to safeguard the purchaser by making the continuance of the contract depend upon his obtaining the council's approval for using the land for the three purposes therein set out. Yet, although the condition was for the protection of the purchaser, it nevertheless affected the vendor, for it obliged the purchaser to make his application for the council's approval within seven days; it provided for the contract coming, or being brought, to an end if the council's approval was not granted by 31st May; and it fixed the date for the completion of the contract by reference to the only event which could give rise to any obligation to complete - that is, the council's approval. These remarks are not inconsistent with the earlier passages to which I have referred. The clause as a whole obviously did affect the vendor in the manner which their Honours described. The judgments of all the members of the Court in that case support the view that a condition may be for the benefit of a purchaser, who may insist on performance of the contract regardless of the fulfilment of the condition, notwithstanding that the contract expressly fixes the date for completion only by reference to the time when the condition is fulfilled. The judgments are consistent with the conclusion I have reached in the present case. 1. (1966) 116 C.L.R. 418. 2. (1966) 116 C.L.R., at pp. 429-430, 443. 3. (1966) 116 C.L.R., at p. 440. 4. (1966) 116 C.L.R., at p. 441.

[45]

Having come to this conclusion, it is unnecessary for me to consider whether, if the contract had not conferred on the purchaser the option to cancel, that party would have been entitled to waive the condition contained in cl. 24. That hypothetical question raises issues of considerable importance which in my respectful opinion should wait until a case arises which requires their resolution. There is the question whether a purchaser seeking specific performance may waive compliance with a condition precedent only where it is shown to be "exclusively" for his benefit (cf. Brightman J. in Heron Garage Ltd. v. Moss [13] ) or whether it is sufficient if the condition be "primarily" for his benefit (cf. Windeyer J. in Gange v. Sullivan [14] ). It is to be noted that in the last-mentioned case Barwick C.J. [15] recognized as relevant to the question whether the purchaser was entitled to waive the non-fulfilment of the condition with respect to local authority planning approval the fact that the vendor did not retain any interest in the subject land. In a case such as the present one the continuing interest of the vendor as mortgagee would be a relevant consideration. There is also the question whether to be effective the waiver must take place before the expiry of the relevant period. Had it been necessary to decide such a point in Gange v. Sullivan, both Barwick C.J. [16] and Windeyer J. [17] would have answered it in the affirmative. See also the cases discussed by Newton J. in Gough Bay Holdings Pty. Ltd. v. Tyrwhitt-Drake [18] . Finally, there is the question whether the fact that the date of completion in a contract where time is of the essence is fixed by reference to the date when a condition is fulfilled renders the clause imposing the condition so inextricably mixed up with other parts of the transaction that it cannot be severed: cf. Hawkesley v. Outram [19] ; Heron Garage Ltd. [20] ; Sheridan v. Nikolic [21] . It is not appropriate to pursue a discussion of these matters in the abstract because the facts of a particular case will often be of critical importance in discovering the intention of the parties. I would merely observe that in undertaking that voyage of discovery one should not lightly imply a right of waiver in one party to the possible prejudice of the other unless it clearly emerges on the face of the contract.

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Judgment (48 paragraphs)

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