SHIMDEN PTY LTD v RONA [2006] NSWCA 256 | Case summary

TUESDAY 19 SEPTEMBER 2006 SHIMDEN PTY LTD v IMAM HUSEYIN RONA Judgment 1 HANDLEY JA: I agree with Bryson JA. 2 HODGSON JA: I agree with Bryson JA. 3 BRYSON JA: This appeal turns principally on the meaning and effect of a special condition in a contract for sale of land; the special condition is not in a standard form. By contract for sale of land (Blue 1/52) dated 2 December 2003 the appellant Shimden Pty Ltd as vendor agreed to sell to the respondent Imam Huseyin Rona as purchaser land known as 218 King Georges Road Roselands, then in use as a petrol station; Folio Identifier 2/555579. The price was $3,212,000 plus GST and a deposit of $321,200 was paid. White J. in the Equity Division decided that the purchaser was entitled to repayment of the deposit after the contract had been abandoned by the parties. The vendor claims orders on appeal which would award the deposit to the vendor. 4 The contract for sale of land contained printed clauses from the 2000 edition of the Standard Contract, and also contained Further Conditions 30 to 45 which vary some printed clauses and make further provision. I will set out several clauses and conditions. 5 Meanings of terms used are set out on the first page of the contract, and one of them is:

The purchaser took a position in a cross appeal (and the position could and should have been taken by notice of contention) which had the effect of challenging the Trial Judge's view about the (as it were) ambulatory meaning of "completion date" in Condition 45(c), and took an alternative position which was consistent with White J.'s view. 7 Clause 16 is the standard printed clause dealing with completion, spells out obligations of the vendor and of the purchaser, and provides for the place for completion. Its provisions relate to completion, and the expression "completion date" is not used in clause 16. 8 I also set out cll 8 and 9: 8 Vendor's right to rescind The vendor can rescind if - 8.1 the vendor is, on reasonable grounds, unable or unwilling to comply with a requisition ; 8.2 the vendor serves a notice of intention to rescind that specifies the requisition and those grounds; and 8.3 the purchaser does not serve a notice waving the requisition within 14 days after that service. 9 Purchaser's default If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice. After the termination the vendor can - 9.1 Keep or recover the deposit (to a maximum of 10% of the price); 9.2 Hold any other money paid by the purchaser under this contract as security for anything recoverable under this clause - 9.2.1 for 12 months after the termination; or 9.2.2 if the vendor commences proceedings under this clause within 12 months, until those proceedings are concluded; and 9.3 sue the purchaser either - 9.3.1 where the vendor has resold the property under a contract made within 12 months after the termination, to recover - · the deficiency on resale (with credit for any of the deposit kept or recovered and after allowance for any capital gains tax or goods and services tax payable on anything recovered under this clause); and · the reasonable costs and expenses arising out of the purchasers non-compliance with this contract or the notice and of resale and any attempted resale; or 9.3.2 to recover damages for breach of contract. 9 Clause 19 is the standard printed clause dealing with rescission and includes the following: (Blue 1/59) 19 Rescission of contract 19.1 If this contract expressly gives a party a right to rescind, the party can exercise the right - 19.1.1 only by serving a notice before completion; and 19.1.2 in spite of any making of a claim or requisition , any attempt to satisfy a claim or requisition , any arbitration, litigation, mediation or negotiation or any giving or taking of possession. 19.2 Normally , if a party exercises a right to rescind expressly given by this contract or any legislation - 19.2.1 the deposit and any other money paid by the purchaser under this contract must be refunded; 19.2.2 a party can claim for a reasonable adjustment if the purchaser has been in possession; 19.2.3 a party can claim for damages, costs or expenses arising out of a breach of this contract; and 19.2. a party will not otherwise be liable to pay the other party any damages, costs or expenses. 10 The contract does not contain any provision which declares or establishes that the completion date or any other date is of the essence of the contract. Condition 32 is a Further Condition in these terms: (Blue 1/63) 32. 32.1 If either the vendor or the purchaser is entitled to serve notice to complete on the other both agree that the notice may require completion to take place within any period of not less than 14 days from the date on which the notice is served. Both parties agree that this period is sufficient for the purpose of this notice to complete and the service of the notice makes time of the essence of this contract. 32.2 A notice to complete may be revoked at any time before the expiration of the given period without prejudicing a party's right to serve a further notice. 11 Condition 45 is: (Blue 1/67) 45. The vendor will provide the purchaser at completion with; a. a registered lease in the terms of the unregistered lease annexed to this contract. b. A discharge of the covenant I 944773 referred to in the Certificate of Title. c. The purchaser and the vendor are entitled to rescind the contract by notice in writing if the vendor is unable to provide a registered lease and a discharge of the said covenant by completion date. d. Any such notice of recision by either party must give twenty one days (21) notice. 12 The lease referred to in Condition 45(a) was registered before 13 January 2004 and the vendor was in a position to provide the registered lease to the purchaser on 13 January 2004, or at any later time. 13 The Covenant in Transfer I944773 was given by the vendor to the Shell Co of Australia Ltd upon transfer of the land from Shell to the vendor on 8 December 1993. The Covenant restrained use of the land as a service station, and the benefit of the Covenant was annexed to other land then owned by Shell at Belfield (or purportedly so annexed: the validity of the Covenant was not debated). The Covenant was released and extinguished and the notification of it on the certificate of title was removed on 18 February 2004, upon registration of a release which had been executed on the same day by the then registered proprietors of the Belfield land. Until 18 February 2004 the vendor was not able to provide the purchaser, at completion or at any time, with a release (referred to in Condition 45(b) as a discharge) of the Covenant. To state the obvious, and echoing Condition 45(c), the vendor was unable to provide a discharge of the Covenant by 13 January 2004. 14 The internal arrangement of Condition 45 is unsystematic. Condition 45 opens by saying "The vendor will provide the purchaser at completion with" but only paras (a) and (b) are about things which could possibly be provided at completion. The opening words, and hence paras (a) and (b), deal with what is to happen "at completion" but paras (c) and (d) deal with a different subject, entitlement to rescind, and if a party rescinds there will of course be no completion. Paragraph (c) refers to what the vendor is able or unable to provide "by completion date", and the meaning of the expression "completion date" was established on the first page of the contract. 15 "Completion date" is referred to in clause 15 in a way which shows that the completion date and the date on which the contract is actually completed may be different things; and also that the date on which completion is required under notice to complete is a different thing to "completion date". 16 The relationship between the parties became highly combative, the positions which they maintained were elaborate and White J. dealt at length with them. It is not necessary to set out all the facts, or all the positions taken and matters put in argument, in order to dispose of the appeal. It is not necessary to examine fully or express views on all the Trial Judge's dispositions. So far as it is necessary to state them the relevant facts are these. 17 After exchange of contracts the purchaser's solicitor made requisitions on title and had other communications with the vendor's solicitor. On 9 January 2004 the purchaser's solicitor forwarded the transfer for execution and inquired by letter whether the lease had been registered and the Covenant had been discharged. Neither party attempted to settle on 13 January 2004. The vendor's solicitor replied to requisitions on 15 January 2004. 18 On 21 January 2004 the vendor's solicitor served notice to complete requiring completion on or before 3 p.m. on Wednesday 4 February 2004. The Trial Judge concluded (judgment 37 Red23) that the notice to complete was invalid, by which I understand that he determined that the notice to complete did not have the effect of making completion by 3 p.m. on Wednesday 4 February 2004 of the essence of the agreement. Neither party disputed this on appeal. 19 On 2 February 2004 the purchaser's solicitor asked to be provided with a copy of the discharge of the Covenant; no discharge was provided, and later that day the purchaser's solicitor by letter referred to Condition 45, said; (Blue 1/17O) "The vendor was unable to provide a 'discharge' of the Covenant … as required by Condition 45(c) of the contract by the completion date of 13 January 2004" and went on to say that the purchaser exercised his right to rescind the contract; and he served notice referred to in Condition 45(c). His letter concluded by asserting "… The rescission is effective 21 days after the date of service of this notice." In a letter on 3 February 2004 he called for repayment of the deposit and said: (Blue 1/18) We appreciate the provisions of SC 45 (d) appear to operate as to require 21 days notice for reasons which we do not understand. However, we do not see the point of any such delay as the rescission right granted in SC 45 (c) is absolute and the passage of a further 21 days will make no difference to the entitlement to rescind which is dependant on a state of affairs as existed on a particular date now past. 20 In reply the vendor's solicitor demanded settlement no later than 3 p.m. on 4 February 2004 and said that the vendor relied on the notice to complete dated 21 January 2004. There was some further correspondence: each side maintained its position. No completion took place at the appointed time. As recounted by the Trial Judge (Judgment 17 and 18 (Red 15-16)) the arrangements for settlement miscarried in that one of the two solicitors who was to represent the vendor at the settlement arrived five minutes after the appointed time: the other arrived 15 minutes after the appointed time; the agent of the purchaser's solicitor had left; they spoke to the agent in the street and showed her and gave her a copy of a deed of release of the Covenant which Shell had executed. However no settlement took place; the purchaser was not prepared to settle and the agent was not equipped with the necessary funds. It seems that the original deed of release executed by Shell had been lodged at the Land Titles Office, was unregistered and was not available to be provided to the purchaser on settlement on that day, and that it never was registered because of a view taken in the Land Titles Office that the release executed by Shell was not effective and that a release should be executed by the then registered proprietors of the Belfield land. It was not maintained on appeal (or, as I understand, before White J.) that the vendor was in a position to comply with Condition 45(b) on 4 February 2004; so the effectiveness of the release executed by Shell need not be considered. 21 The purchaser's solicitor contended in correspondence later on 4 February that release by Shell was not adequate and that it continued to be the case that the vendor was unable to provide a release. On 5 February 2004, in a letter which stated the purchaser's position at length, the purchaser's solicitor again gave notice of rescission under Condition 45(d). At about this time the vendor's retainer of its solicitor ended. The vendor instructed a new solicitor who on 13 February 2004 asserted by letter that the purchaser had failed to complete the contract of sale as required by the notice to complete dated 21 January 2004, and served notice of termination under Clause 9. There was further correspondence, in which the purchaser's solicitor continued to maintain that the contract had already been rescinded pursuant to Condition 45. 22 Late in the day on 18 February 2004 the vendor's solicitor took an unheralded new direction and by letter stated that the Covenant had been removed from the certificate of title (and forwarded copies of the deed of release and certificate of title which bore this out) and also stated that the vendor maintained that the termination of 13 February 2003 was valid and that the vendor was entitled to the deposit and to damages. The letter of 18 February was sent by fax transmission after the ordinary business hours on 18 February and did not come to the attention of the purchaser's solicitor until early on 19 February. The letter went on to refer to the purchaser's position in which the termination was invalid and the contract was on foot subject to the effect of the purchaser's notice of rescission which did not take effect until 21 days after service. The reference was to the purchaser's notice of rescission of 2 February 2004, not that of 5 February 2004. The vendor's solicitor went on to say that he was instructed to tender performance at 2 p.m. on 20 February 2004 "without prejudice to the efficacy of the vendor's termination". In correspondence the purchaser's solicitor disputed the position which the vendor asserted. No completion took place on 20 February 2004, and late on that day by letter the vendor's solicitor stated that the vendor terminated the contract "on the grounds that time for completion was time of the essence and the purchaser breached his obligation to complete … and in the alternative, on the grounds that the conduct of the purchaser, in all the circumstances, is a wrongful repudiation of the contract, which the vendor accepts …". (Blue 1/44). There was no longer an assertion that the termination of 13 February 2004 had been effective. 23 The Trial Judge was of the view that the notice to complete of 18 February 2004 was not valid; and gave several reasons for this view. Among these reasons was (judgment [83] Red 38) "In any event, the notice to complete was invalid for not giving the purchaser a reasonable time to complete. Even if the notice could stipulate a reasonable time, two days was not reasonable … As the purchaser's solicitor said on 19 February 2004, as a simple matter of administration, it would be impossible to organise a settlement involving incoming mortgage finance for 20 February 2004 of the notice which the vendor gave." Senior counsel for the vendor contended that this finding was incorrect, and contended that this was shown by the circumstance that the purchaser's solicitor had made it altogether clear, and had stated repeatedly that the purchaser was not prepared to complete in any event; and also by referring to the impending expiry on Monday 23 February of the 21 days notice referred to in the purchaser's first notice of termination dated 2 February 2004; senior counsel put this forward as showing that it was reasonable to require completion on Friday 20 February 2004. 24 Much as it was debated, it is in my opinion clear beyond debate that the Trial Judge was correct in finding that the notice to complete was invalid because the time allowed was unreasonably short. The notice to complete gave the purchaser less than two business days to ready himself for settlement although he had been maintaining for 16 days that the contract was rescinded and the vendor had been maintaining for 5 days that the contract was terminated. In all practicality, no real opportunity to settle was given. Clause 32 establishes that a notice of 14 days would be sufficient, and the vendor's earlier notice to complete allowed 14 days. This does not mean that a shorter notice is necessarily insufficient: but it is some guide to what is reasonable. 25 Senior counsel for the vendor also maintained on appeal the alternative, expressed in the letter of 20 February 2004, that the conduct of the purchaser in the circumstances was a wrongful repudiation of the contract, and that the vendor then accepted that repudiation. 26 The Trial Judge was of the view that the purchaser was not entitled to rescind the contract on 2 February 2004 or on 5 February 2004, and was in breach of contract in claiming to do so and in repeatedly maintaining this position; His Honour identified seven reaffirmations of the position that the rescission had been effective, would come into final effect on 23 (or 25) February 2004, and that nothing could stop this outcome. The Trial Judge concluded (judgment 90 (Red 42)): "By 20 February 2004, the purchaser, by his persistent maintenance of his position that he was not bound to complete notwithstanding that the vendor had registered a release of the covenant, had repudiated his obligations under the contract in an essential respect." The Trial Judge was further of the view that the vendor had itself repudiated the contract by its purported notice of termination of 13 February 2004 and had not resiled from that position; and for that reason could not terminate the contract by accepting the purchaser's repudiation; that as at 20 February 2004 both parties had repudiated the agreement and wrongly evinced an intention not to be bound by it; that the purchaser's rescission and the vendor's termination were not in effect, that the parties were to be taken as having abandoned or abrogated the contract and that as a consequence the purchaser was entitled to return of the deposit. 27 Both parties debated, on appeal as at first instance, steps in this line of reasoning which were adverse to them. It is not necessary for me to review and express conclusions on all points argued because of the view I have reached on the matter for which the purchaser contends in its notice of cross appeal. In effect it is the purchaser's position that the Trial Judge was incorrect in deciding that the purchaser's notices of rescission were both ineffective. 28 There were grounds for the purchaser's notice of rescission dated 2 February 2004 if, on the true meaning of condition 45, the completion date was 13 January 2004; it is altogether clear that at that date the vendor could not provide the purchaser with a discharge of the covenant. The purchaser's second notice of termination dated 5 February 2004 would be justified on the same basis; except that it was rendered superfluous by the earlier. It would also be justified if it were correct that the completion date referred to in Condition 45(c) was the date fixed for completion by notice to complete which had made that time of the essence for completion; and if the notice to complete dated 21 January 2004 was effective to do so. The Trial Judge held that it was not effective to do so; and disposition of the appeal does not require consideration of this conclusion. 29 In my opinion the completion date referred to in Condition 45(c) is the completion date referred to elsewhere in the contract, in provisions which establish that it was 13 January 2004. The obligation to provide a registered lease and discharge of the covenant at completion, created by the opening words of Condition 45 and by paras (a) and (b), is a different subject to the matter referred to in Condition 45(c), and it is unremarkable that they should impose requirements at different times. In language used elsewhere in the contract "completion" and "completion date" are different things, which may or may not happen at the same time. In this respect the usage of language in the contract accords with general usage of language when speaking of contracts for sale of land, in which it is a commonplace that the contract may provide for a completion date, but that completion may take place at some other time; that very often happens. Further, if, at completion, the vendor was not able to provide the purchaser with the documents referred to in paras (a) and (b), the vendor would be in default and, if time had been made of the essence, the purchaser would be in a position to terminate the contract; this being so, it is not possible to see what function para (c) could have if "completion date" is completion. In my view the ordinary and natural meaning of the references to completion and to completion date in Condition 45 show that they refer to different events which may happen at different times. 30 One result produced by Condition 45(c) is to give the rescinding party the benefit of clause 19 of the contract which spells out what is to happen on rescission. 31 In the Trial Judge's view (judgment 40 (Red 23)) "completion date" in Condition 45(c) meant the date on which the parties were required to complete. As His Honour noticed elsewhere (judgment [5], [39]) "completion date" is defined in the contract so as to indicate 13 January 2004. The Trial Judge did not state why in his view that defined meaning was not applicable to Condition 45(c). In my respectful view the Trial Judge took a wrong view of the meaning of Condition 45(c) in this respect. 32 Condition 45(c) does not deal with something which the vendor was required to do, and does not deal with events which the vendor promised would happen at completion or at any time. Its literal terms and its true meaning do not oblige the vendor to do anything, either at completion or at any time; the obligation imposed on the vendor to provide documents is created elsewhere, in Conditions 45(a) and (b). Condition 45(c) confers, both on the purchaser and on the vendor, an entitlement to rescind if the state of facts which it indicates objectively exists at the time referred to; the right of rescission conferred is not a remedy for any breach or failure; and this is illustrated by its being conferred on both parties. Condition 45(c) operates in the same way as Special Condition 24(iii) under consideration in Turnstila Pty Ltd v North Shore Gas Co. Ltd (1981) NSW Conv R 55-011 of which McLelland J said at 56, 146:- In my opinion it is not possible, in the face of the right of rescission expressly conferred upon the defendant, to find implied any term empowering the plaintiff unilaterally to destroy that right. The contract expressly conferred upon the defendant the right to rescind upon a particular state of affairs coming into existence. The designated state of affairs came into existence and the defendant duly rescinded. I can see no legitimate basis for challenging the effectiveness of that rescission. Support for this view of the matter, where an express right of rescission in the event of non-fulfilment of a contractual condition is conferred on either party, is I think provided by statements in Heron Garage v. Moss (1974) 1 W.L.R. 148 at p.153 and Gilbert v. Healey Investment Pty. Ltd. (1975) 1 N.S.W.L.R. 650 at p. 655, and sub silentio , by the decision of the High Court in Sargent v. A.S.L. Developments (1974) 131 C.L.R. 634. 33 The Trial Judge also considered (judgment [56-68] Red 29-33) the effect of Condition 45(d). Before the Trial Judge but not on appeal the purchaser contended that Condition 45(c) conferred an immediate right of rescission and "the rescission was not suspended". The Trial Judge did not uphold this submission, which was contrary to the clear effect of Conditions 45(c) and 45(d) taken together, in which the process of rescission includes a notice in writing and a period of 21 days, plainly producing the intended result only after the 21 days. It was alternatively contended before the Trial Judge, and it was contended on appeal that nothing that could take place during the 21 days could affect the purchaser's right to rescind. 34 Consideration of that subject could I think be satisfactorily disposed of by the observation that on the facts nothing that did take place within the 21 days after 2 February 2004 did affect the purchaser's right to rescind. The vendor's notice of termination of 13 February 2004 did not do so because the purchaser was not in default of completion on 4 February because (if for no other reason) the vendor could not comply with Condition 45(b) and produce a discharge of covenant. The purchaser was not in default on 20 February because the notice to complete of 18 February 2004 was ineffective. The vendor was not in a position to accept a repudiation by the purchaser on 20 February 2004 because the purchaser's conduct, in giving notices of termination and repeatedly asserting that they were effective, was justified by its exercise of the right conferred by Condition 45(c) and was not repudiatory conduct. 35 It was the Trial Judge's view (judgment 58) that the requirement in Condition 45(d) of 21 days notice had a purpose which was to give the recipient of the notice under Condition 45(c) time to deal with the relevant issue; "if the notice were given by the purchaser, the purpose of the 21 day period would be to allow the vendor further time to procure the registration of the lease or the release of the covenant." In my view this reasoning is not correct because the language of Condition 45(c) is clear in its conferral of an entitlement to rescind in the circumstances stated, there are no expressions which indicate that the recipient of the notice was to have an opportunity to overcome the rescission, and the provision for notice of 21 days did not support an implication that the recipient was to have that opportunity. There is in my opinion no basis, for an implication to the effect that if (in the case of a purchaser's rescission) the vendor is able to procure the registered lease or discharge of covenant within 21 days, the rescission is not to take effect. In my opinion such an implication is not necessary to explain the presence of Condition 45(d), or in the Trial Judge's expression to give Condition 45(d) work to do. 36 The test for implications of a contractual term which the parties have not themselves expressed were stated in the majority opinion in the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 as follows: ... for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract. 37 These conditions have been repeatedly adopted and applied in the High Court of Australia: Secured Income Real Estate v St Martin's Investments Pty Ltd (1979) 144 CLR 596 at 606, Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347, see also Breen v Williams (1996) 186 CLR 71 at 80 (Brennan J), 90 (Dawson & Toohey JJ) 102-103 (Gaudron & McHugh JJ), 123-124 (Gummow J). See too Heimann v The Commonwealth of Australia (1938) 38 SR 691 at 695 (Jordon CJ). However the tests are expressed, the test of necessity is always restated. 38 Conferral of the same right to rescind on both parties is adverse to the view that the purpose of allowing 21 days was to enable the vendor to overcome the difficulty. It is reasonable and appropriate to consider whether every contractual provision has work to do: but it is not correct to override the plainly expressed meaning of one provision in order to give some other provision work to do which its own words do not achieve. The period of 21 days is available for the recipient of the notice to exercise any right otherwise conferred on him by the contract which can be brought into effect within the 21 days; it might conceivably be possible for the recipient to terminate in some way which took effect within the 21 days and brought about a better position for him than the outcome under Condition 45. The period of 21 days could be used to accommodate the recipient's affairs to the new reality that the contract was terminated. The period of 21 days is also available for communication and negotiation between the parties, which conceivably could achieve resolution or modification of rights. It is also available for the commencement and, it may be, decision of litigation challenging the effectiveness of the rescission. 39 Even if, finally, the availability under Condition 45(d) of a period of 21 days before rescission took effect were an unexplained anomaly, I would not regard that as a reason for not giving both Condition 45(c) and Condition 45(d) the meaning which they literally have. Case law shows that notice periods of no apparent purpose are encountered from time to time. 40 A clear example is Gilbert & Anor v Healey Investment Pty Ltd [1975] 1 NSWLR 650. Justice Needham considered a Special Condition (at 651C) not closely similar to Condition 45 but containing a provision for rescission upon giving 21 days notice, no indication being apparent of what if anything might occur during the 21 days. After discussing this Special Condition Needham J. said (655E-F): I concede that this conclusion means that one cannot adequately explain the reason why the parties have said that the right of rescission must be announced twenty-one days before it actually is exercised, but when one is faced with the alternatives of either being mystified about the intentions of the parties in agreeing on a particular phrase in the contract, and, on the other hand, engrafting on a provision a whole branch of the law, which, in my opinion, does not apply to such a provision, the choice must be upon the first of those courses. 41 An even more robust view was taken in Treloar Nominees Pty Ltd v Buttrey (1977) 1 BPR 9672 by Helsham CJ in Eq. at 9673. 42 The construction of Condition 45 is of course not controlled by these decisions on differently expressed provisions, but I am fortified by the approaches taken by Needham J and Helsham CJ in Eq in my view that the absence or inadequacy of discernible reasons for a notice period is not a controlling consideration for the construction of Condition 45. 43 The view I take places Condition 45(c) and Condition 45(d) in a category close to that indicated in Aberfoyle Plantation Ltd v Cheng [1968] AC 115 at 124-125; the category stated by their Lordships was: Where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles. 44 Senior counsel for the vendor contended on appeal that the appeal turned on the question whether White J. was correct in holding that the vendor was still repudiating the contract when the vendor tendered performance in the events of 18 and 20 February 2004. Senior counsel contended that by tendering performance of 20 February the vendor resiled from any earlier repudiation and fulfilled the requirements of being ready willing and able to perform the contract; and referred to Foran v Wight (1989) 168 CLR 385; see Mason CJ at 408-409. In this submission, the rescission which the vendor claimed to bring about late on 20 February 2004 was effective. Senior counsel relied alternatively on the purchaser's failure to comply with the notice to complete dated 18 February 2004 (said to be an actual breach) and on the vendor's acceptance of the purchaser's anticipatory breach and repudiation of the contract consisting of the first or both of the purchaser's notices of termination and later insistence on their effectiveness. The contention was that the rescission of 20 February took effect as an acceptance of a then standing and not previously accepted repudiation by the purchaser. Involved in the positions submitted was that the vendor's termination or purported termination of 13 February lacked effect. It was a difficulty that the positions taken in the letter of 18 February were said to be taken without prejudice to the previous notice of termination; the vendor did not withdraw, or unequivocally withdraw from the position that it had already terminated the contract. 45 The vendor claimed that its readiness, willingness and ability to perform passed the test in Rawson v Hobbs (1961) 107 CLR 466 and referred to Dixon CJ at 481. I do not think that it can be doubted that the vendor was ready, willing and able to perform from delivery of the notice to complete on 18 February until expiry of the time on 20 February which it specified. In my view the events demonstrate altogether clearly that, while the vendor became ready, willing and able to complete on 18 February on registration of the release of covenant, it was not ready or willing to complete at a reasonable time, that is, within or at the expiry of a notice to complete which made available 14 days or some such period for completion. The purchaser was not at that time prepared to complete at all; but that fact does not dispense with the need that a notice to complete specify a reasonable time, and not a nominal time; and does not dispense with the need that the giver of the notice be ready willing and able to complete at that reasonable time. What is a reasonable time for notice to complete does not depend upon the attitude of the recipient; the giving of a notice to complete assumes of the recipient that he has not earlier complied with the contractual obligation, and is now being required and given an opportunity to do so. The purchaser's conduct in giving notices to terminate and repeatedly asserting their effectiveness was not repudiatory, and the notice to complete was ineffective. The purchaser's position was based on a view of its contractual entitlements which was reasonably available; indeed in my ultimate view, it was correct. 46 The orders made by White J. were: 1. Declare that the Contract for Sale of Land dated 2 December, 2003 made between the defendant or cross-claimant as vendor, and the plaintiff as purchaser, of the property comprised in Folio identifier 2/555579 and known as 218 King George's Road, Roselands "the Contract" has been neither rescinded by the plaintiff, nor terminated by the defendant or cross-claimant. 2. Declare that the Contract has been abandoned by the parties; 3. Declare that the plaintiff is entitled to the return of the deposit; 4. Declare that the plaintiff on the one hand, and the defendant or cross-claimant on the other hand, are entitled in equal shares to the interest earned on the deposit, after deduction of all proper government taxes and financial institution and other charges; 5. Order that the defendant and cross-claimant sign all documents and do all things necessary to enable the deposit of $321,000 paid to the selling agent under the Contract and the interest of the deposit to which the plaintiff is entitled, to be paid to the plaintiff; 6. Order that the Summons and Cross-Claim be otherwise dismissed. 7. The exhibits may be returned after 28 days. 47 In my opinion White J. was correct in deciding that the purchaser is entitled to return of the deposit and in making consequential orders; that is in making Declaration 3 and 4 and Orders 5 and 6. However the ground upon which White J. reached his decision were not correct, and Declarations 1 and 2, which reflect those grounds, should not stand. The appeal should be allowed to the extent only of varying the orders so as to set aside Declarations 1 and 2. The substance of the matter however is that the appeal should be dismissed 48 In my opinion the Court of Appeal should order: (1) The appeal is allowed to the extent only of varying the orders of White J by deleting Declarations 1 and 2. (2) Save as aforesaid the orders of White J are affirmed. (3) The Cross-appeal is dismissed. (4) Order that the appellant pay the respondent's costs of the appeal. (5) Order that each party pay its or his own costs of the cross -appeal.

SHIMDEN PTY LTD v RONA

At a glance

Court

Decision date

Before

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Judgment (18 paragraphs)

Parties

Cases Cited (7)

Cited By (2)