36 On the same day, the plaintiff's solicitors served upon the defendant's solicitors a Notice to Complete requiring completion on or before 11 July 2006.
37 Later that day, the plaintiff sent a further email to his solicitors in which he said amongst other things:
"I am hoping they cannot comply with the notice to complete - therefore I can rescind."
38 On 27 June 2006, the plaintiff's solicitors advised him that they had been contacted by the defendant's solicitors advising that they were ready, willing and able to settle on Tuesday 4 July 2006 at Galloways at 3:00pm.
39 In an email to his solicitors on 28 June 2006, the plaintiff said amongst other things:
"I am not of a mind to settle - the place is really not up to scratch.
Please let me know what I should do next!!"
40 On 29 June 2006, the plaintiff received advice from his solicitors by email, the substance of which was that the defects he complained of were not grounds for not completing, and that if settlement did not occur as scheduled the likelihood was that the defendant would issue its own Notice to Complete.
41 In the meantime, the plaintiff's solicitors had made further contact with the Principal Certifying Authority, Mr Dix. They had drawn to his attention defects in the building work and concluded an email to him dated 26 June 2006 with the following:
"As it is likely that the Vendor will require our client to abide by conditions in the Contract only requiring the Vendor to repair defects following completion, it will require completion on receipt of a Final Occupation Certificate.
Our client and others are reliant on your withholding that Certificate until the development has been completed to a reasonable standard."
42 On 28 June 2006, after a conversation between the parties' solicitors, the defendant's solicitors confirmed that settlement had been "amended for" Wednesday 5 July 2006, 3:00pm at Galloways.
43 On 29 June 2006, the defendant's solicitors provided a settlement adjustment sheet which required that a cheque be provided to the Office of State Revenue of $3,707.41 for land tax.
44 By letter dated 29 June 2006, the defendant's lawyers gave directions for bank cheques to be available on settlement including to the first mortgagee and the Office of State Revenue.
45 In evidence was a document entitled Settlement Instructions prepared by the defendant's solicitors, which contained the following notation:
"NB/ Please clear Land Tax Certificate enclosed with cheque 3 (OSR) and hand to Goldbergs Lawyers upon clearance. Please also forward Cheques 2 & 4 to our office."
46 The evidence indicates that as at 30 May 2006 there was land tax charged on the land up to and including the 2006 tax year, and that the defendant intended to clear the liability at settlement.
47 On 3 July 2006, the plaintiff's solicitors wrote to the defendant's solicitors informing them that they required certain documents by midday that day for each of the seven purchasers for whom they acted, including an undertaking that the list of defects issued would be attended to within 28 days after settlement pursuant to Special Condition 30.3.
48 On 5 July 2006, the plaintiff's solicitors wrote to the defendant's solicitors in the following terms:
"We note that we have advised you of various defects in and about our clients [sic] unit, and other units and surrounds being acquired by other clients of this firm (which have not yet been acknowledged by you).
Mr McQueen has become aware of matters relating to the construction generally and in the circumstances he has now instructed us to cancel settlement of this matter today.
We enclose a Notice of Claim pursuant to clause 7 of the Contract and Defect Report."
49 The settlement scheduled for 3:00pm that day accordingly did not proceed.
50 Later that day (5 July 2006), the defendant served its own Notice to Complete requiring the plaintiff to complete on or before 3:00pm on 19 July 2006 and made time of the essence of the Contract in that respect. The Notice included the following:
"4. The Vendor requires you to complete the purchase and to pay to us, or as we direct, the balance of the purchase monies, penalty interest under special condition 35 of the Contract, together with any such other amounts payable and due under the Contract, on or before 3 p.m. 19 July 2006, and in this respect time is of the essence of the Contract.
5. If you fail to comply with this requirement the sum of $45,650.00 which you have paid by way of a deposit guarantee must be paid in accordance with special condition 38 of the Contract, with such amount to be forfeited to the Vendor who shall be entitled to terminate the Contract and thereafter either sue you for breach of Contract and balance of the deposit or resell the property as owner and any deficiency arising on such resale and all expenses of an incidental to such resale or attempted resale and to your default shall be recoverable by the Vendor from you as liquidated damages."
51 Still later on that day, the plaintiff's solicitors acknowledged receipt of "a document purporting to be a Notice to Complete". Their letter concluded with the following statement:
"We acknowledge receipt of a document purporting to be a Notice to Complete. Our client denies your client's right to issue that notice and further notes that it is in any event defective. Any action taken to enforce that Notice to Complete will be denied by our client and our client will thereafter take action to enforce our client's rights pursuant to the Contract and the general law."
52 On 6 July 2006, the plaintiff's solicitors withdrew his Notice to Complete of 5 July 2006.
53 On 12 July 2006, the defendant's solicitors responded to the plaintiff's solicitor's letter enclosing the Notice of Claim with respect to the alleged defects. They pointed out that the defects list did not entitle the plaintiff to cancel or delay settlement. They remarked that they found it peculiar that the plaintiff had refused to settle on the day of arranged (booked) settlement after he had issued a purported Notice to Complete on 26 June 2006. The letter concluded as follows:
"Your client is now under an obligation to complete the purchase of the aforesaid property as per our Notice to Complete.
Your urgent attention to this matter is appreciated."
54 On 12 July 2006, the plaintiff's solicitors (then Burridge & Legg) wrote to the defendant's solicitors in the following terms:
"We note you have not responded to our client's claim served on 5 July 2006.
Our client is left with no option but to instruct us to advise that unless the claim is acknowledged, that confirmation is given that the funds required to be retained will be retained following settlement and that your firm will undertake to hold funds, in that regard we will be instructed to make application to the Supreme Court for appropriate orders.
In the circumstances we state that the appropriate course for your client to take is to withdraw the Notice to Complete purportedly served. In the event that does not occur by 5 p.m. today we will also seek appropriate orders in that regard in the proceedings to be instituted in the Supreme Court."
55 The Notice to Complete was not withdrawn as demanded or at all. This notwithstanding, the plaintiff took no steps as foreshadowed.
56 On 17 July 2006, the plaintiff's solicitors (now Carneys) wrote to the defendant's solicitors in the following terms:
"We act on behalf of Timothy Neil McQueen, the purchaser of the above property. Goldbergs Solicitors have provided to us the file. We note that your Notice to Complete expires on 19 July, 2006. We note that Goldbergs on behalf of the Purchaser provided you on 5 July, 2006 with a Notice of Claim and Defect Report and alleged that the Notice to Complete was defective."
57 On 18 July 2006, the plaintiff's solicitors sent an email to the defendant's solicitors in which they said:
"In McQueen … we allege your notice is defective."
58 On 17 August 2006, the defendant's solicitors informed the plaintiff's solicitors that they had been instructed "to direct" the plaintiff to complete by Thursday, 24 August 2006. In their letter, they stated:
"Such direction is no way to be seen as a waiver of any of our client's rights pursuant to the Contract."
59 They enclosed a settlement adjustment sheet as at 3pm, 24 August 2006. That adjustment sheet referred to a cheque to the Office of State Revenue for $3,707.
60 On 3 October 2006, the defendant's solicitors wrote to the plaintiff's solicitors in the following terms:
"We confirm that your client has continuously neglected, ignored and refused to settle the purchase of the aforesaid property despite numerous requests and demands including the Notice to Complete.
To this end, we enclose herewith by way of service Notice of Termination."
61 The Notice of Termination was itself dated 3 October 2006 and concluded as follows:
"In consequence of your default under the Contract including but not limited to your breach of Clause 38 of the Contract regarding the replacement of the deposit bond which has expired, and the Notice to Complete dated 5 July 2006 making time of the essence of the Contract, I Georges Elias of Cadmus Lawyers, solicitor acting on the instructions and on behalf of the Vendor HEREBY GIVE YOU NOTICE that the Vendor demands the full 10% deposit being $45,650.00 to be immediately paid to the Vendor in cash or by a bank cheque pursuant to Clause 38 of the Contract, by way of forfeiture ($45,650.00), and all other monies paid by you, and that the Contract is entirely at an end so far as it relates to the sale and purchase of the property and further that the Vendor will in pursuance of the hereinbefore recited condition of sale proceed to resell the property and will hold you responsible and liable as well for any deficiency in price and for all costs, charges and expenses occasioned by such resale."
62 The position initially taken by the plaintiff was that the defendant was not entitled to terminate because it had failed to respond to requisitions that had been forward on 15 July 2004, and was therefore itself in default. This contention was persisted in until submissions before me, and then abandoned.
63 On 10 October 2006, the plaintiff through its solicitors asserted that the defendant's termination was a repudiation and himself terminated the Contract.
The parties' contentions
64 The plaintiff put the following:
a the defendant's Notice to Complete was served on 5 July 2006 and required completion by 19 July 2006. Special Condition 36 contemplated a reasonable and sufficient period for a Notice to Complete which made time of the essence, to be 14 days. The defendant's Notice to Complete did not give a full 14 days. The established method for calculating such periods does not include the day of service but includes the whole of the fourteenth day: Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd (1980) NSW ConvR 55-004 at 56,123. The law does not recognise fractions of a day: Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959 at 14,963. Here, the Notice to Complete required settlement at 3pm on the fourteenth day and so fell short;
b strong circumstances must be shown to justify the giving of a Notice to Complete which allows less than the period contemplated by the Contract to be reasonable so as to make time of the essence: Sindel v Georgiou (1984) 154 CLR 661 at 670. There were no such strong circumstances in the present case;
c even if the 13 days given was sufficient, in order to rely on its Notice to Complete, the defendant bore the onus of showing that, at the time stipulated for settlement, it was itself ready, willing and able to complete: McNally v Waitzer [1981] 1 NSWLR 294 at 302. The defendant was not ready and able to complete on 19 July 2006 because:
i. no arrangements had been made to discharge the land tax charge;
ii. no arrangements had been made for the first mortgagee to be present at the required place of settlement with a discharge of mortgage and the certificate of title; and
iii. the defendant was not in a position to deliver a Certificate of Occupation because the certificate in its possession failed to meet a statutory requirement for such a certificate, being that it had to be accompanied by a fire safety certificate;
d finally, even if the defendant was entitled to terminate, its money claim was bound to fail because it had accepted in lieu of payment of the deposit the Bond which had expired. It followed that no deposit was payable or claimable under the Contract. The reference in cl 9.1 of the Contract to the vendor being able to recover the deposit was a reference to recovery under the Bond and that was no longer possible. Moreover, by terminating the Contract, the defendant limited itself to the recovery of loss of bargain damages which required it to establish that it had made a loss; that is, that there was a negative difference between the position it was now in and the position it would have been in had the Contract been performed by the plaintiff, and it had failed to adduce evidence of any such detriment.