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[1978] HCA 30
High Court of Australia
1978-07-01
Aickin JJ, Gibbs J
Original judgment source is linked above.
For the reasons I have given I hold that the contract in the present case was an "instalment contract" within the meaning of Div. 4 of Pt VI of the Property Law Act 1974 and that the purported determination of it was ineffective because the vendor had not given the necessary notice required by s. 72 (1).
I would allow the appeal and restore the judgment of the learned primary judge.
I would allow this appeal and restore the order of the trial judge. Details of the relevant legislation and of the contract of sale the subject of this appeal appear in other judgments and it is enough that I state as shortly as may be my reasons for upholding the appellant's contention.
Division 4 of the Property Law Act 1974 legislates for "Instalment sales of land", as its heading informs. It restricts a vendor's right to rescind the contract or to mortgage the land (ss. 72 and 73), confers upon a purchaser a power to caveat and to require the deposit with prescribed authorities of title deeds and executed conveyances (ss. 74 and 76), and enables parties to the contract to require a conveyance with mortgage back (s. 75). All this it does in respect of what is prescribed as an "instalment contract", which is defined as one involving the purchaser in "a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor". "Deposit" is itself restrictively defined so as to exclude any sum which does not satisfy two criteria, that it should not exceed 10 per cent of the purchase price and that it be liable to be forfeited by the vendor on the purchaser's breach.
The present contract of sale provided for just such a deposit and also for certain payments of interest on the unpaid balance of purchase price from date of entitlement of possession until the much later date fixed for payment of the whole of the purchase price. However it contained no provision for payment of instalments of purchase price, as in a conventional terms contract. It required the purchaser to pay rates, taxes and outgoings from date of entitlement to date of possession, on default of which the vendor might itself make payment, and recover against the purchaser; likewise with stamp duties and registration fees the purchaser in that case indemnifying the vendor against its liability for these.
In the present case a payment of interest fell due, there was a default in payment by the purchaser and the vendor gave to the purchaser a fourteen day notice as contemplated by the contract. When the default was not remedied a notice of rescission followed. Simultaneously the purchaser itself gave notice of rescission, alleging repudiation by reason of the vendor's non-observance of the requirements of s. 72 of Div. 4 of the Act. Hence the question whether or not the contract was an "instalment contract" to which that Division applied. The purchaser succeeded at first instance but the vendor was successful on its appeal to the Full Court of the Supreme Court of Queensland.
In my view this contract is such an "instalment contract" as Div. 4 legislates for. It is a contract under which the purchaser was bound to make payments, other than the deposit, without entitlement to conveyance in exchange. Even if payments made otherwise than to the vendor (e.g. rates, taxes, stamp duties, etc.) are to be disregarded, the payments of interest which the contract calls for themselves suffice to satisfy the language of the definition of "instalment contract". They constitute "payments" which the purchaser is bound to make in terms of the contract, are not "a deposit" and do not of themselves entitle it to a conveyance. Neither context nor legislative history appears to me to afford any ground for so departing from the meaning of the words as to exclude them, and in consequence this contract, from the reach of the definition.
In the reasons for judgment of the Full Court a different view was come to, based upon two considerations: first there were said to be two factors each concerned with the definition of "instalment contract", which pointed towards a contrary conclusion. The first was that ordinarily the term "payment by instalments" suggested payments of the purchase price and not of interest. This may be true enough, but since the definition of "instalment contract" makes no use of the term "payment of instalments", speaking instead only of "a payment or payments" and omitting all reference to the word "instalment", which alone gives the term its particular flavour, I would regard this consideration as of no relevant significance. The second was that, because the payments of which the definition speaks were ones which did not entitle the purchaser to receive a conveyance in exchange, this suggested that the payments in question were payments of part of the purchase price, it being in terms of purchase price that any question generally arises of receipt of a conveyance in exchange for a payment. However the very point of the definition is to define as an "instalment contract" a contract which involves payments which do not entitle to conveyance in exchange: if a contract does involve payments of interest which do not confer such an entitlement then the definition's criterion for an instalment contract is precisely satisfied.
The Full Court also had regard to the mischief which the Act might be seen to be intended to remedy and to the draftsman's use of language apparently culled from a judgment of this Court on earlier legislation. The mischief aimed at may provide a useful aid in interpretation where ambiguity arises, but to my mind the words of the definition are not themselves ambiguous nor do they lead to any apparent absurdity in the operation of the Act if full effect be given to their literal meaning. To restrict a vendor's right to rescind and his ability to encumber, to facilitate the lodging of a purchaser's caveat and the ability of a purchaser to procure the deposit of title deeds, these appear to be reforms equally appropriate, although perhaps not as pressing, in the case of a contract of sale having a substantial time lapse between payment of deposit and completion, during which interest is paid, as they are in the case of the conventional terms contract. I may omit reference to the remaining provision of the Division, relating to conveyance and mortgage back, since it will only apply when at least one third of the purchase price has been paid. That the draftsman appears to have adopted, as his model in framing part of the definition, a passage from the judgment of this Court in Petrie v. Dwyer [3] , where earlier legislation on the topic was in question, is, I think, no good reason for giving to the words in question the limited meaning to which other passages in that judgment may be thought to have there confined them; to do so is to interpret the words of the definition in the light of a quite alien context.
In my view effect must, therefore, as the legislation now stands, be given to the definition of "instalment contract" in a sense not confined to contracts which involve payment of the balance of purchase price by instalments. No doctrine of interpretation justifies, in the present circumstances, any departure from what I regard as the ordinary meaning of the legislature's words.
The terms of s. 72 (1), which refer to "any instalment or sum of money (other than a deposit or any part thereof) due and payable" under an instalment contract (emphasis added) themselves lend support to this view of the definition of "instalment contract". They clearly enough contemplate that under an instalment contract as defined default in payment not only of an "instalment" but also of other sums of money will bring the sub-section into operation. This language in s. 72 (1) is, of course, itself at odds with the terms of the notice of default to which the concluding words of s. 72 (1) refer and which appears in a Schedule to the Act. That notice refers exclusively to default in payment of "the instalment(s)", making no reference to other sums of money which may be in default; however this is readily explicable once the operation of s. 72 (4) is appreciated. Section 72 (4) provides that a notice will be deemed to be "to the like effect" of the scheduled form of notice if it is "reasonably sufficient fully and fairly to apprise the purchaser of his default and of the effect of his failure to remedy the default" in due time. The terms of s. 72 (4) must be read together with s. 40 of the Acts Interpretation Act 1954. Section 40 provides that
Whenever, by any Act , forms are prescribed, it shall be deemed to be provided, unless the contrary intention appears , that forms to the like effect shall be sufficient. The combined effect of this section and of s. 72 (4) is to permit a vendor's notice of default substantially to depart from the prescribed form without affecting its validity so long as it tells the purchaser clearly enough of his default and of what may be its consequences. It follows that the scheduled form of notice is no more than a guide to an actual notice's content, that content necessarily varying with the particular circumstances. If this be so the draftsman's use of the word "instalment" in the model form is of no significance and certainly does not conflict with the earlier reference, in s. 72 (1), to "any instalment or sum of money".
On this appeal the respondent relied upon the terms of a report of the Law Reform Commission. That report was concerned with proposed amendment of the legislation governing instalment contract as it stood immediately before the enactment of Div. 4 in its present form. I have read and am in agreement with the remarks of Mason J. concerning this aspect of the respondent's submission.
There remains one aspect of s. 72 and of the definition of instalment contract in s. 71 to which I have so far made only passing reference. The present contract requires the purchaser to make a variety of payments to third parties, e.g., rates, taxes, stamp duty and registration fees. Does the obligation to make these payments, without more, suffice to bring the contract within the definition of "instalment contract"? If so, will s. 72 (1) then apply to any default in their payment? While, in the outcome, not essential to the resolution of this appeal, it is a question of considerable general importance and one which was the subject of argument on the appeal. In my view such payments do not serve to bring a contract within the definition: the payments to which the definition refers are confined to those which a contract obliges a purchaser to pay to the vendor, they do not include those required by the contract to be paid to third parties.
That this is so emerges most clearly from s. 72 of the Act, but the terms of the definition itself also suggest this to be its true meaning. The clearest indication arises from sub-ss. (2) and (3) of s. 72. Sub-section (2) enables a purchaser who is in default to pay or tender to the vendor, despite the default, "such sum as would have been due and payable under the contract" at date of default, "any sum in respect of which the default was made" being specifically included. Sub-section (3) then provides that upon such payment or tender the vendor's power to determine for default ceases and the purchaser is to be deemed not to be in default. It is, I think, unlikely in the extreme that it was the legislative intent that these provisions should apply not only to payments due to the vendor but also to payments due to third parties; yet it is clear that they are intended to apply to any payment capable of being the subject of a relevant default. This in turn suggests that the payments referred to in the definition of instalment contract in s. 71 are confined to payments which the purchaser is obliged to make to his vendor and the words of the definition are, to say the least, consistent with this view. The criterion which the definition adopts in defining an instalment contract turns upon the nature of payments which the purchaser is obliged to make under it, the criterion being whether or not there is an entitlement to receive in return a conveyance. This appears to assume that the payment is to the vendor, the only question being whether "in exchange therefor" the purchaser becomes entitled to a conveyance.
It is for these reasons that I regard payments due to the vendor under a contract as the only payments relevant to the question whether a contract is an "instalment contract" for the purposes of Div. 4. I likewise regard s. 72 as confined to default in payment of amounts payable to the vendor.
I would allow this appeal and would restore the order of the trial judge.
By an agreement made on 10th June 1976 the respondent agreed to sell and the appellant agreed to buy certain land in the Beaudesert Shire for the sum of $319,200. The purchase price was expressed to be payable as to $31,920 by way of deposit and as to the balance, namely $287,280, by payment on a date thirty-six calendar months after a date referred to as the Plan Registration Date. Provision for the determination of that date was made by the agreement. As it transpired, the Plan Registration Date was 21st July 1976. Of the deposit a sum of $15,960 was to be paid upon the execution of the agreement to the trust account of the vendor's solicitors for the credit of the vendor and the balance of the deposit was to be paid within six months of the date of the making of the agreement.
Clause 15 of the agreement provided that interest would be payable on the balance of purchase moneys from a date twelve calendar months from the Plan Registration Date at the rate of 14.75 per cent on monthly reducing balances. The clause provided that such interest should be payable by the appellant to the respondent monthly with the first payment to be made one month after the date which was twelve calendar months from the Plan Registration Date or extended date for which the agreement made provision. The clause then went on to provide that subsequent payments of interest should be made on the same day of each succeeding month until the whole of the balance of the purchase price should have been paid in full.
The agreement also provided for payment by the appellant of all rates, taxes and outgoings in respect of the land falling due after the Plan Registration Date.
The appellant defaulted in payment of the interest whereupon the respondent gave a notice dated 23rd August 1977 to the appellant under cl. 24 of the agreement specifying the default, the clause providing that the vendor should not be at liberty to exercise "any right remedy or power" under the agreement in relation to any default by the purchaser unless it should have continued for a period of not less than fourteen days after the delivery to the purchaser of a notice specifying the default. The respondent, after the lapse of fourteen days from the delivery of the notice, gave to the appellant a notice dated 7th September 1977 of rescission of the agreement and forfeiture of the deposit which had been paid. The appellant then served on the respondent a notice of rescission of the agreement treating the respondent's notice of rescission as a repudiation of the contract on the ground that the respondent had failed to comply with s. 72 of the Property Law Act 1974 Q. as amended ("the Act").
The appellant commenced proceedings by way of summons under O. 64, r. 1A of the Rules of the Supreme Court (of Queensland) for a declaration that, on its proper construction, the agreement was an "instalment contract" within the meaning of the definition which is set out in s. 71 of the Act and for an order for the return of the deposit. The matter came before Hoare J. who made the declarations sought and consequential orders. On appeal the Full Court of the Supreme Court concluded that the agreement was not an "instalment contract" within s. 71 and it accordingly allowed the appeal. On appeal to this Court the same question remains for determination, namely whether the agreement is an "instalment contract" within the meaning of the section.
Division 4 of the Act contains a series of provisions which are designed to protect purchasers under contracts for the sale of land described as "instalment contracts". The protection which the Division affords consists of restrictions placed on the vendor's right to rescind (s. 72), a prohibition against the sale or mortgage of the land the subject of the contract without the consent of the purchaser (s. 73), the conferring on the purchaser of a right to lodge a caveat (s. 74), the giving of a right to the purchaser to require a conveyance when he is not in default under the contract and he has paid an amount equal to one-third of the purchase price (s. 75) and the giving of a right to the purchaser to direct the vendor to deposit with a prescribed authority the title deed and the duly executed conveyance or transfer (s. 76).
Section 71 (2) contains two important definitions. The first is that of "deposit" which is defined to mean
(i) not exceeding ten per centum of the purchase price payable under an instalment contract;
(iii) liable to be forfeited and retained by the vendor in the event of a breach of contract by the purchaser.
The second is that of "instalment contract" which is defined to mean an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor.
(1) An instalment contract shall not be determinable or determined by reason of default on the part of the purchaser in payment of any instalment or sum of money (other than a deposit or any part thereof) due and payable under the contract until the expiration of a period of thirty days after service upon the purchaser of a notice in Form 2 of the Second Schedule.
(2) A purchaser upon whom a notice in the said form of the said Schedule has been served may within the period mentioned in subsection (1) pay or tender to the vendor or his agent such sum as would have been due and payable under the contract at the date of such payment or tender but for such default (including any sum in respect of which the default was made).
(3) Upon payment or tender in accordance with subsection (2) any right or power of the vendor to determine the contract by reason of the default specified in the notice shall cease and the purchaser shall be deemed not to be in default under the contract.
(4) A notice shall be deemed to be to the like effect of that in Form 2 of the Second Schedule if it is reasonably sufficient fully and fairly to apprise the purchaser of his default and of the effect of his failure to remedy the default within the time specified in this section.
Form 2 of the Second Schedule to the Act is in these terms:
Take Notice that you are in breach of a contract dated__________for the sale of land described as___________in that you defaulted in payment of the instalment(s) due and payable thereunder on the_______day(s) of_____, 19__.
And further take notice that, unless within the period of 30 days of service of this notice, you pay or tender to [insert name of vendor or his agent] the sum of $_____, being the amount of the said instalment(s), the contract will be determined without further notice.
The definition of "instalment contract" speaks of a payment or payments which the purchaser is bound to make without becoming entitled to receive a conveyance in exchange therefor. The respondent submits that the definition should be understood as referring to instalments of the purchase price because (a) the expression "instalment contract" naturally suggests a contract under which the purchase price is payable by instalments; (b) it is payment of the purchase price which ordinarily entitles the purchaser to receive the conveyance; and (c) the apparent policy of the legislation is to give protection to the purchaser under contracts which provide for the payment of the purchase price by instalments.
There are several objections to this argument. First, the definition is not in terms limited to instalments of the purchase price; as I have said, it refers to any payment or payments which the purchaser is bound to make which do not entitle him to a conveyance. Secondly, in drawing a distinction between an "instalment" and "a sum of money" s. 72 indicates that the protection conferred upon the purchaser extends to a determination of the contract by the vendor on the ground that the purchaser has failed to pay a sum of money other than an instalment being part of the purchase price. The force of this comment is diminished by the terms of Form 2 of the Second Schedule. The notice of default which it prescribes speaks of "instalment(s)" and makes no reference to other sums of money. However, the form should be read in the light of the relevant operative provision, namely s. 72, and should therefore accommodate itself to what that section provides. See also the Acts Interpretation Act 1954 Q., as amended, s. 72 (4). Thirdly, the considerations to which I have already referred suggest that the policy of the legislation is not confined to giving protection to purchasers under contracts which provide for the payment of the purchase price by instalments but extends to contracts by which the purchaser is obliged to make any payment or payments without becoming entitled to receive in exchange a conveyance.
It was suggested that the giving of a literal interpretation to the statutory definition would entail its having an extraordinarily wide operation. It would catch up not only covenants to pay interest, but also covenants to pay rates and taxes and even provisions for the payment of a deposit exceeding 10 per cent of the purchase price in circumstances where the purchaser is not entitled to a conveyance. On the assumption that the legislation does have the operation thus attributed to it I cannot think that it is an operation which merits the description "extraordinarily wide" or that it is so extreme or irrational as to compel the conclusion that the Parliament necessarily intended to say something else.
The respondent sought to derive some support from the fact that the statutory definition of "instalment contract" reflects the meaning which this Court in Petrie v. Dwyer ascribed to "contract of sale of land" in s. 3 of the Contracts of Sale of Land Act of 1933 Q.. There the Court said [4] :
The only thing that is clear about the whole Act is that it is intended for the protection of a purchaser, and we think that the wording of the definition makes it at least fairly clear that it is in cases of that kind that the purchaser is to be protected. In our opinion, what the definition contemplates is the case where the purchaser is required to make a payment or payments (apart from a "deposit") without receiving a conveyance or transfer in exchange therefor. The Court was there speaking of the statutory definition of "contract of sale of land" which was expressed in terms which differed substantially from the present definition of "instalment contract". Although the Court was dealing in that case with a provision in a contract relating to the payment of the purchase price, it was not considering a question of the kind that now arises. Accordingly, what the Court said in the last sentence of the passage quoted throws no light on what Parliament meant when it used similar language in the definition of "instalment contract". 1. (1954) 91 C.L.R., at p. 109.
Finally, the respondent relied on the contents of a report of the Law Reform Commission, a statutory authority charged with making recommendations on legislative reform, in which the Commission dealt with the subject matter of instalment sales of land and stated:
In the result we recommend the repeal of The Contracts of Sale of Land Act of 1933 but the retention in cll. 70 to 75 of provisions in better drafted form of principal features of such legislation. The definition of "instalment contract" in cl. 70 (2) is essentially a reproduction in legislative form of the definition arrived at in Petrie v. Dwyer and Cohen v. Mason [5] supra, the other definitions being derived in the main from the Victorian legislation of 1962 and 1964.
Clause 71 is intended to preserve the effect of the requirement imposed by s. 13 (5) of the existing Act that an instalment contract may be rescinded for default in payment of instalments by the purchaser only after notice in the statutory form (or to like effect) has been given followed by a period of 30 days grace within which the purchaser may make good his default.
To me these passages appear to be quite neutral, an impression which is reinforced by a reading of the relevant sections of the report. They indicate that the issue which now arises for consideration was not examined by the Commission. What is more important is that the Commission's draft of cl. 71 (which is the counterpart of s. 72) was significantly altered by Parliament. The Commission's draft referred to "default on the part of the purchaser in payment of any instalment or instalments due and payable under the contract". In s. 72 the language is changed to " any instalment or sum of money (other than a deposit or any part thereof)". As Parliament decided to depart from the Commission's draft in a vital respect it cannot be inferred that Parliament implicitly accepted the Commission's recommendation or the Commission's understanding of the basis on which the recommendation was made. 1. [1961] Qd R. 518.
This is not the occasion to examine in any definitive way the use to which the courts may put the reports and recommendations of law reform commissions in the interpretation of statutes based upon such reports or recommendations and I would not wish it to be thought that what I have said necessarily indicates that in some circumstances I favour resort to documents of this character as an actual aid to statutory interpretation going beyond identification of the mischief at which the statute is directed. See Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. [6] ; Bitumen and Oil Refineries (Australia) Ltd. v. Commissioner for Government Transport [7] .
In the result I would allow the appeal and restore the declarations and orders in terms of pars. 1 to 4 of the summons.
The fate of this appeal depends upon whether the contract of sale of land is an instalment contract as defined in s. 71 (2) (b) of the Property Law Act 1974 which states:
(b) "instalment contract" means an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor;
Section 71 (3) states: Where a contract for the sale of land may, at the election of the purchaser, be performed in a manner which would constitute it an instalment contract, it shall, unless and until the purchaser elects to perform it in some other manner, be presumed to be an instalment contract within the meaning of this section. Section 72 provides:
(1) An instalment contract shall not be determinable or determined by reason of default on the part of the purchaser in payment of any instalment or sum of money (other than a deposit or any part thereof) due and payable under the contract until the expiration of a period of thirty days after service upon the purchaser of a notice in Form 2 of the Second Schedule.
(2) A purchaser upon whom a notice in the said form of the said Schedule has been served may within the period mentioned in subsection (1) pay or tender to the vendor or his agent such sum as would have been due and payable under the contract at the date of such payment or tender but for such default (including any sum in respect of which the default was made).
(3) Upon payment or tender in accordance with subsection (2) any right or power of the vendor to determine the contract by reason of the default specified in the notice shall cease and the purchaser shall be deemed not to be in default under the contract.
The contract was for sale of specified land for $319,200 by the appellant to the respondent. The manner in which the purchase price was to be paid was by a deposit of $31,920 with the balance $287,280, to be paid 36 calendar months after what was referred to as the "Plan Registration Date". Provision was made for determination of that date. Interest was payable on the balance of purchase moneys from a date twelve calendar months after the Plan Registration Date at the rate of 14.75 per cent on monthly reducing balances. This contemplated some $80,000-90,000 interest before completion.
The appellant defaulted on one of the interest payments and was given notice by the respondent in terms of cl. 24 of the agreement, asserting the right to exercise "any right, remedy or power given to it by the said contract in the event of the default continuing for a period of more than 14 days". The default was not remedied within 14 days. The respondent then gave the appellant notice of its purported rescission of the agreement and forfeiture of the deposit which had been paid.
The appellant sought a declaration from the Supreme Court of Queensland that the contract was an instalment contract within s. 71 of the Act. Hoare J. declared that it was an instalment contract and made consequential orders. The respondent appealed to the Full Court of the Supreme Court which reversed the decision, holding that it was not an instalment contract.
The contract is an instalment contract; it satisfies precisely the words of the definition. The contention that there is an implication in the definition that a payment means a payment of the balance of purchase money and does not include any sum of money (such as interest) is not warranted and is quite inconsistent with the intention disclosed by s. 72 which refers to default in payment of any instalment or sum of money (other than deposit or any part thereof).
The definition in the Act is so clear and the contract fits within it so easily that there hardly seems to be any room for ambiguity. However, the Schedule to the Act contains Form 2: Notice of Default under Instalment Contract, Property Law Act 1974, s. 72, which refers only to default in payment of the instalments due and payable and omits reference to default in payment of "any instalment or sum of money (other than a deposit or any part thereof)" mentioned in s. 72. The respondent, contending that the meaning of "instalment contract" was at least ambiguous, sought to rely upon a report of the Law Reform Commission which preceded the enactment of the Property Law Act 1974 to resolve the ambiguity. The question whether such reports should be looked at and for what purpose has been discussed in Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. [8] ; Bitumen and Oil Refineries (Australia) Ltd. v. Commissioner for Government Transport [9] . I referred to it in Dillingham Constructions Pty. Ltd. v. Steel Mains Pty. Ltd. [10] .
[1975] A.C. 591. 2. (1955) 92 C.L.R., at p. 212. 3. (1975) 132 C.L.R. 323, at p. 332.
The Report of the Law Reform Commission recommended the repeal of the previous legislation, the Contracts of Sale of Land Act of 1933 with the retention of provisions of the principal features of such legislation in better drafted form. The definition of "instalment contract" was essentially a reproduction in legislative form of the definition arrived at in Petrie v. Dwyer [11] and Cohen v. Mason [12] . The Report and the bill which was presented to implement it might, if the bill had been enacted without amendment, have lent support to the respondent's contention that payments in the definition of instalment and in s. 71 were restricted to payments of instalment moneys. The wording of the bill was: "an instalment contract shall not be determinable or determined by reason of default on the part of the purchaser in the payment of any instalment or instalments". This was altered to read: " in payment of any instalments or sum of money (other than a deposit or any part thereof)". This shows that the legislature intended that the expression, "instalment contract", included one which provided for payment of sums other than the deposit and final balance.
The appeal should be allowed and the order of Hoare J. restored.
This is an appeal from a decision of the Full Court of the Supreme Court of Queensland in which it allowed an appeal from a decision in which Hoare J. ordered the return of a deposit paid under a contract for the sale of land.
By an agreement dated 10th June 1976 between the respondent as vendor and the appellant as purchaser, the respondent agreed to sell and the appellant to buy certain land in Queensland described by reference to lot numbers, 57 in all, on an annexed plan being part of the land comprised in a specified Certificate of Title.
The material clauses of the agreement were as follows:
The Purchase Price payable by the Purchaser to the Vendor for the Subject Land shall be the sum of $319,200.00 (THREE HUNDRED AND NINETEEN THOUSAND TWO HUNDRED DOLLARS): -
(a) As to the sum of $31,920.00 (THIRTY-ONE THOUSAND NINE HUNDRED AND TWENTY DOLLARS) by way of deposit which said sum shall be paid by the Purchaser to the Trust Account of the Vendor's Solicitors, Messrs. Walsh, Fitzgerald & Hilton, for the credit of the Vendor, by a deposit payment of $15,960 (FIFTEEN THOUSAND NINE HUNDRED AND SIXTY DOLLARS) upon the execution of this Agreement by the Purchaser and the Vendor and by a further deposit payment of $15,960.00 (FIFTEEN THOUSAND NINE HUNDRED AND SIXTY DOLLARS) within six (6) months from the date hereof.
(b) As to the sum of $287,280.00 (TWO HUNDRED & EIGHTY-SEVEN THOUSAND TWO HUNDRED AND EIGHTY DOLLARS) by way of Balance of Purchase Price which said sum shall be payable by the Purchaser to the Vendor in manner hereinafter set out.
The Vendor will, with all convenient speed and at its own cost do all things as shall be necessary to obtain the sealing by Beaudesert Shire Council of Linen Survey Plan No. 148055. As soon as is practicable after the delivery of the sealed Linen Survey Plan to the Vendor by Beaudesert Shire Council, the Vendor will with all convenient speed and at its own cost and expense lodge such sealed Linen Survey Plan in the Titles Office at Brisbane together with any other necessary documents and do all things necessary to procure its registration. Within fourteen days from the date that the Vendor or its Solicitors receives notification from the Registrar of Titles as to the registration of such Linen Survey Plan, the Vendor shall give written notification of the fact of such registration to the Purchaser or its Solicitors. The date of registration of such Linen Survey Plan is hereinafter referred to as "the Plan Registration Date".
All rates and taxes and outgoings (including Land Tax) in respect of the Subject Land shall be paid and discharged by the Vendor up to the Plan Registration Date and from that date by the Purchaser, such rates taxes and outgoings if necessary being apportioned and the Purchaser will thereafter punctually pay all rates taxes and outgoings charged upon the Subject Land or any part thereof or upon the owner or occupier thereof and in the event of the Purchaser failing so to do the Vendor may pay all such rates taxes and outgoings and such amounts so paid shall be recoverable forthwith by the Vendor from the Purchaser and/or shall be deemed to be part of the monies owing hereunder. Land Tax shall be apportioned on the basis that as at midnight on June 30th, 1976 the Vendor owned no other land than the Subject Land.
The possession or receipt of the rents and profits of the Subject Land shall be retained by the Vendor up to the Plan Registration Date and as from that date possession or receipt of the rents and profits thereof shall be taken by the Purchaser and if necessary such rents or profits shall be apportioned.
Clause 16 provided that the purchaser might obtain title to individual lots in advance of the completion date by making specified payments per lot.
Clause 19 repeated the provision of cl. 12 that possession should be given to the purchaser on the Plan Registration Date.
In the events which happened the two parts of the deposit were paid and the Plan of Subdivision was duly registered. The "Plan Registration Date" was 21st July 1976, and accordingly the first monthly payment of interest became due and payable pursuant to cl. 15 on 21st August 1977. The amount of interest due was not paid on that date and by a notice dated 23rd August 1977 the respondent, pursuant to cl. 24, gave notice to the appellant that it was in default in respect of a payment for interest of $3,531.24 and that if the default continued for a period of not less than fourteen days after delivery of the notice the vendor "will be at liberty to exercise any right remedy or power under the said Contract arising in relation to the aforesaid specified default." The default was not remedied and by a notice of rescission dated 7th September 1977 the respondent gave the appellant notice that in consequence of the default the contract was rescinded and the deposit forfeited.
By a notice also bearing date 7th September 1977 the appellant rescinded the contract on the ground that the respondent had "without lawful justification repudiated such agreement for sale and purchase and without lawful justification treated or purported to treat itself as discharged from the obligations of such agreement for sale and purchase."
The appellant's notice was given upon the basis that the agreement was an "instalment contract" within the meaning of Div. 4 Pt VI of the Property Law Act 1974 Q. which came into operation on 1st December 1975 and therefore could not be terminated until the expiration of thirty days after service of a specified form of notice. That Act repealed The Contracts of Sale of Land Act of 1933, an Act which was the subject of much criticism for its obscurity by this Court in Petrie v. Dwyer [13] .
The material provisions of Div. 4 are the definitions of deposit and instalment contract in s. 71 (2) and ss. 71 (3) and 72 and Form 2 in the Second Schedule as follows:
(i) not exceeding ten per centum of the purchase price payable under an instalment contract;
(iii) liable to be forfeited and retained by the vendor in the event of a breach of contract by the purchaser;
(b) "instalment contract" means an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor;
(3) Where a contract for the sale of land may, at the election of the purchaser, be performed in a manner which would constitute it an instalment contract, it shall, unless and until the purchaser elects to perform it in some other manner, be presumed to be an instalment contract within the meaning of this section.
(1) An instalment contract shall not be determinable or determined by reason of default on the part of the purchaser in payment of any instalment or sum of money (other than a deposit or any part thereof) due and payable under the contract until the expiration of a period of thirty days after service upon the purchaser of a notice in Form 2 of the Second Schedule.
(2) A purchaser upon whom a notice in the said form of the said Schedule has been served may within the period mentioned in subsection (1) pay or tender to the vendor or his agent such sum as would have been due and payable under the contract at the date of such payment or tender but for such default (including any sum in respect of which the default was made).
(3) Upon payment or tender in accordance with subsection (2) any right or power of the vendor to determine the contract by reason of the default specified in the notice shall cease and the purchaser shall be deemed not to be in default under the contract.
(4) A notice shall be deemed to be to the like effect of that in Form 2 of the Second Schedule if it is reasonably sufficient fully and fairly to apprise the purchaser of his default and of the effect of his failure to remedy the default within the time specified in this section.
Take Notice that you are in breach of a contract dated__________for the sale of land described as___________in that you defaulted in payment of the instalment(s) due and payable thereunder on the__________day(s) of_________, 19__.
and further take notice that, unless within the period of 30 days of service of this notice, you pay or tender to [insert name of vendor or his agent] the sum of $______, being the amount of the said instalment(s), the contract will be determined without further notice.
Other provisions such as ss. 73, 74, 75 and 76 confer various rights on purchasers and impose various restrictions on vendors so as to provide additional protection for purchasers but they throw no light on the present problem, which is whether this agreement is an instalment contract as defined.
Although this Act has avoided the pitfalls so clearly marked out in Petrie v. Dwyer it is not without its own difficulties. This agreement provides for payment of interest on the unpaid balance of purchase money from the date on which possession is to be given to the purchaser (see cl. 15). This requires the conclusion that the agreement is an "instalment contract" within the definition. I can see no basis on which that definition can be read down so as to confine the word "payment" to instalments of the purchase price. It was argued for the respondent that the use in the definition of "instalment contract" of language derived from the judgment of this Court in Petrie v. Dwyer showed that the legislation was concerned only with the consequences of failure to pay instalments of the purchase price. I do not doubt that where the word instalment is used as a noun it has that meaning, but its use as an adjective in the defined expression "instalment contract" cannot control the meaning of the general term "payment" which is used in the definition. This would be so in the absence of the use in s. 72 (1) of the expression "instalment or sum of money". Accordingly, I am unable to accept that argument. However that is not enough to dispose of the matter because for the appellant to succeed it must show that the notice of rescission was ineffective by reason of s. 72 (1).
One problem which arises is that Form 2 is concerned only with failure to pay a specified "instalment" due on a specified day or specified "instalments" due on specified days, whereas s. 72 (1) speaks of "any instalment or sum of money (other than a deposit or any part thereof)".
It was argued for the appellant that the monthly payments of interest required after the expiration of twelve months from the Plan Registration Date were "instalments" of interest. The total amount of interest which would be payable was calculated on the assumption that the contract would run its full term without payment for the transfer of title to any individual subdivided lots. By this arithmetical process a total sum was reached. It was then said that each monthly payment of interest was an "instalment" of that calculated sum. I am unable to accept this proposition because it appears to me to misconceive both the nature of interest and the nature of an "instalment" in this context. Interest accrues from day to day, and is generally required to be paid at specified intervals of time. A periodical payment of interest is not an "instalment" of anything and in particular is not an instalment of the purchase price. No total figure of interest can properly be said to be "due and payable" under a contract such as this, even if none of the contingencies for early payment of part of the balance of purchase price occur. A monthly payment of interest falling due under this contract does not go in reduction of any larger sum to become payable in full only at a later date. I have no doubt that in this Act the noun "instalment" refers only to instalments of purchase price. As I read Petrie v. Dwyer the essential meaning of "instalment" is that it is a part of a whole and, in relation to a contract for the sale of land, it is a part of the balance of the purchase price already due, but not yet payable in full, but which is payable by two or more payments at specified future dates. This indeed is the ordinary meaning of the term; thus the Concise Oxford Dictionary, 5th ed., defines it as "Each of several parts, successively falling due, of a sum payable".
A payment of interest which becomes payable on a date between payment of the deposit and payment of the balance which entitles a purchaser to a conveyance, though not an instalment of anything, is no doubt the payment of a "sum of money" in the ordinary sense of that expression.
The critical question is whether it falls within s. 72 (1). I would have had no doubt that, but for the requirement of s. 72 (1) that Form 2 be used and the fact that it speaks only of "instalments", amounts payable by way of interest would be within s. 72 (1). However, for reasons which I am about to state, I do not consider that the presence of Form 2 can throw any doubt on that proposition.
Sub-section (4) of s. 72 is a curious provision even when read with s. 40 of The Acts Interpretation Act of 1954 Q. which provides:
Whenever, by any Act or any instrument made thereunder, forms are prescribed, it shall be deemed to be provided, unless the contrary intention appears and provided that deviations from the prescribed forms occurring therein are not calculated to mislead, that forms to the like effect shall be sufficient. Why some statutory exegesis of that provision was thought necessary in sub-s. (4) it is not easy to see. Presumably one is required to read the reference in s. 72 (1) to Form 2 with s. 40 of the Acts Interpretation Act as if there were added some such words as "or a notice to the like effect", the latter expression being explained for the purpose of this section alone by sub-s. (4), if explanation be needed. Section 72 (4) and s. 40 of the Acts Interpretation Act would seem to have been intended together to include in the scope of s. 72 (1) forms involving, not merely immaterial variations not altering the meaning of Form 2, but also words having a corresponding operation in relation to "default in payment of any sum of money" as Form 2 does in relation to "default in payment of any instalment". The words are not very apt for this purpose, but it is hard to see what other operation s. 72 (4) can have (especially in the light of its reference to apprising the purchaser of his default), and it does provide an explanation for the otherwise odd limitation of Form 2 to failure to pay an "instalment" rather than picking up simply "payment" from the definition or "any sum of money" from s. 72 (1). The result can scarcely be said to be as clear as the corresponding provisions of The Contracts of Sale of Land Act of 1933 and the forms prescribed under that Act (s. 13 and Reg. 39 with Form 11). However s. 72 (4) provides a sufficient reason, along with the general context of the provisions for treating the words of Form 2 as not prevailing over the words in the definition of "instalment contract" and the equally clear, though different words (plainly intended to convey the same meaning) in s. 72 (1). It is accordingly not necessary to consider the authorities cited in Craies on Statute Law, 7th ed. (1977), pp. 224-225 and in Pearce, Statutory Interpretation (1974), pp. 40-41 dealing with the resolution of conflicts between sections in an Act and forms in schedules thereto.
It is clear enough that one of the principal objects of this Part of the Act is the protection of certain kinds of purchasers of land. The kind of purchaser is one who agrees to purchase under an "instalment contract", the distinguishing feature of which is that it binds the purchaser to make a "payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange therefor" (s. 71). So far the word "payments" is quite general. Section 72 speaks of default "in payment of any instalment or sum of money (other than a deposit or any part thereof)", which is also quite general. The draftsman has thus used two different expressions (or three if one counts Form 2) in a context where the nature of the legislation might well lead one to suspect that there was one thing in contemplation.
The relevant protection given to such a purchaser is that he is to have not less than thirty days after notice of default in respect of a payment due under the contract, in which to remedy that default. It seems an unlikely intention to provide such protection in respect of failure to pay an instalment and not to provide it in respect of failure to pay other amounts of money due to the vendor. A further factor leading to the same view is that the much criticized The Contracts of Sale of Land Act of 1933 also required notice of not less than thirty days in respect of all breaches, expressed in s. 13 by the words "where the purchaser shall fail to continue to comply with the terms and conditions of the contract of sale or make default in the payment of the instalment or instalments therein" and the form of notice prescribed by regulation referred separately to each of those events. No doubt the former expression would have embraced the latter, but no ambiguity or difficulty of construction was involved. With that background, an intention in the Property Law Act 1974 to provide protection in the case of failure to pay instalments but not in the case of failure to pay other sums of money seems unlikely. Such an intention should not be presumed except from the use of clear language, which is certainly not present, even though the protection given by the 1974 Act is narrower in other respects than the 1933 Act which referred to all breaches of contract.
Argument was directed to the question whether s. 72 applied to payments which under the contract the purchaser is required to make to third parties, e.g. rates, stamp duty and the like. The point does not directly arise on the facts of this case, but I agree with the views expressed about it by my brother Stephen.
For those reasons I would allow this appeal and restore the order of the trial judge.
Wacal Developments Pty Ltd
Realty Developments Pty Ltd
High Court of Australia Gibbs, Stephen, Mason, Murphy and Aickin JJ. Wacal Developments Pty Ltd v Realty Developments Pty Ltd [1978] HCA 30