Sport Developments Pty Ltd v Del Fabbro
[2009] QCA 64
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- Notable Unreported Decision
- Appeal Determined (QCA)
- Sport Developments Pty Ltd v Del Fabbro[2009] QCA 64
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Sport Developments Pty Ltd v Del Fabbro[2009] QCA 64
Sport Developments Pty Ltd v Del Fabbro[2009] QCA 64
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 24 March 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 3 March 2009 |
JUDGES: | Keane and Muir JJA and Daubney J |
ORDER: |
|
CATCHWORDS: | CONVEYANCING – BREACH OF CONTRACT FOR SALE AND REMEDIES – INSTALMENT CONTRACTS – STATUTORY RESTRICTIONS ON RESCISSION OR TERMINATION OF INSTALMENT CONTRACT OR FORFEITURE OF INSTALMENTS OF PURCHASE PRICE – where s 72 of the Property Law Act 1974 (Qld) requires that notice be served upon purchaser 30 days prior to termination of instalment contract – where vendor duly served notice upon purchaser – where parties subsequently agreed to extend duration of contract – where purchaser again defaulted under extended contract – where vendor purported to terminate contract without further notice under s 72 – where purchaser claimed termination ineffective due to lack of notice – whether notice served with respect to first default capable of discharging obligation on purchaser under s 72 for termination pursuant to subsequent defaults CONVEYANCING – BREACH OF CONTRACT FOR SALE AND REMEDIES – INSTALMENT CONTRACTS – FORFEITURE OF INSTALMENTS OF PURCHASE PRICE – RELIEF AGAINST FORFEITURE OF INSTALMENTS OF PURCHASE PRICE – AVAILABILITY – where parties agreed to extend duration of instalment contract – where consideration for extended duration further "instalment" – where purchaser claimed failure by vendor to repay further "instalment" constituted forfeiture – whether purchaser entitled to relief against forfeiture CONVEYANCING – BREACH OF CONTRACT FOR SALE AND REMEDIES – VENDOR'S REMEDIES – RESCISSION OR TERMINATION – ENTITLEMENT TO – where vendor purported to terminate contract on purchaser's failure to perform the contract – where purchaser alleged that terminating party improperly purported to terminate contract insofar as it indicated a readiness and willingness to perform – where alleged readiness and willingness to perform subject to inspection of property by financier – where contract expressly not subject to finance – whether vender entitled to terminate contract Property Law Act 1974 (Qld), s 71, s 71A, s 72 Alghussein Establishment v Eton College [1991] 1 All ER 267, cited |
COUNSEL: | A P J Collins for the appellants |
SOLICITORS: | Williams Graham Carman for the appellants |
[1] KEANE JA: On 14 July 2004 the respondent to this appeal entered into an agreement with the appellants to sell them a piece of land at Palm Cove in far north Queensland. The contract originally provided for a price of $750,000 and a deposit of $75,000 payable in two instalments of $37,500 each and for completion on
29 October 2004. It was expressly provided that time was of the essence of the contract.
[2] The contract subsequently became an "instalment contract" within the meaning of the Property Law Act 1974 (Qld) ("the PLA") as a result of the payment of a third sum of $37,500 as a further "deposit" in December 2004.[1] The date for settlement was extended by agreement until 1 February 2005.
[3] The appellants defaulted in the performance of their obligations on 1 February 2005. Anticipating that the respondent might seek to terminate the contract because of this default, the appellants' solicitors wrote to the respondent's solicitors insisting that because the contract had become an instalment contract, the respondent was obliged to comply with s 72 of the PLA. The respondent accepted that view of the matter and gave a notice in conformity with s 72 of the PLA.
[4] The appellants thereafter sought, and the respondent agreed to grant, several further extensions of time. These agreed extensions culminated in the execution of a Deed on 27 April 2005 ("the Deed"). Under the Deed completion was to occur on 9 May 2005.
[5] Neither vendor nor purchasers were in a position to perform its contractual obligations on 9 May 2005. Acting on the assumption that time had ceased to be of the essence as a result of the non-completion of the contract, on 10 May 2005 the respondent gave the appellants a notice to complete which purported to remake time of the essence and called for completion on 25 May 2005.
[6] The appellants were not in a position to complete on 25 May 2005, and the respondent purported to terminate the contract. The appellants thereafter commenced proceedings for specific performance of the contract. The litigation proceeded to trial and on 6 August 2008 the learned trial judge gave judgment in the action dismissing the appellants' claim.
[7] His Honour held that the respondent's termination of the contract was justified by the appellants' failure to complete on 25 May 2005 notwithstanding the circumstance that no further notice had been given to the appellants under s 72 of the PLA.
The issues
[8] The first issue which arises on the appeal is whether the respondent was obliged to give a further notice under s 72 of the PLA before terminating the contract.
[9] Section 72(1) of the PLA provides relevantly:
"An instalment contract shall not be determinable or determined because of a default on the part of the purchaser in the payment of any instalment of sum of money (other than a deposit or any part of a deposit) due and payable under the contract until the expiration of a period of 30 days after service upon the purchaser of a notice in the approved form."
[10] The second issue which arises on the appeal is whether, if the contract was validly terminated by the respondent, the appellants were entitled to relief against forfeiture in respect of $37,500 being the third instalment of the purchase price together with interest thereon.
[11] I shall address the arguments advanced by the parties in respect of these issues directly, but it is necessary first to set out in some greater detail the relevant facts and brief summaries of the arguments at trial and the learned trial judge's conclusions.
The facts
[12] The contract originally provided for payment of $37,500 by way of a second instalment of the deposit on or before 27 August 2004. The appellants failed to pay this sum on the due date,[2] but it was eventually paid. On 21 October 2004 the parties agreed to vary the contract to provide, inter alia, for the payment of what was described as "a further deposit of $37,500" on or before 22 November 2004 and for the extension of the date for completion of the contract until 1 February 2005.[3] The appellants defaulted in payment of the $37,500, but it was eventually paid in December 2004.
[13] The appellants failed to complete on 1 February 2005. The parties agreed to extend the settlement date of the contract on the basis that the appellants paid various sums for the extensions agreed to by the respondent.
[14] On 7 February 2005 the respondent served a notice of default on the appellants pursuant to s 72 of the PLA requiring settlement on 8 April 2005.[4] That notice was relevantly in the following terms:
"TAKE NOTICE that you are in breach of a contract dated 14 July 2004 for the sale of land described as Lot 3 on SP 146397 in that you defaulted in payment of the balance of the purchase price due and payable on the 1st day of February 2005.
AND further take notice that, unless within the period of 30 days of service of this notice, you pay or tender to Evian Linda Delfabbro the sum of $666,111.47, being the amount of the said balance of the purchase price, the contract may be determined by the vendor."
[15] On 8 March 2005 the respondent agreed to extend the date for completion to 8 April 2005.[5] Once again the appellants failed to complete.
[16] On 27 April 2005 the parties entered into the Deed. The Deed recited that the appellants were unable to complete the purchase on 8 April 2005 and had requested the respondent to extend the settlement date to 9 May 2005.
[17] By cl 2.1 of the Deed the parties agreed that, subject to the appellants paying "extension payments" totalling $97,950.76 to the respondent, the date for settlement was extended to 25 May 2005 with time remaining of the essence. By cl 2.2 of the Deed the appellants agreed that the balance purchase price payable on that date would accord with the settlement statement annexed to the Deed.
[18] Clauses 3 and 4 of the Deed provided as follows:
"3.EXTENSION PAYMENTS
3.1The Buyers and the Guarantors acknowledge that they have been unable to complete the Contract on previous dates that the Contract was due for completion and that in addition to the purchase price payable under the Contract, the Buyers and the Guarantors agree and acknowledge that:
(a)The Buyers agree to pay to the Seller for the following sums ("Extension Payments") in consideration of the Seller agreeing to extend the date for completion of the Contract to the Extended Settlement Date:
(i)Payment for extension
to 1 February 2005 -$21,000.00
(ii)Payment for extension
to 8 April 2005 -$50,000.00
(iii)Payment for extension
to 9 May 2005 - $26,950.76
TOTAL$97,950.76
(b)The Extension Payments do not represent the payment of any instalment or sum of money under the terms of the Contract within the provisions of Division 4 Part 6 of the Property Law Act 1975 (as amended).
(c)The Extension Payment must be paid to the Seller's nominated bank account as clear funds by 5pm Monday 11 April 2005.
(d)The Extension Payments are not refundable by the Seller to the Buyers in any circumstances whatsoever.
4.NO FURTHER EXTENSION
4.1In addition to the Extension Payments, the Seller acknowledges receipt of the sum of $112,500 as part payment of the purchase price payable under the Contract by 3 Instalments of $37,500 each paid by the Buyers on 28 July 2004, 26 November 2004 and 6 December 2004 ("Instalments").
4.2The [Buyers] and the Guarantors acknowledge and agree that:
(a)Following payment of the Instalments, the Buyers by a letter dated 1 February 2005 from their solicitors Miller Harris Lawyers to the Seller's solicitors Gadens Lawyers alleged that the Instalments prevented the Seller terminating the Contract pursuant to the provisions of Division 4 Part 6 of the Property Law Act 1974 (as amended);
(b)The Buyers received notice from the Seller pursuant to Section 72 of the Property Law Act 1974 giving the Buyers a further period of 30 days to complete the Contract, which notice period expired on
8 March 2005;
(c)The Buyers could not complete the Contract on
8 March 2005;
(d)The parties agreed to further extend the settlement date of the Contract to 8 April 2005;
(e)The Buyers could not complete the Contract on
8 April 2005;
(f)The Seller was and still is entitled to terminate the Contract (subject to the terms of this Deed);
(g)The Buyers are not entitled to any further notice under the provisions of Division 4 Part 6 of the Property Law Act 1974 (as amended);
(h)The Buyers are not entitled to any refund of any of the Instalments which the Buyers agree have been absolutely released to the Seller and they are not refundable by the Seller to the Buyers in any circumstances whatsoever;
(i)If settlement of the Contract does not occur on the Extended Settlement Date due to the Buyers' default, the Buyers will have no right to extend the settlement date again and the Seller shall be immediately entitled to exercise any of her rights under the Contract or at law including but not limited to:
(i)Exercise any of the Seller's rights contained in Clause 9 of the Terms of Contract;
(ii)Register the withdrawal of caveat no 708006725 or any other caveat lodged by the Buyers;
AND neither the Buyers nor the Guarantors will have any defence or counterclaim to or in respect thereof and the Buyers and the Guarantors agree that this Deed can be pleaded as a bar to all such proceedings by the Buyers or the Guarantors in respect of any action taken by the Seller." (emphasis added)
[19] The appellants were once again unable to complete on 9 May 2005.[6] The learned trial judge was unable to conclude that the respondent was, herself, in a position to settle on that date because her execution of the land transfer form had not been duly witnessed.[7]
[20] The respondent was not in a position in which she could, beyond argument to the contrary, avail herself of the right of immediate termination conferred by cl 4.2(i) of the Deed or by the general law.[8] Accordingly, on 10 May 2005 the respondent served on the appellants a notice in the following terms:
"1.That the Vendor is ready and willing to transfer to you the property situated at 12 Oliva Street, Palm Cove in accordance with the Contract dated 14 July 2004.
2.You are required to complete the purchase and to pay the balance purchase money on or before the 25th day of May 2005 and in this respect time is of the essence of the Contract.
3.The Vendor appoints 3:00pm on Wednesday 25 May 2005 at the office of the ANZ Bank, 21 Grafton Street, Cairns as the time and place for completion.
4.Unless you complete within the time stipulated in this notice, the Vendor will be entitled to terminate the Contract."
[21] On 17 May 2005 the appellants' solicitors wrote to the respondent's solicitors in the following terms:
"We refer to our telephone conversation yesterday.
As mentioned, our client has the right to inspect the premises by virtue of clause 8.2(3) of the contract.
Given that the premises presently stands vacant and you hold the keys, we submit to 24 hours notice of our client’s intention to inspect is a reasonable timeframe.
In any event, a written request to inspect the premises was made to you on 9 May 2005. As such, it seems to us that there is no issue with reference to 'reasonable notice'.
As we mentioned to you yesterday, unless access is granted to our client’s representative no later than 10am today, our client is likely to be precluded from completing the contract on 25 May 2005. Should that occur, we put you on notice that any attempt to terminate the contract will be met with an immediate application for specific performance. Quite simply, any attempt by your client to terminate the contract will be tantamount to relying on her own default by failure to comply with standard condition 8.2(3) of the contract.
Naturally, our client will be looking for the cost of the action should it be forced to commence proceedings.
We trust that common sense will prevail and your client will grant access to the premises this morning." (emphasis added)
[22] On 18 May 2005 the appellants' solicitors wrote again to the respondent's solicitors:
"We refer to our letter of 17 May 2005 and note that we have not received your reply.
We note that your client continues to deny access and our client’s representative has had no option but to return to Brisbane.
We note your verbal comments that our client has already been granted access on one occasion and, as such, standard condition 8.2(3) of the contract no longer applies.
The assertion is denied.
Our client has not entered the dwelling at any time, whether before or after the time the contract was signed. Indeed, we are informed that the sales agent has never had keys that would have been required to facilitate access.
On our instructions, standard condition 8.2(3) of the contract continues to apply and your client is in breach of that provision.
The implications of your client’s breach are enormous.
As you know, our client has contracts to purchase your client’s property and the adjoining block for development purposes. Our client has secured construction finance on the basis of an amalgamation of both titles. Not only does your client’s breach jeopardise the sale contract in respect of her property, but it also jeopardises the construction finance approval and, consequently, the acquisition of the adjoining block.
If either or both contracts should not proceed, or if construction finance is denied, our client’s damages will obviously be significant. This will include damages for which it is potentially liable in respect of the sale contract on the adjoining block and loss of profits in the context of the overall development.
On our instructions, damages will easily exceed $1 million.
While our instructions are to make good our client’s threat to commence proceedings for the specific performance, the fact is that those proceedings may not be finalised by the due date for completion of the contract for the adjoining block. Therefore, there is a real risk that the damages that our client could potentially incur (as outlined above) will be realised.
The purpose of this letter is to put you on notice that our client will sue for all damages sustained as a consequence of your client’s refusal to allow our client access to the premises, as she is contractually obliged to do in the terms of standard condition 8.2(3).
We should also foreshadow that if your client has a change of heart, the time left remaining to complete the contract under your notice to complete will be insufficient to allow our client’s representative to return to Cairns (for the purpose of the inspection) and compile the report necessarily required by our client’s financiers. While we will require instructions, we anticipate that a further two weeks to complete will be required. Obviously, given that the extra time that is needed has been brought about purely by your client’s failings, our client will not be disposed to paying default interest during that period.
Would you please inform us of your client’s intentions." (emphasis added)
[23] On 24 May 2005 the respondent's solicitors replied to the appellants' demands for access to the property:
"We refer to your facsimile of 18 May 2005. In our telephone conversation on 19 May 2005 we indicated that we retain the keys to the property and our client had instructed us that your client and its representative were authorised to inspect the property. Whilst our client will allow your client the right to inspect the property for the purpose of Clause 8.2(3), she disputes the right of your client's financier to have a valuer inspect the property on the basis that:
1.The purpose of Standard Condition 8.2(3) is to give the buyer the opportunity to inspect the condition of the property prior to completion (see Conveyancing Law and Practice paragraph 6 – 890). [Whilst] our client has agreed to allow your client access for that purpose, we note that your client has declined and requests access solely for its bank's valuer.
2.It is further noted that your client intends to demolish the improvements on the land and to construct a multi-unit development on this and the adjoining property. The condition of the property is not relevant to your client.
3.The contract is not conditional on finance.
4.The original settlement date was 29 October 2004. That date has been extended on numerous occasions and only now has your client requested a further valuation from another bank.
5.The Commonwealth Bank's valuer is not the buyer's 'consultant' for the purpose of Clause 8.2(3) but rather the valuer acting on behalf of your client's financier and is therefore the consultant of that bank and not the consultant of your client.
We advise that our client remains ready, willing and able to settle tomorrow and we look forward to settlement at the offices of ANZ Bank in accordance with the previous Notice to Complete."
[24] On 24 May the appellants' solicitors responded:
"Thank you for your letter of 24 May 2005.
We feel compelled to set the record straight.
Our clients are two companies incorporated in New South Wales. The directors of our clients reside in Sydney.
Obviously, our clients need to appoint a representative to inspect the property for the purpose of standard condition 8.2(3). Our clients’ representative is also Sydney based.
Our clients’ representative came to Cairns on reasonable notice for the purpose of inspecting the property. Notwithstanding the trouble and expense incurred by our clients in having their representative fly to Cairns, your client denied access in breach of her obligations under standard conditions 8.2(3) of the contract. Your client did that knowing that her conduct would deny our clients of the ability to secure the funds they require to complete the contract.
Our clients’ representative was forced to return to New South Wales without being able to inspect the property (which was the only reason for the trip to Cairns).
It seems to us that everything else raised in your correspondence is irrelevant. The fact that our clients’ representative may have qualifications in one field or another does not take away the fact that he was duly appointed by our clients to inspect the property pursuant to standard condition 8.2(3).
As to the final paragraph of your letter, your client is in fundamental default of her obligations under the contract. On that basis, we fail to see any basis for your assertion that she 'remains ready, willing and able to settle tomorrow'.
Our clients still [require] access to the property. The inspection that is still to be undertaken under standard condition 8.2(3) will be undertaken by our clients’ representative.
Would you please confirm that your client will allow access on this basis. We will then take instructions as to the earliest date that it will be possible for our clients’ representative to fly from Sydney to inspect the property.
Once the inspection has been undertaken, settlement should proceed without further difficulty."
[25] On 25 May 2005 the respondent's solicitors wrote back:
"Thank you for your facsimile of 24 May 2005. The fifth paragraph of your fax confirms that the purpose of the inspection is to secure the funds your client requires to complete the contract. We confirm that this is not the purpose of the inspection and furthermore, that the valuer intends to conduct the inspection and is doing so on behalf of your client's financier.
We note from your fax that you will not be in a position to attend settlement today. Nevertheless, we nominate 3.30pm for settlement to occur at ANZ Bank, 21 Grafton Street, Cairns."
[26] On 25 May 2005 the appellants' solicitors wrote back to the respondent's solicitors:
"Thank you for your letter of 25 May 2005.
With respect, the 'purpose' of the inspection is so our clients may satisfy themselves as to the order and condition of the improvements constructed upon the land.
When our clients’ representative was in Cairns, there was no intention to do anything other than that (and indeed, there has not at any time been any suggestion to the contrary).
The fifth paragraph of our letter merely records the fact that your client was fully aware of the consequences of her breach of the contract at the time access was denied. This will clearly be relevant in any legal proceedings which may ensue should your client proceed with her threatened course of terminating the contract today."
[27] It is convenient at this point to make a number of observations about the correspondence referred to in the preceding paragraphs. First, insofar as the appellants were contending for a right of access to the property to allow an officer or agent of their financier to inspect the property, it is not now argued by the appellants that the contract conferred such a right upon them. Rather the appellants argued in this Court that their assertion of the right of access was based upon a genuine misunderstanding of their contractual rights which fell short of a manifestation of a definite resolve not to perform their contractual obligations.[9]
[28] Secondly, the appellants' threats against the respondent were advanced on the basis that, should the appellants be unable to perform their contractual obligations, that would be the result of the respondent's breach of contract in failing to allow the access sought. But the contract was not subject to finance, and the appellants had, in truth, no contractual right of access to the property for the purpose of raising finance. Accordingly, the appellants' threats were as groundless as they were aggressive and highhanded. The appellants' threats conveyed, quite unmistakably, that the appellants did not consider that they were bound by their contractual obligations unless the respondent acceded to their unjustifiable demands. It may well be that a belated appreciation of the peril in which the appellants' stance placed them is the explanation for the discernible change in tone in the last of the appellants' letters referred to above. However that may be, there can be no doubt that the respondent's refusal of access to the property could not justify the position adopted by the appellants.
[29] In the event, the appellants failed to complete the contract on 25 May 2005. The respondent thereupon terminated the contract. The appellants did not accept that this termination was effective and on 17 August 2005 gave a notice to complete calling for completion on 1 September 2005.[10]
[30] The appellants were unable to complete on 1 September 2005, and indeed were not in a position to be able to complete the contract until 12 October 2005.[11]
The issues at trial
[31] The appellants contended at trial that the respondent was not entitled to terminate the contract on 25 May 2005 because the contract was an instalment contract within the meaning of the PLA and the notice required by s 72 of the PLA had not been given.
[32] On the respondent's behalf it was argued that the respondent had complied with s 72 of the PLA by the notice given on 3 February 2005 which duly called for the default to be remedied on 8 March 2005. The respondent argued that the appellants' failure to remedy its default meant that the respondent was entitled to determine the contract, and that the Deed expressly preserved that entitlement so that it might be exercised by the respondent in the event of the non-completion of the contract on
9 May 2005.
[33] The respondent argued in the alternative that the appellants, by their continuing failures to complete and their assertion of a right not to complete the contract until the property had been inspected, effectively renounced the contract. In consequence, s 72 of the PLA did not require a further notice of default prior to the effective exercise by the respondent of her right to determine the contract. That was said to be because the termination by the respondent was not merely "because of a default on the part of the purchaser in the payment of any instalment of money …" but because of the appellants' renunciation of their contractual obligations. In this regard the respondent relied upon the decision of the High Court in Sibbles v Highfern Pty Ltd.[12]
[34] The appellants claimed that if they were not entitled to specific performance of the contract, they were entitled to recover the third sum of $37,500 paid by them.
The learned trial judge's conclusions
[35] The learned trial judge acceded to the arguments advanced on behalf of the respondent. His Honour held that the respondent was entitled to treat the default of 8 March 2005 as a subsisting breach which remained available to the respondent as justification for the termination of the contract, and in respect of which no further notice was required by s 72 of the PLA. His Honour said:[13]
"… The plaintiffs’ failure to comply with the notice was conditionally waived by the defendant by granting the extension of time on 8 March 2004 [sic] and conditionally waived by each extension thereafter. The condition was that the plaintiffs would complete at the end of the extended period, time remaining to be of the essence. That condition having been subsequently breached, the defendant is not again to be made the subject of the statutory constraint. The principle was identified in Inness v Watersen ([2006] HCA 155) where Williams JA said:-
'(10) All that really leads to the conclusion that Connolly J precisely and accurately summarised the law in Spencer v Cali at 466 where he said:
'…a mere extension substituting a new date for the date for performance stipulated in the contract will not destroy essentially either generally or for the performance of the obligation in respect of which the extension is granted: Mehmet v Benson at 305. If time is an essential condition, to extend it does not waive the effect of the stipulation as a condition: Holland v Wiltshire (1954) 90 CLR 409 at 415 per Dixon CJ citing Jessell M.R. in Barclay v Messenger (1874) 30 L.T. 351 at 354 and Talbot J in Bernard v Williams (1928) 139 L.T. 22 at 25. While an extension of time in particular circumstances may destroy essentiality: Kilmer v British Colombia Orchard Lands Ltd [1913] A.C. 319 as explained in Goonan’s case at 53, an extension without more is only a qualified and conditional waiver of the original stipulation and constitutes no more than a promise not to elect to rescind before the extended time; Goonan’s case at 55.'
Further, as Connolly J observed at 470, if the contract did not settle on the extended date the innocent party’s right to rescind would be for the failure to complete on the original date.'"
[36] The learned trial judge adverted to the terms of the Deed as obviating the need for any further notice under s 72 of the PLA. His Honour said:[14]
"Moreover, the plaintiffs are confronted by the express terms of the Deed in Clause 4.1(f) and (g) … and as well the acknowledgement that the latter payments of extension fees were not instalment payments."
[37] The learned trial judge also upheld the respondent's submission that the appellants had renounced the contract so as to obviate any need for the respondent to comply with s 72 of the PLA. His Honour, having referred to the history of the contract, said:[15]
"I regard the circumstances as being similar to those in Sibbles where there was a 'continuing failure to complete the contract' and other predatory conduct on the part of the purchaser. The majority (Mason CJ, Dawson, Toohey and Gaudron JJ) said:-
'The [purchasers'] repudiation continued to operate in the absence of retraction by them. In these circumstances it cannot be said that the termination of the contract by [the vendor] was by reason of default on the part of the purchaser in payment of any instalment or sum of money due and payable under the contract, so that a notice under s 72(1) was required. It was upon the refusal of 'the purchaser' to be bound by the contract that Highfern based its decision and in establishing that refusal it relied upon, and was entitled to rely upon, all of the circumstances from which the necessary inference could be drawn. But it was upon the renunciation of the contract as a whole and not the breach of a specific provision or provisions that Highfern elected to treat the contract as at an end.'"
[38] His Honour rejected the appellants' claim to recover the third payment of $37,500 on the basis that there was no occasion to relieve the appellants from the operation of the Deed.[16]
The arguments on appeal
The termination issue
[39] In this Court the appellants argue that any right which the respondent had to terminate the contract after 7 March 2005 ceased upon the agreement for the extension of the date for completion until 8 April 2005, or upon the execution of the Deed of 27 April. The contract could, thereafter, be determined by the respondent only for a subsequent default in payment of the purchase price, and any such default would have engaged the need for further compliance with the requirements of s 72 of the PLA.
[40] The appellants also argue that the learned trial judge erred in regarding the appellants' conduct as manifesting a renunciation of the contract, and in regarding renunciation as an available ground of determination separate and distinct from the default in payment which engaged the need for compliance with s 72 of the PLA. While the appellants may have been dilatory, their conduct involving as it did the "purchase" of extensions to which the respondent agreed, and a genuine request for an inspection prior to settlement, was consistent with a willingness to perform the contract.
The renunciation argument
[41] It is convenient to deal with the second of the appellants' arguments first. The respondent's argument on this point focused particularly on the correspondence set out in paragraphs [21] – [26] above rather than the earlier requests for extensions of time. The respondent was well-advised to take this course. It is, in my respectful opinion, difficult to accept that the extensions of time which were paid for by the appellants and granted by the respondent should be regarded as manifesting a willingness on the part of the appellants to perform their contractual obligations.
[42] The respondent argued that by that correspondence the appellants asserted a right of inspection of the property in order to assist in raising finance on the explicit footing that their obligation to complete the contract depended upon the respondent's acceptance of that assertion. The respondent argued that the position adopted by the appellants was unjustified by the terms of the contract and manifested an attitude on the part of the appellants that they would perform the contract only insofar as it suited them to do so. In the face of that attitude, so it is said, the respondent was entitled to terminate the contract.[17]
[43] In my respectful opinion, the point made on behalf of the respondent in answer to the second of the appellants' arguments is a good one. The stance taken by the appellants was quite unjustified. The appellants had no right to insist upon an inspection by their financier as a condition of their obligation to complete the contract. The contract was indisputably unconditional as to finance. There is simply no room for any suggestion that the appellants were labouring under a genuine misunderstanding of the terms of the contract which could explain their assertion that their obligation to complete the contract depended upon the respondent's cooperation in the raising of finance. The appellants' stance was not consistent with a readiness and willingness on their part to perform their obligations under the contract in accordance with its terms. As a result the respondent was entitled to bring the contract to an end.
[44] This conclusion is sufficient to dispose of this aspect of the appeal. It is convenient, however, to deal briefly with the other argument advanced by the appellants.
Section 72 of the PLA and the Deed
[45] The appellants expressly agreed in cl 4.2(g) that they were not entitled to any further notice under s 72 of the PLA in relation to the default acknowledged in cl 4.2(c) and preserved for the benefit of the respondent by cl 4.2(f) of the Deed. In my view, the effect of these provisions was that, in the event that the contract was not completed on 9 May 2005 for any reason other than a breach of contract by the respondent herself, the respondent would be entitled to act upon the appellants' earlier default in respect of which notice under s 72 of the PLA had been given.
[46] On the appellants' behalf it was argued that the terms of cl 4.2(g) of the Deed must be understood as being confined in their operation to the 9 May 2005 settlement date. On this view if the contract were not completed on that day, for any reason other than the appellants' default, then the effect of cl 4.2(g) of the Deed would be exhausted and the appellants' previous default would cease to be material to the relationship between the parties. But cl 4.2(g) is not expressly limited in this way; and it is not easy to articulate the limitation for which the appellants contend as something to be gleaned from the context in which it appears.
[47] The appellants' argument focused upon cl 4.2(i) of the Deed, and sought to contend that this provision is an exhaustive statement of the respondent's rights in the event of the non-completion of the contract on 9 May 2005. The appellants point out that, according to cl 4.2(i), the respondent's right of termination depends upon the non-completion of the contract "due to the Buyers' default". Since the non-completion on 9 May 2005 was not due to the appellants' default – because neither party was in a position to charge the other with breach of contract,[18] neither was in breach because of their failure to perform – cl 4.2(i) of the Deed did not justify the respondent's termination of the contract. Central to this argument is the proposition that cl 4.2(i) of the Deed is an exhaustive statement of the respondent's rights in the event of non-completion of the contract on 9 May 2005. I am unable to accept that proposition.
[48] It may be accepted that by cl 4.2(i) of the Deed did not itself confer an entitlement on the respondent to terminate the contract if non-completion on 9 May 2005 was not the result of a breach of contract by the appellants. But nothing in this clause or elsewhere in the Deed prevented the exercise of a right of termination otherwise available to the respondent. It may also be accepted that the Deed does not expressly advert to the circumstance that the contract might not be completed on 9 March without default by either party. The question is whether cl 4.2(f) and cl 4.2(g) were intended, objectively speaking, to cease to have effect upon the legal relations of the parties in that event, or whether they should still operate for the benefit of the respondent.
[49] The terms of cl 4.2(i) expressly assume that rights other than that conferred by cl 4.2(i) are available to the respondent and confirm that those rights may be exercised in addition to the right confirmed by cl 4.2(i). The interpretation of cl 4.2(i) put forward by the appellants fails to recognise that cl 4.2(f) and cl 4.2(g) expressly state rights available to the respondent which support the entitlement of the respondent to terminate the contract independently of cl 4.2(i). Indeed, if cl 4.2(i) was truly intended as an exhaustive statement of the respondent's rights of termination in the event of non-completion on 9 May 2005, cl 4.2(f) would serve no purpose. No provision of the Deed precluded the exercise of those rights in the events which happened and no occasion for implying such a preclusion arises.
[50] Just as the respondent could not charge the appellants with breach of contract on 9 May 2005, neither could the appellants charge her with breach of contract, they being unable to perform their obligations under the contract. If the appellants had been in a position to complete the contract on 9 May 2005, the respondent could not have relied upon her temporary inability to perform her obligations to bring the contract to an end. But the appellants were not in a position to complete the contract and so the question becomes whether the respondent was entitled to rely upon the appellants' default in March 2005 to bring the contract to an end if it was not completed on 9 May 2005. To this question the terms of the Deed require an affirmative answer.
[51] When one has regard to the text of the Deed, and particularly cl 4.2(f) and cl 4.2(g), and the genesis of the Deed in the appellants' serial non-performance, it is impossible to attribute to the parties to the Deed an intention that, should completion of the contract not occur without fault on the respondent's part, the appellants' previous default should thereafter be unavailable to the respondent as a ground of termination without further compliance with s 72 of the PLA. It was integral to the evident commercial purpose of the Deed, readily discernible from cl 3.1, and cl 4.2(b), cl 4.2(c), cl 4.2(d), cl 4.2(e) and cl 4.2(f), that the respondent's existing entitlement to determine the contract for the 8 March default should be prejudiced no more than was necessary than to afford the appellants the opportunity to complete the contract on 9 May 2005. As I have noted, there was no express provision of the Deed that purported to prevent the respondent exercising the right of termination contemplated by cl 4.2(f) and cl 4.2(g) if the appellants did not avail themselves of that opportunity. There is no reason why such a limitation on the respondent's rights should be seen as implicit in the Deed. The respondent could not have relied upon the non-completion on 9 May 2005 (had that occurred by reason of her own default) to terminate the contract; but that is because the law would not allow the respondent to take advantage of her own breach of contract.[19] Further, the reading of the Deed for which the appellants contend does not accommodate cl 4.2(f).
[52] A further question then arises as to whether the parties were free to make a binding and effective agreement in relation to the rights and obligations which arose by virtue of the appellants' earlier defaults and the respondent's notice under the PLA. In this regard the appellants relied upon s 71A(3) of the PLA which applies the provisions of s 72: "(a) to an instalment contract entered into after the commencement of this Act; and (b) despite anything to the contrary contained in any contract." The appellants argued that cl 4.2(g) of the Deed is "contrary to" s 72 of the PLA.
[53] Upon the giving of the notice of 7 February 2005 and the expiration of the time limited thereby for the appellants to remedy their default, the contract became "determinable" by the respondent in accordance with the terms of s 72 of the PLA. There is nothing in s 72 of the PLA which purports to prevent the parties to an instalment contract agreeing that the entitlement of a vendor to treat the contract as "determinable" is to be preserved for the benefit of the vendor. Clause 4.2(g) of the Deed is not "to the contrary" of s 72 of the PLA. Indeed, cl 4.2(g) of the Deed operates on the assumption that s 72 has been complied with; and that assumption was accurate as a matter of historical fact, as opposed to some conventional fiction agreed between the parties to the contrary of s 72. Accordingly, full effect may be given to cl 4.2(g) of the Deed while at the same time giving full effect to the requirements of s 71A(3)(b) and s 72 of the PLA.
[54] For these reasons, I consider that the termination issue must be resolved against the appellants.
The forfeiture issue
[55] As to the appellants' claim to recover the $37,500 instalment of the purchase price paid in December 2004 by way of "relief from forfeiture", once again the answer is to be found in the express terms of the Deed. By cl 4.2(h) of the Deed, the appellants expressly agreed that all the instalments had been "absolutely released" to the respondent and were "not refundable by [the respondent] in any circumstances whatsoever".
[56] The respondent's entitlement to retain the third of the instalments referred to in the Deed cannot sensibly be regarded as the forfeiture of part of the purchase price for the land. The third instalment was not "forfeited" to the respondent when she chose to terminate the contract and keep her land. The respondent's entitlement to retain the instalments absolutely accrued to her pursuant to the appellants' agreement in
cl 4.2(h) of the Deed. The respondent's entitlement to retain the instalments absolutely was not conferred by the contract of sale and was in no way dependent upon, or a consequence of, the termination of the contract.
[57] This is not a case of the kind discussed by Mason and Deane JJ in Legione v Hateley[20] where relief against forfeiture of instalments of purchase money is granted:
"on the footing that the contractual provision entitling the vendor to retain the instalments is in substance a penalty, or in the nature of a penalty, because it is designed to ensure payment of the entire purchase price and it exceeds the damage which he suffers by reason of the purchaser's default."
[58] In this case, the respondent's entitlement to retain the third instalment was conferred on the respondent by the appellants' agreement in cl 4.2(h) of the Deed, not as a penalty for breach of a provision in the original contract, but as part of a package in return for which the respondent agreed to an extension of time for completion of the contract. No question of penalty or forfeiture arises.
[59] There is nothing unconscionable in the respondent's retaining that to which the appellants expressly agreed she should be entitled under the Deed: it is the accepted wisdom of commerce that time is money. The appellants had the benefit of the extension of time which they secured by the Deed and, accordingly, the respondent should be entitled to retain the benefits which the appellants agreed to confer upon her in return for that extension of time.
Conclusion and orders
[60] The appellants' claims against the respondent were rightly rejected.
[61] The appeal should be dismissed.
[62] The appellants should pay the respondent's costs of the appeal to be assessed on the standard basis.
[63] MUIR JA: I agree with the reasons of Keane JA and with the orders he proposes.
[64] DAUBNEY J: I respectfully agree with the reasons for judgment of Keane JA and with the orders proposed by his Honour.
Footnotes
[1] Cf s 71 of the Property Law Act 1974 (Qld).
[2] Sports Development Pty Ltd v Del Fabro, unreported, Jones J, Supreme Court at Cairns, Qld,
SC No 220 of 2007, 6 August 2008 at [7].
[3] Unreported, SC No 220 of 2007 at [8].
[4] Unreported, SC No 220 of 2007 at [10].
[5] Unreported, SC No 220 of 2007 at [10].
[6] Unreported, SC No 220 of 2007 at [12] – [13].
[7] Unreported, SC No 220 of 2007 at [14].
[8] Cf Jeppesons Road P/L v Di Domenico & Anor [2005] QCA 391 at [34].
[9] Cf DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 433.
[10] Unreported, SC No 220 of 2007 at [22].
[11] Unreported, SC No 220 of 2007 at [22] – [23].
[12] (1987) 164 CLR 214 at 226 – 227.
[13] Unreported, SC No 220 of 2007 at [26].
[14] Unreported, SC No 220 of 2007 at [27].
[15] Unreported, SC No 220 of 2007 at [28].
[16] Unreported, SC No 220 of 2007 at [34] – [38].
[17] Cf Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 at 349 – 351; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at [44]; [2007] HCA 61.
[18] Hirji Mulji v Cheong Yue Steamship Company Ltd [1926] AC 497 at 509 – 510; Ireland v Leigh [1982] Qd R 145 at 151; Jeppeson's Road P/L v Di Domenico & Anor [2005] QCA 391.
[19] New Zealand Shipping Company Ltd v Société des Ateliers et Chantiers de France [1919] AC 1 at 8, 9, 15; Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180 at 188 – 189; Alghussen Establishment v Eton College [1991] 1 All ER 267 at 274.
[20] (1983) 152 CLR 406 at 441 – 445.