Latimore Pty Ltd v Lloyd

This case involved a dispute over a contract for the sale of a residential property. The terms of the contract were the REIQ Terms of Contract (16th ed) and, in addition, a special condition that, notwithstanding anything else in the contract, the applicant was to provide the respondent with a Pool Safety Certificate seven days prior to settlement. The special condition was specified as an essential term of the contract. At 5.03 pm on the day the Certificate was due, the respondent sought to terminate on the basis of breach of the special condition. The applicant provided the Certificate at 6.31 pm. When the applicant sought specific performance, the respondent argued that the Certificate was deemed to have been given on the next business day. Bowskill J ordered that the contract be specifically performed.

Bowskill J

27 May 2020

Background

The applicant seller and the respondent buyer entered a contract for the sale of a residential property. [1]. The terms of the contract were the REIQ Terms of Contract (16th Edition), In addition it was a special condition of the contract that:

“3.1  Notwithstanding anything else in the contract, the Seller agrees to provide a Pool Safety Certificate to the Buyer 7 days prior to Settlement. [1]. The parties agree that this is an essential term of the contract”. 

At 5.03 pm on the day that the Certificate was due, the respondent notified the applicant that it was terminating the contract on the basis of the applicant’s failure to provide the Certificate by 5.00 pm. [3]. The applicant provided the Certificate at 6.31 pm that evening. [4]. The following day, the applicant wrote to the respondent reiterating that a Certificate had been provided, and denying that the respondent had any right to terminate in the circumstances. [5].

The applicant sought specific performance. [6]. The respondent argued that because cl 10.4(5) of the contract deemed notice given after 5 pm on a business day to be given at 9 am the next business day, the applicant was in breach of the special condition. [16]–[17]. Alternatively, it contended that, because settlement under the contract was to be effected by 4 pm, the Certificate had been provided less than seven consecutive periods of 24 hours before settlement was to take place. [28]. 

Whether performance was required by 5 pm

Bowskill J noted that the special condition did not prescribe a time of day for compliance. [23]. Her Honour considered that cl 10.4(5) did not apply so as to require the Certificate to be given by 5 pm on the relevant date. [24]. Bowskill J identified that there was a distinction between giving a Certificate and the giving of a “notice” under the contract which was to be construed as a means of conveying information. [24]–[25]. In other words, the obligation under special condition 3 was to provide a Pool Safety Certificate not to give a notice. [26].

Her Honour also found it difficult to reconcile the reference to “business days” in cl 10.4(5), with the reference to ordinary days in the special condition. [26]. In that context, Bowskill J observed that there was “no apparent reason” why the special condition should be construed such that where the Certificate was provided after 5 pm on a business day, it should be treated as not having been given until 9 am on the following business day. [26].

Bowskill J also rejected the respondent’s alternative argument that the period “7 days prior to Settlement” for compliance of the obligation in special condition 3 was to be computed as being “seven consecutive periods of 24 hours” prior to the time for settlement. [29]. Bowskill J explained that in context, “settlement” as referred to in the special condition was to be construed as referring to the day that settlement was to take place, rather than a particular time at which it may have occurred. Thus, the Seller had until the end of the day to comply with its obligation to provide the Pool Safety Certificate. [30]–[31].

Orders

In the result, Bowskill J ordered that the contract be specifically performed. [31]–[32].

B McNamara