Caprice Property Holdings Pty Ltd v McLeay & Anor

This decision of the Court of Appeal concerned the question of whether or not a party to a standard land contract, in which time was of the essence, was in breach of the terms of the agreement if they failed to settle at the nominated time of day agreed for settlement but were ready, willing and able to do so 20 minutes later and before 5.00pm?  In the case before the Court the time for settlement was nominated by the sellers as being at 3.00pm at the offices of the mortgagee.  It was also said that the time was tentative and the seller reserved the right to settle at any time on the appointed day.  The seller was not ready to settle at 3.00pm as the encumbrancer had not arrived with a release of mortgage.  The buyer left the nominated premises at 3.05pm notwithstanding the intimation that the encumbrancer’s representative would be in attendance within 10 to 15 minutes.  The Court held that the seller’s inability to hand over a discharge of the mortgage at 3.00pm was not a breach of the agreement because it was able to do so at 3.20pm.  Jackson J held that the term of the contract making time of the essence meant that the parties agreed to the risk of breach if they were not able to settle at any time between 9.00am and 5.00pm on the date nominated for settlement.  His Honour went on to hold that:

“[25] … there was no agreement and no practise by which each of them also agreed to the risk of being in breach of contract if they were, as in this case, late for the agreed time of day for the settlement by 20 minutes where the time was still between 9.00 am and 5.00 pm and they would be ready to settle within those hours.”

It followed that the buyer was in breach of the agreement by failing to settle the contract before 5.00pm.