Holland v Wiltshire (1954) 90 CLR 409 [29.09C]
Facts The Hollands (the purchaser, D in the action and A before HC) agreed to purchase a property in Flinders park. Agreed price $3750 was to be paid by a $2 deposit and balance due on 14.1.1952, the day fixed for completion. Contract conferred on the vendor the right to re-sell the property and to forfeit any money paid ‘if default shall be made in due payment of the –purchase money and interests or any part thereof respectively at the respective times aforesaid.’
Deposit was paid. D asked for extension on time and this was granted.
However, in the second week of March, D said they would not proceed with the contract. P served a notice that if D did not settle by 28 march proceedings for breach of contract would be taken. Nothing further was heard from D and P resold the land.
LC awarded $645 damages to P.
Decision was affirmed b FC.
D appealed to HC.
Issue Whether the vendor breached the contract by selling the land?
Outcome Appeal dismissed.
Canning v Temby (1905) 3 CLR 149 [29.17C]
Facts Canning (P, A before HC) was vendor under a contract for the sale of land. Contract specified no date for completion (that is, payment of the price and transfer of the property) but the purchaser knew that if completion did not take place on or before 1.9.1902 the vendor would be unable to discharge a mortgage and would therefore not be in a position to convey the title to the land.
Completion did not take place on 1.9. On 5.9, P wrote to the purchasers requesting assistance to save the property. When there was no response provided she sued for damages in SC.
SC gave judgement to the purchaser.
P appealed to FC, which affirmed SC decision.
P appealed to HC.
Outcome Appeal dismissed. Therefore, P failed to recover damages. This was on the basis that failure to complete on 1.09 was not a breach of contract.
Bunge Corporation New York v Tradax Export SA Panama [1981] 1 WLR 711 [30.29C]
Facts T agreed to sell 15 long tons of soya bean meal. Buyers to provide transport and to give 15 days notice of probable readiness of vessel and approximate quantity required for that shipment. Notice given 17 June, less than 15 days before the end of June, therefore in breach of cl 7. Damages claimed for
breach of condition. More understandable if a rise in price and seller wanted to sell elsewhere.
Issue As there was a fall in price during the 4 days late, why didn't the seller waive the breach and supply?
Outcome Lord Wilberforce
Cl 7 of the GAFTA form is called a "condition". Argued that this was an innominate term as per Diplock in Hong Kong, and breach did not make performance impossible, and effect inconsequential. This argument based upon a dangerous misunderstanding of HK. A time clause in a mercantile contract totally different in character from the seaworthiness provision of HK.
The test of HK "substantially the whole benefit" would have unfortunate consequences here. It would remove the certainty which is vital to commercial contracts and increase arbitrations. The submission is unacceptable in law. The judgment of Diplock does not give any support to such a proposition, for it recognises that the parties may agree that any breach will lead to repudiation.
I have myself commended the greater flexibility in contracts to which HK points the way. But court should not be reluctant to find a condition where intended. In such cases, the gravity of breach favoured by HK would be unsuitable. Time clauses important because the ability of the seller may be dependent on punctual performance by the buyer.
Appeal dismissed.
Louinder v Leis (1982) 149 CLR 509 [30.37C]
Facts Louinder, the vendor/appellant, sold property to Leis, the purchaser/respondent.
No date was fixed for completion and time was not stated to be of the essence. However, under cl 4 the purchaser was to tender a transfer to the vendor for execution within 28 days of receipt of the vendor’s statement of title.
The statement was delivered in early November 1979. The parties agreed to settle in January 1980, but in January the vendor sought a delay in settlement for three months. The purchaser agreed, but was then informed that the vendor required settlement within a week.
In early February, no tender of transfer had been made by the
purchaser, and the vendor issued a notice to complete within 21 days.
In early March, the vendor terminated the contract on the ground that the notice had not been complied with.
In mid April, the purchasers sought to complete, but were informed that the contract had been terminated.
The purchaser then sued for specific performance, and the vendor claimed a declaration that the contract had been validly terminated.
Helsham CJ in Equity found in favour of Leis. The vendor appealed.
Issue Issue of unreasonable delay
Whether or not a party could give notice to the other party to complete the contract where a clause in the contract specified a date to complete.
Issue was whether the fixed time was reasonable in the circumstances.
Ratio Where a contract contains a promise to do a particular thing on or before a specified day, and time is not of the essence of the promise, the promisee can, generally speaking, only rescind for
non-performance on that day if he has given a notice requiring
performance within a specified reasonable time and there has been a failure to comply with that notice.
A mere failure to comply with a non-essential time stipulation as to time justifies the giving of a notice having the effect of making time the essence of performance of that stipulation, even though the failure to comply does not involve an unreasonable delay. The non-essential stipulation as to time is a term of the contract enforceable by an action for damages and it is the breach of this term that justifies the giving of the notice.
Outcome The time limit which the Appellant seeks to rely on applies to the tendering of transfer, not to completion of the contract.
He was allowed to give notice with regards to the tendering of the transfer once the delay became evident, but his notice could not require the completion of the entire contract.
To be entitled to terminate the agreement, there must have been an unreasonable delay in the completion of the contract , and then the party can issue a notice with regards to termination.
"Where a contract of sale of land contains a stipulation as to time which is not of the essence of the contract, and one party is in breach or guilty of unreasonable delay, the party not in default may give a notice fixing a reasonable date for completion and making that time the essence of the contract[1]"
In this case, the completion of the contract means settlement, an issue which the parties haven't even gotten to yet. This means that there wasn't an unreasonable delay for completion.
Appeal dismissed.
OTHER KEY CASES
Ankar v National Westminster Finance Ltd (1987) 162 CLR 549 [30.45]
Notes Where in the short extract from the joint judgment of Mason A-CJ, Brennan, Wilson and Dawson JJ you can see that Lord Diplock’s approach was welcomed
as bringing "a greater flexibility to the law of contract".
So, in answer to the basic question: which breaches justify termination? We have so far two approaches, viz breach of condition and a breach, which goes to the root of the contract. There are still other approaches. One is when one party by his or her words or conduct manifests an apparent intention not to be bound by the contract. This is dealt with under the next heading.
Issues Issue of express terms in a contract
Whether or not a term was a condition, the breach of which would allow for termination of the contract.
Laurinda P/L v Capalaba Park Shopping Centre P/L (1989) 166 CLR 623 [30.46]
Facts On 31 October 1985, Capalaba, the lessor, and Laurinda, the lessee, entered into a lease agreement of a shop forming part of the retail centre being constructed by Capalaba.
In 3 December 1985, Laurinda went into possession of the shop and shortly thereafter, paid the appropriate sums for preparation of the lease.
On 14 March 1986, Laurinda’s accountants asked Capalaba’s solicitors to forward a copy of the lease. On 25 March 1986, Capalaba’s solicitors advised that the lease had been sent to Melbourne for execution, and was expected ‘in the near future’.
On 21 August 1986, Laurinda’s solicitors wrote to Capalaba’s solicitors, giving notice for Capalaba to register the lease or deliver it in registrable form. On 3 September 1986, Capalaba’s solicitors replied that they had referred the matter to their client and were awaiting instructions.
On 5 September 1986, Laurinda terminated the agreement on the ground that Capalaba had repudiated the agreement or was in breach of essential terms.
Capalaba contended that Laurinda’s purported termination was a wrongful repudiation, and claimed unpaid rent, damages and interest.
At trial, Connolly J held that the letter was not an effective notice to complete, but that the agreement for the lease had been validly terminated by Laurinda for Capalaba’s repudiation.
The Full Court overturned this decision. Laurinda appealed.
Issues Issue of time delays in a contract
Whether or not a company could terminate a contract as a result of non-compliance with a 14 day notice to remedy the breach or alternatively the long delay in performing the obligation under the term of the contract.
Ratio A notice must convey an intention to require strict compliance with the terms of the contract within a reasonable time, so that the recipient will be made aware that the party giving the notice may elect to treat the contract as at an end at the conclusion of such reasonable time unless
compliance is forthcoming.
In considering whether the time limited by a notice is reasonable in such a case, it is necessary to consider whether an inference of repudiation would be drawn from non-performance if that were to persist beyond that time.
Outcome Appeal allowed
Bowes v Chaleyer (1923) 32 CLR 159 [30.52C]
Facts The Seller [plaintiff/respondent, Chaleyer] entered a contract contract for sale of 1800 yards tie silks with the Buyer
[defendant/appellant, Bowes].
Short time after, Defendant wrote to the Plaintiff that the Defendant would be compelled to cancel the order due to concerns about prices.
The Plaintiff nonetheless continued to import the silks:
340 yards 21st October
800 yeards 17th November
580 yards 13th December
The Defendant refused to accept them, asserting the contract had been cancelled shortly after it was made.
The Plaintiff sued claiming damages for the difference between contract price and price obtained on sale by auction, alleging buyer’s wrongful repudiation.
Issues Election - Consequences of affirmation
Repudiation Outcome Higgins J:
When the Buyer purported to cancel the contract, that was repudiation. However, that repudiation was affirmed and therefore all rights and obligations remain in place for both parties.
"It is clear, therefore, that on and after 19th January, if not before, the defendant gave absolute and unequivocal notice to the plaintiff that he would not accept the goods—would not perform the contract. The plaintiff then had a right of election: he could have concurred with the defendant in rescinding the contract, and bring an action for the breach; or he could have treated the notice as inoperative, and proceed with the contract. The plaintiff chose the latter course; and thereby he remained subject to all his own obligations under the contract, and the defendant remained in a position to take advantage of any failure of the plaintiff to do his part."[1]
Knox CJ:
In determining whether the buyer repudiated by accepting the goods, the question is 'was the buyer entitled to reject the goods on the ground that the conditions of the shipment had not been complied with?
This question has three parts:
1. What is the meaning of the shipping stipulation? -
there was no ambiguity – natural and literal meaning means half now, half in two months. Nonetheless, this is not necessary to decide.
1. Did the seller comply with the stipulation? - No. Two months did not elapse between shipments. The shipments were uneven.
2. If not, did the failure to comply with it entitle the buyer to reject the goods? - There is a general rule: A stipulation in a contract for the sale of goods that goods shall be shipped by a certain time is a condition precedent, the breach of would justify the buyer in rejecting the goods
tendered (terminating the contract). No reason in this case to ignore the rule - the stipulation was a condition precedent.
Therefore, on the grounds that the Seller breached a condition, the buyer was justified in rejecting the goods and his conduct did not amount to repudiation.
Appeal allowed, the Plaintiff fails.
Repudiation
Even where time is not of the essence, a right to terminate will exist where there is repudiation.
This requires a party to indicate intention to no longer be bound by contract: Carr v Berriman.
It must be gross, protracted and frustrate commercial purpose of contract: Neeta v Phillips;
Universal Cargo Carriers v Citati.
Waiver
The term “waiver” is best understood as an umbrella term. It encompasses the legal principles when rights under a contract may be “waived”
In Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57, the High Court held that “waiver” is made up of two principles:
Election
Estoppel
Election to terminate
In order for a party to accept a repudiation or terminate for breach, that party itself must be ready and willing to perform its obligations
In cases of anticipatory breach, this simply means that the party did not have a substantial incapacity, or definitive resolve not to perform
In cases of termination for breach, the party must be able to show that they were ready and willing
Where Party A has relied on a representation by Party B that it will not perform its obligations, and Party A has relied on that representation to its detriment, Party B is estopped from maintaining otherwise
When a party is faced with two mutually exclusive course of action (affirmation or
termination), the party must make a choice between the two and is bound by that choice.
A party may keep the question of election open, so long as it does nothing to affirm the contract, or the other party’s position is not prejudiced.
Termination for repudiation
Where one party manifests an inability or unwillingness to perform his or her contractual obligations under the contract, the other party may have a right to terminate (objective test)
Only a repudiation of a promise or promises of which an actual breach would found a right to discharge will give rise to a right for the aggrieved party to terminate the contract: Foran v Wright (1989) 168 CLR 385 per Dawson J
Conduct that amounts to repudiation
Express statement
Repudiation based on words or conduct Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
On 3 May 1950, T Carr & Co (owner) and J A Berriman (builder) entered into a contract.
Builder promised to erect a factory on the land
Owner promised to excavate site prior to 29 May 1950
All steel would be supplied by Owner and fabricated by builder
Site was not excavated by the owner by 29 May (site was covered by heavy machinery)
Owner accepted another contract for the supply and fabrication of the steelwork for the building
On 31 July 1950, Builder wrote to Owner stating that the Owner committed two breaches of the agreement and purported to cancel the contract.
Fullagar J:
Carr intended to take steps towards the performance of his duty if and when it suited him and not before. The two breaches combined showed, objectively, that Carr did not intend to be bound by the contract
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Tabali leased premises to Progressive Mailing House
Progressive ceased to pay rent
Progressive committed various other breaches that were not remedied (such as a failure to repair)
Mason J:
Repudiation of a contract is a serious matter and is not to be lightly inferred.
Neither a breach of a covenant to pay rent nor a breach of a covenant to repair, without more, amounts to a repudiation of a lease.
However, the breach of the covenant to pay rent, in association with the other breaches, amounted to repudiation.
Relief against forfeiture
Under Australian law, relief may be granted where a sale of land contract is terminated, in order to prevent the forfeiture of the purchaser’s equitable interest in the land.
In extreme cases, it may be appropriate for the court to give relief by decreeing specific performance of the contract.
Relevant factors to consider include:
Did the conduct of the Vendor contribute to the purchaser’s breach?
Was the purchaser’s breach trivial or slight, inadvertent and not wilful?
What damage or other adverse consequences did the vendor suffer by reason of the purchaser’s breach?
What is the magnitude of the purchaser’s loss and the vendor’s gain if the forfeiture is to stand?
Important cases:
Legione v Hateley (1982) 152 CLR 406
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315
KEY CASES
Rawson v Hobbs (1961) 107 CLR 466 [31.06C]
Facts By agreement dated 7th July 1958 Rawson (purchaser, p in the action, A before HC) agreed to purchase a grazing property from the Hobbs (Vendors).
The price of the property ($10,160) was payable by way of deposit ($3160) and three instalment payments. The deposit was paid.
Land was held under part V of the Land Act 1933 (WA), which governed the conditional purchase of leases of grazing property. S 143(1) provided that a transfer of the lease would not be valid or operative until the approval in writing of the minister of lands. Such an approval could lawfully be given if the transfer infringed s47, by vesting in the transferee a total area of land larger than that allowed. Under s151, registration of a transfer was necessary and the transfer of an excessive quantity of land could not be
registered. As husband and wife, the Rawson’s could not become
transferees of the leases without the consent of the minister. Cl 12 of the contract provided that P to obtain on both parties to ‘annul’ the sale if the minister refused consent.
Rawson’s took possession of the property. They spent money on it. On 16 march 1959 they purported to ‘annul’ the sale, pursuant to cl12, on the basis that information from the Under-secretary of lands indicated that the minister would refuse his consent to the transfer.
On 6th may ‘59, the Hobbs responded by a notice that they would ‘rescind’
the contract unless certain breaches were remedied.
In the CS, Rawsons sought a declaration that the contract had been annulled. They also claimed damages.
By counter claim, Hobbs sought orders on the basis that they had validly given notice of ‘rescission’. Wolff CJ ordered that the contract had been rescinded.
FC set aside the judgement and dismissed both the claim and counter claim.
Rawson’s appealed and Hobbs cross-appealed.
Issue Whether the Hobbs were unable to perform the contract?
Outcome Full courts decision was affirmed. Two points to look for:
1. HC held that the right conferred by cl 12 was not available.
2. A party who fails to justify termination by reference to a stated ground may nevertheless rely on an alternative ground is very important in practice. However, HC does not deal with the qualifications to that facility.
Appeal allowed.
Cross-appeal dismissed.
Tropical Traders Ltd v Goonan (1964) 111 CLR 41 [31.13C]
Tropical Traders Ltd v Goonan (1964) 111 CLR 41 [31.13C]