Acemount Pty Ltd v Sunlong Holdings Pty Ltd [No 2]
[2009] WASC 391
•17 DECEMBER 2009
ACEMOUNT PTY LTD -v- SUNLONG HOLDINGS PTY LTD [No 2] [2009] WASC 391
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2009] WASC 391 | |
| Case No: | CIV:2366/2005 | 26 AUGUST & 4, 8-9 SEPTEMBER 2009 | |
| Coram: | HASLUCK J | 17/12/09 | |
| 41 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for first defendant on claim and counterclaim | ||
| B | |||
| PDF Version |
| Parties: | ACEMOUNT PTY LTD SUNLONG HOLDINGS PTY LTD THE REGISTRAR OF TITLES |
Catchwords: | Real property Issues concerning mutually dependant and concurrent obligations of parties under contract for sale of land Whether purchaser was in default in failing to provide signed transfer Whether the obligation of the defendant as vendor to tender performance at settlement was dispensed with Effect of adding the words 'and/or nominee' after the purchaser's name in the contract of sale Whether party named as purchaser's nominee is estopped from denying the validity of a notice of default directed to that party Finding that the plaintiff was in default and that the contract was validly rescinded by the defendant vendor |
Legislation: | Property Law Act 1969 (WA), s 11(1) Transfer of Land Act 1893 (WA) |
Case References: | Acemount Pty Ltd v Sunlong Holdings Pty Ltd [2009] WASC 249 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Bahramitash v Kumar [2006] 1 NZLR 577; (2005) 5 NZ ConvC 194,177 Bell Bros Pty Ltd & Stewart v Sarich [1971] WAR 157 Commonwealth v Verwayen (1990) 170 CLR 394 Foran v Wight (1989) 168 CLR 385 J R Stevens Holdings Pty Ltd v Von Begensey (1992) NSW ConvR 55-623; (1992) 5 BPR 11,534 Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 Summers v Commonwealth (1918) 25 CLR 144 Tonelli v Komirra Pty Ltd [1972] VR 737 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
SUNLONG HOLDINGS PTY LTD
First Defendant
THE REGISTRAR OF TITLES
Second Defendant
Catchwords:
Real property - Issues concerning mutually dependant and concurrent obligations of parties under contract for sale of land - Whether purchaser was in default in failing to provide signed transfer - Whether the obligation of the defendant as vendor to tender performance at settlement was dispensed with - Effect of adding the words 'and/or nominee' after the purchaser's name in the contract of sale - Whether party named as purchaser's nominee is estopped from denying the validity of a notice of default directed to that party - Finding that the plaintiff was in default and that the contract was validly rescinded by the defendant vendor
(Page 2)
Legislation:
Property Law Act 1969 (WA), s 11(1)
Transfer of Land Act 1893 (WA)
Result:
Judgment for first defendant on claim and counterclaim
Category: B
Representation:
Counsel:
Plaintiff : Mr D K Barker
First Defendant : Mr N D C Dillon
Second Defendant : No appearance
Solicitors:
Plaintiff : Chalmers Legal Studio Pty Ltd
First Defendant : Messrs Su & Company
Second Defendant : No appearance
(Page 3)
Case(s) referred to in judgment(s):
Acemount Pty Ltd v Sunlong Holdings Pty Ltd [2009] WASC 249
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Bahramitash v Kumar [2006] 1 NZLR 577; (2005) 5 NZ ConvC 194,177
Bell Bros Pty Ltd & Stewart v Sarich [1971] WAR 157
Commonwealth v Verwayen (1990) 170 CLR 394
Foran v Wight (1989) 168 CLR 385
J R Stevens Holdings Pty Ltd v Von Begensey (1992) NSW ConvR 55-623; (1992) 5 BPR 11,534
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286
Summers v Commonwealth (1918) 25 CLR 144
Tonelli v Komirra Pty Ltd [1972] VR 737
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
(Page 4)
- HASLUCK J:
Introduction
1 The plaintiff in this matter, Acemount Pty Ltd ('Acemount') contracted to purchase certain land with a view to implementing a development proposal, subject to approval by the City of Bayswater. The terms of the contract included the REIWA Joint Form of General Conditions for the Sale of Land 2002 Revision ('the General Conditions').
2 The parties did not proceed to settlement on the prescribed settlement date, namely, 30 August 2005. This led to the seller, Sunlong Holdings Pty Ltd ('Sunlong') issuing a notice of default to Acemount in the manner allowed for by the General Conditions. The contract was then purportedly terminated by Sunlong.
3 Acemount commenced these proceedings with a view to enforcing the contract. Sunlong defended the claim upon the basis that Acemount had failed to submit a signed and stamped transfer to the seller Sunlong prior to the settlement date and was therefore in default. Questions arose as to whether either party by its conduct had repudiated the contract or otherwise intimated to the other party that it was not necessary to proceed to settlement and tender performance.
4 The pleadings raised issues also concerning the validity of the notice of default issued by Sunlong in circumstances where the buyer was described in the contract as 'Acemount Pty Ltd and/or nominee'. The contract included a Special Condition 6 identifying a third party, Newriver Holdings Pty Ltd ('Newriver') as the nominee, being the party named as buyer in the notice of default.
Background
5 The first defendant, Sunlong, was the registered proprietor of land situated at 88 - 90 Guildford Road, Mount Lawley being the whole of the land contained in Certificate of Title Volume 2118 Folios 302 and 303 ('the land'). The part of the land contained in the former title was subject to an encumbrance easement in favour of the Minister for Works ('the easement'); the part in the latter title was subject to an encumbrance memorial under the Heritage of Western Australia Act 1990 (WA) ('the memorial').
6 The subject land was a vacant block. It was being held by Sunlong as an investor, and as land with development potential.
(Page 5)
7 On 3 March 2005 Acemount offered to purchase the land from Sunlong for $3,950,000 with settlement to occur on or before 30 September 2005. The offer was evidenced by a standard offer and acceptance form prepared by Sunlong's agent Eftos Estates, and was subject to the General Conditions. The printed form referred also to certain 'special conditions' set out in Annexure A.
8 The manager of Acemount, Poya Shakibaee, said in his witness statement that when the offer by Acemount was made he was not aware of the existence of the easement. He was aware of a heritage issue but did not know what that heritage issue was, or how it affected the land. He said further that when Acemount offered to buy the land he was aware that Sunlong had carried out demolition works on the land but he did not know what was involved in that regard. It was because of these matters that Special Condition 6 in Annexure A required Sunlong to provide a certificate from the City of Bayswater that the demolition works had not affected the heritage issue and that the demolition works had been carried out to the satisfaction of the City of Bayswater.
9 At some stage prior to 22 March 2005 Acemount received a counter offer from Sunlong to sell the land to Acemount for $4,050,000 with settlement to occur on 30 August 2005 and with Special Condition 6 of Acemount's offer being deleted. Sunlong's counter offer bore the signature of one director and was dated 8 March 2005.
10 On 22 March 2005 Acemount accepted the counter offer. On 18 April 2005 another director/secretary of Sunlong signed the contract with the result that, on Acemount's case, there was, on 18 April 2005, an acceptance of the Sunlong offer to purchase the land in the terms of the offer and acceptance form. The contract documents appear at pages 1 to 24 of the substituted Bundle of Agreed Documents dated 24 August 2009 ('the Agreed Bundle'). For ease of reference, I will describe the documents in question collectively as 'the contract'.
The contract
11 The contract reflected various amendments and deletions arising out of the course of negotiations I have just described. There was an amendment as to the price. Special Condition 4 had originally proposed a settlement date of 30 September 2005 but the date '30 August 2005' was then substituted with these amendments being initialled by the parties. It is important to note that, from the outset, the buyer was described as 'Acemount Pty Ltd and/or nominee of 448 Lord Street, Mount Lawley'.
(Page 6)
- Special Condition 3 provided that 'the nominee is Newriver Holdings Pty Ltd'.
12 The special conditions provided that the seller had 21 days from acceptance to undertake due diligence. If the buyer was not satisfied with its due diligence the buyer could terminate the contract by notice given within the due diligence period.
13 By Special Condition 9 the seller was to provide a letter of consent from the mortgagor confirming acceptance of the contract within 10 business days. By Special Condition 10 a deposit of $100,000 was to be paid upon satisfaction of certain of the special conditions. Further, by Special Condition 13 upon payment of the deposit, Sunlong granted irrevocable permission to the buyer to market the property as required including provision for access and display of signs.
The General Conditions
14 Some of the General Conditions forming part of the contract are of particular significance for present purposes.
15 By cl 2.7 if the land was subject to an easement or restrictive covenant or title restriction which was not specified in the contract the buyer was entitled at any time up to three days before the settlement date to terminate the contract by giving notice to the seller of termination but not otherwise.
16 By cl 3.1 to cl 3.5 the buyer was obliged to prepare, sign and deliver the transfer of title to the seller at a reasonable time before the settlement date, and, further, three days before the settlement date specify the time and place for settlement. The buyer was to arrange for the contract and transfer to be stamped before the transfer was delivered to the seller. Each party was to complete settlement on the date that settlement was specified in the contract.
17 By cl 3.7 the buyer was obliged on settlement to pay to the seller or to any other person as the seller had directed in writing, the balance of the purchase price by one or more bank cheques less any deductions allowed under the contract. By cl 3.10 the seller on settlement had to give to the buyer the duplicate certificate of title for the land, the transfer signed by the seller and any other document necessary to enable the buyer to become the registered proprietor of the land free of encumbrances.
(Page 7)
18 Clause 22 of the General Conditions provided that subject to cl 23, time was of the essence in relation to the provisions of the contract. Clause 23 of the General Conditions concerning default notices reads as follows:
23.1 Requirement for Default Notice
Neither party may terminate the Contract as a result of the other Party's default nor may the Seller forfeit any money paid by the Buyer or retake possession of the property because of the default of the Buyer, unless:
(a) the Non Default Party gives a Default Notice to the Default Party; and
(b) the Default Party fails to remedy the default within the time required under the Default Notice.
23.2 No limit on right to issue further Notice.
The giving of a Default Notice under clause 23.1 does not prevent the Non Default Party from giving a further Default Notice.
23.3 No Default Notice required for Repudiation
Clause 23.1 does not apply if the Default Party repudiates the Contract.
19 Clause 24 of the General Conditions provided that if the buyer was in default under the contract and had failed to comply with the default notice or repudiated the contract, the seller had each right in cl 24.2 in addition to any other right or remedy of the seller. The rights under cl 24.2 include a right to affirm the contract and sue for damages or specific performance or, by cl 24.2(d) to terminate the contract by notice to the buyer but only if the default notice given under cl 23.1 includes a statement that if the default is not remedied within the time specified in the default notice the contract may be terminated. By cl 24.3 if the seller terminates the contract the seller is entitled to forfeit the deposit.
20 The General Conditions also contained a provision concerning the definition and interpretation of various terms. By cl 26.1 a default notice was defined to mean a notice which specifies the default of a party under the contract. A default party means a party who the non-default party contends is in default under the contract. A party means as the case requires either the seller or the buyer, or both the seller and the buyer. The term buyer means each person so specified in the contract.
(Page 8)
Matters of evidence
21 It appears from the evidence of Poya Shakibaee that on 18 May 2005 Acemount paid a deposit of $100,000 into the trust account of Sunlong's agent, Eftos Estates. Acemount appointed the law firm Chalmers & Partners ('Chalmers') to act as solicitors for Acemount and to attend to the conveyancing matters.
22 I note in passing that in a supplementary witness statement Poya Shakibaee for Acemount said that at no time during the communication with Sunlong or its real estate agent did Acemount advise Sunlong or its agent that it had made an election that the transfer was to be in the name of Newriver (that is, the nominee specified in Special Condition 3 of the contract).
23 By letter dated 4 April 2005 Sunlong's solicitor, Tom Hou, wrote to Chalmers as the solicitors acting for the 'buyer' in relation to a transaction described as 'Sale of 88 - 90 Guildford Road, Mount Lawley Sunlong Holdings P/L to Newriver Holdings P/L'. I will call this 'the Hou 4 April letter'.
24 In that letter Tom Hou noted that the settlement date was 30 August and sought receipt of 'the property advice of sale for my records'. He enclosed a letter of consent from the National Australia Bank ('the NAB') as mortgagee and confirmed that Special Condition 9 had been satisfied. He concluded by saying this:
I look forward to receiving the stamped Transfer of Land document for my client's signature a minimum of 10 days prior to settlement.
I will forward an adjusted settlement statement in due course pending the property rating information being to hand.
If you have any queries please contact the undersigned.
The evidence of Katherine Jakimowicz (nee Donnelly)
25 It will be useful to turn now to the evidence of Katherine Jakimowicz (nee Donnelly) who was employed as a registered conveyancer by the law firm Chalmers. She said in her witness statements that she was employed in that capacity between 30 March 2005 and 30 June 2006.
26 The witness said that on 30 March 2005 Chalmers received a letter dated 29 March 2005 from Eftos Estates attaching a settlement instruction sheet dated 22 March 2005. The letter in question advised that the purchasers of the land had requested Chalmers to act on their behalf at
(Page 9)
- settlement. The settlement instruction sheet accompanying the letter described the purchaser as 'Newriver Holdings Pty Ltd' of 448 Lord Street, Mount Lawley.
27 Ms Jakimowicz said that Chalmers operated a computerised document management system known as Filepro. When a new instruction was received a file opening form was completed by the individual receiving the instruction and the information on this form was then data imputed into the computer system, utilising the party's details set out in the original instructions. Accordingly, using the settlement instruction sheet received from Eftos Estates, she opened up a new file describing the purchaser as 'Newriver Holdings Pty Ltd'.
28 The witness said further that the Filepro system operates in such a way that thereafter whenever a letter was created the Filepro system automatically inserted Newriver as the client. Under cross-examination the witness conceded that it was possible to 'override' the computer system she had described and substitute another or more accurate name for the name of the purchaser that would otherwise appear automatically pursuant to the system.
29 The witness said further that after the file was opened on 30 March 2005 Chalmers received instructions from Acemount to act on the purchase of the land from Sunlong. She did not open up a new file in the name of Acemount but continued to use the file already open. When the witness carried out the account enquiry and advice of sale for the land she did so by simply imputing the details as contained in the existing file. I note in passing that neither she nor anyone from Chalmers responded to or made any attempt to correct the assumption reflected in the Hou 4 April letter that the parties to the subject transaction were Sunlong as seller (represented by Tom Hou) and Newriver as buyer (represented by Chalmers).
30 Ms Jakimowicz said that on 2 August 2005 she carried out an account enquiry and advice of sale for the land with the Department of Land Administration, the Office of State Revenue, the Water Corporation and the City of Bayswater. She repeated this on 17 August 2005 for 90 Guildford Road. It follows from her earlier evidence concerning the computer system that in each case this was done upon the basis that the purchaser was to be Newriver.
(Page 10)
Other events
31 It emerged from the evidence of Poya Shakibaee that in the period following the making of the contract Acemount proceeded with its plans to construct 30 dwellings upon the land. Thus, on 8 June 2005 Acemount, by its architects Oldfield Knott Architects Pty Ltd ('Oldfield Knott'), applied to the City of Bayswater for approval to develop the land. A few weeks later, on 29 June 2005, Acemount via its architects, Oldfield Knott, advised the Heritage Council of Western Australia, that it had made application to the City of Bayswater for the development of the land. It requested that the Heritage Council's input with respect to that application be communicated to the City of Bayswater, in time for the City to consider a development application in August 2005.
32 I note in passing that the evidence given by Poya Shakibaee and Katherine Jakimowicz does not identify any moment at which instructions were given to Chalmers in their role as solicitors for Acemount in respect of the purchase to prepare a transfer of the subject land and to submit the same to the vendor Sunlong or its representatives.
33 It was common ground at the trial that the offer and acceptance comprising the contract was lodged at the Office of State Revenue by Acemount prior to the completion date with the result that a stamp duty assessment notice dated 20 July 2005 was issued showing the duty payable to be $212,400. The duty was not paid prior to the specified settlement date of 30 August 2005, or at any time thereafter.
34 It appears that Acemount negotiated an 'arrangement' with the Commissioner for payment of the stamp duty. However, as at the date of the trial, there was no document in existence in relation to the transaction that could be described as a document stamped or endorsed by the Commissioner of State Revenue. I dealt with the implications of this state of affairs in relation to the use of the offer and acceptance in evidence in Acemount Pty Ltd v Sunlong Holdings Pty Ltd [2009] WASC 249. I held that, having regard to the 'arrangement', the parties were at liberty to rely upon the contract in their pleadings and to have the same admitted in evidence.
The August events
35 Katherine Jakimowicz said in evidence that on 15 August 2005 she received a telephone call from Tom Hou, solicitor for Sunlong, enquiring about the transfer. She advised him that she was still awaiting advice
(Page 11)
- from her client as to whether they were going to use the nominee company or not.
36 Tom Hou asked her if he could send his client over to the offices of Chalmers to sign the transfer of the land as his client was travelling to China and would be away for one month. She answered this in the affirmative and he indicated he would advise her of the time. However, she then received a facsimile from Tom Hou indicating that his client's business trip to China had been postponed and requesting that a stamped transfer of the land be sent to him for his client to sign.
37 The Hou facsimile dated 15 August 2005 reads as follows:
Re: Sale of 88 - 90 Guildford, Mt Lawley
Sunlong Holdings Pty Ltd to Newriver Holdings Pty Ltd
I refer to recent telephone conversation in relation to above matter and confirm that my client's business trip to China has been postponed until after the settlement of the above purchase.
It would be appropriate if you could provide the stamped Transfer of Land to this office for my clients at your earliest opportunity.
Once the request number of the account enquiry and advice of sale is provided by you to this office, I will forward the settlement statement to you via facsimile.
Should you have any question please contact the undersigned at your convenience.
Yours faithfully
Tom Hou
38 It does not appear from the evidence at trial that Ms Jakimowicz or anyone else from Chalmers, on behalf of Acemount, responded specifically to the request for a stamped transfer of the land or conveyed to Sunlong's solicitor that there was any difficulty in regard to the payment of the stamp duty. Katherine Jakimowicz said that on 17 August 2005 she faxed to Tom Hou, as solicitor for Sunlong, copies of the account enquiries she had sent out concerning the land. It is apparent from the account enquiry and advice of sale documents (Agreed Bundle pages 76 - 78) that, for the reasons given by the conveyancer concerning her computer system, the buyer was described in each case as 'Newriver Holdings Pty Ltd'.
(Page 12)
39 Katherine Jakimowicz said that on 22 August 2005 Chalmers received a fax from Tom Hou enclosing a settlement statement and advising that the cheque details would be provided in due course. The fax in question describes the transaction as being the sale of the land by Sunlong to Newriver. Tom Hou confirmed that his client Sunlong wished to proceed to settlement on 30 August 2005.
40 The Tom Hou facsimile letter dated 22 August 2005 reads as follows:
Re: Sale of 88 - 90 Guildford, Mt Lawley
Sunlong Holdings Pty Ltd to Newriver Holdings Pty Ltd
Further to the telephone conversation between you and the writer on 19 August 2005 in relation to the above matter, please find enclosed adjusted settlement statement for your attention and advise that cheque requirements will be confirmed in due course.
We confirm that our client is ready, willing and able to effect settlement of the above property sale and look forward to hearing from you shortly with a suitable time for settlement due on 30 August 2005.
If you have any queries feel free to contact the undersigned.
Yours faithfully
Tom Hou
41 The Agreed Bundle includes a letter dated 24 August 2005 from the City of Bayswater to Sunlong's architects, Oldfield Knott. The letter refers to Sunlong's application for approval to commence development on the land dated June 2005 and to amended plans dated 7 July 2005 and 27 July 2005. It is said on behalf of the City that special approval to commence development was granted at the full Council meeting of 23 August 2005. Attached to the letter was a form of approval stating the conditions that had to be complied with. These conditions were quite extensive.
Tom Hou's evidence
42 It will be useful now to turn to the witness statement of Tom Hou who was acting as solicitor for the vendor, Sunlong. He said in evidence that on 4 April 2005 he sent a letter to Chalmers as solicitors for Acemount indicating that the NAB as mortgagee and as Sunlong's bank consented to the transaction (being the Hou 4 April letter mentioned earlier). By that letter he requested that a stamped transfer of land be provided a minimum of 10 days prior to the settlement. He said in
(Page 13)
- evidence also that from 22 April 2005 to 31 August 2005 all correspondence received from Chalmers and including the account enquiry and advice of sale listed Newriver as the purchaser of the property.
43 Tom Hou went on to describe in his evidence the exchanges mentioned earlier between Katherine Jakimowicz and himself in early to mid August concerning a proposal for the transfer to be executed by Sunlong. He said that on 15 August 2005 when he telephoned Ms Jakimowicz/Donnelly and asked when she would be providing the stamped transfer of land for execution by Sunlong he was informed by her that she did not have a stamped transfer for land signed by the purchaser which could be provided to him.
44 In a supplementary witness statement Tom Hou said this:
At no time during my telephone conversation with Ms Donnelly on 15 August 2005 did Ms Donnelly say anything to me that would indicate that the property was going to be transferred to any party other than Newriver. Ms Donnelly did not tell me that she was still awaiting advice as to whether her client was going to use the nominee company or not.
45 Tom Hou said that on 17 August 2005 he sent a facsimile to the NAB requesting that a discharge of mortgage be prepared in respect to the land. On 18 August 2005 he received two facsimiles from the bank enclosing letters of instruction to the bank to discharge the mortgage held over the property which were to be executed by Sunlong.
46 On or before 22 August 2005 Mr Sun informed Tom Hou that Sunlong had properly executed all necessary documents for the preparation of the discharge of the bank's mortgage. It was against that background that on 22 August 2005 Tom Hou wrote his letter dated 22 August 2005 (mentioned earlier) confirming his client's wish to proceed to settlement on 30 August 2005. He required Acemount's solicitors to book a time and place for settlement because, until that was done, he was unable to obtain a payout figure from the bank and was unable to provide a cheque split to Chalmers.
47 On 25 August 2005 Tom Hou telephoned the officer at the bank in charge of discharging the mortgage over the property. That officer confirmed that the bank had received all documents necessary for the discharge of its mortgage and was ready to proceed to settlement on 30 August 2005. I note in passing that this evidence was confirmed at trial by a bank officer, Bernard Kho.
(Page 14)
48 Tom Hou telephoned Katherine Jakimowicz/Donnelly of Chalmers on 25 August 2005. She confirmed that she had received his facsimile of 22 August 2005 and had forwarded the same to the purchaser. She said also that she had been having some difficulties contacting the directors of Acemount. She said also that she was unsure of the purchaser's intentions with respect to proceeding to settlement. He informed her that unless settlement took place on 30 August 2005 he would issue the purchaser with a default notice on behalf of Sunlong. According to him, Ms Jakimowicz/Donnelly responded by saying words to the effect: 'You have to do that'.
49 Tom Hou said that he did not hear from Chalmers from 26 August to 29 August 2005. He received no correspondence from that firm or any other party giving notice of a time and place for settlement on 30 August 2005. He was therefore unable to book settlement with the bank and was unable to obtain a payout figure. He said in evidence that he never indicated to Chalmers that his client required more than one cheque at settlement.
50 On 30 August 2005 he telephoned Chalmers and was told that Ms Donnelly was not available to answer his phone call and was having lunch. He requested that the receptionist ask Ms Donnelly to call back at his office as soon as she returned to the office. At about 4.00 pm on 30 August 2005, having not received a telephone call from Ms Donnelly, he again telephoned Chalmers and was told by the receptionist Ms Donnelly was unavailable.
51 Before leaving this part of the evidence given at trial by Tom Hou, I note in passing that Tom Hou referred also to file notes made by him following his telephone conversations with Chalmers on 15, 25 and 30 August 2005. These file notes corroborated his evidence. His file note concerning the telephone conversation on 15 August 2005 reflects discussion about the property advice inquiries and Sunlong's desire to execute and transfer of land, but does not reflect any comment by Ms Donnelly to the effect that she was awaiting advice as to whether her client would use the nominee company.
52 Tom Hou was cross-examined about these file notes but no admissions were made by him which were inconsistent with his account of the conversations. It was not put to him that any transfer of land had actually been prepared by anyone at Chalmers and delivered to Tom Hou prior to 30 August 2005. It was not suggested that Tom Hou, himself, had said anything in the course of the conversations which might lead the
(Page 15)
- other party to the conversation to believe that the settlement date of 30 August 2005 was to be postponed, or otherwise that Sunlong as seller did not wish to settle on that date.
Further events
53 On 31 August 2005 Tom Hou received a letter from Chalmers by email dated 30 August 2005. The letter claimed that there were various impediments to clear title and vacant possession of the land, and requested that these be remedied before Acemount proceeded to settlement.
54 The Chalmers letter dated 30 August 2005 (Agreed Bundle page 102) commences by referring to 'Newriver Holdings Pty Ltd purchase from Sunlong Holdings Pty Ltd'. The letter commences by saying that 'This matter is due for completion shortly'. It goes on to say that there are a number of matters 'which indicate that your client is not now and will not be ready, willing and able to complete on the due date'.
55 The letter then purports to deal with the various matters of concern to the buyer, namely, the heritage memorial, an alleged impediment to possession, a dividing fence claim, an issue concerning the state and condition of the property, an issue concerning an interest claim by an adjoining party, issues concerning drains and pipes passing through the property and concerning graffiti on a wall. The letter concludes by requesting advice as to 'when your client will be in a position to convey the property free of all those interests'.
56 It is not necessary for me to review the allegations in the Chalmers letters concerning the encumbrances or state of the property in detail, having regard to certain concessions made by counsel for Acemount at the trial. Suffice it to say, in general terms, that, by the 30 August Chalmers letter, Acemount contended that Sunlong was not in a position to settle.
The first default notice
57 Tom Hou said that prior to receiving the 30 August Chalmers letter the solicitors for Acemount had not notified him of any of the issues raised in that letter. He said further that on 31 August 2005, under cover of a letter of that date, he issued a notice of default on behalf of Sunlong. In the covering letter he referred to previous correspondence substantiating his belief that Chalmers was acting as solicitor and settlement agent for the buyer in relation to the completion of the sale.
(Page 16)
58 The default notice reads as follows:
DEFAULT NOTICE PURSUANT TO 'CONTRACT FOR SALE OF LAND OR STRATA TITLE BY OFFER AND ACCEPTANCE'
- TO: NEWRIVER HOLDINGS PTY LTD (ACN 112 794 215)
- of C/- ANDERSON REDMAN
WA 6005
- Phone: 9321 3362 Fax: 9322 5015
- ['THE BUYER']
BY FACSIMILE and BY PERSONAL DELIVERY
AND TO: CHALMERS & PARTNERS
- of G.P.O. BOX R1249, PERTH 6844
['THE BUYER'S REPRESENTATIVE']
BY FACSIMILE and BY PERSONAL DELIVERY
- AND TO: ARASH SHAKIBAEE and POYA SHAKIBAEE
- of Unit 10, 591 HAY STREET, JOLIMONT WA 6014
['THE DIRECTORS OF THE BUYER']
- BY REGISTERED POST
WHEREAS:
1. Pursuant to the terms of a Contract of Sale of Land by Offer and Acceptance dated 22 March 2005 ('the Contract') the Buyer agreed to purchase from SUNLONG HOLDINGS PTY LTD of C/- Sunlong Fresh Foods Pty Ltd of MP 52 Market City, 280 Bannister Road, Canning Vale in the state of Western Australia ('the Seller') the property situated at and known as 88 & 90 Guildford Road, Mount Lawley in the state of Western Australia, more particularly described as Lot 1 & 2 on diagram 190385 and being the whole of the land in certificate of title volume 2118 folio 302 and 303 ('the Properties') upon the terms and conditions specified in the Contract.
2. Pursuant to clause 3 of the Contract, the 2002 Real Estate Institute of Western Australia General Conditions are incorporated into the Contract so far as they are not varied by or inconsistent with the express terms of the Contract.
3. Pursuant to the Contract the Settlement Date is specified to be 30 August 2005.
- 4. On 22 August 2005, the Seller gave notice to the Buyer's Representative that the Seller was ready, willing and able to complete settlement, in accordance with clause 4.4 of the General Conditions.
5. The Buyer has failed to complete settlement.
6. The Seller continues to be ready, willing and able to complete settlement.
TAKE NOTICE THAT:
7. The Buyer is in default of the Contract by reason of the Buyer's failure to complete settlement in accordance with the Contract.
8. The Seller requires the Buyer to remedy the default by completing settlement as specified in the Contract within 10 Business Days after this Notice is duly given.
9. The Seller reserves all its legal rights under the Contract and at law in respect of the Buyer's default.
10. If the default is not remedied within the time specified in this Default Notice the Contract will be terminated.
Dated 31 May 2005
TOM HOU - LAWYER
Solicitor and Representative for the Seller
Further correspondence
59 Tom Hou said in evidence that on 6 September 2005 he responded to the Chalmers letter of 30 August 2005. He made it clear that none of the allegations advanced on behalf of Acemount were accepted. Again, having regard to Acemount's concessions at trial, it is not necessary for me to review the various matters mentioned in the Hou 6 September letter concerning title and the condition of the land. However, importantly for present purposes, the Hou 6 September letter concluded as follows:
Completion
I agree that your client is obliged to take transfer of the property subject to any of the interests referred to in your letter, to the extent that they are in fact interests in the land. If those encumbrances do exist as your client asserts, my client has no capacity to convey the property free of them other than as has been set out in this letter.
(Page 18)
- Summary
In my view, none of the matters raised by your client entitle your client either to terminate the contract or to delay settlement. My client has already served notice of default on your client pursuant to special condition 23, that notice expires on Wednesday, 14 September 2005.
It is my client's suspicion that your client is merely raising the above matters because it has not yet been able to arrange its finances in order to settle. If this is the case, my client hereby puts your client on notice that it considers that your client has had more than enough time to arrange finance and that no further extension will be granted.
My client has by this letter offered your client the opportunity to terminate the contract by giving notice prior to 5 pm on Thursday, 8 September 2005. If notice is so received, my client will allow the return of your client's deposit in accordance with the general conditions. If your client fails to terminate within the time allowed and fails to settle prior to the expiry of the default notice, my client will insist upon its right to retain the deposit. As the deposit does not exceed 10% of the purchase price, it will be forfeit in its entirety.
You will note by this letter my client has effectively agreed with points one to three of your client's 'without prejudice' offer. Our client has not agreed to the extension of the settlement date requested in point four and requires your client either to proceed immediately to settlement, or terminate the contract forthwith.
Yours faithfully
Tom Hou
60 By letter dated 14 September 2005 Chalmers replied to the Hou 6 September letter. It was said that Acemount was not obliged under the General Conditions or at all to take the property encumbered by the heritage memorial. Sunlong's offer to terminate the contract was not accepted. Various observations were made about issues concerning the state of the property. It was said that Sunlong had to remove all encumbrances.
61 The 14 September Chalmers letter concluded with this summary:
My client has received no valid notice which would entitle your client to terminate the contract.
Even if, which is denied, a valid notice had issued then your client would not be entitled to rely upon it because at all times material it was not ready, willing or able to complete.
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- Finally, our client's without prejudice offer remains open if your client is unable to complete in accordance with the terms of the contract and wishes to avoid further unnecessary delay and cost.
62 Tom Hou responded to this letter on behalf of Sunlong by a further letter dated 16 September 2005. It was said that Acemount had been required by the default notice to complete the sale and purchase of the land by close of business 14 September 2005. As that did not occur, 'my client hereby terminates the contract pursuant to condition 24.2(e)'. Sunlong reserved its rights including the right to recover damages if the property could not be sold for the agreed purchase price. Further, pursuant to Condition 24.3(a) of the General Conditions, Sunlong elected to forfeit the entirety of the deposit.
63 It was said further in the Hou 16 September letter that Sunlong intended to relist the property for sale forthwith. Nonetheless, a proposal for resolving the dispute within seven days was put up for consideration.
64 I note in passing that if these exchanges were intended to be on a without prejudice basis it was common ground at trial that any claims to privilege had been waived with the result that the various letters were treated as admissible and received in evidence.
Mr Sun's evidence
65 Mark Wei Min Sun, who was the executive director of Sunlong at all material times, gave evidence that was generally consistent with the evidence given by Tom Hou as solicitor for Sunlong.
66 In the course of his evidence Mr Sun described the negotiations preceding the agreement for sale of the land and the role of Eftos Estates as the company's agent in that regard. He confirmed that on 29 March 2005 through Eftos Estates, Sunlong instructed the solicitor Tom Hou to act as Sunlong's solicitor in regard to the transaction. He noted that by letter dated 4 April 2005 Tom Hou had written to Chalmers concerning the obligation of the buyer to prepare and deliver a transfer of the land.
67 Mr Sun said that on 15 August 2005 he instructed Sunlong's solicitor to write to Chalmers to again request the transfer of land. On 22 August, on his instructions, Sunlong's solicitor wrote to say that Sunlong was ready, willing and able to settle and asking for a time for settlement. Mr Sun confirmed that he was never in fact provided with or shown a stamped copy of the contract or transfer of land. He instructed Sunlong's solicitor to prepare a default notice which was to be served on 31 August 2005 if Acemount had not settled. He confirmed that the letters written
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- by the company's solicitor Tom Hou and the default notice were consistent with his instructions.
68 Mr Hou said that, following termination of the contract by the Hou 16 September letter, he (Mr Sun) instructed Gadens Lawyers to represent Sunlong in succession to Tom Hou. He instructed that firm to serve a fresh default notice in light of the claim made by Chalmers that the default notice previously served by Tom Hou was invalid.
The second default notice
69 By letter dated 10 October 2005 Gadens Lawyers on behalf of the seller, Sunlong, wrote to Chalmers. The letter enclosed a notice of default directed to 'your client'. It was said that if Chalmers, within the General Conditions, was the representative of Acemount the letter was to be regarded as service of the notice. However, Gadens had also served the second default notice on Acemount at its registered office address and at the address stated in the contract.
70 The Gadens' default notice dated 10 October 2005 is in these terms:
DEFAULT NOTICE
Under a Contract by Offer and Acceptance dated 8 March 2005 and made between Acemount Pty Ltd and Sunlong Holdings Pty Ltd for the sale of the Property described in the Schedule
TO
Acemount Pty Ltd
448 Lord Street, Mount Lawley, Western Australia 6050; and
C/- Anderson Redman, Level 1, 35 Outram Street, West Perth, Western Australia 6005
Chalmers & Partners
6th Floor, 524 Hay Street, Perth, Western Australia 6000
Fax number: 9221 1975
as Representative of the Buyer
You are in default of the Contract for the sale and purchase of the Property described in the Schedule in that you have failed to complete the settlement by the due date.
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- You are required to remedy the default within Ten (10) Business Days of the date on which this Notice is duly given.
If the default is not remedied within the time specified in this Default Notice the Seller may exercise any of the rights in General Condition 24, including termination of the Contract.
Schedule
The land situated at and known as 88-90 Guildford Road, Mount Lawley, Western Australia and being:
Lot 1 on Diagram 10385 and being the whole of the land in Certificate of Title Volume 2118 Folio 302; and
Lot 2 on Diagram 10385 and being the whole of the land in Certificate of Title Volume 2118 Folio 303.
Signed
Gadens Lawyers, Representative of the Seller
PO Box Z5470, St George's Terrace Western Australia 6831
Reference: RPS:1834654. Fax (08) 9220 4901
Dated 10 October 2005
Subsequent events
71 By letter dated 21 October 2005 Chalmers put to Gadens Lawyers that Sunlong had not, at the time of the settlement date, been ready, willing and able to settle the sale of the property. This was because it was not able to give vacant possession of the property in the sense of a property clear of rubbish. Further, Sunlong was obliged to transfer the property free of all encumbrances but in fact the property was encumbered by the heritage memorial.
72 It was said further that the notice of default served by Sunlong constituted a repudiation of the contract. Nevertheless, Acemount was not prepared to accept the repudiation with the result that the contract remained on foot. It was said also that Acemount had registered a caveat to protect its beneficial interest in the property.
73 By letter dated 27 October 2005 from Gadens Lawyers to Chalmers a termination notice was served upon Acemount with copies being mailed also to the registered office addresses of Acemount and Newriver. It was said that the obligation to settle was not conditional on the issues raised by
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- Chalmers. It was alleged that Acemount had been unable to raise the finance required to settle the matter. Moreover, it was not a repudiation of a contract to serve a notice in accordance with the terms of that contract.
74 The termination notice dated 27 October 2005 was directed to Acemount and Newriver and to Chalmers as representative of the buyer. It said simply that 'by this notice the contract is terminated'.
75 By letter dated 9 November 2005 from Chalmers to Gadens Lawyers it was said on behalf of Acemount that as Sunlong did not tender performance of the contract on the stipulated completion date, coupled with Acemount not insisting upon performance, the respective parties could be taken to have waived the essentiality of the requirement as to time thereby transforming the contract into one requiring performance within a reasonable time.
76 It was said further that by cl 3.5 of the contract Sunlong's right to the price of the land was dependent on Sunlong conveying title to the land in accordance with the contract. It was said further that Acemount did not advise Sunlong that it would not attend to settlement on the stipulated completion date. For Sunlong to tender performance on the stipulated completion date it had to tender a transfer that was capable of leading to Acemount being the registered proprietor of the land free of a title restriction in the form of a memorial in favour of the Heritage Council of Western Australia.
77 It was said further that following time ceasing to be of the essence, what was required of Sunlong was to issue a notice requiring Acemount to complete within a stipulated reasonable period of time. To issue such a notice Sunlong had to be not in breach of the contract and be ready, willing and able to perform the contract as written. Sunlong was invited to reconsider its repudiation of the contract, but the dispute ran on.
78 It was against this background that Acemount commenced legal proceedings with a view to obtaining a declaration that the contract 'still subsists and is binding on the parties thereto'.
79 Let me now turn to the pleadings.
The statement of claim
80 As I foreshadowed in earlier discussion, various issues fell away at the trial, especially concerning the so-called encumbrances and state of the land. Acemount's written submissions contained a passage to the
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- effect that for the purposes of the trial 'the plaintiff does not rely upon the existence of the easement, the memorial or the rubbish upon the land as evidencing an inability in the plaintiff to be ready, willing and able to now perform its obligation under the contract'. I have included reference to those matters in earlier discussion for the sake of an orderly narrative. However, in seeking to identify the issues to be resolved I will focus upon pleadings bearing upon the remaining and crucial issues.
81 Acemount by its statement of claim noted that no relief is sought against the Registrar of Titles as second defendant other than the continued registration of caveat J438354. Acemount described the formation of the subject contract including reference to the acceptance of an offer from the plaintiff to acquire the land on 18 April 2005. The claim outlined the various conditions of the contract and included a plea to the effect that completion of the contract was due to occur on 30 August 2005. The claim included reference to conditions bearing upon the encumbrance and state of the land issues and factual matters relating to those issues.
82 The plaintiff pleaded at par 13 of the claim that on the completion date Sunlong did not tender performance of the contract. It was then said that subsequent to the completion date Sunlong had not made time, again, the essence of the contract. It was said that on 19 September 2005 Acemount lodged caveat J438354 claiming an interest in the land as purchaser.
83 The plaintiff pleaded at par 17 that on 10 October 2005 Sunlong issued a notice requiring Acemount to remedy in 10 business days an alleged default of having failed to complete the contract on the completion date. As at 10 October 2005 the land was not free of all encumbrances not notified in the contract and was not free of rubbish. This was the position at the expiration of 10 business days from the issue of the default notice and at that time Sunlong did not tender performance of the contract.
84 It was then said at pars 21 to 24 that on 27 October 2005 Sunlong, by written notice, purported to terminate the contract. Acemount has not repudiated the contract. Acemount treats Sunlong's purported termination of the contract as wrongful repudiation of the contract. The operation of caveat J438354 has by order of the Supreme Court been extended until further order of the court.
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85 Acemount claimed by way of relief a declaration that the contract still subsists and is binding on the parties thereto. It claimed also a declaration that Acemount, as purchaser, has an equitable interest in the fee simple of the land.
86 I pause here to say that, at trial, having abandoned its position on the pleadings as to the encumbrance and state of land issues, Acemount's principal contention was that which appears at par 13 of the claim, namely, that on the completion date Sunlong failed to tender performance; that is, essentially, that it had failed to hand over the documents required to convey title to the buyer. Accordingly, being in breach of the contract, Sunlong lacked the capacity to terminate the contract pursuant to the first notice of default.
The defence and counterclaim
87 Sunlong by its statement of defence and counterclaim acknowledged that the parties entered into a contract for the sale of the land in or about March or April 2005. Reference was then made to various terms of the contract including the special conditions in Annexure A and various clauses of the General Conditions.
88 It was said that the heritage memorial remained on the certificate of title but was not a title restriction for the purposes of the General Conditions. Further, and in any event, Acemount was not entitled to defer or delay settlement by reason of the memorial; Acemount was not entitled to defer or delay settlement by reason of the easement in favour of the Minister for Works. Sunlong denied the allegations concerning the state of the land.
89 Sunlong pleaded at par 12 of the statement of defence and counterclaim that Sunlong was not required to tender performance of the contract because:
A. Performance of the contract by the vendor required the vendor to transfer title to the property to the plaintiff, which obligation was interdependent with the obligation of the plaintiff to tender the balance of the purchase price; and
B. The plaintiff was unable to pay the balance of the purchase price because it did not have the funds to do so; and
C. The plaintiff intimated by its conduct that it did not intend to tender the balance of the purchase price.
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90 Sunlong in its pleading then set out particulars of the conduct relied upon in support of the plea just mentioned. It said that pursuant to cl 3.1 of the General Conditions Acemount as the buyer was required to 'arrange for the transfer to be prepared'. By cl 3.2 of the General Conditions Acemount as the buyer was required to sign the transfer and deliver it to the seller or the seller's representative a reasonable time before the settlement date. Settlement was due to take place on 30 August 2005. By letters dated 4 April, 15 August and 17 August 2005 from Tom Hou to Chalmers Sunlong requested a stamped transfer of land document but as at 30 August 2005 Acemount had failed to respond to that request. By facsimile dated 22 August 2005 from Tom Hou to Chalmers Sunlong confirmed it was ready, willing and able to effect settlement due on 30 August 2005 but Acemount failed to attend to preparation, signing, stamping and delivery of the transfer.
91 Sunlong's particulars went on to assert that by letter dated 30 August 2005 from Chalmers to Tom Hou Acemount raised allegations for the first time that it was not in a position to settle and made it clear that it did not intend to proceed with settlement in the circumstances alleged by Acemount. It did not in fact tender the balance of the purchase price because it was unable to do so.
92 Sunlong pleaded further that on 31 August 2005 Tom Hou for Sunlong issued Acemount with a default notice. On 10 October 2005 Gadens Lawyers for Sunlong issued a further default notice out of an abundance of caution in response to allegations by Acemount that the 31 August default notice was not effective. If, after the completion date, time was no longer of the essence (which Sunlong denied), then the 31 August default notice and/or the 10 October default notice made it so.
93 It was said further in par 17 that by letter dated 16 September 2005 from Tom Hou to Chalmers or, alternatively, by letter dated 27 October 2007 from Gadens Lawyers for Sunlong to Chalmers for Acemount, Sunlong terminated the contract.
94 Sunlong pleaded further at par 20 that the obligation on Sunlong to tender performance only arose in circumstances where it could reasonable apprehend that Acemount intended to comply with the requirement to rectify its default and, in the circumstances, Sunlong could not have reasonably apprehended that Acemount intended to tender performance of the contract having regard to its failure to prepare, sign and deliver the transfer to the seller and its failure to attend to its other obligations.
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95 Sunlong denied that the plaintiff was entitled to the relief sought or to any relief. Further, in the alternative, Sunlong pleaded that Acemount by its actions including correspondence in relation to the contract, induced Sunlong to assume that Acemount would not challenge the efficacy of correspondence or notices addressed to or issued to Newriver as nominee of Acemount. In reliance upon that assumption Sunlong issued the 31 August default notice and the first termination notice. In the premises it would be unconscionable for Acemount to refuse to give effect to the assumption by denying the efficacy of the 31 August default notice or the first termination notice and Acemount was estopped from doing so.
96 By way of counterclaim Sunlong pleaded in par 28 that Acemount failed to complete the settlement of the contract by the due date with the result that default notices and termination notices were issued. By reason of Acemount's repudiation of the contract Sunlong has suffered loss and damage. A declaration that the contract has been terminated was sought by way of counterclaim with damages to be assessed.
Acemount's reply and submissions
97 Acemount by its reply asserted that Special Condition 3 of the contract by its terms did no more than name Newriver as the entity to whom Acemount could direct Sunlong to transfer the land to. As at 30 August 2005 Acemount had not directed Sunlong to transfer the land to Newriver. On 15 August 2005, Acemount's conveyancing representative Katherine Jakimowicz informed Sunlong's conveyancing representative that Acemount was yet to decide if the land was to be transferred to Newriver. As to the counterclaim, Acemount asserted that Sunlong's writing did not at law terminate the contract and Sunlong was not entitled to the relief claimed.
Acemount's case
98 It will be apparent from this review of the pleadings that, on Acemount's case, any failure on Acemount's part to provide Sunlong with a transfer would not evidence a dispensation by Acemount of Sunlong's mutually dependent and concurrent obligation under the requirements of the General Conditions to tender the certificate of title to the land and the discharge of the NAB mortgage. In other words, Sunlong would have to remain ready, willing and able to execute such a transfer if it were tendered by Acemount for execution by Sunlong on 30 August 2005.
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99 Acemount contended also that no credible evidence had been adduced that as at 30 August 2005 Acemount was unable to pay the balance of the purchase price as a circumstance of why Sunlong did not have to tender performance of its mutually dependent and concurrent obligations under the General Conditions, especially the seller's obligation under cl 3.10 to give the buyer on settlement the transfer signed by the seller and any other documents necessary to enable the buyer to become the registered proprietor of the land.
100 It was said further that, in any event, a failure by Acemount to provide Sunlong with a transfer would not relieve Sunlong of its obligation not less than two business days before 30 August 2005 to advise Acemount of cheque details as required by cl 3.7(b) of the General Conditions, due to Sunlong having on 22 August 2005 advised Acemount that cheque particulars would be provided.
101 It was said also that Sunlong was not entitled to issue a default notice specifying as the default a failure of Acemount to complete settlement of the contract on 30 August 2005, nor was Sunlong entitled thereafter to terminate the contract due to Acemount's alleged failure to complete the contract on 30 August 2005.
102 Acemount submitted, in the alternative, that even if it be found that Acemount's conduct did dispense with Sunlong's obligations under cl 3.10 (thereby entitling Sunlong to issue a default notice requiring Acemount to complete the contract) the first purported termination was wrongful and amounted to a repudiation of Sunlong's obligations under the contract. This was because the first default notice was directed to Newriver and was based on a failure of Newriver, not Acemount, to complete the contract. It was said that Newriver was simply the named entity in the contract to whom Acemount could direct Sunlong to transfer the land. The naming of Newriver as the nominee in Special Condition 3 could not be construed as the nomination of Newriver as the entity to whom the land was to be transferred or as making Newriver a purchaser.
103 The submissions outlining Acemount's case were reflected in a document dated 20 August 2009 described as the plaintiff's Revised Trial Submissions. Importantly, as indicated in earlier discussion it was said, in these written submissions, under the heading 'Limitation of Issues', that for the purposes of the trial 'the plaintiff does not rely upon the existence of the easement, the memorial or the rubbish upon the land as evidencing an inability in the plaintiff to be ready, willing and able to now perform its obligations under the contract' (par 33).
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Sunlong's case
104 The nature of Sunlong's case is reflected in its pleading and its written submissions; that is, upon its proper construction, the contract provided for Newriver to take the place of Acemount as buyer or, alternatively, to be the party to whom the land was to be transferred. It was intended by the parties that Sunlong was to deal with Newriver as the buyer and this assumption was confirmed by correspondence after the contract was entered into and the course of dealing between the parties.
105 Sunlong contended that in breach of the contract neither Acemount nor Newriver provided the seller with a signed transfer prior to 30 August 2005, nor gave notice of the place or time for settlement. Those parties were not entitled to refuse to proceed to settlement on the basis of the matters raised as impediments such as the encumbrance and state of land issues. In seeking to rely upon such matters (which were now admitted to be untenable) Acemount and Newriver intimated by their conduct that they did not intend to settle by tendering a signed transfer or the balance of the purchase price. Further, and in any event they lacked the financial capacity to pay the balance of the purchase price.
106 All of this meant that Sunlong was not required to tender performance by handing over or being ready to hand over the documents required to convey title (although in fact it was ready to do so). In circumstances where the buyer was in default, Sunlong, as a party not in default, was entitled to terminate the contract and did so pursuant to the first default notice or, alternatively, the second default notice.
General observations
107 These summaries of the pleadings and the respective cases can be used to set the scene for some general observations about the matters in issue.
108 The effect of the contractual provisions was to fix a settlement date of 30 August 2005 and to impose certain interdependent obligations upon the parties in regard to the arrangements required to effect settlement on the due date. In that regard, the buyer was required before settlement to prepare and deliver to the seller (Sunlong) a signed transfer of land to the intent that this would be executed by the seller. It would then be handed over to the buyer at settlement with any other documents required to convey title in exchange for the balance of the purchase price; that is, the amount to be paid after bringing to account the deposit of $100,000 paid to the real estate agent and any adjustments for rates and taxes. The
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- General Conditions required also that three days before settlement the buyer was required to fix a time and place for settlement.
109 Acemount's pleadings proceeded from the premise that in the period before settlement it became apparent that the title to the land was affected by certain so-called encumbrances, including a memorial in favour of the Heritage Council and an easement in favour of the Minister for Works. There were also certain other matters of concern. Concern about these matters led to a situation in which settlement did not take place on the due date, supposedly because Sunlong was in default. Moreover, on Acemount's case, Sunlong failed to tender performance of the contract.
110 It was common ground at the trial that the settlement did not take place on the due date. It was clear from the evidence also that Acemount did not prepare or provide a signed transfer in the manner required by cl 3.1 - cl 3.5 of the General Conditions. Acemount did not attempt to fix a time and place for settlement or purport to tender performance at settlement of its obligations under the contract. Sunlong did not tender performance. It is therefore immediately obvious that an issue lying at the heart of the dispute was whether the parties, or either of them, were excused from liability because the obligation to perform had been dispensed with as a consequence of conduct by the other party.
111 Acemount, as plaintiff, did not plead directly in its statement of claim or reply that its obligation to perform had been dispensed with. Rather, as indicated earlier, its case was that Sunlong had failed to tender performance of the contract and therefore, as a party in default, Sunlong lacked the capacity to rescind the contract.
112 On the other hand, Sunlong pleaded at par 12 of its statement of defence that Sunlong was not required to tender performance because Acemount was unable to pay the balance of the purchase price and intimated by its conduct that it did not intend to tender the balance of the purchase price. Various particulars of Acemount's conduct amounting to an intimation of the kind alleged were set out including Acemount's failure to deliver a signed transfer to Sunlong a reasonable time before the settlement date. Sunlong relied also upon Acemount's conduct in raising untenable allegations about the title and the state of the land.
113 Counsel for Acemount sought to rely upon the reasoning in Foran v Wight (1989) 168 CLR 385 concerning concurrent obligations under an executory contract.
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114 The relevant rules were expressed succinctly by Brennan J in this passage:
The obligation of a vendor to deliver a conveyance and the obligation of a purchaser to pay the price on completion are mutually dependent and concurrent obligations in the absence of any contrary stipulation; each obligation is to be performed in exchange for the other: Palmer v Lark [1945] Ch 182 at 184-5. Where the respective obligations of parties to a contract are mutually dependant and concurrent, the primary rule is that neither party who fails to perform his obligation when the time for performance arrives can rescind for the other party's failure at that time to perform his obligations. Each party's obligation is conditional on performance by the other; neither can complain of non-performance by the other when the condition governing the other's obligation goes unfulfilled. But if one party intimates to the other that it is useless for the other to fulfil his obligation and the other acts on the intimation, the party to whom the intimation is given is dispensed from a nugatory tender of performance (435).
115 Having regard to this passage, and other passages in Foran v Wight, counsel for Sunlong was prepared to accept that in many cases involving the sale of land the obligations of the parties will indeed be mutually dependant and concurrent. However, as Justice Brennan noted, this will only be so 'in the absence of any contrary stipulation'. Counsel submitted that the general rule can often be affected by specific provisions or particular circumstances.
116 With that thought in mind, counsel for Sunlong placed some reliance upon the reasoning in Bahramitash v Kumar [2006] 1 NZLR 577; (2005) 5 NZ ConvC 194,177. In that case the Supreme Court recognised that the vendor's obligation to settle was interdependent with the purchaser's obligation to pay. However, it was for the purchaser to begin the process by tendering payment, and the vendor could not ordinarily be shown to have breached the contract unless there had been proper tender by the purchaser.
117 In the present case, counsel submitted, the General Conditions contained a crucial stipulation bearing upon the interdependent obligations of the parties. Clause 3.1 of the General Conditions required the buyer (Acemount or Newriver) to start the settlement process by providing a signed transfer to the seller a reasonable time before the settlement date. It followed that in the circumstances of the present case the buyer was in breach in having failed to provide the signed transfer and tender performance.
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118 Further, there was an issue to be resolved (raised by par 12 of the statement of defence) as to whether Acemount, in making untenable complaints about encumbrances and the state of the land, intimated by its conduct that it did not intend to tender the balance of the purchase price. Having regard to the reasoning in Foran v Wight, a finding could be made that tender of performance by Sunlong as seller was dispensed with.
Further observations
119 At the trial of the action, counsel for Acemount made it clear that the issues had been narrowed as a consequence of exchanges between the parties before trial and that the court could proceed accordingly. I was informed, as evidenced by letter dated 24 August 2009 from Acemount's solicitors to Sunlong's solicitors, that Acemount 'will abandon the issue that your client could not have been ready, willing and able to tender its obligations on 30 August 2005 due to the existence of an easement and a heritage memorial'. This echoed what had been said in the plaintiff's written submissions at par 33 (mentioned earlier) under the heading 'Limitation of Issues'.
120 The letter in question goes on to make the following observations:
2. The consequence of removing the issue involving the easement and the memorial is that the trial will then involve three issues namely:
2.1 Was tender of your client's obligations on 30 August 2005 dispensed with? If the answer is no, then time is at large and the plaintiff succeeds. If the answer is yes, then issue 2 needs to be determined;
2.2 Was the first defendant's notice of default to Newriver Holdings Pty Ltd (Newriver) and the termination of the contract based upon Newriver's failure to remedy the default valid? If the answer is yes, then the first defendant would succeed. If the answer is no, then issue 3 needs to be decided;
2.3 Was the first defendant's second default notice issued to Acemount Pty Ltd (Acemount) and the termination of the contract based upon Acemount's failure to settle on 30 August 2005 valid? If valid, the first defendant would succeed. If invalid, the plaintiff would succeed.
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- consider its case is confined to the issues your client has specified nor that the conclusions you have specified necessarily follow'.
122 I was assured by counsel on both sides at the commencement of the trial that these letters could be regarded as a clear definition of the position being adopted by each party at trial and that the court could proceed accordingly.
123 I do not necessarily accept that the presentation of the issues in the manner contended for by the plaintiff in this correspondence is sufficient. However, in the case management era, I intend to act on the representation that issues associated with the supposed encumbrances and state of the land as a basis for refusing to proceed to settlement need not be resolved, notwithstanding the assertions of the parties in the pleadings concerning such matters.
124 It will therefore be useful to proceed immediately to the question of whether Acemount was in default and to the related question of whether the obligation of Sunlong as vendor to tender performance at settlement was dispensed with.
Findings as to performance
125 In dealing with these issues in the light of discussion in Foran v Wight as to concurrent obligations under an executory contract, it is important to keep in mind that on the facts of that case there was a clear intimation provided by the vendor to the purchaser that the vendor could not settle on the relevant date. This was because a right of way allowed for by the contract had not been registered. It was held that in these circumstances the purchasers were not required to tender performance and were entitled to rescind the contract.
126 It is difficult to discern in the circumstances of the present case any clear and unambiguous intimation conveyed by Sunlong to the buyer that Sunlong, as seller, did not intend to settle on the due date and would not do so. Indeed, Tom Hou's letters of 15 and 22 August 2005, and his related actions in arranging for discharge of the mortgage, and in seeking to communicate with Chalmers on 30 August 2005, establish, and I so find, that Sunlong was ready, willing and able to settle subject to provision by the buyer of a signed transfer and the balance of the purchase price. On the other hand, as pleaded by Sunlong, there are various facts and matters which arguably amounted to an intimation by Acemount as purchaser that it was not ready, willing and able to settle on the due date. The evidence showed, and I so find, that it had not provided a transfer or
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- attempted to fix a place for settlement. Moreover, as at 30 August 2005 it had not only failed to stamp the contract or transfer but also had raised a number of untenable objections concerning the title and the state of the land.
127 To my mind, the question of what amounts to a sufficient intimation by Acemount that tender of performance by the vendor Sunlong would be useless must be resolved not only by reference to common law principles of the kind described by Justice Brennan in Foran v Wight but also by reference to specific provisions of the contract. Indeed, this was recognised by his Honour in the passage quoted earlier. He said that the obligations of the parties are mutually dependant and concurrent 'in the absence of any contrary stipulation'. These latter words are crucial in the circumstances of the present case.
128 In my view, a careful reading of the General Conditions reveals that the mutually dependant and concurrent obligations of the vendor and buyer are spelt out with great particularity in order to orchestrate (more exactly than the common law principles might allow) the steps to be taken by the parties in order to achieve settlement. A number of obligations and responsibilities are assigned to the buyer with a considerable degree of specificity. When the relevant provisions concerning the buyer's obligation to prepare and submit a transfer to the seller, and eventually to fix a settlement date, are considered collectively, it emerges that the buyer is the party required to initiate the process. The buyer is obliged to play an active role in ensuring that the parties are in a position to come together for settlement at a certain time and place on the due date.
129 Counsel for Acemount seemed to be of the view that, irrespective of whether or not the buyer complied with these pre-settlement obligations, the seller was nonetheless obliged to tender performance on the settlement date; that is, to hand over or be ready to hand over the documents required to convey title and to fix a time and place for that purpose. It was therefore submitted that as Sunlong had failed to tender performance on the settlement date it could be characterised as a party in default. To my mind, this view of the matter is misconceived. In circumstances where the buyer was the party obliged to initiate the process but had failed to do so, the buyer could be characterised as a party in default. Moreover, in circumstances where its default occurred in conjunction with the raising of untenable objections to title on the eve of settlement, a finding can be made that the seller's obligation to tender performance had been dispensed with because the buyer had clearly intimated that it did not intend to proceed to settlement.
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130 Let me now draw together these observations in the form of certain specific findings.
Specific findings
131 I find that the settlement date appointed by the contract was 30 August 2005. The effect of the General Conditions was that Acemount as the buyer was required to sign and deliver a transfer of land in respect of the transaction to the seller or the seller's representative a reasonable time before the settlement date. It is clear from the evidence of Acemount's witness, Ms Donnelly, that this was not done. The evidence establishes, and I so find, that this lack of compliance with the General Conditions occurred in circumstances in which Acemount generally did not appear to be proceeding purposefully towards completing its purchase by the appointed date.
132 The contract documents, being the offer and acceptance form, had been lodged with the Office of State Revenue for assessment, and Ms Donnelly as the conveyancer acting for the buyer had opened and was handling a file on the matter. She had also, prior to the settlement date, made requests for information pursuant to the Landgate EAS procedure. However, no evidence was given at trial as to whether Acemount had taken steps to organise its finance so as to be ready to pay the balance of the purchase price at settlement. Moreover, Acemount by its law firm Chalmers had failed to respond to or deal with specific requests directed to it by letters dated 4 April, 15 August and 17 August from Tom Hou, as lawyer for Sunlong, requesting a stamped transfer and by implication seeking clarification as to whether the settlement would proceed. I find that as at 30 August 2005 Acemount had failed to respond to Sunlong's requests for a stamped transfer of land.
133 I find that by fax dated 22 August 2005 from Tom Hou, as lawyer for Sunlong, to Chalmers, as lawyers for Acemount, Sunlong confirmed that it was ready, willing and able to effect settlement on 30 August 2005 as the operative date. I find also that Acemount, by its lawyers and representatives, failed to attend to the matters raised in the correspondence or otherwise make any arrangements for settlement in the manner envisaged by the General Conditions or at all. By letter dated 30 August 2005 from Chalmers on behalf of Acemount to Tom Hou, as lawyer for Sunlong, Acemount raised allegations for the first time that Sunlong was allegedly not in a position to settle owing to the existence of the so-called encumbrances and certain other concerns. The evidence shows, and I so find, that Acemount did not intend to proceed with settlement because of
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- its complaints about the title and state of the land set out in the 30 August Chalmers letter.
134 I indicated in earlier discussion that Acemount's reliance upon the so-called encumbrances as a basis for refusing to settle has now fallen away. It is not necessary to resolve the issues associated with the so-called encumbrances. However, the 30 August Chalmers letter, when considered in conjunction with the facts and matters mentioned earlier, permits an inference to be drawn that Acemount as buyer was not ready, willing and able to settle as at 30 August 2005. Its failure to comply with its obligations in respect of the transfer and in regard to arranging settlement was not due to any intimation from Sunlong that Sunlong was not willing to settle. It was due essentially to a mistaken assessment by Acemount that it had grounds for not proceeding to settlement on 30 August 2005.
135 I note in passing that the persistent maintenance by one of the parties of an untenable construction of the contract on a matter of essential substance can be regarded as inconsistent with a continuing intention to observe the contractual obligations: Summers v Commonwealth (1918) 25 CLR 144.
136 Against the background of these findings, and having regard to the principles concerning concurrent obligations mentioned earlier, I find that as at 30 August 2005 the buyer was in default. Moreover, Acemount had given a clear and unambiguous intimation to Sunlong as seller that it did not intend to tender the balance of the purchase price on the settlement date or otherwise to proceed with the settlement on that date. The consequence of this was that the obligation of Sunlong to tender performance was dispensed with and it therefore cannot be characterised as a party in default under the contract.
137 I am reinforced in this conclusion by a related finding that Sunlong, having instructed its mortgagee to prepare a discharge of mortgage, could have proceeded to settlement on the due date and tendered performance, and would have done so, had it not been for the conduct of Acemount in conveying to Sunlong that it would be useless for Sunlong to tender performance.
138 It follows from this conclusion that after 30 August 2005 Sunlong, as a party not in default, was entitled to give a notice of default to the buyer, provided the provisions of the General Conditions concerning the giving of a notice of default were complied with. This brings me to the question
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- as to whether the first notice of default that Sunlong by its lawyer delivered to Newriver was sufficient to rescind the contract. There are a number of subsidiary issues associated with this aspect of the dispute.
The nominee issue
139 The offer and acceptance form was completed upon the basis that the buyer was 'Acemount Holdings Pty Ltd and/or nominee'. Condition 3 of the special conditions stated that 'Newriver Holdings Pty Ltd is the nominee'.
140 In the course of argument at trial counsel for Acemount placed reliance upon Tonelli v Komirra Pty Ltd [1972] VR 737 and J R Stevens Holdings Pty Ltd v Von Begensey (1992) NSW ConvR 55-623; (1992) 5 BPR 11,534. In the Tonelli case it was held that the words 'and his nominees' in the sale note were not intended to state who were the persons thereby assuming the obligation of purchasers, but merely conferred a power upon the plaintiff to nominate the persons to whom, along with himself, the conveyance was to be made.
141 In the Stevens' case Young J observed that the addition of the words 'or nominee' after the purchaser's name in a contract usually does no more than indicate that the purchaser may exercise the right, which he has in any event, to have the vendor transfer the land to the person nominated by the purchaser. The original contract remains in existence between the original parties, but the person nominated will in due course become the registered proprietor. Which of the two persons pays the purchase money is usually a matter of indifference to the vendor.
142 In reviewing the decided cases I must take account also of the s 11(1) of the Property Law Act 1969 (WA). The effect of this provision is that a contract can be made for the benefit of a third party who is then in a position to enforce the contract. It is therefore necessary to take account of certain observations made by Burt J in Bell Bros Pty Ltd & Stewart v Sarich [1971] WAR 157. That was an action for specific performance brought by a party nominated as purchaser under a contract of sale said to have arisen by the exercise of an option in favour of a certain party 'or nominee'.
143 Burt J made these observations:
When the expression: 'X [the grantee of the option] or his nominee' is used in an option agreement, it can I think have one of at least three different meanings and which meaning it will have will of course depend upon the language of the document.
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- It may do no more than indicate that the offer although made to X and no one else, may be accepted on behalf of X by a person to be nominated by X. If such be the case and if the offer is accepted by a person so nominated then the result is a contract between the offeror - the grantor of the option - and X. In such a case the person nominated is not a contracting party. He is no more than X's agent with authority to communicate X's acceptance of the offer. A F Grant Pty Ltd v McDonald [1960] Qd R 465, was such a case.
Another possibility is that the offer is made to X and to no one else but the offer is to agree to sell in the sense of convey to X or to such person as X should nominate. The acceptance of such an offer by X together with a nomination, if made, creates a contract between the grantor of the option and X whereby the grantor agrees with X that in exchange for the price to be paid by X he will transfer the subject property to the nominee and the contract to convey to the nominee can be specifically enforced at the suit of X; Coulls v Bagot's Executor & Trustees Co Ltd (1966) 119 CLR 460, at p 478 per Barwick CJ, and at p 499 per Windeyer J; [1967] ALR 385, and Beswick v Beswick [1967] 2 All ER 1197.
Yet another possibility is that by the option agreement the grantor promises X that for the agreed consideration he will for the stipulated time keep open an offer to sell the subject-matter of the contract, such offer to be open for acceptance by X or by such person as X might nominate so that if X should make a nomination and the offer be accepted by the nominee, a contract is thereby formed between the grantor as seller and the nominee as buyer, this being a contract which is enforceable, and in a proper case specifically enforceable at the suit of the nominee and without joining X: Westminster Estates Pty Ltd v Calleja (1970) 91 WN (NSW) 222. This is the way in which the plaintiff's case is put in the present action and as so put it is based upon a correct understanding of the meaning of the document (158).
144 In the circumstances of the present case, I am of the view that, as Newriver was specified as the nominee in Special Condition 3, the intention of the parties was that Newriver should be regarded as a contracting party from the outset. I am conscious that under the General Conditions a default notice could only be directed to a party. However, it follows from the view I have just expressed that Newriver could be characterised as a party because it had, in effect, been specified as a buyer. It was therefore open for the seller to direct a notice of default to that party.
145 The plaintiff contended at trial, as an ancillary issue, that the first notice of default directed to Newriver was defective in that it did not specify an exact and particular default such as a failure to submit a transfer to Sunlong. The notice was said to be too general in its form in
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- that it simply called upon Newriver as buyer to complete the settlement. I have to say that I am not persuaded to this point of view. To my mind, the effect of the notice in practical terms was to call upon the buyer to tender performance by signing and delivering a stamped transfer and paying the balance of the purchase price. In a commercial context the notice was sufficiently clear in its terms to comply with the requirements of the General Conditions.
146 It follows, then, that in my view the contract was rescinded by the notice of default directed to Newriver and served in conjunction with a letter to Chalmers dated 31 August 2005. Thereafter, and I so find, the contract ceased to be of any further force and effect. This means that it is not open to Acemount as plaintiff in these proceedings to obtain specific performance of the contract. It was brought to an end by the first notice of default, notwithstanding an error as to the date of the notice.
147 However, for the sake of completeness, I must deal with the estoppel issue. I will begin by reviewing certain principles bearing upon that issue.
Estoppel
148 In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Mason CJ and Wilson J noted that for many years there was a reluctance to allow promissory estoppel to become a vehicle for the positive enforcement of a representation by a party that he would do something in the future. It was thought to be a defensive equity. Generally speaking, they said, a plaintiff cannot enforce a voluntary promise because the promisee may be expected to appreciate that, to render it binding, it must form part of a binding contract. They went on to accept, however, that in some circumstances promissory estoppel may extend to the enforcement of a right not previously in existence when the defendant has encouraged in the plaintiff a belief that it will be granted and has acquiesced in action taken by the plaintiff in that belief. What gave rise to the need for the court to intervene was the defendant's unconscionable attempt to go back on the assumptions which were the foundation of their dealings.
149 Mason CJ and Wilson J, espousing the majority view, summarised their reasoning in this way:
One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt v Great Boulder Pty
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- Goldmines Ltd (1937) 59 CLR 641. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption (404).
150 It is apparent from this passage and the reasoning of other members of the High Court in Walton's case that the purpose of the doctrine of estoppel is to preclude parties relying on strict rights where to do so would be unconscionable. It is also apparent from later decisions of the High Court in Commonwealth v Verwayen (1990) 170 CLR 394 and Foran v Wight that the assumption being referred to in this line of reasoning may be one as to a legal as well as to a factual state of affairs. In other words, a representation as to the effect of a legal agreement or the adequacy of arrangements made between the parties can give rise to an estoppel.
151 It follows from these principles that, in my view, Acemount was in any event estopped from disputing the validity of a notice of default directed to Newriver. The letters written by Chalmers described Newriver as the buyer. This gave rise to an assumption that Newriver was to be regarded as the buyer, and documents and notices could be prepared accordingly. The file notes made by Tom Hou were precise and corroborate his evidence. Accordingly, I find as a fact, that no mention was made by Ms Donnelly in the telephone conversation of 15 August 2005 that she was waiting on instructions as to whether the nominee company would be used.
152 It would be unconscionable for Acemount to depart from the assumption it had created that Newriver was to be treated as the buyer. For these reasons also I am satisfied on the balance of probabilities that the first default notice directed to Newriver was valid.
153 I digress briefly to say that if it be held that I am wrong in my analysis concerning the validity of the first default notice, I am of the view that, in any event, the contract was rescinded by the second notice of default directed to Acemount. The General Conditions made specific provision for the delivery of a second or further notice of default. Accordingly, if the Newriver notice of default be regarded as a nullity, it was open to Sunlong to rescind the contract by reliance upon a notice of default directed to Acemount as a party that had failed to comply with its obligations concerning settlement. On that view of the matter, because the first notice of default was a nullity, it could not be said (as alleged by Acemount in these proceedings) that the contract had been repudiated or otherwise that enforcement provisions including the term that time was to be of the essence had ceased to apply.
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154 Finally, I have to say, again for the sake of completeness, that even if the plaintiff had been able to persuade the court that Sunlong was not entitled to rescind the contract, or that the notices of default were defective (with the result that the contract remained on foot), it is questionable whether the plaintiff would be entitled to relief by way of specific performance in circumstances where no or no sufficient evidence has been placed before the court that Acemount was ready, willing and able to complete the contract before the action was commenced. See Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 619.
155 However, in the end, it follows from the conclusion I have expressed, that it is not necessary to decide this point. For the reasons previously given, I am of the view that Acemount's claim must be dismissed.
156 In summary, approaching the issues in the manner suggested by Acemount's solicitors in their letter dated 24 August 2009 (mentioned earlier), I am of the view that, as a consequence of Acemount's conduct prior to the settlement date, the tender of Sunlong's obligations on 30 August 2005 was dispensed with. Further, Sunlong's notice of default to Newriver and the termination of the contract based upon Newriver's failure to remedy the default was valid.
Relief
157 This brings me to the question of the relief sought by Sunlong in its counterclaim. The counterclaim contains a claim for damages. However, it was made clear to me at trial that this claim was not being pursued and indeed no evidence was presented in support of such a claim. The assumption underlying the counterclaim is that if it be held that the contract was brought to an end as a consequence of Acemount's default it would be open to Sunlong to lay claim to the deposit of $100,000 being held by the agent as stakeholder. What is sought principally by Sunlong as first defendant is a declaration that the contract has been terminated.
158 In the course of discussion at trial reference was made to the observations of Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 to the effect that it is generally undesirable that a court should make declarations without any orders for consequential relief. The consequence of a declaration concerning the status of a contract should be that the parties seeking to enforce it should submit to the performance of the contract and to an order for specific performance of the contract if that is appropriate. Declaratory relief accompanied by orders for consequential relief will have the effect of quelling all matters in dispute between the parties.
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159 Those observations related to declaratory relief in circumstances where a party was seeking to enforce a contract. However, in the present case, the effect of the declaratory relief would be to establish that the contract had been terminated. A declaration of that kind would effectively put an end to the matters in controversy between the parties. Accordingly, in the circumstances of the present case, I do consider that a declaration of the kind sought should be made. I will hear from the parties as to the exact form of the orders and directions. I anticipate that it will be necessary for an order to be made removing the caveat against the land lodged by Acemount.
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