Astill v South Esplanade Developments Pty Ltd

Case [2007] SASC 231

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Civil)

ASTILL & ANOR v SOUTH ESPLANADE DEVELOPMENTS PTY LTD

[2007] SASC 231

Judgment of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice Bleby and The Honourable Justice Sulan)

26 June 2007

CONVEYANCING - RELATIONSHIP OF VENDOR AND PURCHASER - STATUTORY PROTECTION OF PURCHASERS

CONVEYANCING - RELATIONSHIP OF VENDOR AND PURCHASER - VENDOR AND PURCHASER SUMMONS: SUMMARY PROCEDURE

Sale of land under Land and Business (Sale and Conveyancing) Act 1994 (SA) – action by purchasers for return of deposit paid on rescission – application by purchasers for summary judgment refused by District Court – whether common law or equitable principles affect purchasers’ statutory right to rescind contract – whether statutory right to rescind can be waived by conduct of purchaser – whether defence of election or estoppel can apply – Appeal dismissed (by majority).

Land and Business (Sale and Conveyancing) Act 1994 (SA) ss 5, 7, 9, 10, 11, 12, 14, 15, 16, 33, 34; District Court Rules 1992 (SA) r 25.02; Supreme Court Rules 1987 (SA) r 96A.02; Land and Business (Sale and Conveyancing) Regulations 1995 (SA) regs 7, 16, referred to.
Andrew Knox Holdings Pty Ltd v ANZ Banking Group Ltd & Esanda Finance Corporation Ltd (1996) 188 LSJS 385; Sargent v ASL Developments Ltd (1974) 131 CLR 634; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 215, applied.
Szep v Blanken [1969] SASR 65; Zucker v Straightlace Pty Ltd (1987) 11 NSWLR 87; Blackman & Blackman v Milne & Milne [2006] QSC 350; Myles Pearce & Co Pty Ltd v Leuci & Martin (1997) 193 LSJS 491; The Commonwealth of Australia v Verwayen (1990) 170 CLR 394; Blackman & Blackman v Milne & Milne [2006] QSC 350, considered.

ASTILL & ANOR v SOUTH ESPLANADE DEVELOPMENTS PTY LTD
[2007] SASC 231

Full Court:  Doyle CJ, Bleby and Sulan JJ

  1. DOYLE CJ:          The issue in this appeal turns on the construction of provisions of the Land and Business (Sale and Conveyancing) Act 1994 (SA) (“the Act”).

  2. The Act gives a purchaser under a contract for the sale of land a right to given written notice rescinding the contract.

  3. The issue is whether that statutory right to rescind can be waived or lost as a result of conduct by the purchaser that, but for the operation of provisions of the Act, would amount to a binding election to affirm the contract; or to a binding election to proceed with the contract, or that would give rise to an estoppel which prevented the purchaser from exercising the right to rescind.

  4. The question is whether the provisions of the Act, properly interpreted, confer on a purchaser a right to rescind, the exercise of which cannot be affected by the operation of common law or equitable principles referred to.

  5. The issue arises on an application by purchasers of land for summary judgment in proceedings…

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AGLC
Astill v South Esplanade Developments Pty Ltd [2007] SASC 231
Case
[2007] SASC 231
Decision Date

CaseChat Overview and Summary

The case of Astill v South Esplanade Developments Pty Ltd involved the appellants, the purchasers, contesting the decision of the District Court, which had dismissed their appeal. The purchasers sought the return of their deposit paid upon the rescission of a contract for the sale of land. The court needed to determine whether the common law or equitable principles could affect the purchasers’ statutory right to rescind a contract. Additionally, the court had to decide whether the statutory right to rescind could be waived by the conduct of the purchaser and if the defence of election or estoppel could be applicable. The appeal was dismissed by a majority of the judges, with Bleby and Sulan JJ arguing that the statutory right to rescind is unqualified and not affected by the purchaser's conduct.

The reasoning of the Court involved examining the purpose and effect of Part 2 of the Land and Business (Sale and Conveyancing) Act 1994 (SA) and the relevant provisions that provide protection for a purchaser of land under a contract. The Court found that the purchaser is given an unqualified right to rescind the contract, provided the right is exercised before the prescribed time. This right is a self-help remedy that is to be followed by the return of money paid under the contract (subject to certain exceptions) and, ordinarily, without the intervention of the Court. The Court held that the exercise of the right has nothing to do with fairness as between vendor and purchaser, and is not affected by possible prejudice to the vendor as a result of its exercise. The Court further noted that the purchaser's conduct does not affect the exercise of the right to rescind.

In conclusion, the majority of the judges found that the statutory right to rescind is unqualified and not affected by the purchaser's conduct. The appeal was dismissed, and the orders made by the District Court Master remained in place. This decision highlights the importance of understanding the statutory rights provided to purchasers under the Land and Business (Sale and Conveyancing) Act 1994 (SA) and the limitations of the common law and equitable principles in this context.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Finally, the Court was referred to a number of decisions in which somewhat similar statutory rights were held to be subject to and affected by principles similar to those invoked by the Company in para 19 of the Defence. The decisions are Szep v Blanken [1969] SASR 65; Zucker v Straightlace Pty Ltd (1987) 11 NSWLR 87; Andrew Knox Holdings Pty Ltd v ANZ Banking Group Ltd & Esanda Finance Corporation Ltd (1996) 188 LSJS 385; Blackman & Blackman v Milne & Milne [2006] QSC 350. The short answer to the submission based on those cases is that each case turns on the terms of the legislation then under consideration. In none of those cases was the legislative scheme sufficiently similar, in my opinion, for the reasoning in those cases to be applicable to the present case.Conclusion I would allow the appeal. I would set aside the order of the District Court Judge allowing the appeal to him, and setting aside the judgment in favour of the Astills entered on 18 May 2006. I would order that there be substituted an order that the appeal to the District Court Judge be dismissed. That will leave standing the orders made by the District Court Master.BLEBY and SULAN JJ:Introduction The facts giving rise to this appeal and most of the relevant provisions of the Land and Business (Sale and Conveyancing) Act 1994 (SA) (“the Act”) are adequately covered in the reasons of the Chief Justice. We will not repeat them except where it is necessary to do so for the purpose of these reasons. The appellants and the respondent were purchasers and vendor respectively under a contract of the sale of land as defined in the Act. What is in issue is whether the conduct of the purchasers could either amount to an election to be bound by the contract or give rise to an estoppel which prevents the purchaser from rescinding the contract where the time in which the purchaser may rescind the contract under s 5 of the Act has not passed.The purpose and effect of Part 2 of the Act The principal purpose of Part 2 of the Act is to require full disclosure by a vendor of land of facts and matters relevant to or which may impinge upon a purchaser’s decision to enter into or to be bound by a contract to purchase the land at the purchase price specified in the contract. Central to the operation of Part 2 of the Act is the requirement to serve a vendor’s statement. Subsection (1) of s 7 provides:(1)A vendor of land must, at least 10 clear days before the date of settlement, serve, or cause to be served, on the purchaser a statement in the form required by regulation (signed by or on behalf of the vendor) setting out—(a) the rights of a purchaser under section 5; and(b) the particulars required by regulation of—(i)all mortgages, charges and prescribed encumbrances affecting the land subject to the sale; and(ii)where the vendor obtained title to the land within 12 months before the date of the contract of sale, all transactions involving transfer of title to the land occurring within that period; and(iii)any prescribed matters.The rights of a purchaser under s 5 include the right to rescind or the cooling-off right to which the Chief Justice has referred.

Ratio Decidendi

Legal Principle Established

On the other hand Mr Hayes QC, for the Astills, submits that the scheme of the Act is inconsistent with the operation of the doctrine of election or estoppel to deprive a purchaser of the ability to exercise the power conferred by s 5 of the Act.Consideration of submissions There can be no doubt that the relevant provisions of the Act are intended to provide protection for a purchaser of land under a contract. To that end the purchaser is given an unqualified right to rescind the contract, provided the right is exercised before the prescribed time. I describe the right as “unqualified” because its exercise does not depend upon the purchaser having any cause for complaint, nor does it depend upon any default or failing on the part of the vendor. The purchaser can exercise the right for no reason at all, or because the purchaser has had a change of mind, or because the market has moved and the contract no longer seems advantageous to the purchaser. This is a relevant factor. The exercise of the right has nothing to do with fairness as between vendor and purchaser, and is not affected by possible prejudice to the vendor as a result of its exercise. It is also relevant that the right is a self‑help remedy that is to be followed by the return of money paid under the contract (subject to certain exceptions) and, ordinarily, without the intervention of the Court. Moreover, a vendor must be taken to know that the purchaser has this right, and that failure to serve a vendor’s statement, or the serving of a defective vendor’s statement, will mean that the right to rescind will remain available until settlement, subject to the giving of an accurate vendor’s statement. The vendor’s protection is to serve an accurate vendor’s statement on the purchaser, thus triggering the prescribed time. These features suggest, but do no more than suggest, that the exercise of the purchaser’s right to rescind is not affected by the purchaser’s conduct, nor by the fact that the exercise of the right will cause loss or other prejudice to the vendor. Parliament has given a purchaser a right the exercise of which, in the nature of things, may cause prejudice or loss to the vendor. The next significant feature of the Act is that by s 5(7)(b) Parliament has provided a means whereby the purchaser can, in effect, surrender the right under s 5(1). The ability to do so is carefully limited. This provision is not of itself inconsistent with the possibility of a later surrender or waiver of the right as a result of the purchaser’s conduct. However, it does seem odd to me that the right to rescind should be able to be lost as a result of a purchaser’s conduct after entering into the contract, when the ability to make the section inapplicable is as carefully limited as it is by s 5(7)(b). I have already commented on the remedy conferred on a purchaser by s 15. It is a quite different remedy. The circumstances in which s 16 will operate are not entirely clear. Relevantly, the focus of s 16 is on the failure of the vendor to comply with Part 2 of the Act. For example, the case might be one in which settlement occurred, the purchaser not having exercised the right to rescind. After settlement the purchaser might complain that the purchaser has been prejudiced by the failure of the vendor to serve a vendor’s statement, or by the serving of a defective statement. Under s 15 the remedy is based on prejudice to the purchaser, resulting from the vendor’s failure to comply with the Act. This is quite a different remedy from that given by s 5(1).