Vendor and Purchaser—Sale of land—Default by purchaser—Right of vendor to terminate the contract and sue for damages or resell and recover deficiency—Time not of essence—Notice to complete by fixed date—Statement that in default of compliance vendor will exercise his power under contract without further notice—Effect.

Decisions

May 22.
The following written judgments were delivered:-
McTIERNAN J. The appellant and the respondent entered into a contract for the sale of five acres of land at Bossley Park in New South Wales. The appellant was the purchaser and the respondent the vendor. The contract was in the form approved by the Law Society of New South Wales and the Real Estate Institute of New South Wales (1972 ed.) and cl. 16 of the contract is in the following terms:

"If the Purchaser defaults in the observance or performance of any obligation imposed on him under or by virtue of this agreement the deposit paid by him hereunder, except so much of it as exceeds 10% of the purchase price, shall be forfeited to the Vendor who shall be entitled to terminate this agreement and, thereafter either to sue the Purchaser for breach of contract or to resell the property as owner and the deficiency (if any) arising on such resale and all expenses of and incidental to such resale or attempted resale and the Purchaser's default shall be recoverable by the Vendor from the Purchaser as liquidated damages provided that proceedings for the recovery thereof be commenced within 12 months of the termination of this agreement. The Vendor may retain any money paid by the Purchaser on account of the purchase other than the deposit money forfeited under this clause as security for any deficiency arising on a resale or for any damages or compensation (including any allowance by way of occupation fee or for rents or profits from a Purchaser who has been in possession of the property or in receipt of the rents or profits thereof) awarded to him for the Purchaser's default provided that proceedings for the recovery of such damages or compensation be commenced within 12 months of the termination of this agreement." (at p291)

2. The contract was dated 20th December 1972, but had not been completed twelve months later. On 20thDecember 1973, the respondent served on the appellant and his solicitors a notice to complete which recited the history of the transaction and proceeded to state that the respondent required completion on 4th January 1974. The notice to complete was in these terms:

"WHEREAS by Contract dated 20th December, 1972 ANTONIO CRESTANI agreed to sell and TIBOR BALOG agreed to purchase for the sum of Ninety five thousand dollars ($95,000.00) the freehold property situate in the Municipality of Fairfield, Parish of St. Luke and County of Cumberland being Lot 3 in Section D in Deposited Plan No. 6934 and being the whole of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Balog v Crestani

Details

AGLC: Balog v Crestani [1975] HCA 16
Case: [1975] HCA 16
Decision Date: 22 May 1975

CaseChat Overview and Summary

The High Court of Australia considered an appeal from a judgment of the Supreme Court of South Australia in *Balog v Crestani*. The dispute concerned the validity of a contract for the sale of land, where the purchaser, Mr Crestani, alleged that the vendor, Mr Balog, had made fraudulent misrepresentations inducing him to enter into the agreement. Mr Crestani sought to have the contract rescinded.

The central legal issues before the High Court were whether the representations made by Mr Balog constituted fraud in law, and if so, whether Mr Crestani had affirmed the contract after becoming aware of the misrepresentations, thereby losing his right to rescission. The court also had to consider the nature of the alleged misrepresentations and their impact on Mr Crestani's decision to purchase the property.

The High Court found that the representations made by Mr Balog were indeed fraudulent. However, the court determined that Mr Crestani, by his conduct after discovering the truth of the matter, had affirmed the contract. His continued occupation of the property and his actions in seeking to sell it, rather than immediately seeking rescission, demonstrated an intention to be bound by the agreement. The legal principle applied was that a party seeking rescission for fraud must act promptly upon discovering the fraud and cannot, through their conduct, indicate an intention to proceed with the contract. Consequently, the High Court allowed the appeal, setting aside the order for rescission.

Orders