Bishop v Taylor

[1968] HCA 68

HIGH COURT OF AUSTRALIA

McTiernan, Taylor and Menzies JJ.

BISHOP v. TAYLOR

(1968) 118 CLR 518

31 October 1968

Vendor and Purchaser

Vendor and Purchaser—Written contract—Condition to grant sub-lease—No specified term—"One-third share of crops"—No specified type of crop—Void for uncertainty.

Decisions

October 31.
The following written judgments were delivered:-
McTIERNAN AND TAYLOR JJ. This is an appeal from an order of the Supreme Court by which a suit, instituted by purchasers, for specific performance of a contract for the sale of certain land was dismissed. (at p519)

2. The contract was made on 27th March 1965 and it was for the sale of some 2,625 acres of Crown leasehold, known as "Forest Breay", for the sum of 8,000 pounds "clear of rates and taxes". It was expressed by the conditions of sale to be "subject to satisfactory finance". A further condition was expressed by the words:

"Vendor to pay 1,000 pounds per year in advance for lease of existing cultivation until 30th May 1966 or end of harvesting period. One-third share of crops thereafter until end of peanut crop in 1968 or end of harvesting period or as otherwise agreed upon."

Time was to be of the essence of the contract and possession of the property was to be given not later than 1st May 1965. The suit was dismissed ultimately because the learned judge of first instance held that the provisions of the condition last quoted were too vague and uncertain to enforce and, being an integral and indivisible term, no part of the contract could be specifically enforced. Further, his Honour seems to have formed the view that the appellants had not made out the allegation in their statement of claim to the effect that at all material times they had been, and that they were at the time of the hearing, ready and willing to perform their obligations under the agreement. (at p520)

3. It is unnecessary to traverse in detail all that occurred between the date of the contract and the time the suit was instituted for these matters are fully discussed in the reasons given below. But it should be stated that it is abundantly clear that time ceased to be of the essence of the contract and that, notwithstanding a futile attempt to require the appellants to complete the purchase on 29th October 1965 and some purported rescissions of the agreement, it was, if valid, still on foot when the hearing of the suit commenced. It is also clear enough that although the appellants had some difficulty initially in making the necessary arrangements for financial assistance to enable them to complete they appear to have been able by 5th July 1965 to make arrangements with their bank which probably would have enabled them to settle. But whether after the end of October 1965, or at the commencement of the suit, or at the time of the hearing, they were in a like position is another matter. (at p520)

4. The fact is that settlement did not take place because of a number of circumstances. In the first place there was some delay on the part of the appellants which in all the circumstances of the case is understandable. Thereafter, it seems to us the respondent was not anxious to settle and became, in a measure, unco-operative. Further, as the evidence shows, there was some disagreement, or, certainly no agreement, between the parties as to the meaning and effect of the condition of the contract which we have quoted. In particular, there was a dispute as to whether that condition called for the preparation and execution of a formal lease and, when that dispute was settled, there was further disagreement concerning the terms of the draft lease prepared by the appellants' solicitor and submitted by him to the respondent's solicitor. As far as we can see this dispute was never finally resolved. Finally, there was a dispute as to whether the condition as drawn truly represented the agreement concluded between the parties, the appellants alleging that the agreement that had finally been concluded before it was reduced to writing gave to them the option, after the first year of the term of the so-called lease,

"as to whether future payments would be at a similar rental per year, or as to whether in lieu thereof, he (they) would accept one-third share of the gross proceeds from crops (less one-third share costs of bags)".

All these matters are mentioned in the correspondence between the solicitors for the respective parties. (at p521)

5. When the suit was instituted the appellants claimed specific performance of the written contract as it stood but by an amendment, made at the hearing some fifteen months after the statement of claim had been filed, it was alleged that the written agreement did not, in the particular already mentioned, correctly set out the prior oral agreement concluded between the parties and rectification was sought. The result was that by the statement of claim, as amended, the appellants claimed "specific performance of the said agreement" and "if necessary rectification of the written instrument". We have some difficulty with the statement of claim in this form. Does the allegation of readiness and willingness mean that the appellants were ready and willing to carry out the agreement in a rectified form, or in the form in which the written instrument stood? Or does it mean that they were ready and willing to perform their obligations whatever the Court should ultimately find them to be? There has over the years been much discussion as to whether a plaintiff can in the same suit seek rectification and specific performance of an agreement as rectified (see the cases collected and discussed by Long Innes J. in Montgomery v. Beeby (1930) 30 SR (NSW) 394 ) but, since the learned trial judge found against the appellants on their claim for rectification this aspect need not trouble us; we mention it only because it is of some importance on the issue of readiness and willingness that such a claim was made, not only in the suit, but as early as 14th July 1965. (at p521)

6. But, first of all, we proceed to consider the contention that the condition relating to a lease of the "existing cultivation" is uncertain. We have no doubt that, for reasons appearing in Whitlock v. Brew (1968) 118 CLR 445 , if the condition is void for uncertainty the contract cannot stand so that in this case we confine ourselves solely to a consideration of the terms of the condition itself. On this point the learned trial judge said:

"The phrase 'one-third share of crops' does not make it plain what the plaintiffs were entitled to: whether to a one third share of the standing crops, or a one-third share of the crops after they had been harvested and bagged and made ready for market. It is not a case where the parties are in agreement as to what they intended (cf. Kell v. Harris (1915) 15 SR (NSW) 473 ). The male plaintiff stated that his understanding was that the defendant was to harvest and bag the peanuts at his expense, and that they (the plaintiffs) were to pay the cost of the sacks used in the bagging of their one-third share. A clause to that effect was included in the draft lease drawn by the plaintiffs' solicitor. In evidence the male plaintiff said: 'I understood that it was not Taylor's responsibility to sell them or cart them off the place, or do any of that sort of work. I understood he was going to grow them and harvest them, put them in the bags, which his machine does, and leave them there - a third of them. It was my responsibility to do the rest. If they got wet or lost after that, that was my bad luck.' The defendant's case was that no such agreement had been made as to harvesting expenses ; and this is a reason given by him in the answers to interrogatories for not executing the draft lease. The Statute of Frauds is not pleaded ; but what the plaintiffs seek is specific performance of the written agreement. Share-farming agreements differ widely in the provision made for sharing the produce or the proceeds from the sale of the produce. In my opinion, the provision in the present agreement is uncertain. I am unable to find that the parties were of one mind as to what the phrase 'one-third share of crops' implied. This being the position there is no contract enforceable at law."

There is much to be said for this line of reasoning but we should add that the condition is also uncertain in other respects and that this very uncertainty led inevitably to the disputes between the parties. We do not think that upon its true construction the appellants' initial contention (made in their solicitor's letter of 14th July 1965), that "the lease, (or more correctly sub-lease) is granted under the contract of sale, and the contention that further granting should be necessary, is rather difficult to follow", was sound. It seems to us that the words of the condition naturally contemplate the preparation and execution of an instrument giving effect to the agreement between the parties. But whether it was the intention of the parties, as expressed in the condition, that, after 30th May 1966, the respective rights and obligations of the parties should continue to be governed by a subsisting lease, or, whether it was the intention that a share-farming agreement should be substituted, is very much open to doubt. However, if it was intended that an agreement of the latter character should be substituted, the condition was plainly deficient in a definition of what the rights and obligations of the parties were to be and, for the reasons given by the learned trial judge, "one-third share of crops" was, itself, uncertain. According to the letter of 14th July 1965, the appellants understood this to mean "one-third share of the gross proceeds from crops (less one-third share costs of bags)". But it is impossible to extract this meaning from the language of the condition. On the other hand, if it was intended that the lease should continue to subsist after the first year it is impossible to say with any degree of certainty for what period it was to subsist. The condition did not specify the nature of the crop or crops which the respondent might plant although, no doubt, it was contemplated that they would be peanuts. But the condition does not restrict him in his choice of crops and it may well be that it was for this reason that the condition provided, in effect, that the lease should subsist "until the end of peanut crop in 1968 or end of harvesting period or as otherwise agreed upon". The duration of the lease, therefore, it seems to us, was to depend upon what sort of crops had been sown for harvesting in 1968 and any agreement to grant a lease with the term so defined, or undefined, is void (see Foa's General Law of Landlord and Tenant, 8th ed. (1957), p. 92 ; Woodfall, Landlord and Tenant, 26th ed. (1960), p. 236 ; Halsbury's Laws of England, 3rd ed., vol. 23, pp. 532, 533 ; and Lace v. Chantler (1944) KB 368 ). (at p523)

7. The fact that a contract is uncertain may, of course, give rise to problems in determining whether it can be said that one party has been, at all relevant times, ready and willing to fulfil his obligations thereunder for, if it is impossible to say what his obligations are, the problem of saying whether he was, or was not, at all relevant times ready and willing to carry out the contract, could occasion difficulty. In the present case it was not, of course enough that, at the hearing of the suit, the appellants were ready and willing to perform their obligations in accordance with what the Court should ultimately find them to be for the hearing did not take place until September 1967, that is to say, more than two years after the commencement of the period to which the condition referred. And when it is seen that the appellants' initial contention was that the condition was, in effect, self-executing and that it did not call for the execution of any further instrument (vide the letter of 14th July 1965) and, further, that they maintained that the condition as written did not express the antecedently concluded agreement between the parties, it is plain enough that they could not be said at this time to be ready and willing purchasers on the terms of the written contract. Later, when they prepared and submitted a draft sub-lease, that instrument departed in some respects from the language of the condition. We refer particularly to cl. 5, which sought to enlarge upon the obligations of the respondent with respect to the "one-third share of crops", and to cl. 6, the purport of which was to cast upon the respondent an obligation to plant each year a summer crop "such crop to be peanuts or such other crop as the parties may mutually agree" and, also, an obligation to "cultivate the said lands and tend the said crops in an efficient and workmanlike manner, so as to assure (subject to seasonal conditions) the maximum return from the crops". No doubt the difficulty between the parties might have been resolved if both had been desirous of going on with the transaction but the indifference of the respondent does not remove the difficulties in the way of the appellants establishing that their conduct was not inconsistent with the written contract and that they were ready and willing to carry out their obligations thereunder. Nor was their persistence in their claim for rectification - which continued almost to the end of the case - consistent with any such assertion. In the circumstances, however, it is unnecessary to embark upon a detailed examination of this aspect of the matter or to proceed to examine the evidence tendered to establish that the appellants were financially able to complete. Our view that the contract was void for uncertainty means that the appeal must fail and we think it is sufficient to rest our decision upon this ground. (at p524)

8. Accordingly the appeal should be dismissed. But before parting with the case we feel it necessary to refer to the fact that the evidence shows that the appellants, on 1st May 1965, provided a sum of 4,500 pounds which was deposited with their bank in the joint names of the appellants and the respondent. Unfortunately, so we are told, the deposit was not interest bearing. The contract of sale did not call for the payment of a deposit and, in a desire to avoid further litigation between the parties, we sought from counsel for the respondent and obtained from him the concession that if we should take the view which we have now expressed this sum ought now to be paid or credited to the appellants. (at p525)

MENZIES J. I agree that this appeal should be dismissed. The ground for doing this which commends itself to me, is, that the condition of the contract for a sub-lease from the purchaser to the vendor of some part of the land, the subject of the contract, is one to which it is not possible by a process of construction to give any particular meaning. I agree entirely with what has been said about this condition being void for uncertainty. (at p525)

2. The problem of the purchasers' readiness and willingness to complete the contract is, I think, a difficult one. As matters went, no time was fixed at which the payment of the purchase money became obligatory and if at any time material the purchasers lacked the necessary readiness and willingness it was only when they commenced their action. Of this I am not sure. The learned trial judge did, it seems, treat 22nd July as the critical date but, as I see it, neither then nor on 29th October had the purchase moneys become payable and proof of readiness and willingness to pay at any particular date was not requisite. The requirement of readiness and willingness does not demand that a purchaser should always have the purchase price in his pocket ; all that is necessary is readiness and willingness to perform the contract according to its terms. However, as I am satisfied that the appellants must fail on the other ground, I do not find it necessary to reach a firm conclusion on the issue whether they must fail because of lack of proof of readiness and willingness on their part to complete the contract. (at p525)

Orders

Appeal dismissed with costs.