Carter v Mehmet

[2021] NSWCA 286

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Carter v Mehmet [2021] NSWCA 286

Hearing dates:

20 October 2021

Date of orders:

25 November 2021

Decision date:

25 November 2021

Before:

Meagher JA; Gleeson JA; Payne JA

Decision:

(1)   Appeal allowed.

(2)   Set aside the orders of Ward CJ in Eq made on 17 April 2020 and in lieu thereof order:

(a) Judgment for the appellants against the respondents in the sum of $480,832.20 plus interest thereon from 29 November 2015 pursuant to s 100 of the Civil Procedure Act 2005 (NSW).

(b)      Respondents pay the appellants’ costs of the proceeding below, including (as per the orders of the Court of Appeal made on 13 December 2018) the costs of the separate determination the subject of the proceeding before Darke J in 2017.

(3)   Respondents pay the appellants’ costs of the appeal.

Catchwords:

CONTRACTS — termination — repudiation of contract — implied refusal to perform — where purchasers raised requisitions on title — whether requisitions properly made — whether vendors adequately answered requisitions — whether vendors evinced intention no longer to be bound by contract

CONTRACTS — termination — repudiation of contract — erroneous construction of contract — where vendors insisted on payment of default interest — whether repudiation by insisting on erroneous construction of contract

ENVIRONMENT AND PLANNING — heritage conservation — protection of Aboriginal heritage — National Parks and Wildlife Act 1974 (NSW) — meaning of “Aboriginal object”

LAND LAW — conveyancing — contract for sale — defect in title — whether presence of Aboriginal objects on land constitutes defect in title — whether Aboriginal objects on land — whether presence of Aboriginal objects constituted defect in title where land already subject to development constraints

LAND LAW — conveyancing — contract for sale — termination in accordance with rule in Flight v Booth — whether presence of Aboriginal objects materially or substantially affected contract — no Aboriginal objects on land — no material or substantial effect

LAND LAW — conveyancing — contract for sale — requisitions — where requisitions based on plausible contention of presence of Aboriginal objects — whether purchasers’ objections and requisitions on title properly made — whether vendors’ responses sufficient

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 100

Coastal Protection Act 1979 (NSW)

Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 18

Conveyancing Act 1919 (NSW), s 55

Environmental Planning and Assessment Act 1979 (NSW)

Fauna Conservation Act 1974 (Qld), s 7

Home Building Act 1989 (NSW)

Interpretation Act 1987 (NSW), s 33

Mine Subsidence Compensation Act 1961 (NSW), s 15

National Parks and Wildlife (Amendment) Act 1969 (NSW)

National Parks and Wildlife Act 1967 (NSW), ss 3, 33D

National Parks and Wildlife Act 1974 (NSW), ss 2A, 5, 83, 85, 85A, 86

Real Property Act 1900 (NSW)

State Environmental Planning Policy No 14—Coastal Wetlands

Cases Cited:

Adderton v Festa Holdings Pty Ltd [2003] NSWSC 1065

Adolfson v Jengedor Pty Ltd (1995) 6 BPR 14,147

Bebonis v Angelis (2003) 56 NSWLR 127; [2003] NSWCA 13

Bell v Scott (1922) 30 CLR 387; [1922] HCA 13

Carydis v Merrag Pty Ltd [2007] NSWSC 1220

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2

Country Energy v Williams (2005) 63 NSWLR 699; [2005] NSWCA 318

Crowe v Rindock [2005] NSWSC 375; (2005) 12 BPR 22,823

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12

Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55

Festa Holdings Pty Ltd v Adderton [2004] NSWCA 228

Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160

Frankel v Paterson [2015] NSWSC 1307

Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529; [1972] HCA 36

Gogard Pty Ltd v Satnaq Pty Ltd [1999] NSWSC 1283; (1999) 9 BPR 17,171

Greek Orthodox Parish Community of St Marys and District Ltd v Denis Stanley Merrick [2014] NSWSC 1196

Green v Sommerville (1979) 141 CLR 594; [1979] HCA 60

Gupta v Fordham Laboratories Pty Ltd [2018] NSWSC 551

Liberty Grove (Concord) Pty Ltd v Yeo [2006] NSWSC 1373

Mehmet v Carter [2017] NSWSC 1067

Mehmet v Carter (2018) 98 NSWLR 977; [2018] NSWCA 305

Mehmet v Carter [2020] NSWSC 413

Micos v Diamond [1970] 3 NSWR 407; (1970) SR (NSW) 392

Re Ford & Hill (1879) 10 Ch D 365

Re Stone and Saville’s Contract [1962] 1 WLR 460

Reysson Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2020] NSWCA 281

Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47

Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1; [1973] HCA 14

Votraint No 1088 Pty Ltd v Commonwealth [2004] NSWSC 1003

Walton v Stocks & Parkes Investments Pty Ltd (1975) 1 BPR 9660

William Sindall PLC v Cambridgeshire County Council [1994] 1 WLR 1016

Winchcombe Carson Trustee Co Ltd v Ball-Rand Pty Ltd [1974] 1 NSWLR 477

Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53

Texts Cited:

FE Moss, Sale of Land in New South Wales (5th ed, 1973, Butterworths)

L Voumard, The Sale of Land (5th ed, 1995, Law Book Co)

P Butt, The Standard Contract for Sale of Land in New South Wales (2nd ed, 1998, Law Book Co)

Patricia Lane, Sale of Land in New South Wales (6th ed, 2018, Law Book Co)

Roy Milner Stonham, The Law of Vendor and Purchaser (1964, Law Book Co)

T Williams, A Treatise on the Law of Vendor and Purchaser of Real Estate and Chattels Real (3rd ed, 1922, Sweet and Maxwell)

Category:

Principal judgment

Parties:

Murray John Carter (First Appellant)
The Wheel Resort Pty Ltd (Second Appellant)
Cathscompany Pty Ltd (Third Appellant)
Ian Mehmet t/as ATF Ian G Mehmet Testamentary Trust (First Respondent)
Cameron Mehmet t/as ATF Cameron Mehmet Testamentary Trust (Second Respondent)
Errol Mehmet t/as ATF Errol J Mehmet Testamentary Trust (Third Respondent)
Cheers Aviation Pty Ltd t/as ATF KMCG Investment Trust (Fourth Respondent)
Matthew Timothy Cheers (Fifth Respondent)

Representation:

Counsel:
T Alexis SC, M Southwick (Appellants)
DA Smallbone (Respondents)

Solicitors:
Australian Law Group Heydons (Appellants)
Beswick Lynch Lawyers (Respondents)

File Number(s):

2020/140939

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

[2020] NSWSC 413

Date of Decision:

17 April 2020

Before:

Ward CJ in Eq

File Number(s):

2015/360420

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellants, Mr Murray Carter, The Wheel Resort Pty Ltd and Cathscompany Pty Ltd (the vendors), and the first to fourth respondents, Messrs Ian, Cameron and Errol Mehmet and Cheers Aviation Pty Ltd (the purchasers), entered into a contract dated 6 July 2015 for the sale of land in Byron Bay. The fifth respondent, Mr Matthew Cheers, guaranteed the performance of the purchasers under the contract.

The subject land comprised two lots. Lot 1, approximately 7 acres in size, was partly zoned for commercial tourism use; Lot 10, approximately 23 acres in size, was zoned for environmental protection. Due to a number of zoning constraints affecting the subject land, the potential commercial development of the land was largely, if not wholly, limited to Lot 1.

The cover page of the contract fixed the completion date for the “30^th day after the contract date”, being 5 August 2015. By special condition 21 of the contract, completion was conditional on Mr Carter becoming registered proprietor of Lot 1, and was to take place within 14 days after the vendors’ solicitor had given written notice of registration of a Transmission Application by which Mr Carter would acquire the interest of his late wife in Lot 1. By special condition 8, the purchasers were liable to pay default interest in the event that completion did not occur “by the completion date, without default by the vendor”.

Situated on Lot 1 was a memorial stone and plaque referring to a nearby burial site of Harry and Clara Bray, tribal elders of the Bundjalung tribe. The memorial stone and plaque were placed on the land in 1988 by the NSW Government with the then proprietor’s consent to commemorate the Australian Bicentenary. Although it was reputed in the local Arakwal community that Harry and Clara Bray (and perhaps other Aboriginal persons) were buried in the land, the existence or location of their remains was not known.

On 28 July 2015, the purchasers raised an objection on the basis that the remains of Harry and Clara Bray and other Aboriginal persons were reputed to be located on the land, and that, being “Aboriginal objects” within the meaning of the National Parks and Wildlife Act 1974 (NSW), they constituted a defect in the vendors’ title. The vendors denied knowledge of the Aboriginal objects, or that their reputed presence on the land constituted a defect in title. Between August and September 2015, the purchasers raised further objections and requisitions in relation to the presence of Aboriginal objects on the land, and their effect on the vendors’ title; the vendors continued to contest the presence of any Aboriginal objects on the land and sought further information from the purchasers about their contention to the contrary.

Meanwhile, on 17 July 2015, the vendors lodged the Transmission Application. On 3 August 2015, although written notice of lodgement of the Transmission Application had not been given in accordance with special condition 21, the vendors’ solicitor nominated 5 August 2015 as the date for completion. On 4 August 2015, the vendors supplied the purchasers with executed transfer forms which relevantly identified Mr Carter as registered proprietor of Lot 1.

Settlement did not take place on 5 August 2015. On 27 August 2015, the vendors’ solicitor issued a notice to complete, appointing 10 September 2015 as the settlement date. The settlement figures provided with the notice required payment of default interest calculated from 5 August 2015. The notice was withdrawn on 11 September 2015 and replaced by a second notice to complete appointing 28 September as the date for completion. Updated settlement figures provided with the notice also required payment of default interest calculated from 5 August 2015.

On 23 September 2015, the purchasers’ solicitor issued a notice to perform requiring the vendors to withdraw their notice to complete and demand for default interest and to submit corrected settlement figures, and making time of the essence. The vendors did not comply with the notice to perform and insisted on completion by the purchasers.

On 25 September 2015, the purchasers gave notice purporting to terminate the contract for repudiation. On 6 October 2015, the vendors in turn purported to terminate the contract on the basis that the purchasers’ notice of termination amounted to repudiation of the contract.

The issues in the appeal were:

1. Whether the vendors repudiated the contract by failing properly to address the purchasers’ objections or requisitions founded on the “plausible contention” that there were Aboriginal objects on the land constituting a defect in title, thereby permitting the purchasers to terminate the contract;

2. Whether the purchasers were entitled to terminate the contract by reason of a material or substantial defect in title arising from the presence on the land of the memorial stone and plaque;

3. Whether the vendors repudiated the contract by insisting on payment of default interest;

4. Whether the purchasers were entitled to recover their deposit pursuant to s 55 of the Conveyancing Act 1919 (NSW); and

5. Whether the fifth respondent was liable to the vendors as guarantor under the contract of sale.

The Court (Meagher, Gleeson and Payne JJA) held, allowing the appeal:

Issue 1

1. The evidence did not establish that there were on the land any “Aboriginal objects” within the meaning of s 5 of the National Parks and Wildlife Act 1974 (NSW). The memorial stone and plaque did not “bear witness” to Aboriginal habitation of land in New South Wales in the sense of being a physical manifestation, sign or remnant of such habitation, and thus did not meet the statutory definition: at [72]-[73], [80].

   Country Energy v Williams (2005) 63 NSWLR 699; [2005] NSWCA 318 applied.

2. The presence of the memorial stone and plaque on the land, even if it were an Aboriginal object, did not constitute a development constraint on the land. The land was already affected by zoning constraints affecting its development potential, and the presence of the memorial stone and plaque did not pose any further constraint: at [92], [95].

3. Although the purchasers were entitled to raise a requisition on title based on the plausible contention that there were Aboriginal objects on the land, the objections and requisitions raised were impermissibly broad and not properly made. The vendors were not required to respond to those objections and requisitions: at [129], [134], [136].

   Gogard Pty Ltd v Satnaq Pty Ltd [1999] NSWSC 1283; (1999) 9 BPR 17,171; Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529; [1972] HCA 36; Re Ford & Hill (1879) 10 Ch D 365 applied.

4. Even if the requisitions and objections had been properly made, the vendors’ answers were sufficient to discharge their obligation to provide a reasonable response: at [129], [137]-[138].

   Crowe v Rindock [2005] NSWSC 375; (2005) 12 BPR 22,823 distinguished.

5. The vendors did not evince an intention no longer to be bound by the contract. Accordingly, the purchasers were not entitled to terminate for repudiation: at [129], [140].

Issue 2

1. Assuming the memorial stone and plaque was an “Aboriginal object”, their presence was not a material or substantial matter affecting the contract which would give the purchasers the right to terminate: at [144], [146]-[147].

   Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160; Frankel v Paterson [2015] NSWSC 1307 applied.

Issue 3

1. The vendors did not repudiate the contract by failing to withdraw their claim for default interest which was based on an erroneous interpretation of the contract. The vendors had a reasonable basis for maintaining their claim, and had not erroneously insisted on completion in the face of a clear explanation of the true position: at [158], [163]-[164].

   DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12; Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 applied.

Issue 4

1. The purchasers were not entitled to an order for repayment of their deposit. The purchasers did not demonstrate any injustice, or anything inequitable about the conduct of the vendors: at [170].

   Conveyancing Act 1919 (NSW), s 55(2A). Greek Orthodox Parish Community of St Marys and District Ltd v Denis Stanley Merrick [2014] NSWSC 1196 applied.

Issue 5

1. The fifth respondent was liable to the vendors as guarantor of the purchasers’ performance under the contract: at [172].

Judgment

1. THE COURT: This appeal involves a dispute between parties to a contract for the sale of land in Byron Bay made in 2015. On 3 December 2015, the purchasers commenced proceedings seeking the return of their deposit and damages for breach of contract. The vendors cross‑claimed for damages for loss of the contract for sale. In a judgment delivered on 17 April 2020, the primary judge, Ward CJ in Eq, granted the relief sought by the purchasers and dismissed the vendors’ cross‑claim: Mehmet v Carter [2020] NSWSC 413. The vendors appeal against the whole of the decision below.

Background to these proceedings

The parties

2. The appellants in this appeal were the owners of certain land located on Broken Head Road, Byron Bay. The second appellant, The Wheel Resort Pty Ltd, and the third appellant, Cathscompany Pty Ltd, are controlled by the first appellant, Mr Murray Carter. The second appellant operated an ecological tourist resort known as the Rainforest Resort (formerly The Wheel Resort) on the land. Except where it is necessary to distinguish between them, the appellants will be referred to in this judgment as the vendors.

3. The first to third respondents in this appeal (the first to third plaintiffs and cross‑defendants in the primary proceedings), Messrs Ian, Cameron and Errol Mehmet, are brothers acting in their respective capacities as trustee for a named testamentary trust or partnership. The fourth respondent (fourth plaintiff and cross-defendant), Cheers Aviation Pty Ltd, is a corporate trustee of another investment trust. It is controlled by the fifth respondent (fifth cross‑defendant), Mr Matthew Cheers, who is a friend of the first respondent’s son, Mr Adam Mehmet. Except where it is necessary to distinguish between them, the first to fourth respondents will be referred to in this judgment as the purchasers.

The contract for the sale of land

4. The land which formed the subject matter of the contract for sale comprises two lots. Lot 1 covers an area of approximately seven acres and is partly zoned for commercial tourism use. It is the land on which the Rainforest Resort was operated. When the contract was entered into, this parcel was held jointly by the third appellant, Cathscompany Pty Ltd, and by the first appellant’s late wife, Mrs Catherine Carter. Lot 10 covers an area of approximately 23 acres and is zoned for environmental protection. When the contract was entered into, this parcel was held by the second appellant, The Wheel Resort Pty Ltd.

5. The land has been held under Torrens title since 14 September 1953. Before then, the land was held under a Crown Lease until 1925, and then under a Crown Tenure Conditional Purchase. Prior to 30 December 1916, part of Lot 1 also formed part of Crown Reserve No. R 43074 “for use of the land by Aborigines”. Any potential commercial development of the land was largely, if not wholly, limited to Lot 1.

6. On 6 July 2015, the parties exchanged a contract for the sale of the land for $3 million (including a deposit of $300,000), and a contract for the sale of the Rainforest Resort business (the purchase price for which was included in the price for the sale of land). The contract did not disclose the existence of any Aboriginal objects in or on the land and made no reference to any Aboriginal cultural significance attaching to the site. The terms of the contract made clear that it was an unconditional contract, and that the purchasers were acquiring the property in its present state and condition.

7. On 9 July 2015, the first respondent received a copy of a report prepared by an environmental consultant, Mr Peter Parker, which referred to the land as the burial site of “two prominent Bundjalung elders”, Harry and Clara Bray, and noted the site’s “particular significance to the Arakwal”, the local Aboriginal community group. This report is the genesis of the dispute between the parties which has led them to this Court on two occasions.

8. On 17 July 2015, a transmission application was lodged in respect of the half‑interest of the first applicant’s late wife, Mrs Catherine Carter, in Lot 1. Special condition 21(a) of the contract for sale of land provided that completion was conditional on Mr Carter, as executor of the estate of his late wife, becoming the registered proprietor of Lot 1. Special condition 21(c) provided that completion should take place within fourteen days “after the Vendor’s solicitors have notified the Purchaser or the Purchaser’s solicitor in writing of registration of the Transmission Application”. No formal and separate “written notice” of registration was sent to the purchasers. However, in this Court it was contended for the vendors that the provision of a copy of the executed transfer in respect of Lot 1 on 4 August 2015, which bore Mr Carter’s name and signature as “transferor”, was sufficient notice for the purpose of special condition 21(c). The primary judge considered that the provision of the executed transfer was not sufficient to satisfy the notice requirement in the special condition. As will become apparent, in their communications in August and September 2015 leading to the termination of the contract, the parties overlooked the operation of this clause.

The memorial stone and plaque

9. Situated on Lot 1 are a memorial stone and plaque which were placed there in 1988 with the consent of the then proprietors of the land by the New South Wales Government as part of projects to commemorate Australia’s Bicentenary. As can be seen in the photograph below, which also includes a piece of A4 paper for scale, the stone (as distinct from the plaque) is approximately 1 metre in height and 1 metre in width at its base. The plaque affixed to the stone states:

“Harry and Clara Bray tribal elders of the Bundjalung tribe buried near this site circa late 1890”

10. However, while the vendors admitted the presence of the memorial stone and plaque on Lot 1, they disputed the accuracy of the words inscribed on the plaque. They also disputed the claim that there were the remains of any Aboriginal persons (whether of Harry and Clara Bray, or others) on or within the land.

The alleged defect in title

11. The possible presence of Aboriginal objects on the land and the assertion of a possible defect in title arising from their presence was first raised in correspondence over three weeks after the contracts were exchanged. On 28 July 2015, the purchasers’ solicitor wrote to the vendors’ solicitor asserting that there were “Aboriginal objects” on the land within the meaning of the National Parks and Wildlife Act 1974 (NSW) which constituted a defect in title, and requiring the vendors to remove them before completion. The letter relevantly stated:

“As your clients are aware, the remains of two Aboriginal elders are buried on the land the subject of the sale. There may be other Aboriginal remains on the land. Aboriginal remains constitute an ‘Aboriginal object’ as that term is defined in s. 5 of the National Parks and Wildlife Act 1974. Pursuant to s. 83 of the Act, the remains are deemed to be the property of the Crown. Section 86 prohibits the landowner (or any other person) from harming the remains, and ‘harm’, in relation to an object, is defined to include moving the object from the land on which it had been situated.

The presence on the land of things that the vendors do not own and that prima facie cannot be moved is a defect in the vendors’ title. …

Our clients require this defect in title removed before settlement. Please let us know if you are able to do so, and if so, when and by what means.”

12. The vendors’ solicitor replied on 5 August 2015 (by letter dated 3 August 2015) noting the purchasers’ allegation that the property is subject to a defect in title and asking for “the detail of that alleged defect and your claim”. The purchasers’ solicitor responded to that request on 17 August 2015 in the following terms:

“As indicated in our letter to your office dated 28 July 2015 … we believe there is a defect in title as follows:

1)   There are aboriginal objects on the land that the vendors do not own and cannot transfer title to;

2)   The said objects cannot be removed (or even moved) without a permit that the purchaser does not have (and may not be able to obtain);

3)   The land is accordingly rendered substantially less fit for the purpose for which it was purchased.

Our clients request this defect in title be removed, so that good title can be provided on settlement. We respectfully ask you to urgently provide clarification as to your clients’ position on providing good title on settlement.”

13. There was further correspondence between the parties’ solicitors over August and September, in which the purchasers repeated their requests for information about the Aboriginal objects, and the vendors denied knowledge of Aboriginal objects on the land and contested the alleged defect in title. On 20 August 2015, the vendors’ solicitor requested further information about the remains alleged to be Aboriginal objects and “how the remains, if any, affect the title as distinct to the quality of the land the subject of the contract.”

14. By letter dated 27 August 2015, the purchasers’ solicitor responded with reference to a number of reports and enquiries made in relation to the land, and invited the vendors to concede the presence of Aboriginal remains as Aboriginal objects on the land and that those remains constituted a defect in title:

“1.   (a) On 10 July, 2015 our client received a report by Peter Park[er] concerning the heritage significance of the site. We commend the Report to your attention.

(b) This Report stimulated enquiry by our clients of your clients. On or about 13 July 2015, our clients’ representatives Adam Mehmet and Matthew Cheers visited the Land with your client Murray Carter (‘Murray’). In the course of the visit, Murray informed our clients that the King of Bundjalung and his family are buried on the Land, next to the pool, and that the site has more cultural significance than Cape Byron. Further, our clients were informed by Murray that the local elders continue to visit the burial site approximately every six months, and that 30 elders had recently visited him regarding the preservation of the site.

2.   Subsequent enquiries made to the Bundjalung of Byron Bay Aboriginal Corporation have disclosed the abovementioned Aboriginal elders were known as Harry and Clara Bray, and that the burial site is registered on the Aboriginal Heritage Information Management System (AHIMS) as #04-5-003. It appears also that the remains of other aboriginal persons may be present, including children of Harry & Clara Bray and, possibly, a mass grave. We are continuing our enquiries.

…

4.   … We are continuing our enquiries, but the facts as they presently seem to us to be, particularly in light of the registration of the burial site, are that:

a. The remains are an ‘aboriginal object’ within the meaning of s. 5 of the National Parks and Wildlife Act, 1974; and

b. Therefore, they are property of the Crown, by operation of s. 83 of that Act.

It would follow that your client is not able to pass a good title to the land in that part of the land which comprises the ‘aboriginal object’ is vested in the Crown. This constitutes a defect in title. …

…

In the circumstances, we invite your clients to make a formal concession that the objects do constitute an ‘aboriginal object’.”

15. On the same day, 27 August 2015, the vendors’ solicitor noted that the purchasers were “unable to identify what remains you allege are present nor where they are located” and that the vendors “remain to be persuaded that there are any remains at all after approximately 100 years.” This was followed by a letter on 28 August 2015 in which the vendors’ solicitor again doubted the existence of Aboriginal remains on the land. The letter referred to a report entitled “Protection and Enhancement of Biodiversity in Connected Endangered Ecological Communities Adjacent to Tallow Creek, Byron Bay” dated 7 May 2012 prepared by Mr Peter Parker for the Northern Rivers Catchment Management Authority. The letter relevantly provided:

“You have not identified the Aboriginal Objects. The report by Peter Parker does not of itself evidence the existence of any aboriginal objects.

…

We note you do not address the existence of any remains. Even assuming they were buried on the location of the plaque it seems unlikely that even bones would remain after 100 years. However, if you would like to identify the location of aboriginal objects we will consider that further.

…

We do not believe that the report of Peter Parker supports the continuing existence of remains on the site. Even if they were remains they would not affect our client’s ability to deliver good title to the land. Plainly there is a memorial. That memorial even if it could not be removed (we do not know) represents a very small fraction of the area of this property.”

16. The purchasers’ reply, dated 2 September 2015, repeated the purchasers’ contention that there were Aboriginal remains on the land, and called on the vendors to disprove the presence of Aboriginal remains by conducting an archaeological survey:

“It is somewhat startling that your clients persist in their suggestion that an Aboriginal object is yet to be identified in the subject land. With respect, the remains have been identified as those of (at least) Harry and Clara Bray. The site is registered as a burial site under the Aboriginal Heritage and Information System (AHIMS). Moreover, the Peter Parke[r] Report indicates your clients have been aware of the existence of the remains for some time, as he indeed subsequently admitted to our clients, but only when they confronted him on a visit to the site on 13 July 2015, after they had received the information from others. Only then did Mr Carter admit his knowledge of the remains buried there, and of the significance of the site to local Aboriginal Elders.

… It is for your clients to show a title free of such objects and, in the circumstances now apparent, it seems that that could hardly be possible without the completion of an archaeological survey carried out in a manner compliant with the 1974 Act and the Regulations made under it, with all necessary permissions, so as to avoid the commission of the offence of harming (which may include moving) such an object. Your own suggestion that the remains might not still be in existence after the lapse of 100 years (itself a mere supposition of considerable optimism, given the notorious durability of human remains) demonstrates the need for such examination before demonstration of a title free of the relevant interest could be attempted.”

17. Later in the same letter, the purchasers again required the vendors to provide “material evidence” as to the absence of Aboriginal objects on the land, and also to procure from the Crown an assignment of its interest in any Aboriginal objects which might be on the land:

“TAKE NOTICE THAT your clients are required to state, within a reasonable time, whether they are in a position to provide good title to the Land on 10 September 2015 by having first obtained from the Crown an assignment of any property vested in it pursuant to section 83 of the National Parks and Wildlife Act 1974, or to affirmatively state and prove by reasonable evidence that no such interest exists in respect of any deposit, object or material evidence located in the subject land.”

18. On 9 September 2015, the vendors’ solicitor replied acknowledging the presence of the memorial stone and plaque, but again contesting the existence of any remains on the land. The vendors also disputed the requirement that they conduct an archaeological survey of their land:

“Your letter asserts that our client is unable to give good title because of the alleged existence of aboriginal relics being the remains of Harry and Clara Bray apparently buried in 1890 (or later). There is no doubt there is a plaque commemorating Harry and Clara Bray however that is not evidence of the existence of any remains.

The ongoing existence and location of remains is a matter of conjecture regardless of the registration of the site with AHIMS. All the registration says is ‘1. Aboriginal sites are recorded in or near the above location’. Further there seems to be a 50 meter buffer around the site. Peter Parker cannot know if there are still any remains any more than your client or our client can. None of them were present when the bodies were buried, nor were they present in 1988. Even if the remains located in 1988 belonged to Harry and Clara Bray their current status cannot be known.

The substance of your letter seems to require our client to somehow prove there are no remains and to do so by completion of an archaeological survey.

We are unaware of any case where a Vendor is required to provide archaeological evidence of the absence of something (in this case remains) in order to prove good title.”

19. The purchasers’ solicitor responded the same day, rejecting the vendors’ explanation and claiming:

“The report of Mr Parke[r] makes it crystal clear that your client personally knows that Aboriginal objects are present in the Land. They were dug up and reinterred. The memorial was then placed over them. With respect, your letter most carefully avoids making any direct answer to our enquiries concerning your clients’ knowledge. … Please answer directly the questions that were asked.”

20. On 10 September 2015, the vendors’ solicitor repeated their denial that the vendors had knowledge as to the presence of any remains as Aboriginal objects on the land:

“You are correct we do not know whether there are Aboriginal objects on the Land.

…

As we made clear in our previous letter our client was not present in 1988 and neither was Mr Parker. They cannot have personal knowledge of what happened, and certainly have no way of knowing whether any remains that might have existed in 1988 still exist.”

Notices exchanged by the parties

21. The completion date for the sale nominated on the cover page of the contract for sale was the “30^th day after the contract date”, i.e. 5 August 2015. Special condition 21, however, provided for completion within 14 days after notice of registration of the Transmission Application. On 3 August 2015, the vendors’ solicitor confirmed an appointment for settlement on 5 August 2015 at 11am. On 4 August, a copy of the executed transfer was provided together with a settlement adjustment sheet. Directions to pay were also provided. Settlement did not proceed on 5 August.

22. On 27 August 2015, the vendors’ solicitor issued a notice to complete, appointing 10 September 2015 as the settlement date. The settlement figures provided with the notice to complete required payment of default interest from 5 August 2015. We will return to the significance of the date from which default interest was sought later in these reasons.

23. On 2 September 2015, the purchasers’ solicitor responded to the notice to complete, asserting that the notice was invalid as the vendors had not shown good title at the time of its issue. The letter relevantly provided:

“Your letters proceed on the assumption that the onus lies upon our clients to disprove your clients’ title. On the contrary it is the obligation of the vendors to first show and then prove, by sufficient evidence, and prior to completion, a good title to the land promised to be sold, which the vendors are able to transfer and convey to the purchasers. …

TAKE NOTICE THAT your clients are required to state, within a reasonable time, whether they are in a position to provide good title to the Land on 10 September 2015 by having first obtained from the Crown an assignment of any property vested in it pursuant to section 83 of the National Parks and Wildlife Act 1974, or to affirmatively state and prove by reasonable evidence that no such interest exists in respect of any deposit, object or material evidence located in the subject land. In this regard, we refer to our letters dated 28 July 2015 and 27 August 2015.

If such an assignment has not been acquired, and is not able to be acquired in good time, and if the absence of any such object cannot be affirmatively stated and proved by your clients to the requisite standard applicable to conveyancing transactions, then the Notice must be invalid.

Indeed the Notice was repudiatory, as your clients at the time of its issue were not in a position to settle by 10 September, nor willing to be so, but were rather attempting to force a doubtful title upon the purchasers in defiance of their obligations as vendors.

In any event, the Notice is bad because your clients had not shown a good title and had not provided sufficient particulars for preparation of the transfer of all relevant interests at the time of issue.”

24. On 11 September 2015, the vendors withdrew their first notice to complete, and issued a further notice to complete, appointing 28 September 2015 as the date for completion. Updated settlement figures were provided on 17 September, including a claim for default interest for the period from 5 August 2015.

25. In his letter of 23 September 2015, the purchasers’ solicitor also gave the vendors a notice disputing the validity of the second notice to complete, demanding that the vendors withdraw that notice and the demand for default interest, and requiring the vendors to submit corrected settlement figures by the following day, making time of the essence. The purchasers’ notices provided:

“We refer also to your letter dated 17 September 2015 enclosing settlement figures which we note included an item for default interest of $39,945.21.

Given that our clients are not in default of the contract, those settlement figures are not correct.

TAKE NOTICE THAT our clients require the vendors to submit revised settlement figures omitting that item.

Given that for a completion to take place on 28 September, our clients would need to give directions to their bankers by Friday, our clients require the revised settlement figures and cheque directions to be submitted by close of business tomorrow, Thursday 24 September 2015, and in that regard TAKE NOTICE THAT time shall be of the essence, unless your clients withdraw their second notice to complete.

…

TAKE FURTHER NOTICE THAT our clients require your clients to do the following by 5pm on 24 September 2015:

(a)   Admit that they are obliged to comply with the NOTICE given on page 3 of our letter dated 2 September, 2015;

(b)   Undertake to comply with that NOTICE within a reasonable time; and

(c)   Identify, at least in a preliminary way, the steps and enquiries proposed to be taken by the Vendors towards compliance with that NOTICE, with some at least preliminary estimate of the times needed for the taking of those steps and the making of those enquiries.”

26. The vendors responded on 24 September 2015 insisting on completion and refusing to comply with the notice to perform:

“As to your demand that that [sic] our client withdraw their second notice to complete: We are instructed to advise the demand is rejected.

As to your notice that the purchaser requires the vendor by 5pm on the 24 September 2015 (using your numbering):

a.   Make Admission [that the vendors are obliged to comply with the notice given by the purchasers on 2 September 2015 to “state, within a reasonable time, whether they are in a position to provide good title to the Land”]: Not Agreed.

b.   Give undertakings [to comply with that notice within a reasonable time]: The vendor has provided all responses that he is required to make.

c.   Not applicable: The vendor has done all things required to settle this matter.

As to your claim that the vendor has repudiated, repudiates, or will repudiate the contract, the vendor denies this claim.

The vendor is ready, willing, and able to complete this contract as planned at 2pm on 28 September 2015, at the offices of SAI Global, Level 3 No 60, Castlereagh Street, Sydney.”

Termination of the contract

27. By notice on 25 September 2015 the purchasers purported to terminate the contract:

“Whereas your clients, the vendors, have been unable or unwilling to perform the contract for sale of the above mentioned property dated 6 July 2015, as solicitors for and on behalf of the purchasers, we hereby give you notice that the contract is terminated.

Our clients rely upon all grounds, whether or not previously disclosed and whether known or unknown.” (underline in original)

28. The vendors responded on 6 October 2015 alleging that the purchasers’ notice of termination was repudiatory and themselves purporting to terminate the contract:

“We refer to you[r] letter dated 25^th September but received in our office 2 minutes before 6pm on that date.

We advise that your purported termination on behalf of your clients does not profess to rely on any contractual provision of the contract and amounts to a repudiation of the contract which entitles the vendor to terminate the contract and to claim the deposit, costs, and expenses arising out of the contract and damages.

We note that the Contract for Sale of Land is interdependent with the Contract for the Sale of Business and that your client has also consequently repudiated that contract. Accordingly, our client terminates both the Contract for Sale of Land dated 6 July 2015 and the interdependent Contract for the Sale of Business dated 6 July 2015.

The vendor reserves all rights with respect to the deposit, costs, damages and otherwise.”

29. On 29 November 2015, the property was re-sold at auction for $2.525 million.

Proceedings between the parties

30. On 3 December 2015, the purchasers commenced proceedings in the Equity Division of the Supreme Court of New South Wales. The purchasers sought recovery of the deposit and damages or, alternatively, relief under ss 55(1) and 55(2A) of the Conveyancing Act 1919 (NSW). The vendors filed a cross‑claim against the purchasers and Mr Cheers (who is alleged to be a guarantor) for damages for the loss of the sale.

31. In answer to the cross‑claim, the purchasers denied that the vendors were ready and willing to perform, relied on s 55 Conveyancing Act and raised a claim for misleading or deceptive conduct under s 18 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (Australian Consumer Law) in relation to representations allegedly made during the advertising and marketing of the property. Mr Cheers also denied that he was a guarantor under the contracts.

Issues in the primary proceedings

32. The issues raised in the proceedings below were as follows:

1. Repudiation by failure to address defect in title in answer to requisitions – this raised the issue whether the vendors repudiated the contract by refusing to attempt (or being unable) to show and prove a title free of Aboriginal objects, such that they were not ready, willing and able to perform the contract at the time of the two notices to complete and at the time the purchasers purported to terminate the contract?

This issue potentially raised the following questions:

1. Whether there were in fact any Aboriginal objects on the land?

2. Whether the Aboriginal objects claimed to exist in or on the land were capable of constituting a defect in title?

3. The relevance, if any, to the process of requesting and answering requisitions of there being a “plausible contention” that there were Aboriginal objects on the land, being the remains of two Aboriginal elders, Harry and Clara Bray, and that such objects were capable of constituting a defect in title.

2. Termination for material or substantial defect in title in accordance with the rule in Flight v Booth – this raised the issue whether any Aboriginal objects in fact on the land constituted a defect in title in the sense of being a material or substantial matter impacting on the use of the land, thereby entitling the purchasers to terminate in accordance with the rule in Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160?

3. Repudiation by insistence upon payment of default interest – this raised the issue whether the vendors repudiated the contract by insisting on payment of interest from a date when there was no obligation to make a payment of interest?

4. Recovery of the deposit pursuant to the Conveyancing Act – this raised the issue whether the purchasers were entitled to recover their deposit pursuant to s 55 of the Conveyancing Act?

5. Defence to the cross-claim – although other issues were raised in the cross‑claim, the only issue remaining on appeal was whether Mr Matthew Cheers was liable to the vendors as guarantor under the contract of sale?

33. Success on any of the alternative claims (1) to (3) above would have entitled the purchasers to their relief sought, viz recovery of the deposit and damages for breach of contract. Claim (4) under the Conveyancing Act was an alternative means by which the purchasers could recover the deposit (but not damages).

Decision of the primary judge

34. The primary judge found, after “considerable hesitation” on the issue, that the memorial stone with the affixed plaque is an “Aboriginal object” within the meaning of the National Parks and Wildlife Act 1974 (NSW). Her Honour rejected the claim that any other “Aboriginal objects” as defined were present on the land.

35. The primary judge concluded that the presence of an Aboriginal object on the property was capable of constituting a defect in title if, in the particular circumstances of the case, its existence was a material and substantial matter impacting on the use of the land; or alternatively, on the basis that an Aboriginal object was “property that had vested in the Crown, such that the vendors could not convey a title free of third parties’ property interests”. In reaching the former conclusion, her Honour drew an analogy with the circumstances in Micos v Diamond [1970] 3 NSWR 407; (1970) SR (NSW) 392, where a defect in title existed by reason of the statutory powers which the Water Board could exercise in respect of the land. Her Honour highlighted the “onerous statutory requirements” and the “risk of criminal liability” that Aboriginal objects attract under the National Parks and Wildlife Act. She observed that these requirements under the Act could present “real and significant interference” for use and development of land, depending on the “precise facts of the case”, in particular the location of the Aboriginal object on the land.

36. Although her Honour rejected the purchasers’ claim that it had been established as a matter of fact that Harry or Clara Bray (or any other Aboriginal person) was buried on Lot 1, the primary judge was satisfied that the evidence established a “plausible contention” that Harry and Clara Bray were buried on Lot 1. Her Honour was also satisfied that it was a plausible contention that the burial site on Lot 1 was in the vicinity of a swimming pool, and that the presence of their remains, being Aboriginal objects, in that location was capable of constituting a defect in title.

Resolution of issue 1 – repudiation by failure properly to address requisitions

37. Having found that the presence of an Aboriginal object on the property was capable of constituting a defect in title, and that there was a plausible contention that there were in fact Aboriginal objects on the property, the primary judge concluded that it was incumbent on the vendors to address the purchasers’ requisitions about the Aboriginal objects and establish a good title. The vendors’ failure properly to do so amounted to repudiation of the contract, which gave the purchasers the right to rescind.

38. Her Honour found that the position at common law was that a vendor has an obligation to respond to any requisition concerning a possible latent defect in title; that is, a defect in title which cannot be discovered through reasonable inquiries. Failure by a vendor to respond, or to provide an adequate response, may amount to default on the part of the vendor. While the precise rights of the parties will depend on the terms of the contract and the circumstances of the case, the primary judge observed that this contract for sale did not contain any non‑annulment clause for error or misdescription of the subject matter. Furthermore, although cl 6 of the contract gave the purchasers an election to claim compensation for error or misdescription, the purchasers were not confined to that remedy.

39. The primary judge concluded that the vendors’ conduct, which she characterised as a failure properly to address requisitions made by the purchasers concerning the presence of the Aboriginal objects on the land, amounted to a repudiatory breach of contract by the vendors, giving the purchasers the right to rescind. The primary judge was much influenced in this conclusion by the decision of Windeyer J in Crowe v Rindock [2005] NSWSC 375; (2005) 12 BPR 22,823.

40. Accordingly, issue 1 was resolved in favour of the purchasers.

Resolution of issue 2 – termination in accordance with the rule in Flight v Booth

41. The purchasers asserted there were six items on the land which were “Aboriginal objects” within the meaning of the National Parks and Wildlife Act, being:

1. a memorial stone and plaque bearing the inscription “Harry and Clara Bray, Tribal Elders of the Bundjalung Tribe buried near this site circa late 1890”;

2. the remains of Harry and Clara Bray (and possibly one or more of their children);

3. the remains/burial sites of other Aboriginal persons;

4. the remains of a gunyah (described as a traditional native Aboriginal home or shelter);

5. a ceremonial “mound”; and

6. a bunya pine tree.

42. The primary judge found that the memorial stone and plaque fall within the definition of “Aboriginal objects” under the legislation, in that it is an object that provides material evidence of the fact that Harry and Clara Bray lived in New South Wales. Her Honour concluded that the memorial stone and plaque had been “abandoned” for the purposes of s 83 of the National Parks and Wildlife Act, applying the test of abandonment set out in Gupta v Fordham Laboratories Pty Ltd [2018] NSWSC 551, with the result that the memorial stone and plaque were property of the Crown.

43. The primary judge concluded that the purchasers’ contention that items (2) to (5) were present on the land was not made out, and her Honour was not satisfied that item (6) was “material evidence” relating to human habitation and accordingly was not an “Aboriginal object” as defined. No notice of contention or cross-appeal was filed in relation to those findings.

44. The primary judge concluded that the presence of the memorial stone and plaque was a defect in title that was so material or substantial as to entitle the purchasers to rescind. The presence of that Aboriginal object on Lot 1 imposed a constraint on the purchasers’ ability to develop that land, which the purchasers might reasonably have regarded as substantial considerations in a decision whether to purchase the property. The purchasers were therefore entitled to rescind the contract pursuant to the rule in Flight v Booth.

45. Issue 2 was therefore resolved in favour of the purchasers.

Resolution of issue 3 – repudiation by demand for default interest

46. The primary judge concluded that the vendors’ notices to complete amounted to a repudiation by insisting on an invalid demand for interest. The primary judge relied upon Carydis v Merrag Pty Ltd [2007] NSWSC 1220 which her Honour found was a case “not unlike the claims and pleadings in the present proceeding”. In that case, the vendors purported to terminate a contract for the sale of land on the basis that the purchasers had repudiated the contract by refusing to pay interest on settlement. The judge in that case found that the purchasers’ interpretation of the contract was correct and no interest was payable; since the purchasers were insisting on a correct view of the contractual position they could not possibly have been in repudiatory breach of the contract. Instead, it was the vendors who repudiated the contract by insisting on payment of interest where no obligation existed under the contract properly construed.

47. Her Honour considered that the vendors’ insistence in early August that settlement should proceed on 5 August 2015 was not reasonable, having regard to the various matters “still to be arranged”, with the result that there was no “failure to complete on a date properly appointed for settlement” (cf special condition 8). Furthermore, although special condition 21(c) provided for completion within 14 days after notification of registration of the transmission application, her Honour found that when the notices to complete were issued “there still had been no notice in writing of registration of the transmission application” so that the 14 day period had not commenced.

48. As for the insistence on payment of default interest, the primary judge found that the vendors were not only wrong to require payment of default interest in the absence of any default by the purchasers, but they had refused to withdraw their claim for interest upon being requested to do so by the purchasers, who had also made time of the essence for the vendors to do so. The primary judge found that this conduct amounted to repudiation of the contract by the vendors, giving the purchasers the right to rescind.

49. Accordingly, issue 3 was resolved in favour of the purchasers.

Resolution of issue 4 – recovery of the deposit pursuant to ss 55(1) and 55(2A) Conveyancing Act

50. As the purchasers were successful on their principal claim that they were entitled to rescind the contract and to require the vendors to repay their deposit, this issue did not strictly arise. Even so, the primary judge provided brief reasons on a contingent basis resolving this issue.

51. Section 55 of the Conveyancing Act gives a purchaser the right to recover his or her deposit in certain circumstances. The sub‑sections relied on by the purchasers before the primary judge provide:

55   Right of purchaser to recover deposit etc

(1)   In every case where specific performance of a contract would not be enforced against the purchaser by the Court by reason of a defect in the vendor's title, but the purchaser is not entitled to rescind the contract, the purchaser shall nevertheless be entitled to recover his or her deposit and any instalments of purchase money he or she has paid, and to be relieved from all liability under the contract whether at law or in equity, unless the contract discloses such defect and contains a stipulation precluding the purchaser from objecting thereto.

…

(2A)   In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.

…

52. Although the purchasers sought relief pursuant to s 55(1), this sub-section was not considered by the primary judge, who dealt solely with s 55(2A).

53. It was accepted that, on an application under s 55(2A), the purchaser must show some injustice or something that was inequitable about the conduct of the vendor: Greek Orthodox Parish Community of St Marys and District Ltd v Denis Stanley Merrick [2014] NSWSC 1196 at [17] per Young AJA. The primary judge concluded that there was injustice in the present case, arising from the defect in title. If the deposit was not refunded, the purchasers would essentially have been forced to accept something which was less than that for which they bargained, or risk losing their deposit.

54. The primary judge also accepted the alternative submission that injustice arose from the vendors’ conduct before and after contracting. Prior to exchanging contracts, the vendors failed to disclose the Aboriginal significance of the land, which was within their knowledge, notwithstanding that the property was marketed as a development proposition. After exchanging contracts, upon the purchasers communicating doubts as to the vendors’ title, the vendors did not take up the opportunity to rescind and promptly resell (at a substantially lower price by reason of the disclosure of the Aboriginal significance of the land) in an “attempt to hold on to an unjust gain”.

55. Accordingly, the primary judge concluded that, if not for the purchasers’ success on their principal claim, the power under s 55(2A) should be exercised to require the vendors to return the deposit to the purchasers.

Resolution of issue 5 – defence to the cross-claim for breach of contract

56. As part of its defence to the vendors’ cross‑claim for damages for loss of the sale, the purchasers contended that the vendors had engaged in misleading or deceptive conduct in trade and commerce within the meaning of s 18 of the Australian Consumer Law. Her Honour rejected that claim and no notice of contention or cross-appeal has been filed in relation to that finding.

57. In response to the vendors’ cross‑claim against him, Mr Matthew Cheers denied that he had guaranteed performance of the purchasers’ obligations. Special condition 22 of the contract provided for such a guarantee by the director of the corporate purchaser, Cheers Aviation Pty Ltd, and an indemnity in favour of the vendors. While the execution clause made provision for Mr Cheers to sign as “Sole Director/Secretary”, the primary judge recorded that he denied doing so. In the absence of that signature, her Honour found that Mr Cheers was not bound as guarantor under the contract.

Issues on appeal

58. The issues on appeal are as follows:

1. did the vendors repudiate the contract by failing properly to address objections or requisitions founded on the “plausible contention” that there were Aboriginal objects on the land constituting a defect in title, thereby permitting the purchasers to terminate the contract;

2. were the purchasers entitled to terminate the contract in accordance with the rule in Flight v Booth by reason of a material or substantial defect in title arising from the presence on the land of the memorial stone and affixed plaque;

3. did the vendors repudiate the contract by insisting on payment of default interest when there was no obligation to make that payment;

4. were the purchasers entitled to recover the deposit pursuant to s 55 of the Conveyancing Act;

5. was Mr Matthew Cheers liable to the vendors as guarantor under the contract of sale.

59. Because the conclusion in relation to one matter has a critical impact on the conclusion of each of these issues on appeal, we will address it first. That issue is whether the memorial stone and affixed plaque is an “Aboriginal object” within the meaning of the National Parks and Wildlife Act.

National Parks and Wildlife Act 1974

60. The National Parks and Wildlife Act 1974 (NSW) provides that “Aboriginal objects”, as defined, are deemed in certain circumstances to be property of the Crown. The relevant definitions are as follows:

5   Definitions

(1)   In this Act, except in so far as the context or subject-matter otherwise indicates or requires—

…

Aboriginal object means any deposit, object or material evidence (not being a handicraft made for sale) relating to the Aboriginal habitation of the area that comprises New South Wales, being habitation before or concurrent with (or both) the occupation of that area by persons of non-Aboriginal extraction, and includes Aboriginal remains.

…

Aboriginal remains means the body or the remains of the body of a deceased Aboriginal person, but does not include:

(a)   a body or the remains of a body buried in a cemetery in which non-Aboriginal persons are also buried, or

(b)   a body or the remains of a body dealt with or to be dealt with in accordance with a law of the State relating to medical treatment or the examination, for forensic or other purposes, of the bodies of deceased persons.

Act of 1967 means the National Parks and Wildlife Act 1967.

…

61. To fall within the definition, the memorial stone and affixed plaque must first be an object “relating to the Aboriginal habitation of the area that comprises New South Wales”. The definition includes Aboriginal remains.

62. The provision vesting property in certain Aboriginal objects in the Crown has a number of important features. Critically, for present purposes, s 83(2) provides that “nothing in this section shall be construed as restricting the lawful use of land or as authorising the disturbance or excavation of any land”. As far as the memorial stone and affixed plaque are concerned, to fall within the section the object must be “abandoned” on or after the day of commencement of the National Parks and Wildlife Act on 27 November 1974. The section provides:

83   Certain Aboriginal objects to be Crown property

(1)   Subject to this section—

(a) an Aboriginal object that was, immediately before the commencement day, deemed to be the property of the Crown by virtue of section 33D of the Act of 1967, and

(b)   an Aboriginal object that is abandoned on or after that day by a person other than the Crown,

shall be, and shall be deemed always to have been, the property of the Crown.

(2)   Nothing in this section shall be construed as restricting the lawful use of land or as authorising the disturbance or excavation of any land.

(3) No compensation is payable in respect of the vesting of an Aboriginal object by this section or section 33D of the Act of 1967.

63. The context is important. The following provisions from the Act of 1967 (as amended by the National Parks and Wildlife (Amendment) Act 1969 (NSW)), referred to in s 83(1)(a) have the effect of deeming certain property, namely relics (as defined) which have been abandoned, as property of the Crown:

3   Definitions

(1)   In this Act, unless the context of subject matter otherwise indicates or requires—

…

Relic means any deposit, object or material evidence (not being a handicraft made for sale) relating to indigenous and non-European habitation of the area that comprises the State of New South Wales, being habitation both prior to and concurrent with the occupation of that area by persons of European extraction.

…

33D   Certain relics to be Crown property

(1)   Subject to this section, a relic that, immediately before the commencement of this Act—

(a)   was not the property of the Crown; and

(b)   was not in the possession of any person,

and any relic that is abandoned after that commencement by a person other than the Crown, shall be deemed to be, and always to have been, the property of the Crown.

(2)   For the purposes of subsection one of this section, a person shall not be deemed to have had possession of a relic that was not originally real property only by reason of the fact that it was in or on land owned or occupied by him.

(3)   Nothing in this section shall be construed as restricting the lawful use of land or as authorising the disturbance or excavation of any land.

(4)   No compensation shall be payable in respect of the vesting of a relic by this section.

64. Part 6 of the National Parks and Wildlife Act regulates dealings with Aboriginal objects. Aside from the deemed vesting of abandoned Aboriginal objects as property of the Crown under s 83, there are further provisions inter alia imposing responsibilities on the Chief Executive to protect Aboriginal objects (s 85), providing for the transfer of Aboriginal objects (s 85A), and penalising persons for harming or desecrating Aboriginal objects (s 86).

65. The purpose of Pt 6 of the Act was explained by the Minister for Lands and Minister for Tourism in the New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 29 August 1974 at 783 as follows:

“Part VI of the Act is of major significance as it offers greater protection for Aboriginal relics. … The bill prohibits also the unauthorized disturbance of relics on land owned by the Crown although relics may be moved from one area administered by the service to another. Provision is made for the Minister or the director to acquire relics. The unauthorized destruction of relics and Aboriginal places is prohibited, and relics on privately owned land are not to be destroyed, defaced or damaged without the director’s consent. If the director declines to give his consent the applicant has the right of appeal to the Minister.”

66. The Minister also made comments at 784, relevant to the question of the effect that the presence of Aboriginal objects on land has on a landowner’s ability to use and dispose of land:

“At this stage I would like to refer to the question raised by the honourable member for Raleigh about the preservation of areas containing relics and middens. It is not easy to set any precise limits in this field, which relates to prehistoric time. … The number of areas in this State containing Aboriginal middens is small, and although existing legislation prohibits the destruction of these relics, no impediment is placed on the disposal of land on which the relics are situated. I realize that in a few cases the size of the midden may be substantial, and its location may affect the normal land usage of a property. When this occurs, the honourable member may be assured that the service will be sympathetic to any reasonable proposal that would assist the property owner.”

Is the memorial stone and affixed plaque an Aboriginal object?

67. The unchallenged evidence is that in about 1988 the memorial stone with its affixed plaque was placed on Lot 1 during that year with the consent of the then registered proprietor of the land by the New South Wales Government as a Bicentennial project. The evidence was that the matters recorded in the plaque were grossly inaccurate. Harry and Clara Bray did not die until some time in the 1920s, more than three decades after the “late 1890” date identified by the plaque. Although there was some evidence that some remains were discovered in the construction of a swimming pool on Lot 1 in 1988, the primary judge was not satisfied that any Aboriginal remains existed on the land as at July 2015 when the contract for sale was made.

68. There was no controversy on the appeal about the principles of statutory interpretation to be applied. The task remains the construction of the words the legislature has enacted. The beginning and end of the task of statutory interpretation is the statute or, in this case, statutes, that fall to be construed: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39]. The meaning of words and phrases is influenced by the immediate context in which they are used. The correct approach to statutory interpretation uses “context” in its widest sense “to include such things as the existing state of the law and the mischief which, by legitimate means … one may discern the statute was intended to remedy”: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ); [1997] HCA 2.

69. A construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object: Interpretation Act 1987 (NSW), s 33.

70. The objects of the National Parks and Wildlife Act tend against the purchasers’ contention that the memorial stone with its affixed plaque amounts to an “Aboriginal object”. The objects are relevantly identified in s 2A:

2A   Objects of Act

(1)   The objects of this Act are as follows—

…

(b)   the conservation of objects, places or features (including biological diversity) of cultural value within the landscape, including, but not limited to—

(i)   places, objects and features of significance to Aboriginal people.

71. Accepting as we do the evidence that the land here in question has a particular significance to the local Aboriginal population, it is nonetheless unlikely that a memorial stone and affixed plaque supplied, apparently as a gift, by the Bicentennial Authority to the former registered proprietor of the land could correctly be described as an “object … of significance to Aboriginal people”. It is unlikely that the protective measures and responsibilities imposed by the Act apply to an object created by non-Aboriginal people to record the fact of Aboriginal habitation in a given area.

72. The text of the National Parks and Wildlife Act tends strongly to suggest that the memorial stone and affixed plaque is not an “Aboriginal object” as defined. The first matter to notice is that the definition in s 5 requires the existence of a “deposit, object or material evidence (not being a handicraft made for sale)” relating to the Aboriginal habitation of the area. Whilst the definition is a deliberately broad one, each of the items “deposit”, “object” or “material evidence” relating to the Aboriginal habitation of the area connotes something that is a physical manifestation, sign or remnant of Aboriginal occupation or use of the land. As Basten JA explained in Country Energy v Williams (2005) 63 NSWLR 699; [2005] NSWCA 318 at [29]:

“None of the key terms used in this definition are further defined, other than ‘Aboriginal remains’ …. Clearly the definition is deliberately formulated in broad terms which are apt to catch anything in physical form which bears witness to the presence of Aboriginal people anywhere within New South Wales.”

73. A memorial stone with an affixed plaque provided to a landowner by the New South Wales Government as a Bicentennial project in 1988 does not bear witness in the sense of provide evidence about Aboriginal occupation of the land. There is an important distinction between evidence of human habitation that “bears witness” in some sense to Aboriginal habitation on the one hand and, on the other hand, a plaque prepared by a Government Authority recording the, as it happens incorrect, opinion of that Government Authority about Aboriginal habitation of the land.

74. There are a number of other features of the National Parks and Wildlife Act tending against the purchasers’ contention that the memorial stone and affixed plaque is an “Aboriginal object”. Section 83 of the National Parks and Wildlife Act provides for the vesting in the Crown of an Aboriginal object in two circumstances: first, where the object was, prior to the commencement day of 27 November 1974, deemed to be the property of the Crown by virtue of s 33D of the Act of 1967 and, secondly, where an Aboriginal object is “abandoned” on or after that day.

75. As to the first, the Act of 1967 is the National Parks and Wildlife Act 1967 (NSW), the statutory predecessor to the legislation currently under consideration: National Parks and Wildlife Act, s 5(1) definition of “Act of 1967”. Section 33D of the Act of 1967 is in similar terms to s 83 but provides for the vesting of title to abandoned “relics” (defined in the Act of 1967 in similar terms to “Aboriginal objects” under the present Act) in the Crown. This is an important contextual matter. If the memorial stone and affixed plaque had been placed on the land prior to the commencement date, the language of s 83 of the current Act suggests that title in the memorial stone and affixed plaque would not have vested in the Crown by reason of the first limb, viz. that the memorial stone and plaque do not comprise a “relic” caught by s 33D of the Act of 1967. That conclusion provides support for the vendor’s submission that the memorial stone and plaque is not an Aboriginal object to which s 83 of the current Act applies.

76. As to the second way title to an “Aboriginal object” may vest in the Crown, the concept of “abandonment” in both s 83 of the current Act and s 33D of its statutory predecessor strongly suggests that the Aboriginal object said to have been abandoned must, in and of itself, constitute tangible evidence of Aboriginal habitation. It would strain the concept of “abandonment” to include within the definition of “Aboriginal object” a record of the fact or opinion about Aboriginal habitation which was placed on the property as a Bicentennial project. The notion of “abandonment” provides support for the vendors’ construction that an “Aboriginal object” is confined to tangible evidence of Aboriginal habitation. Such an object can meaningfully be described as having been “abandoned”, in a way that the memorial stone and affixed plaque cannot. In this regard we respectfully doubt that Gupta v Fordham Laboratories Pty Ltd and the authorities referred to at [166]-[168] in that case, which all deal with circumstances in which it may be inferred that a contract has been abandoned by the parties to that contract, throws any light on this question of statutory interpretation.

77. Further support for the vendors’ construction is provided by s 85A of the Act, which deals with the transfer of Aboriginal objects:

85A   Transfer of Aboriginal objects

(1)   The Chief Executive may, despite any other provision of this Act, dispose of Aboriginal objects that are the property of the Crown—

(a)   by returning the Aboriginal objects to an Aboriginal owner or Aboriginal owners entitled to, and willing to accept possession, custody or control of the Aboriginal objects in accordance with Aboriginal tradition, or

(b)   by otherwise dealing with the Aboriginal objects in accordance with any reasonable directions of an Aboriginal owner or Aboriginal owners referred to in paragraph (a), or

(c)   if there is or are no such Aboriginal owner or Aboriginal owners—by transferring the Aboriginal objects to a person, or a person of a class, prescribed by the regulations for safekeeping.

78. The language of this provision, which provides for the “return” of Aboriginal objects to their “Aboriginal owners”, is drafted on the apparent statutory assumption that an Aboriginal object is one which, although currently the property of the Crown, is secret or sacred according to Aboriginal tradition. It would not be consistent with the concept of “returning” an object to its Aboriginal “owner” if according to Aboriginal tradition the relevant object never had any such significance.

79. The relevant context is also consistent with the vendors’ construction. As set out by the Minister for Lands and Minister for Tourism in his second reading speech at Hansard 783, the object of the statute is “to preserve and protect remaining traces of the Aboriginal way of life”. The memorial stone and plaque do not constitute remaining traces of the Aboriginal way of life.

80. In the present case the memorial stone and plaque do not bear witness in any physical sense to Aboriginal habitation of the land. We have thus concluded that the memorial stone and plaque is not an “Aboriginal object” within the meaning of the National Parks and Wildlife Act. This conclusion differs from that of the primary judge and has a significant impact on each of the issues in the appeal to which we now turn.

Issue 1 – The purchasers’ principal repudiation case

81. The appellants challenge the primary judge’s determination that the purchasers had made out their principal repudiation case against the vendors, namely that by failing properly to address the purchasers’ “plausible contention” that there were Aboriginal objects on the land that were capable of constituting a defect in title, the vendors evinced an intention no longer to be bound by the contract. Before turning to that case, three related preliminary issues should be addressed:

1. this Court’s decision in the first Mehmet v Carter appeal;

2. the proposition that the Crown’s property in an abandoned Aboriginal object pursuant to s 83 of the National Parks and Wildlife Act is an interest affecting the vendors’ title to the land; and

3. whether the memorial stone and plaque constitute a constraint on the development of the land.

The preliminary issues

The first Mehmet v Carter appeal

82. This Court in Mehmet v Carter (2018) 98 NSWLR 977; [2018] NSWCA 305 at [100] (Beazley P, McColl JA agreeing), set aside certain answers to separate questions which had been given by Darke J (Mehmet v Carter [2017] NSWSC 1067) and concluded, obiter, that the presence of “Aboriginal objects” as defined by the National Parks and Wildlife Act may be capable of constituting a defect in title as a question of statutory construction of that Act, notwithstanding that sub-s 83(2) of the National Parks and Wildlife Act makes explicit provision that “[n]othing in this section shall be construed as restricting the lawful use of land or as authorising the disturbance or excavation of any land.” Bathurst CJ did not in terms agree with the then President and restricted himself (at [10]) to the observation that “a defect in title is not limited to a failure to convey something which was contracted to be conveyed”.

83. In coming to the conclusion that the presence of Aboriginal objects on the land was capable of constituting a defect in title, Beazley P drew an analogy with the facts in Micos v Diamond [1970] 3 NSWR 407. In that case, the purchasers of a parcel of land sued their solicitor for negligence in failing to inform them before completion of the existence of a sewer drain on the property and the rights of the relevant statutory body, the Metropolitan Water, Sewerage and Drainage Board (the Water Board) in relation to that drain. The Water Board had a statutory right to enter upon any private land and to lay or place therein a sewerage main. The statute then made it an offence to erect, construct or place any building or other structure in, upon, over or under that sewerage main so as to interfere with or to obstruct the sewer, and empowered the Water Board to obtain an injunction to prevent any damage to, interference with or obstruction of the sewer in case of a threatened breach.

84. However, we respectfully doubt whether the analogy to Micos v Diamond is apposite in the present case. Unlike the statutory rights and powers conferred upon the Water Board in that case, here the National Parks and Wildlife Act provides no authority to enter onto the land and specifically provides that the fact that an Aboriginal object is deemed to be the property of the Crown is not to be construed as “restricting the lawful use of land or as authorising the disturbance or excavation of any land”: s 83(2). Whilst it is correct that the Act proscribes certain conduct in relation to Aboriginal objects, the express statutory provision that the lawful use of the land shall not be restricted by reason of the presence of any Aboriginal object which is “property” of the Crown provides a very significant difference from Micos v Diamond. Resolution of this issue, however, should await a case where it directly arises.

Whether the Crown’s property in an abandoned Aboriginal object pursuant to s 83 of the National Parks and Wildlife Act is an interest affecting the vendors’ title to the land

85. The vendors do not cavil with the proposition that they have an obligation to show good title to the land free of any interest of a third party therein. The vendors do challenge the primary judge’s implicit conclusion that the property that the Crown has in an abandoned Aboriginal object pursuant to s 83 of the National Parks and Wildlife Act is an interest affecting the vendor’s title to the land.

86. The terms of s 83 have already been set out at [62] above. Whilst sub‑s 83(1) deems an Aboriginal object that is abandoned as “the property of the Crown”, the use of the word “property” in sub‑s 83(1) does not amount to the creation of a proprietary interest in the Aboriginal object which is vested in the Crown and which would prevent the vendors from passing an unencumbered estate in fee simple in the land. Writing in relation to s 7(1) of the Fauna Conservation Act 1974 (Qld) which, like the National Parks and Wildlife Act, also deems certain items as “the property of the Crown”, the plurality in Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53 (Gleeson CJ, Gaudron, Kirby and Hayne JJ) said:

“[28]   In light of all these considerations, the statutory vesting of ‘property’ in the Crown by the successive Queensland fauna Acts can be seen to be nothing more than ‘a fiction expressive in legal shorthand of the importance to its people that a State have power to preserve and regulate the exploitation of an important resource’.

…

[30]   The ‘property’ which the Fauna Act and its predecessors vested in the Crown was therefore no more than the aggregate of the various rights of control by the Executive that the legislation created. So far as now relevant those were rights to limit what fauna might be taken and how it might be taken (ss 24, 24A, 25, 27, 30, 60), rights to possession of fauna that had been reduced to possession (ss 71(2), 83(3)), and rights to receive royalty in respect of fauna that was taken (s 67) (all coupled with, or supported by, a prohibition against taking or keeping fauna except in accordance with the Act (s 54(1)(a)). Those rights are less than the rights of full beneficial, or absolute, ownership.” (footnotes omitted)

87. That analysis is apposite to the construction of the National Parks and Wildlife Act, notwithstanding that the Act regulates a different subject matter than the statute construed in Yanner v Eaton. The statutory vesting of abandoned Aboriginal objects as property of the Crown under s 83(1) is a “fiction expressive in legal shorthand” of the importance to the people, in particular the Aboriginal people, of New South Wales that the State has the power to preserve and regulate Aboriginal objects. The “property” which the National Parks and Wildlife Act vests in the Crown is the aggregate of the various rights of control by the Executive created by that Act. Those rights are not the rights of full beneficial, or absolute, ownership. They do not affect the legal estate of the land where the Aboriginal object is located. Assuming it is an Aboriginal object, the property of the Crown in the memorial stone and plaque did not constitute an interest in the subject land.

133. Given the focus in the purchasers’ case upon Crowe v Rindock we will explain why the conclusion we have reached is not inconsistent with that case. Crucially in Crowe v Rindock, although the fact said to constitute a defect (the proclamation of land in Cremorne as a mine subsidence district) was observed to be implausible, it was easily ascertainable by the vendors as it was recorded on a certificate attached to the contract. This meant that it was insufficient for the vendors (as they did) to advise the purchaser to rely on their own inquiries, rather than directly answer the requisition. Crowe v Rindock is thus distinguishable from the present case, where the underlying fact (the presence of Aboriginal remains) was no more than “plausibly” contended for and was neither within the vendors’ knowledge nor easily ascertainable by the vendors. In those circumstances, what constitutes a reasonable response by the vendors in this case is different from the response that ought to have been given in Crowe v Rindock.

134. We have concluded that the purchasers’ objection and accompanying requisition were not properly made and that, even if properly made, the vendors’ response was reasonable. The vendors by their response did not thereby repudiate the contract. The purchasers’ principal repudiation claim accordingly fails.

Issue 2 – The purchasers’ alternative case concerning defect in title

141. In the primary proceedings, the purchasers ran an alternative case that they were entitled to terminate the contract as the vendors did not have good title to the land. That case relied on the common law rule as expressed by Tindal CJ in Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160 at 1162-1163 that:

“We think it is, in all events, a safe rule to adopt, that where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject matter of the contract that it may reasonably be supposed that, but for such misdescription, the purchaser might never have entered into the contract at all, in such a case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation.”

142. The purchasers contended that the presence of Aboriginal objects on the land meant that they were not getting substantially the property which they had contracted to buy. The purchasers’ alternative contention depends on a finding that there are in fact Aboriginal objects in or on the land.

143. We have already concluded that there are not any Aboriginal objects on the land. The memorial stone and plaque is not an “Aboriginal object” within the meaning of the National Parks and Wildlife Act.

144. However, even if the memorial plaque and stone is an Aboriginal object within the meaning of the Act, we are not satisfied that its presence on the land would be a material or substantial matter giving the purchasers the right to terminate.

145. The test is whether, objectively, a reasonable person in the position of the purchasers would have taken the view that he or she was not getting substantially the property which he or she contracted to obtain: Frankel v Paterson [2015] NSWSC 1307 at [34].

146. As we have explained at [90]-[95] above, development in the location of the memorial stone and plaque was already prohibited, and any reliance on existing use rights would not have assisted the purchasers in realising the development potential of that land. The presence of the memorial stone and plaque, given their location, did not give rise to any further restriction on development of the land.

147. It cannot be said that the presence of the memorial stone and plaque, even assuming they are an Aboriginal object, affected the contract in a material or substantial way. The purchasers’ alternative case that they were entitled to terminate the contract by reason of the rule in Flight v Booth also fails.

Issue 3 – The purchasers’ alternative repudiation case

148. In the primary proceedings, the purchasers also relied on an alternative case that the vendors had repudiated the contract by purporting to terminate the contract in reliance on an invalid notice to complete which claimed payment of default interest. Having accepted the purchasers’ principal repudiation case, it was not strictly necessary for the primary judge to decide the alternative repudiation case. Nevertheless, her Honour determined that the alternative repudiation case would have been made out.

149. The repudiatory conduct alleged by the purchasers before the primary judge was the vendors’ insistence that the purchasers comply with a notice to complete which was invalid as it was given in circumstances where the purchasers had not been in default of any valid appointment to complete, coupled with the vendors’ insistence on an invalid demand for default interest in the face of a notice from the purchasers requiring the vendors to withdraw the demand for interest (making time of the essence for the vendors to do so).

150. On appeal, the parties’ submissions were confined to whether the vendors repudiated the contract by failing to withdraw their claim for default interest. There was no further contention raised in relation to the validity of the notices to complete, or any allegation that the vendors’ insistence that the purchasers comply with such notice was repudiatory.

151. The vendors’ right to default interest is governed by special condition 8 to the contract. It provides:

“8.   Interest payable for delay in completion

If the purchaser shall not complete this purchase by the completion date, without default by the vendor, the purchaser shall pay to the vendor on completion, in addition to the balance purchase money, an amount calculated as ten per cent (10%) interest on the balance purchase money, computed at a daily rate from the day immediately after the completion date to the day on which this sale shall be completed. It is agreed that this amount is a genuine pre-estimate of the vendor’s loss of interest for the purchase money and liability for rates and outgoings.”

152. The cover page of the contract nominated as the completion date the “30^th day after the contract date”. That date is 5 August 2015, being 30 days after execution on 6 July 2015. However, special condition 21 made completion conditional on transmission of the late Mrs Carter’s interest in the property to her husband and imposed a completion period within 14 days of the written notification of that event. It provides:

“21.   Registration of transmission application

(a)   Completion of the within contract is conditional upon the Vendor, Murray John Carter, as executor of the Estate of the Late Catherine Carter becoming registered proprietor of the subject land by way of transmission within three (3) months of the date thereof.

…

(c)   Completion shall take place within fourteen (14) days after the Vendor’s solicitors have notified the Purchaser or the Purchaser’s solicitor in writing of registration of the Transmission Application.”

153. The parties engaged in the following correspondence in relation to the notices to complete and the payment of default interest:

1. By a letter dated 3 August 2015, the vendors’ solicitor purported to “confirm” an appointment for settlement on 5 August at 11.00am. It is apparent from that letter that the vendors did not have regard to special condition 21(c)when fixing an appointment for settlement on 5 August. There is also a suggestion that this letter of 3 August was not forwarded to the purchasers (through their solicitor) until the early morning of 5 August.

2. By two letters each dated 4 August 2015, the vendors’ solicitor provided copies of duly executed transfers, a settlement adjustment sheet, copies of land tax and rates notices and directions for the drawing of bank cheques. She also confirmed settlement was to occur on 5 August 2015.

3. Settlement did not proceed on 5 August 2015. In his later letter of 23 September 2015, the purchasers’ solicitor said:

“As you know, the date for completion of the contract nominated in the contract passed in circumstances where our clients had raised the problem of your clients’ title not being free of other interests. Your clients had done nothing to address the problem. Indeed, your clients did not even propose settlement figures until 4 August, a time at which was too late for cheques to be arranged by 5 August. For either of these reasons that date therefore went off.

In those circumstances, the time to complete is a reasonable time.”

4. The vendors’ solicitor issued a notice to complete under a letter dated 27 August 2015, appointing 10 September 2015 as the settlement date and providing settlement figures (that the vendors emphasised were draft settlement figures). The settlement figures supplied under this notice required payment of default interest of $25,890.20 calculated from 5 August 2015.

5. On 2 September 2015, the purchasers’ solicitor responded to that notice to complete. The letter required the vendors to state whether they were in a position to provide a good title to the land on 10 September 2015 and asserted that if the vendors were not able to show this then the notice to complete must be invalid. It was further contended that the notice to complete was bad in any event because the vendors had failed to show a good title at the time of its issue.

6. On 8 September 2015 (at a time, the purchasers note, when no response to the 2 September 2015 letter had been received), the purchasers’ solicitor submitted to the vendors’ solicitor a transfer (expressly tendered subject to the above notice to perform and subject to contract) and requested cheque directions.

7. On 9 September 2015, the vendors’ solicitors provided revised settlement figures (which still included the claim for default interest calculated from 5 August 2015) and cheque directions, and confirmed settlement on 10 September 2015.

8. On 10 September 2015, the purchasers attended at the appointment for settlement (with bank cheques drawn in accordance with the cheque directions that had been provided), represented by their solicitor Mr Lynch in the company of one of his staff. The vendors were represented by an agent, Mark Hazlett of Hazlett & Co. Settlement did not occur on that day.

9. On 11 September 2015, the vendors withdrew their first notice to complete. Under cover of the same letter, the vendors gave a further notice to complete (without settlement figures) appointing 28 September 2015 for completion.

10. The vendors then provided further updated settlement figures by facsimile on 17 September 2015, including a claim for default interest of $39,945.21 calculated from 5 August 2015.

11. On 23 September 2015, the purchasers gave to the vendors a notice to withdraw their demand for default interest, and submit corrected figures by the following day (the second last business day before the settlement appointment). The notice made time of the essence in this regard. In the paragraphs preceding that notice, the purchasers identified the reason that the item for default interest was “not correct” as being that they were “not in default of the contract”:

“We refer also to your letter dated 17 September, 2015 enclosing settlement figures which we note includes an item for default interest of $39,945.21.

Given that our clients are not in default of the contract, those settlement figures are not correct.

TAKE NOTICE THAT our clients require the vendors to submit revised settlement figures omitting that item.”

The letter then set out the reasons why settlement did not occur on 5 August (see [153(3)] above).

12. The vendors responded on 24 September 2015 insisting on the claim for interest, explaining the basis for their calculation of default interest:

“As to settlement on the 28 September and your request that our client submit revised settlement figures and omit the default interest. We respond as follows:

a.   Our client does not agree to waive interest.

b.   The contract provides for the Completion Date 30 days after the Contract date which was the 6 July 2015.

c.   Special Condition 8 of the Contract relevantly provides that “If the purchaser shall not complete by the completion date…then the purchaser shall pay to the vendor on completion, in addition to the balance purchase price…an amount calculated as…10% on the balance purchase monies…”.

d.   The vendor is not in default under the contract.

e.   The purchaser is in default of the contract. The purchaser did not attend settlement on the 5^th August.”

13. The purchasers then purported to terminate the contract by notice on 25 September 2015. The notice of termination did not identify the grounds for termination, stating only:

“Our clients rely upon all grounds, whether or not previously disclosed and whether known or unknown.”

14. On 6 October 2015, the vendors responded alleging that the purchasers’ notice of termination was repudiatory and themselves purporting to terminate the contract.

154. These communications show that both parties had overlooked the effect of special condition 21, and neither of them at any relevant time maintained that the time by which completion was to take place as stipulated in special condition 21(c) had not commenced. As is apparent from their exchanges on 23 and 24 September 2015, each was proceeding on the basis that the contract had provided for completion on 5 August 2015. The vendors’ position, completion not having occurred on that date, was that the parties were obliged to complete within a reasonable time. As there was no attention to special condition 21(c), there was no attention to whether the provision on 4 August 2015 of a copy of the transfer executed by Mr Carter as registered proprietor and “Certified correct for the purposes of the Real Property Act” satisfied, or was to be treated as satisfying, the requirement in that paragraph for notice of registration of the transmission application.

155. Although the purchasers now contend that the vendors’ insistence on the payment of default interest constituted repudiatory conduct, at no point in the communications set out above did the purchasers dispute the correctness of the vendors’ interpretation of special condition 8 of the contract, which provided for the payment of default interest, or the vendors’ calculation of that interest.

156. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432; [1978] HCA 12, Stephen, Mason and Jacobs JJ said:

“No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event, an intention to repudiate the contract could not be attributed to him. As Pearson LJ observed in Sweet v Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 669 at p 734:

‘In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments…’”

See also Green v Sommerville (1979) 141 CLR 594 at 611 (Mason J); [1979] HCA 60.

157. In an oft-cited caution against too readily finding that a party has evinced an intention no longer to be bound by a contract, Wilson J said in Shevill v Builders Licensing Board (1982) 149 CLR 620 at 633; [1982] HCA 47:

“Repudiation of a contract is a serious matter and is not to be lightly found or inferred.”

158. This is a case in which it should not be concluded that the vendors repudiated the contract. Both parties proceeded on the basis that the date fixed for settlement was 5 August 2015, and the only point of contention was whether the purchasers did “not complete [the] purchase by the completion date, without default by the vendor[s]” (special condition 8).

159. The view that 5 August 2015 was the settlement date nominated by the contract was an erroneous one. Special condition 21(c) prevailed and required that completion take place within 14 days after notification of the registration of the Transmission Application.

160. In argument before this Court, the vendors contended that the provision of the duly executed transfer identifying Mr Carter as transferor (and therefore registered proprietor) was sufficient to satisfy special condition 21(c). The purchasers contended that it was not. It is unnecessary for us to decide that question.

161. In acting in the way they did, and insisting on payment of default interest calculated from 5 August 2015, the vendors proceeded on a mistaken view as to the date for completion. That view was shared by the purchasers, who never identified or confronted the vendors with that error. Nor did the purchasers suggest that the completion date had not arrived, merely asserting that they were not in default.

162. While the vendors did decline the purchasers’ invitation in their letter of 27 August 2015 “to approach the Court for declaratory relief”, that invitation was made in relation to the dispute between the parties as to the presence of Aboriginal objects on the land and whether they constituted a defect in title. The purchasers did not suggest that the parties seek an authoritative ruling about the correct interpretation of the contract in relation to the payment of default interest.

163. In these circumstances, the vendors’ insistence on the payment of default interest calculated from 5 August 2015 did not amount to repudiation of the contract. They did not insist on settlement with an incorrect view of the contract in the face of a clear explanation of the true position. At the same time, they had a reasonable basis for maintaining that completion had not proceeded on 5 August without their default.

164. The purchasers’ further alternative case that the vendors had repudiated the contract by insisting on the payment of interest from 5 August 2015 also fails.

Issue 4 – return of the deposit pursuant to s 55 Conveyancing Act

165. As the primary judge found that the purchasers had demonstrated an entitlement to the return of their deposit through their principal repudiation claim, it was not strictly necessary to consider whether the purchasers also had a right to recover their deposit pursuant to s 55 of the Conveyancing Act. Even so, her Honour stated that, had it been necessary to do so, she would have considered that the power under s 55(2A) should be exercised to require the vendors to repay the deposit to the purchasers.

166. Section 55(2A) of the Conveyancing Act states:

55   Right of purchaser to recover deposit etc

...

(2A)   In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.

167. The parties accepted at trial that a purchaser who makes an application for the return of a deposit under s 55(2A) must show some injustice, or something that was inequitable about the conduct of the vendor: Greek Orthodox Parish Community of St Marys and District Ltd v Denis Stanley Merrick [2014] NSWSC 1196 at [17] per Young AJA. The “principal injustice” relied upon by the purchasers was the defect in title. In the alternative, the purchasers alleged that injustice arose from the vendors’ concealment of the Aboriginal significance of the land notwithstanding that the land was marketed as a development proposition.

168. We have found above that there were no Aboriginal objects on the land and that, even if there were, they do not constitute a defect in title. This being so, the “principal injustice” alleged by the purchasers is not established.

167. As for the purchasers’ alternative contention, the primary judge did not accept that the evidence established any concealment of Aboriginal heritage on the part of the vendors’ agent (or anyone on behalf of the vendors for that matter). Further, in the context of the purchasers’ unsuccessful misleading or deceptive conduct claim, her Honour considered that it was “abundantly clear” that the purchasers were acting in reliance on their own enquiries and inspection, rather than any representation by the vendors as to the development potential of the property. The purchasers have not challenged those findings. No notice of contention was relied upon in relation to these issues. Their alternative contention as to injustice therefore also fails.

168. Since the purchasers have not demonstrated any injustice or inequity, they are not entitled to an order for the repayment of their deposit.

Issue 5 – The guarantee by Mr Cheers

171. It is no longer in dispute that the fifth respondent, Mr Cheers, signed the personal guarantee provision under special condition 23 of the contract: Exhibit 6. The purchasers accept that Mr Cheers conceded in cross-examination that he had guaranteed the purchasers’ performance under the contract. As recorded in the trial transcript:

“Q. You have also signed that which appears immediately beneath the guarantee clause and the counterpart clause number 22 and 23?

A. Yes, I have.

Q. By signing as you did there and as we can see, you were seeking to confirm that as a director of the company, Cheers Aviation, that you see referred to in clause 22, you were guaranteeing the performance of the purchaser of all of the obligations under the contract and some.

A. Yes.”

172. Since it is no longer in dispute that Mr Cheers guaranteed the purchasers’ performance of the contract, his liability follows that of the purchasers.

Costs

173. As the successful party, the vendors are entitled to an order in their favour in relation to the costs of the proceedings before the primary judge and in this Court.

174. As to the costs of the hearing of the separate question, on appeal this Court made no order as to the costs of the appeal and ordered that the costs of the hearing of the separate questions before Darke J be costs in the cause: Mehmet v Carter (2018) 98 NSWLR 977; [2018] NSWCA 305. The vendors are therefore also entitled to their costs of the separate questions hearing before Darke J.

Conclusion and proposed orders

175. The purchasers have failed to demonstrate that they were entitled to terminate the contract on any of the three alternative bases they relied on, being the principal repudiation claim, the rule in Flight v Booth, and their alternative repudiation claim based on a claim for default interest. Consequently, by purporting to terminate the contract on 25 September 2015 when they had no right to do so, the purchasers themselves repudiated the contract. The vendors were entitled themselves to terminate and to an award of loss of bargain damages.

176. On the hypothesis that the appeal was successful, there was no dispute between the parties as to the quantum of damage suffered by the vendors by reason of the purchasers’ repudiatory breach. That loss is as follows:

1. Loss of bargain damages of $475,000. This is the difference between the contract price and the price achieved by the vendors on re-sale; and

2. Costs and expenses of $5,832.20 associated with the re-sale of the land.

177. For the reasons above, we make the following orders:

1. Appeal allowed.

2. Set aside the orders of Ward CJ in Eq made on 17 April 2020 and in lieu thereof order:

1. Judgment for the appellants against the respondents in the sum of $480,832.20 plus interest thereon from 29 November 2015 pursuant to s 100 of the Civil Procedure Act 2005 (NSW).

2. Respondents pay the appellants’ costs of the proceeding below, including (as per the orders of the Court of Appeal made on 13 December 2018) the costs of the separate determination the subject of the proceeding before Darke J in 2017.

3. Respondents pay the appellants’ costs of the appeal.

**********

Amendments

08 December 2021 - Judgment sum recorded on coversheet and pars [176(1)] and [177(2)(a)] amended to $480,832.20 pursuant to slip rule: Uniform Civil Procedure Rules 2005 (NSW), r 36.17.

Decision last updated: 08 December 2021