Dickinson v Gribble

[2017] SADC 123

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DICKINSON & ANOR v GRIBBLE & ANOR

[2017] SADC 123

Judgment of His Honour Judge Slattery

7 November 2017

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES

Between March and July 2017 the plaintiffs executed three contracts for the purchase of the defendants’ property at Tolley Road Nuriootpa. Each contract required the payment of a deposit and contained special conditions, relevantly clauses SC1 and SC3, relating to the procuration of finance by the defendants to enable the completion of the purchase.

Each of the first two contracts was terminated by consent. A Form 1 was delivered to the plaintiffs under the second contract. No separate Form 1 was delivered under the third contract and the vendors relied upon the content of the Form 1 delivered under the second contract.

The plaintiffs did not pay a deposit under the second or third contracts.

Under the third contract the plaintiffs were required to obtain a grant of finance by 7 July 2017. Under the same contract, the date for settlement was stated to be 8 August 2017 or the date upon which the special conditions were satisfied, whichever is the later.

By letter dated 26 June 2017, the ANZ Bank provided to the plaintiff an offer of finance in the amount sought by them, but subject to eight conditions precedent that relevantly included a requirement for the bank to receive a valuation of the property of no less than $550,000. The plaintiffs accepted the terms of the offer made by the bank.

A valuation delivered to the Bank on 3 August 2017 opined that the property was valued at $475,000.

Between 3 and 8 August 2017 a number of conversations occurred between the plaintiffs and the defendants and with the defendants’ agent, Ms Willson. The plaintiffs had not satisfied the conditions precedent about the valuation of the property by 8 August 2017 and did not inform the defendants of the availability to them of finance in order to complete the purchase.

The plaintiffs contend and the defendants deny that the bank’s letter of offer was, without more, an approval of finance for special condition SC1 of the third contract.

The defendants contend and the plaintiffs deny that in conversations between the plaintiffs and the defendants’ agent between 4 and 8 August 2017, the plaintiffs evinced an intention no longer to be bound to the contract because the valuation identified that the value of the property was $475,000; that the plaintiffs were only prepared to pay the sum of $475,000 or such greater sum as they may agree, but not $550,000; and that no settlement would occur on 8 August 2017.

The defendants contend and the plaintiffs deny that they informed the defendants’ agent that the payment of the deposit by them on the third contract was dependent upon the content of any valuation produced under the special conditions.

Whether the letter of offer of the bank meant that the plaintiffs had obtained approval in writing for a loan to assist in purchasing the property;

Whether in light of the content of the valuation the plaintiffs had communicated to the defendants the approval of the ANZ Bank of a loan on or before 7 July 2017 or alternatively on or before 4 August 2017;

Whether having regard to the content of special condition SC1 and the general conditions of the third contract, the defendants were entitled to give a notice of termination of the contract under clause SC3 of the contract;

Whether the plaintiffs had failed or refused to pay the deposit under the third contract;

Whether as a result of the communications between the plaintiffs and the defendants’ agent, the plaintiffs evinced an intention to no longer be bound by the third contract; if so, whether the defendants were entitled to treat the contract as at end due to repudiatory conduct of the plaintiffs.

HELD:

1. The letter of offer of the bank did not constitute approval in writing for a loan on the terms that the lender required but acceptable to the purchaser to assist in purchasing the property;

2. The plaintiffs did not communicate to the defendants on or before 7 July 2017 or alternatively on or before 8 August 2017 that they had obtained an approval for finance from a bank;

3. Under the special conditions of contract, the defendants were entitled to give a notice of termination of the contract under clause SC3 thereof; the general conditions of contract did not have application except that clause 14 thereof made time of the essence of the special conditions;

4. The plaintiffs failed or refused to pay a deposit under the second contract and refused to pay a deposit under the third contract until the valuation of the property was obtained, regardless of the delivery of a further Form 1;

5. On 8 August 2017 the plaintiffs through Ms Kylie Dickinson informed the defendants’ agent that the plaintiffs wished to reopen negotiations on the purchase price payable under the contract, that they would not be prepared to pay the purchase price under the contract in light of the valuation and thereby evinced an intention no longer to be bound by the contract;

6. The defendants were entitled to treat the conduct of the plaintiffs as repudiatory and to accept that conduct as the basis for termination of the contract; and

7. The plaintiffs’ claims are dismissed and the Court will hear the parties as to any consequential orders and costs.

Land and Business (Sale and Conveyancing) Act 1994 s 7(3), s 88, s 90; Land Agents, Brokers and Valuers Act 1973 s 88, s 90, s91B, s91G; Weaver and Craigie: The Law of Banker and Customer (3d Ed) [2.100]; JW Carter: Contract Law in Australia Lexis Nexis Butterworths (6th Ed) [30-45], referred to.
Meehan v Jones (1982) 149 CLR 571; Myles Pearce & Co Pty Ltd v Leuci and Martin (1997) 193 LSJS 491; Astill v South Esplanade Developments Pty Ltd [2007] SASC 231; Highfield Properties Pty Ltd v Commercial and Residential Developments (SA) Pty Ltd [2012] SASC 165; Butts v O’Dwyer (1952) 87 CLR 267 at 280; Pua Hor Ong & Otrs v Wu You Yang Pty Ltd & Otrs [2008] SASC 365 ; Bowler v Hilda Pty Ltd (in liquidation) [2001] FCA 342; (2001) 112 FCR 59; North v Marina [2003] NSWSC 64; Lane & Otrs v Arrowcrest Pty Ltd Federal Court of Australia judgment 693 of 1990, discussed.
Perri v Coolangatta Investment Pty Ltd (1982) 149 CLR 537; Foley v Hill (1848) 9 ER 1002; Placer Development Limited v The Commonwealth (1969) 121 CLR 353; Graziano v Graziano [2010] SASCFC 76; Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60; Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165; Van der Waal v Goodenough [1983] 1 NSWLR 81; Max Cooper & Sons Pty Ltd v Sydney City Council (1980) 54 ALJR 234 ; Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 ; Mt Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; Gwyn v Neath Canal Navigation Co [1868] LR 3Exch209215 ; Dainford Ltd v Smith [1985] HCA 23; (1995) 155 CLR 342 ; Shevill v Builders Licensing Board [1982] HCA 47; (1982) 1 49 CLR 620 ; Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 ; Bell v Scott (1922) 30 CLR 387 ; Hoad v Swan (1920) 28 CLR 258 ; Paul Fishlock v The Campaign Palace Pty Ltd [2013] NSWSC 531; Lourinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623; Hyde v Wrench [1840] 49 ER 132; W&R Pty Ltd v Birdseye [2008] SASC 321; Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315; Mulkearns v Chandos Development Pty Ltd [2003] NSWSC 1132, considered.

DICKINSON & ANOR v GRIBBLE & ANOR
[2017] SADC 123

Summary and result

1. The defendants were registered as the proprietors of a property at Tolley Road Nuriootpa. The defendants offered the property for sale during 2016 through Ms Jane Willson of Harcourts Real Estate Agents and in 2017 through Ms Willson when she was employed at Marx Real Estate. During 2017 the plaintiffs became interested in purchasing the property because it comprised a house as well as space for sheds and other areas suitable for the conduct of their removalist business and their planned self-storage business.

2. The plaintiffs and the defendants entered into three separate contracts for the purchase by the plaintiffs of the property for $550,000. Each of the first two contracts were terminated by consent. Under each contract the plaintiffs were required to pay a deposit at the end of the cooling off period, governed by the date of the service of the Form 1 document. The defendants served a Form 1 document under the second contract but they did not serve a fresh Form 1 under the third contract. Each of the three contracts were in generally similar terms except that under the third contract the purchasers were required to pay a deposit of $5,000, increased from $2,500.

3. The three contracts each contained special conditions as to finance in almost identical terms under which the plaintiffs were required to use their best endeavours to obtain a loan to assist with the purchase of the property on terms required by a bank and acceptable to the plaintiffs (called the “approval”). The special conditions in each contract required the parties to specify the amount of the borrowing, the applicable interest rate and the date by which the loan should be obtained. In each of those three contracts the parties only stipulated the date by which the loan must be obtained. Under the third contract carrying date 1 July 2017, the date by which the loan was to be procured was 7 July 2017.

4. The plaintiffs applied for finance from the ANZ Bank which first provided an indicative letter of offer subject to conditions to be fulfilled by the plaintiffs and then later by a letter of offer subject to conditions precedent to be fulfilled by the plaintiffs. The effect of the letter of offer that was accepted by the plaintiffs was that the bank would supply finance in the amount of $330,000 for a fixed period at an offered interest rate. The conditions precedent to which the offer was subject included that a valuation of the property be obtained at the purchase price of $550,000. Subject to the satisfaction of that condition precedent and the other conditions precedent which are not material to this decision, the bank would supply a loan for the equivalent of 60% of the purchase price in the amount of $330,000. The valuation was to be done by a firm on the bank’s selection list of valuers or a valuer as agreed by the bank.

5. The third contract specified that the settlement date was 8 August 2017 or such date by which the special conditions are satisfied, whichever is the latest. On 3 August 2017, Opteon Valuers informed Ms Willson, the defendants’ agent of its opinion that the property was only worth $475,000. A copy of that valuation was received by email by the bank on 3 August 2017. The conditions precedent to the grant of finance were not satisfied. As of that date, there was no formal grant of finance. Ms Willson contends and the plaintiffs deny that until that time, she had been consistently requesting the plaintiffs to pay a deposit but they had refused; they wished to await the content of the valuation.

6. Ms Willson also contends and the plaintiffs also deny that on 8 August 2017, the plaintiffs informed her that they were only now prepared to pay a purchase price for the property in the amount of $475,000, the equivalent of the valuation reached by Opteon Valuers. Implicitly, according to Ms Willson, the plaintiffs may have negotiated to a higher figure but not to the sum of $550,000 as required by the defendants. At 4.08pm on 8 August 2017, the defendants received an email from Ms Willson informing them of the status of the negotiations with the plaintiffs and informing them of the new negotiating stance taken by the plaintiffs following receipt of the valuation. There was no settlement of the contract on 8 August 2017.

7. During 2017, the defendants were in a state of penury. They were each on pensions or on NewStart allowances and could not work. They were unable to service the repayments of the mortgage on the Tolley Road property or pay rates and outgoings on that property. Those repayments were being accumulated and were awaiting settlement on the sale of the Tolley Road property. The defendants had entered into a contract to purchase a property at Weetulta due to settle contemporaneously with the settlement of the Tolley Road property. They had also arranged to partially discharge another mortgage given to the Commonwealth Bank over a property at Swan Reach.

8. On 9 August 2017, the defendants delivered to the plaintiffs a notice of termination of the third contract upon failure to obtain finance. The plaintiffs contend that the offer of finance from the bank accepted by them was sufficient approval for clause 1.1 and therefore 1.3 of the special conditions of the contract and that consequently, the defendants had no entitlement to terminate the contract and should now be required to specifically perform the contract. The plaintiffs also contend that nothing done by them on or after 4 August 2017 objectively evinced an intention by them not to be bound and no longer to be bound by the terms of the contract.

9. In the result, the defendants were entitled to rely upon the failure of the plaintiffs to obtain finance to deliver a notice of termination of the contract pursuant to clause 1.3 of the special conditions of the contract, on 9 August 2017. Further or alternatively, the conduct of the plaintiffs communicated to the defendants by their agent evinced a clear intention that they no longer consider themselves bound by the terms of the contract and the defendants were in a position to accept and did accept that conduct as repudiatory by the termination of the contract made by them on 9 August 2017. In the result, the plaintiffs’ claims are dismissed. 

   The Pleaded Case

10. The defendants Donald Dean Gribble and Donna May Gribble are the owners of a property of 29 Tolley Road, Nuriootpa, being the whole of the land comprised in Certificate of Title Register Book Volume 5436 Folio 77. In or about February or March 2017, the Gribbles engaged Ms Jane Willson of Marx Real Estate as their agent to represent them to sell the land. This was a private agency for sale by private treaty; there was to be no costs incurred for advertising or other form of promotion.

11. The plaintiffs are the owners and operators of a business known as Barossa Valley Furniture Removals. They were the owners of a property at 40 Hughes Road, Moppa, South Australia which they had sold. They were looking for a larger premises from which to operate their business. In order to do so, it was necessary for the land to be zoned light industrial. The advantages of the Tolley Road site included its proximity to a local freight route and the size of the allotment. They had been looking at this property on Tolley Road for some time.

12. There were three contracts involved in the purchase. Each of the first two contracts were terminated by consent. The first contract was dated 24 March 2017 and this was terminated by consent on 5 April 2017. The second contract was terminated on 31 May 2017 and the third contract was entered into on 1 July 2017. Although there is some doubt about the date of the third contract, that doubt is not material.

13. It is not in contest between the parties that a Form 1 under the Land and Business (Sale and Conveyancing) Act 1994 (the “Land and Business Act”) was served pursuant to the second contract on or about 26 April 2017. The plaintiffs allege that the third contract was entered into as a result of difficulties faced by Ms Willson, the agent, involved with her prior employment with Harcourts Barossa Valley. The plaintiffs allege and the defendants deny that the reason for the third contract was to aid Ms Willson in avoiding any claim against her for breach of contract alleged by Harcourts Barossa Valley. The plaintiffs also allege and the defendants deny that it was as a result of the new contract of 1 July 2017 being required that the plaintiff’s bank requested that as the purchase was partly for residential and partly for business purposes, the plaintiff’s loan application would be assessed on a business loan and not a residential loan basis.

14. As the evidence developed in this matter, it became clear that this assertion is not correct. The evidence discloses that there were three principal reasons for the new contract being entered into on 1 July 2017. The first was that because of the significant delay in the purchasers obtaining finance under the finance clauses of the previous two contracts, and because of the pressure being brought to bear on the defendants by the prior employer of Ms Willson a fresh contract should be entered into. The second was that the date of that fresh contract being in the new financial year (on or after 1 July 2017) meant that the purchasers would make a substantial stamp duty savings.

15. Also, the plaintiffs required the termination of the first contract in order to delete a special condition concerning rezoning and the plaintiffs sought the termination of the second contract in order to allow the broker to seek finance on the basis that the property was residential. In the end, the question of the residential status of the property changed and funding was sought on the basis that it was to be treated as a commercial property.

16. The plaintiffs allege and the defendants deny that as a result of the execution of the third contract a new Form 1 under the Land and Business Act was required to be served on the plaintiffs. The defendants’ positon is that as the parties and details contained in the existing Form 1 had not materially changed, there was no necessity to serve a further Form 1. The defendants relied upon the content of s 7(3) of the Land and Business Act which provides:-

    (1) …

    (2) …

    (3) The statement need not include reference to charges arising from the imposition of rates or taxes less than 12 months before the date of service of the statement.

17. As the evidence developed, the question of the content of the Form 1 attracted significantly less relevance. I will come to those matters later.

18. The plaintiffs then plead that the commercial contract was subject to a special condition about the obtaining of finance. The contract was silent as to the amount of the finance to be obtained (or the interest rate applicable). The plaintiffs plead that they had an approval for finance from the ANZ Bank. It is described as approval in principle and that this approval in principle had been communicated by the bank to the agent. The final terms of finance were only subject to a commercial valuation of the property.

19. A valuation report of 31 July 2017 valued the property at $475,000. The special condition of finance (SC1, and in particular SC1.1) stipulated that the contract was conditional on the purchaser obtaining:-

    …approval in writing for a loan in the amount … at the interest rate specified below and otherwise on such terms and conditions that the lender requires but acceptable to the purchaser to assist in purchasing the property (the Approval). Upon notification of the approval to the vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the purchaser will be bound by this contract.

20. The defendants plead that the terms of the contract (each of the three contracts) were uncertain. The amount of the loan in special condition 1.5 was not complete and the interest rate provision was also not complete. Therefore the amount of the loan could not be ascertained and there was no consensus or agreement reached between the parties as to that loan condition being satisfied. Therefore, the date by which the plaintiffs were required to apply for a loan pursuant to SC1.2 could not be ascertained and the meaning of SC1.1 and 1.2 is therefore vague and uncertain and the third contract is void for uncertainty.

1. Alternatively, the defendants plead that the plaintiffs did not obtain the approval, under the third contract, by 7 July 2017 and did not provide notification of that approval to the defendants. Therefore the plaintiffs plead that the third contract did not come into existence because it was subject to a condition precedent that was not satisfied. As a matter of law, that is not a correct pleading. The law is well settled: a contract with a subject to finance clause as a special condition exists as a contract between the parties[1] and logically that must always be so. This is because one or the other of the parties to the contract may take advantage of the finance special condition to bring the contract to an end. If it were not otherwise so, there would be no contract to bring to an end and therefore no operative clause in relation to the special condition.

   [1]    See Perri v Coolangatta Investment Pty Ltd (1982) 149 CLR 537; Meehan v Jones (1982) 149 CLR 571.

2. The defendants then plead that the plaintiffs did not have approval from the ANZ Bank as required under the special condition. This was because a valuation of the property at the sum of $550,000 was required and this condition was never satisfied. The valuation report obtained through the bank valued the property at $475,000 and, in the end, the defendants were never advised by the plaintiffs in writing or at all that finance had been approved.

3. The plaintiffs then assert, but this assertion appears to have played little if any part in this action, that the agent of the defendants wrongly assumed that the purchasers’ finance approval was cancelled as a result of the valuation. The plaintiffs then plead that a termination notice dated 9 August 2017 was sent terminating the contract. The plaintiffs allege that this was a wrongful termination and as a result a caveat was lodged on the property.

4. From paragraph 12 onwards of the Statement of Claim, the plaintiffs plead that as a result of the failure of the defendants to serve the necessary Form 1 under the Land and Business Act that the cooling off period did not commence and therefore the obligation to pay the deposit did not commence. The plaintiffs plead that therefore, the second termination notice dated 24 August 2017 based upon the failure to pay the deposit was ineffective. The plaintiffs seek an order for specific performance of the contract of sale. Further pleadings have been filed by the plaintiffs in relation to the positon of the third defendant a subsequent purchaser of the land. I do not need to stay with that matter at the moment.

5. In their defence, the defendants plead that the termination of the contract was valid because the plaintiffs had not obtained approval in writing for a loan and had not notified the defendants of such approval. The defendants also assert that the plaintiffs are estopped from asserting that the termination notice was not validly served due to conversations between the plaintiffs and the defendants’ agent, by the fact that no action was taken on the termination notice until 24 August 2017, that there was no settlement on the property on the due date, 8 August 2017 and that the plaintiffs considered that the termination notice had not been validly served. As a result of that conduct, the defendants say that they entered into the contract with the new purchasers and that it would be unconscionable now for the plaintiffs to seek to resile from the representation that the termination was validly served. 

6. Alternatively, the defendants allege that the plaintiffs had repudiated the third contract by failing to obtain finance, by failing to notify the defendants that they had obtained finance, by advising the defendants that the finance had not been approved, by failing to take any steps to facilitate settlement, and finally by making a counteroffer to the defendants on 8 August 2017 to purchase a property for $475,000. The defendants accepted this repudiation by serving the Notice of Termination.

7. The plaintiffs were given permission at the commencement of the trial to file and deliver a reply. This leave was given following the commencement of the plaintiffs’ opening where the plaintiffs indicated a number of answers that they wished to make in response to the contentions of the defendants in their defence. When it was pointed out to the plaintiffs that these matters had not been pleaded and were matters of fact or mixed fact and law or matters of law, permission was then sought and given to file a reply.

8. In paragraph 4 of the Reply, the plaintiffs described those matters which they contend are the deficiencies in the Form 1. They plead that it was necessary for the defendants to file an updated Form 1 under s.10 of the Land and Business Act. They also plead that as a result of the failure to provide an updated Form 1, despite representations that this would occur, it would now be unconscionable for the defendants to have purported to terminate the contract about the failure of the deposit. Finally, as a matter of law, the plaintiffs plead that the Notice of Termination of the contract dated 9 August 2017 was not valid because it purported to terminate the contract without notice as was required by the general conditions of the contract.

9. Following the receipt of the Reply, permission was given to the defendants to file a rejoinder which was filed on 18 October 2017. The defendants plead in the Rejoinder to the Reply that the material contained in the Form 1 was accurate and was not misleading, that was the position at the time of service of the Form 1. It pleads that the circumstances had not changed such that it was necessary to deliver a fresh Form 1 and that under s 7(3) of the Land and Business Act, it was not necessary for the Form 1 to include references to the charges arising from imposition of rates or taxes less than 12 months before the date of the service of the statement. The defendants also plead that the statements made by the defendants that they would not pay the deposit until the valuation came in, by the effluxion of time from the signing of the third contract and by affirming the third contract by the lodgement of the caveat, the plaintiffs represented to the defendants that they did not require a new Form 1 or an updated Form 1 to be supplied and that payment of the deposit was not dependent on the new or updated Form 1. This led to an assumption being made by the defendants that the plaintiffs did not require a new Form 1 to be served and it would now be unconscionable for the plaintiffs to assert that the defendants be required to serve a new or updated Form 1, that they are estopped from asserting that a new or updated Form 1 was required, or alternatively they have waived the requirement that a new or updated Form 1 to be served.

10. Because of brevity of time I have not given consideration to every aspect of the parties’ pleaded cases as set out above. I have given consideration to all of those matters but I have found it necessary only to consider those matters that are essential to my decision in this action.

11. Having addressed aspects of the pleadings of the parties in relation to the Form 1, it is appropriate at this juncture to consider the decision of the Full Court of the Supreme Court in South Australia in Myles Pearce & Co Pty Ltd v Leuci and Martin.[2] I turn to that matter now.

    [2] (1997) 193 LSJS 491.

    Myles Pearce & Co Pty Ltd v Leuci and Martin

12. Mr Leuci was a vendor of a property at Marion. Mr and Mrs Martin were the purchasers under a contract dated 10 December 1995. The appellant, Myles Pearce & Co Pty Ltd (Myles Pearce) was the agent acting for Mr Leuci. On the day the contract was signed, what “purported to be a vendor’s statement” under ss 88 and 90 of the Land and Business Act was given to the purchaser by the vendor’s agent. The contract was expressed to be subject to the purchasers obtaining finance with settlement set for 27 March 1995. If the vendor’s statement was valid, the cooling off expired on 4 January 1995. On 24 February 1995, the purchasers gave a notice of cooling off under s 88 of the Act, claiming that there were defects in the vendor’s statement of 30 December 1994.

13. The purchasers contended that the defects meant that the statement was not a valid statement for s 90 of the Act and so the prescribed time for the purposes of s 88(1) of the Act had not passed. The deficiencies in the statement were that it did not refer to transactions in relation to the land occurring within 12 months before the date of the contract. It did not refer to a mortgage on the land to National Australia Bank and it did not refer to the particulars of an encumbrance concerning the nature and style of fencing which could be erected on the land.

14. The vendor delivered to the purchasers a Notice to Complete but there was no completion. There was a resale of the land at a reduced figure and losses were assessed at $15,500. An action was commenced in the Magistrate’s Court to recover that sum. The Magistrate held that the Form 1 statement was defective and was of null effect because of the first two defects that it contained. The Magistrate also found that the defects were caused by the breach of duty of the agent and assessed damages which were awarded to the vendor against the agent.

15. The agent appealed. Bleby J wrote the decision of the Full Court. His Honour considered the content of the Land Agents, Brokers and Valuers Act 1973. That Act was repealed by the enactment of the Land and Business (Sale and Conveyancing) Act (1994). In His Honour’s Judgment, Bleby J considered s 88 of the repealed Act. That generally is the equivalent of s 5 of the Land and Business Act. The difference is that there is no equivalent to the content of s 88(3) of the Land Agents, Brokers and Valuers Act. His Honour also considered the operation of s 90 of the 1973 Act. That section is the equivalent of s 7 of the Land and Business Act. His Honour then considered the operation of s 91B of the 1973 Act. That section is the equivalent of s 10 of the Land and Business Act. So also, s 91G of the 1973 Act which is the equivalent of s 15 of the Land and Business Act.

16. Bleby J held that there was a heavy onus on vendors and agents to provide complete and accurate information. His Honour said:-

    Parliament…has determined what information must be supplied to the purchaser and by inference, have determined what information may be material to the purchasers’ decision. Parliament has also made plain…that the information in the vendor’s statement must be accurate…He has taken the further expedient that where the vendor’s statement has been served before the contract is signed and so the cooling off period has not yet begun to run, the information must be accurate at the time when the cooling off period does start to run. By linking the commencement of the cooling off period to the provision of accurate information in the vendor’s statement, Parliament has provided the clearest inference that the cooling off period is not to run until accurate information of a material kind has been provided. If some of that material information is not supplied or is misleading, the purchaser cannot make an informed decision and the cooling off period will not commence to run against the purchaser.

    If that places a heavy onus on vendors and agents to provide complete and accurate information, that merely reflects the policy of the legislation.[3]

    [3] (1997) 193 LSJS 491 at 498.

17. In Myles Pearce, Bleby J held that even if the relevant material defects in the Form 1 statement were not material to purchasers that did not affect the rights of the recipient under the legislation. Bleby J held as follows:-

    I have already noted that the purpose of (s 5) of the Act is to enable purchasers to make an informed decision about whether they will proceed with the contract or exercise their rights to cool off. The nature of the information required to be given about an encumbrance is such that it should not require the purchaser to conduct one or more searches at government offices in order to ascertain the nature and extent of the encumbrance. That is information which the legislation has decreed as relevant to a purchaser exercising cooling off rights. There was not substantial compliance with the requirements of the legislation having regard to its purpose and accordingly I would hold that for this reason also the vendor’s statement was invalid.

    The agent argued that a purchaser should not in these circumstances be permitted to cool off for reasons not associated with the defects in the statement. Cooling off is a summary self-help remedy. The purchaser does not have to justify the decision to cool off to anybody. The decision to cool off may or may not be related to the provision of information required…That is a necessary consequence of the summary remedy that Parliament have provided…[4]

    [4] (1997) 193 LSJS 491 at 500-501.

18. I consider that the state of the law in relation to the operation of the Land and Business Act is clear and well settled. In the later Full Court decision of Astill v South Esplanade Developments Pty Ltd,[5] the majority of the Court (Bleby and Sulan JJ) did not attempt to confine the principles discussed in Myles Pearce but held that the principles of contract such as waiver and estoppel had application to the circumstance of the rights of a purchaser if an appropriate Form 1 had not been served by the vendor. Issues of waiver and estoppel did not arise for consideration in the Myles Pearce decision. In a later decision, Highfield Properties Pty Ltd v Commercial and Residential Developments (SA) Pty Ltd,[6] Blue J referred with approval to the decision in Myles Pearce, confirmed that the question of materiality is to be determined according to the content and requirement of the regulation and, at [121] said:-

    The full Court left open the degree to which (if at all) incompleteness or inaccuracy can be ignored if intrinsically trivial.

    [5] [2007] SASC 231.

    [6] [2012] SASC 165.

19. On that issue, I refer again to the comments of Bleby J at 500-501 in Myles Pearce. His Honour confirmed that the purchaser does not have to justify the decision to cool off to anyone. It may or may not be related to the provision of the information required by s 90 in the regulations. The issue for the vendor is that an appropriate and accurate Form 1 must be provided to the purchasers in accordance with the requirements of the relevant Act. His Honour said that:- “Cooling off is a summary self-help remedy.” It is difficult to see how, in light of that decision, questions of intrinsic triviality have any part to play.

    The documentary evidence before the Court

20. The parties agreed that two books of documents should be placed before the Court. They are Exhibits P1 and P2. Exhibit P1 consists of copies of contracts for the sale of commercial property all pertaining to the property at 29 Tolley Road Nuriootpa; these are three contracts and associated documents relevant to the defendants as vendors and the plaintiffs as purchasers of the Tolley Road property. There is a fourth contract within Exhibit P1. It relates to the contract for sale of the same property between the defendants as vendors and Baskwood Park Pty Ltd as trustee for the JS Hunter Family Trust. The purchase price under each contract is the same $550,000. Baskwood Park Pty Ltd is the third defendant in these proceedings. It has been joined to the proceeding in order to bind it to the result. That company has not taken any active part in the proceedings. The difference in the Baskwood Park contract is that there is no finance clause.

21. The first contract is to be found between pages 1 and 15 of Exhibit P1. The defendants are named as vendors and the plaintiffs are named as purchasers. The first page of the contract describes the purchase price at $550,000 with a deposit of $2,500. The deposit is payable on the next day following the expiration of the cooling off period being two business days after the service of a Form 1. It is not in contest between the parties that no Form 1 was served under the first contract. The settlement date was prescribed as being within seven days after the date on which all the special conditions are satisfied, whichever is the later, or such other date is mutually agreed in writing. There is then a description of matters to be taken into account by the vendor. The vendor was required to clear the block of land before settlement. There are then special conditions on p 3 of the first contract. These special conditions are, in general, consistent throughout the three contracts between the plaintiffs and the defendants. 

22. In this action there has been considerable focus upon the content of these special conditions. Before setting out the terms of the special conditions, it is necessary to note that in the first two contracts under the heading “SPECIAL CONDITIONS” there is a reference to clause (14). Clause (14) is within the general conditions which stand separately from the special conditions. Clause (14) of the geenral conditions reads as follows:-

    “(14) Time of the Essence

    Time will be of the essence of this contract in respect of any obligation under … all Special Conditions:

23. That reference is not to be found in the third contract. That is not a material change for reasons that I will discuss later. It is appropriate here to set out the content of the special conditions. They are as follows:-

    SC1 FINANCE

    SC1.1 This contract is conditional upon the purchaser obtaining, on or before the date specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the purchaser may accept) at the interest rate specified below and otherwise on such terms and conditions that the lender requires but acceptable to the purchaser, to assist in purchasing the property (the “Approval”). Upon notification of the approval to the Vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdrawal the approval, the purchaser will be bound by this contract.

    SC1.2 The purchaser will use best endeavours to obtain the loan.

    SC1.3 In the event that the approval is not obtained on or before the latest date for approval and provided the purchaser has not waived this special condition and communicated such waiver to the vendor in writing then either party (but, in the case of the Purchaser provided it has complied with SC1.2) may immediately terminate this contract by giving notice in writing to the other party.

    SC1.4 …

    SC1.5 In the event of termination of this contract pursuant to SC1.3 in circumstances where the purchaser has failed to comply with SC1.2 the vendor will be entitled to the deposit which is forfeited and to proceed against the purchaser for damages for breach of contract.

24. Below those terms are then three entries to be completed by the contracting parties. They are:

    ·Latest date for approval

    ·Amount of loan

    ·Interest rate

25. The first contract was made subject to the sale of the purchasers’ property under the special conditions. The contract was conditional upon the purchasers entering into a contract on or before 24 April 2017 for the sale of a property at 40 Hughes Road Moppa South Australia 5355 for a price of not less than $500,000 or such lesser sum that the purchaser may accept and settlement of that contract occurring on or before 11 May 2017. In the course of this matter the purchasers’ property was sold and by the third contract, the condition for the purchasers’ property to be sold did not form part of the special conditions of the contract. The first contract was signed by the plaintiff Kylie Dickinson on 24 March 2017. The defendants, as vendors, signed the contract on the same day. The agent, Jane Willson of Marx Real Estate was the witness to those signatures.

26. There was a general annexure to the first contract. The contract was conditional on the Barossa Council approving a current change of use of the property to satisfy the purchasers’ business plan objectives and that approval was to be obtained no later than 20 April 2017.

1. A Mr Andrew Thompson was retained by the purchasers to obtain finance. He gave advice to the plaintiffs as purchasers that if the property was to be valued as a residential property, it was inconsistent for the contract for purchase of the residential property to be subject to a condition requiring approval of a current change of use to satisfy the purchasers’ business plan objectives. Following this advice a Termination of the Contract by Agreement was prepared by the agent and was executed on 5 April 2017.[7] That document is executed by the plaintiff Kylie Dickinson and by the defendants. Ms Willson was again the witness to both of those signatures.

   [7]    Exhibit P1 p 16.

2. There is a slight inconsistency in this approach. I will later discuss the evidence of the various witnesses insofar as I consider it to be pertinent, but the common theme of the plaintiffs’ evidence as purchasers was that they wished to use the property for a number of purposes, namely for residential use, for storage of trucks and other associated paraphernalia of the removalist business which they operated and also as the place from which they would commence to operate a storage business through the use of forms of shipping containers. Thus, the plaintiffs always intended for the premises to have a commercial use. To that extent, it was inconsistent for them to have that intention and to have executed a contract for sale of land: residential property,[8] then to include a Special Condition requiring approval for a current change of use to satisfy those business objectives and then to terminate on the basis that there is an inconsistency between executing a contract for sale for residential property and requiring a valuation on that basis when there is an intention to use the property for a business use.

   [8]    Exhibit P1 p 1.

3. Be that as it may, a second Contract For Sale of Land: Residential Property was then executed by the defendants and the plaintiffs. The purchase price was the same as was the amount of the deposit. The deposit was required to be paid under the same terms. Different from the first contract, a settlement date was prescribed. Initially it was 1 August 2017 and that was brought forward to 12 July 2017 or within seven days after the date on which all the special conditions have been satisfied, whichever is the later or such other date as mutually agreed in writing. The same special conditions apply. The date for approval of the finance by the plaintiffs as purchasers remained at 24 April 2017. There was no entry for the amount of the loan or the interest rate. The sale of the purchasers’ property was also a condition of the contract. Different from the first contract, there was no general annexure Item 1 concerning approval of a current change of use by the Barossa Council. Also different to the first contact, a Form 1 vendors’ statement was served on 26 April 2017. The Form 1 statement carries a date of 24 April 2017[9] but the acknowledgement of receipt of the Form 1 is dated 26 April 2017.[10] The evidence is that the acknowledgement of receipt of the Form 1 was signed at 7 Edwards Street Tanunda. There is no suggestion that the Form 1 was in any way inaccurate. There is no evidence before me of its inaccuracy. I will proceed on the basis that it is accurate for the purposes of the Land and Business Act.

   [9]    Exhibit P1 p 33.

   [10]   Exhibit P1 p 45.

4. Notwithstanding that the Form 1 was delivered, and two business days expired after the delivery of the Form 1, no deposit was paid by the purchaser on this contract. The only excuse proffered by the plaintiffs in evidence was that they did not have the details about where the amount of the deposit was to be paid. For reasons for which I discuss later, I reject that evidence.

5. Consistent with the confusion created by the Special Condition to the first contract, it was found to be necessary for there to be an addendum to the second contract.[11] That addendum reads as follows:-

   “Now it is agreed to vary the terms of the contract (the second contract) as follows:

   The contract shall now be conditional to the Barossa Council’s approval of property’s “current change of use” to satisfy the purchasers business plan objectives for container and self-storage and the approval for the purchasers existing business of “furniture removal” to be relocated to the site. Council approval must be in writing prior to 29 May 2017.

   The finance approval must be received in writing by no later than 29 May 2017.”

   [11]   Exhibit P1 p 86.

6. This document is executed as a deed on 25 April 2017. This is a slightly unusual date as it is the ANZAC Day public holiday. It is signed by the defendants as vendors and by Kylie Dickinson as purchaser. Ms Willson is again the witness to both signatories. The next day the Form 1 was served. Due to the date upon which the Form 1 was served, and having regard to the requirements of the Act, the cooling off period ended at midnight on 30 April 2017. The deposit was not paid after that time. It is worth noting that the addendum to the contract appears to have required the plaintiffs to obtain their finance approval in writing no later than 29 May 2017. There is no evidence that finance approval was received prior to that date. There is also no evidence that the plaintiffs took any steps in reliance upon the failure of the plaintiffs to obtain their finance approval prior to that date.

7. The second contract was terminated. The evidence discloses that there were a number of reasons associated with this termination. I am satisfied that the evidence discloses really only three operative reasons. The first was that the term requiring finance approval to be obtained by 29 May 2017 as reflected in the addendum to contract dated 25 April 2017 had not been satisfied by the end of May. I am satisfied on all the evidence that Mrs Donna Gribble on behalf of the defendant was agitating at least from May 2017 for the plaintiffs to have obtained their finance. They failed to comply with those terms. I am also satisfied that, on the evidence, the defendants were prepared to provide more time to the plaintiffs to obtain their finance in order for them to complete the purchase of the property. The second was that the previous employer of Ms Willson directly or indirectly indicated that the previous contract of retainer between Harcourts Real Estate Agents and the defendants (which involved Ms Willson as the authorized agent) was still on foot and that any commission earned from the sale of the property belongs to that firm. In order to avoid such an outcome, it was necessary to shift out the date of the contract beyond 30 June 2017. The third reason was that having regard to the amendments to stamp duty legislation, if the parties entered into a binding contractual relationship from and including 1 July 2017, in respect of a sale and purchase of commercial property, then there would be a lower rate of stamp duty payable upon the conveyance.

8. For all of these reasons the parties agreed to execute a fresh contract which is dated 1 July 2017. This contract is different in that it identifies Barossa Valley Furniture Removals as the purchaser of the property. The vendors remain the same. The purchase price is the same but the deposit has been increased to $5,000 and is payable at the same time, namely on the expiration of the cooling off period. The settlement date is changed. It was initially stipulated to be 26 July 2017. As a result of and following a suggestion by the defendants’ bank to have mutual settlements, the settlement date was changed to 8 August 2017. By this time, the defendants had entered into a contract to purchase a property at Weetulta on northern Yorke Peninsula and, for the sake of convenience, it was arranged that there would be mutual settlements on 8 August 2017.

9. The initial settlement date prescribed in the third contract was 26 July 2017. That was amended to 8 August 2017 in the circumstances that I have described.

10. I consider that there is an apparent tension between the generality of the settlement date provision[12] and the terms of the special conditions themselves.

    [12]   Exhibit P1 p 89.

11. As there is a difference between the content of the special conditions in the first two contracts and the content of the special conditions in the third contract, it is appropriate that I set out again the content of the special conditions. Before doing so I repeat that under the third contract, at the headings, there is no reference to clause 14 of the general conditions.[13] Clause 14 of the general conditions under the third contract contain precisely the same wording as clause 14 of the earlier contracts. It means that time is of the essence in respect of all special conditions; to an extent this focusses the issues for consideration by the comparison of the settlement date provision[14] and the special Conditions.[15]

    [13]   Clause 14 of the General Conditions is set out in paragraph [42] above.

    [14]   Exhibit P1 p 89.

    [15]   Exhibit P1 p 91.

12. The terms of those special conditions are as follows:-

    SPECIAL CONDITIONS

    SC 1 FINANCE

    SC 1.1 This Contract is conditional upon the Purchaser obtaining, on or before the Latest Date for approval specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the Purchaser may accept) at the interest rate and on terms that the lender requires but acceptable to the Purchaser, to assist in purchasing the property (the “approval”). Upon notification of the approval to the Vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract as the Vendor will rely on a notification of finance approval.

    SC 1.2 The Purchaser will use best endeavours to obtain the loan. The Purchaser will apply for a loan by the Latest Date to apply below specified to apply and will inform the Vendor and or its agent and deliver copies of all finance applications and responses to the Vendor or its agent immediately on request, and if finance is advised as being approved or refused then immediately upon notice being received, and failure to copy the information to the Vendor as herein detailed will be deemed a breach of warranty of best endeavours entitling the Vendor to serve a notice of intention to terminate and then to terminate for any continuing breach in default, being deemed a breach of the warrant of best endeavours.

    SC 1.3 In the event that any finance approval or refusal is not obtained and communicated to the Vendor on or by the Latest Date for Approval and provided the Purchaser has not waived this special condition and communicated such waiver to the Vendor in writing then either party may terminate this Contract by giving notice in writing to the other party (but, in the case of the Purchaser, provided it has complied with SC1.2).

    SC 1.4 In the event of termination of this Contract pursuant to SC1.3 and provided the Purchaser has complied with SC1.2 all monies paid by or on behalf of the Purchaser will be repaid to the Purchaser.

    SC 1.5 In the event of termination of this Contract pursuant to SC1.3 in circumstances where the Purchaser has failed to comply with SC1.2 the Vendor will be entitled to the deposit which is forfeited to the Vendor and the Vendor may proceed against the Purchaser for damages for breach of Contract. 

13. Similar to the earlier two contracts, after the written special conditions there are three entries, namely: “latest date for approval; latest date to apply; amount of loan”. The only entry completed is the latest date for approval and the date set out there is 7 July 2017. No date is specified for the latest date to apply and the amount of the loan is not specified.

14. Different to the two earlier contracts, there is then a section described as: “Other Conditions”. There is a handwritten entry. It reads: “Pre-Settlement inspection Mon” and there are then three dates. The first is 20 July, the second is 30 July and the third is 7 August. Each of the first two dates in this section are crossed out and each of the amendments are initialled. Although there was no specific evidence on this topic, it appears that the parties had turned their minds to the fact that the pre-settlement inspection would take place the day before settlement, namely on 7 August prior to 8 August 2017. The parties have therefore turned their minds to the date of settlement as being 8 August 2017.

15. I consider this to be important at a number of levels. I have earlier indicated that the settlement was changed from 26 July to 8 August 2017. There is a further entry within the settlement date provision which reads: “or (b) within seven days after the date on which all the special conditions are set aside, whichever is the latest.” On one level it could be argued the time allowed within the contractual terms for the satisfaction of the special conditions is completely open ended and so the purchasers may take such time as is necessary to satisfy the special conditions. At another level, the insertion of the date for approval and then the date for the pre-settlement inspection is confirmatory of the approach of the plaintiffs that by a process of a letter of indicative approval from the bank and then a letter of offer of finance from the bank, there has been approval of finance. The plaintiffs argue consequently that there is no basis for termination under special condition 1.3. The defendants contend that the date fixed for settlement was 8 August 2017, the plaintiffs could not settle on that date because they did not have approval for finance and that the defendants were entitled to deliver a Notice under special condition 1.3 (on 9 August 2017) terminating the contract.

16. It is in that background that the evidence of the parties must be assessed. Before assessing the evidence of each of the witnesses, it is appropriate to identify some matters that are not truly an issue between the parties and do not require any findings from me. I have already identified the three contracts and the reason why the second contract was terminated and the third contract entered into. There was some evidence about the fact that although the third contract was dated 1 July 2017 it may well only have been executed by the plaintiffs on the 3^rd or possibly 4^th of July 2017. Nothing turns on that matter. A second matter is that the defendants are in a state of penury.[16] The evidence discloses that the defendants have been unable to pay for rates, taxes and outgoings in respect of the Tolley Road property for some time. The defendants needed to sell the Tolley Road property, discharge the existing mortgages on the property (in the amount of about $330,000), pay $50,000 to the Commonwealth Bank in respect of a mortgage on a house at Swan Reach and purchase their new property at Weetulta on Yorke Peninsula for $125,000 plus settlement costs. The unchallenged evidence was that it was necessary for the defendants to achieve at least $535,000 net from the sale of the Tolley Road property in order to discharge all liabilities to the bank and hold the Weetulta property freehold and unencumbered. In order to facilitate this, Ms Willson agreed to reduce the commission that she would otherwise claim on the sale.

    [16]   For example, see Exhibit D7.

17. In evidence some time was taken in examining when and where particular contracts were signed. Mr Jeremy Thompson gave evidence that the third contract was signed away from the office of Marx Real Estate in Angaston. Ms Willson initially thought that the third contract had been signed in her office. In cross-examination she conceded that she may have been wrong about that and the third contract may have been executed outside of her office. I accept the evidence of Mr Jeremy Thompson on that point. I have earlier referred to the fact that the settlement date was changed to 8 August. I am satisfied that this occurred as a result of a request from Mrs Donna Gribble to Ms Jane Willson. The background to that request was that the Commonwealth Bank had suggested that rather than there being two settlement dates, namely 26 July and 8 August, it was appropriate for the settlement for the purchase of the Weetulta property and the settlement of the sale of the Tolley Road property occur simultaneously on 8 August.[17] I am satisfied that this change of date was as a matter of convenience as much as anything else. However, in relation to the question of where the third contract may have been signed, I am satisfied that nothing turns on the point and that the memory of Ms Jane Willson on the issue was not accurate. However, that does not in any way lead me to doubt the credibility and truthfulness of the evidence of Ms Jane Willson.

    [17]   See the email exchange P2 p 52.

18. I also accept that the memories of the defendants about the reasons they understood the third contract was prepared were not accurate. Mrs Gribble informed me that she thought that the reason why the third contract was formed was because of the stamp duty issues. I accept the evidence of Mr Jeremy Thompson on that issue, namely that there were several reasons as I have earlier expressed. That difference in evidence does not lead me to doubt the credibility and truthfulness of the evidence of Mr and Mrs Gribbles generally. Similarly, I accept that at the time of the conversation held between the plaintiffs and the defendants in the evening of Friday 4 August 2017 at Tolley Road, the defendants had just returned from a trip to Weetulta for the purpose of delivering furniture to that site. Their removalist trailer was empty at the time. Mr Jeremy Thompson thought that when he was present in that conversation, the removalist trailer was full of furniture. He was not correct about that and the event of which he has recollection actually occurred on the previous Wednesday 2 August 2017. That lapse of memory does not lead me to doubt the veracity and truthfulness of the evidence of Mr Jeremy Thompson.

19. An issue that occupied some time in evidence was the question of the willingness and expressed desire of the plaintiffs to complete the contract for purchase of Tolley Road. I accept that at all times up to and including 4 August 2017 the plaintiffs continually expressed their willingness to complete the purchase. That message was clearly conveyed to Ms Jane Willson, the agent for the defendants, up to and including that time. In her evidence, Ms Willson accepted that this was so. There was no evidence that Ms Willson continuously informed the defendants of the willingness of the plaintiffs to complete the contract. I consider that the greater likelihood is that this was a “given” during that time.

20. That said, I think that there was a watershed moment when the valuation of the Tolley Road property was received by the bank and communicated to the parties. There were a number of changes that occurred. The first is that there was some direct contact between the plaintiffs and the defendants on 4 August 2017. The second is that there were further conversations between the plaintiffs and Ms Jane Willson on 7 and 8 August 2017. These communications were ultimately confirmed in writing to the defendants late in the afternoon of 8 August 2017. Those communications precipitated the notice of termination dated 9 August 2017.[18]

    [18]   Exhibit P2 p 125.

21. I will now proceed to consider the evidence of the witnesses in light of those background matters.

22. The plaintiffs called three witnesses, Ms Kylie Dickinson, Ms Kylie Thomson and Mr Jeremy Thompson. I found that Mr Jeremy Thompson was a witness of truth except in one instance where his evidence appeared to be ‘schooled’ or where his evidence was demonstrably contradicted by contemporaneous documents. Subject to that, I accept the evidence of Mr Thompson without reservation. I am unable to accept the evidence of Ms Kylie Dickinson except where her evidence is corroborated by the evidence of Mr Thompson. I found that Ms Dickinson made statements particularly in cross-examination which were without any credit and reflected poorly upon the whole of her evidence in the matter. To the limited extent that it is relevant, I accept the evidence of Ms Kylie Thomson. However, I consider that Ms Thomson, to a significant extent, saw her role as being to support the plaintiffs in the action rather than to give objective dispassionate evidence. When she was closely cross-examined, Ms Thomson was forced to admit a number of what I consider to be plainly obvious matters that contradicted her earlier evidence. To an extent this reflected poorly on the credibility of Ms Thomson but, to her credit, she did accept propositions put to her which were demonstrably correct.

1. The defendants both gave evidence. I found the defendants to be witnesses of truth and gave their evidence in a reliable manner. The defendants also called two further witnesses, namely Ms Jane Willson, the agent, and her immediate supervisor, Ms Sara LaNauze. I considered that both of those witnesses gave their evidence in a credible fashion. I have already indicated that Ms Willson was incorrect in the evidence that she gave about the third contract being signed in her office. In cross-examination she properly and willingly conceded that her memory on that matter may be incorrect and that the contract may have been signed outside of her office. The concession was properly made and the incorrectness of the earlier evidence given by her on that topic does not in any way affect my assessment of the credibility of her evidence generally.

2. I accept that for both parties the Tolley Road property is very important. It is important to the plaintiffs because it is an incontestable fact that it is zoned light industrial, it is close to a major freight route, it is large enough for the plaintiffs to run their business from those premises, it is central to Nuriootpa and it also allows easy access for the family to schools and work places. It also allows sufficient space from which the plaintiffs may operate what they intend to be a future business namely a storage business. It is important to the defendants because the sale of the property is essential to their financial future. Absent a sale at the appropriate price, the defendants, due to their state of penury, are at risk of severe financial distress.

3. In part I have already covered some of the evidence given by Ms Willson which is not seriously in contest between the parties. This relates to the first, second and third contracts. I accept that the termination of the second contract was signed at 17 Centenary Avenue Nuriootpa.[19] I also accept that at the time that the third contract was signed, Ms Jane Willson, the agent of the defendants, said to the plaintiffs that there would be need for an updated Form 1 because of the new financial year. This was because there may be some changes to the Form 1 and there will be more costs in the preparation of that document which may not please the defendants.[20]

   [19]   T44.19-.22; .24-.27.

   [20]   T46.1-.7.

4. Prior to the signing of the third contract[21] the plaintiffs had received a letter from the ANZ Bank Small Business Operations dated 15 June 2017. The letter[22] indicates that the Bank is pleased to provide the plaintiffs with indicative approval for their application. The application is for an amount of a loan of $330,000 for a term of 15 years at an interest rate of 5.99%. The letter sets out some preliminary conditions which relevantly are as follows:-

   “Financial contribution – ANZ has received evidence that you or a guarantor has available funds in a deposit account held with ANZ or, if acceptable to ANZ, another institution of at least $255,000 which will be paid towards the acquisition of 29 Tolley Road Nuriootpa SA 5355.

   Valuation – ANZ had received a valuation for the property situated at 29 Tolley Road Nuriootpa SA 5355 showing a market value of no less than $550,000 and that is otherwise reasonably satisfactory to ANZ.”

   [21]   Exhibit P1 p 89.

   [22]   Exhibit P4.

5. These preliminary conditions form part of the basis upon which the loan had been approved. The evidence of Ms Thomson was that Exhibit P-4 dated 15 June 2017 had been prepared in Melbourne and forwarded to the ANZ branch in South Australia. The view formed by Ms Dickinson was that upon receipt of Exhibit P4 she was in a position to advise Ms Jane Willson, the agent for the defendants, over the telephone that financial approval had been given and that only a valuation needed to be done.[23] In a text sent to Mr Dean Gribble on Friday 16 June 2017 at 12.10pm, Ms Dickinson informed Mr Gribble that: “I am sure that Jane will let you know. Our finance has been approved. They just need to come out to do a evaluation…”[24] I accept that the mindset of the defendants from the date of receipt of the bank letter of 15 June 2017[25] was that the finance had been approved. Whether that is so is a question for my consideration.

   [23]   T49.12-.16; Exhibit P2 p 39.

   [24]   Exhibit P2 p 39.

   [25]   Exhibit P4.

6. After the receipt of the letter of 15 June 2017, the plaintiffs received a letter of offer from the ANZ Bank dated 26 June 2017.[26] Ms Dickinson said that she collected the letter from the Tanunda ANZ branch and had a conversation with Ms Kylie Thomson at about the same time. The letter from the ANZ, prepared in Melbourne, is addressed to the plaintiffs and is dated 26 June 2017. The heading of the letter is “Letter of Offer”. The first paragraph of the letter reads as follows: “ANZ is pleased to provide you with a finance offer to meet your needs…” The details of the proposal are set out within the letter of offer. There is then a summary of facilities offered which is the loan in the amount of $330,000 including a description of the facilities, securities, interest fees and charges. On page two of the letter, there is a statement of the conditions and financial requirements. It reads as follows[27]:-

   [26]   Exhibit P2 p 45.

   [27]   Exhibit P2 p 46.

   Conditions and Financial Requirements

   Any condition precedent, other condition or financial reporting requirement set out in:

   ·The attached conditions and financial requirements schedule;

   ·The documents referred to in the terms and conditions section of this letter of offer apply to the facilities.

7. The letter went on to indicate that in order to accept the offer, the letter needed to be signed and returned to the ANZ Bank. Within the schedule of the document is a Conditions and Financial Requirements Schedule.[28] It reads as follows:-

   [28]   Exhibit P2 p 50.

   “Conditions Precedent

   (What you need to do first)

   ANZ’s obligation to make any facilities available to you is conditional on ANZ being satisfied that:

   ·…    

   ·Financial Contribution – ANZ has received evidence that you or a guarantor has available funds in a deposit account held with ANZ…of at least $255,000 which will be paid towards the acquisition of 29 Tolley Road Nuriootpa SA 5355;

   ·…

   ·Valuation – ANZ has received a valuation for the property situated at 29 Tolley Road Nuriootpa SA 5355 showing a market value of no less than $550,000 and that is otherwise reasonably satisfactory to ANZ.

8. The next document is entitled “Acceptance and Consent (Your Agreement to ANZ’s Offer)”.[29] Under the heading “Acceptance” the letter reads:-

   “Acceptance of the letter of offer dated 26 June 2017

   We accept ANZ’s offer to provide the facilities on the conditions detailed in this Letter of Offer and acknowledge receipt of all documents listed under the section headed “Terms and Conditions” in the Letter of Offer. Before acknowledging receipt, you should ask for a copy of these terms and conditions if you do not already have them.

   [29]   Exhibit P2 p 51.

9. The tendered document[30] discloses that the acceptance and consent is signed by the plaintiffs. The date of signature is 21 July 2017. It is a little peculiar that a letter of offer dated 26 June 2017 was not accepted until 21 July 2017. This was well after the date of the third contract. There was some evidence that the letter of offer was received after the date it bore, however even if that is the case, there is still an unexplained delay between its receipt and the date of 21 July 2017. I will leave that matter aside because I am satisfied that nothing turns on it.

   [30]   Exhibit P2 p 51.

10. Reviewing the letter, I am in no doubt that the bank intended to enter into a formal loan arrangement with the plaintiffs. The bank did so by tendering the letter of offer and the plaintiffs responded by accepting the terms of the bank offer and then returning the signed acceptance to the bank. This is the usual way for a bank to proceed in the ordinary arrangements between banker and customer. The letter of offer and its acceptance is intrinsic to the formation of the banker and customer relationship between the parties concerning this particular loan facility arrangement. It is ordinarily a step that is taken in relation to each facility provided by a banker to a customer and the commercial reasons for that approach are sound and easily explicable. A banker will not rely upon the terms of a general arrangement between banker and customer for example in relation to a similar overdraft and any familiarity by the customer of the bank’s terms and practices when making a contract for the provision of a larger loan facility to that same customer. A bank will always be required to establish the specific terms of the arrangement with the borrower for the protection of both the bank and the borrower.

11. In that background, it is then necessary to properly consider the offer of the bank. The bank offers to provide the facilities on the conditions detailed in the letter. These include that ANZ will make the loan on particular conditions including that it has received a valuation for the property showing a market value of no less than $550,000 and that it is otherwise reasonably satisfactory to ANZ. On the assumption that the other ‘conditions precedent’ are fulfilled, the bank has agreed to make the loan funds available to the plaintiffs as borrowers on the condition that a market valuation of the property of $550,000 is procured. I will leave aside any question of what may otherwise be reasonably satisfactory to ANZ.

12. I refer again to clause SC1.1 of the special conditions.[31] The contract is conditional upon the purchaser obtaining before 7 July 2017 approval in writing for a loan in the amount specified at the interest rate and on the terms which the lender requires but which are acceptable to the purchaser to assist in the purchase of the property. There must be approval in writing for a loan. In the letter of 26 June 2017, the bank has made an offer of finance upon the terms and conditions set out in the letter. A condition precedent to the offer is that the bank receives the appropriate valuation. Upon receipt of the valuation and on the assumption that the terms of the valuation are acceptable to the purchasers, then the bank will make the loan.

    [31]   Exhibit P1 p 91.

13. Until such time as the loan is approved the offer of the facilities is no more than an offer on the terms subject to the conditions precedent. Once the conditions precedent are satisfied the loan will be approved because the terms that the lender requires have been satisfied. The question will always arise whether there has been satisfaction of the terms specified by the lender but that is a question of fact in each case. It would be a peculiar result if once the offer was made on conditions stipulated by the bank it could be said that the purchaser had obtained the loan when those conditions had yet to be satisfied as a condition precedent to the making of a loan.

14. Exhibit P8 discloses that from at least the beginning of June Mrs Donna Gribble, one of the defendants, was very active in attempting to ensure that the valuation of the Tolley Road property had been procured. Exhibit P8 is a “dump” of the contents of text messages sent from Mrs Donna Gribble’s phone. They show that on a number of occasions Mrs Gribble was asking the agent Ms Jane Willson for an update about the valuation. Mrs Gribble gave evidence, which I accept, that she was not completely satisfied that the plaintiffs were wholly committed to the purchase of the property and that she had some nervousness about whether or not the sale would be completed. No doubt that nervousness was exacerbated by the state of penury of the defendants at the time and their reliance on the sale of the Tolley Road property to discharge their borrowings from the Commonwealth Bank.

15. Ms Dickinson said that on a number of occasions Ms Jane Willson made calls to her attempting to ascertain the progress on the valuation. The evidence of Ms Dickinson was that at no time did Ms Jane Willson ever query her about the payment of the deposit. I am unable to accept that evidence. I prefer the evidence given by Ms Jane Willson on the topic that the question of the deposit was a matter that she followed up constantly. Insofar as there is an inconsistency of the evidence between Ms Kylie Dickinson and Ms Jane Willson, I would prefer the evidence given by Ms Jane Willson. I will develop this later in these reasons.

16. Ms Dickinson gave evidence that on 3 August 2017 she received information from Ms Willson that the Opteon valuation had come in and that it was short. The valuation of the property was at $475,000 and not $550,000.[32] Ms Dickinson’s first reaction was to be angry about the fact that Ms Willson knew about the valuation before she did. Ms Dickinson then rang Ms Kylie Thomson at the ANZ Bank and queried whether she had seen the valuation. She had received an emailed copy of the valuation and had opened it. She thinks that she did not speak to anybody else about the valuation on that evening.

    [32]   T54.3-.12.

17. She said that she then spoke to Ms Jane Willson and Ms Kylie Thomson on the 4^th of August. She thinks that she had a number of conversations with Ms Willson on that day.[33] Ms Kylie Dickinson alleges that in the conversations with Ms Willson on the 4^th of August, Ms Willson said that she did not want to inform the defendants of the content of the valuation and that it had come in low. As I understood the evidence of Ms Dickinson she asked me to accept that it was only at her urging that Ms Willson went and told the defendants of the content of the valuation. I am unable to accept this evidence. It does not accord with what might be thought to be plain common sense. Further, Ms Dickinson said that Ms Willson asked her if Mr Jeremy Thompson would like to go and see Mr Dean Gribble and tell him about the content of the valuation because she couldn’t do it herself.[34] I also reject this evidence. It is contrary to plain common sense and is denied by Ms Willson. I accept Ms Willson’s denial.

    [33]   T55.17-56.17.

    [34]   T56.25-.38.

18. Ms Dickinson said that there were a number of conversations between she and Ms Kylie Thomson of the ANZ Bank on 4 August 2017. However, the evidence is that Ms Kylie Thomson did not have any time to look at the valuation on that day because she had other commitments and also was leaving for a conference out of the office. My assessment of the evidence is that the plaintiffs received no assistance from Ms Kylie Thomson on that day due to circumstances out of Ms Thomson’s control.

19. Ms Dickinson gave evidence that she went to see the defendants in the evening of 4 of August 2017. A conversation occurred and it took place outside. Ms Dickinson said that it was a discussion including that they still had finance but they needed to get the valuation which had come in low. Ms Dickinson said on a number of occasions[35] that she told them the bank would still lend up to 60%. However, there is no evidence that any further approach had been made to the bank. There is insufficient time for that to have occurred by 4 August 2017, especially when it is known that Ms Thomson was not available. Ms Dickinson also alleged that Mrs Donna Gribble said she was so unhappy with Ms Jane Willson’s performance that she would go all over social media and tell everyone and anyone possible that she was unhappy with Ms Jane Willson. Mrs Gribble emphatically denied that assertion. I accept the evidence of Mrs Gribble. I do not accept the evidence of Ms Dickinson on this topic. It again does not accord with common sense because the focus of Mrs Gribble and her husband were to perfect the contract of sale of their property.

    [35]   T59.7-.23.

20. Then in her evidence, Ms Dickinson alleged that the Gribbles said that they were happy to give more time to the plaintiffs to obtain bank finance. This followed reassurances from Ms Dickinson that it was a commercial property and the banks always lend up to 60%. She said there was no discussion about not proceeding ultimately.[36] I do not accept this evidence. As I have already discussed, the defendants were already in a state of penury. They were under pressure from their own bank, they had to make a payment on the Swan Reach property, they were being required to settle upon the Weetulta property and they were incurring costs of holding the Tolley Road property which they could not pay. It is impossible to accept that they would have taken a casual laissez-faire attitude to the settlement of the Tolley Road property as indicated by Ms Dickinson.

    [36]   T61.6-33.

21. Ms Dickinson said she did not receive a copy of the valuation until Monday 7 August 2017.[37] She said she did not have any contact with the defendants that day and everything that did occur was on 8 August 2017. She agreed that she sent an email to Mr Dean Gribble on 8 August 2017 at 4.34pm. It read:-

    Hi Dean, just to keep you updated. We have looked over the valuation and the news isn’t good. The bank has also looked at. It is pretty spot on. Jane was going to contact you after I spoke to her. If you would like to see the valuation we can bring it round for you to have a look at.

    [37]   T62.20.

22. At 5.05pm on the same day, Mr Dean Gribble responded[38] in the following terms:-

    No thanks I don’t need to see the valuation the property is worth what we are asking mate. I think the bank tell the valuers what they want also we have bought property well over valuation… so we need $535,000 in our hand to even consider selling.

    [38]   Exhibit P2 p 120.

23. Ms Dickinson gave evidence[39] that on Tuesday 8 August 2017 she had discussions with Ms Kylie Thomson and with Ms Jane Willson. There were many discussions. The discussion with Ms Kylie Thomson was about how long it would take to fully look over the valuation and for Ms Thomson to tell them the options available to them and how it may work if there were renegotiations done.[40] She said she wanted information from Ms Kylie Thomson if there were to be negotiations on price and they wanted every option to look at to make an informed decision.[41]

    [39]   T67.3.

    [40]   T67.24.

    [41]   T67.27.

24. Ms Dickinson said she also asked Ms Jane Willson what generally happens when a valuation comes in short and Ms Willson said there could be renegotiations, she could go back to the other parties and have discussions. She could speak to Mr and Mrs Gribble and see if they were open to negotiations. She said Ms Jane Willson was the first person to raise this idea of renegotiation and that is something she then raised in conversations later with Ms Kylie Thomson.[42]

    [42]   T67.33 – T68.24.

25. As a result, Ms Dickinson said she later had discussions with the Gribbles to see whether they were open to renegotiations. She said she was asked whether she had a figure in mind. Her evidence was she told Mr and Mrs Gribble she did not. She said to Ms Jane Willson she would rather Ms Willson go and speak to the Gribbles and find out if they would be willing to negotiate at all. She said the conversation with Ms Jane Willson was that Ms Willson asked whether she was putting an offer of $475,000 or an offer of $500,000. She wanted a figure to put to the Gribbles. The evidence of Ms Kylie Dickinson was she did not want to give a figure and she just wanted to know whether Mr and Mrs Gribble were open to renegotiations. I reject this evidence. It is contrary to the evidence of Ms Jane Willson which I accept. It is also contrary to the evidence of Ms Sara LaNauze who witnessed the instructions being given over the telephone in relation to the $475,000 offer.

26. Ms Dickinson then alleged that Ms Willson said she would put a figure and also mentioned something about the deposit. She said it was Ms Willson who said she would rather the finance be completely unconditional before a deposit was paid. I reject that evidence. It is inconsistent with what might be described as plain common sense and it is inconsistent with the evidence given by Ms Jane Willson which I accept.

1. In North v Marina[219] Campbell J said:-

   “In construing a document, one seeks to ascertain the intention of the parties arising from the document as a whole, and reading the document with such background information as was known by all parties to it. In McEntire v Crossley Brothers [1895] AC 457 at 462-3, Lord Herschell LC said in words quoted with approval by Isaacs J in Australian Guarantee Corporation v Balding (1930) 43 CLR 140 at 151:

   “The agreement must be regarded as a whole—its substance must be looked at. The parties cannot, by the insertion of any mere words, defeat the effect of the transaction as appearing from the whole of the agreement into which they have entered. If the words in one part of it point in one direction and the words in another part in another direction, you must look at the agreement as a whole and see what its substantial effect is. Where there is no such theme, as seems to have been argued here, as looking at the substance, apart from looking at the language which the parties have used. It is only by a study of the whole of the language that the substance can be ascertained.”

   [219] [2003] NSWSC 64 at [43]-[45].

2. In my interpretation of the special condition I have adopted this approach. Looking at the whole of the contract, its purpose is to facilitate the purchase of the Tolley Road property by the plaintiffs. So much is also clear from clause SC1.1. The contract is conditional upon the plaintiffs’ obtaining approval in writing for a loan on terms that the bank requires but acceptable to the purchaser to assist in purchasing the property (the approval) (my emphasis). Thus, the whole of the first sentence of SC1.1 must be read as a whole in the context of the whole background of the contract itself. As I have said, the background of the contract is the sale by the defendants and the purchase by the plaintiffs of the Tolley Road property. Considered as a whole, the first sentence defines the approval to mean not only approval in writing for a loan but that the loan itself must be on terms acceptable to the purchaser, on terms that the lender requires and with a purpose to assist in purchasing the property. There will be no “approval” for the loan except upon the satisfaction of those three matters, namely: the fact of the loan, on the terms that the defendant requires, that are acceptable to the purchaser and finally, for the purpose of assisting in the purchase of the property. That this approach is correct is only emphasized by the clause itself: after the three things are described the words (“the approval”) are included. Considered objectively, the meaning to be given to the clause is that the parties have turned their minds to what an “approval” constitutes. The content of the brackets are therefore definitive of what the parties consider approval to mean. This is the satisfaction of these three requirements.

3. It follows that notwithstanding that I accept the plaintiffs’ submissions on the question of uncertainty, I am unable to accept their submissions on the question on the meaning of special condition SC1.1 and therefore the operation of SC1.3. I am not satisfied that the letter of offer of 26 June 2017[220] satisfies the requirement of the special conditions. The bank is under no obligation to make a facility available in the event that the valuation of the property does not reach $550,000. The offer is therefore conditional. Before the letter can achieve the status of an “approval,” it must be on the terms that the lender requires. It must also be acceptable to the purchaser and it must be to assist to purchase the property. The terms that the lender required render any consent conditional on the production of a satisfactory valuation of the property. It is described as a condition precedent. I see little utility in discussing concepts of conditions precedent and conditions subsequent. All that it is necessary to say is that it would not be until all of the conditions have been fulfilled that ANZ would be under an obligation to make the loan and that, as a matter of contract, the plaintiffs could call ANZ to a settlement on the sale of the property. I accept the submission of the defendants that there is no present representation that the bank will lend the money and all that the plaintiffs possess is an indication from the bank that there may be approval of the loan in the event that the valuation is procured.

   [220] Exhibit P2 p 45.

4. Consistent with that view, I consider that finance approval has not been obtained and communicated to the vendor on or by the last date for approval. The plaintiffs as purchasers have specifically disclaimed any concept of waiver. Under the clause, the defendants may terminate the contract by giving notice to the other party. For the same reason I am unable to accept the plaintiffs’ argument that clause 13.2 of the general conditions of the contract were required to be complied with before there could be any termination.

5. As I have indicated above, the failure to obtain the approval for finance provides an immediate right in the vendor to terminate the contract. Reading the contract as a whole, there is no basis that has been identified which would require the importation into the consideration of SC1.3 of, for example, the requirements of clause 13.2 of the contract. That is, it would not be necessary for the exercise of a right under clause 1.3 to give a notice of intention to terminate before termination under clause 1.3. That approach is consistent with the operation of clauses 1.4 and 1.5 which deal with the consequences of terminations. Both of them operate upon the basis of an event of termination pursuant to clause 1.3.

6. I also accept the submission of the defendants that clause 13.2 would operate inconsistently with the rights contained in clause 1.3. The defendants contend and I accept that if special condition 1.3 provided a right for either the purchaser or the vendor to terminate, which it does, then, on the plaintiffs’ argument, if a purchaser was to terminate relying upon an inability to obtain the approval, then it would be required to give itself notice that it intends to terminate because of its inability to obtain finance, unless it obtained finance. Such an interpretation is an absurdity and is not intended by the contract itself and is contrary to the principles set out above. The construction of clause 13.2 of the contract is centred on questions of parties being in default. As I demonstrated above, the special condition finance clause 1.1 is designed to protect the position of the plaintiffs as purchasers but operates for the benefit of both purchasers and the defendants as vendors. A failure to obtain an approval cannot be and is not a default for, as an example, the general conditions.

7. If I am wrong about that view, then I am also satisfied that the conduct of the plaintiffs based upon the evidentiary findings that I have made constituted a repudiation of the contract. The usual formulation of repudiatory conduct is by reference to one specific act of repudiation or an accumulation of acts which do not of themselves constitute a repudiation. It would be necessary to identify that the act or acts evidences “an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not any other way…”[221] Such repudiatory conduct will include those circumstances where the contracting party is unable to perform. That inability to perform may be inferred from conduct.[222]

   [221] Shevill v Builders Licensing Board [1982] HCA 47; (1982) 1 49 CLR 620 at 625-6.

   [222] Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 at 437 per Devlin J; Bell v Scott (1922) 30 CLR 387 at 395-6.

8. The learned authors of the sixth edition of JW Carter: Contract Law in Australia state at [30-42]:-

   “The clearest case of repudiation based on an inability to perform is where the promisor expressly declares that it is unable to perform all contractual obligations.”[223] However the declaration need not be express and may, therefore, be inferred from conduct… First, even if a promisor does not expressly state an inability to perform, a repudiation will occur if the only reasonable inference from the promisor’s words or conduct is an inability to perform the contract… In order to establish a repudiation a promisee must be able to prove that the requirement of seriousness is satisfied … This (requirement) is satisfied because the words or conduct relate to all or substantially all of the promissor’s obligations but those words need not go so far.[224]

   [223] Hoad v Swan (1920) 28 CLR 258 at 264.

   [224] See also Paul Fishlock v The Campaign Palace Pty Ltd [2013] NSWSC 531 at [45].

9. The test of whether or not there has been repudiatory conduct is objective: the conduct must be such as to convey to a reasonable person in the position of the defendant: “… a disavowal of the contract as a whole or a fundamental obligation of it…”[225]

   [225] Lourinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 648 and 658.

10. The repudiation itself must be accepted. At 30-45 the learned authors of JW Carter Contract Law in Australia sixth edition[226] say as follows:-

    “[30-45] Acceptance of a repudiation

    The word “acceptance” is used in the context of repudiation to describe the promisee’s decision (election) to terminate the performance of the contract. Therefore, acceptance of a repudiation is necessary if the promisee wishes to terminate the performance of the contract. Acceptance is also required to complete the promisee’s cause of action for damages in cases where the repudiation precedes the time for performance…”

    [226] Lexis Nexis Butterworths.

11. I consider in circumstances involving a contract for the sale and purchase of land, it is necessary for the acceptance of the repudiation to be signified by clear and unequivocal conduct such as the delivery of a notice of termination of the contract.

12. The defendants contend and I accept that the question of repudiation in this matter revolves around the conversation that occurred between Ms Willson as the agent for the plaintiffs and Ms Dickinson on behalf of herself and her co-plaintiff. There is long standing authority for the proposition that offer and acceptance followed by a counter offer amounts to repudiatory conduct and disallows one party calling the other party to perform on the initial contract.[227] These principles cannot be in doubt.

    [227] Hyde v Wrench [1840] 49 ER 132.

13. The defendants point to the fact that the offer of $475,000, the equivalent of the amount of the valuation in consideration for the transfer of the land is to be understood as the plaintiffs informing the defendants that they are no longer prepared to pay the contract price of $550,000. At that time, the plaintiffs had not obtained finance and the time stipulated in the contract to obtain finance had passed. The evidence discloses that Ms Dickinson was indicating, by this offer and by her conversations with Ms Willson, that the plaintiffs were reopening negotiations. Assessed objectively, the intent of what she was doing was to indicate at least three things: that there had been no approval as required under SC1; that the plaintiffs were not prepared to continue with the contract in the amount of $550,000; and the plaintiffs wished to renegotiate the contract price to a lower price inferentially in line with what they considered they may be able to achieve as a financing package with the bank.

14. The defendants rejected that approach. They then delivered the notice of termination dated the 9 August 2017. I am satisfied that the defendants were in a position where they were entitled as a matter of law to treat the conduct of the plaintiffs as repudiatory and to terminate the contract on that basis. That conduct must be assessed objectively and in the whole of the background circumstances as I have described them. One of those circumstances was the urgency for the defendants to achieve settlement. They could not delay settlement for the reasons already discussed.

15. In that background, the statement by Ms Dickinson on behalf of the plaintiffs to Ms Willson that the plaintiffs now wished to reopen negotiations on the purchase price with an offer of $475,000 (and with the prospect of further negotiations) evidences their intention not to be bound by 1 July contract. That position would not have been reached except that the special conditions about finance had not been satisfied. Once it became apparent that the application for finance to which reference was made by Ms Willson and Ms Thomson from early June 2017 had failed, both parties to the contract had their contractual rights. As summarised by Mason J (as his Honour then was) in Meehan, both parties could give notice under clause 1.3 of the special conditions and bring the contract to an end. This is the basis stipulated in the defendants’ notice of 9 August 2017.

16. I am satisfied that what was said by the plaintiffs to the defendants on 8 August 2017 was not in any sense a mere “testing of the waters” to gauge whether the defendants were open to negotiations. It was far more serious than that. I keep in mind the efforts that a Court will make to preserve a contract for sale and purchase of land. Repudiatory conduct must be serious and I think that any doubt must fall to the benefit of the plaintiffs.

17. On my assessment of all the evidence no such doubt arises. Objectively assessed, the whole of the evidence points in only one direction. The plaintiffs wished to and needed to renegotiate the contract for sale with the defendants so that they could approach the bank and in turn renegotiate the contract of loan with the bank. This would require a fresh offer from the bank. The plaintiffs sought to reduce the purchase price payable believing, rightly or wrongly, that this was the only available means to secure their position. This followed the further information from Ms Thompson at ANZ on the borrowing scenarios at $475,000 and $500,000. The plaintiffs then acted to renegotiate the contract. Their intention was manifest and their thinking was in the end, anchored to the valuation upon which they had to negotiate with the bank.

18. The only other scenario available to the plaintiffs was that they could, before settlement date, inform the defendants that they did not rely upon the protections afforded by the special conditions and notify the defendants that they would proceed to settlement. If the plaintiffs wished to forego their protections under the special conditions, it was only necessary for them to give notice and call the defendants to settlement on 8 August 2017 or such other time that was mutually agreed.

19. The plaintiffs did not take any steps, except to attempt a renegotiation of the purchase price under the contract. This approach proceeded upon an assumption of the plaintiffs that the bank would, without more, agree to lend 60% of such lesser sum as may be negotiated, with the plaintiffs supplying the balance of the purchase price. As indicated earlier, this is a unilateral assumption by the plaintiffs and overlooks the time and steps required to be taken to reach a different accommodation with the bank.

20. Once the plaintiffs embarked upon the process of attempted renegotiation of the purchase price in the way that they did, it was open to the defendants to treat that conduct as repudiatory and to terminate the contract. It matters not that the basis of the termination described in the notice was the failure to satisfy the finance condition. The question, assessed objectively, was whether a basis was available to the defendants to terminate the contract. The announcement in the notice about the failure of the finance obligation under SC1.1 and the right to terminate under SC1.3 is not mutually exclusive of another right to terminate. Such an argument is both illogical and is inconsistent, for example, with the reasoning of Von Doussa J in Lane & Otrs v Arrowcrest Pty Ltd[228] at pages 59 and 60. That proposition is simply tested. The election to terminate is final and in the event that the basis of termination relied upon was not available to the party giving the notice of termination, it cannot be said that the termination was otherwise invalid in the event that another basis to terminate the contract was available to the same parties. That other basis may be relied upon by the terminating party if, as a question of fact, that basis is available to the party. Once it is accepted that the contract is at an end, it is fallacious reasoning to attempt to claim wrongful termination by quarantining the logical process of consideration to the wrongful ground. The Court will take into account the whole of the circumstances presented at the time of the termination.

    [228] Federal Court of Australia judgment 693 of 1990.

21. On the question of the special conditions about finance in the contract, it is important to state that the absence of a stipulation of an amount or interest rate in the third contract is not fatal to the ability of the defendants to rely on the failure of the plaintiffs to procure finance under that clause. I have earlier dealt with this topic on the question of uncertainty. It arises here in a slightly different context. An argument may be put that if the amount and applicable interest rate under the loan are not stipulated, then on one view, the plaintiffs could not be said to lose the benefit of the protection under the clause.

22. I consider such reasoning to be without foundation for at least two reasons. The first is that in order to have the protection of the clause there must be a means to identify with sufficient certainty what it is that the plaintiffs are required to do. This is really the problem the High Court was required to address in its decision in Meehan (on the question of uncertainty). A finance clause which left to the purchaser the decision about what (amount of) finance and whether it was satisfactory could, as a question of fact, have contractual force. That is a question involving the construction of the contract. Questions of fact will include that the parties separately agreed in three contracts for the sale and purchase of the same property not to complete those portions of the relevant subject to finance clauses in the special conditions. Thus it may be seen that the intention of the parties is manifest by such conduct. It renders the clause little different in operation to that under consideration in the decision in Meehan.

23. The second ground is that consistent with the first, the plaintiffs accepted and communicated to the defendants that the finance clause requirement had not been fulfilled. The “approval” for SC1.1 had not been obtained, there would be no loan and there could be no settlement (at least on this contractual price) because the valuation did not “come up” as required by the bank’s terms of finance. This means that the plaintiffs made the defendants aware of the failure of the “approval” process for SC1.1 and so brought into focus the operation of SC1.3. That subclause gave protections to both the defendants and the plaintiffs: either could choose to terminate upon the failure under clause SC1.1. Either of them could elect to terminate on that basis. Before the defendants could act, it was possible for the plaintiffs to announce that they were treating the obligation upon them to settle as absolute and confirmed the settlement date. They elected not to do so. The failure to obtain finance was not an obligation for clause 14 of the contract and it could not be characterised as such. However, once it is known that the application for finance in the amount chosen by the plaintiffs would not proceed, the defendants could take advantage of the protection afforded to them under SC1.3.

24. Thus it does not matter what the position was before the valuation was received. The parties were all prepared to await the outcome of that process. As early as 5 July 2017, Ms Willson had sent an email to Ms Thomson at the ANZ Bank and provided to the bank a copy of the contract. Specific reference was made to the finance clause.[229] On the same day, Ms Thomson sent an email to Ms Willson[230] advising that the finance was approved “…subject to valuation…” The email went on to say that subject to that matter, a settlement in August would not be a problem.

    [229] Exhibit P2 p 56.

    [230] Exhibit P2 p 57.

1. As I have already earlier discussed, this is not an “approval” for SC1 as that term is properly to be understood. The importance here is only that the exchange may be identified as informing the parties’ position that clause SC1.1 was operating under the contract according to the objectively verifiable facts. Second, the question of the fulfilment of the requirements of that clause was in the hands of the plaintiffs and the bank. The third is that it is apparent and an inference is clearly available that the finance for the plaintiffs depended upon the valuation of the property reaching $550,000. Were it otherwise, nothing said by Ms Joanne Gaetjens to Ms Willson on 3 August 2017 would have been of any significance. A value of $475,000 would have had no different significance to a value of, say $500,000 or for that matter $400,000. This means that despite the apparent weakness internally of the contract of sale, the parties were operating under it in a way that required the plaintiffs to procure the valuation and for it to be the determinant of the fate of the finance special condition and so the contract itself. This Court would not proceed in a way that ignored this commercial reality because to do so would be to take a wholly artificial approach to the way that parties, for better or worse, have conducted their affairs.

2. If I were wrong about all of the above, then giving due regard to the authorities that bind me[231] I would order specific performance of the contract of sale for the benefit of the plaintiff.

   [231] W&R Pty Ltd v Birdseye [2008] SASC 321 at 297; Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315; Mulkearns v Chandos Development Pty Ltd [2003] NSWSC 1132.

3. However, for all the reasons stated above, I would dismiss the plaintiffs’ claim. I will hear the parties as to consequential orders and costs.