Du Buisson Perrine v Chan - [2016] WASCA 18

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: DU BUISSON PERRINE -v- CHAN [2016] WASCA 18

CORAM: McLURE P
NEWNES JA
MURPHY JA

HEARD: 20 MAY 2015 & FINAL WRITTEN SUBMISSIONS 14 DECEMBER 2015

DELIVERED : 22 JANUARY 2016

FILE NO/S: CACV 71 of 2014

BETWEEN: LOUIS JEAN-MIC DU BUISSON PERRINE
MERCEDES DU BUISSON PERRINE
Appellants
AND
KWAI SEONG CHAN
CHIEW WAH CHAN
Respondents

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :JENKINS J
Citation  :CHAN -v- DU BUISSON PERRINE [2014] WASC 219
File No  :CIV 2088 of 2013

Catchwords:

Statutory construction - Sale of land - Whether contract a 'terms' contract - Payments towards purchase price by instalments - Whether instalments part of 'deposit' - Statutory definition and the use of the word 'includes' - Whether 'includes' denoted exhaustive or nonexhaustive definition - If 'terms' contract, whether vendors gave adequate notice prior to termination

Legislation:

Sale of Land Act 1970 (WA), s 5, s 6

Result:

Appeal allowed
Notice of contention dismissed

Category: A

Representation:

Counsel:

Appellants: Mr A Metaxas
Respondents : Mr D Bedenham

Solicitors:

Appellants: Metaxas & Hager
Respondents : Birman & Ride

Case(s) referred to in judgment(s):

A v Corruption and Crime Commissioner [2013] WASCA 288
Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309
Attorney General (NSW) v Brewery Employees' Union (NSW) [1908] HCA 94; (1908) 6 CLR 469
Bot v Ristevski [1981] VR 120
Braidotti v Queensland City Properties Ltd [1991] HCA 19; (1991) 172 CLR 293
Brambles Australia Ltd v Commissioner of Taxes (1993) 92 NTR 1
Brien v Dwyer (1978) 141 CLR 378
Brisbane City Council v Attorney General (QLD) [1908] HCA 8; (1908) 5 CLR 695
Capper v Thorpe [1998] HCA 24; (1998) 194 CLR 342
Certain Lloyd's Underwriters v Cross [2012] HCA] 56; (2012) 248 CLR 378
Chan v Du Buisson Perrine [2014] WASC 219
Chu Kheng Lim v Minister for Immigration [1992] HCA 64; (1992) 176 CLR 1
Chugg v Pacific Dunlop Ltd [1990] HCA 41; (1990) 170 CLR 249
Coates v Sarich [1964] WAR 2
Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342
Corporate Affairs Commission (SA) v Australian Central Credit Union [1985] HCA 64; (1985) 157 CLR 201
Davies & Jones v Western Australia [1904] HCA 46; (1904) 2 CLR 29
Dilworth v Commissioner of Stamps [1899] AC 99
Ex parte Fallon 5 TR 383; 101 ER 159
Farrant v Leburn [1970] WAR 179
Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59
Grover v Taylor (Unreported, WASC, Library No 8901, 6 June 1991)
Howe v Smith (1884) 27 Ch D 89
Iannello v Sharpe [2007] NSWCA 61; (2007) 69 NSWLR 452
Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216
Koompahtoo Local Aboriginal Land Council v Sampine Pty Ltd (2007) 233 CLR 115
Lacey v Attorney General (Queensland) [2011] HCA 10; (2011) 242 CLR 573
Madin v Palis [2015] FamCAFC 65; (2015) 296 FLR 113
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Mehmet v Benson (1965) 113 CLR 295
Owen v Menzies [2012] QCA 170; [2013] 2 Qd R 327
Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249
Perry v Suffields Ltd [1916] 2 Ch 187
Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50; (2012) 43 WAR 91
Romanos v Pentagold Investments Pty Ltd [2003] HCA 58; (2003) 217 CLR 367
Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252
Sibbles v Highfern Pty Ltd [1987] HCA 66; (1987) 164 CLR 214
Singh v The Commonwealth of Australia [2004] HCA 43; (2004) 222 CLR 322
Soper v Arnold (1889) 14 App Cas 429
Sopikiotis v Owners Corporation RP017740 [2013] FCA 353; (2013) 211 FCR 321
Susiatin v Minister for Immigration and Multicultural Affairs [1998] FCA 825; (1998) 83 FCR 574
Transport Accident Commission v Hogan [2013] VSCA 335
Tropical Traders Ltd v Goonan (1964) 111 CLR 41
Van Der Hulst v Tainui Corporation Ltd [1998] 2 NZLR 359
Wacal Developments Pty Ltd v Realty Developments Pty Ltd [1978] HCA 30; (1978) 140 CLR 503
YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395
Zheng v CAI [2009] HCA 52; (2009) 239 CLR 446

McLURE P: This appeal concerns whether s 6(2)(a) of the Sale of Land Act 1970 (WA) (the Act) applied to the termination of a contract for the sale of land dated 3 September 2012 between the appellants, as purchasers, and the respondents, as vendors (the Contract).
The Contract is a standard form offer and acceptance incorporating the 2011 General Conditions adopted jointly by the Law Society of Western Australia and REIWA (General Conditions).
If the Contract is a 'terms contract' for the purpose of s 6 of the Act and the appellants' breach consisted of a failure to pay a sum of money, the respondents were required to give to the appellants a notice to remedy the breach within 28 days before terminating the Contract. Although the respondents served a default notice on the appellants, it required the appellants to remedy the default within 11 business days and the respondents terminated the Contract prior to the expiration of 28 days from the date of service of the default notice.
If the Contract is a terms contract for the purpose of s 6 of the Act, I agree with Newnes and Murphy JJA, generally for the reasons they give, that the relevant breach of contract by the appellants consisted of a failure to pay a sum of money to which s 6(2)(a) would apply.
The primary issue in the appeal, on which Newnes and Murphy JJA differ, is whether the Contract is a 'terms contract' as defined in s 5, for the purpose of s 6 of the Act. The definition in s 5 of the Act is as follows:
terms contract means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land; or
(b)entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land,
and for the purpose of this interpretation deposit includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract.
The only issue in contest between the appellants and the respondents at trial and in the appeal was whether the meaning of 'deposit' in the definition of 'terms contract' (the internal definition of deposit) is exhaustive or inclusive. If exhaustive, the definition in par (a) of 'terms contract' would read that the purchaser is:
obliged to make 2 or more payments to the vendor (over and above any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract) before he is entitled to a conveyance or transfer of the land;
If inclusive, the words in par (a) would read:
obliged to make 2 or more payments to the vendor (over and above any part of the deposit, which term includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract) before he is entitled to a conveyance or transfer of the land.
It was accepted by both parties that, under the Contract in its original form and as varied, the respondents were obliged to make more than two payments characterised in the Contract as part of the deposit more than 28 days from the execution of the Contract. The primary judge construed the internal definition of 'deposit' to be exhaustive, which compelled the conclusion that the Contract was a terms contract for the purpose of s 6(1) of the Act. The primary judge nevertheless upheld the appellants' claim to the deposit because she concluded that the breach did not consist of a failure to pay a sum of money and that the time specified by the respondents in their default notice was reasonable.
In their notice of contention, the respondents challenge the correctness of the primary judge's conclusion that the internal definition of deposit is exhaustive. If that contention is upheld, the respondents rely on the primary judge's finding that all the payments in question formed part of the 'contractual deposit' for the further contention in [4] of their notice of contention (on which the primary judge made no decision) that the payments were therefore a deposit under s 5 of the Act.
In opposition to the notice of contention, the appellants confine their submissions to upholding the primary judge's construction of the internal definition of deposit. At no stage at trial or prior to the conclusion of the hearing of the appeal did the appellants contend that if the internal definition of deposit is not exhaustive, the payments in question still did not fall within the meaning of the term 'deposit' in the definition of 'terms contract'.
However, an appeal court must apply the law even if the parties have conducted the case on an erroneous legal basis: A v Corruption and Crime Commissioner [2013] WASCA 288 [170]. In order to construe the meaning of the term 'deposit' in the definition of 'terms contract' it is necessary to determine the purpose and scope of the common law meaning of the term. After the hearing of the appeal the parties were given the opportunity to make submissions on the legal issues addressed below.

Factual background

The Contract is dated 3 September 2012; the purchase price for the residential property was $2.09 million; the Contract was conditional on obtaining finance of $1.5 million by 21 September 2012; settlement was to take place on or before 31 January 2013; 'deposit' is defined in the General Conditions to mean money paid or payable under the Contract as a deposit; the contractual deposit was $150,000 of which $5,000 was payable 'now', which I take to be on or before the execution of the contract, $45,000 was payable within three days of finance approval and $100,000 by 15 October 2012. The assumption is that the finance condition was satisfied by 21 September 2012.
The standard form deposit clause in the offer and acceptance made provision for its payment by two instalments, the first 'now' and the second within X 'days of acceptance'.
The amount and times for the payment of the contractual deposit and the settlement date were varied by agreement on 13 October 2012. The time for payment of the contractual deposit was again varied by agreement on 30 December 2012 and 1 February 2013.
The Contract as varied as at 27 February 2013 provided for settlement on 7 March 2013 and for a reduced deposit of $105,000 which was payable and paid as follows:
-$5,000, on 3 September 2012;
-$10,000, on 19 October 2012;
-$30,000, on 12 December 2012;
-$60,000, on 1 March 2013.
Clauses 1.4 and 1.5 of the General Conditions relating to the non‑payment of a deposit do not apply to a terms contract (cl 1.6). Section 6 of the Act applies to a failure to pay a deposit under a terms contract (not General Conditions 22 and 23).

Legislative history

The definition of 'terms contract' in the Sale of Land Bill introduced into the Parliament in 1970 (the Bill) was in the language recommended by the Law Reform Commission of Western Australia in its report entitled 'Protection of Defaulting Purchasers' dated September 1969 (The LRC Report). The LRC Report definition provided:
'terms contract' means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make two or more payments to the vendor (over and above any deposit paid on or in connection with the execution of the contract) before he is entitled to a conveyance or transfer of the land.
The scope of the term 'deposit', with the italicized words, in this definition is consistent with, or at least no wider than, the common law meaning, discussed in detail below. During the passage of the Bill through Parliament, the words in italics were deleted and the current internal definition of deposit inserted.
The italicised words in the Bill had to be removed because they were inconsistent with the internal definition of deposit in two respects. First, the internal definition of deposit extends the common law meaning to include all payments labelled as a deposit in the contract if paid within the nominated period. Second, the internal definition narrows the common law meaning to exclude payments that are in substance deposits if they are not labelled as such in the contract.
Against that background, the term 'deposit' in parenthesis in the body of the statutory definition of 'terms contract' must mean any deposit within the meaning of that term at common law, as varied by the inclusive internal definition of deposit. Accordingly, in order to succeed on their notice of contention, the respondents also had to establish that at least two of the payments labelled as a deposit in the Contract (the contractual deposit) were a deposit at common law as three of the four payments did not fall within the extended meaning in the internal definition of deposit.

Deposit at common law

The common law relating to deposits in a contract for the sale of land is to the following effect.
First, a label or description in a contract of a payment as a 'deposit' is not determinative of its character as such: Coates v Sarich (1964) WAR 2, 15; Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59, 66.
Second, a deposit fulfils two functions; first, its primary function is an earnest given by the purchaser to bind the bargain and to provide security for its performance; second, it is also a part payment of the purchase price: Howe v Smith (1884) 27 Ch D 89; Brien v Dwyer (1978) 141 CLR 378.
Third, on termination of a contract for breach, at common law the deposit paid by the purchaser is forfeited to the vendor: Brien v Dwyer; Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342. The vendor has an unconditional right to retain the deposit paid by the purchaser because the consideration has not failed. Wickham J in Farrant v Leburn (1970) WAR 179 explained:
The agreement to pay [the deposit] was not in consideration of conveyance but was in consideration of the contract. It was the price or part of the price of the vendor's promise to sell and this promise, having been given by the vendor, the consideration for the purchaser's promise was fully executed (184).
This explanation of a deposit at common law resonates with the words deleted from the definition of 'terms contract' in the Bill. In Farrant, the vendor had rescinded the contract for the purchaser's 'fundamental breach' in failing to pay a deposit which was payable immediately on entry into the contract.
Further, the vendor can recover any unpaid deposit that has accrued due prior to contractual termination: Bot v Ristevski [1981] VR 120. By contrast, on termination for breach, an instalment of the purchase price belongs to the purchaser at common law on the basis that the consideration for the payment, being the conveyance or transfer of the land, has failed and thus the instalment can be recovered, subject to the vendor's right to counterclaim for damages: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457.
Fourth, the payment of a deposit within the contractual time stipulation is deemed, at law and in equity, to be an essential term of the contract (Brien v Dwyer) with the consequence that any breach of any nature or degree justifies termination without notice: Koompahtoo Local Aboriginal Land Council v Sampine Pty Ltd (2007) 233 CLR 115 [48]. Repudiation is a separate and independent ground for summary termination at common law: Koompahtoo [44].
Most of the cases on the subject of deposits to which I have referred concerned deposits which were payable on or around the time of entry into the contract. That accords with the common understanding of a deposit as an upfront payment as an earnest of the purchaser's intention to perform and as security for the vendor. A bird in the hand, as they say. Gibbs J stated in Brien v Dwyer that the primary purpose of the deposit would not be served unless the deposit were paid at the very time when the purchaser assumed his obligations under the contract (392). This is reflected in the standard form offer and acceptance. The notion of a purchaser's mere unperformed promise to pay a deposit being the earnest of performance and the security is inconsistent with long established principle. A promise to pay a deposit that survives termination is in substance a liquidated damages clause.
However, it must be accepted that in appropriate circumstances a deposit can be paid by instalments over an extended period: Romanos v Pentagold Investments Pty Ltd. In that case, the majority (Gleeson CJ, McHugh, Gummow, Hayne & Heydon JJ) stated:
In Brien, Jacobs J described a deposit as:
'[A]n assurance to the vendor, a security to him pending completion. He can take his property off the market and not concern himself with other offers in case the sale should go off, with the comfort at least that the deposit is there for his security'.
This reasoning is no less applicable to contracts providing for the payment of a deposit in particular instalments at times each stated to be essential. That is the present case. Further, Brien is authority for the proposition that once there has arisen an entitlement to rescind for failure to pay the deposit, that entitlement may be exercised without the necessity that the purchaser first be given notice requiring payment to be made at a reasonable time [20].
The facts in that case are important to the outcome. Three contracts for the sale of land provided for a deposit of 10% of the purchase price, one‑tenth to be paid on exchange of contracts (which occurred on 15 September 1999) and the balance of nine-tenths to be paid upon approval of a development application. A special condition in each contract required the purchasers to proceed to obtain the approval of the local council to the development of the properties. Each contract also provided that if approval was not received within 270 days, either the vendor or the purchaser could rescind the contract with the consequence that the deposit would be refunded. The purchasers received notice of council approval on 5.00 pm on 1 December 2000. They did not pay the balance of the deposit. Without notice, the vendors terminated the contract on 19 December 2000. The balance of the deposit was paid by the purchasers on 20 December 2000. Special condition 2 of the contract provided:
2.1The purchaser must pay the deposit to the deposit holder as stake holder.
2.2Normally, the purchaser must pay the deposit on the making of this contract, and this time is essential.
2.3If this contract requires the purchaser to pay any of the deposit by a later time, that time is also essential.
…
2.5If any of the deposit is not paid on time … the vendor can terminate but only before the deposit is paid in full.
There is nothing in the facts of Romanos to suggest that there was supervening circumstances of the kind considered by Kitto J in Tropical Traders Ltd v Goonan (1964) 111 CLR 41, 53 ‑ 55, whereby the time stipulation for the payment of the deposit had ceased in equity to be essential [26].
On my reading of the reasons in Romanos, two matters are of particular significance to the outcome. First, the delay in payment of the deposit was directly linked with the third party condition, non‑satisfaction of which entitled the parties to rescind and for the deposit to be repaid. It was in effect a contingent condition on performance of the contract. The timing of the payment of the balance of the deposit was as earnest and security for the future once the sale was unconditional. Second, the express provision in cl 2.3 confirmed the intention that time continued to be of the essence. Neither of these matters are present in this case.

Disposition

The primary judge's finding that the payments in question were labelled or described as 'deposits' in the Contract falls short of establishing the respondents' contention that the payments are a deposit within the definition of 'terms contract' in the Act. As a matter of statutory construction, the correct issue is whether or not two (or more) of the payments are a deposit at common law.
The objectively determined intention of the parties is that the variations, individually and collectively, did not result in the termination of the Contract and its replacement by a new contract. Thus, the Contract as varied was entered into on 3 September 2012. The obligation to pay the deposit by instalments of $10,000 on 19 October 2012, $30,000 on 12 December 2013 and $60,000 on 1 March 2013 are so remote in time from the date of entry into the Contract and when it became unconditional as to be inconsistent with an inference that the primary purpose of the payments was as an earnest given by the purchaser to bind the bargain and to provide security for its performance.
Thus, the payments made in October 2012, December 2012 and March 2013 are not a deposit at common law or within the varied scope of the term in the internal definition of deposit. Accordingly, the Contract as varied is a terms contract to which s 6 of the Act applied.
I agree with the orders proposed by Newnes JA, albeit for different reasons.
NEWNES JA: This is an appeal from a decision of Jenkins J who found that the contract between the parties was a terms contract within the meaning of s 5 of the Sale of Land Act 1970 (WA) (the Act). Her Honour also found, however, that the breach upon which the respondents relied to terminate the contract was not 'a failure to pay a sum of money' under s 6(2)(a) of the Act, with the result that the contract had been lawfully terminated by the respondents and they were entitled to retain the deposit of $105,000.
For the reasons which follow, I would allow the appeal.

Background

On 3 September 2012, the parties entered into a contract pursuant to which the respondents agreed to sell and the appellants agreed to purchase a property in East Perth for the sum of $2,090,000. The contract was a standard form contract published by the Real Estate Institute of Western Australia (REIWA). It expressly incorporated the Joint Form of General Conditions for the Sale of Land 2011 Revision (the General Conditions), published jointly by REIWA and the Law Society of Western Australia.
Initially the contract provided that a deposit of $150,000 was to be paid by the appellants, of which $5,000 was to be paid upon execution of the contract; $45,000 within three days of finance approval; and the balance of $100,000 by 15 October 2012. Settlement was to occur on or before 31 January 2013.
Over the following months a number of variations were made to the contract. Ultimately, the contract came to provide that the deposit of $105,000 was to be paid as follows:
1.$5,000 on 3 September 2012;
2.$10,000 on 19 October 2012;
3.$30,000 on 12 December 2012; and
4.$60,000 by 1 March 2013.
The settlement date was also changed to 7 March 2013.
The deposit was paid but settlement did not occur on 7 March 2013. On 21 March 2013, the respondents served a default notice on the appellants. It stated that the appellants were in default under the contract
in that [they] failed to complete Settlement on 7 March 2013 in accordance with clause 3.5 of the Joint Form of General Conditions for the Sale of Land 2011 Revision.
The default notice required the appellants to remedy the default within 11 business days after service of the notice. Settlement did not occur within that time or at all. On 16 April 2013, the respondents served a notice of termination of the contract. It stated, relevantly:
1.[the appellants] have failed to remedy the default specified in the Sellers' [respondents'] Default Notice dated 21 March 2013;
2.the Seller [respondents] hereby terminates the Contract; and
3.the Seller [respondents] reserves all of its rights under the Contract or at law.
The respondents commenced proceedings by an originating summons seeking declarations, in effect, that the contract had been lawfully terminated and that the respondents were entitled to the deposit of $105,000. The substantive matters in issue in the proceedings were, first, whether the contract was a 'terms contract' within the meaning of s 5 of the Act and, if it was, whether it had been terminated in accordance with s 6 of the Act.
A 'terms contract' is defined in s 5 of the Act as follows:
terms contract means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land; or
(b)entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land,
and for the purpose of this interpretation deposit includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract.
The termination of a 'terms contract' is dealt with in s 6, which provides as follows:
(1)Notwithstanding any stipulation to the contrary, a terms contract shall not be determined or rescinded on account of a breach by the purchaser of any term of the contract unless and until the vendor has served on the purchaser a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach within the time mentioned in subsection (2) and the purchaser has failed to do so.
(2)The time referred to in subsection (1) within which the purchaser is required to remedy a breach is -
(a)where the breach consists of a failure to pay a sum of money - a date stipulated by the vendor being a date not less than 28 days from the date of service of the notice; and
(b)in any other case - a reasonable time from the date of service of the notice.

The reasons of the primary judge

The primary judge held that the contract was a 'terms contract' within the meaning of s 5 of the Act. Her Honour found, in substance, that on its proper construction the definition of 'deposit' in s 5 was an exhaustive definition. That is, an amount paid by a purchaser would be a deposit within the meaning in sub‑paragraph (a) of the definition of 'terms contract' only if it was specified in the contract as being a deposit and was to be paid within 28 days of execution of the contract. Her Honour referred in some detail to excerpts from debate in the Parliament on the Bill which she considered supported that view.
Her Honour declined to follow Grover v Taylor (Unreported, WASC, Library No 8901, 6 June 1991), where Wallwork J had held that the definition of 'deposit' in the Act was not exhaustive but was intended to enlarge the ordinary meaning of deposit to include a very large part payment of the purchase price made in two or more payments, provided the money was paid within 28 days. The primary judge considered Grover to be clearly wrong.
As only one of the instalments of the $105,000 was payable by the appellants within 28 days of execution of the contract, her Honour found that the rest were payments 'over and above' the deposit, with the result that the contract was a terms contract.
However, the primary judge found that the breach upon which the respondents relied to terminate the contract was not 'a failure to pay a sum of money' under s 6(2)(a). Rather, her Honour concluded that the respondents had relied upon a failure by the appellants to comply with the various obligations involved in settlement contained in cl 3 of the General Conditions. The primary judge found that the period of 11 business days specified by the respondents was a reasonable time under cl 6(2)(b) for the appellants to remedy the default. As they had failed to do so, her Honour made the declarations sought by the respondents.

The issues on the appeal

The appellants allege by their grounds of appeal, in substance, that the primary judge erred in finding that the breach upon which the respondents relied to terminate the contract was not 'a failure to pay a sum of money'. The respondents have filed a notice of contention by which they contend that the primary judge erred in finding that the contract was a 'terms contract'.
In my view, the appeal should be upheld and the notice of contention dismissed.

The disposition of the appeal

Turning first to the notice of contention, the question whether the contract was a 'terms contract' depends upon whether the instalments of the sum of $105,000 that were payable by the appellants more than 28 days after execution of the contract were payments 'over and above any deposit'. That in turn depends upon the proper construction of the definition of 'deposit' in s 5 and, in particular, whether that definition is exhaustive.
A definition is to provide aid in construing the statute and is not therefore to be construed in isolation but in the context of the statute. As McHugh J pointed out in Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216:
Nothing is more likely to defeat the intention of the legislature than to give a definition a narrow, literal meaning and then use that meaning to negate the evident policy or purpose of a substantive enactment [103].
It is the case that where 'includes' (as opposed to 'means') is used in a statutory definition it will ordinarily not be intended to be exhaustive but rather simply to enlarge the ordinary meaning of the term to bring within it something that would otherwise not be within it: Owen v Menzies [2012] QCA 170; [2013] 2 Qd R 327 [106]; Transport Accident Commission v Hogan [2013] VSCA 335 [47]. It may also be used to avoid possible uncertainty by expressly providing for the inclusion of particular borderline cases: Corporate Affairs Commission (SA) v Australian Central Credit Union (1985) 157 CLR 201, 206 ‑ 207.
Nevertheless, 'includes' may be exhaustive if the context in which it appears reveals that intention: YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395, 398 ‑ 399, 402; Dilworth v Commissioner of Stamps [1899] AC 99, 106. Ultimately the question is always one of the proper construction of the statute.
In the present case, I consider that the definition of 'deposit' was intended to be exhaustive. Notwithstanding the use of 'includes', the evident intention is to confine the 'deposit' to an amount that is so designated in the contract and is payable (whether by one or more payments) within 28 days of execution of the contract.
That, in my view, is consistent with the object and purpose of the Act. The object of s 6 is to provide to a purchaser under an executory contract for the sale of land who is required to pay two or more instalments of the purchase price (apart from the deposit) before a conveyance of the land, time within which to remedy any default in the payment of an instalment: see Capper v Thorpe [1998] HCA 24; (1998) 194 CLR 342 [4]. To give effect to that object requires the differentiation of a payment that is (or is part of) the deposit and a payment that is an instalment of the purchase price.
In that context, the evident purpose of the definition is to specify what payments are to be treated as payments of the deposit, with the necessary consequence that any other payments are to be treated as payments of the purchase price. Thus, for the purposes of determining whether the contract is a 'terms contract', and thus subject to the requirements of s 6, the intention is that the payment, or payments, which can be ascribed to the deposit are limited to payments in respect of the amount which the contract specifies to be the deposit and which are payable within 28 days of execution of the contract. The stipulated time limit of 28 days is not inconsistent with the ordinary notion that a deposit (whether paid by one or more payments) is paid at or about the time of execution of a contract.
I do not accept the respondents' argument that the intention was simply to expand the ordinary meaning of deposit beyond an amount that might ordinarily be regarded as a deposit to any part of the purchase price, however large, which the contract stipulates as the deposit. In a statutory context where the focus of the relevant provisions of the Act is on the number of payments to be made over and above the deposit, rather than the amount of any payment, it is not evident what purpose that would serve. Nor does it explain why a time limit of 28 days is imposed. Such a construction, in my view, attaches undue significance to the generality of the words 'any part of the purchase price' in the definition of deposit. It is not, however, surprising that the legislature did not seek to be prescriptive as to the amount that might constitute a deposit for the purposes of the Act, given the variety of circumstances that may arise.
The excerpts of the parliamentary debate to which the primary judge referred support the construction I have described. The Bill as originally introduced into the Parliament did not contain the definition of 'deposit' and sub‑paragraph (a) of the definition of 'terms contract' read:
obliged to make 2 or more payments to the vendor (over and above any deposit paid on or in connection with the execution of the contract) before he is entitled to a conveyance or transfer of the land (emphasis added).
In debate on the Bill in the Legislative Council, the Hon I G Medcalf MLC expressed concern that where a deposit was paid in two or more instalments some time apart, the contract may by reason of that alone fall within the definition of a 'terms contract'. Mr Medcalf moved amendments to the Bill to delete the words 'paid on or in connection with the execution of the contract' and to add the current definition of a 'deposit'. He said of the amendments:
The proposal in the first portion of the amendment is to ensure that the deposit need not be paid immediately upon execution of the contract. If a deposit is paid partly on execution and partly later, it may still be treated as a deposit, provided the payments are specified as being the deposit and are paid within 28 days of the execution of the contract. … It allows a little leeway for the payment of the deposit.
That is, the purpose of the amendments was to extend the time for payment of the deposit from 'on or in connection with' execution of the contract to a period of 28 days after execution, to provide 'leeway' where the deposit is paid in more than one instalment.
The Act was passed, without further material debate on this issue, in that amended form.
In my view, the clear intention of the legislature was that a payment of part of the purchase price was a 'deposit' only if it was specified in the contract to be the deposit and was payable, whether by one or more payments, within 28 days of execution of the contract. It follows that in the present case the payments made outside that 28‑day period did not constitute payment of the deposit, with the result that the contract was a 'terms contract' within the meaning of the Act.
I would dismiss the notice of contention.
It is necessary then to turn to the appellants' grounds of appeal. The issue it raises is a short one, namely, whether the breach relied upon by the respondents was the failure by the appellants 'to pay a sum of money'. The primary judge concluded that it was not. I respectfully disagree.
It is convenient to repeat s 6 of the Act, which is as follows:
(1)Notwithstanding any stipulation to the contrary, a terms contract shall not be determined or rescinded on account of a breach by the purchaser of any term of the contract unless and until the vendor has served on the purchaser a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach within the time mentioned in subsection (2) and the purchaser has failed to do so.
(2)The time referred to in subsection (1) within which the purchaser is required to remedy a breach is -
(a)where the breach consists of a failure to pay a sum of money - a date stipulated by the vendor being a date not less than 28 days from the date of service of the notice; and
(b)in any other case - a reasonable time from the date of service of the notice.
It will be recalled that in the default notice served on the appellants the specified default was that the appellants had 'failed to complete Settlement on 7 March 2013 in accordance with clause 3.5 of the [General Conditions]'. The subsequent notice of termination served on the appellants stated, in effect, that the respondents were terminating the contract because the appellants had 'failed to remedy the default specified in the [respondents'] Default Notice dated 21 March 2013'.
Clause 3 of the General Conditions is headed 'Settlement'. 'Settlement' is defined in the General Conditions to mean 'the completion of the sale and purchase of the Property in accordance with clause 3'. Clause 3 provides, by cl 3.1 to cl 3.4, for the completion of the antecedent steps necessary for settlement, including the preparation, execution and delivery by the purchaser of the land transfer, and the payment of stamp duty. Clause 3 then provides, relevantly, as follows:
3.5Completion of settlement
Each Party must complete Settlement on:
(a)the date for Settlement specified in the Contract; or
(b)if no date for Settlement is specified in the Contract …
…
3.7Balance of purchase price
The [appellants] must on Settlement pay:
(a)to the [respondents]; or
(b)to any other person as the [respondents] or the [respondents'] Representative has directed in writing not later than 2 Business Days before the Settlement Date,
by 1 or more bank cheques the balance of the Purchase Price and;
(c)any other money payable by the [appellants] at Settlement;
(d)less any deductions allowed under the Contract.
The primary judge found (at [97] ‑ [99]) that cl 3.5 of the contract incorporated all of the appellants' obligations under cl 3.1 to cl 3.4 to prepare and sign the land transfer, to arrange for the contract to be assessed for stamp duty, to pay any stamp duty and have the land transfer endorsed accordingly, and to deliver the signed and endorsed transfer to the respondents. The breach by the appellants upon which the respondents relied was therefore a failure to comply with the obligations involved in settlement, including the obligations under cl 3.1 to cl 3.4, and not simply a 'failure to pay a sum of money'. As her Honour described it, '[a]s in [Sibbles v Highfern Pty Ltd [1987] HCA 66; (1987) 164 CLR 214], the sellers relied on the buyers' refusal to be bound by the contract, rather than their failure to pay a sum of money'. Therefore, her Honour concluded, s 6(2)(a) of the Act did not apply and the respondents were not required to give the 28‑day notice stipulated by that provision.
I do not, with respect, regard Sibbles as being analogous to the present case. In Sibbles, the parties had entered into a terms contract for the sale of a home unit under the comparable Queensland legislation. The purchasers paid a deposit and, in 1981, entered into possession. The balance of the purchase price was payable in March 1983 and in the meantime the purchasers were entitled to occupy the home unit upon payment of the interest accruing on the balance of the purchase price. In October 1982, the purchasers informed the seller they could no longer afford the interest payments and asked the seller to take back the home unit. No further payments of interest were made and, in May 1983, the seller commenced action against the purchasers for specific performance or alternatively damages. The purchasers defended the action, contending that the contract was not binding on them. On 5 November 1984, the seller's solicitors wrote to the purchasers' solicitors pointing out that the settlement date had passed and enquiring whether the purchasers intended to fulfil their obligations and complete settlement or whether they persisted in their refusal to do so. On 20 November 1984, the seller's solicitors wrote to the purchasers' solicitors terminating the contract in reliance upon the purchasers 'continuing refusal to complete [the] contract'.

The High Court held that it was clear from the letters of 5 November and 20 November 1984 that the seller had terminated the contract, not on the basis of a failure to pay money due under it, but upon the purchasers' repudiation of, or refusal to be bound by, the contract. The seller was not, therefore, required to give notice of default under the equivalent of s 6(2)(a) of the Act.
That is quite different to the present case. In this case, the respondents specifically identified the breach upon which they relied as being the appellants' failure 'to complete Settlement on 7 March 2013 in accordance with clause 3.5 of the [General Conditions].' Clause 3.5 required the appellants to complete settlement on the date specified in the contract, 7 March 2013. Under cl 3.7, the appellants' obligation at settlement was to pay to the respondents a sum of money, calculated in accordance with cl 3.7. Accordingly, in 'failing to complete Settlement' the appellants' breach was, and was no more than, a failure to pay a sum of money.
There is, in my respectful view, no basis for treating the respondents' reliance on a breach of cl 3.5 as incorporating, by implication, reliance upon a breach by the appellants of one or more of cl 3.1 to cl 3.4. Whilst the latter provisions involved obligations that were required to be performed by the appellants before settlement, they were obligations of a distinct and quite different kind to the obligation under cl 3.5. The respondents' assertion of a breach by the appellants of the obligation to pay, on the settlement date, the money then due and payable does not, of itself, involve an assertion of a breach of the appellants' antecedent but separate obligations under cl 3.1 to cl 3.4. There was no assertion by the respondents of any breach by the appellants of any of cl 3.1 to cl 3.4 and, indeed, there was no evidence that there had been any such breach.

It follows that, pursuant to s 6(2)(a) of the Act, the respondents had to give the appellants 28 days within which to remedy the breach. It is not in issue that they failed to do so. The appellants were given 11 days. Accordingly, the respondents failed to terminate the contract in the manner required by s 6(1) of the Act.
The grounds of appeal should be upheld and the appeal allowed.

Conclusion

I would:
1.allow the appeal;
2.dismiss the notice of contention;
3.set aside the orders of the primary judge;
4.dismiss the originating summons;
5.hear the parties on what (if any) other orders should be made.
MURPHY JA:

Introduction

This is an appeal against a decision of Jenkins J in relation to:
(a)whether, on the proper construction of the contract between the parties, it was a 'terms' contract within the meaning of s 5 of the Sale of Land Act 1970 (WA) (the Act); and
(b)whether, if the contract was a 'terms' contract, it was validly terminated by the sellers, in accordance with s 6 of the Act.
Her Honour found that the contract was a terms contract, and that the contract had been validly terminated by the sellers: Chan v Du Buisson Perrine. [1]
[1] Chan v Du Buisson Perrine [2014] WASC 219 (primary reasons).
For the reasons which follow, in my respectful view her Honour erred in finding that on her Honour's construction of s 5 of the Act, the contract had been validly terminated under s 6 of the Act. However, her Honour misconstrued s 5 of the Act, and for this reason, the appeal should nevertheless be dismissed.

Background

The following facts are based on her Honour's findings unless otherwise indicated, and are uncontroversial.
On 3 September 2012, the respondents (sellers) and the appellants (buyers) entered into a contract for the sale and purchase of certain property in East Perth. The contract incorporated the 2011 Joint Form of General Conditions for the Sale of Land, which were published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (the 2011 General Conditions).
The relevant terms of the contract provided as follows:
(a)the purchase price was $2,090,000;
(b)settlement was to occur on 31 January 2013 or before then by mutual agreement;[2] and
(c)a contractual deposit of $150,000 was payable comprising:
(i)$5,000 to be paid upon the date of execution of the contract;
(ii)$45,000 to be paid within three days of finance approval; and
(iii)$100,000 to be paid by 15 October 2012.
[2] GB 47.
The contract was conditional on the obtaining of finance and the latest time for approval of finance was 4.00 pm on Friday, 21 September 2012.
A deposit of $150,000 represented approximately 7.2% of the purchase price.
On 13 October 2012, the parties varied the contract to the following effect:
(a)the settlement date was extended to 7 March 2013 (or a date before then by mutual agreement);[3] and
(b)the deposit was reduced to $105,000, comprising:
(i)$5,000 paid on 3 September 2012;
(ii)$10,000 to be paid by 19 October 2012;
(iii)$30,000 to be paid by 30 November 2012;
(iv)$30,000 to be paid by 28 December 2012; and
(v)$30,000 to be paid by 31 January 2013.
[3] On the proper construction of the variation, GB 70.
The revised deposit represented approximately 5% of the purchase price.
On 12 December 2012,[4] there was a further variation, in relation to the deposit. The amount of the deposit remained at $105,000, and it was agreed to be paid or payable on the basis that:
(a)$5,000 was paid on 3 September 2012;
(b)$10,000 was paid on 19 October 2012;
(c)$30,000 was paid on 12 December 2012; and
(d)the remaining $60,000 would be paid by 31 January 2013.
[4] GB 71 and par 3(b) of the first appellant's affidavit sworn 3 October 2013, GB 75 (the primary judge described this variation as dated 30 December 2012 - primary reasons [6].
On 1 February 2013, there was a further variation by which the parties agreed that the final part of the deposit, in the sum of $60,000, would be paid by 15 February 2013.
On 27 February 2013, the contract was further and finally varied so as to provide that the final part of the deposit, in the sum of $60,000, was to be paid by 1 March 2013.
In accordance with the contract as finally varied, the buyers paid the final tranche of the deposit of $60,000.
Since 11 March 2013, the $105,000 has been held in the sellers' lawyer's trust account.
Settlement did not occur on or before 7 March 2013 in accordance with the variation effected on 13 October 2012.
On 21 March 2013, the sellers served a Default Notice on the buyers on the basis that the buyers had 'failed to complete Settlement on 7 March 2013, in accordance with cl 3.5 of the 2011 General Conditions'. The Default Notice required the buyers to remedy the default within 11 business days after the date of the Default Notice.
The default was not remedied and settlement did not take place within the time specified in the Default Notice, or at all.
On 16 April 2013, the sellers served a Termination Notice on the buyers which provided that the buyers had failed to remedy the default specified in the Default Notice dated 21 March 2013, and that the sellers thereby terminated the contract.
On 23 April 2013, the sellers served a Deposit Holder Notice on the buyers which contended that the contract had been terminated on the basis set out in the Termination Notice dated 16 April 2013, and the deposit holder was required to pay the deposit to the sellers.
On 29 April 2013, the buyers served a Response to Deposit Holder Notice, disputing the right of the sellers to be paid the contractual deposit.

The issues before the primary judge

The primary judge observed that there was a dispute between the parties as to what should happen to the $105,000 paid under the contract, and that the purpose of the proceedings was to resolve that dispute.
Her Honour, in effect, identified two principal issues of statutory construction.[5] First, the buyers asserted that the contract was a 'terms contract' as defined in s 5 of the Act, and that the sellers did not lawfully terminate the contract because the Default Notice did not give the buyers 28 days to remedy the default, as required by s 6(2)(a) of the Act. (In these reasons I will refer to this issue as the 'terms contract issue').
[5] Primary reasons [19] ‑ [20].
Secondly, although disputing that the contract was a terms contract, the sellers also said that even if it was a terms contract, s 6(2)(a) of the Act did not apply as the contract was not terminated for 'failure to pay a sum of money' within the meaning of that provision. (In these reasons I will refer to this as the 'failure to pay a sum of money issue').
Her Honour added:[6]
The parties are in agreement that, if the contract is not a terms contract, the sellers did all that was required under the contract to lawfully terminate it. Further, it is agreed that if the sellers lawfully terminated the contract the sellers were entitled to elect to exercise the forfeit of the contractual deposit (the 2011 General Conditions cl 24.3). It is also the general law principle that it is the intent of the parties to a contract for the sale of land that, if the contract goes off by default of the purchaser, the vendor shall retain the contractual deposit: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 470 (Starke J), 478 (Dixon J).

[6] Primary reasons [18].

Sale of Land Act - terms contracts

Section 5 of the Act defines 'terms contract' to mean:
terms contract means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land; or
(b)entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land,
and for the purpose of this interpretation deposit includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract.
Part II of the Act is headed 'Sale of land under terms contract'. Part II contains s 6 to s 10 of the Act.
Section 6 of the Act provides:
6.Restriction on rescission
(1)Notwithstanding any stipulation to the contrary, a terms contract shall not be determined or rescinded on account of a breach by the purchaser of any term of the contract unless and until the vendor has served on the purchaser a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach within the time mentioned in subsection (2) and the purchaser has failed to do so.
(2)The time referred to in subsection (1) within which the purchaser is required to remedy a breach is -
(a)where the breach consists of a failure to pay a sum of money - a date stipulated by the vendor being a date not less than 28 days from the date of service of the notice; and
(b)in any other case - a reasonable time from the date of service of the notice.
In Capper v Thorpe,[7] the High Court said, with reference to s 6 of the Act:
It is important in considering the issues presented by the appeal to keep in mind the objects of s 6 of the Act. Those objects appear, clearly enough, from the language of the section. Contracts of the specified kind may not be determined or rescinded unless a notice in writing has been served on the purchaser … Its object is plainly to afford the recipient of the notice time within which to secure advice and to attempt to cure the default. Quite often the default will have arisen from an inability to raise funds. In that context, each day of the period of notice may be important to the purchaser in default. The provision is a protective one. It should not be construed in a way that would undermine or frustrate the achievement of the clear legislative purpose [4].
[7] Capper v Thorpe [1998] HCA 24; (1998) 194 CLR 342.
In addition to the restrictions on termination provided for in s 6 of the Act, pt II of the Act also contains other provisions for the benefit of a purchaser under terms contracts. They are, in effect:
•a requirement for the vendor to notify the purchaser of encumbrances upon the land before the purchaser enters into the contract (s 7);
•limitations on the vendor in creating encumbrances on the land under a terms contract (s 7 and s 8); and
•the conferring of a statutory power on the purchaser to commence an action for rescission of the contract in the event of contraventions by the vendor of its obligations concerning encumbrances under s 7 and s 8 of the Act (s 10).

Extrinsic materials

The extrinsic materials relevant in this context to the enactment of pt II of the Act are set out in Appendix 1 of these reasons.

The primary judge's decision

The terms contract issue

The primary judge found that the contract was a terms contract. In so finding, her Honour declined to follow a decision of Grover v Taylor,[8] in which Wallwork J considered the statutory meaning of 'deposit' in s 5 of the Act.
[8] Grover v Taylor (Unreported, WASC Library No 8901, 6 June 1991).
With reference to Wallwork J's decision in Grover, her Honour observed:[9]
After considering the terms of the Act and the decided cases, Wallwork J determined that the definition of deposit in the Act s 5 does not exhaustively or exclusively define the meaning of that word. That is, his Honour's construction is the same as the sellers. His Honour held that:
'[A] court can decide whether a sum of money is a genuine deposit in any particular case. Once that has been done, providing there are two or more payments to the vendor to be made over and above that deposit, the protection of the Act remains. There is no need to exclusively define what is to be regarded as a deposit in a terms contract (15).'
[9] Primary reasons [51].
Her Honour discussed in some detail the extrinsic materials relating to the legislative history concerning the enactment of pt II of the Act. Her Honour observed, amongst other things:[10]
On 12 November 1970, when the Bill was in the Committee stage, Mr Medcalf moved an amendment to delete the requirement that the deposit be 'paid on or in connection with the execution of the contract'. In moving the amendment Mr Medcalf said:
'The proposal in the first portion of the amendment is to ensure that the deposit need not be paid immediately upon execution of the contract. If a deposit is paid partly on execution and partly later, it may still be treated as a deposit, provided the payments are specified as being the deposit and are paid within 28 days of execution of the contract. That is what it really boils down to. It allows a little leeway for the payment of the deposit (2096 - 2097). (my emphasis)'
…
By changing the definition clause from that originally contained in the Bill, Parliament's intention was to narrow the definition of a terms contract so that contracts which provided for the purchase price to be paid in two or more instalments over and above a deposit would not be caught by the definition, 'provided the payments are specified [in the contract] as being the deposit and are paid within 28 days of execution of the contract'.
The inevitable conclusion to draw from Mr Medcalf's explanation given at the time he made the amendment was that it was intended to broaden the statutory definition of deposit from a payment or payments identified as a deposit and made on or in connection with the execution of the contract to a payment or payments identified as a deposit and made within 28 days of execution of the contract. (emphasis added)
[10] Primary reasons [65], [70] and [71].
Her Honour continued:[11]
Although I am mindful of the desirability of maintaining consistency between the decisions of single judges of this court, I am unable to follow Wallwork J's decision in Grover. Having regard to the Parliamentary Debates, I am satisfied that Parliament intended to stipulate a definition of a terms contract which, in turn, contained an exclusive or exhaustive definition of deposit.
The definition of a terms contract, in part, means an executory contract for the sale and purchase of land under which the purchaser is obliged to make two or more payments to the vendor (over and above any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract) before he is entitled to a conveyance or transfer of the land.
I consider that this construction is consistent with the objects of the Act to protect purchasers under contracts which provided for payment on extended terms. It would be unlikely that Parliament inserted a definition of a terms contract and a deposit which, essentially, leaves it to the parties to determine whether a contract is or is not a terms contract which obtains the protection of the Act. Given that the Act resulted from concerns that vendors were abusing their bargaining powers to insert clauses in terms contracts which enabled the vendor to terminate contracts and forfeit deposits or instalments of the purchase price immediately if purchasers failed to make a scheduled payment on a due date, it would not give effect to the purpose of the relevant provisions in the Act to interpret the definition of deposit in a way which enabled the abuse to continue, subject only to the right of the purchaser to have recourse to a court to decide whether the relevant contractual deposit was, in truth, a deposit or not. Such a position would have barely improved the position of purchasers. Vendors could avoid the immediate effect of the Act by calling instalment payments part of the contractual deposit.
For the above reasons, I find that the contract was a terms contract. (emphasis added)

The failure to pay a sum of money issue

[11] Primary reasons [72] - [75].

Her Honour said:[12]
I conclude that the buyers' breach which was relied on by the sellers and which they required the buyers to remedy within the time specified in the Default Notice was not a breach which consisted of 'a failure to pay a sum of money'. It was a failure to comply with the obligations involved in settlement, in accordance with cl 3.5 of the 2011 General Conditions, which incorporated all the obligations in accordance with cl 3 of the 2011 General Conditions. As in Sibbles [v Highfern Pty Ltd [1987] HCA 66; (1987) 164 CLR 214], the sellers relied on the buyers' refusal to be bound by the contract, rather than their failure to pay a sum of money. Thus, the Act s 6(2)(a) did not apply and the sellers were not required to stipulate a date being a date not less than 28 days from the date of service of the Default Notice in order to validly rescind the contract.

Reasonable time

[12] Primary reasons [99].

Her Honour then considered whether the sellers' Default Notice stipulated 'a reasonable time from the date of service of the notice' in accordance with s 6(2)(b) of the Act. Her Honour said:[13]
Reasonableness must be determined not only having regard to objective features but also to the subjective or particular circumstances of the relevant contract. In this respect, I note that the contract was originally executed on 3 September 2012 and it allowed for settlement on or before 31 January 2013. This allowed for over four months between execution of the contract and settlement. Due to the various variations in the contract this period was extended so that there was a period of some six months between execution of the contract and the stipulated settlement date. There was then a further 14 days before the sellers served the Default Notice.
Given these circumstances, I am satisfied that the 11 business days provided by the Default Notice, which was 18 clear days, was a reasonable time from the date of service of the Default Notice within which the buyers could remedy the breach. It is not disputed that they failed to do so.
[13] Primary reasons [103] - [104].

Grounds of appeal and notice of contention

The grounds of appeal were as follows:
1.The learned trial judge erred in law in failing to find [99] that the appellants' defaults consisted of a failure to pay a sum of money under s 6(2)(a) of the Sale of Land Act 1970 (WA).
2.The learned trial judge erred in law in finding [98] that the evidence established that the appellants failed to complete settlement by failing to comply with their obligations in cl 3 of the 2011 General Conditions for the Sale of Land, save for cl 3.7, insofar as:
2.1there was no evidence that the appellants did not comply with their obligations in cl 3 of the General Conditions; and
2.2the only inference that could be drawn from the evidence was the appellants had not paid the balance of the purchase price as required by cl 3.7 of the General Conditions.
The respondent, by notice of contention, alleges that the judge erred in finding that the contract was a terms contract. In response to the notice of contention, the appellants effectively supported the judge's conclusion by reference to the judge's reasoning.

Deposits

The question of construction in relation to the terms contract issue requires an understanding of the meaning and effect of a deposit under the general law. A deposit is not necessary to the validity of a contract for sale of land. In the absence of a stipulation in the contract in that regard, a seller cannot require a deposit, or any part of the purchase money, to be paid prior to completion: Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd;[14] Perry v Suffields Ltd;[15] and Van Der Hulst v Tainui Corporation Ltd.[16]
[14] Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, 321.
[15] Perry v Suffields Ltd [1916] 2 Ch 187, 191.
[16] Van Der Hulst v Tainui Corporation Ltd [1998] 2 NZLR 359, 362 - 363.
The word 'deposit' has a 'long‑established legal meaning'[17] in the context of the sale and purchase of land. A deposit is a 'guarantee that the purchaser means business',[18] and is an 'earnest to bind the bargain'.[19]
[17] Adopting the language of McHugh, Gummow, Hayne & Heydon JJ in Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249 [16].
[18] Soper v Arnold (1889) 14 App Cas 429, 435.
[19] Brien v Dwyer [1978] HCA 50; (1978) 141 CLR 378, 386 ‑ 387, 391 ‑ 392, 397 ‑ 398, 401, 406.
In Romanos v Pentagold Investments Pty Ltd,[20] the plurality observed:
In Brien, Jacobs J described a deposit as:
'an assurance to the vendor, a security to him pending completion. He can take his property off the market and not concern himself with other offers in case the sale should go off, with the comfort at least that the deposit is there for his security.'
This reasoning is no less applicable to contracts providing for the payment of a deposit in particular instalments at times each stated to be essential. That is the present case. Further, Brien is authority for the proposition that once there has arisen an entitlement to rescind for failure to pay the deposit, that entitlement may be exercised without the necessity that the purchaser first be given notice requiring payment to be made at a reasonable time.
[20] Romanos v Pentagold Investments Pty Ltd [2003] HCA 58; (2003) 217 CLR 367 [20].
In Farrant v Leburn,[21] Wickham J explained that the payment of a deposit, as opposed to the payment of instalments towards the purchase price, is not conditional upon completion:
The [vendor's] title to the instalments whether actually received or whether due and payable is conditional upon completion, ie, upon the executory consideration becoming executed. This is not so in the case of a deposit, the payment of which is in no way conditional upon completion and which is the absolute property of the seller if received. The reason for this has been said to be found in the nature of a deposit as a guarantee but this, I think, is not the only way of stating the reason. Here the purchaser made an unconditional promise to pay a deposit immediately and, although if the contract was completed the moneys would according to ordinary principles be credited towards the purchase price and until then would constitute an earnest for performance, the agreement to pay was not in consideration of conveyance but was in consideration of the contract. It was the price or part of the price of the vendor's promise to sell and this promise, having been given by the vendor the consideration for the purchaser's promise was fully executed.
[21] Farrant v Leburn [1970] WAR 179, 183 ‑ 184.
The foregoing observations by Wickham J were cited with approval by Brooking J in Bot v Ristevski.[22]
[22] Bot v Ristevski [1981] VR 120, 123.
The question of whether a payment, although described as a deposit under the contract, is intended to possess the normal incident of a deposit depends upon the proper construction of the contract.[23]
[23] Coates v Sarich [1964] WAR 2, 6, 14 ‑ 15; Freedom v AHR Constructions Pty ltd [1987] 1 Qd R 59, 65 ‑ 66.
In Freedom v AHR Constructions Pty Ltd,[24] McPherson J observed:[25]
[T]here is an antecedent question to be asked, which is whether the payment, although described as a deposit, is intended to possess the normal incident of a deposit, which is that is liable to forfeiture upon default in completion by the purchaser. One factor that comes into consideration is the proportion that the 'deposit' bears to the total purchase price. In Mehmet v Benson (1963) 81 WN (Pt 1) (NSW) 188, 191, Jacobs J had this to say about the matter:
'Before dealing with these terms I should state my conclusion that the initial deposit in this case of £3,000 goes beyond a deposit as an earnest of the bargain between the parties and must be regarded to the extent to which it exceeds a normal deposit, as an instalment of purchase money.
In my view a normal deposit is ten per cent. I realise that upon one view I should have expert evidence of what usually is the course of business in regard to the amount of deposits, but it seems to me that to require such evidence, when so many contracts are observed in these courts and generally in the community, with a deposit of ten per cent, is to substitute rigidity for reality in one’s approach to the matter.'
His Honour was there speaking about conditions in New South Wales, but common experience in Queensland is the same. In this State, at least in regard to the purchase of residential properties, a deposit of 10 per cent of purchase price is the almost invariable rule, and may be thought to have received a degree of legislative recognition in s 71 (2)(a)(i) of the Property Law Act. A payment that exceeds this conventional percentage may therefore be at some risk of being regarded, at least as to the excess, as incorporating an element of part payment and so of not attracting the implication referred to by Fry LJ in Howe v Smith. That is ultimately a matter of interpretation of the terms of the contract which, as Hale J. points out, is distinct from any question whether equity will relieve wholly or in part against forfeiture of the sum paid.
[24] Freedom (65 - 66).
[25] Freedom (66).

The meaning of 'terms contract'

Overview on the question of construction

The primary judge found that the concluding words of the definition of 'terms contract' in s 5 of the Act provided an 'exclusive or exhaustive definition of deposit'.[26]
[26] Primary reasons [72].
With respect to her Honour, I am unable to agree with that conclusion. The word 'includes' bears its ordinary meaning and extends the general law meaning of 'deposit'. It is not an exhaustive definition as found by the primary judge, or in the sense of it being both expansive and limiting in its effect.
The language of the definition is compressed, and it is helpful to break it into its component parts before construing it. In my view, the most natural way of reading the definition of 'terms contract' in s 5 of the Act (without at this point construing it) is, relevantly for present purposes, as follows:
Terms contract means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land;
and for the purposes of this definition, the word 'deposit' includes:
•an amount as part of the purchase price, specified in the contract as a deposit, which is payable in one payment (ie, in a single sum) within 28 days of its execution;
•an amount as part of the purchase price, specified in the contract as a deposit, which is payable by a number of payments (ie, by instalments) within 28 days of its execution.
Using the above as the relevant structure of the provision, in my view, as a matter of construction, the definition of 'terms contract' in s 5 of the Act provides:
Terms contract means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land;
and for the purposes of this definition, the word 'deposit' includes:
•an amount as part of the purchase price, specified in the contract as a deposit, whether or not it would be treated by the general law as a deposit, which is payable in one payment (ie, in a single sum) within 28 days of its execution;
•an amount as part of the purchase price, specified in the contract as a deposit, whether or not it would be treated by the general law as a deposit, which is payable by a number of payments (ie, by instalments) within 28 days of its execution.
The issues concerning the question of construction and my discussion of them and reasoning are set out below.

Discussion - statutory text

In YZ Finance Co Pty Ltd v Cummings,[27] Kitto J observed, in effect, that unlike the word 'means', the word 'includes' has no exclusive force on its own. To say that A includes B means that the whole of B is within A, but not that B is the whole of A. Thus, strictly speaking, the word 'include' cannot be equivalent to 'means and includes'. However, a provision which uses the verb 'includes' may nevertheless, on its proper construction, be 'enacted as a complete and therefore exclusive statement of what the subject expression includes. A provision which is of that character has the same effect as if "means" had been the verb instead of "includes"'.[28]
[27] YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395, 401 ‑ 402.
[28] YZ Finance (402).
In YZ Finance, in the relevant definition clause, the verb 'includes' was followed by a list of specified things. The specified things were 'heterogeneous'; each had a 'common element' from which could be discerned an 'intelligible policy' behind the provision; and the things were 'so widely described as to cover all possible forms' of the subject of the definition. The context was that if the ordinary meaning of 'includes' were applied to the provision, its 'enactment … [would become] inexplicable on any basis of rational policy'.[29] Thus, despite the absence of expressly exclusive language, the definition in question was construed to be exhaustive in nature.
[29] YZ Finance (403).
In the case under appeal, those features are not apparent in the definition of 'terms contract' in s 5 of the Act. In this case, the verb 'includes' is not followed by a list of specified and widely described heterogeneous things. Whilst the object of the verb 'includes' refers to deposits payable (in a single sum or by instalments) within 28 days, it cannot be concluded that the provision would be inexplicable on the grounds of rational policy if the provision were not given a non‑exclusive meaning.
On the construction preferred by the primary judge, if there were a contract requiring a payment of a 10% deposit, payable by two equal instalments, one on execution and the second within 28 days, with the balance on completion thereafter, the second payment would not be treated as a payment 'over and above any deposit' for the purpose of par (a) of the definition, and the contract would not be a terms contract. If, however, under essentially the same contract half of the deposit was payable on execution and half within, say, 29 days, the second payment would be treated as a payment 'over and above any deposit' for the purposes of par (a) of the definition, and the contract would be transformed into a terms contract. Such a construction would destroy the bargain for the vendor with respect to the 'earnest' as it would make the payment of the deposit subject to a notice requirement, but would provide no material protective benefit to the purchaser.
Also, on the primary judge's construction, a payment payable within 28 days which, on the proper construction of the contract, was a deposit (eg, 5% of the purchase price payable upon execution) but which was not specified as such by the parties, would not be a deposit for the purposes of par (a) of the definition, and instead could be one of the 'two or more payments' referred to in par (a) and made subject to a notice requirement. Again, it is difficult, objectively to suppose that this interference with the common law rights of a vendor with respect to a deposit payable within 28 days reflected some underlying policy of the legislation.
On the other hand, it was argued, in effect, that unless the concluding words of the definition of 'deposit' have the effect of creating an exclusive definition of that term, the words would otherwise be mere surplusage. In construing a statutory provision, the court must strive to give meaning to every word of the provision,[30] although there are however many occasions when that cannot be done.[31]
[30] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 [71].
[31] Brisbane City Council v Attorney General (QLD) [1908] HCA 8; (1908) 5 CLR 695, 720; Chu Kheng Lim v Minister for Immigration [1992] HCA 64; (1992) 176 CLR 1, 13; Solution 6 Holdings Ltd v Industrial Relations Commission of NSW [2004] NSWCA 200; (2004) 60 NSWLR 558 [75].
I am not persuaded by that argument. The word 'deposit' in par (a) of the definition 'Terms contract' would ordinarily be given its technical legal meaning, absent the manifestation of a clear contrary intention.[32] It would not include a deposit which, on the proper construction of the contract, did not have the incident of a deposit.[33] The words 'which the contract specifies as being a deposit and provides to be paid … within 28 days of the execution of the contract' are reasonably capable of being read as enlarging the definition of 'deposit' in par (a). They indicate that a deposit is a payment specified as such by the parties, providing that it is payable within 28 days, even if it is a payment which, on the proper construction of the contract, would not otherwise be regarded as a deposit. Although a contract providing for such a payment would not, on that account alone, attract the protection of pt II of the Act (in that par (a) would otherwise still need to be satisfied), the purchaser might nevertheless claim equitable relief under the general law with respect to such a payment on the basis that the payment (albeit payable within 28 days) was not, on the proper construction of the contract, a deposit.
[32] Attorney General (NSW) v Brewery Employees' Union (NSW) [1908] HCA 94; (1908) 6 CLR 469, 531; Davies & Jones v Western Australia [1904] HCA 46; (1904) 2 CLR 29, 42; Frendo v Secretary, Department of Social Security (1987) 77 ALR 682, 684 ‑ 685; see also Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249 [16] ‑ [32].
[33] As to which see Coates and Freedom referred to in footnote 23.
On the other hand, if payments which are payable after 28 days of execution of the contract do not, on the proper construction of the contract, have the incident of a deposit, they are payments 'over and above any deposit' within the meaning of par (a) of the definition, and could, if par (a) were otherwise satisfied, attract the protective operation of pt II of the Act. Accordingly, in my view, the definition of 'deposit' may be seen 'at least partially expansive in its operation' and should not 'be treated as an exclusive definition'.[34]
[34] Federal Commissioner of Taxation v St Hubert's Island Pty Ltd (in liq) [1978] HCA 10; (1978) 138 CLR 210, 216 (Stephen J); 228 ‑ 229 (Mason J); Corporate Affairs Commission (SA) v Australian Central Credit Union [1985] HCA 64; (1985) 157 CLR 201, 206; R v Novakovic [2007] VSCA 145; (2007) 17 VR 21 [5] (Nettle JA); [73] (Redlich JA).
Nor would I, with respect, agree with her Honour's observations that the construction she favoured was to be preferred because the alternative 'would have barely improved the position of purchasers'.[35] In my view, s 6 of the Act has substantial scope for operation in respect of instalment payments or other payments,[36] over and above deposits, which are payable after 28 days and for which time is made of the essence.
[35] Primary reasons [74].
[36] See, eg, Wacal Developments Pty Ltd v Realty Developments Pty Ltd [1978] HCA 30; (1978) 140 CLR 503.
Her Honour also favoured an exhaustive definition because otherwise '[v]endors could avoid the immediate effect of the Act by calling instalment payments part of the contractual deposit'.[37]
[37] Primary reasons [74].
This concern seems to be based on an assumption that vendors will call instalment payments 'deposits' in order to reduce the number of payments 'over and above any deposit' within a contract, so as to avoid the definition of a terms contract in par (a), and thereby avoid the protective provisions of pt II. However, whether the word 'deposit' is given an exhaustive or non‑exhaustive definition, a vendor's ability to 'call' an instalment a 'deposit' when it is not (and therefore seek to avoid the definition of a terms contract in par (a) and the purchaser protection provisions of pt II) is confined to payments to be made within 28 days of the execution of the contract. In these circumstances, those payments are more consistent with the contract having the character of a 'cash contract'. The harm to a purchaser against which pt II exists to mitigate less readily results from such contracts. It is accordingly consistent with the purpose of the legislation that contracts, having the character of, or being similar in character to, 'cash contracts', can be brought outside of the definition of a terms contract (by specifying in the contract that certain payments are 'deposits' to be paid within 28 days of execution) and consequently not fall within the protective provisions with which pt II is concerned. That result is effectuated whether or not the word 'deposit' is given an exhaustive or non‑exhaustive definition, and her Honour's concern is not a sound basis for construing the definition as exhaustive.
Her Honour also appears to have considered that an exhaustive definition was required on the basis that prior to the introduction of pt II of the Act, 'vendors were abusing their bargaining power to insert clauses in terms contracts which enabled the vendor to terminate contracts and forfeit deposits or instalments … immediately if purchasers failed to make a scheduled payment on a due date'.[38] Her Honour said, in effect, that unless an exhaustive definition were adopted, the 'abuse [would] continue, subject only to the right of the purchaser to have recourse to a court to decide whether the relevant contractual deposit was, in truth, a deposit or not'.[39]
[38] Primary reasons [74].
[39] Primary reasons [74].
There are at least two points to be made about those observations. First, neither the text nor the context of pt II suggests that the legislature was seeking to prevent vendors from terminating a contract and forfeiting the deposit if the deposit were not paid in time.

It may also be noted that there was another issue in Braidotti concerning the deposit. As noted earlier, the deposit was $150,000 payable as to $1,000 on execution with the balance of $149,000 payable upon the gazettal of rezoning.[64] Rezoning did not occur, although the condition for it was waived. No provision was made for the payment of the balance of the deposit in that event. The vendors nevertheless also argued that they were entitled to terminate for non‑payment of the balance of the deposit. The majority found, in effect, that as events transpired, the $149,000 became payable on completion as part of the purchase price and lost the character of a deposit.[65]
[64] Braidotti (296), (303).
[65] Braidotti (303); see also Deane J (305 ‑ 306).
It was also held that in any event, even leaving aside the sum of $149,000, the rescission was not in accordance with the statute because it was based, as well, on the non‑payment of the balance of the purchase price.[66]
[66] Braidotti (303).
In the decision under appeal, her Honour appears to have found[67] that s 6(2)(a) of the Act had no application because the breaches on account of which the sellers terminated the contract consisted of:
(a)the purchasers' failure to comply with certain obligations prior to settlement, including the requirements to pay stamp duty on the contract and tender a signed and stamped transfer within a reasonable time prior to the settlement date; and
(b)the failure to pay the balance of the purchase price on the settlement date.
[67] Primary reasons [97] ‑ [99].
I am, with respect, unable to agree with the conclusion that s 6(2)(a) of the Act was not engaged.
The sellers terminated the contract for failure to remedy the default specified in the Default Notice dated 21 March 2013. As indicated earlier, the default specified in that notice was the failure:
to complete Settlement on 7 March 2013, in accordance with cl 3.5 of the [2011 General Conditions].
Clause 3.5 of the General Conditions provided, relevantly:
Each party must complete Settlement on:
(a)the date for Settlement specified in the Contract.
Clause 3.7 relevantly provided:
The Buyer must on Settlement pay:
(a)to the Seller … the balance of the Purchase Price. (emphasis added)
In my view, on a fair reading of the notice dated 21 March 2013, the default specified was the failure to complete settlement 'on' 7 March 2013, being the date specified in the contract. The default in the failure to complete settlement 'on' that date was a failure to pay the balance of the purchase price in accordance with cl 3.7. Properly construed, the notice was not directed to defaults occurring prior to that date. That construction of the notice is confirmed by the fact that there was no evidence of anterior breaches or correspondence between the parties to the effect that the purchasers had renounced their obligation to perform the contract in general or, in particular, had failed to comply with the requirements concerning the payment of stamp duty and the tender of a signed and stamped transfer. It would seem to me that this was a case (as in Braidotti) where there was no evidence that the purchasers' default consisted of anything more than default in payment of the money due under cl 3.7 of the General Conditions.
Accordingly, in my respectful opinion, the only fair inference to be drawn from the contemporaneous evidence was that the sellers had terminated the contract on account of a breach consisting of the purchasers' failure to pay the balance of the purchase price on the date specified for settlement.

Conclusion

Although, for the reasons given above, the appellants have made out grounds 1 and 2 of the appeal, the appeal should nevertheless be dismissed on the basis that the notice of contention should be upheld, subject to the consideration of one further matter, discussed below.
Following the hearing of the appeal the parties were invited to provide written submissions in relation to, inter alia, whether it would be open to the court to decide the appeal on the basis that one or more of the 19 October 2012, 12 December 2012 and 1 March 2013 payments were not part of the deposit at common law.
This point was not in contention at trial or at the hearing of the appeal. Ordinarily, the circumstances in which a party will be allowed to raise a new point on appeal are 'very exceptional'. Such a course will only be permitted if two requirements are met. First, the interests of justice must require determination of the new point and secondly, there must be no prejudice to the party against whom the new point is taken. These exceptional circumstances will not exist where the point, if taken below, 'might' have resulted in additional or different evidence being led.[68]
[68] Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50; (2012) 43 WAR 91 [48] ‑ [52].
The question of whether a variation extending the time given to a purchaser to pay a deposit (either in a single sum or by instalments) changed the character of the payment would depend upon the proper construction of the variation in the circumstances in which it occurred. Ordinarily, it would be expected that this would be a point which 'might' be the subject of additional or different evidence, particularly in this case, commenced by originating summons, where the first‑named appellant, in his affidavit sworn 3 October 2013, had deposed to the variations effecting changes to 'the deposit'; that the 'deposit was payable by 4 instalments' which included the payments on 19 October 2012, 12 December 2012 and 1 March 2013; and that 'the [appellants] contend that the deposit must be repaid to the [appellants]'.[69] Even though the respondent did not contend that new evidence might have been led had the point been raised in the primary proceedings, I am not persuaded that the new point merely raises a discrete or confined question of law and I am not satisfied that in all the circumstances it is in the interests of justice to allow the appellants to rely on this new point now.
[69] Affidavit of the first‑named appellant, 3 October 2013, pars 3 ‑ 4, 8, GB 75 ‑ 76.
If I were wrong about that, I would not find for the appellants on the new point in any event. First, the observations of Barwick CJ (with whom McTiernan J agreed) in Mehmet v Benson[70] are pertinent:
A mere extension of time where a new date for performance is substituted for the contracted date does not result in time ceasing to be of the essence either for performance of the obligation in respect of which the extension is granted or in respect of the performance of other obligations.
[70] Mehmet v Benson (1965) 113 CLR 295, 305.
Secondly, the payments due on 19 October 2012, 12 December 2012 and 1 March 2013 were effectively fractions of the agreed deposit and payable in advance of settlement on 7 March 2013, when the balance of $1.985 million was payable in exchange for the transfer of title. This case is unlike the case of Iannello v Sharpe,[71] in which the second tranche of the alleged deposit only fell due for payment in the event that the purchaser defaulted in the observance of an essential term. In that case, Hodgson JA (with whom Santow & Basten JJA agreed) said:[72]
[I]n my opinion the obligation to make the second payment of $225,000 is not an obligation to pay a deposit or part of a deposit. There never would be a time when this second $225,000 (as such) would be paid so as to show that the purchaser is in earnest in committing himself to pay the rest. On the contrary, the only time when Special Condition 14 obliges the purchaser to pay this sum is when the purchaser has demonstrated that he is not in earnest, and indeed the termination of the contract means that he would not be able to complete the contract. The obligation to pay the second $225,000 is inconsistent with the characteristics of a deposit.
[71] Iannello v Sharpe [2007] NSWCA 61; (2007) 69 NSWLR 452.
[72] Iannello [18].
Thirdly, even if the final tranche of $60,000 were regarded as having lost its character as a deposit, the other two payments did not. In this regard:
(a)each variation specified expressly that it was dealing with the 'deposit';
(b)the effect of the variations was to reduce the payment of the 'deposit' from 7.2% to 5% of the purchase price, which is plainly within the ordinary scope of a deposit at common law;
(c)the contract in its original form provided for the deposit to be paid by instalments, the last of which was payable on 15 October 2012, which was approximately three and a half months prior to the original settlement date of 31 January 2013, and it is not suggested that the payments as originally structured were not instalments of the deposit at common law;
(d)the $10,000 sum payable on 19 October 2012 under the variations was payable only four days after the originally agreed instalment date of 15 October 2012, and was payable over four and a half months prior to the agreed extended settlement date of 7 March 2013; and
(e)the $30,000 sum payable under the variations on 12 December 2012 was payable nearly three months prior to the agreed extended settlement date of 7 March 2013.
In these circumstances, at least each of the payments of 19 October 2012 and 12 December 2012 is properly regarded as an earnest, or 'an assurance to the vendor, a security … pending completion'.[73]

Appendix 1

[73] In the words of Jacobs J in Brien (401), referred to in Romanos [20].

Legislative history

A 1969 report by the Law Reform Commission of Western Australia,[74] included the following recommendations to the then Minister for Justice the Hon Arthur F Griffith MLC:
[74] Law Reform Commission of WA, Project No 1 - Part 1: Protection to Defaulting Purchasers Report (September 1969).
TERMS OF REFERENCE
1.In its first programme project number 1 the Committee was asked -
'to consider the law applicable to a defaulting purchaser under a terms contract for the sale of land and to report whether there is need for reform and the extent of such reform.'
…
THE PRESENT LAW IN WESTERN AUSTRALIA
3.In terms contracts the vendor retains title but becomes in equity a trustee of the land for the purchaser, though in a 'qualified sense', and the beneficial ownership passes to the purchaser and remains with him so long as he continues to meet his obligations under the contract. The vendor has only a lien on the property as security for the payment of purchase money (Voumard: Sale of Land 2nd ed 97). This relationship persists only while the contract remains on foot.
4.Even though a contract does not give the vendor an express right to rescind, he still has a common law right to rescind in the event of a breach of a material term in the contract by the purchaser.
5.Once the vendor exercises his right to rescind the purchaser loses his beneficial interest in the property and his rights and liabilities then depend either on the express terms contained in the contract or on the common law.
6.Where the contract contains no express default provisions, it is well established that on default at common law the deposit is forfeited to the vendor (Howe v Smith [1884] 27 Ch D 89) and any instalments paid (which are regarded as pre‑payments of the consideration for the ultimate conveyance) belong at law to the purchaser on the basis that the consideration for the conveyance has failed and accordingly can be recovered at law by him subject to the vendor's right to counterclaim for damages. (McDonald v Dennys Lascelles Ltd [1933] 48 CLR 457 and also Cowan v Stanhill Properties (1967) VLR 461).
7.Equity will relieve the purchaser against forfeiture of an amount which though described as a deposit is in fact a penalty. In addition, where the contract provides expressly for the forfeiture of the deposit and instalments, equity may grant relief against forfeiture of the deposit if penal and will generally hold that forfeiture of instalments is penal and may give relief on equitable grounds. (Coats v Sarich [1964] WAR 2 and McDonald v Dennys Lascelles Ltd).
8.In the English case of Stockloser v Johnson [1954] QB 476, it is suggested that the courts should make no distinction between cases in which the contract expressly provides for the forfeiture of instalments and those in which the contract is silent on this matter. However, in view of McDonald v Dennys Lascelles Ltd, such a distinction should be made, with the purchaser being in the former case entitled to equitable relief, and in the latter having the right, at law, to repayment of the instalments subject to any set‑off for damage suffered by the vendor.
9.It should be noted that in any claim by the vendor for damages he must credit the purchaser with any increase in the value of the property. This provides a defaulting purchaser with a set‑off shield; it serves only to reduce a claim for damage made by a vendor but does not give the purchaser an independent claim to the increased value of the property either at law or in equity.
MOVEMENT AND NEED FOR REFORM
10.The Purchaser under a terms contract is in the vast majority of cases sufficiently protected by the present law but it has been contended that if in default he may and does sometimes suffer injustice because the vendor may deprive him of -
(a)the benefit of the bargain , and
(b)any increase in the value of the property resulting from a rising market or improvements effected to it by the purchaser (except to the extent to which the purchaser may set off such increase against a claim by the vendor for damages).
11.This contention may be posed in another way; what justification is there for a vendor obtaining more than he was entitled to by the original bargain? Should he not be satisfied if, on the purchaser's default, he recovers the amount contracted to be paid together with compensation for any damage suffered by him by virtue of the default? Why should he get the benefit of the improvements effected by the purchaser and why should he get the benefit of any increase in the value of the land?
…
14.We have not been told of any recent cases (ie within the last twenty years or so) of hardship or injustice arising out of the purchaser's sheer inability to keep up the instalments. We assume that in these days of increasing land prices the purchaser is generally able to protect his position (eg by raising finance on the land or even arranging to sell).
15.However, the Committee has knowledge of two recent cases where hardship has been caused to a purchaser because through an oversight he did not pay an instalment on the due date and the vendor immediately rescinded the contract, relying on the provision in the contract making time of the essence. This hardship could not arise if the purchaser was given reasonable time to make arrangements.
…
RECOMMENDATIONS
18.The Committee in its working paper suggested that the problem that appeared to call for early legislative action in this State was that referred to in paragraph 15 above namely the hardship imposed on a purchaser, who through an oversight fails to pay an instalment under a contract in which there is a time of the essence clause, and also has the default provisions invoked against him immediately without giving him a chance to make good.
19.The Committee stated in paragraph 29 of its working paper that a purchaser under a terms contract, in the conditions at present prevailing in this State, would be sufficiently protected if in addition to his rights under the existing law he was given a statutory right to reasonable notice before the vendor could act against him on his default.
…
22.In the end the Committee decided that it would fix an arbitrary time limit for 28 days to remedy a breach of covenant to pay money, and that for any other breach the legislation should lay down only that the purchaser should be allowed a reasonable time to remedy the default, thus leaving it to the Court to determine in any particular case what period was reasonable.
…
SUMMARY OF RECOMMENDATIONS
The Committee recommends as follows -
(a)that legislation be enacted to ensure that in a terms contract the purchaser is given a right to notice before the vendor can act against him on his default;
(b)that the Vendor and Purchaser Act 1878 (as amended), the Sale of Land (Vendor's Obligations) Act 1940 and the Purchasers Protection Act 1933 ‑ 1948 be repealed and that new legislation be enacted, incorporating such provisions of these three Acts as they are still necessary, and containing provisions to give effect to recommendation (a).
The draft bill annexed to the report proposed a definition of 'terms contract' as follows:
'terms contract' means an executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make two or more payments to the vendor (over and above any deposit paid on or in connection with the execution of the contract) before he is entitled to a conveyance or transfer of the land; or
(b)entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land.
A draft of the Sale of Land Bill was read for a second time by the Legislative Council on 3 November 1970. On that occasion, the Hon A F Griffith referred to the Commission's September 1969 report and said:[75]
Recommendations of the committee were that -
(a)legislation be enacted to ensure that in a terms contract the purchaser is given a right of notice before the vendor can act against him on his default;
…
The Bill now being introduced for consideration incorporates all these recommendations, and it is safe to say that the controls provided will do much to prevent many unsatisfactory practices in respect of sales of land under contract of sale.
Clause 6 provides that a terms contract for the purchase of land cannot be determined unless the vendor serves a notice on the purchaser requiring him to remedy the breach of contract. Twenty eight days from the date of notice is allowed where the breach consists of a failure to pay money, and reasonable time must be allowed in the case of breaches.
[75] Western Australia, Parliamentary Debates, Legislative Council, 3 November 1970, 1942 (Mr A F Griffith, Minister for Justice).
The draft bill was further debated on 5 November 1970 in the Legislative Council. The Hon I G Medcalf said:[76]
I should have mentioned clause 5 before dealing with clause 6. Clause 5 contains a definition of 'terms contract' and this is the type of contract we are dealing with in this Bill. I feel that the definition is rather restricted. I merely make that comment, but I am not necessarily suggesting that it should be enlarged. My reason for thinking that it is rather restricted is that a terms contract is now defined to mean a contract under which the purchaser is obliged to make two or more payments to the vendor over and above the deposit, or is one under which the purchaser is entitled to possession of the land before he becomes entitled to a transfer.
Two or more payments over and above the deposit are not many payments. In many contracts there can be a deposit and then a further instalment. Sometimes the further instalment is called a further portion of the deposit, although it is doubtful whether it really is part of the deposit. In any event, frequently a deposit is made, a further instalment paid, and final payment upon settlement is effected perhaps within 28 days. Under the definition this would be a terms contract, although most people would treat this type of transaction as a cash sale.
I appreciate that the definition has been made restricted because of the necessity to tighten up this aspect. Perhaps if it were not so restricted there might be opportunities for people to exclude a contract where two payments have been made over a long period. It may be that the definition could have been improved by providing a time limit. For example, the wording could state two or more payments outside a particular period, say, extending over a period of more than three months.
I appreciate that might have introduced drafting difficulties and I would not want to do that. I simply draw attention to the fact that this definition could include some contracts which, in the commercial world, are virtually considered cash contracts.
[76] Western Australia, Parliamentary Debates, Legislative Council, 5 November 1970, 1884.

There was a further exchange between the Hon A F Griffith and the Hon I G Medcalf on that occasion as follows:[77]
[77] Western Australia, Parliamentary Debates, Legislative Council, 5 November 1970, 1884 - 1885 (Mr I G Medcalf), 1884 - 1885.
The Hon A F Griffith: In the case you mention where an offer and acceptance form is signed, and the purchaser pays 10 per cent of the purchase price by way of a deposit that starts off the contract. If the balance were payable on possession that would not be a terms contract.
The Hon I G MEDCALF: If it were two payments apart from the deposit it would be a terms contract.
The Hon A F Griffith: This would not be the position in the case of a simple deposit of 10 per cent, and the balance on possession.
The Hon I G MEDCALF: No, that is true. That would not be a terms contract. However, if it were a payment of a deposit with a further instalment, say, within 14 days and the balance, say, within 28 days, that would be a terms contract.
The Hon A F Griffith: The parties to the contract will know what they are doing, will they not?
The Hon I G MEDCALF: We would hope so but perhaps that is the reason for this Bill.
The Hon A F Griffith: That is right.
The Hon I G MEDCALF: We have often wondered whether the parties always realised what they were doing and this measure is an attempt to protect the purchaser. I support the action we are taking but I maintain the definition may perhaps be a little wider than is needed, although I appreciate that drafting difficulties may be encountered if an attempt is made to narrow it.
The second part of the definition refers to a terms contract as being one under which the purchaser is entitled to possession before he becomes entitled to a transfer. This, of course, includes the case of a contract where a purchaser is let into possession when he pays the deposit.
The Hon A F Griffith: That is right.
The Hon I G MEDCALF: Some 28 days later he pays the balance. This is a terms contract, too. Normally that would be regarded as a cash deal. Most vendors would be unwise to let the purchaser into possession when he pays the deposit, but sometimes this is done, particularly in the case of a farm where it is necessary for someone to carry on and look after the place. I do not necessarily quarrel with the second part of the definition, but I draw attention to the slightly restricted meaning which could be placed on the first portion of the definition.
The Hon A F Griffith: The only way to broaden this would be -
The Hon I G MEDCALF: To provide a time limit.
The Hon A F Griffith: No, but to provide for more than two payments.
The Hon I G MEDCALF: Yes, that would broaden it. If the wording were three or more payments that would broaden the meaning and it would cut out the one case I mentioned where it is frequently found that a person cannot immediately produce money by way of deposit. Someone might not have the deposit which the vendor requires. The vendor is anxious to sell his property and says that he will take 5 per cent immediately and, say, another 5 per cent within three weeks. The purchaser knows he will be able to obtain another 5 per cent within three weeks, and he will pay the balance on registration of a transfer or on settlement. That is really not intended to be a terms contract but it would be under this measure. That is a fairly typical situation, and I merely draw attention to it.
On 12 November 1970, the Sale of Land Bill was further considered in the Legislative Council. The Hon I G Medcalf:[78]
[78] Western Australia, Parliamentary Debates, Legislative Council, 12 November 1970 (Mr I G Medcalf), 2096 ‑ 2097.
Members will recall that during the second reading I referred to this clause and said there would be situations in which its provisions might be too restrictive and might, in fact, include a cash sale which is within the definition of 'terms contract'. The definition 'terms contract' as set out in the Bill states that it is a contract in which the purchaser is obliged to make two or more payments to the vendor over and above any deposit.
I pointed out that a deposit is sometimes broken up and because the purchaser may not immediately have the total funds required for the deposit, which would normally be in the vicinity of 10 per cent, he might pay something which is treated as being an initial or part deposit and then subsequently pay a further deposit, thus making the full deposit.
This is frequently availed of so that the parties can in fact sign a binding contract even though the purchaser does not have, immediately, the cash available to make up the deposit.
In those circumstances it seems to me that the second part of the deposit which he paid could be treated as one of the other payments thereby making a cash sale which would come within the definition of 'terms contract' because there would be a part deposit followed by another instalment, which would also really be a part deposit. Although that is really a cash deal and might take effect in a short time - say, 28 days - nevertheless it would come within the definition of 'terms contract' which, I feel, is not intended. For that reason I suggest that although slight difficulties might be involved, the Law Reform Committee might be good enough to look at this and indicate whether or not it would agree to an enlargement of the definition.
The proposal in the first portion of the amendment is to ensure that the deposit need not be paid immediately upon execution of the contract. If a deposit is paid partly on execution and partly later, it may still be treated as a deposit, provided the payments are specified as being the deposit and are paid within 28 days of the execution of the contract. That is what it really boils down to. It allows a little leeway for the payment of the deposit. I therefore move an amendment -
Page 3, lines 6 and 7 - Delete the words 'paid on or in connection with the execution of the contract'.
The Hon A F GRIFFITH: The honourable member has a number of amendments on the notice paper and perhaps you will permit me, Sir, to say at this stage, when dealing with the first amendment, that I have had all of them referred to the Law Reform Committee which sees its way clear to find favour with them. I also contacted the Parliamentary Draftsman who examined the situation in order that I could be satisfied that the amendments would meet with the accord not only of the Law Reform Committee, but also of the draftsman himself.
I make these general comments now which might be in the interests of saving time. I will not find it necessary to make any further comment because I am satisfied with the amendments. One member of the Law Reform Committee, a Crown Law officer, is present this afternoon merely to give us any assistance we might require. However, I would suggest to Mr Medcalf that he describe the reasons for each amendment as he goes along.
Amendment put and passed.
The Hon I G MEDCALF: I move an amendment -
Page 3, line 13 - Delete the word 'land' and substitute the following passage: -
land,
and for the purpose of this interpretation 'deposit' includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within twenty‑eight days of the execution of the contract.
Amendment put and passed.
Specific matters which exercised the mind of Mr Medcalf in the Upper House were not addressed expressly in the Lower House. On 18 November 1970 there was a second reading of the Sale of Land Bill in the Legislative Assembly. On that occasion Hansard records relevantly:
MR COURT (Nedlands - Minister for Industrial Development) [3.13 pm]: I move -
That the Bill be now read a second time.
This is another piece of legislation emanating from research carried out by the Law Reform Committee at the instigation of the Minister for Justice. The terms of reference of the committee were to consider the law applicable to a defaulting purchaser under a terms contract for the sale of land and to report whether there was a need for reform and, if so, the extent of such reform.
The committee requested, and the Minister for Justice was pleased to agree to, an extension of the terms of reference to include a consideration of the provisions of the Vendor and Purchaser Act 1878, as amended; the Sale of Land (Vendors' Obligations) Act, 1940; and the Purchasers' Protection Act, 1933 ‑ 1948, to see whether they could be modernised and consolidated into one Statute.
Attention was drawn as early as 1957 to the concern of purchasers of properties under contract of sale who in many cases, and through no fault of their own, were unable to complete their contracts.
In the course of its research the committee, after studying the legislation provided for the protection of purchasers of land in Victoria, New South Wales, Queensland, and New Zealand, drafted a working paper. This paper was distributed to members of the judiciary, magistracy, Law School, practitioners interested in the subject, law reform committees and commissions of other States, and the Real Estate Institute. All local commentators on the paper agreed that a case existed for reform and agreed generally with the proposals of the committee.
…
Recommendations of the committee were that -
(a)legislation be enacted to ensure that in a terms contract the purchaser is given a right of notice before the vendor can act against him on his default[.]
…
The Bill which is now being introduced into this House, and which has already been passed in another place, incorporates all these recommendations, and it is predicted with confidence that the controls provided will do much to prevent many unsatisfactory practices in respect of sales of land under contract of sale.
Clause 6 provides that a terms contract for the purchase of land cannot be determined unless the vendor serves a notice on the purchaser requiring him to remedy the breach of contract. Twenty‑eight days from the date of notice is allowed where the breach consists of a failure to pay money, and reasonable time must be allowed in the case of other breaches.
…
The Bill is recommended to members for their consideration as it expresses the views and experience of persons interested in the field. The provisions have been drafted to meet present‑day conditions and reflect the need for law reform and revision in an area which affects a great number of people. In the belief that the provisions contained in the measure will prove of benefit to the community, I commend the Bill to the House.