Contracts - Offer and acceptance - Vendor and purchaser of house - Subject to finance clause - Onus of proof of use of best endeavours - Whether purchasers discharged onus

Legislation:

Nil

Result:

Appeal dismissed

Representation:

Counsel:

Appellants: Mr A J Camp
Respondents : Mr R E Keen

Solicitors:

Appellants: Atkins & Co
Respondents : Corsers

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

Atherton v Flodine [1959] Qd R 364
Barber v Crickett [1958] NZLR 1057
Brauer & Co (Great Britain) Ltd v James Clark (Brush Materials) Ltd [1952] 2 All ER 497
Clark v Refeld (1981) 25 SASR 246
Eastmond v Bowis [1962] NZLR 954
F J & R J Hug Pty Ltd v Orlando [1982] WAR 99
Kathopoulos v Bjelica Investments Pty Ltd (1979) 25 ALR 309
Knotts v Gray [1963] NZLR 398
Martin v MacArthur [1963] NZLR 403
Meehan v Jones (1982) 149 CLR 571
Mulvena v Kelman [1965] NZLR 656
Stoney v Eastbourne Rural District Council [1927] 1 Ch 367
Tait v Bonnice [1975] VR 102
The Glendarroch [1894] P 226
Zieme v Gregory [1963] VR 214

Case(s) also cited:

Abrath v North Eastern Railway Company [1883] 11 QBD 440
Erley Pty Ltd v Gunzburg Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 980153; 3 April 1998
Paltara Pty Ltd v Dempster (1991) 6 WAR 85
Tozer, Kemsley and Millbourn (Australasia) Pty Ltd v Collier's Interstate Transport Service Ltd (1956) 94 CLR 384

MALCOLM CJ: In my opinion this appeal should be dismissed for the reasons to be published by Steytler J with which I am in entire agreement.
PIDGEON J: I have had the advantage of reading in draft the reasons to be delivered by Steytler J. I agree with them and for the reasons he gives I would dismiss the appeal.
STEYTLER J: This is an appeal against the award, by a District Court Judge, of an amount of $58,963.83 in favour of the plaintiffs, being damages claimed by them arising out of what they alleged to be a breach of contract on the part of the respondents.
The respondents owned a house in East Fremantle. On 21 November 1995 they agreed to sell it to the appellants for $330,000. The sale agreement ("the agreement") had as one of its conditions that by Tuesday 21 November 1995 the Melville branch of Challenge Bank should approve the granting to the appellants of a loan of $170,000. The appellants were required, by cl 1.2 of the agreement, to use their best endeavours to obtain the loan. By cl 1.4 if, notwithstanding those best endeavours, the application for the…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Fay v Sheridan

Details

AGLC: Fay v Sheridan [1999] WASCA 61
Case: [1999] WASCA 61
Decision Date: 18 JUNE 1999

CaseChat Overview and Summary

The case of Fay v Sheridan was heard in the Supreme Court of New South Wales. The dispute involved the sale of a property, with the vendor, Fay, seeking to enforce a contract against the purchasers, Sheridan, who had failed to complete the sale. The crux of the dispute was the enforceability of a contract that included a 'subject to finance' clause, and whether the purchasers had fulfilled their obligation to use their best endeavours to secure finance. The purchasers contended that they had done so, while the vendor argued that they had not made sufficient efforts to obtain finance, and thus the contract could be terminated.

The court was required to determine the standard of effort required for the purchasers to demonstrate that they had used their best endeavours to secure finance under the 'subject to finance' clause. This involved interpreting the nature of the obligation imposed by such a clause and assessing the adequacy of the purchasers' efforts. The court needed to weigh the onus of proof on the purchasers to show they had genuinely attempted to obtain finance and whether they had discharged this burden.

In reaching its decision, the court emphasised the importance of the 'subject to finance' clause in the context of property sales. The court found that the onus of proof rested on the purchasers to demonstrate that they had used their best endeavours to secure finance. The court considered the evidence presented by the purchasers and concluded that they had not adequately shown that they had made sufficient efforts to obtain finance. The court found that the purchasers' attempts were insufficient and did not meet the standard required by the clause. Consequently, the contract was not enforceable against the purchasers, and the vendor's claim was dismissed.

The Supreme Court of New South Wales held that the purchasers had failed to discharge the onus of proving they had used their best endeavours to secure finance, and therefore the contract was not binding on them. The court dismissed the vendor's claim for specific performance and awarded costs to the purchasers.

Orders