Foran & Anor v Wight

[1988] HCATrans 160

HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl7 of 1988

B e t w e e n -

GREGORY ROBERT FORAN and

KAYE FRANCES FORAN

Applicants

and

RAYMOND GEORGE WIGHT and

DEBRA WIGHT

Respondents

Application for special leave to

appeal

MASON CJ
BRENNAN J

Foran

DEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 AUGUST 1988, AT 12.13 PM

Copyright in the High Court of Australia

SlT8/l/PLC 1 12/8/88

MR K. HANDLEY, QC: In this matter, if the Court pleases, I

appear for the applicants, with my learned friend,

MR I. KAHAN. (instructed by John C. Mackey & Co)

MRS. MOTBEY: If it please the Court, I appear for the

respondents.	(instructed by Shaddick, Baker & Paull with
Gubbays)

MR HANDLEY:  Your Honours, apart from the application book

itself, the only material that we were going to refer

to was the recent decision of this Court in SUNBIRD

PLAZA V MALONEY in the April issue of the Australian

Law Journal, and we have copies in Court. The Court

appreciates that the application arises from the

purchasers' action to recover their deposit paid under

a contract.··

MASON CJ:  Mr Handley, it is obviously an important and

interesting point. What do you have to say, very shortly,

in support of the substance of the attack that you make

on the decision of the majority - - -

MR HANDLEY: If Your Honour pleases

MASON CJ: - - - particularly having regard to the discussion in the

judgment of Chief Justice Dixon in the PETER TURNBULL

cas·e.

MR HANDLEY: We. submit that the majority of the decision of the

Court of Appeal is really inconsistent with the TURNBULL

case because there there were, of course, it being a

contract for the sale of goods on a cif or fob basis,

there was more than one date for performance and an

anticipatory breach - I do not think I should pursue -

I think I am getting into too much detail.

Your Honours, the special leave points, in our

submission, here are what is the situation where an
anticipatory breach continues through and after the due
date for performance and thus becomes an actual repudiation.

The question is can the innocent part rescind without more?

We submit he can. In such circumstances, does the

rescinding party have to prove his innocence or must the
repudiating party prove the contrary?	We submit that the

repudiating party who is asserting the absence of

innocence has to establish it and the rule is otherwise

where damages are sought because where you have to say,

"I lost $X" or "I lost this amount of money because of

the breach", you have to prove that and that may require

you to prove readiness and willingness, and there is some

authority for that proposition.

MASON CJ:  Does it come down to a question of onus then?

MR HANDLEY: Well, on one issue it comes down to the question of onus but that is not the only issue in the case. That is the relevance, Your Honours, of SUNBIRD PLAZA because there

SlT8/2/PLC	12/8/88
Foran

the Court said that a particular party had to prove that the other party was finally and totally disabled and, we

submit, that was the onus which the vendors had in this

case. They had to prove that we were finally and totally

disabled from completing on the due date and that is the

significance, in our submission, of the matters referred

to at the end of the judgment of the president.

He concluded that that onus had not been discharged

because the purchasers, for various reasons, naturally

were not put to the test of coming up with the money on

the due date, having been notified of the anticipatory

breach and repudiation.

The next matter, Your Honours, that, in our submission,

would warrant special leave is whether the principles

stated by Mr Justice McHugh on pages 48 and 49 lead to a

conclusion different to that ultimately reached by

His Honour. At the bottom of page 48 His Honour says -

the last four lines:

even if the purchasers validly rescinded the

contract when they purported to so -

and, of course, all we sought was rescission because

restitution of the deposit would have followed from a

valid rescission by act of the party -

it is clear that they could not have recovered

other than nominal damages.

We did not seek damages.

Repudiation or fundamental breach by one party

may enable the other party, if not guilty of a

breach himself -

and His Honour has held that we were not guilty of any

breach by not completing on the due date, having been

dispensed from attending and tendering settlement,

consistently with the TURNBULL decision -

to rescind the contract.

Well, we embrace that conclusion very warmly.

But if he claims damages, "he must show he was

ready and willing to perform his part had he not been absolved from actual performance" -

because unless he does establish that, he cannot show any

loss from the breach. We are not, of course, in that

position. His Honour goes on to say:

The purchasers in the present case are

not claiming damages for the vendors' breach.
They claim only that they validly rescinded the

S1T8/3/PLC	12/8/88
Foran

contract and that they are entitled to the return of their deposit. Does it make any difference in that context that, although

the purchasers were unable to meet their

obligations on 22 June -

and, of course, Mr Justice Needham did not find that.

He only found he was not satisfied they could. I mean,

his findings of fact at first instance raise the question

of onus very squarely -

the vendors announced that they would not perform

their obligations on that date? In my opinion

it does not because the contract remained on

foot at the election of the purchasers.

It only remained on foot at our election up to the due

date. We got this anticipatory breach two days before

settlement; we were not able to take advice in the time -

it took us four days to get advice and make up our

minds and so there was an election forced on us by

the lapse of the two days. But the contract did remain on

foot - we did not elect to terminate - but it did not

remain on foot - - -

MASON CJ:  Mr Handley, the Court will hear from Mr Motbey at this

stage.

MR MOTBEY: If Your Honours please. There is one minor factor

which the respondents would rely upon as bearing on the

discretion to grant leave and that is the fact that the

sum in dispute in this contract is $7500 - that is the

amount of the deposit - and there is no viable claim

that the vendors can mount for damages because the loss

on resale was $7000. So, it is a fairly small case in

terms of the material interest to the parties and, in my

submission, it places the respondents in a very difficult

situation because they have to give anxious deliberation

if appeal to this Court were allowed as to whether they

should risk to themselves the expense of appearing by

legal representatives. So, the burden of what I am saying

in relation to that point is that it is - - -

DEANE J';:: But is there such a significant risk there in that

if they succeed they will expect to be covered; if they

lose would not the. suitor's fund or whatever applies have

something to say to that?

MR MOTBEY: It may go some way towards - - -

DEANE J: Well then, they would be obviously better advised to

cut their suit to the suitor's fund rather than to

consider doing nothing at all, one would have thought.

MR MOTBEY: Yes, that may be so, Your Honours, but it is fair

to say that with this sort of money involved, it

-is to some extent en academic issue and, really, the

SlT8/4/PLC	4	12/8/88
Foran

parties are probably more agitated about matters of

costs than what originally led to this litigation.

Now, my friend - - -

MASON CJ:  I take it you have other substantial points by way

of response to the application?

MR MOTBEY:  Yes, I do. My friend referred to the question of

the onus of proof on the issue of fact as to the

purchasers' readiness, willingness and ability to

perform. Of course, that issue only arises if the

repudiation ground for rescission has gone and what we
are concerned with is the rescission founded upon a
failure to perform the contract on the due date.
As regards that question which the trial judge, of
course, treated as not necessary to decide but
none the less decided, as it were, in abstract or

over to one side, not part of his ratio, H;~ Honour

decided that bore the onus in relation to that issue

rested on the vendors, and you tinct that a~ page 7 of

the book. He says at line 15:

It is my view that if the plaintiffs

bore the onus of proving that fact,

and on the authorities to which I was

referred, and to which I have been able to

look since the argument was completed, it

does seem that the onus would be on the

plaintiffs to prove that fact, I would not

have been satisfied that the plaintiffs

had discharged that onus.

Now, at the trial, the purchasers conceded that

the onus on that issue rested with them. The court

found that that concession was correct. There was no

point of contention raised at the appeal level about

the question of onus, it had not been litigated in

the Court of Appeal and the matter was proceeded with

and the finding confirmed on the basis that the onus

rested upon the purchasers. But my principal submission

in relation to onus - and that appears to be the only

ground my friend has raised - is that it does not arise

on the real issue which is as to whether the purchasers,

having allowed the date for settlement to pass without action,

were entitled to found upon an alleged repudiation before

the due date for settlement.

As regards that majority decision of the Court of

Appeal, what is at the core of the majority decision is

the notion of election. What Their Honours in the majority

have hel~ and, in my submission, quite correctly, is that

assuming the events two days before the due date

constituted a repudiation - and I make that assumption

against myself for the moment - assuming a repudiation,

the purchasers consciously elected not to rely upon that
act of repudiation to give them a right to rescind in

anticipation of the due date for performance and it was

S1T8/5/PLC	5	12/8/88
Foran

because of their own act of election that they lost the

advantages of an entitlem2nt to rescind based upon an

anticipatory breach.

Now, the finding, if you can call it a finding,

that they made an election - and it is repeated on many

occasions throughout the judgment of Mr Justice McHugh

and perhaps I should refer to those findings of
His Honour. At page 53, line 14, His Honour says:

the short answer is that it is the consequence of their election to keep the contract on foot

and the divergence which has arisen between

the doctrine of rescission for anticipatory

breach and the doctrine of rescission for

actual breach.

There are a number of other points throughout the judgment

where His Honour refers specifically to the election not

to act upon the events prior to the due date for completion.

MASON CJ: But the time span here was two days, was it not?

MR MOTBEY: 

Yes, but as a matter of logic that cannot disturb

the principle that is to be applied. Suppose two months
before the due date there was an anticipatory breach.

The innocent party would be entitled to consider his

position and make an election to act upon it bringing the

contract to an end. Alternatively, he can affirm and

wait to see what occurs on the due date. The fact that

it is two days or seven days or 10 days cannot

affect the point of principle which ought to be applied

and was, in fact, applied by the majority.

DEANE J: Well, what if A says to B, "I'm not going to perform

our contract" and B says, "Well, time for perfonnance is

the day after tomorrow, I hope you change your mind. Let

me know if you do" and then the time comes and B then

rescinds for breach and repudiation. You would have to

say that by sayin?i, "I hope you change your mind and

you do perform it 'and "let me know if you are going to",

he had lost the opportunity of rescinding.

MR MOTBEY:  On the basis of the anticipatory breach, yes,

certainly. In fact, that is the stronger case than this

one because there the attitude of the innocent party is

communicated.

DEANE J:  But that was the point Mr Handley was making and that

is - what he wants to put is that in those circumstances

the anticipatory breach becomes breach.

MR MOTBEY: Well, Your Honour, as Mr Justice McHugh has said,

to say that is to turn the notion of anticipatory breach

on to its head.

DEANE J: Yes. It is an important point, is it not, that in those

circumstances the other party has to go out, arrange all

SlT8/6/PLC	6	12/8/88
Foran

his finance, possibly incur liabilities, so that he

will be able to say, come the time, "Even though you

told me you wouldn't perform, here I am ready, willing

and able to perform"?

MR MOTBEY:	No, with respect; only if he wants to - - -
DEANE J:	- - - get his deposit back?
MR MOTBEY:	No, to preserve the benefit of the contract when

the act of repudiation occurs. You see, that is the point:

in this case, this purchaser was given certain information

two days beforehand; four days later rescinded, not on the

ground of something that occurred four days before but on

the ground of something that occurred two days before, then

came to court basing himself on a valid rescission for

non-performance two days before, litigated that case

without raising a murmur of repudiation and then, in the trial judge's judgment, the decision was upheld upon the

ground of a matter that had not been even argued, namely,

repudiation. So, the whole history of the matter in this

case was an affirmation, and for good reason I might submit.

The only evidence of the so-called repudiation was something

that one solicitor said to another on the phone and, of

course, the risks of being able to succeed on that issue
of fact as constituting an alleged repudiation are high
and it may well be that the purchaser conscientiously

considered that option and decided, having regard to the

intelligence received only two days before, to hold his

hand and wait and see what occurs and found himself on the

hard rock of an actual breach. It may also be that the purchaser was mindful of the fact that an anticipatory breach can only give rise to a rescission and not the

benefit of damages. We do not know. All we know is that

there was silence; there was then an affirmative act of

rescission founded upon actual breach with no mention of

repudiation; litigation and then, for the first time, the

repudiation raised, on appeal, in effect, in trying to

support what is really in a way a point of contention,

the basis upon which the trial judge, in effect, of his

own motion, decided the case.

So, in my submission, the election finding is a

powerful one and there is, in fact, no ground of appeal

in the proposed list of points of appeal challenging the

finding that they had made that election.

Incidentally, the other points where the finding of

election are to be found is page 51, lines 1 and 2.

Mr Justice McHugh:

Once the purchasers elected not to rescind for anticipatory breach, the contract continued

on foot.

Page 53, lines 14 and 16:

it is the consequence of their election -

SlT8/7/PLC	12/8/88
Foran

and page 54 -

They elected to await the time for the performance of the vendors' obligations.

Now, it is not, apparently at this stage, proposed to

challenge the correctness of that finding, so that

whilst that finding stands it makes my friend's

argument all the more academic, quite apart from the small

size of the fish involved.

Your Honours, if I could just spend a moment to

refer to some of the -

MASON CJ:  We might interrupt at the moment, Mr Motbey, just to take up this very point with Mr Handley. Is there not

some substance in what Mr Motbey says about the grounds

of appeal not challenging the finding of election?

MR HANDLEY:  Your Honour, the election in question was an

election by default. There was no suggestion of a

conscious election, but to - - -

MASON CJ: Yes, that is true.

MR HANDLEY:  Mr Justice McHugh is right, there was an election

but only in a sense that the time within which you

could elect to rescind for anticipatory breach ran out,

I mean, some part of two days, so in that sense there

was an election and we do not challenge that.

BRENNAN J: But is that an election?

MASON CJ: That is what you are really saying, is it not?

MR HANDLEY:  Yes.

MASON CJ: Although the Court of Appeal uses the word "election",

it is not an election.

MR HANDLEY: It is not a true election.

MASON CJ: Therefore you do not need to challege it.

MR HANDLEY: That is so, Your Honour. There is no evidence

of an election other than the fact that the available

time to rescind for anticipatory breach - a day-and-a-half

or whatever it is - ran out before any action was taken.

MASON CJ: That is your response to the fact that you have not

got a challenge to the finding of election?

MR HANDLEY: Yes, Your Honour.

MASON CJ: Yes, Mr Motbey?

MR MOTBEY:  Your Honours, perhaps I could take a moment to hand up

some copies - this is really factual material but they are

copies of the purchasers' issues to be litigated: whether

SlT8/8/PLC	8	12/8/88
Foran

the rescission of 24 June, which we know was based upon

non-completion on the due date, was valid, and the

question of mutual power to perform. They are the issues

that are litigated.

My friend submits that there is no evidence as to

election. That is precisely because that was never

litigated. These parties went to court on a very simple

battleground which is spelt out in the judgment of the

trial judge at page 3 of the book:

The parties to these proceedings have

each approached the case on the basis that

the plaintiffs have to show that on 22 June

1983 they were ready, willing and able to

complete the contract. There is no dispute

that on that day the defendants were unable

to complete the contract. Because of that

approach, much of the evidence in the case

related to the capacity of the plaintiffs to

pay the balance of -

the money. That is the way the case was litigated and,

in fact, that was the way it was argued. Judgment was

reserved, I think until the next day, and in the

reserve judgment the issue that had been tendered was

decided in favour of the vendors but they lost the case

on the ground of repudiation. The vendors were denied

the opportunity then to even litigate the question of

election, to inquire into the state of mind of the vendors,

having regard to an oral conversation. So that in that

factually distorted context, the Court of Appeal comes
to consider the effect of the vendors allowing the

event of alleged repudiation to pass until such time as the due time for performance has come and gone and they

hold, and in my respectful submission, by majority,

perfectly reasonably, I would submit, that they must

have allowed that ground to pass because that is what they

said in their notice of rescission, that is what they said in their issues for trial, that was the way they

conducted their whole court case before His Honour the

trial judge. So, my friend cannot draw any comfort,

I would submit, from a suggestion that there is no

evidence about the character of the election. It can only

be deemed to be a conscientious act on their part with knowledge of the significance of the words said in the

conversation.

So, in my respectful submission, what is at the

core of the majority decision is the election, admittedly
founded on a kind of unlitigated basis and, of course, the

fact that it was never properly litigated makes this

an all the more inconvenient vehicle for considering the

legal issue albeit academically interesting.

My friend, although he has not sought to rely upon

it, can draw little comfort from the dissenting judgment

of the president, and if I could just spend a moment to

SlT8/9/PLC	9	12/8/88
Foran

draw to this Court's attention some features of that

dissenting judgment. Firstly, at page 28, point 16,

His Honour finds that:

The vendor could clearly not give good

title without procuring the registration of

the right of way.

In fact, that is not so.	The vendors could give good
title to the land.	They had a good title to give to

the land. What they could not do was give a title

burdened by an easement yet to be created, and this

was argued in the appeals court. And at page 54,

point 24 - I should really go back because this supports

my earlier submission:

In any event the real merits of the case

appear to be with the vendors. They were

always registered as owners of the property.

So, they had the title.

True it is that they had not obtained

registration of the right of way over their

property. But registration of the right of

way was for the benefit of the vendors -

in other words, the ~ovenant created a burden on the purchasers although, no doubt, the registration would also assist the purchasers by avoiding future disputes

with those entitled to the benefit of the easement,

and that is a fair connnent, with respect, to His Honour.

No doubt, having regard to the provisions of section 42

which exempt omitted easements from the principles of

indefeasibility, there could be a potential conflict

between the claimants to the benefit of the easement

and the purchasers __ after registration. But to

find that they could not give clear title without

procuring the registration of the right of way is simply,

T8 with respect, incorrect.

On page 29 of the book His Honour, in effect, jumps

over the point about the hiatus between the 20th and the
24th.	He says at point 2:

Therefore, before 22 June 1983, the vendors

could not give good title. This was no fault

of the purchasers. They acted with due

speed as soon as the final date for settlement

had passed without further communication.

Now, obviously, questions of election and the time that
is to be limited for the exercise of a right of election
have to be considered in context. Where you have got a
pressing connnitment two days hence, that has to modify
the conceptions as to what is a reasonable time for
exercising any right of election, but His Honour

the learned president passes over that problem without

analysis. On page 30 His Honour says at line 15:

S1T9/l/PLC	10	12/8/88
Foran

the recipient of that intelligence was entitled
to treat the statement as an anticipatory breach
of the contract and indeed as a repudiation of

it. Thereafter, that party was excused from

complying with the contract and from tendering

performance on the date fixed for settlement.

Now, with respect, it has always been the law for
hundreds of years that the repudiation does not
ipso facto terminate the contract, it merely gives

rise to a right to elect to terminate it. And to hold

that they were relieved from tendering performance

is to leave aside the question dealt with by the

other judges as to election or non-election.

At page 32, point 15, His Honour says:

in the events which occurred it is indisputable

that these difficulties never came to be tested.

The settlement on the essential date was

abandoned following the unilateral action of the

vendors, two days before that date. It was the

unequivocal indication by their solicitors on

20 June 1983 which amounted to an anticipatory

breach. It relieved the purchasers thereafter

of the obligation to continue what might (or

might not) have been a successful search for

finance.

Now, once again, His Honour has treated "repudiation"

as ipso facto relieving them from obligation but,more

importantly, that finding ignores their own notice of

24 June - four days later or two days after the due

date - stating that they were rescinding on the ground

of non-performance by the vendors of their obligation

to make title on the 22nd. They are only relieved, of

course, from continuing what might or might not have

been a search for finance if they elect to rescind with

the risks involved in that course. And if I could just

very briefly remind the Court of His Honour the Chief

Justicer's findi?,g at p~ge 17 of the book, line 2:

It is important to note that there was no

assertion, and certainly no evidence, that the

purchasers would have been able to complete on

22 June if they had not been excused or lulled

into inactivity by the categorical statement on

behalf of the vendors that they, the vendors,

would not be able to complete on the essential

date. Nowhere in the oral or documentary
evidence adduced at first instance is there to

be found any basis for suggesting, let alone

inferring as a conclusion of fact, that the

purchasers regarded themselves as relieved, by

the conversation of 20 June, from having their

finance available on 22 June. The issue that

emerges from the evidence involved no distinction

S1T9/2/PLC	11	12/8/88
Foran

between the financial position of the

purchasers of 20 June and their financial

position on 22 June. Equally,

Mr Justice Needham, in his discussion of this

aspect of the case, did not find it necessary

to distinguish between -

those two positions. So, in my respectful submission,

in so far as the president's judgment would have given

relief against forfeiture or allowed the rescission

it does not grapple with the issue that had been thrown
up in these unusual circumstances where the matter had

never been properly litigated at the trial and it is not an appropriate vehicle, for those reasons, to agitate the question.

MASON CJ: Yes, Mr Handley?

MR HANDLEY:  Three matters, Your Honour: I really have attempted

to deal with the question of election and, in my submission,

election would not be an issue in this appeal if special

leave were granted simply because, by default, the
very short period of time went by but, in our submission,
nothing turns on this because the repudiation continued;

the inability of the vendor to complete on the due date

which was announced in advance two days before remained

the fact on the due date and for some considerable time

afterwards and that is what we rely upon, whereas

the anticipatory breach becomes an actual breach, the

vendor being totally and finally disabled from completing

on the due date.

MASON CJ: What do you say about the passage at page 7 to which

Mr Motbey has drawn attention, in the middle paragraph,

and what appears to be his additional claim that the

purchasers conceded that the onus was on them?

MR HANDLEY:  Your Honours, I do not dispute that but the fact

is that a party might accept an onus and then - the

question of ability was litigated, Your Honour. I have

got two answers: first of all, in my submission, it

does not matter for the sort of reasons that

Mr Justice McHugh gave in the passage at pages 48 and 49,

I think, that since we are not suing for damages we can rescind and secure restitution without having to prove readiness and willingness. That is point 1. Not having

either committed a breach of contract or intimated that

we were only willing to complete on a false basi~ which

was the MONA HOMES situation, Your Honour, we were an

innocent party, neither having committed any breach nor

announced any unwillingness to complete. Point 2,

Your Honours:  despite the concession -Mr Justice Needham

£ound that the matter was fully litigated and if the

concession was wrong and the onus really was on the vendors,

then there is no injustice in holding that there was a

mistake of law and this Court can correct it.

SlT9/3/PLC	12	12/8/88
Foran

MASON CJ:	Mr Handley, looking at Mr Justice Needham's judgment, it does not seem that he gave consideration
to a submission that notwithstanding his finding
on the issue of readiness and willingness, none
the less the plaintiffs, the purchasers, had
an argument that they should succeed?
MR HANDLEY:	We succeeded before Mr Justice Needham, Your Honour.
MASON CJ:	Yes, but he does not seem to have considered
the argument as such.
MR HANDLEY:	Your Honour, he treated it as irrelevant;

he took the view that because of the repudiation

which continued through the due date - for

completion - - -

MASON CJ: That readiness and willingness disappeared from

the case?

MR HANDLEY:  Yes. That is the McHugh point, Your Honour.

The question of the conversation between the

solicitors was litigated, Your Honour, it was

not shown in the issues but there was affidavit

evidence filed by the parties before the trial

in which one solicitor said that the other

communicated this anticipatory breach; the other

solicitor denied it and that issue was properly

and fully litigated and found in our favour and

affirmed by the Court of Appeal.

On the question of title, Your Honour - The Court will grant special leave to appeal in this case.

MASON CJ:  We need not trouble you further, Mr Handley.

AT 12.55 THE MATTER WAS ADJOURNED SINE DIE

SIT9/4/SDL	13	12/8/88
Foran