Hamdan v Widodo [No 2] - [2010] WASC 6

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HAMDAN -v- WIDODO [No 2] [2010] WASC 6

CORAM: JOHNSON J

HEARD: 5 JUNE 2009

DELIVERED : 13 JANUARY 2010

FILE NO/S: CIV 1813 of 2004

BETWEEN: JAMAL HAMDAN
Plaintiff
AND
SRI WAHJUNI WIDODO
Defendant

Catchwords:

Sale of land - right to rescind where order for specific performance made - Leave of court required - Right to seek orders implementing order for specific performance

Legislation:

Nil

Result:

Plaintiff's application for directions granted
Defendant's application to discharge order for specific performance dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr R J Nash
Defendant: Mr J L H Formby

Solicitors:

Plaintiff: Butcher Paull & Calder
Defendant: Formbys

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

Aarons v Advance Commercial Finance (1995) 6BPR 13911
Austins of East Ham Ltd v Macey [1941] Ch 338
Australian Hardboards v Hudson Investment Group (2007) NSWCA 104
Bailey v Marinoff (1971) 125 CLR 529
Barber v Wolfe [1945] Ch 187
Buckman v Rose (1980) 1 BPR 97059
Elliott v Pierson [1948] Ch 452
Facey v Rawsthorne (1925) 35 CLR 566
Halkett vEarl of Dudley [1907] 1 Ch 590
Hall v Burnell [1911] 2 Ch 551
JAG Investments Pty Ltd v Strati [1981] 2 NSWLR 600
Johnson v Agnew [1980] AC 367
Morrow v Tucker (No 2) [2006] NSWSC 1358
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
Pratt v Hawkins (1991) 32 NSWLR 319
Precision Pest Control Pty Ltd v Ligon 158 Pty Ltd [2004] NSWSC 1163
Procter v Pugh [1921] 2 Ch 256
Public Trustee v Pearlberg [1940] 2 KB 1
Riltang Pty Ltd v L Pty Ltd [2004] NSWSC 977
Singh (Sudagar) v Nazeer [1979] Ch 474
Stevter Holdings Pty Ltd v Katra Constructions Pty Ltd [1975] 1 NSWLR 459
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Zorbas v Titan Properties (Aust) [2005] NSWSC 440

JOHNSON J: The application of the plaintiff, Jamal Hamdan, brought against the defendant, Sri Wahjuni Widodo, seeks orders for the implementation of an order for specific performance made by this court on 9 February 2007. The plaintiff's application was filed in response to a summons filed by the defendant seeking an order vacating the order for specific performance.

Background

The original action brought by the plaintiff against the defendant for specific performance of a contract for sale of land resulted in judgment for the plaintiff. The orders made by the court on 9 February 2007 were as follows:
1.There be specific performance of the contract dated 6 August 2003 made between the plaintiff and the defendant according to its terms under which the defendant agreed to sell to the plaintiff the property situated at 20 John Street, Bentley being lot 2 on Strata Plan 38346 being the whole of the land comprised in Certificate of Title vol 2199 folio 430 (the property).
2.Each of the parties have liberty to apply for further directions as to the implementation of order 1 hereof on giving 48 hours notice to the other party.
3.The defendant to pay the plaintiff's costs of the action, including all reserved costs, to be taxed.
On 1 March 2007, the defendant lodged an appeal and sought orders that the judgment be set aside and the plaintiff's claim in the action be dismissed. The plaintiff deposes to the fact that, acting on legal advice, he did not seek to enforce the judgment pending the decision on the appeal because he understood it was likely that the defendant would then apply for, and obtain, a stay of judgment until the appeal was finalised.
In the period between the delivery of the judgment at first instance and the hearing of the appeal, neither party took any steps in relation to the judgment. Further, at no time prior to the hearing of the appeal did the defendant provide any indication to the plaintiff that, despite the appeal, the defendant sought to settle in respect of the sale of the land in accordance with the order of specific performance.
The appeal was heard on 21 February 2008 and the Court of Appeal reserved its decision. The plaintiff deposes to the fact that, over a period of some 12 months after the appeal was lodged, neither party took any step to enforce the judgment. The plaintiff understood and considered that there was an implied understanding that no enforcement action would be taken until such time as the Court of Appeal had determined the defendant's appeal against the judgment because that would enable the parties not only to know whether the order for specific performance would be upheld or overturned, but also what each party's cost exposure would be to the other. If the appeal was dismissed, taking no action until judgment was delivered would also enable the costs to be taken into account and set off at settlement under general condition 17 of the contract. Applying that rationale, the plaintiff also refrained from seeking taxation of the trial costs awarded to him.
On 28 February 2008, before the reserved decision was delivered, the defendant's solicitor wrote to the plaintiff's solicitors making time of the essence and requiring the plaintiff to complete the purchase of the property within 25 business days of the date of the letter which was stated to be 4 April 2008 (the February Notice). I note in passing that, under the terms of the contract, the original settlement date was some 60 days from finance approval, a significantly greater time than allowed to the plaintiff under the February Notice.
The February Notice was stated to be based on the inevitability of the appeal failing given the attitude of the Court of Appeal judges. However, despite the defendant's belief in the inevitability of the appeal being dismissed, the defendant neither discontinued the appeal nor made any concessions in relation to the issue of the costs of the trial or the appeal.
The plaintiff deposed to the fact that he was not in a financial position to both settle on the purchase of the property and to later pay the defendant's costs of the trial and appeal, in the event the defendant's appeal was upheld. Accordingly, the plaintiff instructed his solicitors to advise the defendant that the plaintiff required the defendant to discontinue her appeal before he would agree to proceed to settlement. The defendant, through her solicitors, declined to discontinue the appeal and continued to insist the sale be completed.
On 4 March 2008, the plaintiff's solicitors wrote to the defendant's solicitor expressing the view that, whilst the defendant's appeal remained on foot, the defendant could not seek to make time of the essence with respect to the settlement of the sale of the property. The plaintiff's solicitors further advised that any resolution regarding the settlement of the sale of the property before the Full Court delivered its judgment and reasons for decision could only occur if the defendant secured, by payment to the defendant's solicitor's trust account, the plaintiff's costs of the appeal proceedings and those at first instance, if not already paid.
The defendant did not secure the plaintiff's costs of the appeal and trial, by the method proposed or otherwise. The plaintiff did not complete the purchase of the property by the time limited in the notice. For the reason expressed by the plaintiff and referred to above, a stay of the order of specific performance was neither sought nor granted. On 10 April 2008 a default notice was served on the plaintiff by the defendant requiring the plaintiff to complete the purchase of the property within 10 business days from the date of the service of the default notice. The default notice was issued under cl 23 of the Joint Form of General Conditions For The Sale of Land 2002 edition, which is incorporated in the contract of 6 August 2003 (the Contract) to which the order for specific performance was directed.
On 15 May 2008 the Court of Appeal dismissed the defendant's appeal with costs. Consequently, if the February Notice had required the plaintiff to complete the purchase within 60 days provided for under the contract, the impediment to settlement perceived by the plaintiff would have been removed.
The plaintiff failed to complete the purchase of the property, as required by the default notice, and by notice dated 30 April 2008 (the April Notice), served by facsimile on that day, the defendant purported to terminate the Contract, in accordance with the default notice.
On the 29 May 2008, some 14 days after the decision of the Court of Appeal, the plaintiff's solicitor wrote to the defendant's solicitor seeking confirmation that the defendant would now proceed to settlement. On 4 June 2008 the defendant's solicitor wrote to the plaintiff's solicitor advising that the contract was at an end and there was no obligation on the part of the defendant to convey the land to the plaintiff.
On 6 June 2008, the defendant filed a summons seeking an order for the removal of a caveat lodged by the plaintiff and a declaration that the contract is at an end. The orders were said to be sought by reason of the failure of the plaintiff to complete the purchase of the property, as required by the Contract. The matter came before Master Sanderson on 17 June 2008, at which time he directed that, within 14 days, the plaintiff bring a motion for implementation of the court's order for specific performance. The motion was filed on 1 July 2008 and both applications were heard together.

The Position of the Parties

In the factual circumstances outlined above, the plaintiff considered that there was an implied understanding that no enforcement action would be undertaken with respect to the judgment until the appeal was determined by the Court of Appeal, thereby preserving the status quo pending the determination of the appeal. The defendant disputed the existence of an implied understanding to that effect and maintained that, in the absence of a stay of proceedings, the plaintiff was required to complete the purchase of the property.
The plaintiff submitted that the defendant had purported to rescind the contract in the face of an existing and operative order of this court for specific performance. The plaintiff further contended that it is not open to a party to serve a notice to complete or to rescind a contract after there has been an order for specific performance, without first obtaining the leave of the court, or without first having the order for specific performance vacated. This is said by the plaintiff to be because, whilst the contractual rights of the parties are not superseded, the future exercise of the rights and performance of the obligations under the contract come under the control of the court once an order for specific performance has been made. The plaintiff maintained that, in the absence of a grant of leave or the vacation of the order for specific performance, the notice of completion was a nullity and the order for specific performance remained in force. According to the plaintiff, the order being operative, the defendant must accede to the plaintiff's request to complete the contract by conveying the land.
The defendant maintained that the authorities relied upon by the plaintiff in support of the plaintiff's proposition that the defendant's notice of completion was incompetent, in particular the decision in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 and the cases referred to therein, are distinguishable from the present case. The defendant further maintained that there was no reason to apply the principle of which the plaintiff relies in Western Australia. The defendant submitted that the court should adopt the view of R Meagher, D Heyden & M Leeming in Meagher Gummow & Lehane's Equity Doctrines & Remedies (4th ed, 2002) to that effect. It is further said that the position which should be adopted is that of Meagher JA in Aarons v Advance Commercial Finance (1995) 6BPR 13911.

The Legal Principles

Counsel for the plaintiff drew to the court's attention a number of authorities, in particular the decision of the High Court in Sunbird Plaza Ltd v Maloney, which are said to establish the proposition that rescission after an order for specific performance requires the leave of the court or, more appropriately, the vacation of the order for specific performance.
Counsel for the defendant, on the other hand, relies on the view of Meagher Gummow & Lehane's Equity Doctrines & Remedies (4th ed, 2002) criticising that line of authority and further submitting that it should not be followed and that the cases referred to in Sunbird Plaza v Maloney can, and should be, distinguished.
In Sunbird Plaza Ltd v Maloney a vendor who had successfully sued the purchaser for specific performance then sued the guarantors when the purchaser failed to comply with the order. The guarantors had guaranteed, jointly and severally, performance of the terms and conditions of the contract, including the payment of all moneys payable under it. Judgment for an amount equivalent to the balance of the purchase price, interest, rates, levies and stamp duty on the contract was set aside by the Full Court. At the time of hearing a further appeal by the vendor to the High Court, the order for specific performance in the proceedings between the vendor and the purchaser had not been complied with and the vendor had not applied for it to be discharged.
The High Court held (246), inter alia, that the judgment in favour of the vendor at first instance could not be supported on an alternative basis of an award of damages for breach of contract since:
(a)the action was not one for damages;
(b)so long as the order for specific performance remained on foot the vendor could not determine the contract;
(c)even if it could determine the contract, the vendor had not established that it had taken the necessary steps to do so; and
(d)damages for loss of bargain are recoverable only if the contract is at an end, and the vendor had failed to show that it was.
It is the second of these reasons which is of application to the instant case and which can be found in the judgment of Mason J (258). Mason J stated that the appellant vendor was unable to bring the contract to purchase to an end as long as the order for specific performance remained on foot. This was said to be an example of the difficulties encountered in the proposition that the judgment encountered at first instance could be supported as an award of damages for breach of contract.
Mason J (259) referred to the line of English authority which supported the proposition that a plaintiff who has obtained an uncompleted order for specific performance cannot accept the defendant's subsequent repudiation of the contract and treat it as at an end: Halkett v Earl of Dudley [1907] 1 Ch 590, 601; Johnson v Agnew [1980] AC 367, 393 ‑ 394; Austins of East Ham Ltd v Macey [1941] Ch 338; and Singh (Sudagar) v Nazeer [1979] Ch 474, 480.
In Halkett v Earl of Dudley the vendor obtained a decree for specific performance when the purchaser became dilatory in completing the purchase. The order having been obtained, two sets of requisitions on title having been answered and observations on the replies provided to the vendor, some 12 months later the purchaser stated that he repudiated, and had previously repudiated, the contract on the ground of want of title: (591). Parker J held (601) that, after a decree for specific performance has been made, the purchaser cannot repudiate the contract without the leave of the court. His Honour observed (601) that repudiation as a defence to specific performance, arising as it does out of the doctrine of mutuality, was out of the questions after a decree for specific performance has been made. Parker J added that, even if repudiation is treated as a rescission of the contract founded on some doctrine of law, he did not think that a Court of Equity would allow rescission without application to itself for leave so to do. An application to be discharged from the contract was said to be the proper course to take in circumstances believed to give rise to a right of repudiation. Parker J further observed (601) that discharge would not result as a matter of course; the Court would consider the circumstances and grant or refuse relief as may appear to be equitable.
Parker J's final observation (608) was that in an action for specific performance there are reasons against the possibility of repudiation or rescission without the leave of the court equally strong as those which, in a foreclosure action, prevail against the right of the mortgagee to sell without the leave of the court.
The court's role in bringing to an end a contract in relation to which there has been an order for specific performance was also addressed in Johnson v Agnew (applied by Hope JA in JAG Investments Pty Ltd v Strati [1981] 2 NSWLR 600, 604) where the following conclusion was drawn (398):
A vendor who seeks (and gets) specific performance is merely electing for a course which may or may not lead to implementation of the contract – what he elects for is not eternal and unconditional affirmation, but a continuance of the contract under control of the court which control involves the power, in certain events to terminate it.
In Austins of East Ham Ltd v Macey the vendors obtained against the purchaser an order for specific performance of the contract and on the failure of the purchaser to comply with that order they moved for an order for rescission of the contract: (338). Sir Wilfrid Greene MR (with whom Clauson LJ and Goddard LJ agreed) stated that an order for specific performance does not 'get rid of the contract'; the contract is not merged in the order, but is treated by the court of equity as still subsisting. Consequently, the position of the vendor, where the purchaser has made default is that he is entitled, not to annul the contract by the aid of the court, but to obtain the normal remedy of a party to a contract which the other party has repudiated. Of particular significance is the observation of the Master of the Rolls that the vendor cannot treat the contract as repudiated except by order of the court and the effect of obtaining such an order is that the contract, which until then existed, is brought to an end: (338).
The final case in the line of English authority, referred to by Mason J in Sunbird Plaza Ltd v Maloney is Singh (Sudagar) v Nazeer. This case was cited as supporting the proposition that a plaintiff who has obtained an uncompleted order for specific performance cannot accept the defendant's subsequent repudiation of the contract.
In Singh (Sudagar) v Nazeer, by an agreement in writing governed by the Law Society's Contract for Sale, the vendor agreed to sell his house to the purchaser. General condition 19 provided for giving a notice in writing to complete by either party in case of the other's default, so as to make time of the essence of the contract. General condition 19 also provided, inter alia, for forfeiture of the deposit and resale of the property if the purchaser did not comply with an effective notice served under the condition. A decree for specific performance was made following the vendor's failure to complete a contract for the sale of land. That decree included the usual declaration that the contract should be specifically performed and carried into execution, as well as an order providing that the vendor execute a proper transfer of the property. It further provided for completion at a time and place to be appointed by the court, at which time the vendor was to deliver vacant possession to the purchaser. The vendor's appeal against that order was dismissed.
The vendor became ready to comply with the court's order but the purchaser became dilatory. Due to lack of progress the vendor gave a completion notice under general condition 19. The purchaser failed to complete. The vendor, by notice of motion in the same proceedings, then moved for orders forfeiting the deposit, liberty to resell the property and payment by the purchaser of any difference between the sale price and the amount identified in the contract.

The issue before the court was whether a completion notice served under the contract, subsequent to an order for specific performance unsuccessfully appealed, is valid and effective. In deciding that issue, Megarry VC stated three points of principle.
The first was that, when an order for specific performance of a contract for the sale of land is made, the contract continues to exist and is not merged in the order. The decision in Austins of East Ham Ltd v Macey was cited as authority for this proposition: (480).
The second point was that once an order for specific performance has been made, there are adequate remedies available to either party, if the other does not appear to be proceeding under the order with due dispatch. An application may be made for a time and place for completion to be fixed or for an order rescinding the contract, either forthwith, if the other party is refusing to complete, or else in default of completion within a limited time: (480).
The third point was that, in ordinary circumstances, the machinery provisions of a contract for the sale of land are intended to govern the carrying out of the contract between the parties out of court, and are not directed to carrying it out when an order for specific performance has been made. That order is made by reference to the rights of the parties under the contract; but when made, it is the provisions of the order and not of the contract which regulate how the contract is to be carried out. The provisions of the contract must yield to any directions on these matters which are given in or under the order for specific performance: (481).
Megarry VC further considered that, where an order for specific performance contains not only the declaratory part but also the consequential directions (for example, as to the preparation and delivery of the conveyance, the mode and date of completion), those consequential directions regulate the performance of the contract so long as they stand and are not varied by the court. If those consequential directions are not complied with, then the court may make an appropriate order in respect of the default, that default being a breach not so much of the still subsisting contract as of the order of the court as to how that contract is to be carried out: (481).
In determining the issue before the court, Megarry VC considered that general condition 19 was not intended to operate in any case where a full decree of specific performance has been made and the contract is being carried out under the directions of the court: (482). Megarry VC further stated that the condition could not be operative unless the order of the court contained some saving provision which preserved its effect, which was not the case. His Honour dismissed the motion, holding that the completion notice was bad: (482). Megarry VC finally observed that, once an order for specific performance is made, the remedy for a party who complains of delay is to come to the court and not to attempt the extra‑curial remedy of serving a completion notice. The vendor should have applied to the court to fix a day for completion: (482).
It can be seen that the facts in Singh (Sudagar) v Nazeeer are almost identical to those in the present case. The only difference is that, rather than being dilatory, the plaintiff was awaiting the outcome of the appeal instituted by the defendant before completion. In particular, the approach taken by the vendor in Singh (Sudagar) v Nazeer was to rely on an incorporated general condition making time of the essence in issuing the completion notice, as did the defendant in this case. Yet the court determined that it was the provisions of the order for specific performance and not the terms of the contract which regulated how the contract is to be carried out. The defendant in the present case relies on the fact that implementation orders were made in Singh (Sudagar) v Nazeer to distinguish the decision. I will address that point later in these reasons.
Mason J in Sunbird Plaza v Maloney also made reference (259) to the strong criticism of these decisions, and the proposition for which they stand, in Meagher Gummow & Lehane's Equity Doctrines & Remedies, (2nd ed, 1984) [2053], (504 ‑ 507). As noted above, it is this criticism, repeated in the 4th edition of the text, on which the defendant relies in the instant case. The view expressed by Mason J (with whom Deane, Dawson and Toohey JJ agreed) (260) was that the comments in the judgment of Gibbs, Mason and Jacobs JJ in Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444, (460 ‑ 461), on which the learned authors rely, fall distinctly short of overruling the much earlier decision of the High Court in Facey v Rawsthorne (1925) 35 CLR 566.
Mason J also noted that, in Facey v Rawsthorne, Higgins J (588) expressly accepted the statement of Parker J in Halkett v Earl of Dudley that after a decree of specific performance, a defendant purchaser cannot repudiate the contract without the leave of the court. As Mason J observed (260), Knox CJ and Isaacs J acquiesced in accepting the propriety of the procedure adopted in that case, namely, an application to the court for leave to repudiate, a decree for specific performance having been made previously.
Mason J also noted (260) that more recent decisions in New South Wales had accepted that the leave of the court is necessary for rescission after an order for specific performance and referred to JAG Investments Pty Ltd v Strati [1981] 2 NSWLR 600 and Stevter Holdings Pty Ltd v Katra Constructions Pty Ltd [1975] 1 NSWLR 459.
Mason J concluded (260):
In the light of the existing authorities, particularly Facey v Rawsthorne, there being no argument challenging their correctness, we should continue to apply the proposition that rescission after an order for specific performance requires the leave of the court or, more appropriately, the vacation of the order. These authorities proceed on the footing that once a plaintiff has obtained an order for specific performance of a contract, he cannot be permitted to act inconsistently by rescinding it so long as the defendant is required by order of the court to complete the contract.
The consequence is that the appellant cannot rely on having brought the contract of sale to an end by accepting a repudiation by the purchaser. And, even if the appellant might have brought the contract to an end in this way without the leave of the court or without vacating the order for specific performance, the evidence does not warrant a finding that the appellant has done so.
Of course, in the present case, it was the plaintiff who sought the order for specific performance, not the defendant, and there is no inconsistency between seeking the order for specific performance and rescinding the contract.
In Sunbird Plaza v Maloney Gaudron J also held (273) that it was necessary for an order for specific performance to be first vacated before an 'innocent' vendor may bring his contractual obligation to an end because a contract for sale of land does not merge in a judgment for specific performance: Austins of East Ham Ltd v Macey (341).
In addressing the defendant's position, it is useful to consider in somewhat greater detail the primary authority referred to and relied upon by Mason J in Sunbird Plaza v Maloney; that is, the decision of the High Court in Facey v Rawsthorne, as well as to consider the more recent NSW authorities to which his Honour referred, JAG Investments Pty Ltd v Strati and Stevter Holdings Pty Ltd v Katra Constructions Pty Ltd. A further consideration of the decision in Ogle v Comboyuro Investments Pty Ltd, on which the view expressed in Meagher Gummow & Lehane's Equity Doctrines & Remedies (4th ed, 2002) is apparently based, is also required
In Facey v Rawsthorne, A obtained a decree for the specific performance by B of two interdependent contract, one for the sale by A to B of certain real property and the other for the sale by B to A of other real property. Shortly afterwards A by deed assigned all his property to trustees for the benefit of his creditors. Subsequently, A committed an act of bankruptcy by failing to comply with a bankruptcy notice served on him by a creditor. B having objected that A was unable to give a good title to the property to be transferred by him, the Master in Equity certified that A was unable to give a good title at that time as there might be a sequestration (based on the act of bankruptcy) at any time and the plaintiff's title to the property was defeasible upon any sequestration order being made against him which is grounded on an act of bankruptcy. A summons to vary the master's certificate was heard when two months had still to run within which a petition in bankruptcy might be instituted, founded upon the act of bankruptcy. Harvey J, having allowed the trustees of the deed of assignment to be added as plaintiffs, upheld the master's certificate and made an order declaring that B was entitled to rescind the two contracts, and ordered that the decree for specific performance should be stayed: (568).
On appeal to the High Court, Knox CJ held that the decision of Harvey J was correct as to absence of good title and would have dismissed the appeal. However, both Isaacs and Higgins JJ concluded that the appellant was entitled to succeed.
Isaacs J observed (579) that the primary judge had decided that, as a result of the imperfection of title, there was an absolute right in the respondent to rescind. However, Isaacs J expressed the view that the authorities dealing with defective title could not be rigidly applied to cases of merely insecure title: (583). Isaacs J further stated that the respondent's right to rescind was, in fact, only a right to obtain a declaration to that effect from the court which would be made by the court only if the judicial discretion could not properly be exercised in any other way: (579). The way in which that discretion should be exercised in such circumstances was identified by Isaacs J in the following terms (579):
The Court's judicial discretion, as I read the relevant authorities, should in such a case be directed to considering whether, having regard to all the circumstances, justice would be better served by allowing the matter to wait until by time or otherwise the danger of bankruptcy was finally determined.
Isaacs J concluded that this question was clearly not dealt with by the primary Judge and proceeded to address it: (579 ‑ 580). His Honour concluded (584) that the balance of justice as between the appellant and the respondent was decidedly in favour of deferring the matter for the period of two months to allow for the title to be secure. This was because the appellant had done nothing inequitable and the original and long continuing fault was that of the respondent. The fault referred to was the conduct leading to the order for specific performance: (584).
Higgins J considered that any confusion which had arisen was due to both parties treating transactions since the decree of specific performance as if they prevented, or might prevent, the purchaser from securing eventually all his rights under the decree: (585). Higgins J formed the view, as did Isaacs J, that the inclusion of the phrase 'entitled to rescind' in the order of the primary judge appears to assume that, if the court upheld the finding against the title, the defendant had, as of course, the right to rescind the contracts as to which specific performance had been decreed. Higgins J applied the decision of Parker J in Halkett v Earl of Dudley in concluding that, after a decree of specific performance, a defendant purchaser cannot repudiate the contract and the decree without the leave of the court: (585). His Honour observed that the defendant could be granted leave by the court to repudiate the contract but it was not clear that the master or the primary judge had taken this approach: (589).
Further, according to Higgins J, if the discretion was in fact exercised, he considered it was wrongly exercised in view of the purchaser's initial default. Consequently, as the court by its order had deprived the plaintiffs of their vested right to specific performance – vested by the decree – the order was set aside: (591).
JAG Investments Pty Ltd v Strati was the first of the more recent New South Wales authorities to which Mason J referred in Sunbird v Maloney. In JAG Investments Pty Ltd v Strati the vendor agreed to sell to the purchaser a parcel of land described by reference to lots in a deposited plan and subject to a reservation. Because of the reservation, the completion of the contract involved a subdivision of the land requiring approval of the local council. Special condition 1 of the contract stated that the contract was subject to the approval by the council of the plan of subdivision and included an undertaking from the vendor to take all reasonable steps to expedite the preparation and submission of the subdivision plan to the council. Special condition 1 further provided that, in the event of the non‑approval of the subdivision plan by council, the contract was to be at an end: (601).
Following a course of events which it is not necessary to describe, the purchaser commenced proceedings for the specific performance of the contract. In addition to the order for specific performance, the court at first instance made a number of other orders including an order for the vendor to apply to council for the approval of the subdivision and an order granting liberty to apply: (602).
A further application to council was made by the vendor for approval of the subdivision. Subsequent to the receipt of the further application, the council communicated to the vendor's surveyor notice of what purported to be a conditional approval of the subdivision in accordance with the plan.
Some 4 1/2 years after receipt of that notice, the vendor's solicitors wrote to the purchaser's solicitors giving notice that the contract was terminated as provided by special condition 1 of the contract. Subsequently the vendor commenced fresh proceedings in which it sought, inter alia, a declaration that the contract had been rescinded. The purchaser cross‑claimed in the same proceedings, seeking a declaration that the contract had not been rescinded and also seeking orders in aide of the earlier decree of specific performance. The purchaser also filed a notice of motion in the original proceedings seeking relief similar to that sought in the cross‑claim: (602).
In the fresh proceedings, McLelland J made a declaration that the contract had come to an end, dismissed the cross‑claim in those proceedings and dismissed the notice of motion of the purchaser in the original proceedings: (603). No question was raised at the hearing as to the necessity, after the making of the decree for specific performance, for the approval or order of the court if the contract was to be discharged, and McLelland J did not deal with the matter. The purchaser appealed against the declaration and orders made, and when the appeal came on for hearing, it sought leave to amend the grounds of appeal to raise the absence of any such approval or order and leave was granted: (603).
The vendor relied on two grounds in reply to the amended ground: (603). First, the vendor accepted that a plaintiff cannot, after the making of a decree for specific performance, determine the contract except with the approval or order of the court. However, the vendor submitted that there was no principle that the unsuccessful defendant in the proceedings could not determine the contract after the decree without that approval or order. Secondly, the vendor submitted that, if the rule applied to a defendant, it applied only when a general decree for specific performance had been granted and did not apply to a case where the decree was in the form of that granted in the original proceedings, namely, a decree ordering unconditionally the carrying out of a step towards the completion of the contract, but ordering the carrying out of further steps conditionally upon the successful result of the first step.
The New South Wales Court of Appeal held that, whether or not a decree for specific performance of a contract is general or specific and conditional upon previous steps having been taken, the approval of the court is required to exercise any rights of rescission arising under the contract because the future performance of the contract has been brought within the control of the court, and such approval is a matter for the exercise of the court's discretion. In reaching that conclusion the Court of Appeal followed the decision in Facey v Rawsthorne: (600).
In reaching that conclusion and in specifically addressing the first of the vendor's grounds, Hope JA (with whom Glass and Mahoney JJA agreed) felt it was unnecessary to trace the history of the rule which requires the order or approval of the court in these circumstances. His Honour noted (603) that its existence was accepted without question by the High Court in Facey v Rawsthorne, that it was discussed in some detail in Stevter Holdings Ltd v Katra Constructions Pty Ltd it was again discussed in some detail in Buckman v Rose (1980) 1 BPR 97059 and it was affirmed by the House of Lords in Johnson v Agnew.
Hope JA further stated (603) that the precise nature of the jurisdiction which the court exercises was not entirely clear but he did not consider it was necessary to resolve that question. However, his Honour observed that it was well established that the contractual rights of the parties do not merge in the decree before stating that 'possibly' the correct view of the basis of the rule was that suggested by Helsham J in Stevter Holdings Ltd v Katra Constructions Pty Ltd (469) that the order of the court for specific performance is binding until the court making it orders that it shall, in effect, be no longer binding, by discharging the contract in respect of which it was made. Hope JA observed (603 ‑ 604) that another way of expressing the same proposition is that the rights which a party has under a decree for specific performance cannot be taken from him by some extra-judicial act: cf Facey v Rawsthorne.
Hope JA emphasised that both parties have such rights (603 ‑ 604) and added (604):
Although by far the large number of cases to which the court has been referred are cases where a plaintiff having the benefit of a decree for specific performance seeks to substitute some other form of relief for that which has been given to him, I can find nothing in any statement of principle which would limit the operation of the rule to such a case; that is, even though it is the plaintiff who has obtained the decree the restriction on terminating the contract without the approval or order of the court applies as much to the defendant as to the plaintiff.
Hope JA cited in support of this proposition the decisions in Facey v Rawsthorne, Singh (Sudagar) v Nazeer, Stevter Holdings Ltd v Katra Constructions Pty Ltd and Halkett v Earl of Dudley. Both Singh (Sudagar) v Nazeer and Halkett v Earl of Dudley were cases where the purchaser obtained a decree for specific performance and the purchaser sought and was given leave to determine the contract. Stevter Holdings Pty Ltd v Katra Constructions Pty Ltd was a case where the vendor obtained a decree for specific performance and the purchaser sought and was given leave to determine the contract.
In relation to the vendor's second ground, Hope JA noted (604) that the decree did not contain the common general declaration that the contract ought to be specifically performed and did not order the same accordingly, thereafter making particular orders and directions to give effect to that general order. Instead, the decree took the matter in steps; the first being the making of the application for approval of the plan. The vendor conceded that had a general decree for specific performance been made this point could not be raised.

Hope JA referred to the position that arises after a decree for specific performance has been made, relying on the description by McLelland J in Buckman v Rose in the following terms (604):
An order for specific performance does not supersede the contractual rights and obligations of the parties but it subjects the future exercise of those rights and performance of those obligations to the control of the court: see eg Singh v Nazeer [1979] Ch 474 at pp 480 ‑ 482.
The decision in JAG Investments v Strati was cited with approval in Australian Hardboards v Hudson Investment Group (2007) NSWCA 104 and Riltang Pty Ltd v L Pty Ltd [2004] NSWSC 977 [51].
In Riltang Pty Ltd v L Pty Ltd, the first plaintiff, Riltang, was the lessee of premises owned by the defendants. The lease under which Riltang was in occupation was executed in compliance or purported compliance with an order made by the court that an option for renewal in an earlier lease between Riltang and the defendant's predecessor in title, Oscty Pty Ltd, be specifically performed. The lease was executed following the order for specific performance but was stated to commence on the day after the expiry of the earlier lease. The issue before the court was, in effect, whether the date for the calculation of 'outgoings' was the date of the renewed lease or the date of the earlier lease
The issue arose from the fact that the order of the court for specific performance reflected the terms of the option of renewal contained in the old lease and required the new lease to contain 'like covenants, terms, conditions and restrictions as contained in the lease and the variations'. In purported compliance with the order the new lease which was entered into included a cl 4.2 which was in precisely the same terms as in the earlier lease which required the lessee to pay 25% of all outgoings 'now assessed or charged'. Once contained in a new lease, the phrase 'now assessed or charged' would refer to the timing of the new lease (2000) rather than the time of the earlier lease (1993): [3].
However, cl 3.7 of the earlier lease provided that any renewal of the lease should be on terms equal to the terms payable as if the initial lease had been granted for the aggregate term of the initial lease and the term of the further lease granted pursuant to the option to renew: [8].
Therefore, the new lease entered into in furtherance of the order for specific performance, including as it did cl 4.2, did not, in fact, give full effect to cl 3.7 and, therefore, the renewal of the lease did not put the plaintiff in the same position as if the initial lease had been granted for the aggregate term. White J concluded that the parties made a mistake in the words they chose to give effect to the order for specific performance and that to adopt any available ordinary meaning of the words 'now assessed or charged' in the 2000 lease created an anomaly that, following the exercise of the option of renewal, the lessee's contribution to outgoings would be substantially reduced: [39].
The defendant had sought an order directing Riltang to execute a variation of lease to correct the mistaken implementation of the court's orders: [44]. That course was objected to on the basis that to make such an order would contravene the principle that once a judgment or order is regularly entered the role of the court is at an end subject only to rights of appeal (Bailey v Marinoff (1971) 125 CLR 529): [45]. However, White J considered that the case did not involve the correction or variation of the order for specific performance but involved the enforcement of the order: [45]. The absence of an order for liberty to apply was not considered by White J to be fatal to the application as, in the case of orders for specific performance or orders of a similar kind, the grant of liberty to apply or reservation of the matter for further consideration will ordinarily be implied: [47]. The decision in JAG Investments Pty Ltd v Strati (607) was cited in support of that conclusion.
An issue then arose as to whether an appropriate order enforcing the order for specific performance, and thereby removing the unintended benefit to Riltang, could be made, and made in circumstances where all persons who were to be subject to the order were not joined in the proceedings: [49] ‑ [50]. The submission of the defendants relied on the decision in JAG Investments Pty Ltd v Strati (604 ‑ 605) that, since the lease was made pursuant to the order for specific performance, the future exercise of the parties' rights and the performance of their obligations under the lease were placed under the control of the court: [50]. Relying on that authority, and also on the decision in Sunbird Plaza Pty Ltd v Maloney and Singh (Sudagar) v Nazeer, White J stated that he could see no reason in principle why the court should not have jurisdiction to secure the proper performance of its own orders. His Honour added that, whilst a party may be precluded from obtaining the court's assistance to enforce its order where the parties have agreed to act differently from its requirements, that was not the case before him. White J further noted that, even though the document which the parties executed was not that which the order required, there was no evidence that the parties agreed or intended to depart from the requirements of the order: [52]. His Honour concluded that it made no difference to the court's jurisdiction to deal with the matter that the default was mistaken rather than intentional, or that it was by both parties not one. White J considered that, unless the order for specific performance was vacated, or a different order was subsequently made, the plaintiff as much as the defendant was bound to act in conformity with it: [53]. This was said to be because, as stated by Megarry VC in Singh (Sudagar) v Nazeer, the order for specific performance is not independent of the contract but is the court's order as to how the contract is to be carried out which replaces the mode for which the contract provides as to how it is to be carried out, even if it speaks in the same terms: [55].
The decision in Stevter Holdings Ltd v Katra Constructions Pty Ltd involved two companies that had entered into a contract in the form approved by the Law Society and the Real Estate Institute of NSW for the sale of land and where the purchaser's intention was to erect a residential flat building thereon. Clause 17 of the contract provided, inter alia, that, if it were established that, at the date of the contract, the property was affected by any residential district proclamation under s 309 of the Local Government Act 1919 (WA) (the Act) the purchaser should be entitled to rescind the contract by notice in writing to the vendor given prior to completion. After the vendor had obtained a decree of specific performance, the purchaser discovered the existence of a proclamation, which had not previously been known to either party and was not disclosed on the certificate issued under the Act. On the same day and in reliance on cl 17, the purchaser gave the vendor notice of rescission.
In fact, the land was subject to a residential district proclamation under s 309 of the Act which prohibited the erection and use of buildings for certain purposes, but did not prohibit the erection of residential flat buildings. However, the Marrickville Planning Scheme Ordinance provided that the operation of s 309, and of proclamations thereunder declaring residential districts, was thereby suspended to the extent to which such section and such proclamations were inconsistent with the ordinance or with any consent given. The ordinance also provided that the only purpose for which buildings might be erected on certain land, including the subject land, without the consent of the responsible authority, was dwelling‑houses, and that residential flat buildings might be erected on the subject land only with the consent of that authority: (459).
Having determined that cl 17 of the contract required both the ordinance and the proclamation to be disclosed, Helsham J then considered whether the decree for specific performance precluded the purchaser from exercising the right of rescission: (464). Helsham J noted that no case discovered at that time indicated that a purchaser may escape from an order for specific performance except where the vendor has not been able to make title: (464).
The first point considered and accepted by Helsham J (464) was that an order for specific performance does not affect the operation of the contract and the contract continues to govern the rights and obligations of the parties to it. The effect of an order for specific performance was said to be to compel one party to perform the contract into which he has entered, and, subject to the court's power to enable steps not contemplated by the parties to be taken when the party ordered to perform it refused to obey the order, it is the contract that continues to govern the rights and obligations of the parties to it.
On an initial consideration there does appear to be some tension between this statement of the effect of an order for specific performance and the statement made in cases such as Precision Pest Control Pty Ltd v Ligon 158 Pty Ltd [2004] NSWSC 1163, Johnson v Agnew, and JAG Investments Pty Ltd v Strati. However, I do not consider that this statement of Helsham J was intended to convey the impression that, in every case where an order for specific performance is made, the parties are obliged to look at the terms of the contract to determine how that order is to be implemented and that, provided there is some basis in the contract for the subsequent action, it is justified. Much will depend on the nature of the orders made by the court but, in my view, the orders would need to incorporate the contractual provisions before it could be assumed that the court was removing itself from any involvement in the way in which the order is implemented. Certainly his Honour’s acceptance (469) of the proposition that repudiation or rescission may not take place without the leave of the court is at least consistent with the court retaining control over the actions of the parties pursuant to that order.
Helsham J next turned to consider the difference between repudiation of a contract and rescission of a contract because of his belief that it lay at the basis of the plaintiff vendor's submission that the decree is final and binding on the defendant, allowing no escape from specific performance: (464). The proposition relied on by the plaintiff is that, where a decree for specific performance of a contract for sale of land has been made at the suit of a vendor, a purchaser will only be able to avoid the consequences of that decree in a case where the vendor, after decree, is unable to make title; such an inability is said to enable a purchaser to repudiate the contract in equity, and hence it may be raised as a defence to specific performance even after decree, provided that leave of the court is first obtained.
The argument is that the decree affirms the contract, and cannot be set aside or varied, except upon this purely equitable basis by the Court of Equity that made it. As Helsham J observed (467), the plaintiff relies upon the views expressed in the English decisions to found its argument that the ambit of the right of a purchaser to avoid the consequences of a decree for specific performance of a contract for the sale of land having been made against it is a very limited one, and one dependant upon the equitable doctrine of mutuality. That is, according to the plaintiff, the doctrine of mutuality will be invoked by a Court of Equity when it finds that, notwithstanding its decree, there is no mutuality because the vendor is unable to make title, and will in such a case allow its decree to be the subject of later review; but otherwise the ordinary rule will apply that a decree once passed and entered cannot be the subject of later variation or setting aside.
Reference by Helsham J was made to the decision of Parker J in Halkett v Earl of Dudley where Parker J (599) distinguished between equitable repudiation and the right to rescind at common law before stating (601) his view on the supervening effect of a decree for specific performance. That view, as referred to above, was that, after a decree of specific performance, a defendant purchaser cannot repudiate the title or the contract without the leave of the court. Parker J further stated (601) that, even if repudiation were treated as a rescission of the contract founded on some doctrine of law, he did not think that a Court of Equity would allow rescission without application to itself for leave so to do: (465 ‑ 466).
Despite the strong criticism of Parker J's view by the author of a certain text on vendor and purchaser, Helsham J noted (467) that the decision in Halkett v Earl of Dudley had been accepted as correct in Procter v Pugh [1921] 2 Ch 256 and Elliott v Pierson [1948] Ch 452, 456 and observed that it was probably unnecessary to resolve the controversy although necessary to understand it.
Helsham J concluded (470) that the court should not refuse the motion of the purchaser for an order discharging it from the contract. In addressing plaintiff's proposition, his Honour made the following observation (468):
But I do not agree with this. It seems to me clear that there may be cases where the failure of a vendor to make title may be a ground for rescission by a purchaser of a contract as well as repudiation if it by him; while it is not necessary to decide whether, as argued by Williams…or as suggested in Halsbury… every rightful repudiation by a purchaser also operates as a rescission of the contract at law; it is clear that a repudiation will sometimes so operate; and while the failure to make title is the most usual ground for repudiation and rescission of a contract by a purchaser, it is only an example of the general right to rescind for fundamental breach; where a contract is voidable for such breach, and is rescinded, it seems to me inconceivable that equity would regard the act by which it was disaffirmed as having been effective only as a repudiation available in equity, and not as a rescission; indeed Parker J in Halkett v Earl of Dudley… in the passage which I have quoted seems clearly to recognise that repudiation may also act as a rescission of the contract. This seems to me consonant with principle. Where, as I have indicated, the contract continues to regulate the rights and obligations of the parties to it after a decree for specific performance has been granted, I can see no reason , in the cases, or in logic, why an act that would operate to bring the contract to an end by way of rescission before decree should not be just as effective an answer to enforcement of the contract after decree as an act of repudiation would be. Subject to two matters I shall mention, I think it would be. I am unable to accede to the argument that, after decree, the only situation that an Equity Court will take cognizance of is a repudiation by the person bound to perform it operating as such in equity alone as a defence to specific performance. In my view, an Equity Court would be bound to take equal notice of a rescission of the contract at law. Indeed one can imagine the situation where a vendor is unable to give title on settlement; the purchaser would, at least where time had been made of the essence, be entitled to rescind forthwith; if he did this might not amount to a repudiation in the sense I have discussed. But I do not believe that an Equity Court would have no regard to it because the purchaser intended to and did in fact rescind.
Helsham J added (468) that, if a contract may be rescinded after decree for a fundamental breach on the part of the party who obtained that decree, it was difficult to see why it may not be rescinded upon any other available ground. His Honour conceded that the rescission under cl 17 of the contract in question would be of a different kind and may have different consequences from that which follow a fundamental breach, but he did not believe that mattered.
Helsham J noted (468), relying on Barber v Wolfe [1945] Ch 187 and Hall v Burnell [1911] 2 Ch 551, that a vendor, after obtaining a degree for specific performance, may rescind the contract, however, he did not consider that it mattered whether such rescission was for breach or pursuant to some express or implied term. His Honour also conceded that, in many instances, a failure to rely upon the ground of rescission available before the decree would prevent it being availed of afterwards but this did not apply to the case before him.
Helsham J concluded (469) that a contract may be rescinded after a decree for specific performance has been made; it may be rescinded by vendor or purchaser; it may be rescinded upon any available grounds. However, his Honour noted (469) that the authorities all seem to assert that repudiation or rescission may not take place without the leave of the court. Two possible explanations for that principle were identified by Helsham J (469). The first was that there is a requirement for leave in every case because the order of the court is binding until the same court that made it orders that it shall be no longer binding by discharging the contract in respect of which it was made. The second was that the contract bears the imprimatur of the court and cannot be rescinded except with the assistance of the court.
Helsham J expressed himself (469) as content to assume that the requirement exists; namely, that a person claiming to be entitled to rescind a contract after a decree for specific performance of that contract has been made against him must move the court to be discharged from the contract. The decision in Halkett v Earl of Dudley was cited in support of that conclusion.
Finally, Helsham J concluded (469) that the court has a discretion in the matter when it is approached for an order that the contract be discharged, and that there is no absolute right to obtain such a discharge when sought. Helsham J considered that this conclusion flowed from his examination of the relevant authorities and Halsbury's Laws of England (3rd ed) vol 34, 326 [553] and was so in the case of rescission as distinct from repudiation.
Counsel for the plaintiff cited a number of other authorities from New South Wales, more recent than those referred to by Mason J in Sunbird Plaza Ltd v Maloney. A brief reference to those cases follows, with a view to determining any variation on the principles to which I have already referred, before turning to consider the authority on which the comments by Meagher Gummow & Lehane's Equity Doctrines & Remedies (4th ed, 2002) are based, that of Ogle v Comboyuro.
In Morrow v Tucker (No 2) [2006] NSWSC 1358 the court was asked to determine a procedural question whether the relief sought by the plaintiff under a notice of motion was relief which could be obtained in the proceedings. The circumstances were that the plaintiff had entered into a contract to purchase certain land from the defendant. The plaintiff commenced proceedings for specific performance and, after a contested hearing, obtained an order that the agreement ought to be specifically performed and carried into execution as well as an order that the defendant specifically perform and carry into execution the agreement so far as it remains to be performed: [2]. Liberty to apply on seven days' notice was also ordered as were costs to the plaintiff.
Some three months after the order for specific performance, the plaintiff filed a notice of motion in the same proceedings seeking orders which would have the effect of implementing the order for specific performance, including orders for the execution of all instruments and production of the certificate of title: [3]. The decree for specific performance did not include any directions for its implementation: [7].

Biscoe AJ referred to the statement of procedural and substantive principles found in Fry on Specific Performance (6th ed, 1921) (546 ‑ 547) which supported the use of the notice of motion procedure in circumstances where relief is sought following a judgment for specific performance and the contract has not been completed: [8]. His Honour further observed that the notice of motion procedure was supported in Jones and Goodhart on Specific Performance (2nd ed, 1996) (256 ‑ 257) as well as in authorities such as Halkett v Earl of Dudley: [9] and [10]. Support was also found in the decisions in Singh (Sudagar) v Nazeer, Johnson v Agnew, Buckman v Rose, JAG Investments Pty Ltd v Strati and in Sunbird Plaza Pty Ltd v Maloney: [12], [13], [14], [15] and [16].
Of course, the relevance of the applicability of the notion of motion procedure was the related proposition that such orders could properly be sought by the plaintiff and sought in the action for specific performance.
In that regard, Biscoe AJ also referred to the discussion in Jones and Goodhart On Specific Performance (2nd ed, 1996) (258 ‑ 259) which was as follows:
A plaintiff who has obtained an uncompleted order for specific performance may be unable to enforce the order or may no longer wish to do so. This may happen, for example, in a purchaser's action if the vendor's title is shown on the inquiry as to title to be subject to a defect which the plaintiff is unwilling to waive; or if it becomes apparent that it will be impossible or not reasonably practicable to enforce the order against the defendant.
But the plaintiff (whether vendor or purchaser) is not entitled to put an end to the contract himself by treating the defendant's continued non‑performance as a repudiation of the contract and accepting the repudiation; he must apply to the court for an order discharging the contract. Although the contract continues to exist and is not merged in the order, it is the provisions of the order and not of the contract which regulate the working out or cancellation of the contract. Thus, after an order for the specific performance has been made, the contract becomes due for completion at the time directed by the court and neither party can serve a completion notice purporting to make time of the essence, even if the conditions of sale applicable to the contact provide for such a notice.
The other authorities referred to by Biscoe AJ and mentioned above [89] support the following propositions:
(1)Where a right of repudiation arises after a decree of specific performance has been made, the proper course is to move to be discharged from the contract (Halkett v Earl of Dudley (601)): [11];
(2)Where a vendor has obtained a decree of specific performance of a contract for the sale of land, a purchaser can later apply in the same suit for an order that it be discharged from the contract (Stevter Holdings Ltd v Katra Constructions Pty Ltd (459)): [ 11];
(3)Where an order for specific performance has been made, a completion notice served under the contract is neither valid or effective as such a condition of the contract does not apply unless the decree for specific performance contains some provisions which preserve its effect. The rationale behind the principle is that, whilst the contract continues to exist, the application for and grant of specific performance put the matter in the hands of the court and the working out, variation or cancellation of that order is essentially a matter for the court. Further, when the order is made, it is the provisions of the order and not of the contract which regulate how the contract is to be carried out and such provisions must yield to any directions on these matters given in or under the order for specific performance, unless the decree preserved the effect of those provisions (Singh (Sudagar) v Nazeer (480 ‑ 482)): [12];
(4)Where an order for specific performance is obtained by the vendor the vendor is entitled to apply to the court in the same proceedings and obtain an order for enforcement of the order or may apply to the court to dissolve the order and ask the court to put an end to the contract by discharging the order for specific performance and terminating the contract. An order discharging the contract may even be obtained where, before the order could be carried out, the vendor's mortgagees sold the property and title could not be passed (Johnson v Agnew (393 ‑ 394)): [13];
(5)The court which orders specific performance retains the jurisdiction to rescind the order and discharge the contract but the exercise of the jurisdiction was discretionary and depended on the particular circumstances (Buckman v Rose (9559)): [14];
(6)An order for specific performance does not supersede the contractual rights and obligations of the parties but it subjects the future exercise of those rights and performance of those obligations to the control of the court (Buckman v Rose (9559)): [14];
(7)Whether or not a decree for specific performance of a contract is general or specific and conditional upon previous steps having been taken, the approval of the court is required to exercise any rights of rescission arising under the contract because the future performance of the contract has been brought within the control of the court, and such approval is a matter for the exercise of the court's discretion (JAG Investments Pty Ltd v Strati): [15];
(8)The proposition that rescission after an order for specific performance requires the leave of the court or, more appropriately, the vacation of the order, should continue to apply (Sunbird Plaza Pty Ltd v Maloney (260)): [16].
The common thread to all these propositions is the supervisory role of the court and the need to obtain leave to bring either the order for specific performance or the contract to an end.
In addition to the authorities cited in par [89] above, Biscoe AJ also referred to the decision of the Supreme Court of NSW in Precision Pest Control Pty Ltd v Ligon 158 Pty Ltd [2004] NSWSC 1163 and in Pratt v Hawkins (1991) 32 NSWLR 319.
In Precision Pest Control Pty Ltd v Ligon158 Pty Ltd [51] a decree of specific performance was made by consent. It contained a declaration that a contract for the sale of land be specifically performed and carried into execution on the basis that the vendor would convey the land to the purchaser; and, secondly, an order that, in the event of default, the Registrar in Equity be empowered to execute all instruments and do all things in the name of, and on behalf of, the vendors as may be necessary in order to specifically perform and carry into execution the contact. The orders also made reference to an 'agreement of the parties' which identified the completion date of the contract. The sale was not completed at the time referred to in the 'order' as being agreed between the parties, for reasons which did not result from an intention on the part of the plaintiff not to complete. In fact, the plaintiff was ready to settle a mere half hour later: [22]. Subsequently, the plaintiff purchaser applied in the same proceedings for an order that the Registrar execute a transfer in accordance with the consent orders.
Palmer J held [23] that, although the orders made by consent implementing the order for specific performance were defective in many respects, the future performance of the contract was by those orders, brought within the control of the court and no party to the contract could exercise a right of rescission or serve a notice to complete without the approval of the court or without first having applied successfully to the court for an order vacating the orders for specific performance. This was said to be because the terms of the order did not have the effect of inserting into the contract a term making time for completion of the essence; the order was only in purported exercise of the Court's supervision of the future performance of the contract. Palmer J added [24], relying on the decision in JAG Investments v Strati, that the way in which the court supervises the performance of a contract within its control is a matter for the court's discretion.
Biscoe AJ in Morrow v Tucker also referred with approval [18] to the decision in Zorbas v Titan Properties (Aust) [2005] NSWSC 440 in which the court ordered that a contract for sale of land between the parties be specifically performed and carried into execution and further ordered that the defendant purchaser attend on a specific date, and at a specified date time and place 'to do all things necessary to complete' the contract. Liberty to apply was granted. When the defendant's solicitor failed to attend for settlement, the matter was re-listed before the court in the original proceedings. Campbell J held that it is a general principle concerning order for specific performance that once an order for specific performance has been made the contractual rights of the parties are not superseded but the future exercise of the right and performance of obligations under the contract, or the working out of the order for specific performance, is under the control of the court. In the circumstances of the case, Campbell J was prepared to give the defendant further time in which to settle the transaction.
The defendant in Morrow v Tucker submitted that the cases referred to by the plaintiff in argument, included in the analysis of cases outlined above, were distinguishable. This was said to be because the principle that the rights and obligations of parties come under the control of the court after an order for specific performance has been made, only applies where a party purports to rescind the contract. However, Briscoe J concluded that cases such as Singh (Sudagar) v Nazeer, Precision Pest Control v Ligon 158 Pty Ltd and Zorbas v Titan Properties (Aust) illustrate that the principle applies equally where a party wishes to exercise a contractual right, such as termination, after an order for specific performance has been made: [19].
The defendant further submitted that the cases were distinguishable because, contrary to the circumstances in Morrow v Tucker, they included particular directions to give effect to the general specific performance relief. It was further submitted that the absence of such directions, the control of the proceedings did not remain under the control of the court and the defendant was at liberty to exercise her contractual powers without reference to the court: [20]. However, Briscoe AJ concluded [21], relying on the decision in Pratt v Hawkins, that where an order for specific performance has been made, whatever its precise form, the rights and obligations of the parties come under the control of the court: [21].
In Pratt v Hawkins, where the decree was in similar terms to that in Morrow v Tucker, Young J observed (324) that, where an order for specific performance of a contract is made, the rights of the parties under the contract continue in existence but there is superadded the requirement to defer to the court's direction and control in respect of any matter which the parties cannot themselves solve by agreement. His Honour added (325) that there can be no termination without the leave of the court and the appropriate method of procedure is to apply for directions for the implementation of the decree of specific performance which fixes times and places for various steps to be performed and contains a default order for termination if there is no compliance with those times.
Turning now to address the authority on which the defendant relies in support of its application and in opposition to that of the plaintiff, in Ogle v Comboyuro Investments Pty Ltd, the High Court held that a vendor who is entitled to rescind a contract for the sale of land because of the purchaser's failure to complete on time, but who elects to sue for specific performance, is not thereby precluded from later rescinding the contract and claiming damages for the continued refusal by the purchaser to complete if the purchaser's conduct evinces an intention no longer to be bound by the contract: (444).
The circumstances of the case were that the purchaser agreed to purchase certain land from the vendor. The contract was subject to a condition which provided for completion, within 12 months or within such extended time as the vendor may allow in writing, of the contract of sale between the vendor herein and the present registered proprietor of the land for the acquisition of the lands. The condition also included an agreement that, should the contract between the vendor and the present registered proprietor not be completed within 12 months then the contract would be at an end: (455).
The sale from the present registered proprietor to the vendor was completed within the 12‑month period. Prior to the date of settlement, the vendor came to the conclusion that the purchaser did not intend to complete at the agreed time and informed the purchaser that an action would be taken for specific performance. On the same day the writ was issued and the purchaser advised that the vendor was ready to complete, the purchaser advised that it intended to comply with its contractual obligations but took no steps to do so. A month later, the vendor applied for summary judgment which was opposed by the plaintiff and refused by the court. However, the vendor was granted leave to amend the writ by adding a claim for damages for breach of contract: (456).
Shortly before the amendment was made, the vendor requested performance and indicated its readiness and willingness to complete, before, on the following day, making it clear that it regarded settlement as overdue and requesting nomination of a time for settlement: (456 ‑ 457). No more than a formal reply was ever received. Two days before the amendment was made, pursuant to an arrangement between them, the vendor required the previously registered proprietor to re‑purchase the land. Prior to the completion of the re‑purchase of the land, which occurred in January of the following year, the statement of claim in the pending proceedings between the vendor and purchaser was delivered. By it damages only were claimed for breach of the contract. The vendor claimed that the purchaser had repudiated the contract and that the vendor accepted the repudiation on various nominated dates. The purchaser notified the vendor that it would claim at the hearing that the cause of action had not accrued at the date of the writ. Consequently another action for damages was commenced and the earlier proceedings were by leave discontinued: (457).
The purchaser raised two issues in its defence. First he denied that he had repudiated the contract and secondly he denied that the vendor could rescind the contract at the dates alleged because on those dates there was pending in the court an action for specific performance, and at the earlier date for specific performance alone: (457).
Gibbs, Mason and Jacobs JJ held that the purchaser had failed to complete and was in breach of contract and that the action for specific performance did not waive the breach of contract but waived reliance by the vendor on the breach of contract as the breach of a fundamental term thereof entitling the vendor to rescind: (457). Their Honours also held that, by the time of the repudiation and rescission alleged in the current statement of claim, it had become clear that the purchaser had no intention of completing within a reasonable time, or probably at all: (458). It was further held that a party who has waived a right to treat a failure to complete on the due date as the breach of an essential term may nevertheless thereafter call on the other party to complete and a failure on the part of the latter to complete on or by a further named day fixed reasonably ahead or even a continued long failure to complete will amount to a refusal to be bound by the contract and a repudiation thereof entitling the other party to rescind and to claim damages for loss of the bargain: (458). Gibbs, Mason and Jacobs JJ also considered that, although mere delay will be no more than an omission to remedy the past breach which has been waived as a ground for rescission, there are cases where the purchaser by further unreasonable delay or by a further act expressly evinces an intention no longer to be bound by the contract in which case either the further delay or the further act may constitute a repudiation of the contract: (459).
In considering the effect on these circumstances of there having been current an action for specific performance, Gibbs, Mason and Jacobs JJ considered two aspects: First, the effect of the action on the legal rights under the contract and, secondly, the application of any principle of equity which would curtail or suspend the legal rights of the vendor: (459).
Gibbs, Mason and Jacobs JJ concluded that it does not follow that so long as the action for specific performance is on foot the vendor cannot ever rescind at law for further breach or for further refusal or neglect which amounts to repudiation and, therefore, it was not necessary for the vendor to discontinue its claim for specific performance before rescinding: (460), (462). Their Honours stated (460 ‑ 461):
Legal rights are not affected at law by the mere existence of an action for specific performance though they are affected by the election involved in its institution. However, in equity a party would not in certain circumstances have been allowed to rescind a contract if his action for specific performance was still pending. That is the effect of the decision in Warde v Dixon (1858) 28 LJ Ch 315. It is a very understandable rule of equity…
Later, with reference to the rule established in Public Trustee v Pearlberg [1940] 2 KB 1, which the court declined to follow, their Honours said (461):
But is this a rule applicable to all cases where an action for specific performance is or has been pending?... It seems to us that it is not. If a party has by his conduct shown and continues to show an intention never to complete the contract, especially where his conduct by express act or by implication is not consistent with an intention to perform the contract pursuant to any judgment for specific performance, then it must be open to a vendor to rescind even if there is current an action for specific performance. If there is a further breach of an essential term or some further conduct amounting to a repudiation while the action for specific performance is pending, the existence of the action will not then prevent the vendor electing to rescind but her will on such an election lose the right which he previously had to specific performance and will be limited to damages for the breach.
Gibbs, Mason and Jacobs JJ noted that before the judicature system was introduced a plaintiff would have had to discontinue his proceedings in equity before he could pursue his action for damages at law but this was no longer necessary: (462). Their Honours further observed that, if the law were otherwise than as stated by them, it would place a party in circumstances such as the vendor in an impossible situation. Gibbs, Mason and Jacobs JJ observed (462):
A vendor commences proceedings for specific performance. He thereby offers to perform and keeps the contract on foot. However, delay on the part of the purchaser makes it practically impossible for the vendor to retain the land. He has to sell it. Thus it is put out of the power of the vendor to perform the contract on his part. In those circumstances he has no alternative but to discontinue his claim for specific performance and to claim damages for breach of contract instead. However, if he has to rely on some further act or default of the purchaser after the discontinuance before he can rescind or if he cannot rescind after he has elected to discontinue his claim for specific performance but before it is actually discontinued, he may no longer be in a position himself to perform the contract and thus at the time of a later rescission he may be unable himself to perform a condition precedent. Thus he would be deprived of his right to sue for damages because he could no longer himself complete as a result of the delay which had compelled him to re-sell the land. We do not believe that the rule of equity was ever intended to apply in such circumstances.

As noted above, the view taken by Mason J (with whom Deane, Dawson and Toohey JJ agreed) in Sunbird Plaza Pty Ltd v Maloney (260) was that the comments in the judgment of Gibbs, Mason and Jacobs JJ in Ogle v Comboyuro Investments Pty Ltd at (460 – 461) fall distinctly short of overruling the much earlier decision of the High Court in Facey v Rawsthorne in which Higgins J (588) expressly accepted the statement of Parker J in Halkett v Earl of Dudley that after a decree of specific performance, a defendant purchaser cannot repudiate the contract without the leave of the court. One specific matter to consider is that the comments were made in the context of a mere application for specific performance rather than in the situation where the decree had already been made.
Putting to one side for the moment the impact of the decision in Ogle v Comboyuro Investments Pty Ltd on the line of authority set out above, the decision can clearly be distinguished on its facts. In the present case there is no evidence of an absence of intention to complete, or any conduct inconsistent with performing the contract. The plaintiff simply displayed an unwillingness to proceed to settlement until the Court of Appeal had handed down its decision and that unwillingness was entirely reasonable in the circumstances. Further, this position was communicated to the defendant who had the opportunity to remove this obstacle by agreeing to end the appeal. The defendant's refusal to do so when, on his own description, the outcome was obvious, was unreasonable in the circumstances and could not be justified on the extremely remote possibility that an award of costs might yet be obtained. Further, and significantly, in the present case the order for specific performance had already been made.
In my view, even if there were some substance to the views expressed by the learned authors of Equity Doctrines and Remedies, the decision in Sunbird Plaza Pty Ltd v Maloney is binding on this court and confirms, as applying in Australia, the principle that, where there is in force a decree of specific performance, neither party can repudiate the contract without the leave of the court. Other authorities indicate that this principle appliers irrespective of the form of the order for specific performance.
The description of the authors of Equity: Doctrines and Remedies of the doctrine identified in the line of authority set out above is given in contemptuous terms. It is described as an 'extraordinary' doctrine. Common law rights are said to 'vanish' and rights under the contract are said to become 'anaesthetised'. The relevant part of the text refers to the inability of the 'innocent' party, no matter how 'innocent' or 'provoked', to repudiate without curial permission: [20‑265]. The authors posit the question: In what other area of law does equity deprive a litigant of the right to exercise ordinary common law remedies although it is in no way unconscionable to do so?
It must be said that the very facts of the matter before this court indicate that it is not always the case that it is the 'innocent' party who is seeking to repudiate, nor that the exercise of that right is never unconscionable.
The authors observe (698) that, in the case of Ogle v Comboyuro Investments Pty Ltd, it was unnecessary to deal with the position which would have obtained if a decree for specific performance have been made in favour of the plaintiff at the time when the defendant committed a subsequent breach, but it is difficult to see why precisely the same analysis should not apply. However, in my view, in relation to those cases where the order for specific performance has been granted, the rationale provided in decisions such as Singh (Sudagar) v Nazeer (480) that, when an order for specific performance is made, it is the provisions of the order and not of the contract which regulate how the contract is to be carried out, and in Riltang Pty Ltd v L Pty Ltd [45], [53] that the requirement for court approval is based on the right to ensure that its own orders are appropriately and fairly implemented, have substance. In particular, the power of the court to regulate the specific performance of the contract prevents one party from impeding or manipulating in its favour the implementation of the order for specific performance and even from depriving the other party of the benefit of such an order.
The authors of Equity Doctrines and Remedies, refer to the rejection by the House of Lords in Johnson v Agnew of the proposition that the mere act of instituting proceedings for specific performance involves an election to abandon any common law rights in respect of past and future breaches and notes that this view had never been accepted in Australia: (699). However, they then refer to the fact that leave of the court is required for rescission after the decree of specific performance has been made. The allegation is made that the reason for the principle and its limits are questions which the proponents are unable to answer, although the basis for the requirement for curial intervention provided by Lord Wilberforce in Johnson v Agnew (399) is discarded as being 'nonsense' without being given any real consideration. That justification is in the following terms:
Once the matter has been placed in the hands of a court of equity, or one exercising equity jurisdiction, the subsequent control of the matter will be exercised according to equitable principles. The court would not make an order dissolving the decree of specific performance and terminating the contract (with recovery of damages) if to do so would be unjust…
The criticism levelled by the authors is that an initiating process for specific performance is merely a request that a certain kind of order be made and it is not a deed of surrender. It was further said that nobody submits any rights to the court, and it is presumptuous of the court to imagine it controls them; the court has one function only, to make an order or to decline to enforce the contract: (699). Whilst there may be some substance to this criticism it applies only in the context of a request for relief rather than the grant of an order for specific performance, and removes from the court any right to ensure that orders made by it are implemented in an appropriate and equitable manner.
Finally, the authors submit that the better view is that the supposed jurisdiction does not exist and contend that it is unfortunate that in Sunbird Plaza Pty Ltd v Maloney, the High Court missed the opportunity to put matters back on a right course. Emphasis is placed on the fact that no argument was presented challenging the existing authorities: (700).
Although no argument was presented to the court, it is the case that the High Court addressed the precise issue and determined that it should continue to apply the proposition that rescission after an order for specific performance requires the leave of the court or, more appropriately, the vacation of the order.
In my view, there exists both binding and persuasive authority that, when an order has been made for specific performance, whether in general or specific terms, but the order has not been implemented, leave of the court is required if a party seeks to rescind the contract and also when a party seeks to implement that order in a way that is without the consent of the other party or is not the subject of a specific direction of the court. In my view, leave is required and the court must exercise its discretion taking into account the particular circumstances which apply.

Further Submissions

Prior to the implementation of these proceedings, the plaintiff's solicitors wrote to the defendant's solicitors identifying some legal principles which were said to preclude the defendant from adopting the course that he did. However, at the hearing of the applications, the plaintiff did not seek to rely on those principles, although they were addressed in the submission of counsel for the defendant and some were supported by authority.
In my view, the principle on which the plaintiff relied at the hearing is a complete answer to the conduct of the defendant and to the defendant's application and it is unnecessary for me to consider those other principles.
The plaintiff also seeks an order for interest on legal costs to commence from the date of judgment. The defendant’s position is that interest should run only from the date of taxation. This issue was very briefly addressed at the hearing of the applications. Unfortunately, I have formed the view that I require further submissions from the parties in order to resolve that issue and propose to deal with it separately.

Conclusion

When the order for specific performance was made, the parties were given liberty to apply to bring the matter back to seek directions implementing that order in the event that the parties could not reach agreement as to the appropriate process. Instead, the defendant pursued an extra‑curial remedy and in doing so placed the defendant in the untenable position of being unable to meet the cost of the purchase and the costs of the appeal if the defendant's appeal were successful or of running the risk of losing the benefit of the order it obtained as a result of the conduct of the defendant in attempting to avoid completing the sale of the property. The defendant now asks this court to retrospectively approve that conduct by vacating the order for specific performance and terminating the contract. Immediately the appeal was dismissed the plaintiff advised that it was willing to complete the contract and, in the circumstances which applied, cannot, in my view, be said to have been in any way dilatory in obtaining the benefit of the order for specific performance. The only impediment to completion has been the institution of the appeal and the defendant's unreasonable refusal to withdraw the appeal or allow the finalisation of the appeal before requiring the plaintiff to comply with a notice of completion
It can also be seen from the above analysis of the authorities that they support the plaintiff's argument that the defendant should have come before the court seeking orders implementing the order for specific performance if it wished to settle at the time nominated in its notice. The plaintiff would then have been able to raise its concerns about being required to settle before disposal of the appeal, concerns which in my view are completely reasonable, and the court would have made orders for effecting settlement which occasioned no detriment to either party, such as an order that the defendant discontinue the appeal. The authorities also support the plaintiff's position that the defendant's completion notice served under the contract is neither valid nor effective and hence the notice terminating the contract is invalid and of no effect.
The defendant further submitted that the terms of the judgment did not specify the method of performance of the order for specific performance and, therefore, the provisions of the contract, including the incorporated provisions applied. In my view, for the reasons to which I have already referred, that submission is flawed. The proposition that, after an order for specific performance, the parties can rely on the terms of the contract to effect settlement without recourse to the court is contrary to authority, as outlined above. Further, it is not correct to say that the order for specific performance did not allow for the implementation of the order. Order 2 expressly stated that each of the parties had liberty to apply 'for further directions as to the implementation of order 1 hereof'. It was clearly contemplated that, if the parties were unable to agree on an appropriate method of implementation, the court would make the necessary orders. The terms of this order, in my view, are contrary to the proposition that either party was entitled to impose on the other a particular method of implementation or that the provisions of the contract were to be used to implement the order for specific performance other than by consent of the parties.
The issue of the notice to complete and purporting to rescind the contract was conduct undertaken without leave of the court and occurred in the face of an order for specific performance. In my view, the notice of completion was a nullity and the purported rescission of no effect. Therefore, the order for specific performance stands as an operative order of this court to be implemented by appropriate directions.
For these reasons, the plaintiff's application for directions for implementation of the order for specific performance made by this Honourable Court on 9 February 2007 will be granted, and the defendant's summons for the discharge of the order for specific performance will be dismissed.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HAMDAN -v- WIDODO [No 2] [2010] WASC 6 (S)