Hawkes Menangle Pty Ltd v Brennan

[2023] NSWSC 1095

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Hawkes Menangle Pty Ltd v Brennan [2023] NSWSC 1095

Hearing dates:

8 June 2023

Date of orders:

8 September 2023

Decision date:

08 September 2023

Jurisdiction:

Equity - Real Property List

Before:

Richmond J

Decision:

Defendants’ termination of the contract held to be ineffective. Parties to bring in short minutes of order to give effect to these reasons.

Catchwords:

LAND LAW — conveyancing — contract for sale — validity of notice to complete

LAND LAW — conveyancing — contract for sale — agreement to vary

Legislation Cited:

Conveyancing Act 1919 (NSW)

Conveyancing (Sale of Land) Regulation 2017 (NSW)

Electronic Conveyancing National Law (NSW)

Land Tax Management Act 1956 (NSW)

Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW)

Cases Cited:

Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202

Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520; [2000] HCA 35

Dowling v Rae (1927) 39 CLR 363; [1927] HCA 5

H Clark (Doncaster) Ltd v Wilkinson [1965] 1 Ch 694

Inness v Waterson A/T for Cobok Family Trust [2006] QCA 155

McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38

McNally v Waitzer [1981] 1 NSWLR 294

Morris v Baron & Co [1918] AC 1

Nowrani Pty Ltd v Brown [1989] 2 Qd R 582

Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221; [1941] HCA 35

Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313

Proctor v Chahl [2008] NSWSC 1252

Radoman Pty Ltd v Vexapu Pty Ltd (2008) 13 BPR 24,903; [2008] NSWSC 8

Sandpiper Kooragang Pty Ltd v Fortis Products Pty Ltd (2020) 19 BPR 40,689; [2020] NSWSC 1256

Texts Cited:

GE Dal Pont, Law of Agency (4th ed, Lexis Nexis, 2020)

Category:

Principal judgment

Parties:

Hawkes Menangle Pty Ltd (Plaintiff)
Stephen Leonard Brennan and Gregory John Holdsworth (Defendants)

Representation:

Counsel:
D Allen (Plaintiff)
M J Wells (Defendants)

Solicitors:
Darby Jones (Plaintiff)
Kerrisons Legal Services (Defendants)

File Number(s):

2022/210748

Publication restriction:

Nil

JUDGMENT

1. The plaintiff (purchaser) seeks an order for specific performance of a contract for the sale of land entered into on 8 December 2020 (the Contract) in respect of land situated at Menangle NSW 2568 (the Property). The plaintiff, Hawkes Menangle Pty Ltd, was the purchaser under the Contract. The defendants, Mr Brennan and Mr Holdsworth were the vendors (vendors). The plaintiff entered into the Contract as trustee for the Menangle Unit Trust.

2. By summons filed on 19 July 2022, the plaintiff claims that the defendants wrongfully purported to terminate the Contract for breach, and that the Contract remains on foot. The defendants submit that the Contract was validly terminated for breach following the service of a notice to complete on 8 June 2022, and the passing of the time specified for completion of 24 June 2022.

3. The primary dispute between the parties is whether that notice to complete was valid.

Background

4. The Contract is in the form of the 2019 edition of the standard contract for the sale and purchase of land published by the Law Society of New South Wales and the Real Estate Institute of New South Wales. The Contract also contained a number of special conditions.

5. The relevant terms of the Contract are:

1. The “contract date” is specified on the front page as 8 December 2020.

2. The “date for completion” is specified on the front page as “18 months after the contract date”.

3. The contract price was $1,250,000 with a deposit to be paid of $125,000.

4. Clause 15 provides:

The parties must complete by the date for completion and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so.

5. The parties nominated that the Contract would be an electronic transaction to be arranged through the nominated electronic lodgement network operator, PEXA. This meant that cl 30 of the Contract applied. Relevantly, cl 30 provides:

30   Electronic transaction

30.1   This Conveyancing Transaction is to be conducted as an electronic transaction if –

30.1.1   this contract says that it is an electronic transaction;

…

30.4   If this Conveyancing Transaction is to be conducted as an electronic transaction –

30.4.1   to the extent that any other provision of this contract is inconsistent with tis clause, the provisions of this clause prevail;

30.4.2   normally, words and phrases used in this clause 30 (italicised and in Title Case, such as Electronic Workspace and Lodgment Case) have the same meaning which they have in the participation rules;

30.4.3   the parties must conduct the electronic transaction –

•   in accordance with the participation rules and the ECNL; and

•   using the nominated ELN, unless the parties otherwise agree;

30.4.4   a party must pay the fees and charges payable by that party to the ELNO and the Land Registry as a result of this transaction being an electronic transaction;

30.4.5   any communication from one party to another party in the Electronic Workspace made –

•   after the effective date; and

•   before the receipt of a notice given under clause 30.2.2;

is taken to have been received by that party at the time determined by s 13A of the Electronic Transactions Act 2000; and

30.4.6   a document which is an electronic document is served as soon as it is first Digitally Signed in the Electronic Workspace on behalf of the party required to serve it.

30.5   Normally, the vendor must within 7 days of the effective date —

30.5.1   create an Electronic Workspace;

30.5.2   populate the Electronic Workspace with the title data, the date for completion and, if applicable mortgagee details; and

30.5.3   invite the purchaser and any discharging mortgagee to the Electronic Workspace.

30.6   If the vendor has not created an Electronic Workspace in accordance with clause 30.5, the purchaser may create an Electronic Workspace. If the purchaser creates the Electronic Workspace the purchaser must –

30.6.1   populate the Electronic Workspace with title data;

30.6.2   create and populate an electronic transfer;

30.6.3   populate the Electronic Workspace with the date for completion and a nominated completion time; and

30.6.4   invite the vendor and any incoming mortgagee to join the Electronic Workspace.

30.7   Normally, within 7 days of receiving an invitation from the vendor to join the Electronic Workspace, the purchaser must –

30.7.1   join the Electronic Workspace;

30.7.2   create and populate an electronic transfer,

30.7.3   invite any incoming mortgagee to joint the Electronic Workspace; and

30.7.4   populate the Electronic Workspace with a nominated completion time.

30.8   If the purchaser has created the Electronic Workspace the vendor must within 7 days of being invited to the Electronic Workspace –

30.8.1   join the Electronic Workspace

30.8.2   populate the Electronic Workspace with mortgagee details, if applicable; and

30.8.3   invite any discharging mortgagee to join the Electronic Workspace.

30.9   To complete the financial settlement schedule in the Electronic Workspace –

30.9.1   the purchaser must provide the vendor with adjustment figures at least 2 business days before the date for completion;

30.9.2   the vendor must confirm the adjustment figures at least 1 business day before the date for completion; and

30.9.3   if the purchaser must make a GSTRW payment or an FRCGW remittance, the purchaser must populate the Electronic Workspace with the payment details for the GSTRW payment or FRCGW remittance payable to the Deputy Commissioner of Taxation at least 2 business days before the date for completion.

30.10   Before completion, the parties must ensure that –

30.10.1 all electronic documents which a party must Digitally Sign to complete the electronic transaction are populated and Digitally Signed;

30.10.2 all certifications required by the ECNL are properly given; and

30.10.3 they do everything else in the Electronic Workspace which that party must do to enable the electronic transaction to proceed to completion.

30.11   If completion takes place in the Electronic Workspace –

30.11.1 payment electronically on completion of the price in accordance with clause 16.7 is taken to be payment by a single settlement cheque;

30.11.2 the completion address in clause 16.11 is the Electronic Workspace; and

30.11.3 clauses 13, 13.2 to 13.13.14, 16.8, 16.12, 16.13 and 31.2.2 to 31.2.4 do not apply.

Clauses 30.5 to 30.11 deal with the procedures to be followed to effect completion of an “electronic transaction” which is defined to mean “a Conveyancing Transaction to be conducted for the parties by their legal representatives as Subscribers using an ELN and in accordance with the ECNL and the participation rules”. Relevant definitions of other terms used in these provisions are as follows.

The term “Electronic Workspace” has the meaning ascribed to it in the participation rules as determined by the Electronic Conveyancing National Law (NSW) (ECNL) as the appendix to the Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW). The participation rules made by the Registrar General under s 23 of the ECNL define “Electronic Workspace” to mean “a shared electronic workspace generated by the ELN” and ELN is defined in the ECNL to mean “an electronic system that enables the lodging of registry instruments and other documents in electronic form for the purposes of the land titles legislation”. PEXA operates an ELN.

The “effective date” is the contract date, “completion time” is “the time of day on the date for completion when the electronic transaction is to be settled” and “populate” means “to complete data fields in the Electronic Workspace”. The expression “date for completion” is not defined in clause 30 and therefore has the meaning given on the front page.

6. Special condition 34.1 provides:

(a)   If completion does not occur on or before 3:30pm on the Completion Date, at any time thereafter either party (not then being in default under this Contract) may serve on the other a notice (“Notice to Complete”) requiring completion of this Contract on a specified date being not less than 14 days (“Notice Period”) after the date of service of the Notice to Complete.

(b)   The parties agree that:

(i)   the Notice Period is sufficient; and

(ii)   time will be essential for compliance with the Notice to Complete.

The term “Completion Date” is not defined and is to be construed as having the same meaning as “date for completion” on the front page.

7. Clause 34.2 provides:

For the purpose of calculating the Notice Period:

(a)   the Notice Period commences at midnight on the business day on which the Notice to Complete is served, and

(b)   a reference to a day means the period of time commencing at midnight and ending 24 hours later.

8. Clause 34.3 provides:

Any Notice to Complete may specify any time of the day between 10:30am and 3:30pm as the time for performance of any obligation under this Contract in which event performance by that specified time is of the essence.

6. The parties agree that s 52A(2)(b) of the Conveyancing Act 1919 (NSW) applied to the Contract. The effect of this is that terms, conditions and warranties prescribed in the Conveyancing (Sale of Land) Regulation 2017 (NSW) (Regulation) are incorporated into the Contract, as that form of the Regulation was in force at all material times. Clause 6 of the Regulation provides:

6   Implied term of all contracts that relates to land tax

(1) For the purposes of section 52A(2)(b) of the Act, the following terms are prescribed for all contracts for the sale of land—

(a)  in a case where the date for completion is specified in the contract—

(i)  if that date is 14 days or less after the day on which the contract is made—the term set out in clause 2 of Schedule 2, or

(ii)  if that date is more than 14 days after the day on which the contract is made—the term set out in clause 3 of Schedule 2,

(2)  In any term prescribed by this clause, current land tax certificate, in relation to a contract for sale of land, means a certificate applied for by, or on behalf of, the vendor that—

(a) is issued under section 47 of the Land Tax Management Act 1956 in the year in which the contract is to be completed, or no more than 3 months before the date on which service is required by the term, and

(b)  relates to the land the subject of the contract for sale (or, in the case of a contract for the sale of land comprising one or more lots in a proposed plan of subdivision, the land from which those lots are to be created).

7. By virtue of cl 6(1)(a)(ii), the term contained in cl 3 of Schedule 2 to the Regulation is implied into the Contract, which provides:

3   Land tax certificate—contracts completing in more than 14 days and contracts where no completion date agreed

(1)  The vendor must serve, at least 14 days before completion, a current land tax certificate.

(2)  The purchaser does not have to complete earlier than 14 days after service of the certificate.

8. On 8 December 2020, the purchaser paid the deposit in full, and contracts were exchanged.

9. On the same day, the solicitor for the vendors sent a letter to the solicitors for the purchaser which stated:

As settlement is not to take place until 8 June 2022, we will open a PEXA workspace closer to the date of settlement.

10. On 10 December 2020, the purchaser lodged caveat AQ632732 over the Property to protect its interest as purchaser under the Contract.

11. On 14 December 2020, the vendors’ solicitor served a certificate pursuant to s 47 of the Land Tax Management Act 1956 (NSW) (land tax certificate) on the purchaser via its solicitors. That certificate indicated that the land was ‘clear’ of land tax, i.e. that there was no land tax charged on the land up to and including the 2020 tax year.

12. On 9 March 2022, the vendors’ solicitor sent an email to the purchaser’s solicitor which relevantly stated (emphasis in original):

Under the terms of the Contract, settlement of the sale of the Menangle property is scheduled to take place by Wednesday, 8 June 2022.

Please therefore find attached copy of our letter to you dated today Wednesday, 9 March 2022.

13. The letter dated 9 March 2022 attached to the email stated relevantly:

…

The critical dates are as follows:

1.   Exchange of Contracts took place on 8 December 2020.

2.   The Contract provides for settlement [to] take place within 18 months of the Contract date, i.e., by Wednesday, 8 June 2022.

Therefore:

1.   You might like to speak with your client, and let us know whether you are on track to settle on or before the nominated settlement date.

2.   We will open a PEXA Workspace in due course, and invite you to “join in” …

It will be seen that the first paragraph 2 misstates the Contract as providing for settlement to occur within 18 months of the contract date.

14. On the same day, the purchaser’s solicitor responded:

I have just spoken to my client and he confirms he will be ready to settle in accordance with the contract.

15. On 19 May 2022, the vendors’ solicitor created a workspace in the PEXA electronic lodgement network (PEXA Workspace) that nominated the date and time of settlement as 8 June 2022 at 2:00pm. On that same day, the purchaser’s solicitor ‘accepted’ the settlement date and time within the PEXA Workspace. By 7 June 2022, there were four participants in the PEXA Workspace:

1. the purchaser’s solicitor, acting for the ‘Incoming Proprietor’;

2. the vendors’ solicitor, acting for the ‘Proprietor on Title’;

3. Westpac as the ‘Mortgagee on Title’; and

4. National Australia Bank (NAB) as the ‘Incoming Mortgagee’

16. On 1 June 2022, the purchaser’s solicitor provided to the vendors’ solicitor a settlement schedule that stated 8 June 2022 as the date for settlement. After discussion between the solicitors, the purchaser’s solicitor provided an amended settlement schedule later on 1 June 2022 showing the amount due on settlement to be $1,105,019.41, with no change to the date for settlement. The adjustments in these settlement schedules for council rates and water rates were calculated on the basis that settlement would occur on 8 June 2022.

17. Also on 1 June 2022, an updated land tax certificate was provided to the purchaser by the vendors’ solicitor, showing no land tax was charged on the land up to and including the 2022 land tax year.

18. On 2 June 2022, the vendors’ solicitor sent to the purchaser’s solicitor a further revised settlement schedule showing the amount due on settlement to be $1,125,019.41 but kept the scheduled date for completion as 8 June 2022. The PEXA Workspace was updated by the defendants’ solicitor with this new “Amount due on Settlement” on the same day.

19. On 8 June 2022, the settlement failed as not all participants in the PEXA Workspace were ‘ready’. In order to obtain ‘ready’ status in the PEXA Workspace all participants must have completed the required actions assigned to them by the system prior to settlement. Neither the purchaser’s solicitor nor NAB were ‘ready’ in order for settlement to occur.

20. The scheduled time for completion on 8 June 2022 was 2:00pm. If a property settlement does not occur at the nominated time, it ‘rolls over’ in half-hour blocks. In this case the system attempted to settle again at 2:30pm and at half-hourly intervals thereafter until 5:00pm, at which point the PEXA Workspace was ‘locked’ and settlement could no longer occur.

21. On 9 June 2022, at 9:20am, the vendors’ solicitor sent an email to the purchaser’s solicitor which stated:

As you are aware… [the matter] was due to settle yesterday however, due to your incoming mortgagee not being in a position to settle, settlement did not take place.

Can you please provide us with an update as soon as possible on where your bank is at for settlement and if they will be ready to settle today.

22. The purchaser’s solicitor responded by email at 10:56am on the same day which stated: “Thanks for your patience, we are awaiting instructions from client/bank and will hopefully have a reply soon”.

23. At 11:13am on 9 June 2022, the vendors’ solicitors served a notice to complete on the purchaser’s solicitor by email which nominated 3:00pm on 24 June 2022 as the time for completion in the PEXA Workspace. The notice to complete states relevantly (emphasis in original):

…

2.   The Vendor has complied with the terms and conditions of the Contract and is ready, willing and able to complete the Contract and transfer the Menangle property to the Purchaser in accordance with the terms of the Contract.

3.   The Vendor requires the Purchaser to complete the Contract in accordance with its terms, and in this respect, time is of the essence for completion of the Contract.

4.   The Vendor appoints 3:00 pm on Friday 24 June 2022 in the Electronic Workspace as indicated in the Contract as the time and place for completion or at some prior time as may be agreed upon by the solicitors for the Vendor and the Purchaser respectively.

5.   If you fail to complete the Contract on or before 3:00 pm on Friday 24 June 2022 then the Purchaser shall be in breach of the Contract and the Vendor shall be entitled to exercise all other rights and remedies as are available to Vendor by reason of the breach.

24. On 20 June 2022, the vendors’ solicitor sent an email to the purchaser’s solicitor stating:

We refer to the above-mentioned matter and settlement which was due to take place on 8 June 2022.

Can you please provide us with an update on your clients incoming lender and if you will be in a position to settle this week.

25. On 22 June 2022, the purchaser’s solicitor replied by email to the vendors’ solicitor stating:

We are advised the client is signing mortgage docs today & will only need a couple of days to settle.

I have requested something in writing, will revert back soon.

26. On 23 June 2022, at 4:25pm the purchaser’s solicitor sent an email to the vendors’ solicitor requesting that the time for settlement be extended from 24 June to 29 June 2022. Later the same day, at 4:47pm, the purchaser’s solicitor sent a letter to the vendors’ solicitor in the following terms:

I note that the current Section 47 Certificate was served on 1 June 2022. In accordance with current conveyancing regulations, the Vendor is not entitled to serve a Notice to Complete until 14 days after the date of service of a current Section 47 Certificate, this date being 15 June 2022.

The Vendors Notice to complete was served on 9 June 2022, being prior to the date that the Vendor was entitled to serve a Notice to Complete.

Accordingly, the Notice to Complete is ineffective and invalid and cannot be relied upon to terminate the contract.

I await a valid Notice to Complete…

27. On 23 June 2022, at 4:52pm, the vendors’ solicitors responded to the first email referred to in [26] refusing the request to extend the date for settlement to 29 June 2023.

28. Settlement did not occur on the PEXA workspace at 3:00pm on 24 June 2022. The purchaser’s solicitor did not accept the settlement date and time, nor did NAB.

29. On Friday, 24 June 2022, at 3:04pm, the vendors’ solicitor responded to the second email referred to in [26] rejecting the contention that the notice to complete was invalid. An “unfinished version” of a letter setting out the reasoning behind that rejection accompanied the email. On Monday, 27 June 2022, a “complete version” of that letter was sent to the purchaser’s solicitor by email.

30. On 24 June 2022, at 3:29pm, the purchaser’s solicitor sent an email to the vendors’ solicitor repeating its claim that the notice to complete was invalid, and stated:

1.   Settlement in accordance with the Contract was due 8 June 2022;

2. A Current S47 Certificate was served 1 June 2022, in accordance with Schedule 2 Clause 3(1), the Vendor MUST serve, at least 14 days before completion, a current land tax certificate. The completion date would then be 15 June 2022;

3.   Notice to complete was served 9 June 2022. We note the Vendor was not entitled to serve a Notice to Complete until after 15 June 2022…

31. At 4:26pm on the same day, the vendors’ solicitor sent an email to the purchaser’s solicitor which rejected that contention again, and at 4:55pm served a notice of termination purporting to terminate the Contract. The email of the vendors’ solicitor stated relevantly (emphasis in original):

We seem to be at cross purposes.

The position reached appears to be:

1.   You are asserting that the vendor was not entitled to issue and serve a Notice to Complete until after 15 June 2022, based on an interpretation of Reg 6(1)(a) and Clause 3 of Schedule 2 of the Conveyancing (Sale of Land) Regulation 2017.

2.   We are asserting that the Regulation says nothing of the sort. To reiterate, it simply says that the purchaser does not have to settle “earlier than 14 days after service of the Certificate”, i.e. the purchaser does not have to settle before 15 June 2022. It does not inhibit or prevent, or seek to inhibit or prevent, the issue of a Notice to Complete.

The bottom line is that as a matter of fact the purchaser did not settle on or before 15 June 2022.

What we have done, in issuing the Notice to Complete, is inter alia to require the purchaser to settle at 3 PM today Friday, 24 June 2022. Today in fact is 23 days after the issue of the Land Tax Certificate back on 1 June 2022.

32. On 27 June 2022, the purchaser’s solicitor sent an email to the vendors’ solicitor attaching a letter from NAB dated 23 June 2022 stating that NAB had formally approved a loan to the purchaser of $875,000, and that “the loan documents are in the process of being generated”. The PEXA Workspace records show that the purchaser signed the loan documents required by NAB and NAB created a mortgage document on around 8 July 2022.

33. On 8 July 2022, the purchaser’s solicitor (now a different firm), sent a letter to the vendors’ solicitor claiming that the Contract was invalidly terminated.

34. On 19 July 2022, the purchaser filed the summons.

Issues

35. The purchaser contends that the Contract was not validly terminated because:

1. the completion date under the Contract was 9 June 2022, not 8 June 2022;

2. the notice to complete was invalid, because it was served before the contractual right to serve such a notice had accrued, being 3:30pm on the completion date;

3. further, or in the alternative, the notice to complete was invalid because it was served within 14 days after the service of a valid land tax certificate (1 June 2022).

36. The vendors contend that the notice to complete and, therefore, the notice of termination were valid because the parties agreed after the Contract was entered into that the date for completion was 8 June 2022, and the date of service of a land tax certificate is irrelevant to whether the notice to complete was valid.

37. Accordingly, the issues which arise are:

1. Whether the date for completion was 8 or 9 June 2022;

2. Whether the notice to complete served on 9 June 2022 was invalid for either of the reasons stated in 35 (2) and (3) above.

Issue 1: Date for completion

38. The purchaser submitted that the words ‘18 months after the contract date’ should be interpreted to mean that the 18-month period began on 9 December 2020 and did not expire until the end of 8 June 2020, so that the date fixed for completion was 9 June 2022 being the first day after expiry of the 18 month period.

39. The purchaser relies on the decision of Ward J (as her Honour then was) in Proctor v Chahl [2008] NSWSC 1252. In that case a contract for sale of land which was entered into on 20 June 2006 stated on the front page that the date for completion was ‘12 months after the date of this Contract’. The vendors contended that the completion date was 20 June 2007 and completion not having occurred on that date, served a notice to complete on 21 June 2007 requiring completion to occur on or before 3pm on 6 July 2007. When completion did not occur by that time on 6 July 2007, the vendors terminated the contract. Her Honour held that the notice to complete was not valid because it was issued prior to the purchasers being in breach of the obligation to complete. Her Honour concluded that the first day for the calculation of the 12‑month period was 21 June 2006, and that the entire period had to expire before completion could be required so that the completion date was 21 June rather than 20 June 2007. Her Honour said at [39] (emphasis in original):

If one cannot logically say that there has been a period of time from a particular day or event until the whole of that period of time has elapsed, then it follows that a completion date fixed for a 12 month period after a particular day does not arrive until the first point at which the whole of the 12 month period has come to an end. If so, then the completion date here must be the day immediately following the expiry of the 12 month period.

40. I agree with the purchaser’s submission that, applying the reasoning in Proctor, the 18-month period began on 9 December 2020 and concluded at the end of 8 June 2022, so that the date for completion under the Contract was 9 June 2022.

41. The defendants do not dispute the correctness of Proctor but rather contend that the parties varied the date for completion by agreeing to a new completion date of 8 June 2022, evidenced by the parties’ correspondence and actions in the PEXA Workspace, being:

1. the correspondence from the vendors’ solicitor to the purchaser’s solicitor on 8 December 2022, 9 March 2022 and 20 June 2022 stating the date for completion as 8 June 2022 (see [9], [12], [13] and [24] above); and

2. the two emails from the purchaser’s solicitor to the vendors’ solicitor on 1 June 2022, attaching settlement schedules showing the date for settlement as 8 June 2022 (see [16] above).

3. the email from the purchaser’s solicitor to the vendors’ solicitor on 24 June 2022 which stated that “settlement in accordance with the contract was due 8 June 2022” (see [30] above).

42. Further, the vendors point to the acceptance by the purchaser’s solicitor on 19 May 2022 of the settlement date and time in the PEXA Workspace, as noted at [15] above, as indicating that there was agreement between the parties that completion was to occur at 2:00pm on 8 June 2022.

43. In order to succeed on this argument, the vendors must show that the Contract has been varied by the alteration of the completion date from 9 June 2022 to 8 June 2022. The significance of the characterisation of the alteration of the completion date as a variation of the Contract is that because the Contract was required to be in writing by s 54A of the Conveyancing Act1919, any variation to it will only be enforceable if also evidenced in writing: Morris v Baron & Co [1918] AC 1 at 16 and 31; Dowling v Rae [1927] HCA 5; (1927) 39 CLR 363 at 370–371; Phillips v Ellinson Bros Pty Ltd [1941] HCA 35; (1941) 65 CLR 221 at 234, and 243–244; Radoman Pty Ltd v Vexapu Pty Ltd (2008) 13 BPR 24,903; [2008] NSWSC 8 at [32].

44. Section 54A(1) of the Conveyancing Act 1919 provides:

No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.

45. The vendors have the onus of proof in relation to this argument because a party seeking to rely upon the validity of a notice to complete (whether as a plaintiff or as a defendant) bears the onus of establishing that fact: Sandpiper Kooragang Pty Ltd v Fortis Products Pty Ltd (2020) 19 BPR 40,689; [2020] NSWSC 1256 at [64].

46. In Phillips v Ellinson Bros, Williams J referred to the distinction between a parol variation of a contract required to be in writing (which is unenforceable) and an arrangement made orally as to the mode of performance of such a contract (which can be enforced despite the lack of writing). His Honour said at 243:

It is clear law that a contract required to be in writing by the Statute of Frauds cannot be varied orally (Morris v. Baron & Co.; British and Beningtons Ltd. v. N.W. Cachar Tea Co.; Dowling v. Rae; and, as to deeds, Berry v. Berry), but “a distinction has been pointed out and recognized between an alteration of the original contract in such cases, and an arrangement as to the mode of performing it. If the parties have attempted to do the first by words only, the court cannot give effect, in favour of either, to such attempt; if the parties make an arrangement as to the second, though such arrangement be only made by words it can be enforced” (Plevins v. Downing). And, as Goddard J. (as he then was) pointed out in Besseler Waechter Glover & Co. v. South Derwent Coal Co.: “It does not appear to me to matter whether the request comes from one side or the other, or whether it is a matter which is convenient to one party or to both. What is of importance is whether it is a mere forbearance or a matter of contract.” If an arrangement amounts to a parol variation of the original contract it is ineffective either to enable the contract to be enforced as so varied or to prevent the original contract being enforced in its unaltered form. And, even if the original contract as varied is subsequently wholly performed by the plaintiff there does not appear to be any reason why the defendant, by the application of some doctrine of waiver or estoppel, should be prevented from relying on the statute, when he could do so where the plaintiff has wholly performed an original contract required to be in writing by the statute (Cocking v. Ward). In Morrell v. Studd and Millington, Astbury J., and in Hartley v. Hymans, McCardie J., expressed the view, with which I agree, that when a contract falling within the statute is once made, no conduct or verbal waiver can be relied upon to substitute a different term from one appearing in the contract itself: See also Harvey v. Grabham; Levey & Co. v. Goldberg.

The only case therefore in which a subsequent parol arrangement can be effective is where it relates to the mode and manner of the performance of an existing obligation and is not intended to substitute one agreement for another (Hickman v. Haynes).

47. An example of an arrangement to alter the mode of performance which is not required to be in writing is the postponement of the settlement date under a contract for sale of land to a later date: Morris v Baron at 31; Inness v Waterson A/T for Cobok Family Trust [2006] QCA 155 at [3].

48. In my view, the bringing forward of the completion date from 9 to 8 June 2022 cannot be regarded as a mere alteration of the mode of performance of the Contract, because if it is binding, the effect would be to prevent the Contract from being enforced in its unaltered form: the purchaser could no longer tender performance of its obligation to complete on 9 June 2022 under the Contract in its unaltered form (and would potentially be liable to damages for failure to complete on the altered completion date): see McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38 at 47; Radoman at [36].

49. There is a distinction between, on the one hand, a variation of a contract by a discharge of the original contract and the creation of a new contract and, on the other, a further contract which merely varies one or more terms of the original contract which remains on foot, subject to the variations made by the further contract: Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520; [2000] HCA 35 at [22]–[24]. Which of these two alternatives applies is a question of the intention of the parties (see Sara Lee at [23]-[24]), but in each case there are two contracts.

50. In the present case, if the Contract has been varied by the alteration of the completion date this would involve a further contract between the parties of the second kind referred to in Sara Lee. However, in order for such a further contract to be binding it would need to be supported by consideration and comply with s 54A of the Conveyancing Act. If a contract of that kind is not established, the Contract will remain on foot unaltered.

51. In my opinion, there has been no variation of the Contract for the following reasons. First, it is apparent from the evidence referred to at [41]–[42] that the proposal for completion to occur on 8 June 2022 was made by the vendors’ solicitor and came about not because of an intention to vary the Contract, but rather by reason of an error made by the vendors’ solicitor in the construction of the relevant words of the Contract (ie. “18 months after the contract date”) as requiring completion within 18 months of the contract date: see [13] above. The purchaser’s solicitor went along with the vendors’ suggestion as to what that form of words meant, but did not evince an intention to vary the Contract. In particular, there is no evidence to suggest that either the vendors’ solicitor or the purchaser’s solicitor (let alone their respective clients) had any intention to change the completion date from 9 June to 8 June 2022. Whether the parties to a contract have by a later contract varied that contract depends ultimately on the intention of the parties as noted above, and absent proof of that intention, there can be no variation.

52. Second, irrespective of whether the solicitors for the parties intended to change the completion date from 9 to 8 June 2022, the difficulty for the vendors is that there is no document or documents in evidence which can be regarded as an agreement in writing to vary the completion date or a memorandum or note thereof, signed by the parties to the Contract or a person authorised to sign it on their behalf.

53. While the solicitors for the parties have communicated by email to each other and made entries in the PEXA Workspace regarding a completion date of 8 June, a solicitor retained by the client to act on a conveyancing transaction does not, absent actual authority, have authority (either implied or ostensible) to vary a contract on behalf of his or her client: Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313 at [137]-[155]; Nowrani Pty Ltd v Brown [1989] 2 Qd R 582 at 586; Inness v Waterson at [49]–[50]; H Clark (Doncaster) Ltd v Wilkinson [1965] 1 Ch 694 at 702; GE Dal Pont, Law of Agency (4^th ed, Lexis Nexis, 2020) at [8.28].

54. There is no evidence before the Court to suggest that the plaintiff’s solicitor had actual authority to vary the Contract. The only document in evidence which refers to the instructions given by the purchaser to its solicitor regarding the completion date is the email set out at [14] above, but this merely states that the purchaser had confirmed it would be ready to settle “in accordance with the contract”. On its proper construction, the Contract required settlement on 9 rather than 8 June 2022.

55. Third, the procedures followed in the PEXA Workspace do not alter these conclusions. It was submitted for the vendors that the making of the entries in the PEXA Workspace whereby the solicitors for the parties “accepted” a completion date and time of 8 June 2022 at 2:00pm had the effect of altering the completion date to that date through the operation of cl 30 of the Contract. Clause 30 sets out a regime for completion of the Contract as an electronic transaction. It contemplates that the “date for completion” will be entered into the Electronic Workspace, and prima facie this would be the date prescribed on the front page of the Contract. However, cl 30 must be read in light of the Contract as a whole, including cl 15 which (through the word “by”) contemplates that the parties may endeavour to complete on an earlier date. Nevertheless, unless the Contract is varied to alter the “date for completion”, the failure to complete on that earlier date would not be a breach of the Contract entitling the vendors to serve a notice to complete under cl 34.1. There is nothing in cl 30 to alter that conclusion. Further, once it is accepted that in order for the alteration of the completion date to be legally effective a variation of the Contract was necessary, the taking of the steps to implement completion of the Contract by entries in the PEXA Workspace could not, without an instrument complying with s 54A of the Conveyancing Act signed by a person with authority to bind the purchaser, achieve that result. As stated above, the purchaser’s solicitor did not have that authority.

56. I note that the vendors did not advance an argument that the matters referred to at [41]–[42] gave rise to an estoppel which precluded the purchaser from denying that the completion date had been varied.

57. It follows in my view, that the completion date was 9 June 2022.

Issue 2: Whether the notice to complete was valid

58. It follows from the conclusion that the completion date under the Contract was 9 June 2022, that the notice to complete which was served before 3:30pm on that day was not authorised by cl 34.1 of the Contract and was therefore invalid. The notice of termination served on 24 June 2022, based as it was on the failure of the purchaser to comply with the invalid notice to complete, was also invalid.

59. While the purchaser’s alternative argument does not arise in light of this conclusion, I will deal with it briefly, upon the assumption that I am wrong in the conclusion that the completion date was 9 June rather than 8 June 2022. On that premise, the vendors were entitled to give a notice to complete on 9 June 2022 under cl 34.1 provided that they were the innocent party (ie. not in breach of the Contract), and ready, willing and able to perform their obligations as and when required to be performed up to and including completion: Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202 at [27]. Breaches which are minor or trivial, or are not connected with the securing of completion of the contract, will not preclude a party in breach from serving a notice to complete: Sandpiper at [70]. The exception for breaches which are minor or trivial is based on the de minimis principle (McNally v Waitzer [1981] 1 NSWLR 294 at 300–301) and this principle applies equally to cl 34.1 of the Contract which precludes a party from issuing a notice to complete if that party is “in default under this Contract”.

58. In the present case, the vendors were in breach of cl 3 of sch 2 to the Regulation at the time they served the notice to complete, because they had failed to serve the land tax certificate at least 14 days before completion, having served it only seven days before completion. However, that breach falls into the category of a minor or trivial breach because the land tax certificate served on 1 June 2022 showed that the land was clear of any charge for land tax. Hence nothing turned on the failure of the vendors to serve it 14 days before completion. Accordingly, if the completion date had been 8 June rather than 9 June 2022, the notice to complete served on 9 June would not have been invalid.

Conclusion

61. For the above reasons the notice to complete dated 9 June 2022 and the notice of termination dated 24 June 2022 are both invalid and that the Contract is valid and subsisting and remains on foot. The plaintiff is entitled to declarations to that effect. The plaintiff is also entitled to an order for specific performance of the Contract.

62. There is no reason, in my view, why costs should not follow the event and the Court will make an order that the defendants should pay the plaintiff’s costs of the proceedings.

63. The summons sought additional relief, including damages or equitable compensation but there was no argument in relation to the additional relief and it was not pressed.

64. I direct the parties to confer and within seven days submit a form of short minutes of order to give effect to these reasons.

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Amendments

01 December 2023 - Correction to typographical errors at [45] and [61]

Decision last updated: 01 December 2023