Hewitt v Debus - [2004] NSWCA 54

No judgment structure available for this case.

Reported Decision:
59 NSWLR 617

Court of Appeal

CITATION: Hewitt v Debus [2004] NSWCA 54

HEARING DATE(S): 11 November 2003

JUDGMENT DATE:
12 March 2004

JUDGMENT OF: Meagher JA at 1; Giles JA at 13; McColl JA at 101

DECISION: By majority: (1) Grant leave to appeal; (2) Direct that the notice of appeal be filed within seven days; (3) Dismiss the appeal; (4) Order that the claimant/appellant pay the costs of the opponent/respondent.

CATCHWORDS: Vendor and purchaser - contractual right to terminate if default by purchaser - termination - question at trial whether time of the essence - held it was not so termination ineffective - question on appeal whether inquiry into time being of the essence excluded - appellant relied on Honner v Ashton (1979) 1 BPR 97049 - by majority, held inquiry not excluded - necessary to consider application of s 13 of Conveyancing Act 1919 - parties had not litigated application of s 13 - can not decide case on a basis not litigated.

CASES CITED: Australian and New Zealand Banking Group Ltd v Burgess (Underwood J, 30 September 1994, unreported);
Balog v Crestani (1975) 132 CLR 289;
Brien v Dwyer (1978) 141 CLR 378;
Canning v Temby (1906) 3 CLR 419;
Carolan v AMF Bowling Pty Ltd (CA, 16 November 1995, unreported);
Casinos Australia International (Christmas Island) Pty Ltd v Christmas Island Desert Pty Ltd (Owen J, 16 December 1998, unreported);
Goffin v Houlder (1920) 90 LJ Ch 488;
Holland v Wiltshire (1954) 90 CLR 409;
Honner v Ashton (1979) 1 BPR 97049;
Kassem v Colonial Mutual [2001] NSWCA 38;
Legione v Hateley (1983) 152 CLR 406;
Louinder v Leis (1982) 149 CLR 509;
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457;
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286;
Raineri v Miles [1981] AC 1050;
Smith v Hamilton [1951] 1 Ch 174;
Stern v McArthur (1988) 165 CLR 489;
Stickney v Keeble (1915) AC 386;
Tanwar Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853;
Tilley v Thomas (1867) LR 3 Ch A 61;
Thomas v Monaghan (1975) 1 NZLR 1 cl 10;
United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904;
Wacal Investments Pty Ltd v Hurley (1992) 1 Qd R 455;

PARTIES :
Melissa Anne Hewitt - Claimant
Catherine Debus - Opponent

FILE NUMBER(S): CA CA 40257/03

COUNSEL: T Lynch - Claimant
M J Stevens - Opponent

SOLICITORS: Ellis Baxter, Murwillumbah - Claimant
Abbott Tout - Opponent

LOWER COURTJURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): ED 4862/02

LOWER COURT
JUDICIAL OFFICER : Palmer J

CA 40257/03
ED 4862/02

MEAGHER JA
GILES JA
McCOLL JA
Friday 12 February 2004

HEWITT v DEBUS

Judgment

1 MEAGHER JA: In this matter I have seen in draft the judgment of Giles JA. Unfortunately, I disagree with it. More than that, I regard it as wholly mis-stating the law, and in a very fundamental way.

2 The facts are as stated by Giles JA.

3 Let it be said at once that the purchaser’s claim to a return of moneys paid must have succeeded in one form or another if pressed. That result, however, has got nothing to do with the essentiality or non-essentiality of time. It is simply the application of the principle propounded by Dixon J (as he then was) in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, that a vendor, on a purchaser’s default, cannot have both the land and the purchase price. Before us, there was no dispute on that point.

4 The question before us, and before the trial judge, was whether the contract between the parties had been validly terminated by the vendor’s notice of termination.

5 This question must be answered in the affirmative.

6 The contract simply states that if certain payments are not made on time, the vendor may terminate the contract. The payments were not made on time, and the vendor issued a Notice of Termination. Why could she not do so?

7 Whether time was or was not of the essence might have assumed some importance if the purchaser had sought specific performance of the contract. She did not do so, and could not do so, being unable to proffer performance of her own obligations. In an action for specific performance, in a proper case a purchaser may acknowledge breach (and termination at law for that breach) but still obtain the relief he seeks. In such circumstances the essentiality of time may indeed arise as a question to be debated.

8 Where, however, no equitable relief is sought, questions of time become irrelevant. On the question of termination, no equitable relief was sought.

9 The law as I have stated was decided by this Court in Honner v Ashton (1979) 1 BPR 97049. That decision is clearly right, and has never been overruled. It apparently disconcerted a University academic, but that is bad luck for him.

10 It is also said to be inconsistent with a leading English authority, Smith v Hamilton [1951] 1 Ch 174. Whether it is so or not is debatable, but it hardly matters, as that case is unsupportable. It is authority for the proposition, that, as a matter of construction, in a Court of Equity (but not in a Court of Law) a time stipulation contained in a contract is to be interpreted as meaning “within the specified time or within a reasonable time thereafter”. But it is nonsense to hold that words mean one thing at law and another in Equity. That has been held to be nonsense; in the nineteenth century by no less a lawyer than Lord Cairns in Tilley v Thomas (1867) LR 3 Ch A 61 at 67, and in the twentieth century by the House of Lords in Raineri v Miles [1981] AC 1050 and (which is more important) by the High Court in Louinder v Leis (1982) 149 CLR 509.

11 His Honour the trial judge had obviously never heard of Honner v Ashton, although the principles it applies are obvious enough. Nor did either counsel draw it to his Honour’s attention. Nonetheless, that should not stop one applying it.

12 In my view, leave to appeal should be granted, the appeal allowed, the order of the trial judge be set aside, and an order made that the contract had validly been terminated by the vendor. The purchaser should pay the vendor’s costs both here and below, and have a certificate under the Suitors’ Fund Act.

13 GILES JA: This is an application for leave to appeal from a decision in a dispute between vendor and purchaser. The claimant was the vendor and the opponent was the purchaser. The application was heard on full submissions so that, if leave to appeal were granted, the appeal could be decided without a further hearing.

The contract for sale

14 The vendor was the owner of one of five shares in the issued capital of South Arm Enterprises Pty Ltd (“South Arm”). Each share entitled its owner to occupy a home site on land owned by South Arm at Uki in the Murwillumbah area.

15 By a Deed dated 22 August 2000 (“the Agreement”) it was agreed that the vendor would sell and the purchaser would purchase the share on a terms payment basis and that the purchaser could occupy the site under licence.

16 The Agreement began -

“1. It is hereby agreed that consideration for the transfer of the said Share shall be Seventy Five Thousand Dollars ($75,000.00) which shall be paid as follows:

(a) the sum of One Thousand Dollars ($1,000.00) on the execution of this Deed, such sum to be held by the Vendor’s Solicitor, as Stakeholder;

(b) the sum of Thirty Nine Thousand Dollars ($39,000.00) within thirty (30) days of the date of execution of this Deed, in which regard time shall be in-essential;

(c) the sum of Ten Thousand Dollars ($10,000.00) within six (6) months of the date of execution of this Deed;

2. Notwithstanding any other provision in this Deed, the Purchaser and Vendor acknowledge that:

(i) Either party may upon the expiration of the time referred to in Clause 1(d) hereof, issue a Notice to Complete making the time for completion of this Deed in accordance with such notice of the essence of this Deed; and

3. On payment of the balance of the consideration, the Vendor shall hand over to the Purchaser, or her Solicitor, a Transfer of the Share duly executed by the Vendor in registerable form, together with the Share Certificate in relation to the said Share.”

17 Clause 4 of the Agreement granted the purchaser a licence to occupy the site “[o]n and from payment of monies referred to in Clause 1(b) hereof”. One of the terms of the licence was that the purchaser would pay “rates, taxes, charges and other outgoings” during her occupancy. Another was that she would “not, without the Vendor’s consent, part with possession of the property, or allow anything to be done to impair the value or amenity of the property”.

18 By clause 5 of the Agreement-

“5. In the event of default by the Purchaser in the performance of any term or condition contained in or implied by this Agreement, the Vendor may terminate this Licence by giving seven (7) days prior written notice to the Purchaser.”

19 There was then a return to payment of the consideration in cl 6 of the Agreement -

“6 (a) In the event that payments due by the Purchaser to the Vendor pursuant to Clause 1 of this Deed are not made within the time prescribed then the Purchaser will thereafter and pending completion pay to the Vendor on completion interest on the balance of the purchase price at the rate of ten (10%) per centum per annum. The obligation to pay interest is an essential term of this Deed and the Vendor is under no obligation to complete unless the interest provided for in this Special Condition has been paid.

(b) If payment is not paid on time, or a cheque for any of the payment is not honoured on presentation, the Vendor can terminate this Agreement. The right to terminate this Agreement is lost as soon as the payment is made in full.”

20 Clause 7 of the Agreement provided for things to occur “on payment of the balance of the consideration”. By cl 8, if the purchaser established prior to the time for payment of the balance of the consideration that South Arm’s land was adversely affected in any of a number of respects, the purchaser could terminate the Agreement “and the deposit paid herein shall be refunded to the Purchaser without deduction”.

21 There followed clauses dealing with warranties and indemnities given by the vendor, with an internal Deed involving earlier or other shareholders in South Arm, and with other matters of no present relevance.

The dispute between the vendor and the purchaser

22 The purchaser duly paid the initial sum of $1,000 and the further sum of $39,000. She did not pay the $10,000 payable within six months of the date of execution of the Deed. She paid some of the instalments of $800 per month, but ceased to pay instalments after July 2001. She paid some amounts with respect to outgoings.

23 The purchaser entered into occupation of the site in late August 2000. She and her partner brought a rented caravan onto the site, in which they lived with their son. By the end of the year hostility between the vendor and the purchaser, it seems involving hostility from at least one of their partners, had arisen, and the purchaser left the site. The hostility continued, according to the purchaser including damage to her car on one of the occasions on which she thereafter visited the site.

24 By a letter dated 20 July 2001 the solicitors for the vendor required payment of the $10,000, plus interest, within 14 days, saying that in the absence of payment the vendor “will terminate the Contract”. By a letter dated 14 August 2001 the solicitors for the purchaser alleged misrepresentation in relation to entering into the Agreement and complained of a number of other matters, saying that “all payments will cease until [the vendor] complies with her obligations and [the purchaser] is thereafter able to assess her position”. Further correspondence was unable to resolve this impasse.

25 The vendor advertised the site for sale. On 5 June 2002 she entered into a Deed under which she sold and Mr Darren Gillham purchased the share for $42,000, their agreement being “subject to and conditional upon” termination of the agreement with the purchaser.

26 By letters dated 19 June 2002 the solicitors for the vendor served on the purchaser and her solicitors a Notice of Intended Termination. It recited default in payment of the $10,000 and the instalments (para A) and default in other respects to do with occupation of the site and payment of outgoings (para B), and concluded -

“C The vendor intends to terminate the Agreement upon the expiry of 7 days after the giving of this notice.

27 The response of the purchaser’s solicitors, by a fax dated 5 July 2002, was relevantly (and curiously) -

“We refer to the notice dated 18 June 2002. At paragraph C the notice provides that ‘the Vendor intends to terminate the Agreement upon the expiry of 7 days after the giving of this notice’. We are of the view that the Agreement was effectively terminated by the vendor on 25 June 2002 by virtue of paragraph C.

We are instructed that our client does not intend to put forward any offers or make any proposals to the vendor and that she relies on the Agreement dated 22 August 2000.”

28 By letters dated 12 July 2002 the solicitors for the vendor served on the purchaser and her solicitors a Notice of Termination. After reciting the same defaults (paras A and B) and the Notice of Intention to Terminate (para C), it stated -

“D. None of the defaults referred to in A. or B. above have been remedied.

hereby terminates

29 The response from the purchaser’s solicitors, by a letter dated 18 July 2002, relevantly read -

“We refer you to the agreement. Excepting clause 1(b) time for payment of the sum of $10,000 and the instalments of $800 are not expressed to be of the essence.

Clause 2 provides that the vendor may issue a notice to complete upon the expiration of the time referred to in clause 1(d). We are instructed that no such notice to complete was ever issued by the vendor.

Clause 6(a) of the agreement provides that ‘in the event that payments due by the purchaser to the vendor pursuant to clause 1 of the deed are not made within the time prescribed then the purchaser will thereafter and pending completion pay to the vendor on completion interest on the balance of the purchase price at the rate of 10% per annum …”.

Clause 6(b), upon which you have relied to terminate the agreement is quite clearly subject to clause 2. That is, your client was required to issue a notice to complete making time essential for payment of the amounts due under clauses 1(c) and (d), and 4(b) and for completion of the deed.

The issuance of the Notice of Termination amounts to a repudiation of the contract and we are hereby instructed by our client to accept your client’s repudiation of the contract and to terminate the contract.

Demand is hereby made for the immediate return to our client of all amounts paid under the contract totalling $49,200.00. If your client fails to pay this sum within 14 days we intend to commence legal action seeking damages against your client.”

30 By a fax dated 30 July 2002 the purchaser’s solicitors again called for repayment of all money paid under the Agreement. Under cover of her solicitor’s letter dated 28 August 2002 to the purchaser’s solicitors the vendor paid $12,586 to the purchaser, calculated as $48,500 paid by the purchaser less damages of $33,000 (the difference between $75,000 and $42,000 from the sale to Mr Gillham) and $2,914 (costs of advertising, legal advice, and cleaning and some overdue levies). By a letter dated 10 September 2002 the purchaser’s solicitors disputed the entitlement to damages and called for repayment of a balance of $36,014. There were differing starting-points of $48,500 and $48,600 as the amount paid by the purchaser; in the result, the agreed net amount was $35,914.

The proceedings

31 By a summons filed on 30 September 2002 the purchaser claimed -

“1. A declaration that the deed for the sale of share number 3 in the issued capital of South Arm Enterprises Pty Limited CAN 002 868 706 made between the Plaintiff as purchaser and the Defendant as vendor on 22 August 2000 has been validly terminated by the Plaintiff (“the Deed”).

32 No order for pleadings was made. Affidavits were filed. The summons was fixed for hearing on 11 March 2003. At the last minute the vendor filed a cross-claim dated 10 March 2003, in the form of a summons, claiming -

“1. Declaration that the Defendant/Cross Claimant is entitled to a set-off of all or part of the sum of $35,914.00 by way of damages to the Plaintiff for the Plaintiff’s breach of contract as set out in letter dated 28 August, 2002 from the Defendant/Cross Claimant’s solicitor to the Plaintiff/Cross Defendant’s solicitor.”

The judge’s reasons

33 After setting out the facts, his Honour said -

“9 The central issue in this case is whether the Deed provided that time was of the essence in the performance of the Purchaser’s obligations to pay the amounts required by Clauses 1(c) and (d). If that question is answered ‘no’, so that a notice making time of the essence was required to be given, then it may be necessary to consider whether the Notice of Intention to Terminate was itself a notice making time of the essence.

10 The critical clause upon which the Vendor relies is Clause 6(b). It will be noted that that clause does not, of course, expressly state that time for payment is of the essence. The Vendor says, however, that it clearly enough makes time of the essence by implication.

11 I am of the view that Clause 6(b) does not make time of the essence for the payment of the amounts referred to in Clause 1(c) and (d). My reasons are as follows.”

34 His Honour said, in summary, that -

· the contract was “closely analogous” to a contract for sale of land (para 12);

· a condition as to time in a contract for sale of land is not regarded in equity as essential unless there are special circumstances, and that time is essential “must be made expressly clear or must be implicit from the nature of the contract in the surrounding circumstances” (ibid).

· there were no special circumstances whereby the Agreement, and cl 6(b) in particular, implicitly made time for performance essential (para 13).

· on the contrary, there were “powerful indications otherwise” (ibid).

35 For the indications otherwise his Honour first referred to a number of matters, again in summary that the Agreement was a terms contract under which the purchaser was entitled to go into occupation of the site; that the $10,000 was payable at an indeterminate time within the six months from the execution of the Agreement; and that interest was payable on the $10,000 and the instalments in the event of non-payment.

36 His Honour then said -

“17 However, in my view the most cogent indication contrary to the submission that the Deed makes time for payment under Clause 1(c) and (d) of the essence is the very wording of Clause 6(b) itself. The hallmark of a time of the essence clause is that breach of that clause affords the innocent party an immediate right of termination, and proffered performance by the defaulting party, no matter how shortly after expiry of the essential time, is of no effect and can be ignored subject, of course, to circumstances which might give a ground for equitable relief. The second sentence of Clause 6(b) completely removes this critical hallmark. It provides, in effect, that if the Vendor does not immediately terminate for default, the right to do so can be taken away by the tender of performance by the Purchaser no matter how long after default performance is tendered so long as the Vendor has not terminated by that time.

18 The presence of this sentence in Clause 6(b) is cogent against the construction of that clause as making time of the essence. In my view, all that the first sentence of Clause 6(b) provides is that non-payment of any sum of money under Clause 1 at the time stipulated, whether the amount is large or small, is regarded as of such consequence as to justify termination. It does not, however, provide an immediate right for termination upon failure to pay by the stipulated time by making time of the essence.”

37 His Honour concluded -

“19 For these reasons, I conclude that the Vendor was required to give a notice making time of the essence before she was entitled to terminate for the Purchaser's breach of Clauses 1(c) and (d).”

38 Then turning to the Notice of Intention to Terminate, his Honour held that it did not make time of the essence, that by giving the Notice of Termination the vendor had wrongfully repudiated the Agreement, and that the repudiation had been accepted by the purchaser’s solicitors’ letter of 18 July 2002. It is not necessary to go to the deficiencies found in the Notice of Intention to Terminate, since his Honour’s decision that it did not make time of the essence was not challenged.

39 In coming to his decision his Honour also observed that the vendor had repudiated the Agreement “by entering into a contract for the sale of the share on 5 June 2002” (para 21) and said that there was “another wrongful repudiation of the vendor which justified the purchaser’s termination at that time, namely, of course, the fact that the Vendor had already entered into a contract for sale of the subject property to a third party.” (para 22). With respect, this was not correct. The Deed of 5 June 2000 was subject to and conditional upon termination of the Agreement. The vendor’s conduct in entering into the conditional agreement recognized rather than repudiated her then obligations to the purchaser, and she was not impeded in giving good title to the purchaser. The purchaser submitted that the judge’s decision should be upheld on the basis of this other repudiation, but in Goffin v Houlder (1920) 90 LJ Ch 488 to which she referred the vendor had unconditionally sold to another purchaser and so could not make out a good title. No more need be said of the other repudiation.

40 His Honour made the declaration claimed by the purchaser in para 1 of her summons, ordered that the vendor pay the purchaser $35,914 plus interest, and dismissed the vendor’s cross-claim.

The vendor’s case on appeal

41 The vendor did not challenge his Honour’s decision that the Agreement did not make time of the essence for payment of the $10,000 and the instalments. She submitted that the inquiry into whether time was of the essence was beside the point, saying that cl 6(b) of the Agreement gave her an express right of termination and that was the end of it. Finding that time was of the essence, she said, arose only where there was otherwise not a right of termination, being then necessary in order that failure in timely performance entitle the vendor to terminate the Agreement: if there was an express right of termination, it mattered not. The vendor relied on the 1979 decision of this Court in Honner v Ashton (1979) 1 BPR 97049.

42 In Honner v Ashton a vendor agreed to sell a country property to purchasers with completion to take place on 20 June 1974. The purchasers paid a deposit of $5,000 to the vendor’s agent. By a varying memorandum dated 14 February 1975 completion was postponed to 30 April 1975 and the purchasers were let into possession pending completion at an occupation rent of $300 per week.

43 The contract was in the then standard New South Wales form, in which cl 16 relevantly provided -

“16. If the purchaser defaults in the observance or performance of any obligation imposed on him under or by virtue of this agreement the deposit paid by him hereunder, except so much of it as exceeds 10 per cent of the purchase price, shall be forfeited to the vendor who shall be entitled to terminate this agreement and thereafter either to sue the purchaser for breach of contract or to resell the property as owner … “

44 The purchasers did not complete on 30 April 1975. In early August 1975 they ceased to pay the occupation rent. The vendor threatened specific performance. The purchasers’ response was that they could not raise the necessary funds and were giving up possession, and that the threat of specific performance was therefore pointless. The vendor treated the purchasers’ response as a repudiation and terminated the contract. The vendor brought proceedings to recover the deposit, in which the agent inter-pleaded.

45 Glass JA, with whom Hope JA agreed, found it unnecessary to decide “difficult and borderline” questions concerning repudiation (at 9482). His Honour said that the vendor was entitled to succeed -

“ … on his further argument that by dint of the purchasers’ failure to pay rent and relinquishment of possession they had put themselves in breach of the head agreement for sale and purchase as varied in a way which entitled the vendor to give notice of termination”. (at 9482-3)

46 Glass JA stated and gave reasons for his view that the vendor’s notice of termination was so framed as to make it clear that the vendor was exercising the rights conferred upon him by cl 16. He continued -

Stickney v Keeble

But these considerations are irrelevant for present purposes. The failure to pay an occupation rent by the due date is a default within the meaning of cl 16 whether or not it is of an essential character which exposes the defaulter to the risk of having his contract terminated

47 Mahoney JA dissented in the result. He considered that the purchasers’ breaches of the contract were neither fundamental breaches nor repudiatory, and that the vendor had therefore not been entitled to bring the contract to an end. His Honour did not refer to cl 16 as a basis for termination by the vendor.

Commentary on

Honner v Ashton

48 In the second edition of Time in the Performance of Contracts, published in 1982, Professor Lindgren (as Lindgren J then was) said that Honner v Ashton “has caused consternation amongst conveyancers in New South Wales” (para 313). The concern was that cl 16, as given effect in Honner v Ashton, would entitle a vendor to terminate the contract, forfeit the deposit and sue for damages upon any default by the purchaser under any term of the contract, including (for example) one day’s delay in submitting the form of conveyance or transfer. The decision was overcome in the 1982 standard form contract by a provision entitling the vendor to terminate only for the purchaser’s default in an obligation “which is or has become essential”, and subsequent standard form contracts have restricted the vendor’s entitlement to terminate to breaches “in an essential respect”.

49 Professor Lindgren nonetheless accepted the result in Honner v Ashton, although following a different process of reasoning. Having set out in para 313 the relevant passage from Honner v Ashton, he said (para 315) -

“It is respectfully submitted, contrary to the passage quoted in [313], that s 13 of the Conveyancing Act 1919 (NSW) requires the question to be asked whether Equity would award specific performance to the purchaser under the form of contract contemplated and in the light of the purchaser’s untimeliness and all the other circumstances of the case. This would in turn raise the question whether the presence in the contract of the standard form of purchaser’s default clause should be treated as evincing an intention to make timely performance ‘essential’. In this respect, it is difficult to contend that while the time stipulation itself is to be construed precisely the purchaser’s default clause is not to be so construed. It is submitted that any scope for a Court of Equity to mitigate the ‘effect’ of a time stipulation at common law, is apparently eliminated in contracts incorporating purchaser’s default clauses of the kind contemplated because of the express provision in those clauses as to what the effect of a failure by a purchaser to meet his obligation is to be. Yet it is thought that this does not represent the common intention and expectation of vendors and purchasers or of their legal advisers and that the standard form of contract be amended [sic].”

50 Section 13 of the Conveyancing Act 1919 referred to in this passage provides -

“13. Stipulations in contracts, as to time or otherwise, which would not before the commencement of this Act have been deemed to be or to have become of the essence of such contracts in a court of equity, shall receive in all courts the same construction and effect as they would have heretofore received in such court.”

51 The different process of reasoning of the learned author was that, contrary to the approach of Glass JA, the considerations as to essentiality and equitable intervention to which his Honour referred were inevitably raised for consideration by s 13 of the Conveyancing Act; but cl 16 sufficed to make time of the essence because, in accordance with those considerations, it showed an intention to make time essential and to preclude equitable intervention. The difference is important. On the approach preferred by Professor Lindgren, a differently worded provision (cl 6(b) in the present case is differently worded) or regard to matters beyond cl 16 not present in Honner v Ashton can result in it being held that, notwithstanding the provision, time is not essential for the performance of the obligations on breach of which the provision operates.

52 On this view, there must always be regard to s 13. If a time stipulation would be regarded as essential in equity, s 13 does not touch it and the party not in breach will be entitled in law to terminate the contract. If a time stipulation would not be regarded as essential in equity, the party not in breach will not be entitled to terminate the contract, although that party will have other remedies for the breach. But the question posed by s 13 must always be asked, even if, on the terms of the particular contract, it is clear what the answer will be. Having an express right of termination is not the end of it, and an inquiry of the kind undertaken by the judge in the present case is not beside the point.

53 Honner v Ashton in the present respect rather struck out on its own. Although they are far from conclusive, the following earlier cases suggested a different result: they are by no means exhaustive.

54 In Smith v Hamilton (1951) 1 Ch 174 the contract provided in cl 25 that the vendor could forfeit the deposit and resell the property if the purchaser “shall neglect or fail to complete his purchase according to these conditions”. Harman J said at 183 -

“The condition which has to be satisfied is that the purchaser shall neglect or fail to complete his purchase according to those conditions. One of them is that the purchase shall be completed on the day named in the special condition, that is to say, April 4. But it is agreed that that date, except in special circumstances, is not an essential part of the contract, and therefore the condition is, I think – and I accept Mr Blackett-Ord’s argument on this point – that the purchase shall be completed on April 4 or within a reasonable time thereafter. Therefore the right to forfeit and re-sell in condition 25 does not accrue until there has been a default by the purchaser in completing either on the day fixed or within a reasonable time. That right does not in effect arise until a purchaser has deprived himself of the equitable remedy of specific performance by his delay or default, or by a repudiation, express or implied, of the contract.”

55 This was not consistent with an immediately exercisable right to forfeit and resell, regardless of whether the time for completion was essential. So far as it was held in Smith v Hamilton that a notice to complete could not be given until there had been unreasonable delay in completion, the decision is not good law, see Louinder v Leis (1982) 149 CLR 509 at 513-4, 524. But it remains a decision that a notice to complete was required, albeit largely by concession that time was non-essential.

56 The contract in Balog v Crestani (1975) 132 CLR 289 included cl 16 in the same terms as in Honner v Ashton. The decision turned on whether time had been made essential by a notice to complete. It was not suggested that cl 16 made irrelevant whether time had been made essential; however, the case is not authority for something it did not decide.

57 In Thomas v Monaghan (1975) 1 NZLR 1 cl 10 of the contract provided that the vendors could rescind if the purchaser defaulted and continued his default for fourteen days. It was held that the vendors had given a sufficient notice to complete. The Court nonetheless undertook, albeit inconclusively, the inquiry which on the approach of Glass JA in Honner v Ashton would not have been relevant. Their Honours asked whether cl 10 “manifested a clear intent to make a default continuing for 14 days an essential breach both in law and equity” (at 6-7). They said that that appeared to be so at first glance, but that it was -

“ … arguable that adequate purpose and effect can be given to the 14 day requirement in the present contract without carrying the matter to the point where it can be said that the parties have shown ‘in a fashion which was unmistakable’ that they intended a 14 day continuation of a default in completion to go to the substance of their bargain and thus make it essentially unfair for a Court of Equity to grant relief.” (at 8)

58 The default in Brien v Dwyer (1978) 141 CLR 378 was failure to pay the deposit. By cl 1 of the contract, if a cheque paying the deposit was not honoured on presentation the purchaser “shall immediately and without notice be in default under this agreement”. The contract included cl 16 in the same terms as in Honner v Ashton. Failure to pay the deposit was regarded as a fundamental breach entitling the vendor to terminate. The decision went off on what Stephen J described at 397 as “the quite special character of a purchaser’s promise to pay a deposit”. Only Gibbs J referred to cl 16, saying at 394 that the fundamental nature of the promise was “supported by the final words of cl 1, read in conjunction with cl 16”. It is difficult to find support in this for the approach of Glass JA in Honner v Ashton.

59 Counsel were unable to refer us to any decision preceding Honner v Ashton in which a similar approach had been taken, and these cases provide grounds for the consternation on the part of practitioners to which Professor Lindgren referred.

60 Subsequent decisions reflecting on Honner v Ashton in this respect are sparse. It was referred to in passing in Casinos Australia International (Christmas Island) Pty Ltd v Christmas Island Desert Pty Ltd (Owen J, 16 December 1998, unreported, see section 7.6 of the judgment) without comment on its correctness. In Australia and New Zealand Banking Group Ltd v Burgess (30 September 1994, unreported) cl 19 of the contract provided that the vendor could forfeit the deposit and resell the property if the purchaser failed to complete. After reference to Honner v Ashton Underwood J said that if it were necessary for him to decide, which it was not -

“ … I would conclude that the intention of the parties to this contract was that the vendor could not avail himself of the provisions of cl 19 until time for completion had been made of the essence of the contract and the purchaser had failed to complete within that time. Only in those circumstances could it be said that there had been a failure to complete as provided in cl 19.”

61 In Wacal Investments Pty Ltd v Hurley (1992) 1 Qd R 455 the contract contained a clause whereby the vendor could rescind and forfeit the deposit if the purchaser failed to “pay his deposit or any installment of the balance of the purchase money”. The purchaser failed to pay the balance of the purchase money on the due date. McPherson SPJ, with whom Ryan and Dowsett JJ agreed, noted that the only matter argued was whether time was of the essence of the contract, and held that the clause did not make time of the essence. Honner v Ashton was not mentioned. Again, the case is not authority for something it did not decide, but no one suggested the inquiry into essentiality was irrelevant.

62 It can not be said that the approach of Glass JA in Honner v Ashton has been embraced or become entrenched. It is not referred to, for example, in the 4th (1986) edition of Voumard, The Sale of Land in Victoria. In Butterworth’s Conveyancing Service New South Wales, a looseleaf service under the editorship of Young CJ in Eq, it is said in para 10250 that the amendment to the standard contract was “to counter any suggestion that a vendor may exercise rights under the clause no matter how trivial the relevant breach”, footnoting Honner v Ashton: there may be oblique disapproval. Halsbury’s Laws of Australia para 110-9120 does say that stating that every breach is to give rise to a right to terminate makes a term a condition, footnoting Honner v Ashton with the proposition, “Since the provision confers a contractual right to terminate, the character of the term may be treated as irrelevant to the promisee’s right to terminate”.

Leave to appeal

63 Leave to appeal is required because the amount at stake is less than $100,000, see Supreme Court Act s 101(2)(r).

64 The purchaser submitted that leave to appeal should be refused because “the judge’s decision was not demonstrably wrong and the nature of the case is such that it does not warrant leave being granted”, referring to Carolan v AMF Bowling Pty Ltd (CA, 16 November 1995, unreported) and Kassem v Colonial Mutual [2001] NSWCA 38 but not otherwise explaining the application of the cases. She also suggested that the amount at stake was not the $35,914 the subject of the judge’s order, but a much lesser sum, because the purchaser was in any event entitled to return of her payments in excess of a sum representing a deposit.

65 The purchaser did not seek relief against forfeiture of the money she had paid, whether her payments in excess of a sum representing a deposit or the whole amount. She asserted the validity of her own termination of the Agreement and claimed consequential return of the money she had paid. Further findings would be necessary if relief against forfeiture were to be considered. It is apparent from the judge’s reasons that relief against forfeiture was not raised, the necessary findings were not made, and the amount at stake on appeal is the $35,914 the subject of the judge’s order.

66 We were informed that the judge was referred to Honner v Ashton, although it is not mentioned in his reasons. There is an issue of general principle and importance, whether the approach taken by Glass JA in Honner v Ashton is correct. If the vendor’s submission be accepted it would be unjust to the vendor to leave his Honour’s decision uncorrected, in a not insignificant amount. In outlining the policy reasons for requiring leave to appeal in Carolan v AMF Bowling Pty Ltd Kirby P recognised that considerations such as these may weigh against the policy reasons and warrant a grant of leave, and in my opinion in the present case leave to appeal should be granted.

Discussion

67 What were the considerations as to essentiality and equitable intervention to which Glass JA referred? The historical background is the growth of the Lord Chancellor’s equitable jurisdiction, to the point of courts of equity co-existent with and in some respects competing with the common law courts and the principled grant of equitable remedies. The common law became rigid, but equity appealed to conscience and, in the words of Meagher Gummow & Lehane, Equity Doctrines and Remedies, 4th ed, para 1-005, “softened and modified many of the injustices at common law”.

68 The equitable remedies included specific performance of contracts, relief against forfeiture, and the “common injunction” restraining the commencement or prosecution of proceedings in the common law courts. Arrival at the following general principles was not without divergences, and their statement can not be unqualified, but they suffice for this case.

69 A contractual term was regarded as a condition or as a warranty; the category of an intermediate term need not presently be addressed. These labels were not always used, but the distinction they signified was long recognized. A condition was a term the breach of which entitled the innocent party to terminate the contract and/or claim damages. A warranty was a term the breach of which entitled the innocent party to claim damages, but not to terminate the contract.

70 In the common law courts a stipulation as to a time for performance under a contract was generally regarded as a condition. Failure of a party to perform in accordance with the time stipulation entitled the other party to terminate the contract. This common law attitude was not universal, but was taken with respect to times stipulated for completion in contracts for the sale of land. For present purposes attention can be focused on contracts for the sale of land, and it was not in dispute that, although strictly a contract for the sale of the share in South Arm, the Agreement was a contract of that nature.

71 Thus, a time stated for completion of a contract for the sale of land was a condition of the contract, and breach entitled the innocent party to terminate the contract and, if the purchaser, recover the deposit, or if the vendor, forfeit the deposit. As Griffith CJ said in Canning v Temby (1906) 3 CLR 419 at 425 -

“At common law it was said that, in the case of the sale of land, time was of the essence of the contract. That doctrine, however, only applied when a date for completion was named in the contract. It was held that when a date is so mentioned, there are mutual promises to complete on the appointed day, and that, on failure of either party to do his part on that day, he lost all rights under the contract, and became himself liable to an action for damages.”

72 A stipulation as to the time for performance in a contract for sale of land in a respect other than completion of the contract, for example delivery of an abstract of title, answering requisitions on title and submission of a form of conveyance or transfer may have been a condition, but it is not necessary to go into that. Implicit in the issue joined before the judge was the assumption that a time for payment of instalments was a condition of the contract at law. That a time for payment of instalments may be a condition underlay cases such as Stern v McArthur (1988) 165 CLR 489, and there is no occasion to go behind the parties’ assumption.

73 The courts of equity tempered the rigour of the common law. They relevantly did so in two ways.

74 The first way was that, if the party in breach sought the equitable remedies of specific performance and a common injunction, equity might decree specific performance and grant an injunction notwithstanding that the innocent party was entitled to terminate the contract or had terminated it. Equity did so by declining to treat the time stipulation as essential. Equity did not do so, however, if the parties had made timely performance essential. To return to the condition/warranty dichotomy, in that event the courts of equity treated the time stipulation as a condition just as the common law courts did. In Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286, in a passage taken up by the judge in the present case, Barwick CJ and Jacobs J said at 298 -

“A stipulation as to time for performance of obligations was not in proceedings in equity regarded as an essential term unless the contract expressly or by implication made it so. If the contract so provided equity would follow the law. Essentiality would be implied from the nature of the contract in its surrounding circumstances. But a contract for the sale of land where there were no special circumstances was not regarded in equity as one in which a condition as to time was an essential condition.”

75 The second way was that equity might grant relief against forfeiture. The relief could be against loss of money paid under the contract notwithstanding that the contract had been validly terminated. Whether it could also be against loss of the purchaser’s interest in the land notwithstanding that the default was breach of an essential stipulation as to time, the relief against forfeiture founding a decree for specific performance of the contract, fluctuated over the years. Legione v Hateley (1983) 152 CLR 406 and Stern v McArthur appeared to settle for Australia that it could. The joint judgment in Tanwar Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853 might be thought to reopen the question, or at least narrow the occasions on which the relief will be granted, and perhaps to make essentiality of time an element in a wider view of equitable relief. It pointed to circularity in finding a purchaser’s interest in land, and endorsed reluctance to interfere with the parties’ choice to make time of the essence of the contract. It rested equitable relief more directly on whether specific performance remained an available remedy because the vendor’s reliance on his legal right to terminate was unconscientious (see at [12]-[13], [19] in particular). It is not necessary to go further, since in the present case the purchaser did not seek relief against forfeiture, and it would be inappropriate to do so in the absence of argument.

76 To decide whether the vendor’s case on appeal should be accepted, it is necessary to ask on what basis equity intervened by declining to treat the time stipulation as essential.

77 One view was that equity looked to the substance of the contract and construed a time stipulation only as a target, not firm as to the time but really meaning at the stated time or within a reasonable time thereafter. But a contract can not mean one thing when construed in a court of law and another thing when construed in a court of equity, and any suggestion that it can was put to rest by the House of Lords in Raineri v Miles (1981) AC 1050 and in the High Court in Louinder v Leis (1982) 149 CLR 509.

78 The other view also looked to the substance of the contract, but invoked the broad notion that equity would disregard the common law’s strict insistence on timely performance if justice so required. This view has prevailed. Thus in Stickney v Keeble (1915) AC 386 Lord Parker said at 415 -

“In such cases, however, equity having a concurrent jurisdiction did not look upon the stipulation as to time in precisely the same light. Where it could do so without injustice to the contracting parties it decreed specific performance notwithstanding failure to observe the time fixed by the contract for completion, and as an incident of specific performance relieved the party in default by restraining proceedings at law based on such failure.

This is really all that is meant by and involved in the maxim that in equity the time fixed for completion is not of the essence of the contract, but this maxim never had any application to cases in which the stipulation as to time could not be disregarded without injustice to the parties, when, for example, the parties, for reasons best known to themselves, had stipulated that the time fixed should be essential, or where there was something in the nature of the property or the surrounding circumstances which would render it inequitable to treat it as a non-essential term of the contract.”

79 Lord Loreburn agreed with Lord Parker, and added at 400 -

“I will merely observe that the date fixed for completion in a contract for the sale of land is no less a part of the contract than any other clause, but equity will grant relief where a party seeks to make an unfair use of the letter of his contract in this respect, having regard to the state of the law relating to real property in England. It is safe to say that this relief will always be refused when to grant it would be essentially unfair.”

80 Lord Atkinson said at 401 -

“There is no occult or elusive mystery hidden in the phrase, ‘in equity time is not of the essence of the contract’. It merely expresses in a condensed form the doctrine that if a Court of Equity, looking not at the letter but at the substance of a contract to purchase land, sees that in none of the three ways above mentioned is an intention disclosed that the time limited for completion, or for any step towards completion, is to be strictly adhered to, that Court will relieve against breaches through mere lapse of time touching these matters when that can be done without substantial injustice.”

81 In Louinder v Leis at 524 Mason J referred to equity “exercis[ing] a jurisdiction similar to relief against forfeiture and penalties, construing the contract as it would be construed at common law, but restraining the parties from an unconscionable exercise of their legal rights”. The common basis with that now found in Tanwar Enterprises Pty Ltd v Cauchi was adopted, and equity intervened because it would be unconscientious for the party entitled to terminate to rely on his strict legal rights.

82 In accordance with statements such as that of Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips earlier set out, the innocent party’s reliance on his legal rights would be unconscientious unless, from regard to the terms of the contract and its nature in its surrounding circumstances, the contract made timely compliance essential. Express statement that time was of the essence would ordinarily suffice. Essentiality could be found in other ways: in Brien v Dwyer the special nature of a deposit at least contributed, and if the property sold was of diminishing or fluctuating value that may suffice. The determination was made as at the time of contract, not as at the time of termination, and in this respect the inquiry into the unconscientious of legal rights differed from the inquiry where the termination was for breach of a time stipulation which was essential in equity as well as at law. It remains to be seen whether the joint judgment in Tanwar Enterprises Pty Ltd v Cauchi heralds a single (and perhaps more rational) path to equitable intervention, with essentiality in equity of timely performance one matter in deciding as at the time of termination whether reliance on strict legal rights is unconscientious.

83 Into the common law and equitable mix then came s 13 of the Conveyancing Act 1919, taking up s 25(7) of the Judicature Act 1873 (UK). Section 13 left untouched a time stipulation which the courts of equity would treat as essential. What was the position if the courts of equity would treat the time stipulation as non-essential?

84 It was well established that equitable intervention by treating the time stipulation as non-essential was only for the purposes of the claim to equitable relief. The party in breach was still in breach and liable in damages for any loss occasioned to the innocent party, and if the innocent party had terminated the contract the party in breach could not himself rely on the contract in proceedings at law. In Canning v Temby Griffith CJ said at 426 -

“The doctrine, therefore, that time is not of the essence of a contract is a doctrine applied in relief of a party who is himself technically, but not substantially, in default, so as to allow him to claim specific performance in a proper case, although at law he could not maintain an action. The Courts of Equity never held that a party who had made default in performance of his contract was not liable for damages for the breach, but they treated the stipulation as to time not as a condition, but as an independent term of the contract, the breach of which might be compensated for by damages.”

85 See also Louinder v Leis at 526, 532, at the latter page pointing out that upon breach the legal right to terminate arose, that equity might “interfere with the legal remedy for the purpose of granting specific performance”, and that a notice to complete was a means of obviating equitable restraint upon the legal right to terminate.

86 If the party in default, then, was not in a position to obtain a decree of specific performance, it mattered not that equity would treat the time stipulation as non-essential. The position at law remained. So in Stickney v Keeble Lord Parker said at 416 -

“It should be observed, too, that it was only for the purposes of granting specific performance that equity in this class of case interfered with the remedy at law. A vendor who had put it out of his own power to complete the contract, or had by his conduct lost the right to specific performance, had no equity to restrain proceedings at law based on the non-observance of the stipulation as to time.”

87 It followed that in the application of s 13 it was necessary to ask whether in the particular case equity would have granted relief had it been sought. Speaking of s 25(7), Lord Parker said in Stickney v Keeble at 417 -

“It means, in my opinion, that where equity would prior to the Act have, for the purposes of decreeing its own remedies, disregarded a stipulation as to time and restrained an action at law based on the breach thereof, the Courts constituted by the Act are for the purpose of giving common law relief to disregard it in like manner. … The section cannot in my opinion mean that the rules as to time laid down by Courts of Equity in certain cases, for certain purposes, and under certain circumstances only, shall be applied generally and without inquiry whether the particular case, purpose or circumstances are such that equity would have applied the rules. If since the Judicature Acts the Court is asked to disregard a stipulation as to time in an action for common law relief, and it be established that equity would not under the then existing circumstances have prior to the Act granted specific performance or restrained the action, the section can, in my opinion, have no application, otherwise the stipulation in question would not, as provided in the section, receive the same effect as it would prior to the Act have received in equity.”

88 The same view of s 13 or its equivalent was taken in Australia, see for example Holland v Wiltshire (1954) 90 CLR 409 and Louinder v Leis at 524, 533. In Holland v Wiltshire the vendors terminated the contract following the purchasers’ failure to complete, and successfully claimed damages. Dixon CJ said at 415 -

Stickney v. Keeble

89 In the same case Kitto J said at 418-9 -

Noble v. Edwardes

Stickney v. Keeble

re Sandwell Park Colliery Co; Field v. The Company

Lock v. Bell

90 It has been suggested that in United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904 the House of Lords moved towards acting on equity’s view of time stipulations although specific performance would not be decreed. The decision has been criticized, amongst other things for adopting the “fusion fallacy” (Meagher Gummow & Lehane, Equity Doctrines and Remedies, 4th ed, at para 2-295), and in Raineri v Miles their Lordships may have retreated. However, this was not the subject of argument and again it would be inappropriate to go further.

Decision on the vendor’s case on appeal

91 I am respectfully unable to agree with the approach of Glass JA in Honner v Ashton. It does not seem to me correct to say that the considerations as to essentiality and equitable intervention to which his Honour referred were irrelevant.

92 In Honner v Ashton cl 16 gave the vendor a right to terminate the contract. If the contractual right to terminate had not been stated, the vendor would still have had the right at law to terminate the contract. The basis for equitable intervention being unconscientious reliance on strict legal rights, if equitable intervention was available in relation to the common law right it was also available in relation to the contractual right, and there remained the prior question whether time was of the essence for performance of the obligation on breach of which either right arose. The statement of the contractual right, conforming to the common law right, was a matter to be taken into account in determining whether it was unconscientious for the vendor to hold the purchaser to timely performance, in the same manner as an express statement that time was of the essence would have conclusively determined that it was or other matters might have that consequence. The prior question was the essential or non-essential character of the obligation to pay the occupation rent, specifically whether the statement of the contractual right was sufficiently clear agreement that timely performance was essential.

93 That does not mean that the decision in Honner v Ashton was incorrect. If it had been asked whether cl 16 sufficiently showed that the parties agreed that all terms were conditions, or specifically that the times for payment of the occupation rent were essential, an affirmative answer may well have been appropriate. I understand this to be the basis on which Professor Lindgren accepted the result. Further, if it had been asked whether in any event equity would have refused relief had it been sought, because the purchasers were neither able nor willing to complete the contract, the answer would have been clear enough. It was a similar situation to that in Holland v Wiltshire. But in my opinion inquiry into equitable intervention was not made irrelevant because cl 16 stated that the vendor was entitled to terminate the contract if the purchasers defaulted in the performance of their obligations.

94 In my opinion, therefore, the judge did not err in inquiring whether the parties had made essential the time for payment of the $10,000 and the instalments. The inquiry remained to be made, notwithstanding the statement in cl 6(b) that the vendor could terminate the Agreement if payment was not made on time. That statement would be one of the matters taken into account in the inquiry. But the Agreement had many other matters to be taken into account, different from those in Honner v Ashton, in determining whether equity would treat the time stipulation as essential.

Further matters

95 To repeat, the vendor did not challenge his Honour’s decision that the Agreement did not make time of the essence for payment of the $10,000 and the instalments. The Agreement was poorly drafted. Despite the statement of a right of termination, his Honour found in its confused language, and in the circumstances in which it was made, insufficient for equity to treat the time for payment of the $10,000 and the instalments as essential. There is no occasion to agree or disagree with his Honour’s view, although I respectfully would not wish to be taken to agree with all of his Honour’s reasoning.

96 As can be seen from the preceding discussion, the inquiry undertaken by his Honour was only the first question. No doubt because the parties themselves passed it by, his Honour did not address the application of s 13 of the Conveyancing Act. At law the vendor was entitled to terminate the Agreement. The purchaser treated the vendor’s termination as a repudiation and herself terminated the Agreement. The purchaser did not seek an equitable remedy, but asserted the validity of her own termination and claimed consequential return of the money she had paid. The purchaser’s termination was effective only if the vendor’s termination was ineffective, and the vendor’s termination was effective unless, pursuant to s 13, equity’s treatment of the time stipulation as inessential was to be adopted in deciding the position at law between the parties. Paragraph 19 of his Honour’s reasons elided this second question, one requiring further findings and of potential complexity if argument ventured into fusion fallacy territory.

97 The parties did not raise or litigate the second question. The determination of their rights was on an incomplete basis, as it may be that this also was a similar situation to that in Holland v Wiltshire and the correct holding was that the vendor’s termination was effective and so the purchaser’s termination was ineffective. But the point was not taken at the trial, and it was not taken in the application. I do not think we can decide the application on the ground that s 13 had no relevance.

98 The vendor and the purchaser were represented by counsel in the application. After judgment was reserved the purchaser’s solicitor delivered written submissions entitled “Opponent’s further submissions in response to the appeal of the claimant”. Leave had not been given to deliver further submissions. The vendor objected to the further submissions being received. Even that did not produce a request, after the event, for leave to deliver the further submissions. The further submissions should not have been delivered, and they should not be received. Even if they had been received, they could not be entertained. They sought to support his Honour’s decision on the ground that the vendor had by her conduct waived or otherwise lost the benefit of essentiality of time. This had not been raised before, and the purchaser could not be permitted to raise it for the first time on appeal.

99 Since writing the above I have read in draft the reasons of Meagher JA. So far as his Honour says that, absent any question of specific performance of the Agreement and with the parties’ rights determined solely at law, cl 6(b) would be given effect, I do not disagree. However, I do not think that was the basis on which Honner v Ashton was decided. Nor was it the basis on which the proceedings were conducted before Palmer J, where the parties joined issue on whether time was essential, or of the vendor’s case on appeal, which relied on Honner v Ashton. As I have sought to indicate in paras [96] and [97] above, I respectfully do not think it is open to us to ignore the question whether equity would have granted relief if sought and decide the case in the manner Meagher JA has done.

Orders

100 I propose the orders -

1. Grant leave to appeal.

2. Direct that the notice of appeal be filed within seven days.

3. Dismiss the appeal.

101 McCOLL JA: I agree with Giles JA.

**********

Last Modified: 03/16/2004

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Hewitt v Debus [2004] NSWCA 54

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CITATION:	Hewitt v Debus [2004] NSWCA 54
HEARING DATE(S):	11 November 2003
JUDGMENT DATE:	12 March 2004
JUDGMENT OF:	Meagher JA at 1; Giles JA at 13; McColl JA at 101
DECISION:	By majority: (1) Grant leave to appeal; (2) Direct that the notice of appeal be filed within seven days; (3) Dismiss the appeal; (4) Order that the claimant/appellant pay the costs of the opponent/respondent.
CATCHWORDS:	Vendor and purchaser - contractual right to terminate if default by purchaser - termination - question at trial whether time of the essence - held it was not so termination ineffective - question on appeal whether inquiry into time being of the essence excluded - appellant relied on Honner v Ashton (1979) 1 BPR 97049 - by majority, held inquiry not excluded - necessary to consider application of s 13 of Conveyancing Act 1919 - parties had not litigated application of s 13 - can not decide case on a basis not litigated.
CASES CITED:	Australian and New Zealand Banking Group Ltd v Burgess (Underwood J, 30 September 1994, unreported); Balog v Crestani (1975) 132 CLR 289; Brien v Dwyer (1978) 141 CLR 378; Canning v Temby (1906) 3 CLR 419; Carolan v AMF Bowling Pty Ltd (CA, 16 November 1995, unreported); Casinos Australia International (Christmas Island) Pty Ltd v Christmas Island Desert Pty Ltd (Owen J, 16 December 1998, unreported); Goffin v Houlder (1920) 90 LJ Ch 488; Holland v Wiltshire (1954) 90 CLR 409; Honner v Ashton (1979) 1 BPR 97049; Kassem v Colonial Mutual [2001] NSWCA 38; Legione v Hateley (1983) 152 CLR 406; Louinder v Leis (1982) 149 CLR 509; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; Raineri v Miles [1981] AC 1050; Smith v Hamilton [1951] 1 Ch 174; Stern v McArthur (1988) 165 CLR 489; Stickney v Keeble (1915) AC 386; Tanwar Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853; Tilley v Thomas (1867) LR 3 Ch A 61; Thomas v Monaghan (1975) 1 NZLR 1 cl 10; United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904; Wacal Investments Pty Ltd v Hurley (1992) 1 Qd R 455;
PARTIES :	Melissa Anne Hewitt - Claimant Catherine Debus - Opponent
FILE NUMBER(S):	CA CA 40257/03
COUNSEL:	T Lynch - Claimant M J Stevens - Opponent
SOLICITORS:	Ellis Baxter, Murwillumbah - Claimant Abbott Tout - Opponent

LOWER COURTJURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	ED 4862/02
LOWER COURT JUDICIAL OFFICER :	Palmer J