Hillier v Sheather

The appeal concerned a dispute between the appellant, Hillier, and the respondent, Sheather, concerning the interpretation of a clause in a contract for the sale of land. The primary issue was whether the clause, which stipulated that the vendor must provide a "clear title" to the purchaser, required the vendor to discharge an existing mortgage over the property before settlement. The case was heard in the Court of Appeal of New South Wales.

The central legal question before the court was whether the contractual obligation to provide a "clear title" encompassed the requirement for the vendor to discharge any encumbrances, specifically a mortgage, prior to the completion of the sale. This involved an examination of the ordinary meaning of the phrase "clear title" in the context of property law and contract law, and whether it implied a title free from all registered encumbrances at the time of settlement.

The court considered the common understanding of "clear title" in conveyancing, which generally means that the vendor is able to transfer the property to the purchaser unencumbered. The judges reasoned that for a vendor to provide a clear title, they must be in a position to give the purchaser unencumbered ownership. This necessarily implies that any existing mortgages or other registered encumbrances must be discharged before or at the time of settlement, as the purchaser is entitled to receive the property free from such burdens. The court found that the vendor's obligation was not merely to have the right to discharge the mortgage, but to actually do so to provide the stipulated clear title.

The appeal was dismissed, with the court upholding the primary judge's finding that the vendor had breached the contract by failing to discharge the mortgage prior to settlement.