Kaneko v Crawford

[1995] QCA 384

IN THE COURT OF APPEAL	[1995] QCA 384
SUPREME COURT OF QUEENSLAND

Appeal No. 251 of 1994.

Brisbane

[Kaneko v. Crawford]

BETWEEN:

HIROE KANEKO

(Plaintiff) Respondent

AND:

JOSEPHINE MARY CRAWFORD

(Defendant) Appellant

___________________________________________________________________

Pincus J.A. Davies J.A. Shepherdson J.

___________________________________________________________________

Judgment delivered 25/08/1995

Judgment of the Court
___________________________________________________________________

THE APPEAL WILL BE ALLOWED WITH COSTS AND THE APPELLANT'S COSTS MUST BE PAID BY THE RESPONDENT, BOTH AS TO THIS APPEAL AND THE PROCEEDINGS INSTITUTED BY SUMMONS FILED ON 4 NOVEMBER 1994.

THE ORDERS AND DECLARATIONS MADE IN THIS COURT SHALL NOT BE ENTERED FOR 14 DAYS AND THE PARTIES MAY FILE WRITTEN SUBMISSIONS RELATING TO THE FORM OF THE DECLARATIONS WITHIN 7 DAYS. SUBJECT TO ANY ORDER WHICH MAY BE MADE DURING THOSE 14 DAYS, THE DECLARATIONS WILL BE AS FOLLOWS :-

(I) THAT THE CONTRACT BETWEEN THE APPLICANT AND THE RESPONDENT AS ALLEGEDLY VARIED WAS NOT AN "INSTALMENT CONTRACT" AS THAT TERM IS DEFINED IN THE PROPERTY LAW ACT 1974.

(II) THAT THE RESPONDENT VENDOR'S PURPORTED TERMINATION OF THE CONTRACT ON THE BASIS OF NON- PAYMENT OF THE BALANCE OF PURCHASE MONEYS AT SETTLEMENT DID NOT CONSTITUTE A WRONGFUL REPUDIATION OF THE CONTRACT ENTITLING THE APPLICANT PURCHASER TO RESCIND THE CONTRACT.

(III) THAT THE APPLICANT PURCHASER WRONGFULLY PURPORTED TO RESCIND THE CONTRACT ON 11 AUGUST 1994.

___________________________________________________________________

CATCHWORDS: PROPERTY LAW - contract for sale of land - agreement to extend completion date - whether extension converted it into an instalment contract - whether extension not part of the contract of sale but was a collateral agreement - whether a varied contract.

Ss. 71, 72 Property Law Act 1974
Perri v. Coolangatta Investments Pty Ltd (1982) 149 C.L.R. 537
Wacal Developments Pty Ltd v. Realty Developments Pty Ltd

(1978) 140 C.L.R. 503

Counsel:	Mr P McMurdo Q.C. for the appellant. Mr A J H Morris, with him Mr B A Laurie for the respondent.
Solicitors:	Watkins Stokes Templeton as town agents for Hickey Lawyers for the appellant. Stubbs Barbeler Grant as town agents for Michael Elliott for the respondent.

Hearing date:26 May 1995.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 251 of 1994.

Brisbane

Before Pincus J.A. Davies J.A. Shepherdson J.

[Kaneko v. Crawford]

BETWEEN:

HIROE KANEKO

(Plaintiff) Respondent

AND:

JOSEPHINE MARY CRAWFORD

(Defendant) Appellant

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 25/08/1995

This is an appeal from a judgment given in Chambers relating to what was held to

be an "instalment contract" within the meaning of s. 71 of the Property Law Act 1974 ("the

Act"). By contract dated 19 April 1994 the appellant agreed to sell to the respondent land

at Runaway Bay for $550,000, on $55,000 deposit. The agreed completion date was 3

June 1994. On 30 June 1994 the vendor's solicitors wrote to the purchaser's solicitor

advising "our client's agreement to the extension of the date for completion under the

Contract until Tuesday, 5th July, 1994 on the basis that interest is paid at the rate of

11.25% on the sum payable at settlement from the 1st July, 1994". The letter went on to

say "In all other respects the terms and conditions of the Contract of Sale remain

unchanged and in particular, time remains of the essence.". On 5 July 1994 the purchaser's solicitor wrote to the vendor's solicitors a letter the body of which reads as

follows:

" We refer to your letter of the 30th June, 1994, whereby the time for settlement was extended until today the 5th instant on condition that our client pay interest on the balance of settlement moneys at the rate of 11.25 per cent.

We request that the Contract be varied to provide for a settlement date of
Friday the 8th July, 1994, with time to be of the essence of the Contract.

As a condition of the proposed variation, our client is prepared to pay the sum of $677.97 forthwith and a further payment calculated on the basis of 11.25 per cent per annum from today until settlement on the balance payable on settlement, to be paid at settlement.

Please advise by return whether this is acceptable. ".

That was replied to on 6 July 1994 by a letter from the vendor's solicitors:

" We refer to your facsimile dated 5th July, 1994 and confirm our client's agreement to the extension of the date for completion to Friday, 8th July, 1994 on the basis that the sum of $677.97, representing the interest calculated for the period for the 1st July, 1994 to the 5th July, 1994, is paid to our client forthwith with further interest to be calculated on the basis of 11.25% per annum from the 5th July, 1994 until settlement on the balance payable on settlement.

In all other respects the terms and conditions of the Contract of Sale remain unchanged and in particular, time remains of the essence. ".

The purchaser's solicitor acknowledged the letter of 6 July, sent by fax, on the same day

and sent a cheque for the amount of $677.97 stated in it.

There was a further letter dated 8 July 1994, agreeing to an extension to 8 August,

but it is unnecessary to set out the details of that.

It was argued before the primary judge, and the argument was accepted, that the parties' agreement on 6 July that the date for completion would be extended on the basis set out in the letter of that date produced a variation of the contract, which converted it into

an instalment contract; his Honour so declared. When the purchaser defaulted by not

paying up on the ultimate settlement date, 8 August 1994, the vendor purported to

terminate the contract; that was held to be ineffective because it was not preceded by

notice as required by s. 72 of the Act, so the defaulting purchaser was entitled to the

moneys paid to the vendor under the contract.

The definition of "instalment contract" in s. 71 of the Act reads as follows:

" means an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange for the payment or payments; ".

The argument for the appellant is that the primary judge was in error in holding that

there was a variation converting the contract into an "instalment contract" within the

meaning of the definition, because all the parties agreed to was that the vendor's right of

rescission for breach should be suspended; because the purchaser did not ever become

bound to pay the $677.97; and because the extension was not part of the contract of sale

but was a collateral agreement. It is only necessary to deal with the second argument.

Counsel for the appellant, Mr McMurdo QC, contended that the agreement of 6 July

was not such as to create any immediately enforceable obligation, but depended entirely

on payment of the $677.97. The argument was that payment of the $677.97 was a

condition precedent. It should not be overlooked that there is a distinction between an

event or obligation which constitutes a condition precedent to the existence of a contract,

and one which constitutes a condition precedent to performance, the latter being ordinarily the construction which should be adopted: Perri v. Coolangatta Investments Pty Ltd (1982)

149 C.L.R. 537 at 552. One reason for that preference is that ordinarily parties who have

made a conditional contract may be presumed to have intended that obligations, even if

conditional ones, would flow from it immediately. But the question is always one of

construction of the particular contract, against the background of the circumstances which

gave rise to it. The critical point in the present case is: what were the parties' mutual

obligations in the period between the making of the agreement for extension of 6 July and

payment of the $677.97? The choice is between interpreting the arrangement as one

under which the vendor agreed to an extension in exchange for the mere promise to pay

the money, and interpreting it as one in which the vendor was not bound at all until the

money was paid. If the former view is correct, the purchaser was immediately indebted in

the sum of $677.97. The latter view appears to accord better with the language used and

with what one would expect the parties to have intended. It should be added that it seems

probable that an estoppel, or the doctrine of waiver, might have prevented the vendor from

rescinding during the period covered by the word "forthwith"; but it is unnecessary, for

present purposes, to consider that further.

The conclusion then, which we did not understand Mr Morris QC who led for the

purchaser to resist, is that the agreement of 6 July did not bind the purchaser to pay any

sum; prima facie, that agreement could not have made the contract of sale into an

"instalment contract".

We have noted that under the agreement of 30 June interest was to be payable for

the same period as under the 6 July agreement - i.e. 30 June to 5 July, but that interest

was, in our view, not payable until settlement and therefore the agreement of 30 June did
not convert the contract into an "instalment contract".

Mr Morris argued, on the assumption that the 6 July agreement did not oblige the

purchaser to pay $677.97, that there was an "instalment contract" for another reason,

namely the provisions of s. 71(3) of the Act:

" Where a contract for the sale of land may, at the election of the purchaser, be performed in a manner which would constitute it an instalment contract, it shall, unless and until the purchaser elects to perform it in some other manner, be presumed to be an instalment contract within the meaning of this section. ".

The contention was that if the purchaser had no obligation to pay the $677.97, but a choice

as to whether or not to pay it, then she had such an election as is mentioned in s. 71(3);

it was said that, the purchaser never having elected to perform "in some other manner",

it was presumed to be an election contract, the word "presumed" being equivalent to

"deemed".

It is unnecessary to determine whether "presumed" here means "deemed" or has

its ordinary meaning, for the argument fails whatever its meaning. The right of election

relied on is the purchaser's right to bring the agreement for further extension into effect by

paying $677.97. But on payment of that sum, there would not come into existence a

contract "in terms of which the purchaser is bound to make a payment or payments (other

than a deposit) without becoming entitled to receive a conveyance in exchange for the

payment or payments". That is so because the payment itself would effect the election and

bring the varied contract into existence; under that varied contract the purchaser would not

be obliged to pay $677.97, having already paid that sum. This conclusion makes it

unnecessary to consider the vendor's other contentions, that there was no variation of the contract effected on 6 July, and that any agreement of that date was collateral to and not

part of the contract of sale.

The above reasons deal with the case on the evidence which the applicant in the

Court below (respondent here) chose to place before the primary judge and on the basis

of which relief was sought and obtained. The contention then was, so far as presently

relevant, that there was an agreement in writing to vary the contract of sale: para. 10 of the

statement of claim and para. 10 of the affidavit filed below in support of the application for

judgment. After conclusion of the argument in this Court, an affidavit was filed on behalf of

the respondent which swore to a conversation between the solicitors which it appears is

relied on as an oral agreement to vary the contract. It is plain that if the application for

judgment was sought to be based on any such ground, there should have been evidence

of it placed before the court below, and it is equally clear that the evidence now adduced

is not fresh evidence. Nevertheless, the appellant does not object to our considering the

new affidavit.

If the conversation relied on had substantially the same effect as the

correspondence we have already dealt with, then it cannot assist the respondent. And the

affidavit does not suggest that it had any different effect; the letter of 6 July 1994 is

described there as a "confirmation" of the extension - presumably meaning confirmation

of what was discussed. In these circumstances it does not appear that the affidavit affects

the conclusion arrived at above, that the agreement of 6 July did not take effect until the

$677.97 was paid.

This case illustrates, again, the complexities arising from one or both of the
definition of "instalment contract", in s. 71(2) of the Act, and the restriction on the vendor's

right to rescind, in s. 72; since 1978, when Wacal Developments Pty Ltd v. Realty

Developments Pty Ltd (1978) 140 C.L.R. 503 was decided, it has been clear that these

provisions have consequences which the legislature could hardly have intended, and

require amendment.

The primary judge made three declarations in favour of the purchaser and

consequential orders. In vendor and purchaser summonses, it is often convenient, when

the summons is dismissed, to reflect the court's views in declarations contrary to those

sought; as the parties were not heard on this subject they should be given an opportunity

to file written contentions.

The appeal will be allowed with costs and the appellant's costs must be paid by the

respondent, both as to this appeal and the proceedings instituted by summons filed on 4

November 1994.

The orders and declarations made in this Court shall not be entered for 14 days and

the parties may file written submissions relating to the form of the declarations within 7

days. Subject to any order which may be made during those 14 days, the declarations will

be as follows :

(i)        That the contract between the applicant and the respondent as

allegedly varied was not an "instalment contract" as that term is

defined in the Property Law Act 1974.

(ii)        That the respondent vendor's purported termination of the contract on

the basis of non-payment of the balance of purchase moneys at

settlement did not constitute a wrongful repudiation of the contract

entitling the applicant purchaser to rescind the contract.

(iii)       That the applicant purchaser wrongfully purported to rescind the

contract on 11 August 1994.