La Fontaine, Peter Francis v La Fontaine, Raymond
[2009] VCC 1678
•27 November 2008
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
Case No. C1-06-03251
| Peter Francis La Fontaine | Plaintiff |
| v | |
| Raymond Leonard La Fontaine and | Defendant |
| Melbourne Development Company Pty Ltd ACN 096 874 458 |
---
| JUDGE: | Lewitan |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 21, 22 and 24 October 2008 |
| DATE OF JUDGMENT: | 27 November 2008 |
| CASE MAY BE CITED AS: | La Fontaine, Peter Francis v La Fontaine, Raymond Leonard & Melbourne Development Company Pty Ltd |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 1678 |
---
Catchwords: Repudiation of Contract
---
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr. P. Vout | Francis V Gallichio |
| For the Defendant | Mr. J. Wilson | Christopher Bunnett |
| HER HONOUR: |
A. THE PRELIMINARY QUESTION 1 By consent, the parties have asked the Court to determine, as a preliminary point, the following question:
Did Peter La Fontaine (Peter) validly terminate an agreement made 21 September 2004 (“the sale agreement”) between Peter (for and behalf of his family trust) and Raymond La Fontaine (“Raymond”) to sell to Raymond his units in the Melbourne Development Unit Trust?
B. THE AGREED FACTS 2 Peter (as trustee of the P & T La Fontaine Family Trust) and Raymond (as trustee of the La Fontaine Family Trust) are equal unit holders under a Deed of Trust dated 21 May 2001 (“the Trust Deed”) and named “Melbourne Development Unit Trust” (“the trust”). The second defendant, Melbourne Development Company Pty. Ltd. (“the trustee”), is the trustee of the trust. Peter and Raymond are directors of, and equal shareholders in, the trustee.
3 Raymond was the sole shareholder and director of Salcomm Building Services Pty. Ltd. trading as Melbourne Building Company (“MBC”) which at all relevant times carried on business as a builder.
4 In May 2002, before Peter had any interest in the trustee or the trust, the trustee purchased the land at 127-129 Bluff Road, Black Rock, Victoria (“the trust property”), for the purpose of a building development. The development involved the design and construction of two offices and two residential apartments on the trust property.
5 On 22 August 2002 Peter and Raymond agreed to enter into a partnership (“the partnership”) for the purpose of completing the building development on the trust property. The terms of the partnership agreement included terms that:
(a)
the trustee would be the corporate vehicle for the completion of the building development of the trust property;
(b)
Peter would pay $100,000 to Raymond being one-half of Raymond’s equity in the development to date;
(c)
Raymond would transfer to Peter one-half of his interest in the shares in the trustee and the units in the Trust;
(d) Peter would be appointed a director of the trustee; (e)
the parties would contribute equally to the trustee’s requirements for capital by way of equity and borrowings and the provision of security to obtain borrowings;
(f)
the parties would sell or retain, part or all of, the development for profit to be shared equally between them through their interest in the Trust; and
(g)
the parties would cause the trustee to engage MBC to be the builder of the development of the property.
6 In August 2002, the trustee entered into an agreement with MBC to complete the development of two offices and two residential apartments on the trust property.
7 A dispute arose between Raymond and Peter in November 2003 about construction costs and invoices raised by MBC against the trustee. On 24 November 2003 the trustee paid MBC an additional $160,000.
8 From shortly prior to Christmas 2003[1] until 21 September 2004 Raymond and Peter negotiated with a view to terminating the partnership. Their business relationship had irretrievably broken down and they wanted to end their partnership.[2] The National Australia Bank was becoming increasingly impatient about the extent of its exposure in relation to the development of the trust property.[3]
[1] Exhibit 5.
[2] See, for example the email from Raymond to Peter dated 2 February 2004 (exhibit 12), the solicitor’s letter to Raymond dated 12 March 2004 (exhibit 13), the email from Raymond to Peter dated 5 April 2004 (exhibit 14), the email from Raymond to Dennis Liner dated 16 April 2004 (exhibit 15), and the email from Raymond to Peter dated 25 May 2004 (exhibit 18).
[3] Exhibit 17.
9 On 24 December 2003 Raymond and Peter agreed to resolve their dispute, brokered by their father, Barry La Fontaine. Raymond agreed to pay Peter the sum of $140,000 on or before 31 January 2004. Peter agreed to “relinquish his share of MDC when the money is paid.” [4] Raymond did not pay the sum of $140,000 to Peter before 31 January 2004.[5]
[4] Exhibits 6, 7, 8 ,9 and 10.
[5] Exhibit 11.
10 By an agreement dated 21 September 2004 (“the agreement”) Peter agreed to transfer Peter’s units in the trust to Raymond for an amount of $120,000.[6] The agreement provides:
“We, Peter La Fontaine and Raymond La Fontaine, hereby agree to the transfer of Units in the Melbourne Development Trust for an amount of $120,000.
This amount is to be paid by Raymond La Fontaine on the earlier of 60 days from the signing of this agreement or Raymond La Fontaine obtaining bank finance to enable the payout.”
[6] Exhibit 19.
11 An offer to purchase 129A Bluff Road, Black Rock, the last unsold title of the trust property, was made by Hans Dieter Wild and Eva Mariah Wild on 24 November 2004 for the sum of $420,000. The purchaser’s offer was accepted by Raymond La Fontaine on behalf of the vendor, Melbourne Development Company Pty. Ltd., on 24 December 2004.[7]
[7] Exhibit 25.
12 Raymond paid Peter $10,000 on 20 November 2004.
13 By letter dated 14 December 2004[8] the solicitors for Peter, Francis V Gallichio Lawyers (“Gallichio”), stated:
On 21 September 2004, you entered into a written agreement for the purchase of our client’s units in the Melbourne Development Trust for the price of $120,000 payable by no later than 20 November 2004.
You have only paid $10,000 and, therefore, are in breach of the agreement.
You have persistently failed to comply with your obligations and assurances over the course of the last 12 months and our client has now lost all patience with you.
Unless, by no later than 5.00 pm tomorrow, our client receives payment of $110,000 by bank cheque, or cleared funds, he will sue you for appropriate relief, without further notice to you.
All our client’s rights against you remain reserved.
[8] Exhibit 20
14 On 16 December 2004 Raymond forwarded an email to Gallichio in the following terms:
I am in receipt of a faxed demand letter re your client P La Fontaine.
Please be advised that the $10,000.00 was paid by agreement as an interim payment on the understanding that your client accepts payment of the remainder by 23/12/2004.
I advise that I am endeavouring to comply with this agreement under very difficult circumstances and look forward to disassociating all interests with your client as soon as humanely possible.
We will not be able to settle on the time your letter demands, but will by
23/12/2004.[9][9] Exhibit 21.
15 On 24 December 2004 Raymond sent the following sms messages to Peter:
3.19 pm
You’ve got 10K already 5K is needed to repair defects. The builders margin is 23k short. That makes it 82K not including damages but you can have 90k today if you sign a release and end it! Otherwise you can have the company. I’m going to see dave for 2 weeks so think about it carefully. You never had this money anyway, think of it like that, you’re a winner anyway move on.”
3.39 pm detriment of my health and that of your family. I have the control now.
4.02 pm
You show some appreciation for what I’ve done for you and Tanya and pay 15% margin on cost. You agreed to and I’ll give you some money. Now it’s my turn to teach you a lesson you arrogant person. That doesn’t hurt me and your comment is how this all began. Be reasonable and you can have your money today, it’s that simple. Be warned Pete this time it’s different.[10]
[10] Exhibit 22.
16 Raymond paid $105,000 to Peter through his father, Barry La Fontaine, on 25 December 2004.
17 On 18 January 2005 Peter forwarded the following e-mail to Raymond:
Please advise whether or not you intend paying the remaining $5000 as per our agreement and if so by when.[11]
[11] Exhibit 23.
18 By e-mail dated 19 January 2005[12] Raymond responded as follows:
[12] Exhibit 24.
As I advised Dad by tex [sic] message when I gave him my cheque (and the rest of the family), $5000 is being kept to carry out to cover extensive repairs to the rear decks of the property that where cut by the tiller accidentally when the tile grout was done wrong and the tile sizes were incorrect. That has caused leaking to the garage. You were involved with this and should remember. Also there are other issues with the building which require maintenance as they are defects and must be covered by my building insurance.
Its like your old house at Primrose, you sold it, made a lot of money yet, I had to spend money fixing building problems, also the same as St Ninnians.
Had the full 15% on building cost been paid as per our agreement, I would not require the $5000 bond! I believe this fair as I built a building that cost $455000.00 and should have been paid $68250.00; instead you choose to pay me $45000.00. For two years of work and heart ache.
You where [sic] advised that by banking the money you did so and agreed with the final balance in exchange for the return shares in MDC P/L, (my company).
Do you realise that had you agreed to pay me the building margin as per our agreement when it fell due, none of this would have happened and wed probably been on speaking terms you’d have your money and id have my company.
Your decision to try and make me be accountable for the building cost over runs was a bad mistake and founded on incorrect facts, manipulated by your desire and disappointment to not have made the money in the development we originally planned. Your words at my office that day before you walked out, “Im going to teach you a lesson” have only taught me how foolish you have been.
While I concede that I have lost my cool on too many occasions, rest assured it has been because of the emotional disappointment you have caused me by talking those steps and the lack of empathy in your replies to my emails.
I am damage physiology by your actions and therefore, I guess, you have got what you threatened to do that day, “teach me a lesson”.
Things go wrong Pete, that’s developing and there are always risks. But even despite the additional costs we made money, and a lot of it, we made in excess of 140% return on our investment each! Id likes to know what else you’ve gone into that has given you the same results.
As it was just before Xmas, I rang you that day to discuss this issue but you answered the call with the words “where’s my fuckn money” I could see that you were unavailable to discuss the matter civilly and I lost my cool as a result.
That phone caused me so much pain so I decided to end it and gave Dad the cheque at Michaels Xmas day, I decided to move on and give you the money and put the whole affair behind me. It has caused too much pain for everyone and affected my health.
I told Dad at Michaels that I would Tex him with the conditions to release the cheque to you as I was leaving that day to WA and didn’t want to spoil the lunch at Michaels.
The Tex message given to dad that was conveyed to Tanya when she picked up the cheque was that the balance given to you was in full and final settlement and by taking the money was done so in agreement of the $5000 being withdrawn for building repairs.
I could have held up paying you and using it to black mail you like you did me with Salcomm but I choose rather, to give you the money and finalize it unlike the previous Xmas’s.
You have not respected me and what I have done for you and miss trusted me my actions and the effort and trust I placed in our brotherhood. As a result your actions have substantially contributed to the demise of my building Company and my personnel assets and that of my children’s family trust.
Perhaps one day you will reckon with your demons and ego and understand the emotional heartache you have caused me because of your envy. I went into that deal with you with no ulterior motives other than to help a brother I once loved. Mum warned me about you at the time but I chose to ignore her, it would seem she was right to me.
It’s my 43rd birthday today and I reckon you have contributed to my premature age and the way I feel, (very low). I’m going however to try and forget the past and move on.
I suggest you do the same, let it go and move on.
19 On 28 February 2005 Peter purported to terminate the sale agreement by a letter from his solicitors (“the termination letter”)[13]. In that letter Gallichio stated:
Termination of the Agreement
By your conduct, including matters stated in your e-mail of 19 January 2005, you have evinced an intention to be no longer bound by the Agreement.
Our client considers that your conduct constitutes a repudiation of your obligations under the Agreement and that you no longer intend to be bound by it.
You are now informed that our client accepts your repudiation of the Agreement and now elects to terminate it.
Although our client was ready, willing and able to proceed with the Agreement, you must have known that our client would never have agreed to enter into the Agreement, if had known that, either, you were not going to pay the full price on the due date, or that you were going to put him through the series of delays and broken promises and then, in any event, refuse to pay the full price. Further, he would never have entered into the Agreement if he had of known about the proposed sale of Land, and the sale itself, or he would have terminated the Agreement earlier, if he had found out about the sale earlier than he did, or set it aside from its inception on the basis that he was mislead from the beginning.
Our client now considers the Agreement to be at an end and is now discharged from any obligation to transfer any of his interest in MDUT (or MDC) to you under the terms of the Agreement.
In relation to the funds that you have paid our client, he will deal with those funds in whatever way the Court deems appropriate.
[13] Exhibit 28.
20 Messrs Cohen Woolf & Weinberg responded to Gallichio’s letter on 9 March 2005[14] as follows:
[14] Exhibit 29.
1. Background
Our client acknowledges that an agreement was reached on or about 21 September 2004, whereby your client would be paid $120,000 in full and final settlement of all disputes between our respective clients and in consideration of your client transferring all his interest in the Melbourne Development Company Pty. Ltd. and the Melbourne Development Unit Trust.
As this agreement superseded all previous discussions and agreements, we believe it is unproductive and unnecessary to comment on other aspects of the background as described in your letter. Suffice to say, our client denies any inappropriate behaviour or conduct by our client towards your client.
Our client concedes that he has withheld payment of the final instalment of $5,000.00 from your client in consideration of estimated expenditure of $10,000.00 required to effect repairs to decking on a property for which both of our respective clients are liable.
Nevertheless, we enclose our client’s bank cheque for $5,000.00 payable to
your client in order to conclude the agreement.We also enclose Resignation Minute, Share Transfer form and Unit Transfer form. Please ensure your client now complies with his obligations under the agreement by completing, executing and returning the documents to our office within 14 days.
…
Termination of agreement
It follows from the matters raised above that your client does not have any grounds to “terminate” the agreement reached on or about 21 September 2004. We are particularly puzzled by your assertion that the failure to pay the final instalment of $5,000.00 somehow amounts to a repudiation of the agreement. How so?
It is clear that there has been substantial performance of the agreement by virtue of the fact that our client has paid (and your client has accepted) $115,000.00 pursuant to the agreement.
Our client clearly has remedies for specific performance and will pursue these in the event your client refuses to return the executed documents allowing the transfer of his interest in the Melbourne Development Company Pty. Ltd. and the Melbourne Development Unit Trust to our client.
As a matter of fact, by your client stating via your open letter that he now wishes to terminate the agreement, he is repudiating it. Our client does not accept that repudiation and insists that the agreement be completed as aforesaid.
21 On 9 March 2005 Raymond tendered $5000 by bank cheque[15] which was received but not banked.
[15] Exhibit 29.
[16] Exhibit 24.
C. DID RAYMOND REPUDIATE THE AGREEMENT BY HIS EMAIL DATED 19 JANUARY 2005?[16] 22 The defendant submitted that the resolution of the preliminary point boils down to the meaning of the words “$5000 is being kept” in the email Raymond forwarded to Peter on 19 January 2005. The defendant submitted that the meaning and construction of those words is highly equivocal. The defendant submitted that nothing in that email evinces an intention no longer to be bound by the sale agreement. There is no blatant statement which says “it’s over.” In fact, the reverse is true because a very short time later Raymond pays a bank cheque for $5000 addressed to Peter. The plaintiff bears the burden of demonstrating that the contract has been repudiated.
23 The defendant submitted that it is necessary to place Raymond’s response by email on 19 January 2005 in context. The day before Peter had written to Raymond in polite terms “Please advise whether or not you intend paying the remaining 5000 as per our agreement and if so by when.”[17] “When” as a question must be taken to mean that Peter is not insisting on immediate payment. Peter left it up to Raymond to volunteer two things: whether he is going to pay it, and if so, when.
[17] Exhibit 23.
24 In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [18] the majority of the High Court (Gleeson CJ, Gummow, Heydon and Crennan JJ.) stated:
The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It may be termed renunciation. …Secondly, it may refer to any breach of contract which justifies termination by the other party.
[18] (2007) 233 CLR 115, 135-136.
25 The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[19]
[19] (2007) 233 CLR 115, 135-136.
26 The question in this case is whether Raymond’s email stating that “5000 is being kept to carry out to cover extensive repairs” conveyed to a reasonable person a renunciation of the sale agreement. Raymond’s state of mind is irrelevant. It is his conduct that matters. In Laurinda Pty. Ltd. v Capalaba Park Shopping Centre Brennan J (as he then was) said:
Repudiation is not ascertained by an enquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party’s inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way.[20]
[20] (1989) 166 CLR 623, 647.
27 In my view, by his email of 19 January 2005, Raymond evinced an intention no longer to be bound by the sale agreement. Raymond said that $5000 is being kept indicating that he would not pay Peter the rest of the purchase money even though he was obliged to pay it.
28 The word “kept” is the past participle of the word “keep”. The word “keep” has numerous meanings but is relevantly defined in The Oxford English Dictionary as:
[21] (2nd ed., 1989) Volume VIII, p371.
“28. To withhold from present use, to reserve; to lay up, store up. Refl. To
reserve oneself.29. Actively to hold in possession; to retain in one’s power or control; to continue to have, hold or possess.” [21]
29 The Oxford English Dictionary also notes that:
“in later usage, at least, keep implies the exercise of stronger efforts to retain, so that have, hold, keep, form a series, the members of which pass into each other with progressive intensity of action.[22]
[22] (2nd ed., 1989) Volume VIII, p371.
30 Further, Raymond’s statement that the “$5000 is being kept to carry out to cover extensive repairs to the property” makes it clear that Raymond was retaining the $5000 for a use which was unrelated to the sale agreement. Raymond’s proposal to use the $5000 to carry out extensive repairs to the rear decks of the property showed that he intended to fulfil the contract in a manner which was substantially inconsistent with his obligations under the sale agreement.[23] The sale agreement was a settlement arrived at between the parties resolving their differences. The terms of that settlement indicated that any partnership between the brothers to develop the trust property was at an end. The statement that the $5000 of the purchase price is being kept to carry out extensive repairs to the property was inconsistent with the terms of the sale agreement. The sale agreement required Raymond to pay Peter $120,000 as consideration for the transfer of units in the trust. The agreement did not provide that the sum of $120,000 or any part of it would be used for repairs to the buildings on the trust property.
[23] See Shevill v Builders Licensing Board (1982) 149 CLR 620, 625-626.
31 Accordingly it is not necessary for me to consider whether the failure by Raymond to pay the $5000 due under the sale agreement was a breach of that agreement which justified the termination of the sale agreement by Peter’s solicitors by letter on 28 February 2005.
32 However, for the sake of completeness, I indicate that in my view the payment of $120,000 by Raymond was an essential term of the sale agreement in the circumstances of this case. The purpose of the contract was to effect the value of the units in the trust for valuable consideration and the payment was Raymond’s only obligation.
33 Accordingly the failure by Raymond to pay the entire sum stated in the sale agreement was a breach of an essential term of the sale agreement.
34 In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [24] the majority of the High Court held:
It is the common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and (in a case such as the present) the commercial purpose it served, that determines whether a term is “essential”, so that any breach will justify termination.
[24] (2007) 233 CLR 115, 138.
35 Where a term is essential, the slightest breach of the term will give the other party a right to rescind; the other party may treat himself as discharged upon any breach of the promise however slight.[25]
[25] Tramways Advertising Pty. Ltd. v Luna Park (NSW) Ltd. (1938) 38 SR (NSW) 632 at 641-642 per Jordan CJ.
36 Accordingly the failure by Raymond to pay the balance of $5000 which he had promised to pay Paul under the sale agreement is a breach of an essential term which entitled Peter to terminate the sale agreement.
37 I accept the plaintiff’s submission that the facts of this case are different from the facts in R & A Cab Co Pty. Ltd. v Lindsay Kotzman[26]. In that case a solicitor agreed to pay his client $150,000 within seven days as part of terms of settlement. A cheque for $146,500, drawn on the Legal Practitioners Liability Committee, was forwarded to the client within the seven days. The solicitor did not refuse to pay the balance of $3500 but suggested an alternative means of paying the balance by way of set off. In the words of Ashley JA:
“I cannot agree with the submission for the appellant that this was an unequivocal refusal to pay the settlement amount as required by the deed. Plainly, it was not an express repudiation of the contract. At most, the respondent was proposing, as one of two alternatives, a different manner of paying the small outstanding balance of the settlement sum. The letter did not suggest that the respondent had purported to effect a set-off. Indeed, the copy statement of account which he attached to the letter recorded no such transaction. Neither again did the letter indicate that the respondent would attend to his obligation if and when he felt like it. In substance, the letter invited discussion about the manner of payment of the balance.[27]
[26] [2008] VSCA 68.
[27] [2008] VSCA 68, para. 54.
38 Unlike the facts in R & A Cab Co Pty. Ltd. v Lindsay Kotzman, in this case Raymond evinced an intention to no longer be bound by the sale agreement and indicated to Peter that the $5000 is being kept for a purpose which was inconsistent with the terms of the sale agreement.
Substantial performance
39 I do not accept the defendant’s submission that the sale agreement is not an entire agreement. The agreement on its face contains a promise to pay and the consideration for that payment. The fact that Raymond did not pay the $120,000 in one lump sum does not mean that the sale agreement is not to be construed as an entire agreement.
40 The defendant submitted in the alternative that if the sale agreement is an entire agreement, it has been substantially performed. The defendant submitted that Peter was not entitled to terminate the sale agreement because Raymond had paid $115,000 to Peter prior to the termination letter. Peter had accepted all amounts which had been paid under the sale agreement and appropriated all of the amounts to his own use. Peter did not return the money which had been paid. Raymond had, if anything, failed to pay a trivial amount. Peter’s remedies were to sue for the payment of the outstanding amount.
41 Counsel for Raymond, Mr. Wilson, sought to distinguish the facts in this case from the facts in Phillips v Ellinson Brothers Pty. Ltd.[28] He submitted that this is not a case where the plaintiff is unable to recover anything until the whole of the work was done.
[28] (1941) 65 CLR 221, 222-223.
42 The defendant submitted that Peter has been paid everything which was due under the sale agreement and that the sale agreement has been fully performed by Raymond. On 9 March 2005 Raymond tendered a bank cheque for $5000 to Peter’s solicitors which was received but not banked. Being a bank cheque, Raymond has not had the use of the proceeds of the cheque since 9 March 2005. Accordingly Raymond has divested himself of the full amount of $120,000. Peter has not provided the share certificates in MDC. Peter has not returned the sum of $115,000, nor provided transfers of the units in the trustee. The defendant submitted that Peter’s solicitor was wrong when he asserted on 28 February 2005 that Raymond had repudiated the termination agreement. In fact, it was Peter who breached the sale agreement by wrongfully repudiating it. Peter also wrongfully refused to bank the bank cheque for the final $5000.
43 However before Raymond paid the remaining $5000 on 9 March 2005, he had indicated to Peter that he did not intend to be bound by the terms of the sale agreement. He said that $5000 was being kept to cover repairs. In those circumstances, Peter was entitled to terminate the sale agreement on 28 February 2005. It is not Peter’s position that he is entitled to both the units and the moneys paid to him. In the termination letter Peter stated that he would deal with those moneys “in whatever way the Court deems appropriate.”[29]
[29] Exhibit 28.
D. WAS TIME OF THE ESSENCE? 44 The defendant claims that time was not of the essence of the agreement.
45 I accept the defendant’s submission that time was not of the essence. The agreement does not say that it is. Although the sale agreement provided for payment within 60 days, Peter accepted a partial payment of $10,000 on 20 November 2004, and another payment of $105,000 on 25 December 2005.
46 The plaintiff submitted that it made time of the essence by its letter dated 14 December 2004 which stated that “Unless, by no later than 5.00pm tomorrow, our client receives payment of $110,000 by bank cheque, or cleared funds, he will sue you for appropriate relief, without further notice to you.”
47 I do not accept the plaintiff’s submission. The time for payment in that letter was not reasonable. As stated by Fullagar J. in Carr v JA Berriman Pty. Ltd.[30] :
Where a contract contains a promise to do a particular thing on or before a specified day, time may or may not be of the essence of the promise. If time is of the essence, and the promise is not performed on the day, the promisee is entitled to rescind the contract, but he may elect not to exercise this right, and an election will be inferred from any conduct which is consistent only with the continued existence of the contract. If time is not of the essence of the promise, the promisee is not entitled to rescind for non-performance on the day. If either (a) time is not originally of the essence, or (b) time being originally of the essence, the right to rescind for non-performance on the day is lost by election, the promisee can, generally speaking, only rescind after he has given a notice requiring performance within a specified reasonable time and after non-compliance with that notice.
[30] (1953) 89 CLR 327, 348 -349.
48 In any event, on 25 December 2004 Peter accepted the payment of $105,000 which was after the date specified in the letter from Peter’s solicitors dated 14 December 2004. Peter subsequently sent an email on 18 January 2005 asking whether Raymond intended paying the remaining $5000 and “if so by when.” [31] That e-mail makes it clear that Peter was not maintaining that time was of the essence of the sale agreement on 18 January 2005.
[31] Exhibit 23.
49 The defendant submitted that because time was not of the essence, Raymond’s conduct could not be repudiatory. There is no requirement that time be of the essence before an inference of repudiation can be drawn. It is sufficient if Raymond’s conduct evinces an intention not to be bound.[32] As stated in the above paragraphs 22 to 30, in my view Raymond indicated an intention not to be bound by the sale agreement in the email he forwarded to Peter on 19 January 2005. Accordingly Peter was entitled to terminate the sale agreement by the termination letter.
[32] Carr v J.A. Berriman Pty. Ltd. [1953] 89 CLR 327.
E. THE ANSWER TO THE PRELIMINARY QUESTION Peter validly terminated the sale agreement.
0
7
0