Legione v Hateley

Legione (the purchaser) and Hateley (the vendor) entered into a contract for the sale of land on an instalment basis, where time was of the essence for payment of the balance of the purchase price. The purchaser failed to pay the balance by the due date. The vendor's solicitor sent a notice to the purchaser's solicitor stating that if the outstanding amount was not paid by a specified date, the contract would be rescinded. This notice, however, erroneously included a demand for payment of an amount that was not actually due under the contract. The purchaser sought to rely on a conversation between the solicitors as evidence of an extension of time and claimed equitable relief against forfeiture.

The High Court of Australia was required to determine whether the notice issued by the vendor was valid, notwithstanding the erroneous inclusion of a non-existent default. The Court also had to consider whether the conversation between the solicitors gave rise to an equitable estoppel preventing the vendor from rescinding the contract, and whether equitable relief against forfeiture was available to the purchaser in circumstances where time was of the essence.

The Court held that the notice was invalid because it demanded payment of an amount that was not due, thereby failing to specify the actual defaults that required remedy. A notice to remedy a default must be precise and relate to actual defaults. The Court further found that the conversation between the solicitors did not establish an equitable estoppel, as there was no clear and unequivocal representation by the vendor that the time for payment would be extended. While equitable relief against forfeiture is generally available, it is not available where time is of the essence and the purchaser has failed to comply with a valid notice to remedy defaults.

The appeal was allowed, and the contract was rescinded.