Margush v Maddeford - [2014] SASCFC 129

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
MARGUSH v MADDEFORD
[2014] SASCFC 129
Judgment of The Full Court
(The Honourable Justice Vanstone, The Honourable Justice Peek and The Honourable Justice Parker)
25 November 2014
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
Appeal against dismissal of claim for damages for breach of contract - the appellant/vendor (Mrs Margush) listed her house for sale (the property) and the respondent/purchaser (Ms Maddeford) signed a contract to purchase it for $1.2M (the contract) - special conditions provided that the sale was subject to the purchaser obtaining finance by 5 February 2009; that the purchaser was required to use best endeavours to do so; and that either party could terminate the contract after 5 February with the purchaser only being liable for damages if she had failed to use best endeavours - Ms Maddeford understood that she would receive the funds from a Mr Young, with whom she proposed to live at the property; she repeatedly sought the money but was unsuccessful; she had limited means and could not otherwise obtain a loan - the Judge found that she had used best endeavours and the appeal was conducted on that basis - Mrs Margush subsequently purported to terminate the contract and later sold the property for $90,000 less than the contract price; she claimed the difference in sale price, together with costs associated with the second sale, as damages for breach of contract - a District Court Judge dismissed her claim - the appellant contended that because neither party terminated the contract after 5 February 2009, the contract became unconditional; that it was able to be enforced by the appellant; and that by failing to settle, the respondent was in breach - the respondent contended that, since she had used best endeavours to obtain finance, the special conditions subsisted and she was not in breach such as to be liable in damages.
Held per Peek J (Parker J agreeing, dismissing the appeal):
1. the special conditions of the contract did not constitute a condition precedent to any operation of the contract; by signing the contract, the respondent contractually undertook to use best endeavours to obtain finance - however, provided that the respondent did use best endeavours, the contract at all times remained conditional upon approval for finance being obtained;
2. the inability of the respondent to obtain finance did not bring the contract to an end; rather, it became voidable at the instance of either party - since neither party validly terminated the contract, it remained on foot;
3. the failure of the appellant to terminate the contract after 5 February 2009 left the special conditions operative and left the respondent free to attempt to obtain finance after that date - Suttor v Gundowda (1950) 81 CLR 418 distinguished;
4. the correct construction of the special conditions of the contract was that damages could only be awarded to the vendor if the purchaser had failed to use best endeavours to obtain finance - the District Court Judge was correct in concluding that the respondent was not in breach of the contract so as to be liable for an award of damages to the appellant;
5. the appeal is dismissed.
Held per Vanstone J (dismissing the appeal): the contract was throughout conditional upon the approval of finance - the purchaser did not (relevantly) breach the contract - the judge correctly rejected the vendor’s claims for damages - the appeal is dismissed.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, applied.
Suttor v Gundowda (1950) 81 CLR 418, distinguished.
Meehan v Jones (1982) 149 CLR 571; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Willing v Baker (1992) 58 SASR 357, discussed.
Margush v Maddeford [2014] SADC 44; Jet City Pty Ltd v Yenald Nominees Pty Ltd [1999] WASC 1042; Pipeline Services WA Pty Ltd v Atco Gas [2014] WASC 10; Kurnann v Pivovorava (2012 32 NTLR 48; Pacific Carriers Ltd v PNP Paribas (2004) 219 CLR 165; Dodds v Kennedy (No 2) [2011] WASCA 131, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
""Society of Auctioneers and Appraisers (SA)", "Contract for the Sale of Land Residential Property""

MARGUSH v MADDEFORD
[2014] SASCFC 129

VANSTONE J: The appellant, who was the plaintiff in the court below, agreed to sell a house property at Hyde Park to the respondent purchaser. The contract was a standard Real Estate Institute contract. It contained a special condition making it conditional upon the purchaser obtaining approval in writing for a loan of a specified sum by a certain date at a specified rate. A term of the contract was that time was of the essence in respect of certain defaults by either party, including by the purchaser in failing to settle, and in respect of all special conditions.
The respondent purchaser failed to obtain the finance. The special condition clause gave rise to a right in either party to immediately terminate the contract by giving notice in writing. However, the purchaser did not take that step and, when the vendor’s agent was finally told that finance was not available, neither did the vendor take that step. It is common ground that the contract remained on foot. The contest is whether, in the absence of the purchaser either terminating, or waiving the special condition, the contract remained subject to finance or became unconditional.
Background
The contract was signed on 29 January 2009. The purchase price was $1.2m. The special condition referred to the purchaser obtaining approval in writing for a loan of $600,000 at the “standard” interest rate, the latest date for approval being given as 5 February 2009. In fact, the purchaser had no means of obtaining any such loan. She was expecting that her male friend of long standing would soon receive a large amount of money by way of inheritance. He had told her that a substantial amount of those funds would be applied to the Hyde Park property.
Settlement was to take place on 20 February 2009. The purchaser neither paid the deposit after the cooling off period ended, nor settled on 20 February. The vendor purported to send a notice to complete and sought information about the purchaser’s ability to settle; nothing came of either initiative. Early in March the vendor advised that the contract was terminated. The property was later sold for $1.11m. The vendor sued for the difference in the contract prices as well as associated costs.
On appeal the vendor argues that at the point at which the special condition was not met the contract did not become void, but voidable. The vendor relies on a statement by the High Court in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 441 to this effect:
The provision in question is to be construed as making the contract not void but voidable. The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract. If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him.
It is said that the High Court recognised the same principle in Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, and that it has often been applied since.
The vendor argues that at the point where the special condition was not satisfied the purchaser had a choice whether or not to terminate the contract by giving notice in writing. The vendor argues that the result of the purchaser not having done so was that the contract became unconditional. Mr Hoile for the appellant vendor put it this way:
It is erroneous to say that the contract was always conditional on the subject to finance clause. By its terms, that subject to finance clause had an expiry date, being 5 February, which date was made of the essence.
Then, the vendor argues that the purchaser’s conduct in failing to pay the deposit, failing to settle and evincing an intention to the agent that she would only settle if and when the finance became available, was conduct entitling the vendor to terminate the contract, because it was both repudiatory and in breach of essential terms.
The respondent purchaser argues that the trial judge’s conclusion that the contract remained a conditional one after the latest date for approval is consistent with the reasoning of the Full Court in Willing v Baker (1992) 58 SASR 357. It is put that there it was held that the failure to terminate did not have the effect of transforming the contract from a conditional to an unconditional contract. It is argued that in the present case, in deciding not to terminate, the vendor evinced an intention to proceed with an advantageous contract in the hope that finance might be found. It is put that neither party’s decision amounted to an election between inconsistent rights. In essence, the argument is that abstaining from terminating the contract in the face of the unavailability of finance does affect the conditional nature of the contract.
It is convenient to set out the special condition under consideration.
CONTRACT FOR THE SALE OF LAND RESIDENTIAL PROPERTY
Society of Auctioneers and Appraisers (SA) Inc.
SPECIAL CONDITIONS
(clause 14)
SC1        FINANCE
SC1.1This Contract is conditional upon the Purchaser obtaining, on or before the date specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the Purchaser may accept) at the Interest rate specified below and otherwise on such terms and conditions that the lender requires acceptable to the Purchaser, to assist in purchasing the property (“the approval”). Upon notification of the approval to the Vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract.
SC1.2         The Purchaser will use best endeavours to obtain the loan.
SC1.3In the event that the approval is not obtained on or before the latest date for approval and provided the Purchaser has not waived this special condition and communicated such waiver to the Vendor in writing then either party (but, in the case of the Purchaser, provided it has complied with SC1.2) may immediately terminate this Contract by giving notice in writing to the other party.
SC1.4In the event of termination of the contract pursuant to SC1.3 and provided the Purchaser has complied with SC1.2 all monies paid by or on behalf of the Purchaser shall be repaid to the Purchaser.
SC1.5In the event of termination of this Contract pursuant to SC1.3 in circumstances where the Purchaser has failed to comply with SC1.2 the Vendor will be entitled to the deposit which is forfeited and to proceed against the Purchaser for damages for breach of Contract.
Latest date for approval     Thursday 5/2/09
Amount of Loan              $600,000 (or less than)
Interest Rate                 Standard Rate .% per annum (or less than)
Analysis
In my opinion the judge under appeal was correct in finding that, in the absence of notification to the vendor of the approval of finance or termination by either party, the contract remained on foot as a conditional contract.
So much flows from the terms of the special condition itself. The contract can become unconditional only if the condition is satisfied as provided in SC 1.1, or if the purchaser waives the special condition and communicates such waiver to the vendor as provided in SC 1.3. The vendor contends for an interpretation that equates the purchaser’s silence in the face of her right to terminate the contact with communication to the vendor of her waiver of the special condition. That contention must be rejected.
The principle referred to in Suttor v Gundowda is uncontroversial, but it does not avail the vendor.
In that case the parties had contracted for the sale and purchase of a pastoral property. The contract was subject to the consent of the Treasurer being obtained within two months or such later period as might be agreed. When the two months elapsed the vendor did not return the deposit. When the Treasurer’s consent later was given the purchasers sought to enforce the contract. The High Court upheld the order for specific performance.
The Court held that failure to meet the condition under consideration rendered the contract voidable rather than void. Not having exercised his right to avoid the contract, the vendor was still bound by it at the time when the Treasurer’s consent materialised.
The factual difference between Suttor v Gundowda and the present case is immediately apparent. There, the condition was ultimately fulfilled. It was in that context that the statement of the High Court which I set out earlier was made. Suttor v Gundowda is certainly not authority for the further proposition for which the vendor contends, namely that upon neither party avoiding the contract at the point of non-fulfilment, the contract is transformed into an unconditional one. The case provides no support, express or implied, for that contention.
The vendor’s attempt to distinguish Willing v Baker on the basis of the clause in the present contract providing that in relation to the special condition time is of the essence must fail. The rights of the parties to terminate immediately under SC 1.3 accrue if approval is not obtained before the latest date for approval. That is so irrespective of any operation of the time clause. Conversely, the time clause does not have the effect of terminating the contract where neither party intervenes. The distinction between the present contract and that in Willing v Baker is not material.
The facts in Willing v Baker were different, although the contract was in very similar terms to the one now under consideration. There, the contract was for a block of land at Greenhill. The special condition was as to the sale of the purchasers’ home at Burnside for at least a certain price on or before a date two months after the contract was struck and settlement to take place three months after the contract was struck. Although the purchasers were unable to sell their house, they determined to waive the benefit to themselves of the special condition. They said as much to the male vendor (who was also acting as the land agent) and later tried to hand him written advice to that effect. However, he would not accept it. But importantly, two days prior to the date fixed for settlement on the Greenhill property, the purchasers’ solicitors wrote to the vendors’ solicitors advising that they had waived the special condition. A week later the same solicitors wrote again enclosing a Notice to Complete. About a month later the purchasers issued a Summons for Specific Performance.
The trial judge, King CJ, found that because the purchasers’ Burnside house had not sold (despite best endeavours) both parties could have terminated the contract on seven days notice pursuant to clause 15 of the contract. However, neither had done so. The Chief Justice found and the Full Court agreed that the special condition being solely for the benefit of the purchasers, they were entitled to unilaterally waive the fulfilment of the condition, and so the notice of waiver given by the purchasers’ solicitors two days before settlement was valid. Legoe J, with whose reasons Cox J generally agreed, expressed the view at 373-374 that the special condition clause permitted the purchasers to waive the fulfilment of the condition at any time up until the proposed date of settlement. Mullighan J, who concurred in the result, expressed the same view at 377:
In my view the special condition is a typical condition inserted for the benefit of the respondents and they were at liberty to waive it at any time within the currency of the contract. Consequently they were not required to waive the special condition by 25 March 1991, the date specified in cl E(2) [which clause provided that the purchase was subject to the sale of the purchasers’ property at Burnside]. Whether, to be effective, waiver of a special condition must take place before the expiration of the relevant period depends upon the particular circumstances: Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153, per Wilson J at 166. Here, there is nothing about the terms of the bargain between the parties to the contract which would require the waiver to be effected by 25 March 1991.
The Full Court dismissed the appeal against the order for specific performance in favour of the purchasers.
The importance of this case from the point of view of the present purchasers is that the finding that the special condition there could be waived at any time up to settlement clearly implies that the contract which remained on foot in the absence of termination was the conditional contract.
In the present case the vendor purported to call upon the purchaser to settle as if the contract then in force were unconditional. It was not open to the vendor to do so. The vendor had the choice either to terminate the contract when finance was not approved by 5 February, or to give notice of termination based on any available and sufficient breach on the part of the purchaser. She did neither of these. (In particular she did not rely on the purchaser’s failure to pay the deposit.) Instead, she served what the judge found was an ineffective notice to complete.
Conclusion
The contract was throughout conditional upon the approval of finance. The purchaser did not (relevantly) breach the contract. The judge correctly rejected the vendor’s claim for damages.
The appeal should be dismissed.
PEEK J. Appeal against dismissal of claim for damages.
In January 2009, Mrs Margush (the appellant/vendor) had her house in Hyde Park for sale (the house), and Mr McRostie was acting as her real estate agent. Ms Maddeford (the respondent/purchaser) viewed the house, spoke to Mr McRostie, and signed a contract to buy it for $1,200,000.00, with special conditions stipulating that the sale was subject to the obtaining of finance. The respondent was subsequently unable to obtain finance. Unfortunately, she did not actively terminate the contract but rather buried her head in the sand. In the words of the trial Judge “She did nothing: she ignored calls from the real estate agent, did not cool-off, did not pay the deposit and did not settle.”[1]
[1] Margush v Maddeford [2014] SADC 44, [1].
The appellant was forced to put the house back on the market and eventually sold it to another buyer for $90,000.00 less than the respondent had offered. The appellant issued proceedings in the District Court claiming that $90,000.00 difference in the sale price, plus costs associated with the second sale, as damages for breach of contract. The District Court Judge dismissed her claim and she now appeals to this Court against that dismissal.
The witnesses at trial
The appellant called only her real estate agent, Mr McRostie. The Judge found Mr McRostie to be an honest and reliable witness and proceeded on the basis that his Honour preferred, and acted upon, his evidence in any matters where his evidence differed from that of the respondent or her witness Mr Young. I take the same approach. However, as the Judge correctly observed: “there are only minor factual differences and they do not matter”. As to the appellant, the Judge was “satisfied that she did her best to tell me the truth in evidence. Indeed, as things turned out, her evidence on relevant matters was unchallenged”. As to Mr Young, the Judge found that he “had poor recall of events but that his evidence generally supported” the respondent’s evidence. The respondent also called Mr Grant Thomas, a finance expert. His evidence was unchallenged and accepted by the Judge.
The findings of fact made by the trial Judge

The Judge made detailed and comprehensive findings of fact. His Honour’s findings were unchallenged on the appeal and are extracted below (numbered for convenience):
1Ms Maddeford is a 58 year old unmarried woman who, throughout her life, has worked as a clerk in addition to running a small business of her own, a ballet school. Her total income from both sources has ever been only modest. At the beginning of 2009, she was living in a home unit at Melrose Park which was worth about $220,000.00. She owed about $64,000.00 on her mortgage.
2When Ms Maddeford was 22, she met Mr Bill Young, an older, married man and they began a relationship which lasted into 2009. Despite their long relationship and Ms Maddeford’s hopes, they never lived together. Mr Young continued to live with his wife. During the years of their relationship, Mr Young prevailed upon Ms Maddeford from time to time to lend him significant sums of money, sums which he never repaid. On occasions, he gave her cheques which were dishonoured. Over the years, he took advantage of her fondness for him and of her hopes that they could eventually set up house together.
3Sometime before the weekend of 17 and 18 January 2009, Mr Young announced to Ms Maddeford that he was about to receive, by way of inheritance, some £1,000,000.00 to £1,500,000.00 from the sale of a house property in Portman Square in London and that they at last would be able to buy a house of their own. Despite his previous behaviour, Ms Maddeford believed him. She and Mr Young looked at a number of houses before seeing the house at 5 Charra Street, Hyde Park which Mrs Margush had put on the market. Mr McRostie of Smallacombe Real Estate Pty Ltd was Mrs Margush’s agent.
4On the weekend of 17 and 18 January 2009, Ms Maddeford and Mr Young inspected the house at Charra Street. During one of their inspections, one or other of them told Mr McRostie that they had sold a property. Ms Maddeford liked the house at Charra Street very much and, on 29 January 2009, she signed a contract to buy it. The purchase price was $1,200,000.00 and a deposit of $50,000.00 was to be paid on the next day following the cooling-off period. Settlement was to be on 20 February 2009.
5The contract was subject to finance. By special condition 1.1 the contract was conditional upon Ms Maddeford’s obtaining a loan in the sum of $600,000.00 by 5 February 2009. …
6Mrs Margush also signed the contract on 29 January 2009.
7At the time she signed the contract, Ms Maddeford believed that Mr Young would shortly receive the proceeds of the sale of the London property and that he would then pay the full purchase price of the house at Charra Street. Ms Maddeford had no other possible source of funds. I accept Mr Thomas’s evidence that no lending institution would have approved a loan in the sum of $600,000.00 or, indeed, any sum like it. Ms Maddeford knew that the only possible source of funds was Mr Young’s expected inheritance and that it was pointless for her to try to borrow elsewhere.
8In the days following the signing of the contract, Mr McRostie tried to serve the Form 1 documents on Ms Maddeford but she delayed, avoided, or cancelled appointments. Mr McRostie first arranged to meet Ms Maddeford on Monday 2 February but she postponed that meeting until the following day, saying that there had been a ‘small hiccup’. On Tuesday 3 February, Mr McRostie and Ms Maddeford met at the Palais café on North Terrace but, on that occasion, Ms Maddeford put off signing the documents, saying that Mr Young did not want the documents signed until Thursday as he expected to have the cash in the bank on Thursday. Accordingly, Mr McRostie made an appointment for her to attend with him at a solicitor’s office on the Thursday but, an hour before Mr McRostie was due to collect her, Ms Maddeford rang and said that the finance had not come through. Thereafter, Ms Maddeford ignored Mr McRostie’s telephone calls and did not reply to his messages. Accordingly, on Friday 6 February 2009, Mr McRostie sent the Form 1 documents to her by registered mail. In accordance with the provisions of clause 13.4 of the Contract of Sale, she is deemed to have been served with those documents two clear business days after posting, namely, Wednesday 11 February 2009. She did not respond to receipt of the documents. In particular, she did not exercise her right to cool-off within two clear business days of receiving them.
9By letter dated 12 February 2009, Mr McRostie wrote to Ms Maddeford advising her that the cooling-off period had ended and that the deposit was due. Mr McRostie’s assertion that the cooling-off period ended on 12 February was wrong; the correct date was 14 February. Ms Maddeford ignored the letter. She did not communicate any intention to cool-off and she did not pay the deposit.
10From the time Ms Maddeford signed the contract until at least 18 February, she continually asked Mr Young if the money from England was coming through and she continued to believe that the money would come through. She asked Mr Young to speak to Mr McRostie. On 18 February, Mr Young rang Mr McRostie on Ms Maddeford’s behalf and left a message in which he said that Ms Maddeford was waiting on finance but that finance was ‘down to him’ because he was waiting on a property sale in the United Kingdom which was just about to be finalised. Mr Young suggested meeting with Mr McRostie the following Friday; then he suggested the Sunday and, later, the following Monday. There was never any meeting and both Mr Young and Ms Maddeford ignored Mr McRostie’s calls.
11Ms Maddeford failed to settle on 20 February 2009, the date stipulated for settlement in the contract. She believed that she was not bound by the contract as she had not paid a deposit.
12On 25 February 2009, Mrs Margush’s solicitors sent to Ms Maddeford by registered mail a ‘Notice to Complete’. The notice asserted a breach by non-completion of the purchase on settlement date, 20 February 2009, and relied upon clause 9.3 of the Contract of Sale. The notice required Ms Maddeford to complete the purchase on 2 March 2009 at 11:30am.
13The notice was defective. It was posted on Wednesday 25 February 2009. Ms Maddeford is not deemed to have received it until two clear business days after the date of posting. Accordingly, the date of receipt was Monday 2 March 2009. Pursuant to clause 9.3 of the Contract of Sale, the vendor could require the default to be remedied and appoint a time for settlement being not less than three clear business days after service of the notice upon Ms Maddeford. Because clause 9.3 required three clear business days, Mrs Margush was not entitled to require settlement on 2 March. She was not entitled to require Ms Maddeford to settle before Friday 6 March 2009.
14Because Ms Maddeford takes no point about the plaintiff’s repudiation, the fact that the notice was defective does not matter. I make this finding in case I am wrong about my ultimate conclusions.
15On 4 March 2009, Mrs Margush’s solicitor wrote to Ms Maddeford. The letter included this paragraph:
Would you please provide a detailed assessment of your ability to settle on the land contract in the next seven days. Please note that this does not relieve my client of the option to terminate the land contract without further notice to you and seek damages for loss from you at a later date.
16Ms Maddeford did not reply to the letter.
17On 12 March 2009, Mrs Margush’s solicitor wrote again. In that letter he said:
I am instructed that the contract dated 29 January 2009 for the sale and purchase of the above property is now terminated pursuant to your failure to settle on the contract as detailed in the Notice to Complete dated 25 February 2009.
18Again, Ms Maddeford failed to respond to the solicitor’s letter.
19Sometime later, Mrs Margush re-advertised the house and sold it on 28 August 2009 to another buyer for $1,110,000.00. Not only did she sell the house for less than the price agreed with Ms Maddeford, Mrs Margush incurred various costs associated with the subsequent sale. Her damages, in total, but excluding interest, are agreed at $110,089.88. I did not hear argument about interest.
The relevant special conditions in the contract
The relevant special conditions in the contract appeared as follows.
SPECIAL CONDITIONS
(clause 14)
SC1   FINANCE
SC1.1This Contract is conditional upon the Purchaser obtaining, on or before the date specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the Purchaser may accept) at the Interest rate specified below and otherwise on such terms and conditions that the lender requires acceptable to the Purchaser, to assist in purchasing the property (“the approval”). Upon notification of the approval to the Vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract.
SC1.2 The Purchaser will use best endeavours to obtain the loan.
SC1.3In the event that the approval is not obtained on or before the latest date for approval and provided the Purchaser has not waived this special condition and communicated such waiver to the Vendor in writing then either party (but, in the case of the Purchaser, provided it has complied with SC1.2) may immediately terminate this Contract by giving notice in writing to the other party.
SC1.4In the event of termination of the contract pursuant to SC1.3 and provided the Purchaser has complied with SC1.2 all monies paid by or on behalf of the Purchaser shall be repaid to the Purchaser.
SC1.5In the event of termination of this Contract pursuant to SC1.3 in circumstances where the Purchaser has failed to comply with SC1.2 the Vendor will be entitled to the deposit which is forfeited and to proceed against the Purchaser for damages for breach of Contract.
Latest date for approval Thursday 5/2/09
Amount of Loan           $600,000 (or less than)
Interest Rate  Standard Rate ~~% per annum~~ (or less than)
The respective cases of the parties
In essence, the appellant’s case was that because neither party sought to terminate pursuant to SC1.3 after the respondent had failed to obtain finance by 5 February 2009, the contract remained on foot but became unconditional; it was said that by failing to terminate immediately after 5 February, the respondent waived her rights under the special conditions. It was said that the appellant was entitled to call upon the respondent to settle and, by later failing to settle on the stipulated date, she was in breach.
In essence, the respondent’s case was that she used her best endeavours to obtain the loan by continually pressing Mr Young about the money and that she could not do more. As the evidence of Mr Thomas (the finance expert) made clear, it would have been pointless for her to approach a bank or other lender to borrow $600,000.00 and this aspect of her case is not now disputed. She then argues that the contract continued to subsist after 5 February 2009 because neither party chose to exercise their respective right to terminate, and the special condition as to obtaining finance also continued to subsist, as did her inability to obtain finance despite her best endeavours. Accordingly, she was not in breach of the contract.
The Judge’s reasons
The appeal has been conducted on the specific basis that the respondent did use her best endeavours to obtain the loan but was not successful. Although it was unnecessary for the Judge to make a finding about best endeavours, his Honour made the following finding:
[28]A ‘best endeavours clause’ required Ms Maddeford to act honestly and reasonably. What is reasonable is to be determined in light of the capacity, qualifications and responsibilities of the purchaser viewed in light of the particular contract. Parties bound by such a clause are not obliged to go beyond the bounds of reason or to obtain finance in terms unacceptable to them.[2] As I have said, there was no challenge to Ms Maddeford’s evidence that her only possible source of funds was Mr Young’s supposed inheritance. From the time she signed the contract, she remained very eager to buy the house and continued to ask Mr Young when the money would be available. She was honest about that.
[29]Ms Maddeford, in 2009, was a woman nearing the end of her working life. She had modest assets and a very modest income. The evidence adduced on her behalf that it would have been pointless for her to try to obtain a loan of $600,000.00 from any commercial source is unchallenged. In those circumstances, it would be unreasonable to expect her to have done so. All she could do was continue to press Mr Young. She did that; it was all she could reasonably do. Accordingly, she complied with her obligation under the contract to use her best endeavours.
[2] Jet City Pty Ltd v Yenald Nominees Pty Ltd [1999] WASC 1042, [4] and [4.1].
The Judge dismissed the claim on the basis that the contract always remained conditional upon the respondent obtaining finance; at no time did she waive that condition,[3] or affirm the contract, or act in any way that would estop her from relying upon that condition. Thus his Honour stated:
[3]    See Pipeline Services WA Pty Ltd v Atco Gas [2014] WASC 10, [69].
[30]In my view, the case turns upon whether or not the plaintiff is correct in her submission that the contract became unconditional immediately upon Ms Maddeford’s failure to exercise her right to terminate immediately after 5 February 2009. I do not accept that submission. It is settled law that a subject to finance clause subsists for the benefit of the purchaser. But the clause does not make the contract completely “one-sided”. The wording of the contract is such that, even though the clause is for Ms Maddeford’s benefit, Mrs Margush was not at any risk of being left ‘in limbo’ if Ms Maddeford failed to exercise her right to terminate. That, of course, is because the special condition also gave Mrs Margush the right to terminate. Mrs Margush could have terminated on 6 February by giving notice in writing to Ms Maddeford. Plainly, she was anxious that the sale proceed. At that stage Ms Maddeford was also still hoping that it could proceed. Both of them, therefore, chose not to terminate and both continued to treat the contract as remaining on foot.
[31]There is no basis for the assertion that the contract became unconditional once 5 February had passed. This is not a case where the contract became unconditional because the purchaser failed to comply with her obligations under the “subject to finance” clause.[4]
[32]    I refer to the judgment of Mason J in Meehan v Jones[5] at 588.
Primarily the object of such a clause is to benefit or protect the purchaser…by ensuring that he is not under a binding obligation to complete if he is unable to obtain finance.
[33]    Later in the judgment at 592, his Honour said this:
I say ‘each party’ because it seems to me that, although the primary object of the condition is to protect the purchaser, it is perhaps difficult to assert that the clause is for his benefit exclusively when it states that the result of non-performance is that the contract shall be null and void, rather than null and void at the option of the purchaser. I see no justification for implying a right of avoidance on the part of the purchaser alone. In other circumstances to make this implication would be to reach a one-sided interpretation, allowing the purchaser to keep the contract on foot, despite the non-performance of the condition, but denying the vendor the right to avoid. Here the vendors were protected by the fixing of the date for completion and the making of time of the essence.
[34]Even though the wording of the special condition was different in Meehan v Jones, his Honour’s comments are apposite here. Here, too, Mrs Margush was protected against a one-sided contract by the fact that a particular date had been fixed for the obtaining of the finance and the contract stipulated that, as far as a special condition was concerned, time was of the essence. Making time of the essence of the contract did not mean that Ms Maddeford was obliged to terminate immediately upon the expiry of the stipulated time. Making time of the essence of the special condition meant that, upon the expiration of the stipulated time, either party was entitled to exercise her option to terminate if she chose to do so.[6] Neither of the parties chose to do so and the contract, therefore, subsisted. Because the subject to finance clause was for Ms Maddeford’s benefit, she was entitled to waive the condition. She did not do so. Her position never changed: she continued her attempts to obtain finance from the same source, namely, Mr Young. That is, at no stage did she do anything inconsistent with her continuing to act as a purchaser who could only settle if she obtained finance from Mr Young. It cannot be said that, at any stage, she evinced “an unequivocal final choice between alternative procedures so that it could be said that [she] had abandoned the right, if the right was thereafter asserted”.[7] Up until 18 February, Mr Young, on her behalf, was making it plain to Mr McRostie that Ms Maddeford was still ‘waiting on finance’. Thereafter, she continued to wait but, of course, must have eventually realised that, yet again, no money would be forthcoming from Mr Young.
[4]    Kurnann v Pivovorova (2012) 32 NTLR 48.
[5] (1982) 149 CLR 571.
[6]    Dodds v Kennedy (No 2) [2011] WASCA 131, [50].
[7]    See Pipeline Services WA Pty Ltd (supra), [69].
Accordingly, his Honour found that the respondent was not in breach and therefore not liable for damages.
The argument of the appellant on appeal
In essence, the argument of the appellant on appeal was as follows.
First, the special conditions did not constitute a condition precedent to any operation of the contract, citing Perri v Coolangatta Investments Pty Ltd[8] and other decisions. That proposition is not disputed by the respondent and is obviously correct. It is clear that by signing the contract, the respondent contractually undertook to “use best endeavours to obtain the loan”; if she had not done so she would have been in breach of contract.
[8] (1982) 149 CLR 537, 552.
Second, the inability of the respondent to obtain finance did not bring the contract to an end; the contract was voidable rather than void. Again, that proposition is not disputed by the respondent and is obviously the correct construction of this particular contract as a whole.
Third, that because the respondent did not exercise her right to terminate the contract under SC1.3, “(i)t follows that the appellant was entitled to enforce the contract against the respondent”.
The Judge rejected that third submission, and the appellant submits that his Honour erred in doing so because (as set out in the appellant’s outline of argument):
29.In particular, it is submitted that he [the Judge] erred in holding that “the contract always remained conditional upon (the respondent) obtaining finance” (see Reasons [2], [30] and [31]). This overlooks that time in respect of the obligations in the Special Conditions was of the essence pursuant to Clause 14, and is incompatible with Suttor v Gundowda at 441 which is authority that as the respondent did not clearly exercise her right to terminate by 5 February 2009 – or any later date – then the appellant can enforce the Contract.
30.Applying this principle, then the respondent did waive the benefit of the Special Condition, and did affirm that the Contract subsisted after 5 February 2009 without continuing to possess that benefit, and did act so as to be unable thereafter to rely on it; contrary to the trial Judge’s conclusions at Reasons [2] and [34], CB 55 and 62 respectively.

I do not accept this contention. I consider that the reasoning of the Judge was correct and that the appeal must be dismissed. My reasons follow.
Discussion
One can, of course, appreciate that the appellant would be disgruntled. The respondent was less than forthcoming in informing Mr McRostie of her inability to obtain the loan and the appellant had to go to the time and expense of finding another buyer. On the other hand, it is the case that real estate agents and vendors well know that a contract conditional upon the obtaining of finance is very much second best to an unconditional contract and are only entered into by vendors when satisfactory unconditional contracts are unavailable.
In any event, the correct approach to construction here is that stated in the judgment of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd:[9]
[40]This Court, in Pacific Carriers Ltd v BNP Paribas,[10] has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[11]
[9] (2004) 219 CLR 165, (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
[10] (2004) 78 ALJR 1045; 208 ALR 213.
[11] Pacific Carriers Ltd v BNP Paribas (2004) 78 ALJR 1045, 1050-1051 [22]; 208 ALR 213, 221.
It is convenient to again set out the “subject to finance” special conditions in the contract which deal definitively with the rights and obligations of both parties, including the very limited circumstances under which damages may be awarded where the purchaser fails to arrange finance.
SC1.1 – This Contract is conditional upon the Purchaser obtaining, on or before the date specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the Purchaser may accept) at the Interest rate specified below and otherwise on such terms and conditions that the lender requires acceptable to the Purchaser, to assist in purchasing the property (“the approval”). Upon notification of the approval to the Vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract.
As noted above, the commencing words “This Contract is conditional …” are not used in the sense of a condition precedent to any contract coming into force. However, they are wide words and are indicative of the conclusion that, provided that the purchaser uses her best endeavours to obtain the specified loan, the contract will remain conditional upon her being able to obtain the specified loan.
Of benefit to the vendor, SC1.1 specifies the maximum amount of the loan that is required to satisfy the condition. Thus, if the purchaser is able to secure a loan for $600,000.00 then the purchaser is bound to settle for the full contract price of $1,200,000.00; it will not avail the purchaser to later say that she had decided that she needed a larger loan than $600,000.00 in order to pay the full amount at settlement. Similarly, SC1.1 specifies the percentage interest rate that the purchaser is required to accept (unless she is able to negotiate a lower rate with a lender). Here the parties have elected to specify “standard rate” rather than a particular figure percentage. The effect of this is that if the purchaser were able to secure a loan for $600,000.00 at “the standard rate”, then the purchaser would be bound by the contract to settle for the full contract price of $1,200,000.00; it would not avail the purchaser to later say that she had found that she needed a loan less than “the standard rate” in order to pay the full amount at settlement.
The last sentence of SC1.1 is also important for the overall construction of the contract (although not directly bearing on the factual situation here): “Upon notification of the approval to the Vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract”.
The effect of this term, against the background of the whole of the special conditions, is as follows. Up until 5 February 2009, the purchaser may require the vendor to abstain from contracting to sell to another party. However, in order to prevent the vendor from terminating the contract as from 6 February, the purchaser must notify the vendor prior to 6 February 2009 that the loan has been approved. Importantly, and of benefit to the vendor, once that “notification” has been given by the purchaser, the contract becomes unconditional in the sense that subsequent events adverse to the purchaser (such as the lender later withdrawing the approval) will not excuse the purchaser from performance of the contract. Thus, upon “notification”, the contract will proceed as if no special condition existed.
SC1.2 – The Purchaser will use best endeavours to obtain the loan.
As noted above, it is not disputed that the respondent did use best endeavours. However, the present point of importance is that the obligation upon the purchaser to use best endeavours – and more particularly the effect of a failure to do so under the later special conditions – again supports the contention that the special conditions precisely regulate the circumstances under which the vendor may recover damages following a failure to obtain the loan.
SC1.3 – In the event that the approval is not obtained on or before the latest date for approval and provided the Purchaser has not waived this special condition and communicated such waiver to the Vendor in writing then either party (but, in the case of the Purchaser, provided it has complied with SC1.2) may immediately terminate this Contract by giving notice in writing to the other party.
The first aspect of SC1.3 is that, as from 6 February 2009, if and only if, the purchaser has not by then notified the vendor in writing of either waiver of the special condition or of loan “approval”, the vendor may immediately, and at any time thereafter, terminate the contract by giving notice in writing to the purchaser. The second aspect of SC1.3 is that, as from 6 February, if and only if, the purchaser has used best endeavours to obtain the specified loan, the purchaser may immediately, and at any time thereafter, terminate the contract by giving notice in writing to the vendor. There are several matters of importance here.
First, there is no time limit within which either party may exercise the right to terminate.
Second, there is no requirement on either party to exercise the right to terminate at all.
Third, the topic of waiver is specifically addressed by the parties. It is not a nebulous matter of inference but rather a matter to be specifically stated in writing.
Fourth, as appears from SC1.5 below, the purchaser will be under no liability for damages if she does, or does not, terminate, provided that she has used best endeavours to obtain the specified loan.
SC1.4 – In the event of termination of the contract pursuant to SC1.3 and provided the Purchaser has complied with SC1.2 all monies paid by or on behalf of the Purchaser shall be repaid to the Purchaser.
The effect of SC1.4 is that, provided that the purchaser has used best endeavours, all monies paid by the purchaser must be repaid to her. Thus, in such circumstances any deposit paid cannot be retained by the vendor. This is entirely congruent with SC1.5 which provides that the purchaser will also not be liable for damages in such circumstances.
SC1.5 – In the event of termination of this Contract pursuant to SC1.3 in circumstances where the Purchaser has failed to comply with SC1.2 the Vendor will be entitled to the deposit which is forfeited and to proceed against the Purchaser for damages for breach of Contract.
The effect of SC1.5 is that, if and only if, the purchaser has not used best endeavours, any deposit paid may be retained by the vendor and the purchaser will be liable for damages.
The effect of the special conditions in the context of the whole of the contract
The contention of the respondent is that it is only in the circumstances specified in SC1.5 that such damages may be recovered. I therefore turn to the overall effect of the special conditions in the context of the whole of the contract[12] in order to ascertain whether there is anything in the balance of that contract that is inconsistent with that contention.
[12] The standard Society of Auctioneers and Appraisers (SA) Inc Contract For The Sale Of Land Residential Property.
Clause 14: Time of the essence
The special conditions make reference to “clause 14” in the main body of the contract which appears as follows:
14. TIME OF THE ESSENCE
Time will be of the essence of this contract in respect of any obligation under clauses 9, 10, 13 and all special conditions.
The appellant contends that the application of clause 14 to the special conditions strengthens her position. I cannot agree. The correct construction of clause 14 is simply that compliance with the dates stated in the special conditions is critical. Thus, the purchaser could hold the vendor bound until 5 February 2009, but only until then; immediately after that time expired, the vendor could terminate the contract, with no preliminary notice, no matter how close the purchaser may have been to getting loan approval. The Judge expressed the same conclusion thus:
[34]Making time of the essence of the contract did not mean that Ms Maddeford was obliged to terminate immediately upon the expiry of the stipulated time. Making time of the essence of the special condition meant that, upon the expiration of the stipulated time, either party was entitled to exercise her option to terminate if she chose to do so.[13]
[13] Dodds v Kennedy (No 2) [2011] WASCA 131, [50].
Clauses 9.3 and 9.4: Default by purchaser in settlement and Remedies of Vendor
Clauses 9.3 and 9.4 provide as follows:
9.3     Default by purchaser in settlement
In the event the Purchaser defaults in the due observance or performance of the obligations on the Purchaser’s part to settle and such default continues for a period of three (3) clear business days after the Settlement Date then the Vendor may serve a notice on the Purchaser requiring the default to be remedied and appointing a time for settlement being not less than three (3) clear business days after the service of the notice requiring the Purchaser to settle at the time and date appointed in the notice. If the Purchaser fails to comply with the notice the Vendor may terminate the Contract by further written notice without prejudice to the vendor’s rights and entitlements at law. The Vendor will be entitled to serve more than one notice without prejudice to any of its rights and obligations.
9.4     Remedies of Vendor
(a)     In the event this Contract is terminated by the Vendor then the Vendor may either retain the property or sell the property and in either event sue the Purchaser for damages.
(b)     The Vendor will be entitled to retain the deposit if this Contract is terminated by the Vendor.
(c)     If the Vendor re-sells the property the Vendor may retain absolutely any surplus arising from such re-sale in excess of the original Purchase Price and expenses arising from the re-sale and all losses and expenses incurred by the Vendor resulting from the Purchaser’s default.
(d)     In the event this Contract settles on a date after the date for settlement first agreed to by the parties and as stated in the Contract (and whether or not subsequently varied by agreement) and provided that the delay in settlement is not due to the Vendor’s default, the Purchaser will pay at settlement, if demanded by the Vendor, interest on the Purchase Price at the default rate for the period between the date for settlement first agreed and the date of actual settlement. In this event, at settlement all outgoings and income on the property shall be apportioned and adjusted to midnight on the day before the date for agreed settlement.
The appellant took the view that clauses 9.3 and 9.4 were operative in the present case and sent to the respondent a Notice to Complete dated 25 February 2009, which reproduced clauses 9.3 and 9.4 and asserted that the respondent had breached the contract by not completing the purchase on the nominated settlement date of 20 February 2009. It purported to require the respondent to settle on 2 March 2009. Subsequently, after the respondent did not settle on that date, the appellant purported to terminate the contract by a Notice of Termination dated 12 March 2009.
There were at least two serious problems with this procedure. The first problem was that the Notice to Complete was defective for the reasons stated by the Judge (in his finding numbered 13 reproduced above at paragraph [27] of this judgment). It follows that the purported Notice of Termination, founded upon a defective Notice to Complete, was also necessarily defective. The result is that the contract remained on foot until it came to an end as a result of the repudiation of the contract by the appellant through selling the house to another buyer.
The more fundamental problem was that clauses 9.3 and 9.4 require that the purchaser be “in default” and for present purposes that could only be so if the purchaser was contractually required to settle. The correct construction of the special conditions in the context of the whole of the contract is that the respondent was not required to settle because, despite her best endeavours, she had not been able to secure the required loan. The result is the same as above; the contract remained on foot until it came to an end as a result of the repudiation of the contract by the appellant through selling the house to another buyer.
The decision of the High Court in Suttor v Gundowda
The appellant seeks to rely on the judgment of the High Court in Suttor v Gundowda and refers to the following passage:[14]
The provision in question is to be construed as making the contract not void but voidable. The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has option of avoiding the contract. If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him. (Emphasis added)
[14] (1950) 81 CLR 418, 441 (Latham CJ, Williams and Fullagar JJ).
It is true that in both the present case and in Suttor, the contract was voidable rather than void and analysis is to proceed on the basis that the happening (or non-happening) of the specified event has occurred without the default of either party. However, it is there that any similarities end. The headnote in Suttor provides a brief and accurate summary of the facts for present purposes:[15]
A contract, dated 20th October 1947, for the sale of a pastoral property provided, by cl 12, that in the event of the consent of the Treasurer not being obtained within two months of that date, or within such further period as might be mutually agreed upon by the parties, the contract should be deemed to be cancelled and upon the vendor returning to the purchaser any deposit neither party should be under any further liability to the other for any sum for damages, costs or otherwise. The purchaser’s agent resided on the property with the defendant, and had frequent relevant conversations with him, from 29th November to 8th December 1947 and from 27th December to 30th December 1947. The Treasurer’s consent in writing was obtained on 5th January 1948. On 15th January 1948, the vendor’s solicitor, by letter, informed the purchaser’s solicitor that the Treasurer’s consent not having been obtained within the said period of two months the contract was no longer effective after 20th December 1947.
[15] (1950) 81 CLR 418, 418-419.
The Court construed the provision concerning the Treasurer’s consent as making the contract voidable at the instance of either party, rather than void. That being so, the contract continued on foot after 20 December 1947, there having been no termination by either party. The position is the same in the present case – the contract continued on foot after 5 February 2009, there being no termination by either the appellant or the respondent.
However, in Suttor a positive change occurred after 20 December 1947 while the contract was still on foot, namely, that on 5 January 1948, the consent in writing of the Treasurer was obtained, thus fulfilling (or removing) the condition to the requirement of the vendor to sell the property. On 15 January 1948, the vendor attempted to rely on the original condition but it was too late. As the Court stated:[16]
[16] (1950) 81 CLR 418, 442.
But there was no clear statement that the contract was considered by the defendant as cancelled until 15th January 1948 when the defendant’s solicitor wrote to the plaintiff’s solicitor that “the consent of the Treasurer was not obtained within the period of two months of the date of the contract and therefore the contract is no longer effective after 20th December 1947.” But this letter was obviously written on the view, with which we do not agree, that cl 12 effected an automatic cancellation of the contract when the Treasurer had not consented by 20th December 1947. His Honour accepted the evidence of McManamey and Allworth of the events that occurred at Gundowda between 27th and 31st December, 1947, and it is clear from this evidence that the defendant was treating the contract as still on foot although he was asking for certain variations to which McManamey agreed provided the directors of the plaintiff approved. Before the defendant’s solicitor purported to cancel the contract the consent in writing of the Treasurer to the transfer had been obtained on 5th January, 1948, and the cancellation was therefore too late.
Thus the Court found in Suttor that both parties were content after 20 December 1947 to leave the contract on foot such that if the Treasurer’s consent in writing was later forthcoming, the contract would become unconditional. Of course, either party could terminate prior to such consent being given, but when the consent was given, the contract ipso facto became unconditional; it was then too late to attempt to revert to the original requirement of consent to be given by 20 December 1947.
So in the present case, the vendor not having terminated on 6 February 2009, the purchaser was free to continue to attempt to obtain the loan. If she had been successful (the contract still being on foot) and duly informed the vendor pursuant to SC1.1 that the loan had been approved, it would then have been too late for the vendor to terminate, just as it was in Suttor.
The difference in the present case is that here the loan did not eventuate whereas in Suttor the Treasurer’s consent did eventuate. Here the contract did not change from conditional to unconditional because the loan did not eventuate whereas in Suttor, the contract did change from conditional to unconditional because the Treasurer’s consent did eventuate. The decision in Suttor is of no assistance to the appellant; indeed, a correct appreciation of the decision in Suttor rather favours the contentions of the respondent.
Conclusion

In summary, the correct construction of the present contract (viewed prospectively) was as follows:
·Until 5 February 2009, the vendor must proceed with the contract with the purchaser and must abstain from contracting to sell the property to a person than the purchaser, provided that the purchaser uses best endeavours to obtain the specified loan. [SC1.1, 1.2, 1.3]
·Until 5 February 2009, the purchaser may require the vendor to continue with the contract by communicating in writing to the vendor that she waives the special condition as to finance. Upon such communication, the contract will proceed as if no special condition existed. [SC1.1, 1.2, 1.3]
·Until 5 February 2009, the purchaser may require the vendor to continue with the contract by notifying the vendor that the loan has been approved – “approval”. Once that “notification” has been given by the purchaser, the contract becomes unconditional in the sense that subsequent events adverse to the purchaser (such as the lender subsequently withdrawing the approval) will not excuse the purchaser from performance of the contract. Upon “notification”, the contract will proceed as if no special condition existed. [SC1.1, 1.2, 1.3]
·As from 6 February 2009, if the purchaser has not by then notified the vendor of either waiver of the special condition or of loan “approval”, the vendor may immediately, and at any time thereafter, terminate the contract by giving notice in writing to the purchaser. (If the purchaser has used best endeavours to obtain the specified loan, she will be under no liability for damages.) [SC1.1, 1.2, 1.3]
·As from 6 February 2009, if and only if, the purchaser has used best endeavours to obtain the specified loan, the purchaser may immediately, and at any time thereafter, terminate the contract by giving notice in writing to the vendor. (If the purchaser has used best endeavours to obtain the specified loan, she will be under no liability for damages.) [SC1.1, 1.2, 1.3]
·As from 6 February 2009, if neither party has terminated the contract by giving notice in writing to the other, then it will be taken that the vendor is prepared to give further time to the purchaser to arrange finance. During this time, the vendor remains at liberty to instantly terminate the contract at any time by giving notice in writing to the purchaser, but is under no obligation to do so. [SC1.3]
·As from 6 February 2009, if neither party has terminated the contract by giving notice in writing to the other, the purchaser remains at liberty to instantly terminate the contract, but is under no obligation to do so. The purchaser may continue with the contract for as long as she pleases hoping that finance will somehow eventuate. The vendor has the power and unfettered discretion at any time to decide that further delay is fruitless and to give notice of termination. [SC1.3]
·SC1.5 (together with SC1.4) specifically address and govern the right of the vendor to “proceed against the Purchaser for damages for breach of Contract”. SC1.5 must be interpreted as meaning that damages may be awarded to the vendor if and only if the purchaser has failed to use best endeavours to obtain the specified loan (as required by SC1.2) and the vendor has terminated the contract under SC1.3.
·The general clauses of the contract (referred to as “General Conditions) do not impinge upon the above construction. The correct construction of clauses 9.3, 9.4 and 14 is referred to above.
As stated above, the respondent at all times used her best endeavours to obtain the loan. She never elected to waive the condition in relation to the loan. The limited circumstances under which a purchaser who has the benefit of this particular condition can be in breach and be liable to an award of damages are clearly and specifically delineated by the special conditions. The Judge was correct in concluding that the respondent was not in breach of contract such as to be liable to an award of damages.
I would dismiss the appeal.
PARKER J: I agree with the reasons of Peek J and would dismiss the appeal.