McFarlane v Reffold

Case [2013] SASCFC 31

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

MCFARLANE v REFFOLD

[2013] SASCFC 31

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Gray and The Honourable Justice Vanstone)

24 April 2013

CONVEYANCING - FROM CONTRACT TO COMPLETION - PURCHASE MONEY - INTEREST ON PURCHASE MONEY - EFFECT OF DELAY

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - ELECTION AND RESCISSION - GENERALLY

CONVEYANCING - BREACH OF CONTRACT FOR SALE AND REMEDIES - VENDOR'S REMEDIES - RESCISSION OR TERMINATION - ENTITLEMENT TO

CONVEYANCING - THE CONTRACT AND CONDITIONS OF SALE - GENERALLY - OTHER MATTERS

Appeal from dismissal of the appellant’s claim for damages in the District Court – appellant and respondent entered into contract for sale of house and land – contract included a warranty that no improvements had been carried out on the property without all necessary consents and approvals – after entering into the contract the appellant noticed a septic tank that had been installed without required approvals –  appellant did not settle on settlement date – respondent served a Notice to Complete – at new settlement date, appellant tendered purchase price but refused to pay interest for delayed settlement – respondent refused to accept tender of the purchase price and settlement failed – appellant sought damages for wrongful refusal to settle.

Whether the respondent was in breach of the contract and therefore the appellant was not required to pay interest – whether the warranty was a term or condition to be performed by the vendor.

Held (per Kourakis CJ & Vanstone J): Appeal dismissed – the warranty was not a term of the agreement “to be performed by the vendor” – the respondent was therefore not in breach of the contract and was entitled to charge interest – the appellant was in breach of the contract.

Held per Gray J (in dissent): Appeal allowed - Mr Reffold was in breach in refusing to accept the amount tendered by Mr McFarlane - Mr Reffold's conduct in refusing to settle and then purporting to terminate the contract was unlawful - Mr McFarlane's approach to damages was flawed from the outset - the generalised assertions advanced on appeal did not lead to any entitlement beyond that allowed by the Judge.

Public and Environmental Health Act 1987 (SA), referred to.
United Australia Ltd v Barclays Bank Ltd [1941] AC 1; Ciavarella v Balmer (1983) 153 CLR 438; Equuscorp Pty Ltd v Wilmoth Field Warne (2007) 18 VR 250; MLW Technology Pty Ltd v May [2005] VSCA 29; Peter Turnbull & Co Pty Ltd v Mundus Trading (1954) 90 CLR 235; Foran v Wight (1989) 168 CLR 385; K & K Real Estate Pty Ltd v Adellos Pty Ltd [2010] NSWCA 302; Payzu Ltd v Saunders (1919) 2 KB 581; Sotiros Shipping Inc v Sameiet Solholt (the Solholt) [1983] 1 Lloyd’s Rep 605; Ayling v Wade [1961] 2 QB…

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AGLC
McFarlane v Reffold [2013] SASCFC 31
Case
[2013] SASCFC 31
Decision Date

CaseChat Overview and Summary

This case concerned an appeal from the District Court concerning a contract for the sale of a house and land. The appellant, Mr McFarlane, alleged that the respondent, Mr Reffold, was in breach of contract by refusing to settle the sale. The dispute arose after the appellant discovered a septic tank installed without necessary approvals, which he contended breached a warranty in the contract. The appellant failed to settle on the agreed date, and after the respondent served a Notice to Complete, the appellant tendered the purchase price on a new settlement date but refused to pay interest for the delayed settlement. The respondent then refused to accept the tender, and settlement failed. The appellant sought damages for wrongful refusal to settle.

The central legal issues before the court were whether the respondent had breached the contract, thereby relieving the appellant of the obligation to pay interest on the purchase money for the delayed settlement, and whether the warranty regarding improvements constituted a term to be performed by the vendor.

The majority of the Full Court, comprising Kourakis CJ and Vanstone J, held that the warranty was not a term of the agreement to be performed by the vendor. Consequently, they found that the respondent was not in breach of contract and was entitled to charge interest. The appellant, by refusing to pay the interest, was therefore in breach of contract. Gray J, in dissent, found that the respondent was in breach by refusing to accept the tendered purchase price and by purporting to terminate the contract unlawfully.

The appeal was dismissed by the majority. Kourakis CJ and Vanstone J would have dismissed the appeal, upholding the District Court's decision. Gray J would have allowed the appeal. However, the decision of the majority meant that the appeal was dismissed.

Orders

Orders of the court

Held (per Kourakis CJ & Vanstone J): Appeal dismissed – the warranty was not a term of the agreement “to be performed by the vendor” – the respondent was therefore not in breach of the contract and was entitled to charge interest – the appellant was in breach of the contract.

Held per Gray J (in dissent): Appeal allowed - Mr Reffold was in breach in refusing to accept the amount tendered by Mr McFarlane - Mr Reffold's conduct in refusing to settle and then purporting to terminate the contract was unlawful - Mr McFarlane's approach to damages was flawed from the outset - the generalised assertions advanced on appeal did not lead to any entitlement beyond that allowed by the Judge.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Mr McFarlane’s claim for damages may be tested in another way. He was in a position to settle on the property on 4 March 2008. During the course of the appeal, he acknowledged that he could have paid the disputed interest under protest and he could have reserved his right to claim damages in respect of the breach of warranty. This would have involved an outlay of a little more than $2,000.00. Instead of having a dispute over an amount of about $2,000.00 and damages for breach of warranty, on any view a modest amount, Mr McFarlane elected not to proceed with the settlement and then to claim damages of more than $250,000.00. There is an implausibility about Mr McFarlane’s claims. Conclusion In accordance with these reasons, I would allow the appeal, set aside the judgment entered in the District Court and enter judgment for Mr McFarlane in the sum of $20,000.00. VANSTONE J: For the reasons given by Kourakis CJ I would dismiss this appeal.

Ratio Decidendi

Legal Principle Established

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