McFarlane v Reffold

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.