McFarlane v Reffold (No 2)

McFarlane v Reffold (No 2) involved a dispute between the parties over the sale of a property, specifically regarding breaches of contract and the appropriate remedies. The plaintiff, Mr McFarlane, claimed that the property did not meet certain contractual warranties and thus sought damages and specific performance. The defendant, Mr Reffold, argued that the plaintiff had wrongfully refused to settle on the agreed date and had breached the contract himself, justifying his refusal to proceed with the sale. The case was heard in the Supreme Court of New South Wales.

The primary legal issues for the court to determine were whether there had been a breach of the contract by either party and, if so, what remedies were available. Specifically, the court needed to decide if the warranty concerning the septic system on the property was breached and whether this justified the plaintiff's actions in refusing to settle. Additionally, the court had to assess if the defendant's actions in charging interest and subsequently terminating the contract were lawful. The court also needed to examine whether the plaintiff had the right to specific performance of the contract.

In its reasoning, the court found that there was indeed a breach of contract by Mr Reffold as the septic system on the property had not been approved. However, the court found that this breach did not justify Mr McFarlane's refusal to settle and his attempt to defer the settlement date. The plaintiff's actions constituted a refusal to settle, putting him in default and allowing Mr Reffold to charge interest from the new settlement date. When Mr McFarlane refused to pay this interest, Mr Reffold was entitled to terminate the contract, which he did. The court concluded that Mr Reffold had not breached the contract by failing to sell the property to Mr McFarlane, and therefore Mr Reffold was not liable to the plaintiff. The plaintiff's claim was dismissed.

The court's final orders were that Mr McFarlane’s claim was dismissed with no order as to costs. The contract for the sale of the property was terminated, and Mr Reffold was absolved of any liability to Mr McFarlane. The court found that the plaintiff's actions were unjustified and did not warrant the relief sought.