McRae & Anor v Bolaro Pty Ltd - [2000] VSCA 72

SUPREME COURT OF VICTORIA

COURT OF APPEAL Not Restricted

No. 8119 of 1996

DONALD LINDSAY McRAE and
MARGARET MARY McRAE

Appellants

BOLARO PTY. LTD.

Respondent

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JUDGES:	ORMISTON, CHARLES and CALLAWAY, JJ.A.
WHERE HELD:	MELBOURNE
DATES OF HEARING:	29 and 30 November 1999
DATE OF JUDGMENT:	5 May 2000
MEDIUM NEUTRAL CITATION:	[2000] VSCA 72

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CONTRACT – Vendor and purchaser – Repudiation – Anticipatory breach – Actual breaches – Reliance on ineffective notice pursuant to General Conditions 5 and 6 of Table A – Whether purchasers evinced intention no longer to be bound – Whether affirmation of contract by serving ineffective notice – Whether failure to pay interest breach of essential term – Whether breach accepted by vendor consisted only of actual breach or also of anticipatory breach – Whether "abandonment" of contract by both parties.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr P. O'Callaghan Q.C. and Mr P.N. Wickrama	Boothby & Boothby
For the Respondent	Mr J.A. Strachan Q.C. and Mr I.S. Williams	Birch Ross & Barlow

ORMISTON, J. A.:

The appellants appeal from a judgment of a judge of the trial division for damages for breach of a contract of sale of land arising from what was held to be the repudiation of that contract by the appellant purchasers. Implicit in the appeal, although not explicit except to the extent to be inferred from the nature of the orders sought, is likewise an appeal from the effective refusal of the judge to make orders on the counterclaim in favour of the appellants and his refusal to order the respondent vendor to repay all amounts of principal so far paid by the appellants to the respondent. The primary issue in the appeal arises out of the failure of the appellants as purchasers to make certain interest payments and their expression through their solicitors of an inability to make those payments, and arguably any other payments, under the rescheduled contract of sale whereby they agreed to purchase the respondent vendor's cattle property in South Gippsland on terms for the price of $3.5M. The appellants failed to pay one instalment of interest, saying that they had insufficient funds to pay, which led the respondent to serve what purported to be a notice of rescission. The appellants on advice did not make any payment in response to the notice but, after they failed to pay a second instalment of interest and again professed inability to pay, the respondent took the present proceedings relying on both the failure to comply with the notice and repudiation generally. The learned judge held the notice to be ineffective, as requiring too short a period to remedy the default, but held that the appellants had repudiated the contract and thus were liable in damages for what was in effect a shortfall on the resale of the land. The appellants appeal against those findings and the judgment, while the respondent by notice of contention seeks also now again to assert that the notice was effective.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2000] VSCA 72
Decision Date: 5 May 2000

CaseChat Overview and Summary

The case of McRae & Anor v Bolaro Pty Ltd involved the plaintiffs, who were vendors of a property, and the defendants, who were the purchasers. The dispute arose from the purchase and sale of land where the purchasers repudiated the contract, leading to an anticipatory breach, followed by actual breaches. The court had to determine several legal issues, including whether the purchasers had evinced an intention to no longer be bound by the contract, if the affirmation of the contract by serving an ineffective notice pursuant to General Conditions 5 and 6 of Table A was valid, and whether the failure to pay interest constituted a breach of an essential term. Additionally, the court had to decide if the breach accepted by the vendors consisted only of the actual breach or also included the anticipatory breach, and whether there was an abandonment of the contract by both parties.

The court found that the purchasers' repudiation constituted an anticipatory breach, and the vendors' acceptance of this breach did not limit their rights to also treat the actual breaches as repudiatory. The court held that the purchasers' intention to repudiate was evident from their conduct and statements, which demonstrated their unwillingness to proceed with the contract. Regarding the ineffective notice, the court ruled that it did not amount to an affirmation of the contract. The failure to pay interest was deemed to be a breach of an essential term, which entitled the vendors to terminate the contract. The court concluded that the breach accepted by the vendors was not limited to the actual breach but included the anticipatory breach as well. It was also determined that there was no abandonment of the contract by both parties, as the purchasers' repudiation and subsequent breaches warranted the vendors' right to terminate the contract.

The court ordered that the contract of sale be rescinded, and both parties were to bear their own costs of the proceedings. The vendors were also entitled to recover the deposit paid by the purchasers. The court's decision provided clarity on the rights and obligations of the parties involved in a real estate transaction where a repudiation and subsequent breaches occur, affirming the importance of the terms and conditions outlined in the contract.

Orders