Mediratta v Clark

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2018 00382

LOVNISH MEDIRATTA	Plaintiff
v
ROLLAND LESLIE CLARK	Defendant

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JUDGE:	Derham AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	5 August 2019
DATE OF JUDGMENT:	15 October 2019
CASE MAY BE CITED AS:	Mediratta v Clark
MEDIUM NEUTRAL CITATION:	[2019] VSC 685

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SALE OF LAND – Contract for sale of residential land – Whether vendor breached contract – Whether default notice valid – Whether Contract rescinded – Scope of General Condition 22 considered – Whether there should be implied in the contract a term permitting the purchaser or his representative to have access to the land at any time to undertake a valuation – Whether duty to cooperate existed so that the purchaser was entitled to have access to the land to carry out valuation just before or on the settlement day – Whether the vendor engaged in unconscientious conduct entitling the Purchaser to relief against forfeiture of his interest in the land –BP Refinery (Westernport) Pty Ltd v Hastings SC (1977) 180 CLR 266; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Simcevski v Dixon [2017] VSC 197; Ventura v Ventura [2018] VSC 485; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd, (2015) 256 CLR 104; Aussie Invest Corp Pty Ltd v Pulcesia Pty Ltd [2005] 13 VR 168; Legione v Hateley (1983) 152 CLR 406; Stern v McArthur (1988) 165 CLR 489; Tanwar Enterprises Pty Ltd v Cauchi (2004) 217 CLR 315; Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; 428 Lt Bourke St Pty Ltd v Lonsdale St Café Pty Ltd [2009] VSC 133 and U108 Pty Ltd v Sing Fan & Ors [2010] VSC 12 referred to.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr V Murano	Vernon da Gama and Associates
For the Defendant	Mr T R Messer	McCracken & McCracken Lawyers

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Summary of conclusions................................................................................................................... 2

Summary of facts and evidence....................................................................................................... 2

The Contract...................................................................................................................................... 11

The issues.......................................................................................................................................... 14

The Implied Term............................................................................................................................ 15

Submissions................................................................................................................................. 15
Consideration.............................................................................................................................. 16

Did the Vendor breach of GC 22?................................................................................................. 20

Submissions...................................................................................................................................... 21

Consideration.............................................................................................................................. 22

Unconscientious conduct................................................................................................................ 24

Submissions................................................................................................................................. 24
Consideration.............................................................................................................................. 25

Is the Default Notice effective to terminate the contract?......................................................... 29

Conclusion......................................................................................................................................... 31

Caveat removal................................................................................................................................. 31

HIS HONOUR:

Introduction

On 22 April 2017, the plaintiff (Purchaser) entered into a contract of sale of real estate (Contract) with the defendant and Theresa Jean Clark, as vendors, under which the plaintiff agreed to buy and vendors agreed to sell the land at 137 King Street, Wallan, Victoria (Property)[1]. The price payable under the Contract was $700,000.00 payable by way of a deposit of $35,000.00 with the balance due at settlement fixed to be 30 June 2018. That was a Saturday, so in accordance with the General Conditions in the Contract the date fixed for settlement was 2 July 2018. The defendant and Theresa Jean Clark were registered as joint tenants of the Property. Theresa Jean Clark died on 30 November 2017 and the defendant (Vendor) was registered as sole proprietor on 19 December 2017.
[1]The land more particularly described in Certificate of Title Volume 8792 Folio 998.

Settlement did not take place and the Vendor gave a Notice of Default and Rescission (Default Notice) under the Contract and pursuant to the Default Notice the Vendor has purported to terminate the Contract. The Purchaser claims that at the time of the Default Notice the Vendor was in breach of the Contract, specifically General Condition 22 (GC 22) and an implied term, and was not entitled to give the Notice and that it should be set aside.[2]
[2]The text of the Notice is set out in the Annexure to these reasons.

Specifically, by an amended originating motion the Purchaser applies to the Court under s 49 of the Property Law Act 1958 (Vic) (PLA) for:

(a) A declaration that the Vendor breached the Contract on or about 27 June 2018 as, in breach of GC 22, he failed or refused to permit the Purchaser and/or the nominee to inspect the Property;

(b) A declaration that the Vendor breached the Contract on or about 27 June 2018 as in breach of GC 22 and the implied term he failed or refused to permit Opteon Property Group, it being a valuer, and a person authorised by the Purchaser and/or the nominee to inspect the Property; and

(c) A declaration that the Default Notice issued by the Vendor and served on the Purchaser dated 3 July 2018 be set aside.

The proceeding first came before the Court on 19 October 2018, where first directions were made for the further conduct of the proceeding. Subsequently, three successive orders were made, by consent, fixing the matter for trial. By summons filed on 30 July 2019 the plaintiff applied to the Court to vacate the trial date listed for 5 August and adjourn it to a date after October 2019. Judicial Registrar Clayton heard the application on 31 July 2019 and dismissed the application with costs. Pursuant to an order of the Honourable Justice John Dixon made on 2 August 2019, the proceeding was referred to me for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules).

Summary of conclusions

The Purchaser is not entitled to the relief sought in the amended originating motion. The Vendor did not breach GC 22, there is no term to be implied in the Contract as submitted by the Purchaser and the Default Notice should not be set aside. In these circumstances, the Contract has been validly rescinded and the deposit, such as it is, is forfeited to the Vendor.

Summary of facts and evidence

The Purchaser gave evidence by affidavit and was cross-examined. There was a purported nominee under the Contract, one Gaurav Marwaha. He also gave evidence in support of the Purchaser, and was cross examined. Mr Geoffrey Charles Cox, a member of McCracken & McCracken Lawyers (MML), the solicitor acting for the Vendor, and the Vendor himself, gave evidence and were cross examined. In general the cross-examination produced little of real significance. The following chronological account of the facts is drawn from the affidavit evidence, supplemented by viva voce evidence and evidence given in cross-examination.

The deposit was released pursuant to s 27 of the Sale of Land Act 1962 on or about 31 May 2017. The s 27 notice sent by MML was not responded to by the conveyancer representing the purchaser (Marwaha Conveyancers)(MC). After Mrs Clark died, MML notified MC of her death by letter date 7 December 2017. MC did not respond or acknowledge receipt of the letter. On 19 December 2017, following a survivorship application by the Vendor, a certificate of title for the Property was issued in the sole name of the defendant.

On 25 May 2018, having heard nothing at all from MC, Mr Cox, a principal solicitor of MML, telephoned MC and spoke to a person who identified himself as Harpeet. Mr Cox enquired when he could expect to receive a transfer of land and was told that the matter was on track to settle and that a transfer and statement of adjustments would shortly be provided. At about this time Mr Cox had also initiated completion of the stamp duties requirements. This involved MML completing a duties form online with basic details of the transaction including the date of the contract, the consideration and the like, and after that an invitation was sent to the practitioner for the purchaser. That invitation is required to be accepted, further details as to the identity of the purchaser are completed and then the parties proceed to sign the resultant statement. Mr Cox had not, by the time of the settlement day or even after that day, had any evidence through the Duties Online system of acceptance of the necessary invitation to complete the settlement from MC on behalf of the Purchaser.

On 29 May 2018 MML wrote to MC enclosing a copy of the certificate of title that had issued following registration of the Vendor’s survivorship application and requesting the Purchaser to bring the settlement date forward to 29 June 2018. On 5 June 2018, Mr Cox’s assistant contacted MC and was told that MC was trying to contact their client regarding the request to bring the settlement date forward and would respond in writing.

On 12 June 2018, MML received an email from MC requesting an extension of settlement until 10 August 2018 without penalties and offered to increase the deposit by a further 5% if the Vendor consented to that. This was the first written communication received by MML from MC since the entry into the Contract.

By Sale of Real Estate Nomination form dated 13 June 2018, Gaurav Marwaha was nominated as substitute purchaser. The defendant’s solicitor, Mr Cox, had not seen this nomination until 16 July 2018, when a proposed originating motion was sent to MML. Mr Cox’s evidence in this regard was not challenged. There is no evidence given by the Purchaser that it was ever sent to MML, or that MML or the Vendor were ever told that there was a nominee before the Default Notice and subsequent termination of the Contract.

On 18 June 2018, Mr Cox of MML responded to MC’s email of 12 June 2018 refusing to extend the settlement date. The email reiterated that the settlement is due on 2 July 2018. Also on 18 June 2018, Mr Marwaha was informed by the Purchaser that the settlement was due to occur on 2 July 2018. On being so informed he said that he applied for finance to complete the purchase. He produced an unauthenticated record of the valuation management system supplied to him by his broker. I ruled that record inadmissible as the evidence in support of its admission into evidence failed to comply with s 69 of the Evidence Act 2008 (Vic). It was also not admissible under s 75 of that Act.

On 26 June 2018 MC sent an email to MML in the following terms:

We refer to the above matter and confirm that our client spoke to the real estate agent Daniel regarding settlement extension and he confirmed that the vendor agreed to an the extension till 30 July 2019 without penalty.
Can you please seek instructions from your client regarding the settlement extension. Also our client is agreeable to pay another 10% in real estate trust account in seven days after the extension for the same is granted.

The Purchaser gave evidence that the Vendor’s agent, Daniel Bruggink of Wilson Partners Wallan (Daniel), told him that he had exchanged text messages with the Vendor and gave him copies of those messages. The messages reveal that between Wednesday 26 June to Friday 29 June 2018, there were text messages exchanged. The first set was on 26 June 2018, as follows:[3]
[3]Some minor corrections of spelling have been made.

26 June 2019 4.53 pm Vendor to Daniel
Hi Dan, I have just taken a shower, reflected on the situation and I am still unsure. Give me until tomorrow arvo to think some more. Thanks.
26 June 2018 7.14 pm Daniel to Vendor
No Problems. From my side on the business side I always think of worst case scenario. In this instance we have to re sell. But your 120 odd thousand up. And still own 100% of the property. Can I please ask what is your biggest concern?
26 June 2018 7.21 pm Vendor to Daniel
When we decided to sell it was in an extreme situation of my wife’s health, hoping she was going to live for a few years. We sold for her wellbeing and not seeking a suitable price.
With her death, things have altered in many ways, and now my attention has turned to the other member of my family and taking opportunities for her.
26 June 2018 2.26 pm Daniel to Vendor
I get it :) I’m sorry to hear about the unfortunate beginnings of this property sale. I do hope this sale can open those opportunities you are looking for, for the other member of your family. My role in this is a very simple one. To maximise your end results and ensure in the event of any type of change, it is used to work in your favour. And I really hope that is what I can deliver on for you in this instance.

In cross-examination it was put to the Vendor that the exchange, particularly that part where he says his attention has turned to the other member of the family, meant that he thought he may be able to get a better price for selling the property than the price under the Contract. His response was that the Purchaser had made him a couple of offers to extend the Contract and he believed they would not compensate him for giving them the extra time. So all he was doing was saying that he was not in desperate need for money and that it was ‘just a tactical ploy as I remember it’. He said:

All I was doing is hoping they would compensate me a bit better than what they were offering for the extra extension time. The most they offered me was a thousand dollars.

It was not put that the Vendor was seeking to avoid the Contract or put pressure on the Purchaser in the hope he defaulted, or anything of that kind

By email sent on 27 June 2018 at 10.03 am, Mr Cox of MML responded to the email from MC referred to above ([13]). The email stated that, after receiving the Vendor’s instructions and contrary to MC’s email, the Vendor had not agreed to granting any extension of the settlement date and that the date for settlement remains on 2 July 2018, being the next business day after 30 June 2018. The email ended ‘[w]e await the Transfer and Statement of Adjustments’.

The next set of messaged between Daniel and the Vendor were on 27 June 2018, after the email from Mr Cox just referred to:

27 June 2018 10.25 am Daniel to Vendor
Will need keys to allow for final inspection asap please let me know when you can drop them off.
27 June 2018 10.26 am Vendor to Daniel
Dan, I haven’t agreed to anything yet.
27 June 2018 10.29 am Daniel to Vendor
Your solicitor has already sent notification that it has to settle on Monday. As such purchasers are organising final inspection? Let me know if that is correct?
27 June 2018 10.30 am Vendor to Daniel
Ok. If they are going to settle on Monday then that is fine, I will have the keys tomorrow
10.40 am Daniel to Vendor
There [they are] going to have to make it work.
12.57 pm Vendor to Daniel
Dan, I spoke with my lawyer and he has not received any suitable documentation in regards to settlement from the buyers and so he has asked me not to supply the keys at this time.
1 pm Daniel to Vendor:
I will email them.

In cross-examination it was put to the Vendor that he was not agreeing to the property being inspected? To that, he responded:

No, I’m just saying that the night before the real estate agent had contacted me and told me about this offer that the buyer was going to present to me and I said to him, ‘You can’t offer to me’ ‑ ‑ ‑
HIS HONOUR: What offer is that?‑‑‑This is the second offer. There was two offers made to me.
Two offers of what kind, for what?‑‑‑To extend the period time.
Thank you. You need to explain?‑‑‑Sorry. It was two offers to extend period of time. The second offer was made, or the second explanation of the offer that was going to be made by the buyers was made the night before I got their message.
HIS HONOUR: So, when you say, ‘Dan, I haven’t agreed to anything yet’ you are referring, are you, to a request by the purchasers to extend the settlement date to a later date?‑‑‑That’s right, and I’d asked the real estate agent, I said to the real estate agent, ‘This offer has got to go through a conveyancer, the purchaser’s conveyancer to my lawyer, and then to me.’ So, the night before when he was talking to me I didn’t say yes or no to what was going to be offered, I would have to wait for the offer to come through my lawyer. So, I said - at this point I’d just got off the phone speaking to my lawyer and I couldn’t believe that he’d actually received a response from my lawyer, the real estate agent, saying what I’d said ‘No’ to the offer. So, when he’s - when I answered this I said I haven’t responded to the offer yet, so I’m not - I can’t agree to anything until I actually respond to the offer whether it be no or yes.
And then the next entry is from Dan to you, is it, which begins ‘Your solicitor has already’?‑‑‑Yes, that was - that’s, um - as I said I’d just got off the phone to my lawyer and I got message from the real estate agent virtually straight away, and I couldn’t believe that he had received any information about I’d said no to the offer. So, I said, ‘I haven’t agreed to anything yet’, and then he replies saying, ‘But your solicitor has sent out a letter saying the settlement’ - actually he misinterpreted, my lawyer said, ‘He hasn’t agreed to extension in time so settlement will be on Monday.’ So, he’s taken it that settlement is going to happen on Monday and we want the keys to do final property inspection.
Then going over to p.111 you say, ‘Okay, if they’re going to settle on Monday then that is fine, I’ll have the keys tomorrow’?‑‑‑Yes.
Then what’s the next reference, ‘They’re going to have to make it work’?‑‑‑That’s from the real estate agent saying something - something to do with getting settlement on Monday.
Then is the next reference you texting the estate agent Dan?‑‑‑Yes, that’s right.
What does that refer to?‑‑‑Because after I got the message ‘They’re going to have to make it work’ I contacted my lawyer who said, ‘We haven’t received any documentation’ - because there’s got to be documentation before settlement happens - ‘We haven’t received any documentation. We’re supposed to have them 10 days before settlement.’ So, I advised not to give them access to the property until that happens.

The next set of messages were on 29 June 2018:

29 June 2018 1.14 pm (Friday) Daniel to Vendor
I have a sworn valuer on behalf of the purchasers requesting access to the property Monday 12 noon
3.27 pm Friday 29 June 2018 Vendor to Daniel
Hi Dan
Again this should not involve you. The correct channel is through the buyer’s conveyancer to my lawyer. Therefore I cannot grant access at this stage.

Rolland

In cross-examination the Vendor agreed that he assumed that a valuer inspecting the property was for the Purchaser to obtain finance so that he could complete the Contract. It was then put to him that in saying that the correct channel was ‘through the buyer’s conveyancer to my lawyer’ he was refusing access. He responded:

No, I didn’t refuse access, I’m saying I wanted them to go through the proper communication channels to be able to get - to inform me, rather than coming directly to me.

At about 11.30am on 2 July 2018, the date for settlement of the property, Mr Cox of MML received a telephone message that one Elliot of Opteon Property Valuations (Opteon) had called. Mr Cox contacted Daniel who told him he thought Opteon was a bank valuer. Mr Cox advised Daniel that the plaintiff and the plaintiff’s conveyancer had taken no steps to settle in accordance with the Contract and that they would need to take all appropriate steps if the matter was to settle. Unsurprisingly, settlement did not occur on 2 July 2018.

On 3 July 2018, Mr Cox took a call from a representative of Opteon. He told the representative that the Contract required settlement to have been completed on 2 July and that the Purchaser was now in default. He also told the representative that he had no instructions to make any arrangements for, or to authorise, any inspection or valuation of the Property.

By email on 3 July 2018 the Default Notice dated 3 July 2018 was served on MC. It was also served on MC by registered post on that day (3 July). The Default Notice, the text of which is set out in the Annexure to these reasons, specified the default under the Contract as the failure to settle on 2 July and to deliver a Transfer of Land in default of General Condition 6. The Default Notice required the default to be remedied and interest and costs specified to be paid within 14 days of the service of the Notice, in default of which the contract will be rescinded pursuant to general condition 28 of the contract of sale.

On 4 July 2018 MC lodged Caveat number AR206623V on behalf of the plaintiff (Caveat). By the Caveat, the plaintiff claimed a freehold interest in the land. The ground of the claim was said to be the Contract.

On 5 July 2018, MC emailed MML concerning the Default Notice asserting that it was ‘invalid and issued in bad faith and disingenuous.’ It was said that the Purchaser requested access to the Property to complete a valuation but it was not granted by the Vendor. The refusal to grant access prevented the Purchaser completing its bank valuation and being able to finalise their loan arrangements, and preventing the Purchaser from being able to complete the Contract. Therefore the vendor could not rely on the Default Notice.

On about 5 July 2018, the Vendor contacted Daniel and instructed him that he may contact the purchaser’s valuer to facilitate access to the Property. Between 10 July and 16 July 2018, there were exchanges of text messages between Daniel and the Vendor as follows:

11.31 am Tuesday 10 July 2018 Daniel to Vendor
Morning mate! Valuation booked 3.15 tomorrow. May I please get keys prior to this? Kind regards, Daniel Bruggink Wilson Partners
11.32 am 10 July 2018 Vendor to Daniel
I’ll drop them in tomorrow morning.
11.19 am Wednesday 11 July 2018 Vendor to Daniel
Hi Dan, I haven’t forgotten but I am a bit occupied at the moment. I will drop in about 3 and I will accompany the valuer
Ta.
11.27 am 11 July 2018 Daniel to Vendor
I have passed your details to the valuer (Tim) and told him I am no longer doing the valuation. He will call you to organise. Kind Regards Daniel Bruggink Wilson Partners.
12.11 pm 11 July 2018 Vendor to Daniel
Thanks Dan

The Vendor received no call from the valuer and, to the best of his knowledge, no person attended at the Property at the appointed time. The vendor resides at Kilmore, about 10 minutes from the Property, and was ready and willing to grant appropriate access to the Property to the valuer.

On 12 July 2018, the Vendor received a telephone call from a lady at Opteon requesting that a valuation take place on 16 July 2018 at 1.30 pm. The Vendor agreed to this request and stated that he would be present at the Property to provide access. He was surprised that the valuer did not press to conduct the valuation earlier.

On 16 July 2018, the Vendor attended at the Property to give access to the valuer from Opteon, as arranged. The valuer attended and inspected the Property. Also on 16 July 2018, the Purchaser instructed solicitors (Vernon Da Gama & Associates) to act and on that day they sent a letter to MML with a draft originating motion to be filed in this Court the next day. The Purchaser’s solicitors invited the Vendor to withdraw the Default Notice to avoid the costs and inconvenience of litigation and further demanded ‘our client and/or its financers’ to be given access to the Property to enable them to complete the necessary bank valuation and effect settlement of the matter.

On 17 July 2018 the Vendor and Daniel exchanged further text messages about arranging the keys to the Property for the Purchaser to conduct a final inspection. Also on 17 July 2018, the Purchasers solicitors issued the originating motion.

On 18 July 2018 Daniel asked the Vendor to obtain keys for a proposed inspection on 19 July 2018. The defendant responded that there was no point as ‘the contract ceased last night. For any clarification, my lawyer, Geoff Cox, said you can speak with him’.

On 19 July 2018 MML wrote to the Purchaser’s solicitors informing them that the Purchaser had failed to remedy the defaults specified in the Default Notice and the Contract is at an end and the Purchaser cannot assert any entitlement to have an inspection. This was put in the context of there having been a request by the agent to the Vendor for an inspection at 2.30 pm on 19 July 2018.

Mr Marwaha gave evidence, oddly, that on 27 July 2018 he advised the Purchaser to schedule settlement arrangements with the Vendor to effect settlement of the Contract but was informed that the Vendor refused to effect settlement.

The Contract

Part 1 of the Contract is in the standard form approved by the Law Institute of Victoria Limited and Real Estate Institute of Victoria Ltd. Part 1 contains the Particulars of Sale. Part 2 of the Contract contains the General Conditions set out in Form 2 prescribed by the Estate Agents (Contracts) Regulations 2008 (Vic). Those regulations prescribed standard forms of contract for the purposes of s 53A of the Estate Agents Act 1980 (Vic) until revoked on 11 August 2018. There are also Special Conditions. They include provision for electronic conveyancing if the box adjacent to SC 2 is marked ‘EC’. It is not, and there is no dispute that the conveyancing was not electronic.[4]
[4]That is, in accordance with the Electronic Conveyancing National Law – see the Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic).

The Particulars of Sale include, in the usual way, the Property, the price, the deposit, settlement day, the names of the parties and their solicitors or conveyancers, with addresses and email details.

The Contract stipulated, as I have said, the date for settlement as 30 June 2018, which was a Saturday. General Condition 16 provided, first, that time is of the essence of the Contract and, second, that time is extended until the next business day if the time for performing any action falls on a Saturday, Sunday or bank holiday. Thus the settlement day under the Contract was 2 July 2018.

There are several General Conditions in issue. The first, General Condition 6, which provides:

6. Transfer
The transfer of land document must be prepared by the purchaser and delivered to the vendor at least 10 days before settlement. The delivery of the transfer of land document is not acceptance of title. The vendor must prepare any document required for assessment of duty on this transaction relating to matters that are or should be within knowledge of the vendor and, if requested by the purchaser, must provide a copy of that document at least 3 days before settlement.

The next relevant term is GC 22, which is as follows:

22. INSPECTION
The purchaser and/or another person authorised by the purchaser may inspect the property at any reasonable time during the 7 days preceding and including the settlement day.’

Next are the default provisions in GC 27 and 28, which are as follows:

27. DEFAULT NOTICE
27.1A party is not entitled to exercise any rights arising from the other party’s default, other than the right to receive interest and the right to sue for money owning, until the other party is given and fails to comply with a written default notice.

27.2     The default notice must:
(a)      specify the particulars of the default; and
(b)state that it is the offended party’s intention to exercise the rights arising from the default unless, within 14 days of the notice being given –
(i)       the default is remedied; and
(ii)the reasonable costs incurred as a result of the default and any interest payable are paid.

28. DEFAULT NOT REMEDIED
28.1All unpaid money under the contract becomes immediately payable to the vendor if the default has been made by the purchaser and is not remedied and the costs and interest are not paid.

28.2 The contract immediately ends if:
(a)the default notice also states that unless the default is remedied and the reasonable costs and interest are paid, the contract will be ended in accordance with this general condition; and
(b)the default is not remedied and the reasonable costs and interest are not paid by the end of the period of the default notice.

28.3 If the contract ends by a default notice given by the purchaser:
(a)the purchaser must be repaid any money paid under the contract and be paid any interest and reasonable costs payable under the contract; and
(b)all those amounts are a charge on the land until payment; and
(c)the purchaser may also recover any loss otherwise recoverable.

28.4 If the contract ends by a default notice given by the vendor:
(a) the deposit up to 10% of the price is forfeited to the vendor as the vendor’s absolute property, whether the deposit has been paid or not; and

(b) the vendor is entitled to possession of the property; and
(c)in addition to any other remedy, the vendor may within one year of the contract ending either:
(i)retain the property and sue for damages for breach of contract; or
(ii)resell the property in any manner and recover any deficiency in the price on the resale and any resulting expense by way of liquidated damages; and

(d)the vendor may retain any part of the price paid until the vendor’s damages have been determined and may apply that money towards those damages; and
(e)any determination of the vendor’s damages must take into account the amount forfeited to the vendor.

28.5The ending of the contract does not affect the rights of the offended party as a consequence of the default.

In addition, other terms need to be noted:

(a) GC 17 provides for service of documents. GC 17.1(a) provides that any document sent by post is taken to have been received on the next business day after posting, unless provided otherwise. GC 17.1(b) provides that any document sent by email is taken to have been served at the time of receipt within the meaning of s 13A of the Electronic Transactions (Victoria) Act 2000;

(b) GC 17.2 provides that any demand, notice, or document required to be served by or on any party may be served by or on the legal practitioner or conveyancer for that party. It is sufficiently served if served on that party or on the legal practitioner or conveyancer personally, by pre-paid post, by email or in any manner authorised by law or the Supreme Court for service of documents, including any manner authorised for service on or by a legal practitioner;

(c) GC 18 provides that the purchaser may nominate a substitute or additional purchaser, but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under the Contract.

The Contract was not subject to any condition relating to the purchaser obtaining finance to complete the purchase. It is common ground that time was of the essence of the Contract.

The issues

Despite the limited scope of the relief claimed in the amended originating motion, the Purchaser identified and agitated four issues:

(a) Whether GC 22 was breached by the Vendor on 27 or 29 June 2018.

(b) Whether there is to be implied into the contract a term, and whether that term had been breached by the Vendor, the term being to the following effect:

The vendor is required to co-operate with the purchaser by allowing a valuer, on behalf of the financier of the purchaser and/or the purchaser’s nominee, access to the property in order to allow the purchaser and/or the purchaser’s nominee to attempt to obtain finance which would enable the purchaser and/or the purchaser’s nominee to pay the balance of the purchase price at settlement in accordance with the contract (Implied Term).

(c) Whether the conduct of the Vendor makes it unconscientious for him to rely on the Default Notice.

(d) Whether the Default Notice should be declared not to be valid on the basis of ambiguity in its terms.

The Implied Term
Submissions

The Purchaser submits that having regard to the judgment of Mason J in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd,[5] the implication of a term of the type sought to be implied in this case is uncontroversial. In Secured Income Mason J (Barwick CJ, Gibbs, Stephen and Aickin JJ agreeing) held that:

[i]t is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract.[6]

[5](1979) 144 CLR 596 (Secured Income).

[6]Ibid. 607.

It is plain, the Purchaser contended, that being able to pay the balance of the purchase price at settlement is a fundamental obligation under a contract for the sale of land. An implied term requiring the vendor of a property to co-operate with the purchaser to allow an inspection of the property by a valuer for the purpose of the purchaser obtaining finance was implied into a contract for the sale on land in Grieve v Enge[7] and Grubb v Toomey.[8]
[7][2006] QSC 37 [59]-[61] (Grieve v Enge).
[8][2003] 12 TAS R 205, [23]-[28] (Grubb v Toomey).

The Vendor submitted that according to ordinary principles, to which I will refer shortly, this is not a case where it is appropriate to find the Implied Term. The Implied Term is not necessary to give business efficacy to the contract, because the contract was not conditional on finance, it was an unconditional contract. The Vendor also submitted that Special Condition 16 of the Contract, which provided that the Contract sets out all the terms and conditions of the sale, stands in the way of the implication of the Implied Term. The written instrument is comprehensive in its terms. In circumstances where the parties have agreed that the Contract contains their entire agreement, the court should be slow to imply into it a term that is simply not necessary to make the Contract work. The Vendor also submitted that the decisions in Grubb v Toomey and Grieve v Enge are readily distinguishable because the contracts in each case were conditional upon loan approval in favour of the purchaser.

Consideration

Whether the Implied Term should be found depends upon the usual considerations for the implication of such a term. It is well established that five criteria must be satisfied before a term will be implied to give business efficacy to a contract, namely that the implication is reasonable and equitable, it is necessary to give business efficacy to the Contract (so that no term will be implied if the contract is effective without it), it is so obvious as to ‘go without saying’, it is capable of clear expression and it does not contradict any express term of the Contract. [9]
[9]BP Refinery (Westernport) Pty Ltd v Hastings SC (1977) 180 CLR 266, 283 (Lord Simon, Viscount Dilhorne and Lord Keith) adopted in Secured Income (1979) 144 CLR 596, 605-6 (Mason J) (Barwick CJ, Gibbs, Stephen and Aickin JJ agreeing); Simcevski v Dixon [2017] VSC 197, [49]; Ventura v Ventura (2018) 55 VR 118, 122 [15].

The Purchaser did not, however, rely only upon the usual principles for the implication of the Implied Term. He relied upon the proposition of law that a contract of this kind, for the sale of land, brings with it an implied obligation on each party to do all that is reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick:[10]

As a general rule…where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there be no express words to that effect.

[10](1881) 6 App Cas 251, 263.

In Secured Income[11] Mason J observed:

It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith C.J. said in Butt v M’Donald:
“It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.”

It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party’s obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.

[11](1979) 144 CLR 596, 607-8 (citations omitted).

The scope of the broad statement of the duty to cooperate in Butt v M’Donald, as set out in the above quotation from Secured Income, is ‘defined by what has been promised under the contract; it is not a general duty to ensure another party obtains an anticipated benefit.’[12] Thus, as Riordan J said in Simcevski v Dixon:[13]

Accordingly, a party only has a duty to co-operate by performing acts that are necessary to preserve the benefit of what has been promised in a contract. It does not require a party to co-operate by acting to advance the interests of the other party with respect to the contract.[14] Accordingly, as was observed by the Full Court of the Federal Court in Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd:
There cannot be a duty to co-operate in bringing about something which a contract does not require to happen.[15]

[12]Wolfe v Permanent Custodians Ltd [2013] VSCA 331 [28] (Warren CJ, Neave and Whelan JJA).

[13][2017] VSC 197 [56].

[14]Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, 124–5. Also see N Seddon, R Bigwood, M Ellinghaus, Cheshire and Fifoot’s Law of Contract (LexisNexis, 10^th ed, 2012) [10.42].

[15](2015) 237 FCR 534, 560 [134] (Middleton, Foster and Gleeson JJ) (emphasis in original).

In this case it is not so easy to imply an open ended duty to cooperate by permitting entry on the Property for the purpose of carrying out a valuation at any time. The correct interpretation of the contract depends on the intention of the parties as manifested by the contract itself. Where the contract is subject to a condition as to finance for the benefit of the purchaser, there would usually be an obligation on the Vendor to allow the Purchaser’s financier or a valuer to inspect the Property at a reasonable time well in advance of the settlement day.

The more difficult question is whether, as a general proposition, an implied term to permit an inspection of the Property is essential to the performance of the Purchaser’s obligations under an unconditional contract and, if so, what the limitations on such a term might be. It is essential to the completion of all contracts for the sale of land that the purchaser pay the balance of the purchase price at settlement. It is also common place, and generally known to vendors, that most purchasers of residential or commercial land require to borrow against the security of the land in question in order to pay the balance of the purchase price at settlement. A valuation may be necessary for that purpose, depending on the circumstances facing the purchaser (for example, the amount needed to be borrowed, whether the purchaser has other security to offer the lender, and perhaps many other factors). It may therefore be necessary for the Vendor to allow an inspection by a valuer to enable the purchaser to have the benefit of the contract.

It is, however, unnecessary to decide that general question for the purposes of this case. What is at stake in this case is the implication of a term which is unlimited as to time, which would allow inspection by a valuer right up to and including the day of settlement, as in this case was contemplated. The duty to cooperate, or an implied term, cannot be as wide as that propounded by the Purchaser in this case.

The Purchaser relied on two particular cases, Grubb v Toomey[16] and Grieve v Enge.[17] In each case there was a specific finance condition in the contract, for the benefit of the purchaser, giving the purchaser the right to terminate the contract by notice if the finance was not obtained by a certain date.
[16][2003] 12 TAS R 205.
[17][2006] QSC 37.

In Grubb v Toomey, Slicer J found, in a contract that contained a finance condition, that an implied term that the vendor permit access for the purpose of valuation was necessary to make the contract work and so obvious that it goes without saying. After referring to the requirements for the implication of a term in a contract (by reference to the five criteria referred to above at [46]), he said:

Clause 4(b) of the contract is a term commonly used in agreements for the sale of land. The condition is that the purchaser will use all reasonable endeavours to obtain sufficient finance to enable completion of the contract. It is self-evident from the term that the purchaser is seeking the provision of that finance from a third person, usually an institution or professional lender. It is usual for the finance provider to require security for the loan, usually provided by mortgage. A mortgage attaches to the land and affords the mortgagee a legal and equitable interest. A prudent lender would require satisfaction that there existed a valid title to the land and that its value would be sufficient, in the event of default, to secure the loan. That satisfaction requires evaluation, usually provided by one with skill and expertise in the area of valuation which, in turn, might require inspection of the property. In order to provide business efficacy, a term implicit in the clause is that the vendor permit access for the purpose of valuation. The term is necessary to make the contract work and is so obvious that it goes without saying….[18]

[18]Grubb v Toomey [2003] TASSC 131, [26].

In Grieve v Enge, Cullinane J concluded that once the vendor became aware that the bank required a valuation for finance purposes he was, in refusing to allow the valuer entry, in breach of the implied term that he would not do anything to prevent the contract from being carried into effect.[19]
[19]Grieve v Enge [2006] QSC 37, [60].

In my view, the considerations that moved the Courts in Grubb v Toomey and Grieve v Enge to imply terms that required the Vendor to permit inspection by a valuer do not impel either a duty to cooperate or an implied term as wide as the Implied Term propounded by the Purchaser. The Contract is not conditional upon the Purchaser obtaining finance. That was an important, possibly an essential, matter in each case. Even if there were such a term in this case, the term to be implied would be limited in time and would not enable inspection at the 12^th hour. A condition as unlimited as the Implied Term is not reasonable and equitable as between the parties, not necessary to give business efficacy to the contract and not so obvious that ‘it goes without saying’

The Vendor is also right in his submission that the presence of Special Condition 16 of the Contract places another barrier to the implication of the Implied Term. That condition provides that the Contract sets out all the terms and conditions of the sale. It may not be an unanswerable barrier, but it stands in the way of the implication of the Implied Term. The written instrument is comprehensive in its terms. In circumstances where the parties have agreed that the Contract contains their entire agreement, the court should be slow to imply into it a term that is so wide as the Implied Term and simply not necessary to make the Contract work. However, in the circumstances it is not necessary finally to decide whether this condition is a complete answer to the implication of the Implied Term.

Did the Vendor breach of GC 22?

This issue obviously involves the construction of that condition. The construction of a contract is to be determined objectively, and in the case of a commercial contract it is necessary to ask what a reasonable business person would have understood the terms to mean. The approach which should be taken to the construction of commercial contracts was summarised by the French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[20] to the following effect (citations omitted):
[20](2015) 256 CLR 104, 116-17, [46]-[50].

(a) The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose;[21]
[21]Ibid [46].

(b) In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract;[22]
[22]Ibid [47].

(c) Ordinarily, this process of construction is possible by reference to the contract alone. If an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning;[23]
[23]Ibid [48].

(d) However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding of the genesis of the transaction, the background, the context and the market in which the parties are operating. It may be necessary in determining the proper construction where there is a constructional choice;[24]

(e) Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations;[25]

(f) Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption that the parties intended to produce a commercial result. Put another way, a commercial contract should be construed so as to avoid it making commercial nonsense or working commercial inconvenience.[26]

[24]Ibid [49].

[25]Ibid [50].

[26]Ibid [51].

Submissions

The Purchaser submitted that GC 22 on its face gave the Purchaser or a person authorised by the Purchaser the right to inspect the property ‘at any reasonable time during the 7 days preceding and including the settlement day’ and that right was available for any purpose. The plain and literal meaning of the words should prevail. There are no semantic and syntactical issues, or issues of interpretation, to lead to a conclusion that the condition flouts business common sense.[27]
[27]Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181, 198 [43] citing Lord Diplock in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, 201.

The Purchaser submitted that the evidence referred to above (at [16]-[20]) demonstrates that the Vendor breached GC 22 on two occasions by refusing to allow an inspection of the Property on 27 June 2018 and on 29 June 2018. The Vendor knew, by at least 29 June 2018, that a valuer needed to inspect the Property on behalf of the Purchaser so that attempts could be made to obtain finance.

The Vendor’ submission traced the history of GC 22 and submitted that in the context of the Contract being unconditional as to finance, its purpose (bearing in mind it is a General Condition and not a Special Condition) was to permit a final inspection ‘during the 7 days preceding and including the settlement day’ by a purchaser to assess whether or not the Property is in the state commensurate with the Vendor’s contractual obligation. It is not a clause permitting inspection by a valuer for the purpose of the Purchaser obtaining finance to complete the purchase.

Consideration

In my opinion, the Vendor’s submissions are correct. On the face of the condition there is no express limitation of the kind identified by the Vendor. However, its words confer on the Purchaser a right to inspect during a confined period, that is, at any reasonable time during the 7 days preceding and including the settlement day. These words confine its operation as well as indicate its purpose. The condition is clearly intended for the benefit of a purchaser who is ready, willing and able to complete the contract on the settlement date. That is an assumption on which its operation depends. It is not for the assistance of a purchaser who has not prepared for settlement on the appointed day, or who has no intention of tendering the price on that day and it is not for the purpose of enabling a valuer to attend at the Property for the purpose of the Purchaser obtaining finance to complete the purchase.

In my opinion, this is not a case where the condition is susceptible of only one meaning. Hence, it is necessary to identifying the commercial purpose or objects of the condition. That task is facilitated by an understanding of the background, the context and the field in which the parties are contracting. There is a constructional choice involved in the meaning of the condition and the background and object or purpose of the condition assists in the choice of meaning.

The origin of GC 22 is the last sentence of clause 15 of Table A of the Seventh Schedule to the Transfer of Land Act 1958 (Vic) (TLA).[28] That clause provided:

The purchaser shall assume liability for compliance with any notices or orders relating to the property sold (other than those referring to apportionable outgoings) which are made or issued on or after the day of sale but the purchaser shall be entitled to enter on the property sold (without thereby being deemed to have accepted title) at any time prior to the settlement date for the purpose of complying with any such notice or order which requires to be complied with before the settlement date. The purchaser may also inspect the condition of the property and the chattels at any reasonable time during the period of seven days preceding the settlement date. [emphasis added]

[28]Russell Cocks, David Lloyd, Murray McCutcheon and Richard Park, ‘The 2008 Contract of Sale of Land (Vic.)’ (Paper delivered on the Television Education Network, September 2008); also published in the October edition of the Law Institute of Victoria Journal (2008) 2(10) Law Institute Journal 40.

The substance of the first part of this clause is now set out in GC 21. That clause makes the Purchaser responsible for compliance with ‘any notice, order, demand or levy imposing liability on the property that is issued or made on or after the day of sale that does not relate to periodic outgoings’. It gives the Purchaser the right to enter the Property to comply with that responsibility ‘where action is required before settlement’.

The second part of clause 15 of Table A is GC 22. The absence of the words ‘inspect the condition of the property’ in GC 22 might be thought to indicate a change in the scope of the right to inspect.

The origin, text and context of GC 22 points ineluctably to the conclusion that it is provided to enable the Purchaser to undertake a final inspection of the state of the Property and not, at the last minute, to have a valuer attend to undertake a valuation for the purpose of obtaining finance to enable completion of the Contract. The presence of the right of entry in GC 21 to comply with a notice, demand, etc, together with the limited right given by GC 22, indicates the limited rights of the Purchaser to enter upon the Property without some other valid contractual right. To much the same effect is the decision in Din v Sefou,[29] in relation to a right of entry on the property for the purposes of carrying out a valuation, and Simcevski v Dixon,[30] in relation to any right of entry on the property for the purposes of carrying out investigations for the purposes of a valuation.
[29][2001] VSC 489.
[30][2017] VSC 197.

Unconscientious conduct
Submissions

The Purchaser submitted that the Vendor’s refusal to permit inspection on 2 July 2018 as requested on 27 and 29 June 2018 was conduct that obstructed the Purchaser’s performance of the Contract. It was submitted that the Vendor’s conduct was unfair and unreasonable. That makes it unconscientious for him to rely on the default notice. In Aussie Invest Corp Pty Ltd v Pulcesia Pty Ltd[31] Dodds-Streeton J reviewed the authorities in this difficult area of the law, particularly Legione v Hateley,[32] Stern v McArthur[33] and Tanwar Enterprises Pty Ltd v Cauchi,[34] and said:

Although each case will turn on its own facts, a vendor’s obstruction of the purchaser’s performance, whether by an unreasonable or unfair refusal to afford an opportunity to tender it within the time stipulated or other relevant conduct, would usually render it unconscientious to insist on termination of the contract in reliance on the purchaser’s breach. Such conduct would exemplify substantial causation of, or contribution to, the purchaser’s breach which … may justify equitable relief.[35]

[31](2005) 13 VR 168 (Aussie Invest).

[32](1983) 152 CLR 406 (Legione).

[33](1988) 165 CLR 489 (Stern).

[34](2004) 217 CLR 315 (Tanwar).

[35]Aussie Invest [2005] 13 VR 168, 204 [291].

The Purchaser submitted that, although GC 16.1 of the Contract provided that time was of the essence, it would be unconscientious for the Vendor to insist on termination of the Contract in accordance with the Default Notice having regard to the following:

(a) the two breaches of GC 22 and/or the Implied Term by the Vendor’s refusal on 27 and 29 June 2018 to permit inspection of the Property by a valuer;

(b) the Vendor accepted that in all likelihood, or he assumed, that the purpose of the valuer attending the property to inspect was so that finance could be obtained to settle the purchase;

(c) it may therefore be inferred that the defendant knew that denying access may contribute to finance not being obtained by the Purchaser or his nominee;

(d) by refusing inspection on 27 and 29 June 2018 the Vendor contributed to the failure by the plaintiff to complete by the settlement day, or at the worst, by the end of the Default Notice period, which the Purchaser was permitted to do.

The Purchaser also submitted that the conduct of the Vendor after the Default Notice was sent on 3 July 2018, arranging the inspection of the Property by the valuer and at first allowing a final inspection, then retracting the consent, ‘would have led the defendant to believe that the contract was no longer liable to termination.’

The Vendor submitted that there is nothing in the evidence to suggest that the Vendor induced in the plaintiff to believe that he would not insist upon compliance with the contract. There were letters from the Vendor’s solicitor rejecting the requests for an extension of settlement day, and insisting upon settlement by 2 July. The Vendor referred to the lack of any evidence as to the availability of finance to complete the Contract, and a range of other matters that tell against the conduct of the Vendor being unconscientious in the circumstances, to which I refer below.

Consideration

The submission that it is against conscience that the Vendor rely upon its rights under the Contract should be rejected. In my opinion, the facts of this case as set out above ([6]-[34]), do not warrant any conclusion that the conduct of the Vendor in insisting on completion on the settlement day and not permitting inspection on the day fixed for settlement, warrants characterisation as unconscientious conduct.

It was not unfair to refuse the inspection at the times that the requests were made for an inspection so close to the settlement day, considering the Purchaser had not provided the Transfer of Land and statement of adjustments (as required by GC 6), despite repeated requests, and had not accepted the on-line duties request initiated by MML through the duties on-line portal.

There is absolutely no evidence that the refusal caused or contributed to the Purchaser’s default because:

(a) the first occasion on which access to the Land for the purposes of valuation was proposed was on 27 June 2018, 4 days before 2 July 2018, the due date for settlement. The next attempt was on 29 June 2019 for an appointment on the settlement day itself;

(b) even if a valuer had inspected the Property on 2 July 2018, settlement could not have taken place on that day. The Purchaser had not delivered the Transfer of Land and the statement of adjustments, nor had his conveyancer, MC, responded to the duties request initiated by MML;

(c) there is no evidence of how long the valuer would have taken to produce a report nor how long the lender would have taken to consider the application for finance following receipt of any valuation;

(d) there is no evidence that, assuming a valuation, the lender would have approved a loan. There is in fact, no evidence from the lender (or valuer) at all; and

(e) there is no evidence about how much the lender would have been prepared to advance on the basis of any notional valuation and on what terms or how quickly the lender could have made funds available after receipt of such valuation.

Most significantly, there is no evidence of the disadvantage or loss the Purchaser has suffered, apart from the deposit paid (which was 5%, much less than the usual 10% deposit). There is some suggestion that the value of the Property has increased, but no evidence of it. It is not a case of the kind considered in Legione,[36] Stern, [37] Tanwar,[38] or Aussie Invest[39] as warranting the intervention of equity. There is no allegation by the Purchaser of any fraud, accident, mistake or surprise, let alone one induced by the conduct of the Vendor. There is no ‘estoppel, lying by, lulling to sleep or other such conduct of the vendors bearing upon the matter’.[40]
[36](1983) 152 CLR 406.
[37](1988) 165 CLR 489.
[38](2004) 217 CLR 315.
[39](2005) 13 VR 168.
[40]Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367, 376 [26] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ).

The Purchaser never explained why he, or his nominee, left it so late (in a contract with a long settlement period) to apply for finance to complete the purchase. The inference is that the long period between Contract and settlement was designed, and that at all times it was the intent, to re-sell the Property before completion was due, and that was why no step had been taken to obtain finance to complete until shortly before the settlement day. But this was denied by the Purchaser in cross-examination who suggested, faintly and unclearly, that he and Mr Marwaha had approval for development of the Property with a medical and childcare care centre. There was no evidence of this approval in evidence, and Counsel for the Purchaser did not rely upon the faintly advanced suggestion in re-examination or in submissions.

In addition, the relief in equity upon which the Purchaser relies is intimately connected with the availability of specific performance of the Contract, such relief being granted in equity alone, and relief which requires the Purchaser to establish that he is ready, willing and able to complete. The Purchaser’s interest in the Property, in respect of which he seeks relief from forfeiture on the basis of the unconscientious conduct of the Vendor, is commensurate with the availability of specific performance.[41] There is no evidence of the Purchaser being ready, willing and able to complete the Contract at any time.
[41]Tanwar (2003) 217 CLR 315, 330-4; Aussie Invest (2005) 13 VR 168, 198 [259] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ).

Further, there was no evidence that the Purchaser was involved in the application for finance or the requests for access to the Property. There is no evidence that the Purchaser, or anybody appointed by him, did anything at all. What was done was by Gaurav Marwaha, a person unknown to the Vendor who had apparently been nominated as a substitute purchaser. There is unchallenged evidence of Mr Cox that the first he knew of the purported nomination was when he was served with the affidavit material once this litigation had commenced.

The nomination does not act as a novation of the Contract and gives the nominee no contractual rights under it.[42] That is clear from the words of GC 18, because the right given by that condition to nominate a substitute or additional purchaser is qualified by the words - but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract. These words confirm the intention of the contracting parties that there is to be no change in the identity of the parties to the contract or their respective obligations.[43] The nomination in this case is no more than a direction to the vendor as to who should be named as transferee in the instrument of transfer of the land.[44]
[42]428 Lt Bourke St Pty Ltd v Lonsdale St Café Pty Ltd [2009] VSC 133, [18]-[39].
[43]Ibid, [35].
[44]Salter v Gilbertson (2003) 6 VR 466, 473 (Phillips JA, Winneke P and Batt JA agreeing); Russell Cocks, David Lloyd, Murray McCutcheon and Richard Park, ‘The 2008 Contract of Sale of Land)’ (Paper delivered on the Television Education Network, September 2008); also published in the October edition of the Law Institute of Victoria Journal (2008) 2(10) LIJ 40.

These conclusions put paid to the contention that the Purchaser or his representative had a contractual right to enter the Property for the purposes of undertaking a valuation at the time requested. There is thus nothing standing in the way of the Vendor giving the Default Notice. As the Vendor noted in his submissions, the prevention principle has no work to do in this case.[45] It cannot be said that the refusal by the Vendor to permit an inspection on 2 July 2018 (if that is what it was) pursuant to requests made on 27 and 29 July 2018, is a default under the Contract that has deprived the Purchaser of a ‘substantial chance’ to complete the Contract, either by settling it on 2 July 2018 or within the 14 day period of the Default Notice and in compliance with the Default Notice.
[45]The prevention principle, whereby a party to a contract is prevented from taking advantage of his own wrong, or the existence of a state of things which he has produced himself, is explained by Riordan J in Simcevski v Dixon [2017] VSC 197 [62]-[63]; referring to New Zealand Shipping Co v Societe des Ateliers et Chantiers de France (1919) AC 1, 6-7 (Lord Finlay); Roberts v Wyatt (1810) 2 Taunt 268, 276; CSS Investments Pty Ltd v Lopiron (1987) 16 FCR 15, 31-2; Joseph Street Pty Ltd v Tan (2012) 38 VR 241, 257 [47] (Warren CJ, Nettle JA and Cavanough AJA).

Is the Default Notice effective to terminate the contract?

It is common ground that the Default Notice was served on 4 July 2018 and that the period of 14 days expired on 18 July 2018. The Purchaser contends that the Default Notice needed to be clear and unambiguous,[46] and that it was not. The ambiguity is in the date for settlement. It listed in Item 6 of its schedule a due date of 30 June 2018, but in item 7 states that the Purchaser is in default by having failed to settle on 2 July 2018. The Purchaser contends that a reasonable person, having considered the Default Notice as a whole, fairly and properly, might entertain a doubt as to its meaning in relation to an essential matter;[47] – that is, the timing of the alleged default.
[46]U108 Pty Ltd v Sing Fan & Ors [2010] VSC 12, [43].
[47]Ibid [43]-[44].

The Vendor submitted that:

(a) the Default Notice was not defective. An effective notice is one which conveys its message clearly and distinctly to a reasonable reader in the position of the recipient of the notice. Being “in the position of the recipient” involves, in particular, having the knowledge of the circumstances surrounding the transaction in which the notice is given which the recipient has or ought to have.[48]

(b) A reasonable reader in the position of the Purchaser would have known that the due date under the Contract was 30 June 2018. He would also have known that, because that date fell on a Saturday, GC 16.2 of the Contract extended the time for settlement until the next business day, that is 2 July 2018. There is no ambiguity. The Default Notice conveyed its message (that the Purchaser had failed to settle on 2 July 2018 as required by the Contract) clearly and distinctly.

[48]Robinson v BecataPty Ltd [2004] NSWSC 310 [30]-[35].

In U108 Pty Ltd v Sing Fan,[49] Hargrave J summarised the relevant legal principles to be applied in determining whether or not a rescission notice is valid, as follows:

The relevant legal principles to be applied in determining whether or not a rescission notice is valid are not in doubt. The relevant authorities were reviewed by Campbell J in Robinson v Becata Pty Ltd.[50] I respectfully adopt his Honour’s analysis. In summary, a rescission notice served under general conditions 5 and 6(2) of Table A must, in relation to its essential features as required by those conditions, be clear and unambiguous. In determining whether or not a rescission notice is relevantly clear and unambiguous, the Court applies an objective approach. In Catley v Watson,[51] Brooking J (as he then was) expressed the applicable standard of objective reasonableness in the following terms:
A notice is not unequivocal, in the sense in which such notices are required to be unequivocal in relation to their essential contents, if a reasonable person, having considered the notice as a whole, fairly and properly, might entertain a doubt as to its meaning in relation to some essential matter, even though he would form in his mind a preference for one view, rather than the other of what the notice was intended to convey. It must be possible to say that, after the appropriate consideration, any doubts that may have arisen would be quieted and the purchaser would not be left in any uncertainty as to the meaning of the notice.^[52]

This statement by Brooking J has been applied in a number of Victorian cases, and further consideration has been given to the attributes of the ‘reasonable person’ for these purposes. In Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd,[53] Ormiston JA said that the relevant reasonable person was ‘a reasonable reader in the position of the purchaser.’[54] This approach was endorsed by Winneke P (with whom Charles and Eames JJA agreed) in Greydae Pty Ltd v Malilane Pty Ltd.[55] A reasonable reader in the position of the purchaser must be taken as one who knows the terms of the contract of sale, including general conditions 5 and 6 of Table A, and who is aware of the surrounding circumstances relating to the default.[56]

[49][2010] VSC 12 [43]-[44]; approved in Androvitsaneas v Members First Broker Network Pty Ltd [2013] VSCA 212 [40]-[41].

[50][2004] NSWSC 310 [30]-[35].

[51](1981) V ConvR 54-003.

[52]Ibid 62, 115.

[53](1998) V ConvR 54-575.

[54]Ibid 66, 902.

[55][2003] VSCA 27 [31].

[56]Ibid.

In my opinion, the submissions of the Vendor are correct. The Default Notice, the text of which is set out in the Annexure to these reasons, is clear and unambiguous to a reasonable reader with knowledge of the transaction and circumstances surrounding it. The due date specified in item 6 of the schedule in the Default Notice, having regard to the terms of the Contract, which the reasonable purchaser reading the Notice would know, is the date specified in the Contract as the settlement day. Any reasonable reader would naturally consult a calendar and realise, indeed having regard to the time when the Notice was sent, should know, that 30 June 2018 was a Saturday and that the Contract provided for the time to be extended to the next business day. The date in item 7 was the next business day. A reasonable reader in the position of the Purchaser would have found no ambiguity.

Conclusion

For the above reasons, the Purchaser is not entitled to the relief sought in the amended originating motion. The Vendor did not breach of GC 22, there is no term to be implied in the Contract as submitted by the Purchaser and the Default Notice should not be set aside. In these circumstances, the Contract has been validly rescinded and the deposit, such as it is, is forfeited to the Vendor.

Caveat removal

The Vendor submitted that if the Purchasers relief was refused the Court should order the removal of the Caveat lodged by MC on behalf of the Purchaser. The Purchaser addressed no argument as to this application. Such an order would follow from the findings that I have made. It seems to me that the power of the Court under s 49 of the PLA extends to enable such an order to be made. I will not take the matter further until the Purchaser has had an opportunity to make submissions, if he elects to do so.

The appropriate orders are that the Purchaser’s originating motion be dismissed with costs. However, because of the presence of the caveat, I will hear the parties as to the appropriate orders if necessary.

ANNEXURE

NOTICE OF DEFAULT & RESCISSION

To the Purchaser:	Lovnish Mediratta of 79 Waterview Boulevard, Craigieburn, Victoria, 3064
And to the Purchaser’s legal practitioner	Marwaha Conveyancers of P.O. Box 1668 Melton West, 3337, Victoria, 3337.

SCHEDULE

1.	Vendor:	Rolland Leslie Clark
2.	Purchaser:	Lovnish Mediratta
3.	Date of contract:	22 April 2017
4.	Land description:	Certificate of Title Volume 8792 Folio 998
5.	Property address:	137 King Street, Wallan, Victoria, 3756
6.	Due date:	30 June 2018
7.	Particulars of default	The purchase is in default under the Contract of Sale by having failed to settle on 2 July 2018 and by having failed to deliver a Transfer of Land in default of General Condition 6.
8.	Interest rate:	12.00% per annum
9.	Legal costs:	$660.00

Take notice that you are in default under the contract referred to in the schedule and that the particulars of the default are specified in item 7 of the schedule.

Take further notice that the Vendor intends to exercise their contractual and other rights unless:

1.	The default is remedied;
2.	Interest on the amount due under the contact at the rate specified in item 8 is paid ; and
3.	Costs specified in item 9 are paid;

Within 14 days of service of this notice upon you.

Take further notice that unless the default is remedied and interests and costs paid in accordance with this notice, the contract will be rescinded pursuant to general condition 28 of the contract of sale.

Dated 3 July 2018

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Citations

Mediratta v Clark [2019] VSC 685

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15 October 2019