Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd

[1976] HCA 30

HIGH COURT OF AUSTRALIA

Barwick C.J., Mason and Jacobs JJ.

MERITON APARTMENTS PTY. LTD. v. McLAURIN &TAIT (DEVELOPMENTS) PTY. LTD.

(1976) 133 CLR 671

21 June 1976

Vendor and Purchaser

Vendor and Purchaser—Specific performance—Vendor not registered as proprietor of land sold but purchaser under valid and binding contract of sale—Whether decree of specific performance obtainable against purchaser—Real Property Act, 1900 (N.S.W.), as amended, s. 43A.

Decision

June 21. THE COURT delivered the following written reasons for judgment:-
By a contract dated 16th February 1973 the respondent agreed to sell and the appellant agreed to purchase for $354,000 a group of contiguous properties at 85-91 Cook Road, Centennial Park, Sydney. The contract was on the printed form of the 1972 edition of the Law Society of New South Wales. It provided for the payment of the balance of the purchase price in cash on completion which was to take place on or before 28th August 1973. The contract was subject to a condition requiring the approval of the Council of the City of Sydney to a development application for the erection of forty-eight units consisting of thirty-six two bedroom and twelve one-bedroom units. The contract further provided that in the event that the approval was not forthcoming within five months of the date of the contract the respondent should be entitled to rescind. As it happened the Council gave its approval within the time stipulated. (at p673)

2. The property then became the subject of "green bans" or embargoes imposed by certain trade unions in the building industry because they opposed the use of the land for the proposed development. The appellant declined to complete the purchase, claiming a right to rescind on various grounds which are not now material. In consequence of the appellant's claim to rescind, proceedings were instituted in the Supreme Court of New South Wales in which a declaration was made that there was a valid and subsisting contract. From this decision the appellant appealed unsuccessfully to the Court of Appeal and later sought leave from the Privy Council to appeal from the judgment of the Court of Appeal. Once again the appellant was unsuccessful. (at p673)

3. However, the appellant still refused to complete, with the result that the respondent commenced an action for specific performance in the Supreme Court. An order for specific performance was made by Wootten J. from which the appellant appealed to this Court. At the conclusion of the hearing we dismissed the appeal and announced that our reasons would be delivered later. (at p673)

4. The principal point argued in support of the appeal was that as the respondent was not the owner of the property sold when the action was heard he was not ready and able to complete the purchase. Although title to the land was held under the Real Property Act the respondent was not registered as the proprietor. In fact it had exercised options to purchase the individual properties the subject of the sale but the contracts constituted by the exercise of the options have not yet been completed and the respondent has not been registered as the proprietor. The respondent proposed on completion to deliver instruments of transfer executed by the existing registered proprietors by direction of the respondent. The respondent sought the appellant's concurrence to this proposal. The appellant did not make its attitude known until the hearing of the action when, at the conclusion of the evidence it presented the argument now under consideration. The primary judge did not consider for himself the question now raised by the appellant as it was common ground that he was bound by the decision of the Court of Appeal in Jonray (Sydney) Pty. Ltd. v. Partridge Bros. Pty. Ltd. (1969) 89 WN (Pt 1) (NSW) 568 to hold that this submission was not a bar to the respondent's success. (at p674)

5. The appellant argued that Jonray (Sydney) Pty. Ltd. v. Partridge Bros. Pty. Ltd. was wrongly decided, submitting that at common law the vendor was bound to deliver a conveyance which he had executed and that it was not enough to deliver a conveyance executed by a predecessor in title. Underlying this approach is the notion that, in the absence of an appropriate provision in the contract, the vendor cannot impose upon the purchaser the burden of verifying the signature of a person who is not a party to the contract. In the case of land under Torrens title this consideration is reinforced, so the argument went, by the deprivation which the purchaser may suffer because he will or may be denied the protection otherwise accorded to him by s. 43A of the Real Property Act 1900 (N.S.W.), as amended, if he receives an instrument of transfer executed by a person other than the vendor - see in this respect the judgment of Kitto J. in I.A.C. (Finance) Pty. Ltd. v. Courtenay (1963) 110 CLR 550, at p 573 . (at p674)

6. We think the point taken by the appellant is not a good defence to the action. With reference to want of a good title as a defence to a vendor's suit for specific performance Fry on Specific Performance, 6th ed. (1921), p. 410, says: "Where the vendor of land sues the purchaser for a specific performance of the contract, the defendant is entitled to have the action dismissed, if it appear that the plaintiff cannot make out a good title to the land." The learned author goes on to say: "The title which the vendor must show must be a title in himself, or in those whom he has a legal or equitable right to require to join in the conveyance..." (at p674)

7. There is a wealth of authority in England and Australia to support the general rule that, in the absence of special agreement to the contrary, the vendor shows a good title by showing a good equitable title and a power to get in the legal estate, or as it is sometimes put, by showing that he can compel the assurance of all necessary interests in the subject matter of the sale (see Camberwell and South London Building Society v. Holloway (1879) 13 Ch D 754, at p 763 ; Harold Elliott and H. Elliott (Builders) Ltd. v. Pierson (1948) Ch 452, at p 455 ; Bell v. Scott (1922) 30 CLR 387, at pp 392, 399 ). (at p675)

8. That the respondent had the benefit of valid and binding contracts to purchase individual properties from the registered proprietors was not disputed by the appellant. A witness called by the respondent was cross-examined in a desultory fashion with a view to suggesting that the respondent lacked the financial ability to complete the contracts but the suggestion met with the general response that bank finance would be available in addition to some accommodation which had been granted by the individual vendors. The suggestion may therefore be discarded. Instruments of transfer from the individual vendors had not been delivered to the respondent by the date fixed by the contract for completion because it was intended by the respondent that completion of the contracts with these vendors should take place at the time of completion of the contract between the respondent and the appellant. The contracts with the individual vendors all provided that completion should take place on 28th August 1973, the date fixed for completion of the present contract. On the evidence therefore the respondent emerged as a vendor able to compel an assurance from the existing registered proprietors. (at p675)

9. Since on the evidence the respondent was in a position to give a good title on completion, the appellant's objection to the form of the instrument of transfer proposed by the respondent goes not to a want of capacity in the respondent to give a good title but to the form of the conveyance. Having regard to its character and to the circumstances in which it was taken for the first time after the completion of the evidence, the appellant's objection cannot on any view constitute a denial of the respondent's readiness, willingness or ability to perform the contract. Even if it were well founded, the objection would merely demonstrate that the appellant was acting within its rights in rejecting a proposal made by the respondent as to the form of transfer. It would not show a want of readiness or willingness in the respondent to complete the contract. (at p675)

10. As it happens, it is our view that the objection is not well founded. If the vendor shows a good title by showing a good equitable title and a power to get in the legal estate, or by showing that he can compel the assurance of all necessary interests in the subject matter of the sale, it is because he is in a position to cause to be vested in the purchaser all that the latter has contracted to get. In the absence of an agreement to the contrary the identity of the transferor is an irrelevant consideration so long as it is established that he transfers title to the appropriate estate. That the purchaser may have some difficulty in the case of common law title, as Williams on Vendor and Purchaser, 4th ed. (1936), pp. 642-643, suggests, in verifying the signature of a person other than the vendor, is not a sufficiently strong consideration for holding that the delivery of an instrument of transfer executed by the person registered as the proprietor of the appropriate estate or interest in land under the Real Property Act is not a discharge of the vendor's obligation to give a good title. (at p676)

11. Indeed, there is an advantage to the purchaser in taking a transfer direct from the registered proprietor - the risk that intervening equitable interests will arise is diminished. And this procedure does not lessen the protection which s. 43A of the Real Property Act affords. The limited operation of that section is, we think, correctly explained by Taylor J. in I.A.C. (Finance) Pty. Ltd. v. Courtenay (1963) 110 CLR, at pp 583-585 ; see also United Starr-Bowkett Co-operative Building Society (No. 11) Ltd. v. Clyne (1967) 68 SR (NSW) 331, esp at pp 340-341 ; and the Jonray Case (1969) 89 WN (Pt 1) (NSW), at pp 576-577 . The reasons given by Taylor J. indicate persuasively that the section confers upon a purchaser who has received a registrable instrument and paid the purchase money the same protection against notice as that achieved by a purchaser who acquires the legal estate at common law, rather than the larger degree of protection the purchaser would achieve if, in accordance with the view expressed by Kitto J. in the same case, the section advanced in time the protection which ss. 42 and 43 give upon registration. (at p676)

12. Once the more limited view of s. 43A is accepted, the principal ground of criticism of the Jonray Case (1969) 89 WN (Pt 1) (NSW) 568 disappears and the reasons which led the Court of Appeal to the conclusion that in the absence of some special provision in the contract of sale the purchaser is bound to accept a transfer from the registered proprietor by the direction of the vendor remain undisturbed. (at p676)

13. More recently in Rands Developments Pty. Ltd. v. Davis (1975) 133 CLR 26, at p 35 , Jacobs J. expressed the view that, subject to any agreement to the contrary, a purchaser was entitled to have followed that procedure on settlement which will "minimize as far as was reasonably possible the risk to him of failing to obtain registration", and that this procedure called for the delivery on settlement of a transfer executed by the registered proprietor. Gibbs J. (with whom Stephen J. agreed) found it unnecessary to examine this question. However, Gibbs J. did observe that (1975) 133 CLR, at p 31 , "Speaking generally, a vendor is obliged to execute a conveyance of the land sold to the purchaser or as he shall direct (see Vickery v. Woods (1952) 85 CLR 336, at p 343 and Curtis Moffat Ltd. v. Wheeler (1929) 2 Ch 224 ), but in my opinion it does not necessarily follow that a purchaser is obliged to accept a conveyance from anyone other than the vendor". His Honour went on to say: "... it has been held in Canada that under a contract by which a vendor agrees to convey lands to the purchaser the latter has the right to refuse conveyance from a third person: Stewart v. Friedrichsen (1960) 24 DLR (2d) 477, at p 479 ." We read these remarks, not as expressing disagreement with the view stated in the Jonray Case (1969) 89 WN (Pt 1) (NSW) 568 but rather as indicating that there is a question to be resolved. For our part, without seeking at this time to qualify the rule to which his Honour referred in its application to property not under the Real Property Act, we would answer that question as already indicated, recognizing that land under the Real Property Act stands in a special position and that conveyancing procedures in relation to such land are affected by practical considerations which make this a desirable result. The decision in Stewart v. Friedrichsen (1960) 24 DLR (2d) 477 turned partly on a provision in the contract which was regarded as a covenant by the vendor to convey personally the estate to the purchaser and partly on a statutory provision which was held to impose an obligation to the like effect. (at p677)

14. The appellant made three other submissions none of which requires lengthy discussion. In our view the primary judge was correct in holding that under cl. 3 of the form of contract the vendor's duty to supply particulars of title does not arise until the lapse of a reasonable time after written request is made by the purchaser. No such request was ever made. Furthermore, the particulars of title were stated in the contract and the respondent's solicitor supplied his title searches to the appellant's solicitor, the searches containing particulars of title. Likewise his Honour was correct in holding that the imposition of the green ban did not work a frustration of the contract. The imposition of the ban after the property was at the risk of the purchaser, though it did not destroy the subject matter of the contract, substantially diminished its value and prevented the use of the land for the purpose for which the purchaser bought it. But this is not enough to bring into play the doctrine of frustration. The availability of the land for the proposed development was not made a condition of the contract and there is no basis upon which a term to that effect could be implied. The contract stipulated that the development should be approved by the Council within a particular time, but beyond this the contract did not go. That, as the primary judge observed, was the one risk in relation to the contingencies affecting development which was to be borne by the respondent, leaving all other risks to be borne by the appellant. (at p678)

15. Finally there was the argument that specific performance should have been refused on the ground that to enforce the contract would impose hardship on the appellant. Again we see no reason to doubt the correctness of his Honour's rejection of this submission. There was in this case no unconscionable conduct, no overreaching on the part of the vendor in the making of the contract; nor was there any default or delay on his part in completing the contract. The green ban imposed, as it was, after the property was at the risk of the respondent was an industrial risk of a kind which a purchaser might expect to encounter in the execution of a commercial development. (at p678)

16. It is for these reasons that we participated in the order dismissing the appeal. (at p678)

Orders

Appeal dismissed with costs.