Re Ronim Pty Ltd & Imperial Brothers Pty Ltd

[1998] QSC 245

IN THE SUPREME COURT

OF QUEENSLAND  O.S. No. 9731 of 1998

Brisbane

[Re Ronim Pty Ltd & Imperial Brothers Pty Ltd]

IN THE MATTER of The Property Law Act 1974

- and -

IN THE MATTER of a Contract of Sale between RONIM PTY LTD (ACN 001 387 051) and IMPERIAL BROTHERS PTY LTD (ACN 076 760 131)

REASONS FOR JUDGMENT - MOYNIHAN J.

Judgment delivered 6 November, 1998

1. This is an application pursuant to s.70 of the Property Law Act 1974 (the Act) for a declaration that a contract for the sale of freehold land dated 25 August, 1998 between the applicant as purchaser and the respondent as vendor remains on foot.

2. By the contract the respondent agreed to sell the land to the applicant for $3,625,000.00 with a deposit of $181,200.00.  There were commercial premises on the land and completion of the contract involved the assignment of service contracts and leases as well as the release of mortgages.

3. The contract provided that the date for completion was 13 October, 1998.  Condition 4 of the standard conditions forming part of the contract provided to the effect that the balance of the purchase price was to be paid on the date of completion in exchange for (among other things) possession and a properly executed transfer capable of immediate registration free from encumbrances.  The contract contained a special condition (8) giving the applicant access to part of the property prior to completion in order that it might set up its management offices.

   Clause 25.1 of the standard conditions of contract relevantly provided:-

   “Completion shall be effected at such time and place as may be agreed upon by the parties.  The time for completion shall be between the hours of 9.00 a.m. and 5.00 p.m. on the Date for Completion.  Despite any agreement by the parties as to a specific time for completion the provisions of Clause 26 does not apply in respect of that time”.

5  The place of settlement was to be the office of the respondent’s solicitors.  Clause 26 provided that except as otherwise provided “time shall be deemed to be of the essence of the contract”.

1. The parties had agreed on 3.30 p.m. as the time for completion but nothing turns on that.  Nor does anything turn, for present purposes, on whether there was any delay by the respondent in providing information for the calculation of the balance of the purchase price payable after adjustment although the applicant’s material refers to this.

2. At about 12.30 p.m. on 13 October, Ms Cuman, the articled clerk having conduct of the matter learned that it was not possible to carry out a check search because the relevant departmental computer system was not operating.  At the direction of her supervising partner she endeavoured to contact the respondent’s solicitor to obtain an extension for the time of settlement until the following day so that the search might be carried out when the system became operational.  The material refers to difficulties Ms Cuman had in effecting contact with the solicitor.  On the view I take of the matter nothing turns on that. 

3. In the event an extension was refused.  Ms Cuman confirmed that she would be attending at the settlement and requested that the previously agreed time of 3.30 p.m. be altered to 5.00 p.m. so that she could arrange for and collect the necessary cheques and to drive from Brisbane to the Gold Coast where the respondent’s solicitors had their offices.

4. Ms Cuman left Brisbane shortly after 3.00 p.m. in a motor vehicle driven by another articled clerk.  Severe thunderstorms and consequential traffic disruption delayed their progress.  In the course of the journey Ms Cuman, who had a mobile phone, advised the respondent’s solicitors that the purchaser wished to settle and, given the traffic conditions, would do so at some time between 5.00 and 5.15 p.m.  In the course of another telephone call during the journey she purported to “reserve the applicant’s rights to settle after 5.00 p.m.” and was informed that the respondent’s solicitor had instructions not to settle after 5.00 p.m.  She made a further telephone call during the course of the journey to seek direction as to the best route - having regard to the prevailing traffic conditions - to the respondent’s solicitor’s offices.  She arrived there a few minutes after 5.00 p.m.

5. When Ms Cuman arrived she was ready, willing and able to complete the contract on the applicant’s behalf.  The other parties to the settlement, the respondent’s solicitor and a mortgagee’s representative equipped with the necessary release were also present and were in a position to complete the contract.  The respondent’s solicitor however stated that as Ms Cuman was late, he would need to obtain instructions.  I should remark at this stage that given the reciprocal nature of the settlement obligation, it is I think little to the point that the applicant could have made alternative arrangements for the funds for completion to be provided.  It should also be noted that the evidence is that to check the relevant documentation, the figures and to otherwise do what was necessary to effect completion, would take about half an hour.

6. The respondent’s solicitor left the room to obtain instructions and returned shortly afterwards stating that his instructions were to the effect that the vendor was not proceeding with the settlement since the purchaser’s solicitors had arrived too late.  The contract was not completed.

7. By a letter of 14 October (inadvertently dated 13 October) 1998 the vendor’s solicitors stated that:-

   “In accordance (with) standard condition 13 of the Contract, it hereby terminates the contract, declares the deposit forfeited and reserves its rights pursuant to the terms of the contract”.

1. Clause 13 of the standard condition gave the purchaser the option of affirming or  terminating the contract in the event of the purchaser’s failure to comply with any of its terms or conditions.  If the vendor affirmed, it could sue for the deposit or any outstanding balance, for damages for breach of contract or for specific performance and damages in addition to or instead of damages for breach.  In the event that it terminated the contract it could declare the deposit forfeited, sue for breach or re-sell recovering any deficiency and expenses associated with the re-sale as liquidated damages.

2. The respondent submits that the court ought not deal with the matter pursuant to s.70. It seems to me that the question is not one “affecting the existence” of the contract in terms of the exception provided for by that section. There is no doubt that there was a contract, indeed the respondent relies on it both to justify its termination and for the consequences of what it contends was its lawful termination on the 14th; c.f. re: MacDonald[1].  There is no issue about the facts upon which the resolution of the issue raised by the application turns and it seems to me appropriate to dispose of it.

   [1] (1989) 2 Qd.R. 29 per Dowsett J. at page 33, Matthews and Carter JJ’s concurring.

3. The question whether a contractual provision is essential, so that breach of it is repudiatory, and the question of whether an essential condition is satisfied by substantial as distinct from strict performance are different questions; per Bryson J. Smilie Pty Ltd v. Bruce[2].  His Honour went on to point out, citing Tramways Advertising Pty Ltd v. Luna Park NSW Ltd[3], that a condition may be essential yet substantial performance be sufficient compliance. 

   [2](unreported) SC NSW 4023/97, (judgment 17 February, 1998). 

   [3](1938) 38 SR NSW 632 at 642.

4. In Lohar Corp Pty Ltd v. Dibu Pty Ltd[4] the issue was whether the time given by notice of completion of a contract of sale of land was reasonable.  It was submitted that it should have been found that the vendor was not ready, willing and able to settle at the appointed time because it was without lease documents and bond money which it was conceded “he could have laid his hand on in 10 minutes”.  Glass JA expressed the view  that consideration of whether a party had failed to perform or was ready, willing and able to complete depended on all the circumstances viewed practically and on the nature of the obligation in question.  In Lowe v. Evans[5] McPherson J. concluded that a contract had been discharged because the vendors were not able to settle in circumstances where it could not be said that the precise settlement time was “marginally” exceeded.  He spoke of the parties wishing to identify with some precision, the time of day at which settlement was to take place so as to enable the contract to be rescinded if it was not adhered to but that it could not necessarily be assumed “that they intended seconds or minutes to be critical”. 

   [4]1 Butterworth Property Reports 97014.

   [5](1989) 1 Qd.R. 295.

5. Union Eagle Ltd v. Golden Achievement Ltd[6] was an appeal against the dismissal of an action for specific performance.  The principle issue was whether the court had and should exercise an equitable power to absolve a purchaser from the contractual consequences of being late and to decree specific performance.  In that case the purchaser tendered the balance of the purchase price 10 minutes after the time for completion of the contract which expressed time to be of the essence and the vendor thereupon declared the contract rescinded and the deposit forfeited.  The issue of substantial compliance with an essential condition does not seem to have arisen for consideration.  The Privy Council rejected what it regarded as a relaxation of the principle in Steedman v. Drinkle[7] and by the High Court in Legione v. Hateley[8]; and Stern v. McArthur[9] noting that it remained for consideration on some future occasion as to whether the problems which arose in such cases should be dealt with by “relaxing” the principle in Steedman “as the Australian courts had done” or by developments of the law of restitution and estoppel.

   [6](1997) 2 WLR 341 (P.C.).

   [7](1916) 1 AC 275, PC.

   [8](1983) 152 CLR 406.

   [9](1988) 165 CLR 489.

6. In the present case the contract was on foot when the purchaser’s agent arrived to  complete and the vendor and purchaser were in a position to complete but the vendor declined in the circumstances mentioned earlier.  There is no basis, apart from the terms of the clause, for concluding that the parties intended minutes to be critical to completion.  It is of some interest that the completion of this particular settlement if commenced at, say, 4.45 would have gone past 5.00 where as a less complex transaction could so have finished by 5.00.  In my view in the circumstances, there was substantial performance of the vendor’s obligation with the consequence that the contract remains on foot.