Rona v Shimden Pty Ltd

[2005] NSWSC 818

CITATION:	Rona v Shimden Pty Ltd & 1 Or [2005] NSWSC 818
HEARING DATE(S):	04/07/05, 05/07/05; written submissions 29/07/05
JUDGMENT DATE :	29 August 2005
JUDGMENT OF:	White J
DECISION:	See paragraph 98 of judgment.

CATCHWORDS:	CONVEYANCING - Contract for sale of land - Purchaser seeks return of deposit - Where purchaser purported to rescind for vendor's failure to provide release of restrictive covenant - Where vendor purported to terminate for purchaser's failure to complete - Construction of term granting right to rescind - Vendor's notices to complete invalid - Whether vendor able to complete - Who could release covenant - Both parties had purported to rescind and both had repudiated contract - Vendor also purported to accept purchaser's repudiation - Held neither party had terminated the contract - Contract had been abandoned - Purchaser entitled to deposit.
LEGISLATION CITED:	Real Property Act 1900 (NSW)
CASES CITED:	McNally v Waitzer [1981] 1 NSWLR 294 Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 Louinder v Leis (1982) 149 CLR 509 Cripps v Irwin (1931) 31 SR (NSW) 383 Barnes v Weekes (1987) NSW ConvR 55-338 Aberfoyle Plantations Ltd v Cheng [1960] AC 115 Gilbert v Healey Investment Pty Ltd [1975] 1 NSWLR 650 Brien v Dwyer (1978) 141 CLR 378 Fitzgerald v Masters (1956) 95 CLR 420 Mayner v Payne [1914] 2 Ch 555 Bell v Norman C. Ashton Ltd (1956) 7 P & CR 359 Mr P R Watts, "Variation of Restrictive Covenants, Real Property Act 1900 (NSW), (1947) 21 ALJ 225" Foran v Wight (1989) 168 CLR 385 Abela v Lawnside Holdings Pty Ltd (1988) 4 BPR 9443 Fekala Pty Ltd v Castle Constructions Pty Ltd (2002) 11 BPR 20,395; [2003] NSW ConvR 56-042 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1977) 138 CLR 423 Sindel v Georgiou (1984) 154 CLR 661 British & Commonwealth Holdings plc v Quadrex Holdings Inc [1989] QB 842 Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 Summers v The Commonwealth (1918) 25 CLR 144 Dimond v Moore (1931) 45 CLR 159 Satellite Estate Pty Ltd v Jacquet (1968) 71 SR (NSW) 126 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Shevill v Builders Licensing Board (1982) 149 CLR 620 Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 Frost v Knight (1872) LR7Exch 111 Thors v Weekes (1989) 92 ALR 131 Kyrwood & Ors v Drinkwater & Ors [2000] NSWCA 126
PARTIES:	Imam Huseyin Rona v Shimden Pty Limited & 1 Or
FILE NUMBER(S):	SC 2981/04
COUNSEL:	Plaintiff: Mr J Boxsell (sol); Mr G McNally (written submissions) Defendant: Mr M Condon
SOLICITORS:	Plaintiff: Williams Boxsell Georgas Defendant: David Legal

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Monday, 29 August 2005

2981/04 Imam Huseyin Rona v Shimden Pty Limited & 1 Or

JUDGMENT

1 HIS HONOUR: The issue in this case is whether the purchaser rescinded or the vendor terminated, a contract for the sale of land; or whether neither did so effectively, but the contract is to be taken to have been abandoned.

2 The plaintiff was the purchaser under a contract for sale made on 2 December, 2003 of a petrol station located at 218 King Georges Road, Roselands. The vendor was Shimden Pty Limited. The purchase price was $3,212,000. The plaintiff paid a ten percent deposit. Special condition 32.1 provided:

“ If either the vendor or the purchaser is entitled to serve notice to complete on the other both agree that the notice may require completion to take place within any period of not less than 14 days from the date on which the notice is served. Both parties agree that this period is sufficient for the purposes of this notice to complete and the service of the notice makes time of the essence of this contract. ”

3 Special condition 45 provided:

“ The vendor will provide the purchaser at completion with:
a. A registered lease in the terms of the unregistered lease annexed to this contract.
b. a discharge of the covenant I944773 referred to in the Certificate of Title.
c. The purchaser and the vendor are entitled to rescind the contract by notice in writing if the vendor is unable to provide a registered lease and a discharge of the said covenant by the completion date.
d. Any such notice of recision (sic) by either party must give 21 days’ (21) notice. ” (sic)

4 The covenant referred to is contained in a transfer I944773 dated 8 December 1993, from The Shell Company of Australia Limited (“Shell”) (called “the Transferor”) to Shimden Pty Limited, (called “the Transferee”). The transfer was in the standard form and included a statement that “the Transferee Covenants with the Transferor as set out in Schedule Three”. Schedule Three contained printed words “the Transferee hereby covenants with” and the following typewritten words:

“ The Transferee for itself and all persons claiming title under it hereby covenants with the Transferor and all persons claiming title under it for the benefit of the lands of the Transferor comprised in Certificate of Title Folio Identifier 1/827440 that the Transferee will not use or permit to be used the land hereby conveyed or transferred for the purpose of a “service station” which expression shall include premises used for or in connection with the storage, supply or retail of motor fuels and/or petroleum products and the land which is to be subject to the burden of this covenant is the land hereby conveyed or transferred; and that persons by whom and with whose consent the foregoing may be released, varied or modified is the Transferor. ”

5 The contract defined the “Completion Date” as being the forty-second day after the date of the contract. That day was 13 January 2004.

6 On 4 December 2003, the purchaser’s solicitor delivered requisitions on title. On 8 December 2003, he enclosed a land tax certificate for clearance prior to settlement.

7 On 9 January 2004, the purchaser’s solicitor referred to special condition 45 and enquired whether the lease had been registered and covenant I944773 discharged. A transfer was enclosed. He asked to be advised when the vendor would be able to settle. So far as the evidence reveals, 13 January, 2004 came and went without any further attempt by either party to settle on that day. It was not until 15 January, 2004 that the vendor’s solicitor replied to the requisitions on title.

8 The next step was that on 21 January, 2004, the vendor’s solicitor served a notice to complete. The notice stated that the vendor was ready and willing to transfer the property in accordance with the contract dated 2 December 2003, and required the purchaser to complete the purchase and pay the balance of the purchase money on or before 3.00 pm on Wednesday, 4 February 2004, in which respect time was to be of the essence. Completion was to take place at the Law Society.

9 Unsurprisingly, there is a dispute as to whether that notice to complete was effective.

10 On 2 February 2004, the purchaser’s solicitor asked to be provided with a copy of the discharge of covenant. He wrote another letter on the same day asserting that the vendor was unable to provide a discharge of the covenant I944773 as required by special condition 45(c) by the completion date of 13 January 2004. He then said:

“ The purchaser hereby exercises his right to rescind the contract and serves herewith the notice in writing of such referred to in special condition 45(c).
The purchaser gives 21 days’ notice as required by special condition 45(d) of the Contract. We therefore note the rescission is effective 21 days after the date of service of this notice .”

11 The notice was served on 2 February 2004.

12 The following day, the purchaser’s solicitor asked the vendor’s solicitor to authorise repayment of the deposit by the agent. He asserted that although special condition 45(d) appeared to operate so as to require 21 days’ notice, there was no point to such a delay, as special condition 45(c) gave an absolute right of rescission to which the passage of a further 21 days could make no difference.

13 On 3 February 2004, the vendor’s solicitor rejected the purported rescission of 2 February 2004 and demanded that settlement take place by Wednesday, 4 February 2004. On the same day, the solicitors debated the effect of special condition 45. The purchaser’s solicitor repeated his view that because the release was not provided prior to the date for completion, namely 13 January, 2004, the purchaser was entitled to rescind without further arguments from the vendor. The vendor’s solicitor said that the vendor had 21 days from notice being given to fix the problem and that was yet to expire.

14 On 3 February 2004, the purchaser obtained approval from the Arab Bank Australia for a loan of $2,462,000 to assist with the purchase. For the plaintiff to draw down the loan, he needed to sign the letter of offer, pay a non-refundable establishment fee of $8,600, provide securities over property which he owned at Blacktown and over the petrol station at 218 King Georges Road, Roselands, procure further securities from a company which he controlled called Boston Importing Pty Ltd, and attend to other requirements from the bank including the obtaining of a satisfactory environmental audit or remediation certificate. The bank also required a satisfactory valuation of the securities. The purchaser did not take any of these steps to be in a position to draw down on the facility, as he contended that he had rescinded the contract because the vendor had not performed. He said that if the “registration” had come in time, he might have changed his mind and purchased the property, but it did not come until very late. There is no reason to doubt the purchaser’s ability to have raised the necessary funds to complete the purchase within a reasonable time after 3 February. However, he was unwilling to do so after receiving advice from his solicitor, Mr Boxsell, that the contract could be rescinded due to the vendor’s failure to procure a release of the covenant at the completion date specified in the contract.

15 By facsimile sent at 12.06 pm on 4 February 2004, the purchaser’s solicitor advised the vendor’s solicitor that its title search revealed there was an unregistered dealing lodged on the title, but had no information as to what the dealing was. He had been advised that the document was being examined by the LPI, that is, Land and Property Information, which is part of the NSW Lands Department. The unregistered dealing was a release of the restrictive covenant signed by Shell.

16 At 13.40 pm on that day the vendor’s solicitor said that a discharge of covenant would be handed over at settlement.

17 No settlement figures were received from the purchaser’s solicitor prior to settlement. The vendor’s solicitor, Mr Woods, attended settlement at about 3.15pm. He had asked another solicitor, a Mr Fung, who did work for the vendor, to attend as well. Mr Fung arrived at about 3.05 pm. He called out whether there was anybody there from Williams Boxsell Georgas, (the purchaser’s solicitor). There was no answer. When Mr Woods arrived at about 3.15 pm Mr Fung called out the same words and was told that someone representing Williams Boxsell had recently left. Mr Woods and Mr Fung then left the Law Society building and caught up with a lady in Phillip Street who identified herself as an agent of Williams Boxsell Georgas. Mr Woods asked if she was in a position to settle the matter. She asked if he had a copy of the deed of release in relation to the covenant. He showed it to her and left a copy of it with her. She then left.

18 The document in question was a form 13RRE Release of Restriction on the Use of Land, to which was attached a deed between Shell and Shimden Pty Limited. Shell released the restrictive covenant.

19 There is an issue as to whether that was an effective release, or whether, for the release to be effective, it had to be given by the then registered proprietors of the land entitled to the benefit of the covenant.

20 On 5 February 2004, the purchaser’s solicitor served a further notice of rescission expressed to be done “for the sake of covering all contingencies”. The “alternative notice of rescission” was expressed to be given pursuant to special condition 45 of the Contract on the ground that it was then clear that the vendor was still unable to provide a discharge of the covenant pursuant to special condition 45(c) as at 4 February 2004. In giving the second notice, the purchaser’s solicitor noted that the rescission was effective 21 days after service of the notice.

21 On 9 February 2004, the vendor’s solicitor, Mr Woods, telephoned the purchaser’s solicitor and advised him that he was no longer acting for Mr Demian, the managing director of the vendor, as his instructions had been withdrawn. The purchaser’s solicitor, Mr Boxsell, said to him words to the following effect:

“ Off the record, as far as the purchaser is concerned this property was bought for a much higher price than it should have been. The valuation that the family has made of this property is far less greater then what it went for in the auction. (sic) . The family really doesn’t want to buy this property and special condition 45 certainly assisted in this. ”

22 The vendor relies upon this conversation as showing that the purchaser did not intend to complete.

23 On 13 February 2004, the vendor’s new solicitor, Mr David, gave notice that the vendor terminated the contract under clause 9 for the purchaser’s failure to complete as required by the vendor’s notice to complete dated 21 January 2004. He said that the vendor would take steps to re-sell the land and institute proceedings for recovery of the deposit.

24 A question arises as to whether this notice was effective, or whether it was a repudiation of the contract, and if so, whether the vendor ever resiled from the repudiation.

25 The purchaser’s solicitor replied to the purported notice of termination on 13 February, 2004. He said that it was invalid. He asserted that the contract had already been rescinded pursuant to special condition 45. He also disputed the validity of the notice to complete and the efficacy of the deed of release. The purchaser has submitted that by this letter he accepted the vendor’s repudiation and terminated the contract.

26 On 16 February 2004, the purchaser’s solicitor elaborated upon an argument that the release from The Shell Company of Australia Limited was ineffective as the covenant had to be released by the “Transferor” which meant “the Transferor and its assigns”.

27 On 18 February 2004, the vendor’s solicitor, Mr David, sent to the purchaser’s solicitor a copy of a new deed of release and form 13RRE, this time, executed by the registered proprietors of the land entitled to the benefit of the covenant. He said that the vendor maintained that it had validly terminated the contract on 13 February 2003, but without prejudice to the efficacy of that termination, tendered performance of the contract by appointing 2.00 pm on Friday, 20 February 2004 as a date for settlement. He enclosed a settlement statement and advised how the cheques should be drawn. The letter purported to make time for settlement essential. The letter was sent by facsimile transmission after 6.00 pm on the evening of 18 February 2004. Hence, it gave less than 2 days’ notice to complete. The letter included the following paragraph:

“ In circumstances where the purchaser has disputed the validity of an earlier termination and has given notice of rescission expiring on a future date, the vendor is entitled in equity to assert its rights as a true alternative, without the making of an election, and to make time for completion time of the essence. If an election is involved, the vendor maintains its right to insist upon performance. ”

28 The release of covenant 194473 was registered on 18 February, 2005.

29 The facsimile from Mr David was seen by Mr Boxsell, the purchaser’s solicitor, at about 10.00 am on 19 February 2004. He wrote to Mr David that day, saying that the late service of the new document was evidence that the vendor was not able to complete by providing a discharge of the covenant as at either 13 January 2004, or 4 February 2004. He disputed that the time fixed for completion was adequate, and said it would be impossible to organise a major commercial settlement involving incoming mortgage finance for the next day. He concluded by saying that the purchaser stood by his position as set out in previous correspondence.

30 Later that day, Mr Boxsell reaffirmed that the purchaser had rescinded the contract for the vendor’s non-compliance with special condition 45(c) by the completion date. He said that that rescission would come into effect on 23 February 2004 and that the purchaser would require the immediate repayment of the deposit the following day.

31 The purchaser did not attend the settlement at the settlement rooms of the Law Society at 2.00 pm on 20 February 2004. Later that afternoon, the vendor’s solicitor gave notice of termination of the contract on behalf of the vendor. The notice of termination was based on two grounds. First, that the purchaser had breached its obligation to complete when time was of the essence. Secondly, that the purchaser’s conduct was a repudiation of the contract, which the vendor accepted. The purchaser disputes the validity of that notice.

32 On 6 April 2004, the vendor re-sold the property for a price of $2,965,000. It claims to be entitled to damages of $343,238.15 by reason of the purchaser’s default. This sum is made up of the difference between the purchase price on the two contracts, interest incurred on borrowings until the settlement of the second contract, additional solicitors’ costs and advertising expenses, water rates, council rates and land tax, less rent received for the additional period before the second sale was completed.

33 Questions arise at each stage of the transaction. The most important are:

1. Whether the vendor was entitled to serve a notice to complete on 21 January 2004;

2. Whether the purchaser was entitled to give a notice of rescission under special condition 45 on 2 or 5 February 2004;

3. If the purchaser was entitled to rescind, whether the notice of rescission was effective immediately, or whether it only took effect after 21 days, and if the latter, whether the notice was deprived of effect if, before the expiry of that period, the vendor procured a release of the covenant;

4. If the purported notice to complete dated 21 January 2004 was valid so that time for completion on 4 February 2004 was made essential, or the vendor is estopped from denying its validity, whether the vendor was in breach of contract by being unable to settle on that day;

5. Whether the purchaser’s notice of rescission of 5 February 2004 was effective to terminate the contract, because the vendor was in breach of an essential stipulation, even though it was not expressed to be given on that ground;

6. Whether the vendor’s notice of termination of 13 February 2004 was effective, or whether it was a repudiation of the contract;

7. Whether the purchaser should be allowed to contend that on 13 February, 2004 he accepted the vendor’s repudiation of the contract, and if so, whether the purchaser did accept the repudiation and terminate the contract;

8. If the contract was still on foot on 18 February 2004, whether the vendor was entitled to give a notice to complete on that day;

9. Whether the vendor’s notice to complete of 18 February 2004 was invalid for stipulating too short a period for completion;

10. Whether, by 20 February, 2005, the purchaser had repudiated its obligations under the contract by insisting on its interpretation of special condition 45 and insisting that its rescission was effective, notwithstanding that the vendor had procured a release of the covenant;

11. Whether the vendor’s purported termination of 20 February 2004 was effective, either because the purchaser did not complete in accordance with the notice to complete of 18 February, or because it was an acceptance of the purchaser’s repudiation;

12. Whether the vendor was precluded from terminating the contract on the basis of the purchaser’s repudiation because the vendor had itself repudiated the contract through its prior purported termination which it had not withdrawn;

13. Whether neither party effectively terminated the contract;

14. Whether the contract should be taken to have been abandoned, and if so, whether the purchaser is entitled to the return of the deposit and interest.

First Notice to Complete

34 The vendor submitted that it was entitled to give the notice to complete on 21 January because, at that time, it was not itself in breach of contract. Although it had not procured a discharge of covenant by the completion date specified in the contract, it was not obliged to provide such a “discharge” until completion. Moreover, it was then ready, willing and able to proceed to completion, as evidenced by the fact that it obtained what it contended to be the appropriate release by the date fixed for completion, namely 4 February 2004. It was not necessary for it to show that it was able to complete at the date of giving the notice. (McNally v Waitzer [1981] 1 NSWLR 294 at 297, 303-304). The vendor also submitted that not being in breach of contract, and being ready, willing and able to proceed to completion, it could give a notice to complete because the time fixed for completion in the contract had passed.

35 I do not accept these submissions.

36 Where a contract for sale of land fixes a time for completion, and one party defaults, the party not in breach of contract can give a notice to complete, making time essential. Where a contract for the sale of land does not fix a time for completion, so that completion is due within a reasonable time, a party not in default can give notice to complete where the opposite party has been guilty of unreasonable delay. This was explained in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 and Louinder v Leis (1982) 149 CLR 509 at 523. In the latter case Mason J said (at 523):

“ A more liberal approach was taken by Barwick CJ and Jacobs J in their joint judgment in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286, when they said (at 299): “In cases where the contract contains a stipulation as to time but that stipulation is not an essential term then before a notice can be given fixing a time for performance, not only must one party be in breach or guilty of unreasonable delay, but also the party giving the notice must himself be free of default by way of breach or antecedent relevant delay. Only then may a notice be given fixing a day a reasonable time ahead for performance and making that time of the essence of the contract.” The reference to “breach” or “unreasonable delay” is explained by the circumstance that the passage is directed to stipulations as to time generally, viz those which stipulate a date and those which call for performance within a reasonable time. The reference to “breach” applies to the former, “unreasonable delay” to the latter, and to the former where there has been a waiver of the breach or the innocent party is disentitled to rely on it.

Their Honours pointed out that in relation to the giving of notice three questions arise: (1) Was the other party “in breach of any term of the contract or guilty of unreasonable delay”?; (2) Was the innocent party in “breach of any term of the contract or guilty of any antecedent relevant delay”?; (3) Was the time fixed reasonable in all the circumstances? ”

37 In the present case, neither party attempted to settle the purchase on the nominated completion date of 13 January, 2004. At that time the vendor had not even answered requisitions on title. Thereafter, completion was to take place within a reasonable time. The purchaser was not in breach of contract by having failed to complete on 13 January, 2004. The vendor was not entitled to give a notice to complete on that basis. Nor had the purchaser been guilty of unreasonable delay by not completing prior to 21 January, 2004. The vendor had not proposed completion and had provided no evidence that it was in a position to complete. Accordingly, the notice to complete was invalid.

38 That does not mean that the vendor was not entitled to fix 4 February as the date for completion. It was a reasonable time for completion, after the parties had allowed the specified date to go by. But it was not entitled to make time for completion on that day essential.

Special Condition 45 – The Notice of Rescission of 2 February, 2004

39 The purchaser submitted that special condition 45 has two parts. Paragraphs 45(a) and (b) refer to what must be provided to the purchaser at completion. Paragraphs 45(c) and (d) are independent of 45(a) and (b). The purchaser submitted that the vendor was unable to provide a discharge of the covenant by completion date. He submitted that “completion date” meant the date described in the contract as the completion date, that is, 42 days from the date of contract. The vendor was unable to provide the “discharge” of the covenant at that date because it did not then have any documents signed by the “Transferor” releasing the covenant.

40 In my view, the expression “completion date” in special condition 45(c) meant the date the parties were required to complete. Initially, it meant 13 January, 2004 as the contract provided for completion on the forty-second day from the date of the contract. However, neither party sought to complete on that day. By their conduct they extended the completion date. The “completion date” in special condition 45(c) was extended to a date either party validly fixed as a reasonable time for completion.

41 Neither party had attempted to fix 2 February, 2004 as the time for completion. In my view, the first notice of rescission was premature.

Vendor Not Able to Complete on 4 February, 2004

42 The vendor was not able to complete on 4 February, 2004 because it was not able to provide an effective release of the covenant in registrable form. This issue turns on identifying whose consent was necessary to the release of the covenant.

43 The Deed of Release attached to the form 13RRE Release of Restriction on the Use of Land was made between Shell (called “the Grantee”) and “Shimden Pty Ltd (ACN 082 158 003), (called “the Grantor”). It was in the following terms:

“ Recitals
A By transfer dated 8 December 1993, registered dealing No. I944773 created a restrictive covenant ( Restriction ) in favour of the Grantee, being the then registered proprietor of the land contained in Folio Identifier 1/827440 ( Benefited Tenement ), over the land contained in Folio Identifier 2/555579 ( Burdened Tenement ).
B The parties have agreed to release the Restriction.
____________________________________________________
Operative Part
1. The Grantee releases the Restriction.
2. The Grantor agrees to pay the Grantee’s reasonable legal costs, the stamp duty and registration fees on the release of the Restriction. ”

44 Shimden Pty Ltd (ACN 082 158 003), which was a party to the deed, was not the same company as the company which had given the restrictive covenant in transfer I944773. That company was Shimden Pty Ltd (ACN 003 365 100). The purchaser did not submit that this meant that the release was ineffective. It was not submitted that if the covenant could be released by Shell, it could only be released by Shell pursuant to a deed to which the covenantor was a party.

45 The vendor submitted that as the release was to be given by “the Transferor”, that meant Shell. It had given the necessary release. The purchaser relied on s 3(1)(b) of the Real Property Act 1900 (NSW) which provides that:

“ 3(1) In the construction and for the purposes of this Act, and in all instruments purporting to be made or executed thereunder (if not inconsistent with the context and subject matter):

…

(b) the describing of any person as a proprietor, transferor, transferee, mortgagor, mortgagee, charger, chargee, lessor or lessee, or as seised of having or taking any estate or interest in any land shall be deemed to include the executors, administrators, and assigns of such person. ”

46 Counsel for the vendor submitted that to construe the word “Transferor” where it last appears in the covenant, as including the Transferor’s assigns, is inconsistent with the context and subject matter of the instrument, because the covenant, where it intends to refer to persons claiming title under the Transferee or Transferor, does so expressly. By contrast, the word “Transferor” where it appears at the conclusion of the clause, refers only to Shell and not to persons claiming title under it.

47 In Cripps v Irwin (1931) 31 SR (NSW) 383 Ferguson J considered a clause in a lease which contained a prohibition against assignment by the lessee, his executors, administrators and permitted assigns, and a covenant for the payment of money by the lessee. His Honour said (at 384-385) that if the covenant had stood alone the language, which clearly distinguished between a lessee and his assigns in one case, and the named lessee in the other, would naturally suggest that where the latter expression only was used, only the named lessee was intended. However, throughout the lease the word “lessee” was often used where it must have been intended to refer also to the lessee, his executors, administrators and assigns, and that in the absence of any uniform use of the expression, s 3(b) of the Real Property Act should apply to the covenant in question so that the reference to the lessee included an assignee of the lessee. The vendor relied upon this case as supporting its construction of the covenant in question.

48 However, in the present case, the covenant suffers the same problems of lack of uniformity of expression. It is true that if the typewritten schedule 3 to the transfer is considered in isolation, there appears to be a distinction drawn between the Transferor on the one hand, and the Transferor or persons claiming under it on the other. However, the schedule is but part of the relevant covenant. When the whole of the instrument is considered, including the printed form, there is no such clear distinction to be drawn. The relevant opening words are that “the Transferee Covenants with the Transferor as set out in Schedule Three.” In that part of the instrument the words “Transferee” and “Transferor” clearly have the extended definition given to them by s 3(1)(b) of the Real Property Act. That is true also of the printed words in schedule 3. There is therefore no uniform use in the instrument of the word “Transferor” as referring only to Shell, in contrast to Shell or persons claiming title under it.

49 Nor is there anything in the subject matter of the covenant to indicate that only Shell was meant to be referred to by the expression, “the Transferor”. There was only one parcel of land identified as having the benefit of the covenant. This is not a case where the consents of numerous persons would be required to the release of the covenant, if a reference to “the Transferor” means the Transferor or its assigns. (Compare Barnes v Weekes (1987) NSW ConvR 55-338).

50 I do not consider that Mayner v Payne [1914] 2 Ch 555 or Bell v Norman C. Ashton Ltd (1956) 7 P & CR 359, which were also cited, are of assistance in construing the covenant. They each depended upon the terms of the particular building scheme considered in those cases.

51 I should note that the vendor ultimately did not press a submission that Shell’s successors in title to the land having the benefit of the covenant were not its “assigns” within the meaning of s 3(1)(b) of the Real Property Act, as there was nothing to show that there had been an assignment by Shell of the benefit of the covenant, as distinct from a transfer of the property to which the benefit of the covenant attached. (See the article by Mr P R Watts, “Variation of Restrictive Covenants, Real Property Act 1900 (NSW), (1947) 21 ALJ 225”). The resolution of that question can await another day.

52 I conclude that the vendor was not able to complete the sale on 4 February, 2004 as it had not procured a “discharge” of the restrictive covenant from the registered proprietors of the land entitled to the benefit of the covenant. Of course, had I concluded otherwise, the vendor would still not have been entitled to terminate the contract for the purchaser’s failure to complete on 4 February.

Second Notice of Rescission of 5 February, 2004

53 Although the vendor was not entitled to make time for completion essential on 4 February, 2004, it was entitled to fix that as the date for completion. 4 February 2004 became the “completion date” for the purposes of special condition 45(c). As the vendor had not obtained an effective release of the covenant, the purchaser was entitled to give 21 days’ notice of rescission, which he did by his solicitor’s letter of 5 February, 2004.

54 The vendor submitted that the purchaser was not entitled to give the notice of rescission of 2 February, 2005, or the notice of 5 February, 2005. It said that for a valid notice to be given under special condition 45, the notice had to require completion of the contract at the expiry of the period of the notice. The reason for this was that the only obligation of the vendor to provide a “discharge” of covenant arose on completion. It submitted that as the effect of non-compliance with the notice at the end of 21 days would be that the purchaser could rescind, the notice operated as a notice to complete. To be validly given, the purchaser had to be ready, willing and able to proceed to completion of the contract at the end of the period of expiry of the notice. Although the purchaser may have been able to proceed to completion, it was not willing to do so. Hence, it was submitted, the notice was invalid.

55 I do not accept this submission. I do not accept that a notice under special condition 45(d) operates as a notice to complete. In any event, it is reading too much into the condition to require that a notice under special condition 45(c) expressly or impliedly fix a time for completion. The purchaser was entitled to rescind the contract, or give notice of intention to rescind if the vendor could not provide the documents, without fixing a new time for completion. There would be nothing to prevent the vendor from nominating a new completion date at any time within the 21-day period. In my view, it was not encumbent on the purchaser, when giving the notice, to fix a time for completion.

56 The purchaser submitted that he had an immediate entitlement to rescind the contract under special condition 45(c). The paragraph provides that the purchaser and the vendor “are entitled” to rescind the contract if the vendor is unable to provide a discharge of the covenant by the completion date. Those words conferred an immediate right of rescission. The purchaser submitted that the rescission was not suspended. In the alternative, he submitted that if the rescission did not take effect for 21 days, nonetheless, as the condition which gave rise to the right of rescission had been satisfied at the date notice was given, nothing that could take place in the next 21 days could affect the purchaser’s right to rescind.

57 This may well be the correct construction if special condition 45(c) were read in isolation, without regard to paragraph 45(d). The purchaser recognised that on his construction of special condition 45, paragraph 45(d) was meaningless and had no work to do. He submitted that for that reason it should be severed. However, severing paragraph 45(d) would not give it any operation, on the purchaser’s construction.

58 It is trite to say that the document has to be construed as a whole so that effect is given, if it can be, to each part of it. A construction of paragraph 45(c) which meant that paragraph 45(d) had no effect, should be rejected if a sensible meaning can be given to the clause when considered as a whole, even if that meaning requires the addition of other words. The requirement in paragraph 45(d) of 21 days’ notice clearly had a purpose. The purpose was to give the party which received a notice under paragraph 45(c), time to deal with the relevant issue. The notice could be given by either the vendor or the purchaser, and it could be given either in relation to an inability by the vendor to provide a registered lease, or to provide a release of the covenant. The obligation of the vendor to provide a registered lease and a release of the covenant was clearly for the benefit of the purchaser. If the vendor were unable to provide either of these documents it could give notice under clause 45(c). The purpose of the vendor’s giving 21 days’ notice of rescission would be to allow the purchaser either to waive the requirement for either document, or to deal with the lessee or the covenantee. If the notice were given by the purchaser, the purpose of the 21 day period would be to allow the vendor time to procure the registration of the lease or the release of the covenant.

59 It is unclear whether the notice contemplated by clause 45(d) is notice of an intention to rescind after 21 days, or, whether the effect of the clause is that the vendor can give a notice of rescission which will not take effect for 21 days, and will then only take effect if, at the end of that period, the vendor is unable to provide the registered lease or the release of the covenant, and the purchaser has not waived the requirement. In substance, there is no difference between the two positions. The vendor did not contend that the notice was ineffective because it should have been a notice of intention to rescind, as distinct from a notice of rescission to take effect with in 21 days, and then only if the vendor was still unable to provide a “discharge” of the covenant.

60 In Aberfoyle Plantations Ltd v Cheng [1960] AC 115 the Privy Council said (at 124-125):

“ (i) Where a conditional contract of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date;
(ii) where a conditional contract of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time;
(iii) where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles. ”

By a “conditional contract”, their Lordships meant a contract whose existence depended on the satisfaction of a condition precedent or subsequent.

61 In Gilbert v Healey Investment Pty Ltd [1975] 1 NSWLR 650 Needham J applied these principles to a contract for the sale of a lot in a proposed plan of subdivision. The contract provided for completion to take place within 30 days of registration of the plan. It was subject to a special condition that if the plan was not registered within 6 months of the date of contract, either party could rescind the contract upon giving 21 days’ notice of its intention to do so. Shortly after the expiry of 6 months, the purchasers’ solicitor enquired whether the plan had been registered. More than a month later, the vendor’s solicitor replied that the plan had been registered 5 days previously. The purchasers then gave 21 days’ notice of their intention to rescind on the ground that the plan had not been registered within 6 months of the date of the contract, and they subsequently rescinded. Needham J held that they were entitled to do so. As the plan was not registered within 6 months, the contract was voidable at the option of either party. His Honour treated this as a conditional contract to which the third of the propositions in Aberfoyle Plantations Ltd v Cheng applied. Hence, the 6-month period for registration of the plan had to be strictly adhered to, and the right to rescind did not have to be exercised prior to the registration of the plan. His Honour recognised that this gave no effect to the requirement that 21 days’ notice of intention to rescind be given.

62 Before me, the solicitor for the purchaser did not rely on Gilbert v Healey Investment Pty Ltd. I do not know whether this was a conscious decision. The case has frequently been followed where there has been a failure of a condition requiring registration of a plan. In Brien v Dwyer (1978) 141 CLR 378 Stephen J, in dealing with the late payment of a deposit, said (at 398):

“ The vendor acquired this entitlement as soon as the breach occurred and no unilateral act on the part of the purchaser can deprive him of it. The position is no different from that of an unfulfilled contingency, precedent or subsequent, upon the timeous fulfilment of which is made to depend the coming into effect, or continuance in being, of the contractual relationship. In relation to such contingencies Needham J, held, in Gilbert v Healey Investments Pty Ltd [1975] 1 NSWLR 650, that performance of the contingency out of time did not, in the absence of waiver, prevent the other party from thereafter avoiding the contract. His Honour relied upon what their Lordships had said in Aberfoyle Plantations Ltd v Cheng [1960] AC 115 at pp 124-125. ” (Emphasis added).

63 Ultimately, the question depends on the terms of the individual contract to be construed. It seems to me that there is a critical difference between the condition in Gilbert v Healey Investment Pty Ltd, which went to whether the vendor could convey title, and the condition in this case. The conditions in special condition 45 are not conditions on whose performance the continued existence of the contract depended, to which the observations of the Privy Council in Aberfoyle Plantations Ltd v Cheng apply. In Gilbert v Healey Investment Pty Ltd, Needham J applied those observations to a condition which in form did not make the continuance of the contract depend on its timeous fulfilment, as distinct from giving both parties the right to bring the contract to an end if it were not fulfilled. As the condition had to be fulfilled before the vendor could convey title, the contract was treated as being, in substance, a conditional contract. That is not the case here. In this case, the 21-day notice period cannot be disregarded.

64 In Gilbert v Healy Investment Pty Ltd it was argued that the purpose of the 21-day notice period, was to allow a party to make time of the essence for an act to be done by the other. That argument was rejected as there was no act which the purchaser had to perform in order to ensure the plan was registered.

65 I do not regard the required 21-day period of notice of rescission in this case as being the equivalent of a notice to complete. There is no difficulty in both parties being required to give the other 21 days’ notice of intention to rescind once the right to rescind arises, or, which amounts to the same thing, for the rescission to take effect only after 21 days, and then only if the conditions which give rise to the right still obtain.

66 There is a tension between special condition 32.1 and special condition 45(d) if the purchaser wished to give a notice to complete if the vendor was unable to complete because it had not procured the registration of the lease or “discharge” of covenant. It may be that in such a case the purchaser could not rely on clause 32.1. That question does not arise. It is not a matter which affects the construction to be given to special condition 45(c) and (d).

67 In this case, special condition 45(d) should be given work to do. Special condition 45(c) should be read as if it started with the words “Subject to (d)”. In my view that is what it means, and those words can be supplied to avoid the absurdity of 45(d) having no effect, and the inconsistency which otherwise exists between paragraphs (c) and (d). (Fitzgerald v Masters (1956) 95 CLR 420 at 426-427).

68 As a release of the covenant was obtained and registered on 18 February, 2004, that is, within the 21-day period, the purchaser’s notice of rescission of 5 February, 2005 did not take effect. Even if, contrary to my previous conclusion, the purchaser had been entitled to give a notice of rescission on 2 February, 2004, it also would not have been effective.

Could the Second Notice of Rescission Operate as a Termination for the Vendor’s Breach?

69 The next question is whether, without knowing it, the purchaser effectively terminated the contract on 5 February 2004, owing to the vendor’s inability to complete on 4 February 2004. That submission was only faintly pressed. As the notice to complete was not valid, time was not in fact made essential. I do not consider that the vendor is estopped from denying that time for completion on 4 February 2005 had been made essential. The purchaser did not do anything in reliance on the notice to complete. (Compare Abela v Lawnside Holdings Pty Ltd (1988) 4 BPR 9443; Fekala Pty Ltd v Castle Constructions Pty Ltd (2002) 11 BPR 20,395; [2003] NSW ConvR 56-042). In any event, the purchaser was not itself ready, willing and able to complete at the time it served the notice of 5 February 2004. Nor did the notice of rescission of 5 February 2004 purport to be a termination of the contract for the vendor’s breach. It rather sought to exercise a contractual right of rescission and a contractual right for the return of the deposit.

70 The contract thus remained on foot after 5 February 2004.

Vendor’s Purported Termination of 13 February, 2004

71 The vendor purported to terminate the contract on 13 February, 2004, for the purchaser’s alleged failure to comply with the notice to complete of 21 January 2004. It was not entitled to do so. The notice to complete of 21 January, 2004 was invalid. Even if it had been valid, the vendor was not able to complete on 4 February, 2004, as it had not obtained the appropriate release of the covenant.

72 When the vendor purportedly terminated the contract on 13 February 2004, it did not contend that the purchaser had repudiated the contract. The vendor did not submit that its termination of 13 February 2004 could be supported as an acceptance of a prior repudiation by the purchaser. There is no reason to doubt that counsel for the vendor was correct in not advancing such a submission. Any such submission would have raised the questions whether the purchaser had by then repudiated the contract, and whether, at the time it purported to terminate, the vendor was ready, willing and able to complete the contract. (Foran v Wight (1989) 168 CLR 385 at 408, 409).

73 The vendor was not entitled to terminate the contract on 13 February 2004, as it purported to do.

Vendor’s Repudiation of 13 February, 2004

74 By serving the notice of termination on 13 February, 2004, the vendor evinced an intention no longer to be bound by the contract. This was a repudiation of it. The vendor submitted that its purported termination could not constitute a repudiation of the contract because the purchaser was not willing to perform the contract according to its tenor. However, that submission elides the question of whether the vendor repudiated the contract, with the question whether the purchaser could rescind the contract by accepting the repudiation. For a party to be entitled to rescind on the basis of the other’s anticipatory breach, the rescinding party must be ready and willing to perform his essential obligations under the contract on its proper interpretation. (DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1977) 138 CLR 423 at 433; Foran v Wight (1989) 168 CLR 385 at 408, 424, 452)). However, the unwillingness of the purchaser to perform his side of the contract does not save the vendor’s purported but wrongful termination from being a repudiation by it of the contract.

75 No submission was made at the hearing that the purchaser accepted the vendor’s repudiation on 13 February, 2004. That submission was advanced in written submissions delivered after the hearing in response to my request for written submissions on the following four issues:

“1. Whether the vendor’s purported termination on 13 February, 2004 was a repudiation of the contract;
2. If yes to 1, whether the vendor was precluded on that ground from giving its notice to complete dated 18 February, 2004;
3. If yes to 1, whether the vendor resiled from its repudiation prior to 20 February 2004;
4. If, as at 20 February 2004, the vendor had repudiated the contract and had not resiled from its repudiation, whether it was precluded from accepting the purchaser’s [assumed] repudiation.”

76 I did not invite submissions on whether the purchaser accepted the vendor’s repudiation of 13 February, 2004. However, because it is related to the issues on which submissions were invited, I will explain why I reject the purchaser’s contention.

77 By his letter of 13 February, 2004, Mr Boxsell asserted that the notice of termination was clearly invalid and that the contract had already been rescinded pursuant to special condition 45. He did not purport to bring the contract to an end by accepting the vendor’s wrongful termination as a repudiation. He asserted, wrongly, that the contract was already rescinded.

78 In any event, the purchaser was not entitled to accept the vendor’s repudiation because he was not ready and willing to complete the purchase if the vendor procured a release of the covenant within the 21-day period.

Second Notice to Complete

79 The next question is whether the vendor’s notice to complete of 18 February 2004 was valid. In my view it was not. It was issued immediately the vendor had procured the registration of the release of the covenant from Messrs Diab, the registered proprietors of the land having the benefit of the covenant.

80 The instrument signed by Messrs Diab to release the covenant was in the prescribed form 13RRE. The applicants were the Messrs Diab. The relevant part of the form said:

“ The applicant applies to have a recording made in the Register of deed of release [of] the above restriction on the use of land dated 18 February 2004 and annexed hereto marked ‘A’. ”

The restriction was that in I944773. The attached deed of release was between the Messrs Diab and Shimden Pty Ltd (ACN 082 158 003). It was in the same terms as the earlier deed of release in which Shell was named as the Grantee. It was not submitted that the release of the restriction in transfer I944773 was ineffective because Shimden Pty Ltd (ACN 003 365 100) was not a party to the deed. The release was registered.

81 On 18 February, 2004, the vendor could have stipulated a reasonable time for completion of the contract. However, it was not in a position to give a notice which made time for completion essential. On 18 February 2004, the purchaser was not in default in completing the contract. He was not guilty of any unreasonable delay in completing the contract. Until he received the purported notice to complete, the purchaser was unaware that the vendor had procured a release of the covenant.

82 The notice to complete was invalid as it did not prvide the period of 14 days which the contract required. The notice to complete was also invalid for not giving the purchaser a reasonable time to complete. The time given was less than two days. Special condition 32.1 provided that if either party was entitled to give a notice to complete, a period of “not less than 14 days” would be sufficient. The phrase “not less than” indicates that the parties intended that at least 14 days’ notice would be given. (M&L Hazelton Pty Ltd v Woodfield (1982) 2 BPR 9,558 at 9.559; Doyle v Howey (1990) 6 BPR 13,401 at 13,404-13,405).

83 In any event, even if the notice could stipulate a reasonable time, two days was not reasonable. The question of what is a reasonable period to be specified in a notice to complete is a question of fact depending upon the circumstances of each case. Strong circumstances must be shown to justify the giving of a notice to complete which allows less than fourteen days for completion. (Sindel v Georgiou (1984) 154 CLR 661 at 670). Up to the date of service of the notice, the purchaser did not know that the vendor had procured or could procure a release of the covenant. It is true that the purchaser insisted that he was not obliged to complete, irrespective of whether the vendor was able to procure a release of the covenant by 23 or 26 February 2004. However the vendor, in my opinion correctly, took a different view. If, within the 21-day period, it were able to provide a release of the covenant, then the purchaser could not insist upon his rescission. The fact that the purchaser took the stance he did could not make the notice period reasonable. I accept, as counsel for the vendor submitted, that a vendor serving a notice to complete does not have to allow a purchaser time to arrange finance. (British & Commonwealth Holdings plc v Quadrex Holdings Inc [1989] QB 842 at 859-860). However, even a purchaser whose finance is in place needs a reasonable time to satisfy his mortgagee’s requirements and book a settlement. As the purchaser’s solicitor said on 19 February 2004, as a simple matter of administration, it would be impossible to organise a settlement involving incoming mortgage finance for 20 February 2004 on the notice which the vendor gave. It was unreasonable to expect the purchaser to do that without prior notice that the vendor would be in a position to complete on 20 February.

84 Because the second notice to complete was invalid, the vendor was not entitled to terminate the contract on 20 February by reason of the purchaser’s failure to attend at the nominated time and place for settlement. The vendor had not succeeded in making time for completion on 20 February 2004 of the essence.

Did the Vendor Resile from its Repudiation of 13 February?

85 The vendor was itself in breach of contract when it gave the notice. It had repudiated the contract by its purported termination of 13 February 2004. The vendor submitted that it resiled from its repudiation by arranging and readying itself for completion on 20 February, 2004. It obtained a deed of release of the covenant executed by the current registered proprietor of the land benefited by the covenant. It gave directions as to how bank cheques should be drawn up. This conduct was only consistent with its being ready and willing to perform the contract in accordance with its terms.

86 However, the second notice to complete was given without prejudice to the earlier termination on 13 February, 2004. As counsel for the vendor submitted, it is possible for a party who has terminated a contract to give a notice to complete without prejudice to its rights to treat the contract as at an end pursuant to its earlier termination. Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 was such a case. The giving of a notice to complete may give rise to an estoppel which precludes the party giving the notice from asserting that the contract has been terminated. Here, the purchaser did not do anything consequent upon the service of the notice which could create such an estoppel. Estoppel aside, the service of a notice to complete without prejudice to a prior notice of termination takes effect as an offer to revive the agreement, capable of being accepted by performance in accordance with the terms of the notice to complete. (Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 at 9184, 9187).

87 The vendor was saying that it had already brought the contract to an end, but it was willing to revive the contract if the purchaser completed in accordance with the notice to complete. It was a conditional retraction of its prior termination. I do not consider that the vendor’s repudiation by its 13 February notice of termination is an independent ground which makes its second notice to complete invalid. On the other hand, the fact that it resiled from its repudiation of 13 February, 2004 only on the condition that the purchaser completed on less than two days’ notice under an invalid notice to complete, means that when the purchaser did not do so, the vendor was still repudiating the contract. It was still saying that it had brought the contract to an end on 13 February, 2004 and could not be required to complete it unless the purchaser tendered performance on 20 February, 2004.

Purchaser’s Repudiation

88 The vendor also claimed to terminate the contract by accepting the purchaser’s repudiation of it. The vendor relied upon the repeated assertions by the purchaser that he had already rescinded the contract on 2 February 2004, had repeated that rescission on 5 February 2004, and that he could not be required to complete the contract irrespective of what might happen within the succeeding period of 21 days. That position was repeated in the two letters sent by the purchaser’s solicitor on 19 February. In the first of the letters, Mr Boxsell said that the purchaser stood by his position as set out in previous correspondence. In the second of the letters, he repeated that position. He asserted that the right of rescission granted to the purchaser was absolute and unqualified, and that nothing could stop the passage of 21 days which would elapse on Monday, 23 February 2004. He asserted that on that date the rescission would come into final effect and the purchaser would require immediate repayment of the deposit. This was a re-affirmation of the position which he had enunciated on seven previous occasions, viz, by the letter of rescission of 2 February 2004, by two letters on 3 February 2004, in a telephone conversation with the vendor’s solicitors on 3 February 2004, in the letter of rescission of 5 February 2004, by letter of 13 February 2004 denying the validity of the vendor’s termination and asserting that the contract had already been rescinded, and by the first letter of 19 February 2004 stating that the purchaser stood by his position as set out in previous correspondence.

89 Up to 18 February 2004, the purchaser did not have to face the position that the vendor was able to complete the contract by providing a release of the covenant. However, by 19 February, the vendor had shown that it was able to complete. The purchaser adhered to his contention that he had validly rescinded the contract. He refused to complete and foreshadowed that he would demand the return of the deposit on the expiry of its 21-day notice of rescission. In my view, that was a “distinct refusal” by the purchaser to be bound by the terms of the contract in the future. (Summers v The Commonwealth (1918) 25 CLR 144 at 152; Dimond v Moore (1931) 45 CLR 159 at 166; Satellite Estate Pty Ltd v Jacquet (1968) 71 SR (NSW) 126 at 149; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 643, 658; Foran v Wight (1989) 168 CLR 385 at 416, 441; Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626).

90 The purchaser did not merely enunciate a wrong view of a contract which he believed to be correct, whilst expressing a willingness to perform the contract according to its tenor. The purchaser did not evince a willingness to “accept an authoritative exposition of the correct interpretation”. To the contrary, he persisted in his attitude “willy nilly, in the face of a clear enunciation of the true agreement”. (DTR Nominees Pty Ltd v Mona Homes Pty Ltd at 432; Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 at 734). By 20 February 2004, the purchaser, by his persistent maintenance of his position that he was not bound to complete notwithstanding that the vendor had registered a release of the covenant, had repudiated his obligations under the contract in an essential respect.

Vendor Precluded from Accepting Purchaser’s Repudiation

91 Were the vendor free from fault, it could have accepted the repudiation and terminated the contract. However, for the reasons I have given, the vendor had itself repudiated the contract by its purported notice of termination of 13 February 2004. It had not resiled from that position. The vendor submitted that as its repudiation of 13 February, 2004 was not accepted by the purchaser, the contract remained on foot for the benefit of both parties and it could “take advantage of any supervening circumstances which would justify [it] in declining to complete it.” (Frost v Knight (1872) LR7Exch 111 at 112). But this principle does not avail the vendor. The question here is whether a party who has repudiated a contract, but whose repudiation was not accepted, can terminate the contract for the other party’s repudiation, if he has not retracted his own.

92 The vendor relied on the judgment of Deane J in Foran v Wight where his Honour said (at 437-438):

“ Absence of actual or potential readiness or willingness to perform a contract will prima facie preclude a successful action against the other party for specific enforcement of the contract or for the recovery of damages for its breach. It does not, of itself, preclude rescission of the contract by acceptance of the other party’s repudiation. Were it otherwise, the law would require the useless and futile expenditure by an innocent party of whatever time, effort or money was necessary to place himself in a position where he could positively demonstrate actual or potential ability to perform a contract in order to be able to bring it to an end on the ground that it had already been repudiated by the other party. Indeed, it is difficult to see why, as a matter of principle or common sense, actual breach or even repudiation by one party to a contract should prevent that party from rescinding the contract by accepting a repudiation of the contract by the other party. Put differently, it is difficult to see why the law should insist that, even though both parties to a contract have repudiated it, the contract must hang like an albatross around their necks unless and until they can reach a new agreement about its termination.”

However, Mason CJ, Brennan J and Dawson J expressed different views. A party rescinding for anticipatory breach must, at the time of rescission, be ready and willing to perform the contract in its essential respects when his performance is due. ( Foran v Wight at 408-409, 424, 427, 452; DTR Nominees Pty Ltd v Mona Homes Pty Ltd at 433). Where a party has himself repudiated the contract and not resiled from that repudiation, he is not willing to perform the contract when his time for performance would fall due, even if he is able to do so. A party who has repudiated a contract, or who is in breach of a fundamental obligation under it, cannot terminate the contract for the other party’s anticipatory breach. ( Wight v Foran (1987) 11 NSWLR 470 at 487-488; Thorsv Weekes (1989) 92 ALR 131 at 143-144; Kyrwood & Ors v Drinkwater & Ors [2000] NSWCA 126 per Fitzgerald JA at [228]-[249]. The answer to Deane J’s metaphor in Foran v Wight is that both parties do not have to reach a new agreement about termination, if both have repudiated. Either can resile from its repudiation, and being ready and willing to complete, allow the other party the opportunity to do so. It can then terminate the contract if the other party persists in its repudiation. But if both parties are repudiating, it is not just that the right to rescind should depend on who acts first. Deane J’s views in the passage relied on by the vendor are inconsistent with the views of the majority of the Justices in Foran v Wight .

93 As the vendor had repudiated the contract, it could not terminate it by accepting the purchaser’s repudiation. It is not entitled to damages for the loss of its bargain. As at 20 February 2004, both the vendor and the purchaser had repudiated the agreement. They had both wrongly evinced an intention not to be bound by it. Both the purchaser’s rescission and the vendor’s termination were ineffective.

Abandonment

94 After 23 February 2004, neither party sought to enforce the agreement. Each contended that it had come to an end. The parties are to be taken as having abandoned or abrogated the contract. (Summers v The Commonwealth (1918) 25 CLR 144 at 151-152; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434).

95 The consequence of this finding is that the purchaser is entitled to the return of the deposit. (DTR Nominees Pty Ltd v Mona Homes Pty Ltd at 434-435). The purchaser would not be entitled to interest on the deposit under s 94 of the Supreme Court Act. (DTR Nominees Pty Ltd v Mona Homes Pty Ltd at 435). However, the purchaser made no such claim. Under clause 3 of the contract, the interest earned on the deposit was to be shared equally between the parties. The purchaser is entitled to the return of the deposit and half of the interest earned on the deposit. The vendor is entitled to the remaining half of the interest earned on the deposit. I will make declarations and consequential orders, accordingly.

96 In summary, my conclusions are:

1. The purchaser’s rescission was ineffective because the vendor registered a release of the covenant before the expiry of 21 days after notice of rescission was given;

2. The vendor’s purported termination of the contract of 13 February 2004 was ineffective because it was not entitled to give the notice to complete pursuant to which it purported to terminate the contract, and because it was not able to complete the contract at the time stipulated in the notice due to its not having then procured a release from the current registered proprietors of the land benefited by the covenant;

3. The vendor’s purported termination of 13 February 2004 was a repudiation of the contract;

4. The purchaser was not entitled to and did not accept that repudiation as bringing the contract to an end;

5. The second notice to complete was ineffective because the vendor was not entitled to give the notice when it did, and because the time for completion was too short;

6. The vendor was therefore unable to terminate the contract on the ground that the purchaser had failed to complete in accordance with the second notice to complete;

7. By 20 February 2004, the purchaser had repudiated the contract;

8. The vendor had only conditionally resiled from its repudiation of 13 February, 2004;

9. The vendor could not terminate the contract by accepting the purchaser’s repudiation of it, because the vendor had itself repudiated the contract and not resiled from that position;

9. Accordingly, neither party brought the contract to an end;

10. As both parties treated the contract as at an end they are taken to have abandoned or abrogated it; and

11. The purchaser is therefore entitled to the return of the deposit.

97 The contract named the vendor as Shimden Pty Ltd without an Australian company number. The plaintiff joined Shimden Pty Ltd (ACN 082 158 003) as the defendant and sought a declaration that it had rescinded the contract with the defendant as vendor. That company filed a notice of appearance. On 6 October 2004, Shimden Pty Ltd (ACN 003 365 100) filed a cross-claim in which it described itself as the defendant and sought a declaration that it had terminated the contract. I do not know why two companies were using the same name. It is apparent from the execution pages of documents executed by Shimden Pty Ltd (ACN 003 365 100) and Shimden Pty Ltd (ACN 082 158 003) that Mr Demian is a director of both companies. No issue was taken about the identity of the vendor. One or other of the companies calling itself Shimden Pty Ltd was the vendor. Both companies are parties to the proceeding. The company with the ACN 082 158 003 is the defendant. The company with the ACN 003 365 100, although irregularly joined, is the cross-claimant. The declarations and orders will take account of this position and the uncertainty of the vendor’s identity.

98 I make the following declarations and orders:

1. Declare that the Contract for Sale of Land dated 2 December, 2003 made between the defendant or cross-claimant as vendor, and the plaintiff as purchaser, of the property comprised in Folio Identifier 2/555579 and known as 218 King George’s Road, Roselands “the Contract” has been neither rescinded by the plaintiff, nor terminated by the defendant or cross-claimant.

2. Declare that the Contract has been abandoned by the parties;

3. Declare that the plaintiff is entitled to the return of the deposit;

4. Declare that the plaintiff on the one hand, and the defendant or cross-claimant on the other hand, are entitled in equal shares to the interest earned on the deposit, after deduction of all proper government taxes and financial institution and other charges;

5. Order that the defendant and cross-claimant sign all documents and do all things necessary to enable the deposit of $321,000 paid to the selling agent under the Contract and the interest on the deposit to which the plaintiff is entitled, to be paid to the plaintiff;

6. Order that the Summons and Cross-Claim be otherwise dismissed.

7. The exhibits may be returned after 28 days.

99 I will hear the parties on costs.

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