Sanwa Home Australia (formerly Balfield) Pty Ltd v Eamon Pty Ltd

[1992] HCATrans 106

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IN THE HIGH COURT OF AUSTRALIA	•
Office of the Registry

Brisbane Nos B4 and Bll of 1992

B e t w e e n -

SANWA HOME AUSTRALIA (formerly

BALFIELD) PTY LTD

Applicant

and

EAMON PTY LTD

First Respondent

RADOR PTY LTD

Second Respondent

BLACKEDGED PTY LTD

Third Respondent

Applications for special leave

to appeal

Sanwa 1 10/4/92

DEANE J
DAWSON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 10 APRIL 1992, AT 10.58 AM

Copyright in the High Court of Australia

MR w. SOFRONOFF, QC:  May it please the Court, I appear with

my learned friend, MR J. SULLIVAN, in application

B4 of 1992, and with my learned friend,

MR S.L. DOYLE, in application B11 of 1992.

(instructed by Morris Fletcher & Cross)

MR P.A. KEANE, OC:  May it please the Court, I appear with

my learned friend, MR P.L. O'SHEA, for the

respondents in both applications. (instructed by

Corrs Chambers Westgarth)

DEANE J: Very well. What is the convenient way of dealing

with these matters?

MR SOFRONOFF:	May I sketch the facts, Your Honour.
DEANE J:	You can take it that we have, with some difficulty

in relation to the second one, read the documents.

So we are acquainted with the facts.	Would you
suggest we deal with them together?

MR SOFRONOFF:  Yes, if it pleases the Court, that would be

convenient.

DEANE J: Very well.

MR SOFRONOFF:  Your Honours, could I then touch upon the

facts very briefly. Among the grounds of defence

raised by the applicant purchaser at the trial was

that the vendor owed obligations to fulfil certain

rezoning obligations and they were called the
rezoning points during the proceedings and

reference is made in the reasons to that.

His Honour the learned trial judge concluded, on a

construction of the contract, that the time for

completion had not yet arrived, and so the time for

fulfilment of those obligations had not yet arisen,

but His Honour nevertheless went on to consider

whether or not there was anything in those points.

Honour held against the applicant on two of them	Relevantly there were three such points, and His	and concluded that, as to the third, it was
hypothetical given his finding as to one of the
other two.

The matter went on appeal to the Full Court,

and the Full Court also concluded that, the time

for completion not having arisen, it was premature

to consider whether the rezoning obligations had

been or had not been fulfilled by the vendor.

Could I take Your Honours to book B4, at page 94, where Mr Justice McPherson, who delivered the only

judgment, said - referring to the rezoning

obligations and certain other obligations that are

not material:

Sanwa 2 10/4/92

But in any event these obligations, if

that is what they really are, are expressed in

ell 4(a) and 26 in terms that require their
performance either "by the date for

completion" or "prior to completion" of the

relevant contracts. Until, therefore, a fresh

date for completion is fixed and has arrived,

it is not in law possible for the purchaser to

assert that the vendors are in breach, or that

they are unwilling, unable, or not ready to

perform the contracts in accordance with their

terms.

Otherwise, Their Honours dismissed the appeal.

The matter then would have gone back to

Acting Justice Robin, for the purpose of making the

final order, but His Honour's commission as an
acting judge of the Supreme Court had expired and

so it went before Mr Justice Byrne.

Mr Justice Byrne made the usual sort of specific

performance order, that is, one which involved the

exchange of documents for money. Before His Honour

the point was taken that the applicant purchaser

maintained a right to assert that the rezoning

obligations had not been fulfilled. His Honour

declined to cause the order to reflect that

assertion or contention of the purchaser, but

instead directed that the vendor, by its

solicitors, send a letter to the purchaser. That

letter, Your Honours, appears in book Bll and it is

the last document in the book. The particular

matter that His Honour required the plaintiff's

solicitors to write, to communicate, is that in the

first paragraph:

The plaintiffs acknowledge that the

defendant's rights pursuant to special

conditions 4 and 5 -

those that contain the rezoning obligations -

of each of the contracts are unaffected by the

absence of any express reference to the

plaintiffs' obligations thereunder in the

order of Byrne J.

And then the plaintiffs went on to say that their

position, of course, as is the fact, was to the

contrary.

DAWSON J: Well, what is the effect of that letter?

MR SOFRONOFF:  Your Honours, His Honour was concerned to

ensure that nothing he did affected the position of

the applicant purchaser, whatever that might, at

the end of the day, be determined to be, in respect

Sanwa 3 10/4/92

of the fulfillment of the rezoning obligations.

The Full Court - - -

DAWSON J:  But does it mean that the order was subject to

compliance with conditions 4 and 5?

MR SOFRONOFF: Yes, in our submission. His Honour, we

submit, clearly intended it to be so because of his

requirement that the letter be sent.

DAWSON J:  Why could he not put that in the order?

MR SOFRONOFF:  I do not know, Your Honour. In any event,

the order was made which called for exchange on

3 February.	On that day the parties met, but
settlement did not take place.	My client declined

to complete. It, on that day, did not raise any

particular ground for that, but later raised the

ground, which is not germane to present

proceedings, relating to whether a release of

mortgage had been properly signed. The parties met

again on, I think, 15 March, and again my client

took a point which, suffice it to say it does not

bear examination and, at the invitation of my

client, finally, the parties met again on 11 March

for settlement and on that day my client finally

determined - or rather said it would not proceed

and revealed its hand, as it were, with respect to

the three town planning points, the rezoning

points.

The vendors then brought an application for

what is called a Morgan v Brisco order before

Mr Justice de Jersey. My client brought an

application for leave to be discharged from the

contract. Mr Justice de Jersey dismissed my

client's application, because although it was

submitted to him that the rezoning obligations had

not been fulfilled and that that entitled my client

to get out of the contract, His Honour was of the

view that my client had not evinced any intention,

in any event, to settle the contract, and was not

in a position, therefore, to call for performance.

His Honour then turned to the question of the

Morgan v Brisco order, pursuant to which the vendor

would be at liberty to deposit the documents of

title and transfer in court, whereupon my client

would be ordered, within four days or so

thereafter, to pay the money. It was submitted to

His Honour that such an order ought not be made in

circumstances where there was a live issue that the
town planning obligations, the rezoning

obligations, had not been fulfilled. That was the

issue that the Full Court had left open and,

indeed, had said could not, as a matter of law, be

raised at that point. His Honour, however,

Sanwa 4 10/4/92

declined to accede to that submission and made the

order.

My client appealed to the Court of Appeal, and

it is the decision of the Court of Appeal
dismissing that appeal that is the subject of
application Bll. Their Honours of the Court of

Appeal concluded that whether or not that issue remained alive, the court had power to order specific performance of the contract. Could I take

Your Honours, please, to page 31 of Book Bll, the

last paragraph on the page. After having

considered my client's contention with respect to

whether the points were still alive, whether what

Acting Justice Robin decided about them left them alive, and the opposing contentions, Their Honours

said:

It is unnecessary to determine whether or not the appellant is estopped as the

respondents contend. There is another ground

upon which this appeal must fail.

Irrespective of whether or not any particular

issue has been finally determined against the

appellant (subject to the ultimate disposition

of the proceedings in the High Court), the

Court has ordered that the contracts be

specifically performed and carried into

execution. The orders of Byrne Jon

19 December 1991 and de Jersey on

13 March 1992 are merely ancillary orders to
give effect to that decree in the changing
circumstances which have emerged. Those

circumstances do not include any change in the

position with respect to the validity and

efficacy of the Order in Council -

that is to say, the rezoning matter:

Whether or not any particular issue has

been decided in favour of the respondents so

that the appellant cannot again raise it,

(subject to the outcome of the proceeding in

the High Court) the Court has ordered both

parties to perform the contract under its

control. Its power includes power to make an

order dissolving the decree of specific

performance and terminating the contract at

the instance of either party if it is

established that it would be just to do so in

the circumstances. Unless that is

established, it has power to make such orders
to carry the contracts to completion as are

just in all the circumstances: cf Johnson v

Agnew (1980) AC 367. That was the power which

Byrne J exercised when he fixed a date for completion and made orders with respect to the

Sanwa 10/4/92

exchange of documents and money. As has been

exercise by de Jersey Jin the different

noted, there was no appeal from his orders.

circumstances which were established before

him.

Your Honours, in our submission, what has resulted

is that whereas the Full Court had acknowledged

that the rezoning obligations were matters which
the applicant could not, as a matter of law, raise

at that stage because the time for completion on

construction of the contracts had not arrived yet,

and whereas Mr Justice Byrne was at pains to ensure

that that position was not affected by the order

that he made, the Court of Appeal has determined

that notwithstanding that at some later date it

might be determined that my client is right, that

it is receiving less than it contracted for, that
it nevertheless has to fulfil the contract by

receiving title, such as it is - - -

DEANE J: Are Their Honours not saying that the supreme

court keeps control of its orders and you can go

back if you have proper grounds to get the order

varied?

MR SOFRONOFF: Their Honours are saying that.

Mr Justice de Jersey was asked by us to make an

order in terms that allowed the rezoning points to

be dealt with before the obligation to pay money

arose. His Honour declined to do that. That was

part of the appeal to the Court of Appeal, and the

court's conclusion, we submit, is that although, of

course, in some proceedings at some stage my client may agitate the rezoning points, it will all be too

late, because the contract will have been

completed. It will have paid the money. It will

have received the land.

DEANE J: Their Honours do not seem to have understood the

matter as you put it, because it says:

The appellant's only attempt at such an

exercise, the application which it made to

de Jersey Jon 11 March 1992, failed and there

has been no appeal.

MR SOFRONOFF: That was the application, Your Honours, for

discharge of the contracts. His Honour did not
consider the rezoning points on that application
although they were put before him because

His Honour concluded that the applicant was not in

a position to assert a failure by the respondent to

fulfil its obligations in circumstances where the

applicant was not itself ready to pay the money in

Sanwa 6 10/4/92

any event. There has not been any appeal against

that finding and that conclusion.

So our submission in short, Your Honours, is this: specific performance orders are made by

courts in order to enforce the obligations of both

parties to the contract. The orders are made in

order to carry out the terms agreed upon by the

parties to the contracts. Those orders are not
made to compel one party to fulfil its part of the

bargain in circumstances where it may later be adjudged the other party has not fulfilled its

obligations. That is the position, we submit, that

has obtained here in circumstances where the

documents having been deposited last Monday, my

client came under an obligation to pay the money.

And yet, if its contentions are correct, the

rezoning points have not yet finally been

determined, and it may be the case and a court may

find it to be the case, that the vendor has not

fulfilled its obligations.

That, Your Honours, is the ground for special

leave that we raise at page - - -

DEANE J: That is in the second matter?

MR SOFRONOFF:  Yes, Your Honours, in the second matter at

pages 62 and 63 in paragraph 9. In our submission,

the effect of this judgment is that it is authority

for the proposition that the court has power to

make an order compelling both parties to complete a

contract as long as there is in existence a

contract that has not been discharged by the

parties or by the court, and we say that that

arises from Their Honours' conclusion at page 32 at

about point 3:

Its power includes power to make an order

dissolving the decree of specific performance

of either party if it is established that it	and terminating the contract at the instance
would be just to do so in the circumstances.
Unless that is established -

that is, that it is just to terminate the

contract -

it has power to make such orders to carry the

contracts to completion.

DEANE J: Well, your proposition can be put two ways: one

is that no matter how badly one party to a contract

behaves and how delaying its conduct is, the court

can never order specific performance while he has

any point at all that he can raise against

completion; or alternatively, your argument is

Sanwa 7 10/4/92

that in the circumstances of this case a discretion miscarried. Well now, is it the first or is it the

second?

MR SOFRONOFF: It is neither, with respect. It is more like

the first proposition that Your Honour put. We

would put it in these terms: notwithstanding that

a defendant may be wrongly seeking to evade its

obligations under the contract, or could I - - -

DEANE J: Assume, for example, the case of an ordinary

purchase of a house where the contract was due for

completion in January, and the vendor did not

complete March, June, November, and the next

January, having promised completion, the purchaser turns up, having sold his home, dependent on the new home, is refused completion, goes to court for

specific performance and some obscure point is

raised by the vendor, is your submission that the
court lacks jurisdiction in those circumstances to

say, "This is a case where we will order specific

performance of the contract, but you can still

raise your point if you want to."?

MR SOFRONOFF:  Your Honour, the question would not arise in

that fashion. If, let us say, there was an

application for summary judgment seeking specific

performance of the agreement and the obscure point

was raised by way of raising a triable issue, it

would either be a triable issue or it would not.

If it was a triable issue, that could not be

determined there and then by the judge in chambers,

there would be a trial, at the end of which there

would be an order for specific performance if the

plaintiff succeeded.

DEANE J: So, your point is that the court would lack

jurisdiction to make an order for specific

performance, leaving open if subsequent rescission

MR SOFRONOFF:  If it was not clear that the point raised by

the respondent in resisting the order was a bad

one, and in this case, in our submission, it was

not clear. Mr Justice de Jersey, when asked to

determine the point on the application for leave to

discharge the contract, called it - I think the

words were - "a complicated legal and factual

dispute" which was not suitable to be determined in

chambers before him. That is the sort of point

that it was and it would not require a very long

delay in order to have a trial about it to see
whether my client's contentions are right or not.

Or, alternatively, the order we proposed His Honour make was that the purchase moneys be ordered

to be payable upon the filing of an affidavit by

Sanwa 8 10/4/92

the vendor that it had fulfilled its obligations

with liberty to apply. We, of course, would have

immediately applied and have had that issue

determined. Whether they had indeed fulfilled

their obligations, namely the re-zoning ones, the

order could have been limited to giving liberty to

apply only with respect to those matters if it was

thought that general liberty would be too great a

liberty for this defendant in these circumstances

and, in my submission, one could see why a court

might think that. But this point was a point which

undoubtedly had been raised at the trial, which the

Full Court determined was premature for consideration and which the defendants have sought

to be dealt with in a final and determinative way

and, in our submission, the court does not have

power to preclude it, without hearing the

respondent, from getting that determination. To do

otherwise, we submit, is to go further than - the

cases say, go further than merely enforcing the

contract and to risk trampling on one party's

rights.

McHUGH J: But, in Bll your appeal was against the stay

order, application for a stay, was it not?

MR SOFRONOFF:  No, Your Honour. In Bll the appeal was

against Mr Justice de Jersey's making of a Morgan v

Brisco order. We applied to His Honour for a stay;

His Honour refused that.	We applied de novo to the
Court of Appeal for a stay.	The point was taken

that there was no jurisdiction or might be no

jurisdiction in the Court of Appeal to entertain an

application de novo. To avoid controversy, the

Court of Appeal treated it as an appeal from the

refusal of a stay, granted a short stay, heard the

appeal within a short time of a week or so and

dismissed it shortly after that. That is why there

might be a reference in the record to an appeal

against a stay, Your Honour.

DEANE J:  And was your client in breach of the supreme

court's order at the time it applied to

Justice de Jersey?

MR SOFRONOFF:  His Honour must have - could I answer it

descriptively, Your Honour.	The order was for
settlement on 3 February.	The reason my client did

not settle on 3 February is because its solicitor

said, one of eight releases of mortgages had been

signed by only one attorney for a bank when two

ought to have signed. That is a matter that is

hotly contested. There is a trial about it. That

is to be heard on 30 April. That still has

consequences because of interest provisions and

presumably the trial will go ahead. That was the

reason there was no settlement on 3 February. The

Sanwa 9 10/4/92

question whether my client wrongly declined to

settle will be determined at that trial, and it is

a credit case.

On the second occasion there was a date for

settlement proposed, not pursuant to a court order, but the parties got together and my client declined

to settle on a ground that, I concede, was not

tenable. On the third occasion my client proposed

the date for settlement, declined to settle, and

ultimately said the reason it declined to settle

was the failure to fulfil the town planning

obligations. So in those circumstances, in our

submission, it may be determined on 30 April, the

date of the trial, that my client was in breach of
the order, but we will not know that until the

court hears the evidence.

Your Honours, those are the submissions on the

application for special leave from the decision of
the Court of Appeal in application Bll. Could I

deal with the - - -

DAWSON J: Could I just take you back to Mr Justice Byrne's

order. If the effect of the letter was that that
order was conditional upon compliance with the

conditions, does that then carry right through?

MR SOFRONOFF:  In our submission, yes. His Honour

Mr Justice Byrne was a member of the Full Court

that heard the appeal, the first appeal, and we

submit that His Honour was peculiarly positioned to

understand why such a qualification was necessary.

Of course, it left the plaintiff in a position to

assert the contrary: that my client was estopped,

that the grounds were bad, that they had been

determined to be bad by Acting Justice Robin, and

that that had at some stage to be determined. But

we submit my client has been denied - - -

DAWSON J: But then Justice de Jersey's order would be also

subject to the same condition because it was merely

working out, as it were, or implementing

Justice Byrne's order.

MR SOFRONOFF:  It ought to have been but in plain terms it

is not, because on its face it allows the vendor
liberty to deposit the documents of title and

transfer in court, whereupon my client becomes

ordered to pay the purchase price within a fixed

number of days. So there is no room there.

DAWSON J:  Why is there not? Why can you not now suggest

that Justice de Jersey's order was subject to that

condition or qualification?

Sanwa 10 10/4/92

MR SOFRONOFF:  We asked him to express that to be the case

and His Honour expressly declined to do that.

Could I find the page at which His Honour does

that?

DAWSON J: Whether or not he declined to do so, the argument

is still available that nevertheless your

obligations are subject to that qualification now.

MR SOFRONOFF:	Yes, it is.
DAWSON J:	The argument is available.

MR SOFRONOFF: It is available but, in our submission, it

would have to fail because His Honour was pressed

with precisely that submission. It was rejected.

That was made the subject of a ground of appeal and

the decision of the Court of Appeal can only be
understood on the basis that they declined to

accept that submission. Indeed, the terms of the

reasons in the Court of Appeal, and the reasons of

Mr Justice de Jersey, are such that it leaves no

doubt that they were of the view that, irrespective

of this proposition of my client's, it was to

settle. It was to pay the money.

DEANE J:  And if you look at Justice de Jersey's judgment at

page 4, on his findings, this is very much the sort
of case that I put to you in terms of the vendor

just taking points for the sake of taking them.

MR SOFRONOFF: That was the vendor's submission that the

purchaser was taking points, and there is no doubt

that that - - -

DEANE J: That is His Honour's finding.

NR SOFRONOFF:  Yes.

DEANE J: In other words, your client is playing a game of

ducks and drakes with the orders of the supreme

court?

MR SOFRONOFF: His Honour said that, but - - -

DEANE J:  He found that?

MR SOFRONOFF:  His Honour found that. we do not challenge,

we cannot now challenge that my client is an

extremely reluctant purchaser who, if it is able
lawfully to avoid settling the contract, would do

so.

DEANE J: There is nothing wrong with that?

MR SOFRONOFF:  No.

Sanwa 11 10/4/92

DEANE J: But there is something wrong with a conduct as

described by Justice de Jersey in the second

paragraph on page 4?

MR SOFRONOFF:  There is. We would submit that His Honour

was wrong in drawing that conclusion. The only

evidence His Honour heard was from my client's

solicitor who said that he attended on the first

settlement, without any money from his client, and

saw that the release had not been signed. That was

the evidence that His Honour heard. His Honour

also heard, or saw evidence in affidavit form, as

to my client's attitude on the second and third

occasions for settlement. In our submission,

His Honour was wrong in concluding that, with

respect to the rezoning obligations which were

proved on affidavit material before him to at least

be alive if not correct, His Honour was not

entitled, we submit, to conclude that with respect

to those points my client had no bona fide belief

in their validity.

Your Honours, with respect to that last matter

I dealt with, my learned junior reminds me that the

rezoning points were taken by my client at the

trial before Acting Justice Robin in the Full

Court, until the matter was not argued because of the approach adopted by the Full Court and my

client's acceptance of that approach; at

settlement on 10 March, that is the last occasion
for settlement, before Mr Justice de Jersey and in
the Court of Appeal, and in those circumstances, in

our submission, my client is in a strong position

to agitate that His Honour was wrong in concluding

that, with respect to that point, leaving aside

other points, my client was playing ducks and

drakes.

Could I turn then, Your Honours, to the first

application, the original application in B4.

Your Honours, the affidavit raises a number of
grounds of special leave.	I propose to make

submissions about only one of them and that appears

at page 113, paragraph 6(a) -

DEANE J: If I might say so, that is a rather wise course in

that the approach of building 15 or 20 points of

law in a case is thought by some to be attractive

to this Court. It has quite a contrary result when

you look at a case and it is said to involve this

point, this point, this point, this point and this

point. You almost, invariably, get the feeling,

"Oh for heavens sake it is not a suitable vehicle

to raise all of those" .

MR SOFRONOFF:  Thank you, Your Honour. My client would not

wish to raise anything but the best points.

Sanwa 12 10/4/92

Your Honours, under the contracts - there were

three interrelated contracts - the original date

for completion was 29 March 1991. The contract,

however, was varied and the variation appears at

page 83 of book B4.

The variation related to when completion would

occur and Mr Acting Justice Robin, and the Full
Court - and we do not challenge this - concluded

that the variation did relate to when completion

might occur, the parties having agreed that it

would not occur on 29 March.

If Your Honours look at the first clause, in

the middle of page 83, the first obligation, we

submit, which arises, is that:

1.      Your clients -

the vendors -

are to satisfy the purchaser's solicitors that the vendors have attended to and finalised all

outstanding matters within their control in

relation to the rezoning ..... by 5 pm the 28th

day of March, 1991 -

The second clause then obliges the vendors to

provide documents evidencing those facts. The

third clause entitles Sanwa, the applicant, to

consider for 14 days whether it is reasonably

satisfied. Your Honours will notice the word

"reasonably" in brackets. That was a word that was

added by agreement between the parties. It is a

word that is missing in paragraph 1 which relates

to the satisfaction of the purchaser's

solicitors.Then clause 4 provides for a timetable.

If Your Honours turn over the page you will

see that clause 8 provides that:

Time shall remain of the essence.

The learned trial judge found that the purchaser's

solicitors, under clause 1, need only be satisfied

honestly, not reasonably. And His Honour concluded

- and this was not upset on appeal - that the

plaintiff had not established that the solicitor

was dishonest in forming the view that he was not
satisfied that all things that could be done had
been done. That finding, as I say, was not
satisfied on appeal but nevertheless it was held
that the purchaser could not terminate the contract

for failure of the vendor to satisfy the

purchaser's solicitors of those matters by 5 pm on

28 March.

Sanwa 13 10/4/92

If Your Honours would go to page 91, as we

will see, over the page, His Honour

Mr Justice McPherson concluded that time was of the

essence of the matters in the variation agreement.

In the middle of the page, then:

Nor is it, in my opinion, possible for the

purchaser to assert an independent right to

determine the varied contract arising from

failure to fulfil the conditions contained in

paras 1 and 3 of the variation agreement -

1 being the solicitor and 3 being Sanwa.

Even if, contrary to the trial judge's

findings on this point, Sanwa could be said to

have been acting reasonably -

His Honour had held that it was not acting reasonably and that is not challenged -

when on 9 April 1991 it expressed its non-

satisfaction with the matters specified in

para 1 of that agreement, it thereby acquired

no right to put an end to the contract. The

variation agreement itself did not confer any

such right, whether in express terms or

otherwise. Such a right may sometimes be

implied from the mere presence in a contract

of the words "subject to ... ". But no such

words appear in the agreement of 8 March 1991.

Indeed, none of the provisions of the first

four paragraphs of that agreement is expressed

in language appropriate to a contractual

condition. The purchaser was given no right

to determine the contract if the terms of the

relevant paragraphs were not fulfilled.

If Your Honours skip down two thirds of the way

down the page, the end of the middle paragraph, the

last sentence, that is where His Honour concludes

that: 

By virtue of para 8 time was to remain of the

essence of that date for completion, as well,
no doubt, as of the other dates specified in

the variation agreement.

Your Honours, the result, in our submission, of
that conclusion is that although one expects,
according to orthodox authority, that if time is of
the essence for the fulfilment of some task or
condition in a contract, then the other party, the

innocent party, may, if that condition is not

fulfilled, terminate it.

Sanwa 14 10/4/92

The effect of this conclusion is, we submit,

that before that can arise there must be some

express or implied words to the effect that you

thereby get a right to terminate. We submit that

that is not the law but if that is the law it

signifies a substantial departure from what has

been understood to be the law since Hoad v Swan was

decided in 1920 and has been accepted ever since.

This ground, as I say, is set out at page 113,

paragraph 6(a).

DEANE J:  I am not sure I quite follow how that fits into

the overall case. The finding was that Sanwa was

not acting reasonably and we assume that that is so

for the purpose of this argument.

MR SOFRONOFF:	Yes.
DEANE J:	Can you explain to me where the argument leads.
MR SOFRONOFF:	Yes. There were relevantly, under the

variation agreement, two matters to occur, time

being of the essence of the occurrence of those.

The first is that the purchaser's solicitor must be

honestly satisfied that certain things had
happened, and he must be satisfied of those things

before 5 pm on 28 March.

The second matter is that Sanwa had to be

reasonably satisfied, not just honestly, by some

other date or within some other period.	We say
nothing about that.	The conclusion was that Sanwa

was not reasonable in the view that it came to, and

we say nothing about that. But we succeeded at the

trial with respect to the first matter, that the

solicitor was not honestly, if unreasonably or

irrationally - he was honestly dissatisfied that

the vendor had done the things within its power and

control.

The vendor having failed to satisfy him by the

time stipulated, time being of the essence, my

client was entitled to terminate the contract,

which it did, or rather I should say, which it

purported to do. Mr Acting Justice Robin concluded

that it had not, that it had let time slip by

without acting and that by the time it acted on, I

think, 11 June, a couple of months later, a month

and a half later, it was too late.

We would seek to challenge that latter finding

on any appeal, but of course it does not throw up

any special point. The point that is thrown up is

whether it is correct to say that in the absence of

words which expressly or implicitly give rise to a

right to terminate, then the mere statement that

party A must do something by a particular date,

Sanwa 15 10/4/92

time is of the essence, does not give rise to a

right to terminate.

DEANE J:  What if one reads these variation provisions on

the basis that clause 1 is not a free standing
independent provision, but is a procedural

mechanism leading into clause 3?

MR SOFRONOFF:  We submit that it does not make any

difference and, indeed, I would wish my submissions

to be understood as, put at their lowest, that -
put on the basis of the worst case from my client's

point of view - they are machinery provisions; they

all work together and they work together in order

to achieve a date for completion. Time, however,
remains of the essence of the fulfillment of the

matters stated therein.

DEANE J: But that would lead to the implied specification

in the active clause 3 of, what, 11 April? Now, if

you had 11 April in the critical clause 3, would
you not have to read clause 8 as referring, not to

29 March, but to 11 April?

MR SOFRONOFF:  No, Your Honours, we would submit the time

within which the matters in those clauses are to be
attended to is, in each case, of the essence, and
we say that because there are two alternative

ways - the parties having abandoned the certain

date for completion, 29 March - a new completion

date can be arrived at. One is by this machinery,

which would arrive, I think, at a date of June 11,

60 days from April 11. The other is, if that

clause fails to operate, then the parties might
agree, in the absence of anything else, they would
be put to the position that only a reasonable time
for completion is required, it would be implied.

But that does not mean that clause 1 does not mean

what it says - - -

DAWSON J:  I wonder about that because, really, the more

reasonable interpretation would be that the vendors

had to place all the materials before the

purchaser's solicitors by that date, whereby he

could satisfy himself, rather than that he should

satisfy himself because he could simply delay

satisfying himself beyond the date.

MR SOFRONOFF:  Yes. Your Honours, as to that, his client

might be in breach in the sense of preventing the

performance of a contract by its agent.

Alternatively, the operation of the term might be

frustrated. Could I say, however, that that

construction that Your Honours put was the one that

commended itself to Acting Justice Robin in the

Full Court. We would have to overturn that

construction in order to succeed on the appeal

Sanwa 16 10/4/92

ultimately. We contend that the clause read as

separate provisions, or read as one machinery

provision in order to settle a new date,
nevertheless provide for times and clause 8 of the

variation agreement provides that those times are

essential times.

DAWSON J: But you cannot be in breach of the time provision

in the sense that you have no control over what

happens to take you over the time limitation, can

you?

MR SOFRONOFF: It is akin, in our submission, to a

provision, for example, that says one of the
parties shall do his best to get the minister's

consent by 23 March and he has to do his best to

get that consent, but ultimately the obtaining of
the consent is not within his control, perhaps,
nevertheless the failure of that time may lead to

the consequence that time is of the essence, the

contract might be terminated.

DAWSON J: Well, you can hardly say that the party is in

breach, in those circumstances, can you

Mr Sofronoff?

MR SOFRONOFF:	No, that is correct.
DAWSON J:	It is only on breach that the right to terminate

would arise.

MR SOFRONOFF: That, however, does not arise here for two

reasons: one is, he, the solicitor in this case,

was dissatisfied; did receive the material and was

not satisfied by it, as the trial judge concluded,

the onus being on the plaintiff to show dishonesty;

and secondly, the Full Court concluded, and we

adopt this conclusion, that the times referred to

each of them are of the essence. That was at that

passage I showed to Your Honours earlier.

DAWSON J: But the vendors did complete all they had to do

within the time limited, did they not?

MR SOFRONOFF:  It depends how one views clause 1; if it only

throws up an obligation to provide materials within
time for him to consider them by 5 pm on 28 March,

yes; if they had an obligation to satisfy him,

then, no. We submit that latter is the correct

construction.

DEANE J: But they did provide materials which, on the

findings below, would have satisfied any solicitor

acting reasonably.

MR SOFRONOFF:  Yes, we challenge that, but that is the finding and the Full Court agreed.

Sanwa 17 10/4/92

DEANE J: Yes, I understand your challenge to it, except if

one construes clause 1 the way you would favour, it

provides pretty strong reasons for reading it

simply as something leading into clause 3 in terms

of consequences.

MR SOFRONOFF:	Your Honours, 28 March is the significant date, we submit, because the 29th was the old
essential date for completion.
DEANE J:	I follow that.
MR SOFRONOFF:	And so, the position is that the parties have

agreed that by close of business on the day

preceding the old day of completion,

notwithstanding that the re-zoning and other

obligations had not by then been fulfilled, when

they would have had to have been before, it is

sufficient if, leaving aside fulfilment, the vendor

has at least done everything in its power to ensure

that they are completed in a timely fashion by the

bureaucracy, and satisfied the purchaser's

solicitor of that fact. That was the obligation

that was substituted for the original obligation of

actual fulfilment of the obligations by the day

after. And so, against that background, we submit,

the construction that we contend for is the

preferable one.

Your Honours, unless there is anything else,

those are our submissions.

DEANE J: Thank you, Mr Sofronoff. Yes, Mr Keane.

MR KEANE:  May it please the Court, would it be convenient

if we dealt with the two applications in the same

order in which they are dealt with by our learned

friends?

DEANE J:  You take them in whatever order you like.

MR KEANE:  As Your Honours please. If then we may proceed

to the second application, that is B11, could we

draw the Court's attention to the observations made

by the Court of Appeal last Monday, 6 April, which

appear in the book B11 at pages 46 to 48. We

apprehend that it is useful to draw the Court's

attention to these matters in relation to our

learned friend's argument on the second application

that there is a question as to whether his client

is getting that which they have bargained for

because the town planning points are still in

dispute.

We draw Your Honours' attention to what is

recorded there from the President of the Court of

Appeal, speaking for the court, because it

Sanwa 18 10/4/92

demonstrates that - and this is particularly so at

page 47, the first long paragraph on the page,

which demonstrates that when the matter of the

appeal came on for argument the present applicant

sought to have the court not determine the validity

of the town planning points, on the footing that
the material was not before the court, the time was

not right for determination of those points; and

preferred not to have them determined at all,

notwithstanding our agitation that they should be

determined, or at least could be so.

We draw Your Honours' attention to the balance of page 47 and the concluding remarks of the court

because, Your Honours, in our respectful

submission, an opportunity to have the town

planning points determined was foregone

deliberately, then what was sought to happen was

that submissions were sought to be made to agitate

those points again, the Court of Appeal having

reached the conclusion that the judgment of

Mr Justice de Jersey was sustainable without

reference to whether the town planning points were

good or not.

If we may develop those observations a little

further in relation to the other side's

opportunities to have the town planning points

determined, but their almost religious reluctance

to have the substance of them aired, may we say

that the town planning points, critical as a matter
of substance to their contentions, were raised in

the original notice of appeal to the Full Court,

which appears in the first application book at

pages 76 to 77, that is application book B4,
paragraphs 5 to 12. If we might ask Your Honours

to note particularly paragraph 12, because

Your Honours will appreciate that in reading the

judgment of the Full Court no reference is made to

any contention that the present applicant

justifiably terminated the contract on 12 June by

reason of the non-satisfaction of conditions 4 and

5, the town planning points.

Your Honours, it has been said by our learned

friend several times that the Full Court concluded

that those points could not be raised. With

respect, that misstates the position. The Full

Court concluded that unless time were of the

essence, those points could not succeed as grounds

justifying the rescission on 12 June.

The position is that, on the appeal before the

merit they are clearly covered by the privative

Full Court, those points were not argued,

clause relied upon by Acting Justice Robin and, in

Sanwa 19 10/4/92

relation to what Mr Justice de Jersey made of them,

he expressed the view that he regarded

Acting Justice Robin's treatment of the points,

made at length, after full argument, as being

sufficient to enable him to proceed on the footing

that there was nothing in them.

Your Honours, we submit in relation to the

second argument, or the second application, that

Your Honours do not have the benefit of any

discussion of these points by either of the

appellate courts below. The reason Your Honours do

not have that is because they have been

deliberately foregone, on both occasions in which

they could have usefully been agitated,

particularly in relation to the first occasion

because,on that occasion, if the other side had

been able to make out its contention, albeit it one

that it made in the alternative, that completion

on 10 or 11 June was of the essence and the town

planning points were good, then they would have

succeeded in establishing their counter claim to

have the contracts declared rescinded on the 12th,

which, of course, is the contention that is sought

to be made in paragraphs 4 and 6 of the draft

notice of appeal in the first application, that

is B4.

Your Honours will see that if Your Honours

turn to the first application book, that is B4, at

pages 130 to 132 of the record, and Your Honours

are still in the position where Your Honours have
heard not a word of the merit of these points.
Your Honours are in the same position in that

regard as the Full Court and as the Court of Appeal

and, as Your Honour the presiding judge observed,

there may be nothing wrong with a party taking

points in its own interest if they are lawfully

available, but there is, with the greatest respect,

something wrong in a party seeking special leave

who has deliberately put it out of the way of the

appellate courts before whom the matter has come to

determine the point.

Might we say one thing further about that.

That is in relation to the orders of

Mr Justice Byrne. Those orders required completion

on 3 February. Prior to 3 February, the letter

of 19 December was sent. It was made very clear in

that letter that the respondents' contention was
that the respondents had complied, in all respects,

with its obligations in relation to the town

planning matters. Nothing further was done about

that. No further proceedings were taken before

completion and in that time the present applicant

stood by while the respondents put themselves in a

position to complete, and that involved not simply

Sanwa 20 10/4/92

getting the documents together, Your Honours, but

it involved the destruction of the hotel which

stood on the property.	Your Honours, that is all
we wish to say about B11.

In relation to the argument in respect of B4,

if we may address the merit of that argument. The

argument depends upon a construction favourable to

the applicant of a contract which one would venture

to hope is unique in its critical terms. All four

judges who have thus far considered this question

have rejected the construction contended for by the

other side, we submit correctly. We submit that

they were correct in taking the view that

Mr Rudkin's position, under clause 1, was

preliminary to Sanwa's determination which was

itself a mechanism to fix a date for completion.

And we submit that it is implicit, particularly in clause 3, that there be no right to determine, or

indeed no right to do anything at all, conferred

implicitly upon Mr Rudkin, or upon the solicitors,

by clause 1 of the document.

Your Honours, in relation to the matter of

merit, we would mention as well, with respect, that

Hoad v Swan was a clear case of breach of timely

performance of a promissory obligation.

Your Honours, there is one further matter in

relation to B4, and that is, that even if it be

correct that matters which occurred or

non-satisfaction which occurred on 28 March could

somehow be taken as a matter of construction to

entitle the applicant to determine the contract as

the applicant now wishes to contend, there are
findings which have not been attacked to the effect
that the essential character of time in respect of

those matters was lost by reason of the applicant's

conduct after 29 March.

We draw Your Honours' attention in that regard

to the discussion of the point in relation to

Havenbar v Butterfield and Mehmet v Benson at

pages 89 to 90 in application book B4. The

discussion commences strictly, I suppose, with
respect, at the bottom of page 88 in the last

paragraph, but it takes up the present point on

page 89 above the citation of Mehmet v Benson and

Havenbar v Butterfield and continues at the bottom

of 89 in the paragraph which commences:

Of the application of those principles,

the present transaction provides an ample

illustration. Once 29 March 1991 had arrived

and passed, the purchaser not only failed to

take steps to communicate an election to

rescind by reason of non-fulfilment of the

Sanwa 21 10/4/92

original contractual conditions by the

specified completion date, but it continued to

take affirmative and active steps that fully

acknowledged the continuing existence of the

contract.

Your Honours, Acting Justice Robin expressed

similar views at pages 37 point 7 to 39 point 2,

which we do not take Your Honours to at the moment.

We make the point because, with respect, our
learned friend's contentions and the contentions

they seek to agitate in the notice of appeal, which

would go forward if leave were granted, are doomed,

with respect, to fail because whatever success they
may have on the construction argument, there are

concurrent findings which, as we say with respect,

are not attacked, that any essential character that

may have attached to Mr Rudkin's exercise was lost

by the other side's conduct. Your Honours, unless

there is something that Your Honours wish to raise

with us, those are our submissions.

DEANE J:  Thank you, Mr Keane. Yes, Mr Sofronoff?

MR SOFRONOFF:  Your Honours, could I address only on the

submission that we abandoned before the Full Court

or elsewhere: the contentions that we had been

seeking to raise relating to the town planning

points. The position before the Full Court was

that it emerged in debate during argument that if

the date for completion was, as my client asserted

it to be, still 29 March, then on any view the

rezoning obligations had not been fulfilled on any

view because they were, on the plaintiff's own

case, fulfilled view later.

So it was not necessary to argue their

fulfilment if that was the conclusion the court

came to. If the court came to the conclusion that

the contract was an open one, then it was not

necessary to argue them because in the event, the

time for completion had not arrived. Because of that discussion during argument, the points were not argued before the Full Court and, as appears

from the last page of the reasons of the Full

Court, the court came to the conclusion that the

contract was an open one and the points did not
arise or, rather, the obligations had not yet

arisen for fulfilment.

If the point had been abandoned, we submit it

would have clearly emerged from the reasons that they had been abandoned. If the points had been

abandoned, it is inexplicable why Mr Justice Byrne

would have directed the sending of the letter that

he did direct.

Sanwa 22 10/4/92

Before the Court of Appeal, I was invited to

say what was my client's position with respect to

making submissions about the rezoning points. My

submission was that the appeal did not·properly

throw them up for consideration, although they

could be dealt with ultimately within a short time,
that is to say, days or weeks if the court could

find an opportunity. Alternatively, if the court

was against that, we could be ready within 24

hours. The court said that if they required

submissions on it, they would let us know.

In the event, they held against us, dismissed

the appeal without recourse to those matters, but in the course of doing so, they made reference to the fact that if those submissions had been made

and had been successful, that might have helped.

So we put the written submissions in that

Their Honours refer to in the paper that

Your Honours were taken to, where the president

refers to further submissions having been made.

We submit that we continually reserved those

points. We sought to raise them before

Mr Justice de Jersey. That did not work, and we

did not abandon them before the Full Court or the
Court of Appeal. That is all I wanted to address

upon, Your Honour.

DEANE J: Thank you, Mr Sofronoff. These two applications

for special leave to appeal have been heard

together. As regards the first of them, the Court

is of the view that the prospects of an appeal
succeeding on the question of the construction of

the variation agreement which would lie at the forefront of such an appeal is insufficient to

warrant a grant of special leave.

As regards the second application for special

leave to appeal, the Court considers it would be

quite inappropriate to grant special leave to appeal in all the circumstances of this case.

MR KEANE:  Your Honours, we would ask for orders for costs in relation to each application.

DEANE J: Mr Sofronoff?

MR SOFRONOFF:	I can say nothing about that, Your Honour.
DEANE J: Very well.	The application is refused in each

case with costs.

Sanwa 23 10/4/92

The Court would like to compliment counsel on

both sides for the manner in which they have

identified the real points in complicated

applications, and we are appreciative of it.

AT 12.03 PM THE MATTER WAS ADJOURNED SINE DIE

Sanwa 24 10/4/92