Tonner v Delaporte
[2018] WASCA 115
•25 JULY 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: TONNER -v- DELAPORTE [2018] WASCA 115
CORAM: MURPHY JA
BEECH JA
PRITCHARD J
HEARD: 23 MAY 2018
DELIVERED : 25 JULY 2018
FILE NO/S: CACV 88 of 2017
BETWEEN: JOSEPH ANDREW TONNER
First Appellant
LINDA JANE TONNER
Second Appellant
AND
SHARON LOUISE DELAPORTE
Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram: PARRY DCJ
File Number : CIV 1077 of 2016
Catchwords:
Contract - Contract for sale of land - Whether email sent by buyers was a repudiation - Turns on own facts
Legislation:
Nil
Result:
Appeal upheld
Primary judge's orders set aside
Order for repayment of deposit amount
Category: B
Representation:
Counsel:
| First Appellant | : | Mr C S Williams |
| Second Appellant | : | Mr C S Williams |
| Respondent | : | Mr P G McGowan |
Solicitors:
| First Appellant | : | Solomon Brothers |
| Second Appellant | : | Solomon Brothers |
| Respondent | : | GV Lawyers |
Case(s) referred to in decision(s):
Browne v Dunn (1893) 6 R 67
C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643
David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353
Delaporte v Tonner [2017] WADC 100
DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423
Eade v Vogiazopoulos (No 2) [1999] 3 VR 889
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498
Fazio v Fazio [2012] WASCA 72
Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385
Hooper v Oates [2013] EWCA Civ 91; [2014] Ch 287
Koompahtoo Local Aboriginal Land Council v Sanpine Ltd [2007] HCA 61; (2007) 233 CLR 115
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623
Lords v von Thomann [No 2] [2014] WASC 320; (2014) 47 WAR 473
Ng v Filmlock Pty Ltd [2014] NSWCA 389; (2014) 88 NSWLR 146
RCR Tomlinson Ltd v Russell [2015] WASCA 154
Roxborough v Rothmans of Pall Mall Australia [2001] HCA 68; (2001) 208 CLR 516
Ryder v Frohlich [2004] NSWCA 472
Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620
Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144
JUDGMENT OF THE COURT:
The appellants, Mr and Mrs Tonner (the Buyers) challenge the decision of the primary judge[1] awarding damages to the respondent, Mrs Delaporte (the Seller), for the Buyers' repudiation of their contract with the Seller to purchase her property. The Buyers challenge the finding that they repudiated the contract. They also challenge the award of damages.
[1] Delaporte v Tonner [2017] WADC 100 (primary reasons).
For the reasons that follow, we would uphold the Buyers' challenge to the finding of repudiation. The award of damages must be set aside and, instead, an order made for payment of the deposit amount by the Seller to the Buyers.
Background facts
The essential background facts are not, and were not, in dispute.[2]
The contract for sale and purchase of the property
[2] Primary reasons [12]; appellants' submissions [2]. The following background facts are substantially taken from the primary judge's reasons and accepted in appellants' submissions [2].
On 1 May 2013, the Seller and the Buyers entered into a contract for the sale and purchase of 99A Ullapool Road, Mt Pleasant, Western Australia (the property) for $3.1 million (the contract).[3] The contract stated that settlement was to be in nine months, being 1 February 2014.[4]
[3] Primary reasons [13].
[4] Primary reasons [13].
Under the contract, the Buyers were to pay, and did pay,[5] a deposit of $100,000 within 10 days to be held on trust by the Seller's real estate agent, Alan Bourke and Associates Pty Ltd trading as Bourkes (Bourkes).[6]
[5] Primary reasons [14].
[6] Primary reasons [13].
The contract incorporated the Joint Form of General Conditions for the Sale of Land (the 2011 General Conditions).[7]
[7] Primary reasons [15].
Clause 24.1 of the 2011 General Conditions concerns default, relevantly stating:[8]
If the Buyer:
…
(b)repudiates the Contract,
the Seller has each right in clause 24.2, in addition to any other right or remedy of the Seller.
[8] Primary reasons [16]; exhibit 2.
Clause 24.2 states, in part:[9]
If clause 24.1 applies, the Seller may:
…
(e)where the Buyer repudiates the Contract, terminate the Contract by Notice to the Buyer.
[9] Primary reasons [17]; exhibit 2.
Clause 24.3 states, in part:[10]
If the Seller terminates the Contract under clause … 24.2(e), the Seller may, subject to the further provisions of this clause, elect to exercise any one or more of the following.
(a) Forfeit the Deposit.
(b) Sue the Buyer for damages for default.
(c) Resell the Property.
[10] Primary reasons [18]; exhibit 2.
The contract was also subject to three special conditions,[11] the second of which (special condition 2) states:
The purchasers agree to rent this property on a 9 month lease with options to renew at $2500 per week from the date of this contract going unconditional up until the time of settlement to be managed by Bourkes on behalf of the owners.
The lease agreement
[11] Primary reasons [19]; exhibit 1.4.
On 24 May 2013, the parties entered into a standard residential property lease under which the Seller leased the property to the Buyers for $2,500 per week for a nine‑month term, commencing on 1 June 2013 (the lease).
The lease included the following special condition:
The Lease Agreement shall be terminated upon settlement of the property.
The Buyers and their family moved into the property and resided there until 21 March 2014.[12]
Extension of the settlement date and lease term
[12] Primary reasons [21].
On 1 February 2014 (the date on which settlement was to occur), the parties held a meeting at the property. At the Buyers' request,[13] the contract settlement date was extended to 28 February 2014.[14] The lease term was adjusted accordingly and the parties amended and initialled the lease document to specify that it was to expire on 28 February 2014.[15]
February 2014 correspondence
[13] Primary reasons [67].
[14] Primary reasons [22].
[15] Primary reasons [22]; exhibit 1.5.
On 14 February 2014, a Bourkes marketing and sales consultant, Ms Nikki D'Agostino, sent an email to the Seller:[16]
Dear Sharon,
I've left a message with you advising I would follow up with email. I have received information from the buyer that they wish to proceed with the settlement, working toward the goal to settle on 28th Feb.
Alan indicated to me from a discussion you had that you would look to extend the penalty period to this date - can you please confirm that this is agreed?
The buyer said they will have further update from the bank mid next week.
Warmest regards,
Nikki D'Agostino
Marketing & Sales ConsultantPerth Strata Specialist Team
[16] Primary reasons [23]; exhibit 1.1.
On 15 February 2014, the Seller sent the following email in reply to Ms D'Agostino:
Thanks Nikki
We will accept extending settlement time to the 28 Feb 2014 with the penalty interest applied, but no further extension after that date.
Regards
Sharp [sic]
On the same day, Ms D'Agostino replied by email, stating 'I will advise accordingly and have update mid week'.[17]
[17] Primary reasons [25]; exhibit 1.1.
On 16 February 2014, the Seller sent the following email to Ms D'Agostino:[18]
Nikki,
Barry & I have discussed the situation regarding the settlement & extension of time. As we have agreed to extend to the 28th Feb we would request that the deposit be released to us immediately. We feel we have kept faith at all stages of the process & are now suffering huge financial ramifications due to the late settlement that the penalty interest does not cover. If we has [sic] declined to extend the settlement the deposit would have been awarded to us within a few days, thus alleviating the current pressure this delay has placed us under. The release of the deposit does not in any way change the position for the owners [sic], as these funds have not been in their account for 9 months & in any case would be forfeited if they can not settle.
Regards
Sharon Delaporte
[18] Primary reasons [26]; exhibit 1.25.
Later that day, Ms D'Agostino replied to the Seller's email as follows:[19]
Hi Sharon
Just confirming receipt of your email. I am awaiting response from the purchaser to have this arranged. I will be in touch once I have confirmation. Thanks
Warmest regards,
Nikki D'Agostino
Marketing & Sales Consultant
Perth Strata Specialist Team
[19] Primary reasons [27]; exhibit 1.6.
The next day, Ms D'Agostino sent an email to the Seller, which set out Mr Tonner's email in reply to the Seller's request for the deposit to be released. In summary, Mr Tonner's email said that the Buyers were content to release the deposit to the Seller, so long as there would be no penalty interest charged on account of the amended settlement date. Ms D'Agostino asked the Seller for her position on this proposal.[20] Ms D'Agostino forwarded the email chain to Mr Tonner later on 17 February 2014.[21] There was no evidence of any response by the Seller to this email.
[20] Exhibit 1.25.
[21] Exhibit 1.25.
On 21 February 2014, the Buyers received an undated letter from Ms Sandie Stewart from Bourkes' Property Management Department (the notice to vacate), stating:[22]
[22] Primary reasons [28]; exhibit 1.3.
To Andrew & LInda [sic],
Re: 99A Ullapool Road MOUNT PLEASANT WA 6153
We regret to inform you the landlord has given instruction that the property must be vacated by FRIDAY 21st MARCH 2014.
According to our records, your rent is currently paid to 20/02/14, you are required to continue paying rent up until the day you vacate. Please be aware you cannot use your bond as the final month's rent.
We have enclosed our final inspection guide to assist you in ensuring a trouble free end to your tenancy with us. Please be aware that if the property is not left in a clean and tidy condition there can be a delay of up to 2 months in getting your bond refunded or we may have to deduct the costs of rectifying the property from the bond.
As you are no doubt aware, it is our obligation to re-let the property to another suitable tenant. We would greatly appreciate your co-operation by allowing scheduled access for prospective tenants to view the property. We will contact you at a later time to arrange this as required.
We understand it is not always possible to move out precisely on the specified date. We ask that should you find alternative accommodation and be able to move out sooner than the required date that you provide written notice to us of the intended date two weeks prior to moving out.
Please return all the keys and remotes to our office Monday - Friday 8:30am - 5:00pm with the key return form supplied. A final bond inspection will be carried out as soon as practical once keys are returned.
Kind regards,
Sandie Stewart
Property Management Department
(emphasis in original)
Enclosed with the notice to vacate were (1) a key return form; and (2) a document entitled 'Final Inspection Guide'.[23] The Final Inspection Guide stated that the information it contained 'has been prepared to assist you when vacating the property you have been renting with Bourkes' and contained detailed information relating to requirements for general cleaning, areas of special attention and other reminders.[24]
[23] Primary reasons [30]; exhibit 1.3.
[24] Primary reasons [30]; exhibit 1.3.
At 12.08 pm on Friday, 21 February 2014, Mr Tonner sent the following email to Ms D'Agostino:[25]
Subject: FW: 99 Ullapool
Hi Nikki, I have received a letter from Sandie at Bourke's asking me to vacate the house by 21/3/14 and I have replied to Sandie saying that we will accommodate their request, I Take this letter to mean that they are not wanting to settle on the property so I have informed my Financier and Account [sic] to stop what they are doing and not to waste any more resources on the subject, Linda and myself are disappointed that they have made this call after all the work yourself and the Tonners have put in to help the owners with their position after it was presented to us at that meeting on the 1/2/14 at the home, as we know it should not have had any Bering [sic] on us and the purchase of Ullapool but offered an idea that might have helped all concerned but as with all the discussion we have had over the last Ten months it always ends up one way. So we do expect our deposit to be returned in full to us with no delay From Bourke's trust account ,at this point in time we would like to thank you on the professional manner you conduct yourself throughout this whole process even when the sellers [sic] partner (Barry) verbally attacked you in the driveway on the 1/2/14 after our meeting , Linda and myself both commented how improper that was on their behalf .. From this point forward we will start looking again…PS you know all the swings and rounder [sic] about there has been over the last two months , I was hopping [sic] to speak with you before sending this email …
Kind regards
Andrew Tonner
General Manager - Operations
[25] Primary reasons [31]; exhibit 1.26.
At 2.40 pm that day, Ms D'Agostino replied to Mr Tonner's email, stating:[26]
Thank you Andrew for your comments.
I am forwarding this email to Alan Bourke to attend to.
[26] Primary reasons [32]; exhibit 1.26.
Later that day, Mr Bourke telephoned Mr Tonner.[27] Mr Bourke was not called to give evidence at trial.[28] In cross-examination, Mr Tonner gave the following evidence about this telephone conversation:[29]
And what passed between you and Alan Bourke during the course of that telephone conversation? - - - It was a very short telephone conversation and he just said to me that it's what the owners want to do and it's their prerogative to do that.
Was there anything else that he said to you or you said to him during the course of that telephone conversation? - - - It was very short phone call of 15 to 20 seconds.
[27] Primary reasons [33].
[28] Primary reasons [33].
[29] Primary reasons [33]; ts 59 - 60.
As will be seen, the primary judge drew inferences from Mr Bourke's subsequent email, referred to at [29] below, as to what Mr Bourke said in the course of this conversation. The drawing of those inferences is challenged by ground 3.
At 2.35 pm on Monday, 24 February 2014, Mr Tonner sent the following email to Mr Bourke:[30]
Subject: FW: vacate letter
Hi Alan , Thank you for calling on Friday 21/2/14 to explain your understanding of the letter which your office sent , Our position stands in how it has been received and with what dialog [sic] we have had over many weeks through Nikki with the owners this is no different than any other agreement we come to , the( owner) agrees with all things discussed and then the( Partner] changes it all to suit his agenda and deals going on in the back ground [sic] that are not our concern no matter what. As mention [sic] to you on Fridays [sic] phone call that I had informed all my team working on this and discussed the letter received and early received emails/sms we were all of the same conclusion.. On Friday my wife has put in position all the items which Sandie Stewart had highlighted that needed to completed before handing the keys back and also has committed to a new Property to go to , While I spend a great deal of time working on Projects through out [sic] the country my family require a lot more certainty than this.. AS [sic] to the Deposit of $100.000 Placed [sic] in Bourke's trust account , I do expect it to be refunded in to [sic] our account with no delays. Alan I would like to say how Professional Nikki has been throughout this process even when the owners [sic] partner verbally attack [sic] her in the drive way [sic] of the home after a meeting that we hold [sic] on the 1/2/14 which was disappointing to see , so in closing we have excepted [sic] there [sic] decision and we move forward.
Kind regards
Andrew Tonner
General Manager - Operations
[30] Primary reasons [34]; exhibit 1.7
The seller pleaded, and the judge found, that this email constituted a repudiation of the contract.
At 3.21 pm later that day, Mr Bourke replied by email (Mr Bourke's email) to this email, as follows:[31]
[31] Primary reasons [37]; exhibit 1.7.
Dear Andrew,
Its [sic] not that easy to believe that we just return the deposit and everyone goes on their way.
You committed to buy the home and the owners entertained a delay in proceedings to allow for a settlement at latest by the 28th of February.
They are fully entitled to seize the deposit and use all the default provisions in the General Conditions of sale.
Please think very seriously about this termination of the purchase and get legal advice before defaulting on the transaction.
The previous advice was a tenancy issue and has no bearing on your purchase of the home.
I can be contacted through out [sic] the day on the below numbers
Regards
Alan Bourke
On 26 February 2014, GV Lawyers sent a letter (the solicitor's letter) by email to the Buyers, stating:[32]
[32] Primary reasons [38]; exhibit 1.10.
Dear Sir/Madam
CONTRACT FOR SALE OF 30B BRIAN AVENUE, MT PLEASANT:
DELAPORTE TO TONNER - CERTIFICATE OF TITLE VOLUME 2584 FOLIO 414
We act for Sharon Louise Delaporte who is the registered proprietor of the above mentioned property and refer to the contract to sell the property to you dated 1 May 2013.
We also refer to your email to our client's selling agent, Alan Bourke, dated 24 February 2014 advising that you no longer intend to proceed to purchase the property from our client and demanding the return of the $100,000.00 deposit you have paid to the selling agent. We confirm that your email evinces your intention not to proceed with the contract and constitutes a repudiation of the contract. Our client accepts your repudiation of the contract, elects to terminate the contract pursuant to Clause 24.2(e) of the Joint Form of General Conditions for the Sale of Land and claims the forfeit of the deposit pursuant to clause 24.3(a) of the General Conditions and further damages for breach of contract.
Our client otherwise reserves all its rights at law and in equity in respect of your breach and termination of the contract.
Yours faithfully
GV LAWYERS
Luke Barker
On 28 February 2014, by further letter by email, GV Lawyers clarified that their earlier letter should have referred to the contract to settle '99A Ullapool Road, Mt Pleasant'.[33]
The marketing and sale of the property
[33] Primary reasons [39]; exhibit 1.11.
On 5 March 2014, the Seller entered into an exclusive selling agency agreement for the sale of the property with Ace Realty (WA) Pty Ltd trading as Ace Realty (Ace Realty).[34] The 'listing price' of the property pursuant to this agreement was $3.5 million.[35]
[34] Primary reasons [41]; exhibit 1.12.
[35] Primary reasons [41]; exhibit 1.12.
Both the Seller and Mr Sanchez gave evidence that, during the period of Ace Realty's agency (from 5 March 2014 until 27 July 2014), Ace Realty conducted an active advertising campaign, consisting of (1) onsite signage; (2) use of marketing websites including realestate.com.au; and (3) home opens almost every weekend.[36] The Seller paid $3,000 to Ace Realty for the advertising campaign.[37] During this time, the Seller and her husband resided at the property and took measures to present it in a way so as to be attractive to potential purchasers.[38] However, no offers to purchase the property were received.[39]
[36] Primary reasons [44]; ts 16, 28.
[37] Primary reasons [44]; exhibit 1.13.
[38] Primary reasons [45].
[39] Primary reasons [46].
On 24 April 2015, the Seller entered into an exclusive selling agency agreement for the sale of the Property with Ms Colleen Gandini trading as Colleen Gandini Residential.[40] It stated the 'listing price' for the Property as 'HIGH $2m's'.[41]
[40] Primary reasons [52]; exhibit 1.18.
[41] Primary reasons [52]; exhibit 1.18.
Ms Gandini (1) advertised the property on all major websites and using signage; (2) contacted people who had been looking at other houses with Colleen Gandini Residential; and (3) opened the Property for inspection every weekend; sometimes twice on a weekend.[42] The Seller paid Ms Gandini marketing fees of $420.[43]
[42] Primary reasons [54].
[43] Primary reasons [54].
Ms Gandini received an offer for the purchase of the property at $2.4 million.[44] The Seller made a counter offer of $2.75 million before ultimately accepting a price of $2.6 million on 7 October 2015.[45]
[44] Primary reasons [55].
[45] Primary reasons [55].
Claims and submissions at trial
On 29 March 2016, the Seller filed a writ of summons with an indorsement of claim,[46] contending that Mr Tonner's email, of 24 February 2014 to Mr Bourke, constituted conduct by which the Buyers evinced an intention to no longer be bound by the contract and, therefore, repudiated it.[47] The Seller contended that the solicitor's letter of 26 February 2014 constituted acceptance of this repudiation on her behalf and, consequently, the contract came to an end on 26 February 2014.[48] She sought damages of $409,863, being the difference between the contract price and the sale price achieved in October 2015 less the deposit and additional marketing costs incurred between March 2014 and October 2015.[49]
[46] Primary reasons [56].
[47] Primary reasons [35], [64]; Statement of Claim [7], Blue AB 43.
[48] Primary reasons [40]; Statement of Claim [7], Blue AB 43.
[49] Primary reasons [56]; Statement of Claim [11], Blue AB 44.
The Buyers contended that Mr Tonner's email of 24 February 2014 did not constitute repudiation of the contract on their part, on the grounds that:
1.instead, the Seller repudiated the contract through the notice to vacate and Mr Tonner's email of 24 February 2014 was in response to, and effected an acceptance of, that repudiation;[50]
2.Mr Tonner's email of 24 February 2014, viewed objectively, did not evince their unwillingness to complete the contract because 'it is predicated on an understanding that [the Seller] had already conveyed that she would not continue to perform the contract';[51]
3.the email of 24 February 2014 'did not amount to a repudiation because [the Seller] failed to make clear that she was not refusing to perform and thereafter provide an opportunity for the [Buyers] to "reconsider [their] position in light of an assertion of the correct interpretation [of the preceding communications]"';[52] and
4.there was no evidence to support an inference that Mr Tonner was acting with the authority of Mrs Tonner when he sent the email of 24 February 2014 to Mr Bourke.[53]
[50] Primary reasons [36], [69].
[51] Primary reasons [84].
[52] Primary reasons [89].
[53] Primary reasons [92].
The Buyers alternatively submitted that the Seller's acceptance of the repudiation was invalid because she failed to give prior notice to the Buyers as required by s 6(1) of the Sale of Land Act 1970 (WA) (the SL Act).[54]
[54] Primary reasons [98].
Additionally, the Buyers submitted that the Seller could not prove an entitlement to loss or damage because:
1.the general rule for loss of bargain damages for termination of a contract for the sale of land is the difference between the market value of the land at the time of termination and the price payable by the purchaser under the contract (not to be displaced where the seller has made all reasonable efforts to re-sell the property but is unable to do so for a substantial period of time);
2.the Seller did not call expert valuation evidence to establish the market value of the property at 26 February 2014 (the purported date of contract termination); and
3.the $2.6 million re-sale price of the property in October 2015 was so remote in time from 26 February 2014 that it could not safely be relied upon as evidence of the property's market value as at that date.[55]
[55] Primary reasons [112], [137].
The Buyers counterclaimed an order for return of the deposit; further, or alternatively, damages.[56]
[56] Defence and Counterclaim [23], Blue AB 51 - 52.
Issues at trial
The primary judge identified three principal issues for determination, being:
1.whether the Buyers had repudiated the contract by Mr Tonner's email of 24 February 2014;
2.if 'yes' to issue 1, whether the Seller's acceptance of the Buyers' repudiation and termination of the contract by the solicitor letter was invalid because of her failure to give prior notice to the Buyers pursuant to s 6 of the SL Act; and
3.if 'no' to issue 2, whether the Seller had proved that she suffered loss and damage as a result of the Buyers' repudiation of the contract in the amount claimed or at all.[57]
[57] Primary reasons [57].
Reasons of the primary judge
The primary judge upheld the Seller's claim and dismissed the Buyers' counterclaim.[58] In reaching this conclusion, the primary judge determined the three principal issues as follows.
Issue 1 - the Buyers' repudiation
[58] Primary reasons [153] - [154].
The primary judge referred to four High Court decisions for the relevant, undisputed principles in respect of contract repudiation.[59] The Buyers accept the correctness of these principles.[60]
[59] Primary reasons [59] - [63] citing Koompahtoo Local Aboriginal Land Council v Sanpine Ltd [2007] HCA 61; (2007) 233 CLR 115 [44], Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620, 633, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 657 - 658, DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 432.
[60] Appellants' submissions [6] - [7].
The primary judge found that, viewed objectively and in context, Mr Tonner's email of 24 February 2014 to Mr Bourke evinced a clear and unequivocal decision by the Buyers not to proceed to settlement of the contract and, therefore, constituted repudiation of the contract.[61]
[61] Primary reasons [66].
The primary judge gave the following reasons for this finding:
1.Mr Tonner stated in the email that (1) Mrs Tonner 'has committed to a new Property to go to'; (2) he expected the deposit of $100,000 'to be refunded in to [sic] our account with no delays'; and (3) 'in closing we have excepted [sic] there [sic] decision and we move forward'.[62]
2.The email was sent at the commencement of the week in which completion of the contract was to take place and after a four week extension of the completion date, made at the Buyers' request.[63]
3.It was clear from the Buyers' conduct in sending the email, in the terms it contained, that they did not intend to proceed to settlement of the sale that week or at all.[64]
[62] Primary reasons [67].
[63] Primary reasons [67].
[64] Primary reasons [68].
This finding and reasoning are challenged by ground 2.
The primary judge proceeded to deal with, and ultimately reject, the four main submissions of the Buyers on this issue, set out at [38] above, in the manner summarised below.
Buyers' submission 1 - repudiation by the Seller
The primary judge rejected this submission for the following reasons.
The primary judge considered that the expression and terminology of the notice to vacate was solely in the language of leasing. His Honour referred to the contract:
1.being sent by the Bourkes 'Property Management Department', not property sales;[65]
2.referring to instructions given by 'the landlord', not 'the vendor';[66]
3.referring to the end of 'your tenancy with us', not to the end of the contract for the sale and purchase of the property;[67] and
4.referring to 'rent' and 'the bond', not to 'price' or 'deposit'.[68]
[65] Primary reasons [70].
[66] Primary reasons [70].
[67] Primary reasons [70].
[68] Primary reasons [70].
The primary judge held that the notice to vacate could not have conveyed a repudiation by the Seller, to a reasonable lay person in the position of the Buyers, because such persons would have appreciated that they were both (1) tenants under the lease, a special condition of which was that the lease 'shall be terminated upon settlement of that property'; and (2) purchasers under the contract to purchase the property with the settlement date of 28 February 2014, being three weeks before the vacation date stated in the notice to vacate.[69] In his Honour's view, it was clear that, if the contract proceeded to settlement on 28 February 2014, any requirement for the Buyers to vacate the property after that date would have fallen away.[70]
[69] Primary reasons [72].
[70] Primary reasons [71].
This reasoning is challenged on appeal by ground 1.
The primary judge considered whether the Buyers misunderstood the notice to vacate.[71] His Honour noted that Mr Tonner commenced his 24 February 2014 email to Mr Bourke by writing: 'Thank you for calling on Friday 21/2/14 to explain your understanding of the letter which your office sent'.[72] His Honour observed that Mr Tonner did not give evidence that Mr Bourke told him in the telephone conversation that the Seller would not be proceeding to settlement of the property.[73] His Honour considered that the evidence Mr Tonner did give was equivocal and unclear.[74] The primary judge ultimately found it likely that, during the telephone conversation, Mr Bourke explained his understanding of the notice to vacate in similar terms to what was contained in Mr Bourke's email, namely that it was 'a tenancy issue and has no bearing on your purchase of the home'.[75] This finding is challenged by ground 3.
[71] Primary reasons [74] - [78].
[72] Primary reasons [76].
[73] Primary reasons [77].
[74] Primary reasons [77].
[75] Primary reasons [78]; see also [85], [90].
The primary judge then dealt with the Buyers' submission that, by the notice to vacate, the Seller purported to terminate the terms of the contract (specifically special condition 2), amounting to her repudiation of the contract. His Honour considered this submission misconceived and incorrect because (1) the vacation date specified by the notice to vacate was three weeks after the settlement date; and (2) the parties had already complied with their obligations under special condition 2; the Buyers by renting the property on a nine month lease at $2,500 per week and the Seller by granting that lease.[76] This aspect of the judge's reasoning is not challenged on appeal.
Buyers' submission 2 - understanding that the Seller would not complete the contract
[76] Primary reasons [80] - [83].
The primary judge rejected the Buyers' submission that their understanding, that the Seller had already conveyed that she would not perform the contract, was not outside the bounds of a reasonable reaction to the notice to vacate.[77] In support of this view, his Honour repeated his conclusions at [50], [51] and [53] above, including the finding challenged by ground 3, that Mr Bourke said in the telephone conversation that it was a tenancy issue not a purchase issue.[78]
[77] Primary reasons [85].
[78] Primary reasons [85].
The primary judge also rejected the Buyers' submission that 'the fundamentally responsive nature' of Mr Tonner's email of 24 February 2014 precluded it from constituting a repudiation.[79] His Honour considered it clear from Mr Tonner's email that the Buyers' decision to 'move forward' was based on issues of concern that they perceived 'over many weeks'.[80]
[79] Primary reasons [86] - [88].
[80] Primary reasons [88].
Therefore, his Honour found that Mr Tonner's email of 24 February 2014 clearly evinced an unwillingness to proceed to settlement of the contract and was not merely a response to a perceived decision by the Seller not to proceed to settlement of the contract.[81] This finding is challenged by ground 2.
Buyers' submission 3 - the Seller's failure to clarify and provide an opportunity to reconsider
[81] Primary reasons [88].
The primary judge considered that, to the extent that the Buyers misinterpreted the notice to vacate as indicating the Seller's unwillingness to the settle the property, Mr Bourke made it clear that that was not the case.[82] In support, his Honour referred to (1) the statement of Mr Bourke's email to 'Please think very seriously about this termination of the purchase and get legal advice before defaulting on the transaction'; and (2) his earlier finding that, in their telephone conversation, Mr Bourke told Mr Tonner that it was a tenancy issue not a purchase issue.[83]
[82] Primary reasons [90].
[83] Primary reasons [90] - [91].
Therefore, his Honour considered that the Buyers had an opportunity to 'reconsider [their] position in light of an assertion of the correct interpretation [of the preceding communications]' and 'recognise their heresy'.[84]
[84] Primary reasons [91] citing DTR Nominees Pty Ltd v Mona Homes Pty Ltd (432).
These aspects of the judge's reasoning are challenged by ground 5.
Buyers' submission 4 - lack of authority
On the basis of the language of Mr Tonner's email of 24 February 2014 and Mrs Tonner's subsequent inaction, the primary judge found it more probable than not that Mr Tonner sent the email on behalf of himself and Mrs Tonner.[85]
[85] Primary reasons [93].
His Honour referred to the following:
1.Mr Tonner's references in the email to 'Our position', 'our concern' and 'we' on a number of occasions (plainly referring to himself and Mrs Tonner as the purchasers under the contract), contrasted with the use of the word 'I' when clearly talking only about himself.[86]
2.The lack of evidence of any response by Mr or Mrs Tonner to the solicitor's letter which was addressed to both of them and asserted that they no longer intended to purchase the property and had repudiated the contract.[87] His Honour considered it reasonable to expect Mrs Tonner to respond to the assertions in the solicitor's letter if the earlier email was not sent by Mr Tonner with her authority.[88]
[86] Primary reasons [94].
[87] Primary reasons [95] - [96].
[88] Primary reasons [97].
The judge's conclusion on this issue is challenged by ground 4.
Issue 2 - invalidity of the Seller's termination of the contract
It is not necessary to detail the primary judge's reasoning in relation to this issue as no aspect is challenged on appeal. In summary, his Honour found that the Seller's acceptance of the Buyers' repudiation was not invalid because the contract was not a 'terms contract'. Consequently, the Seller was not required to give notice to the Buyers specifying the breach complained of and requiring them to remedy the breach, within the time nominated in s 6(2) of the SL Act.[89]
Issue 3 - damage
[89] Primary reasons [110] - [111].
The primary judge accepted that the conventional measure for loss of bargain damages on termination of a contract for the sale of land is the difference between the contract price and the market price or value of the land at the date of the termination of the contract.[90]
[90] Primary reasons [122].
The primary judge found that the Seller's conduct in re-marketing the property was 'persistent and unrelenting', at all times based on advice of her respective real estate agents, and reasonable and responsive to the circumstances.[91] Relevantly to the appeal, this included marketing the property at the original re-sale price of $3.5 million in March 2014.[92]
[91] Primary reasons [149].
[92] Primary reasons [143] - [146].
The primary judge outlined the approaches taken in, on one hand, Lords v von Thomann [No 2][93] which followed Hooper v Oates[94] and, on the other hand, Ng v Filmlock Pty Ltd[95] and C & P Syndicate Pty Ltd v Reddy[96].
[93] Lords v von Thomann [No 2] [2014] WASC 320; (2014) 47 WAR 473.
[94] Hooper v Oates [2013] EWCA Civ 91; [2014] Ch 287.
[95] Ng v Filmlock Pty Ltd [2014] NSWCA 389; (2014) 88 NSWLR 146.
[96] C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643.
His Honour applied the approach in Lords v von Thomann [No 2], holding that the fact that the Seller was unable to re‑sell the property for a substantial period of time, despite taking all reasonable steps to do so, justified departure from the conventional measure in order to give effect to the compensation principle.[97]
[97] Primary reasons [150] - [152].
Therefore, his Honour awarded damages in the amount of $409,863, being the difference between the contract and re-sale price, less the $100,000 deposit and additional marketing costs of $9,863.
The primary judge's approach to damages is challenged by ground 6.
Grounds of appeal
The grounds of appeal are lengthy. It is not necessary to set them out in detail. They may be summarised as follows:
1.The notice to vacate was a repudiation of the contract by the Seller, and the primary judge erred in fact and in law in finding otherwise.
2.The primary judge erred in fact and in law in finding that the email sent by Mr Tonner to Mr Bourke on 24 February 2014 constituted a repudiation of the contract.
3.The primary judge erred in fact and in law in finding that in the course of Mr Tonner's telephone conversation with Mr Bourke, Mr Bourke said to Mr Tonner something to the effect that the notice to vacate was a tenancy issue and had no bearing on the Buyers' purchase of the property, that finding not being open by virtue of the rule in Browne v Dunn[98] and constituting a denial of procedural fairness.
4.The primary judge erred in law in finding that Mr Tonner acted with Mrs Tonner's authority when he sent the email to Mr Bourke on 24 February 2014.
5.The primary judge erred in finding that Mr Bourke's email provided the Buyers with an opportunity to reconsider their position, and in finding that the sending of Mr Tonner's email of 24 February 2014, in itself, constituted a repudiation of the contract.
6.The primary judge erred in fact and in law in departing from the conventional measure of assessing damages for breach of contract and assessing the Seller's damages as the difference between the contract price and the re-sale price.
[98] Browne v Dunn (1893) 6 R 67.
Mr Tonner's bankruptcy
It should be noted that on 20 March 2018, a bankruptcy order was made against Mr Tonner. On 7 May 2018, Mr Tonner's trustee in bankruptcy elected, pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth), to continue prosecuting the appeal.
The Seller accepted that there was no impediment to the hearing and determination of the appeal.[99]
[99] Appeal ts 3.
Repudiation: general principles
The principles relevant to whether a party to a contract has repudiated or renunciated the contract are well known, and were not in issue in this appeal. The following outline substantially reflects the principles stated by the primary judge.
In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd,[100] Gleeson CJ, Gummow, Heydon & Crennan JJ explained that the term 'repudiation' refers to:
… conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.
[100] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [44].
Repudiation of a contract is a serious matter and is not lightly to be found or inferred.[101] Whether conduct amounts to repudiation is to be determined objectively, by reference to the effect of the allegedly repudiating party's conduct upon a reasonable person in the position of the other party.[102]
[101] Shevill v Builders Licensing Board (633).
[102] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (657 ‑ 658); Koompahtoo [44].
A party who misinterprets the provisions of a contract may or may not be found to have repudiated the contract. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd,[103] Stephen, Mason and Jacobs JJ said as follows:
No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him.
[103] DTR Nominees Pty Ltd v Mona Homes Pty Ltd (432).
Ground 1 alleges that, by the notice to vacate, the Seller repudiated the contract. It is convenient to begin with that contention.
Ground 1: was the notice to vacate a repudiation?
We do not accept the Buyers' contention that, by the notice to vacate, the Seller repudiated the contract. Essentially, we agree with the primary judge's reasons for rejecting the Buyers' contention.
The notice to vacate was sent on 21 February 2014 in a context where:
1.the Seller and the Buyers were parties to a contract of purchase with a settlement date of 28 February 2014;
2.under the lease agreement, the lease would terminate upon settlement of the sale of the property; and
3.the notice to vacate provided for a vacation date of 21 March 2014.
Read objectively, in this context, the notice to vacate was intended to govern the position in relation to the property if settlement on 28 February 2014 did not proceed. Although this was not expressed in the notice to vacate, in its context it was implicit that if the contract of sale proceeded to settle on its due date of 28 February 2014, the lease would be terminated, with the consequence that any requirement for the Buyers to vacate the property would also fall away.
This reading of the notice to vacate is reinforced by its use of the language of the lease agreement, and the absence of reference to the contract.[104]
[104] See the features outlined by the primary judge in [50] above.
For these reasons, ground 1 fails.
It is convenient to deal with ground 3 next, because it relates to an intermediate finding of fact made by the judge, relevant to his ultimate conclusion on repudiation.
Ground 3: did the judge err in his finding as to the telephone conversation?
Ground 3 challenges the primary judge's finding of fact about the telephone conversation between Mr Tonner and Mr Bourke, which occurred on 21 February 2014 between Mr Tonner's email of that day (to Ms D'Agostino) and his second email of 24 February to Mr Bourke. As we have outlined, the judge found that it was likely that, in that telephone conversation, Mr Bourke said to Mr Tonner words to the effect that the notice to vacate was a tenancy issue and had no bearing on the Buyers' purchase of the property. The Buyers contend, and the Seller concedes,[105] that this finding was not open to the primary judge and breached the rule in Browne v Dunn. For the reasons that follow, we accept that contention.
[105] Respondents' submissions [20]; appeal ts 30, 33.
Mr Tonner gave evidence‑in‑chief about the content of the telephone conversation. He was not cross‑examined about the content of that conversation and the judge did not ask any questions about it.
Mr Bourke was the Seller's agent and was not called as a witness.
At trial, counsel for the Seller made no submission to the effect that Mr Tonner's evidence about the telephone conversation with Mr Bourke should not be accepted. Had such a submission been made, a breach of the rule in Browne v Dunn would have occurred. If a party's submission inviting a particular finding about a witness's evidence would breach the rule in Browne v Dunn, a finding to that effect by the trial judge may be precluded in circumstances where no such submission is made.[106]
[106] Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 [72] ‑ [75]; RCR Tomlinson Ltd v Russell [2015] WASCA 154 [71].
In our opinion, in circumstances where:
1.Mr Tonner's evidence of his conversation with Mr Bourke was not challenged in cross‑examination;
2.there was nothing inherently illogical or implausible about that evidence; and
3.Mr Bourke was not called as a witness;
it was not open to the judge to reject Mr Tonner's evidence about the content of the telephone conversation.
For these reasons, we uphold ground 3. Consequently, grounds 2 and 5 must be approached on the footing that, contrary to the judge's finding, in the telephone conversation on 21 February 2014, Mr Bourke told Mr Tonner that, 'It's what the owners want to do and it's their prerogative to do that'. For reasons to be explained, that has significance for the overall question of whether the email sent by Mr Tonner after this conversation constituted a repudiation of the contract.
Grounds 2 and 5: was the email of 24 February 2014 a repudiation?
In our opinion, read in context, Mr Tonner's email of 24 February 2014 did not evince a refusal to perform the contract of purchase. Rather, the overall impression conveyed to an objective reasonable person was of a genuine misunderstanding, by the Buyers, of the Seller's position. Our reasons are as follows.
Notwithstanding our view above that the notice to vacate did not amount to a repudiation by the Seller of the contract, the sending of the notice to vacate was apt to give rise to some confusion. For example, it referred to the obligation of the Seller's agent to re‑let the property to another suitable tenant. The operation of the notice to vacate was not expressed to be conditional. Nothing in the notice to vacate explained that it would operate only if the settlement, due on 28 February 2014, failed to proceed.
Mr Tonner's email of 21 February 2014 to Ms D'Agostino objectively reveals the Buyers' apparent understanding that the Seller did not wish to go ahead with the sale of the property. The email states that 'I [ie, Mr Tonner] take [the notice to vacate] to mean that they are not wanting to settle on the property so [Mr Tonner] has [informed] his financier and accountant to stop what they are doing' (emphasis added). The email also states that the Buyers were 'disappointed that they [ie, the Seller and her partner] have made this call' (emphasis added).
Read objectively and as a whole, the email of 21 February 2014 reveals an understanding, on the part of the Buyers, that the Seller had, by the notice to vacate, decided not to proceed with the contract of sale, to which decision the Buyers were responding.
The Seller submits that:
(1)on an objective reading, the terms of the notice to vacate are incapable of giving rise to any such understanding; and
(2)consequently, insofar as the email reveals any such understanding, it should not be taken, objectively, as revealing any genuine understanding to that effect.[107]
[107] Appeal ts 31 - 33.
We do not accept this submission. For the reasons in [92], we think there was room for confusion or misunderstanding arising from the notice to vacate. The Seller's position, as reflected in the notice to vacate, was not so clear that the understanding stated in Mr Tonner's email of 21 February 2014 could be objectively dismissed as not genuine. In other words, the reasonable reader of Mr Tonner's email, aware of the terms of the notice to vacate, could not conclude that Mr Tonner's email was disingenuous.
On 21 February 2014, Ms D'Agostino informed Mr Tonner by email that she was forwarding Mr Tonner's email of 21 February 2014 to be dealt with by Mr Bourke.[108] Given that later that day Mr Bourke telephoned Mr Tonner,[109] it may be inferred that Ms D'Agostino did as she said she would and forwarded Mr Tonner's email to Mr Bourke.
[108] Primary reasons [32].
[109] Primary reasons [33].
Later on 21 February 2014, Mr Bourke and Mr Tonner had the telephone conversation to which we have already referred. As explained above, Mr Tonner's evidence that Mr Bourke told him 'it's what the owners want to do and it's their prerogative', is to be accepted as the only evidence of this conversation. The judge described this evidence as equivocal.[110] We do not think that the evidence of the conversation is, in any relevant sense, equivocal. The subject matter of the conversation was Mr Tonner's email of 21 February 2014, which had been forwarded to Mr Bourke, and which revealed the Buyers' understanding of the effect of the notice to vacate. Nothing in Mr Bourke's telephone conversation with Mr Tonner disabused the Buyers of their apparent misconception that the Seller did not want to go ahead with the contract of purchase. To the contrary; what Mr Bourke said tended to reinforce the Buyers' apparent understanding.
[110] Primary reasons [77].
There was no evidence or finding of further correspondence between the Buyers and Sellers, through Bourkes' agents or otherwise, before Mr Tonner sent his email of 24 February 2014. So, by the time Mr Tonner sent the email, the Seller had not said or done anything to disabuse the Buyers' apparent misconception that, by the notice to vacate, the Seller was evincing an intention not to perform the contract of sale. In our view, the email of 24 February 2014 must be read in that context.
We accept, as the primary judge emphasised,[111] that, in his email, Mr Tonner expressed dissatisfaction and frustration about conduct he attributed to the Seller or her partner over a period of some weeks. However, to our minds, that does not alter the fundamental message conveyed by the email. The subject matter of the email was the notice to vacate, referred to as the 'vacate letter'. The opening sentence of the email referred to the letter which Mr Bourke's office had sent and to 'how it has been received'. The final sentence refers to the Buyers having, in effect, respected the Seller's decision. A reasonable reader of the email would conclude that the Buyers considered that the Seller had indicated her decision not to perform by giving the notice to vacate, and the Buyers were accepting the Seller's decision and so would not proceed with the purchase. As we have said, the Buyers' understanding in this respect could not be dismissed by the reasonable reader, aware of the context, as not genuine. The email did not amount to an unequivocal refusal by the Buyers to perform the contract.
[111] Primary reasons [87] ‑ [88].
The judge found that, insofar as the Buyers had misinterpreted the notice to vacate as indicating an unwillingness on the part of the Seller to settle, in two respects Mr Bourke made it clear to the Buyers that this was not the case. First, Mr Bourke said as much in the telephone conversation on 21 February 2014.[112] Secondly, Mr Bourke's email of 24 February 2014 gave the Buyers an opportunity to reconsider their position in the light of an assertion of the correct interpretation of events.[113] In our respectful opinion, both aspects of this reasoning reveal error.
[112] Primary reasons [90].
[113] Primary reasons [91].
The first finding is the subject of ground 3 and is erroneous for the reasons given in upholding that ground.
For two reasons, we do not accept the judge's second finding in this respect. First, Mr Bourke's email of 24 February 2014 was sent after the allegedly repudiating email sent earlier that day. The Seller's case was that it was the email, and not any other conduct, which constituted the Buyers' repudiation.[114] Secondly, in any event, insofar as Mr Bourke's email of 24 February 2014 gave the Buyers an opportunity to reconsider their position, the Seller terminated within less than 48 hours. Thus, insufficient time had elapsed to sustain an inference that, notwithstanding Mr Bourke's email, the position conveyed in Mr Tonner's email of 24 February 2014 was being maintained.
[114] Statement of Claim [7], Blue AB 43.
As we have said, in our view, Mr Tonner's email of 24 February 2014, read in its context, revealed an understanding, on the part of the Buyers, that the Seller's notice to vacate reflected her decision not to proceed with the sale of the property. The Buyers' misunderstanding in this respect was not removed by any clarification of the Seller's position. In the circumstances, we are not persuaded that the conclusion of repudiation could be drawn from the email of 24 February 2014.
For these reasons, in our respectful opinion, the primary judge erred in concluding that the email of 24 February 2014 constituted a repudiation of the contract. We would uphold grounds 2 and 5.
Other grounds
Given our conclusion that the email sent by Mr Tonner was not a repudiation, it is unnecessary to deal with ground 4. Nonetheless, we will explain, in a summary manner, why we would not uphold the ground.
The ground alleges that the Seller failed to prove that in sending the email of 24 February 2014, Mr Tonner had the actual or apparent authority of Mrs Tonner. The Buyers contend that, although the Seller had pleaded that Mr and Mrs Tonner were a 'married couple', that alone was insufficient to render Mr Tonner's conduct, in sending the email, conduct he engaged in on Mrs Tonner's behalf. Reference was made to Eade v Vogiazopoulos (No 2),[115] where Smith J said that a 'solicitor could not in the 1980s proceed on the mere assumption that a spouse has authority to act for the other spouse'.
[115] Eade v Vogiazopoulos (No 2) [1999] 3 VR 889, 929.
It is unnecessary to consider the position of actual authority. Mr and Mrs Tonner were both parties to the contract of sale and to the lease agreement. They were purchasing a residential property in which they were both tenants pending completion. It had all the hallmarks of a joint enterprise. The notice to vacate received on 21 February 2014 was addressed and sent to them both. Mr Tonner responded almost immediately by email. Mrs Tonner did not take any separate action in response to the notice to vacate. There is no suggestion that they were estranged, and nothing to indicate that their interests diverged with respect to responding to the notice to vacate.
In all the circumstances, it was open to his Honour to infer that Mrs Tonner held out to the Seller that she was content for Mr Tonner to deal with the notice to vacate on her behalf, and that ostensible authority was established.
For these reasons, we would not uphold ground 4.
In the circumstances, it is unnecessary to deal with ground 6, as the question of damages is not reached.
The orders that should be made
We have concluded that, contrary to the judge's finding, the Buyers did not, by Mr Tonner's email of 24 February 2014, repudiate the contract. The parties' rights and remedies relating to the contract must then be determined in light of this conclusion. The Buyers addressed written and oral submissions to that subject.[116] The Seller did not advance any submissions in answer.
[116] Appellant's submissions [58] ‑ [64]; appeal ts 17 ‑ 18.
Although (understandably, given his finding of repudiation) the judge did not make findings relevant to this question, this court is in as good a position as the primary judge to make the necessary findings, given that there were no factual issues in this respect.
In the circumstances, in our view, the proper conclusion is that, prior to 7 October 2015 (when the Seller entered into a contract to sell the Property to a third party), the parties had mutually abandoned the contract. When the conduct of parties reveals that neither intends that the contract be further performed, the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract.[117] The inference of abandonment may be drawn when an 'inordinate' length of time has been allowed to elapse during which neither party has attempted to perform, or called upon the other to perform, the contract between them. Thus, 'each party [is] entitled to assume from the long-continued ignoring of the contract on both sides that the "matter is off altogether"'.[118] That is the case here. Following the Seller's solicitors' letter of 26 February 2014, all parties to the contract acted on the basis that the contract was no longer on foot. The Seller marketed the property for sale. The Buyers made no attempt to enforce the contract.
[117] DTR Nominees Pty Ltd v Mona Homes Pty Ltd (434); Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144, 151 ‑ 152; Ryder v Frohlich [2004] NSWCA 472 [135]; Fazio v Fazio [2012] WASCA 72 [74].
[118] Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 432; Ryder v Frohlich [135].
Consequently, the Seller should be ordered to pay the amount of the deposit to the Buyers.[119] That is because the consideration for the payment of the deposit has failed totally, given that the contract has come to an end without being performed and without fault on the part of the Buyers.[120] In those circumstances, 'the state of affairs contemplated as the basis or reason for the payment'[121] no longer exists.
[119] DTR Nominees Pty Ltd v Mona Homes Pty Ltd (434 ‑ 435); Summers v The Commonwealth (153).
[120] Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, 432, 438, 455, 459.
[121] David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, 382; Roxborough v Rothmans of Pall Mall Australia [2001] HCA 68; (2001) 208 CLR 516 [16], [104]; Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498 [31], [134], all quoting with approval P Birks, An Introduction to the Law of Restitution (rev ed, 1989) 223.
For the reasons we have given, we would make orders to the following effect:
(1)The appeal be upheld.
(2)The orders made by the primary judge be set aside.
(3)In substitution for the primary judge's orders, there be orders to the following effect:
(a)The Seller's action be dismissed.
(b)The Buyers' counterclaim be upheld.
(c)The Seller pay the sum of $100,000 to the Buyers.
We would hear from the parties as to the costs of the appeal and the costs before the primary judge.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LW
RESEARCH ASSOCIATE/ORDERLY TO THE HONOURABLE JUSTICE BEECH25 JULY 2018
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