Tropical Traders Ltd v Goonan

Tropical Traders Ltd (the vendor) sought to rescind an agreement for the sale of land against Goonan (the purchaser), who was in possession of the property. The dispute centred on the purchaser's failure to pay the balance of the purchase money by the due date, and subsequently by an extended date. The vendor contended that time remained of the essence of the contract and that they were entitled to rescind.

The primary legal issues before the High Court of Australia were whether the vendor had elected not to rescind the contract by previously accepting late payments of instalments and interest, and whether the vendor's right to rescind was affected by the purchaser's possession of the land. The court also considered the applicability of section 3 of the Landlord and Tenant Act 1912 (W.A.), which required notice before re-entry for breach of covenant in a lease, to the vendor's right to rescind an agreement for sale where the purchaser was in possession.

The court held that the vendor's acceptance of late payments did not constitute an election not to rescind. It reasoned that each late payment was a breach of contract, and the vendor's acceptance of such payments, along with interest, did not necessarily waive their right to enforce the time stipulations for future payments, particularly when time was expressly of the essence. The court further determined that section 3 of the Landlord and Tenant Act 1912 (W.A.) did not apply to the vendor's right to rescind the contract for sale, as the relationship was not one of landlord and tenant, but rather vendor and purchaser under an agreement for sale. The vendor's right to rescind was therefore not fettered by the notice requirements of that section.

The High Court found in favour of the vendor, allowing the rescission of the contract.