W & R Pty Ltd v Birdseye - [2008] SASC 321

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
W & R PTY LTD v BIRDSEYE
[2008] SASC 321
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Duggan and The Honourable Justice Anderson)
26 November 2008
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - DELAY AND PROVISIONS AS TO TIME
Appeal from District Court order for specific performance of two contracts for the sale of vacant land - appellant sold two blocks of land to respondent - respondent failed to pay the deposit when due - respondent failed to settle on the nominated date - appellant served notice of termination on respondent - notice of termination provided by vendor contained errors - purchaser subsequently transferred amount greater than nominated deposit into broker's account - vendor attempted to arrange new settlement dates - purchaser failed to settle on new settlement dates - notice to complete was sent by vendor - notice to complete contained errors - purchaser payed additional amounts into broker's account - purchaser failed to settle on date nominated in notice to complete - vendor sent second notice of termination - vendor purported to terminate the contracts because of purchaser's alleged acts of repudiation.
Held: Failure to pay the deposit when due gave right to termination - notice of termination was adequate.
Land and Business (Sale and Conveyancing) Act 1994 (SA) s 5, s 7 and s 17, referred to.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - WHAT AMOUNTS TO REPUDIATION
Whether purchaser's conduct repudiatory.
Held, by majority: There was no repudiatory conduct by purchaser.
Brien v Dwyer (1978) 141 CLR 378; Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; Concut Pty Ltd v Worrell (2000) 75 ALJR 312; Devries v Australian National Railways Commission (1993) 177 CLR 472; State Rail Authority (NSW) v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 82 ALJR 345, applied.
Stern v McArthur (1988) 165 CLR 489; Legione v Hateley (1983) 152 CLR 406; Elizabeth City Centre Pty Ltd v Corralyn Pty Ltd (1994) 63 SASR 235; Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 82 ALJR 968; Carr v J A Berriman Pty Ltd (1953) 89 CLR 327; Shevill & Anor v The Builders Licensing Board (1982) 149 CLR 620; Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; Taylor v Oakes, Roncoroni & Co (1922) 127 LT 267; Shiloh Spinners Ltd v Harding [1973] AC 691; Louinder v Leis (1982) 149 CLR 509, discussed.
Forslind v Bechely-Crundall [1922] SC (HL) 173; Holland v Wiltshire (1954) 90 CLR 409; Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117, considered.

ESTOPPEL - ESTOPPEL BY CONVENTION
Whether estoppel by conduct or convention.
Held, by majority: There was an estoppel.
Grundt & Ors v The Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641; Waltons Stores (Interstate) Ltd v Maher & Anor (1988) 164 CLR 387; Northside Developments Pty Ltd v Registrar-General & Ors (1990) 170 CLR 146; Commonwealth of Australia v Verwayen (1990) 170 CLR 394; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1985-1986) 160 CLR 226; Thompson v Palmer (1933) 49 CLR 507; Foran v Wight (1989) 168 CLR 385; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; Caboche & Bond v Ramsay (1993) 119 ALR 215; Hilton Hotels (Australia) Pty Ltd v Sunrise Resources (Australia) Pty Ltd (2000) 9 BPR 17,495; ACIL & Anor v England (unreported) Supreme Court of South Australia, Doyle CJ, 1 November 1995; The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; Government Employees Superannuation Board v Martin (1997) 19 WAR 224; Sumampow v Mercator Property Consultants Pty Ltd [2005] WASC 64; MK & JA Roche Pty Ltd & Ors v Metro Edgley Pty Ltd & Anor [2005] NSWCA 39; Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175; Heggies Bulkhaul v Global Minerals Australia (2003) 59 NSWLR 312; Waterman v Gerling Australia Insurance Co Pty Ltd (2005) 65 NSWLR 300, discussed.
ICA Group Pty Ltd v MK River Pty Ltd [2007] NSWSC 145; Equuscorp Pty Ltd v Wilmoth Field Warne (a firm) [2007] VSCA 280, considered.

EQUITY - EQUITABLE REMEDIES - SPECIFIC PERFORMANCE - DEFENCES - FROM CONDUCT OF PARTIES - ABSENCE OF READINESS AND WILLINGNESS
Whether purchaser ready, willing and able to settle.
Held, by majority: Purchaser not unwilling to settle.
Mulkearns v Chandos Developments Pty Ltd [2003] NSWSC 1132, applied.
Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641; Meyers v Casey (1913) 17 CLR 90; Mehmet v Benson (1964-1965) 113 CLR 295; Green v Sommerville (1979) 141 CLR 594; Bahr v Nicolay [No 2] (1987-1988) 164 CLR 604, discussed.

EQUITY - EQUITABLE REMEDIES - SPECIFIC PERFORMANCE - DEFENCES - FROM CONDUCT OF PARTIES - ACTS INCONSISTENT WITH CONTINUANCE OF CONTRACT
Whether specific performance should have been ordered.
Held, by majority: Trial judge did not err in the exercise of the discretion to grant specific performance.
HELD, BY MAJORITY: APPEAL DISMISSED.

W & R PTY LTD v BIRDSEYE
[2008] SASC 321
Full Court: Doyle CJ, Duggan and Anderson JJ

DOYLE CJ: The facts of this case can be found in the reasons of Anderson J. They reveal a history of inaction, confusion and mistakes by the parties to what should have been a straightforward sale of two parcels of land.
The contracts were signed in May 2003. Five years later, the parties are still litigating over the contracts. There has been a trial in the District Court occupying seven days, and now an appeal to this Court against the decision of the District Court.
It is difficult to decide where to begin in an attempt to unpick the legal tangle that the parties have produced. I will, as far as possible, avoid repeating the facts which Anderson J has summarised. I rely generally on his statement of the facts.
In summary, my conclusions are as follows.
Mr Birdseye, the purchaser under each contract, failed to pay the deposit within the time required under each of the two contracts. W & R Pty Ltd (the vendor) was entitled to terminate the contracts without giving notice requiring payment of the deposit within a reasonable time. Although the vendor failed to terminate the contracts promptly, it did not lose the right to do so. The vendor terminated the contracts by letter dated 8 September 2003.
Subsequently, in September and October 2003, the vendor and Mr Birdseye adopted as the basis of their dealings the assumption that the contracts had not been terminated and were still on foot, and that payments by Mr Birdseye to the vendor’s broker had met Mr Birdseye’s obligation to pay a deposit. The vendor dealt with Mr Birdseye on that basis. Mr Birdseye responded on that basis. The rights of the parties are to be decided on the conventional basis that the contracts remained on foot.
The vendor attempted to give Mr Birdseye effective notices to complete under the contracts. The vendor failed in that attempt. The vendor’s Notice of Termination of 18 November 2003 was not effective in law. On the basis of the estoppel by convention as between Mr Birdseye and the vendor, the contracts remained on foot and enforceable at the instance of each party.
The Notice of Termination cannot be supported on the basis that by the time it was given, Mr Birdseye’s conduct (his action and inaction) amounted to a repudiation of the contracts on which the vendor can now rely, even though it did not do so at the time.
The Judge did not err in deciding that an order for specific performance should be made despite Mr Birdseye’s inability to settle under the contracts until early December 2003. He had not breached an essential term of the contracts (after the estoppel operated). Although he had exploited the vendor’s mistakes to his own benefit, he had not failed to observe his obligations under the contracts any more than had the vendor.
Failure to pay the deposit
Each of the contracts was a standard form contract, the Real Estate Institute of South Australia Rural Contract. The contracts comprised 11 printed conditions. A Schedule to each contract (comprising sections A to Z) made provision for the insertion of the particulars of the contract in question. In particular, the Schedule made provision for the insertion of the price, the amount of the deposit and when it was payable, and the settlement date.
The vendor’s agent was Elders Real Estate. Mr Stephens was the person who handled the matter on behalf of the agent.
By letter dated 12 May 2003 Mr Stephens sent to Mr Birdseye two contracts for him to sign. Mr Stephens had completed the Schedule in each case.
In addition to the contracts, Mr Stephens also sent two documents, one for each contract. The documents are both headed “Form 1 Statement under Section 7”. Section 7 of the Land and Business (Sale and Conveyancing) Act 1994 (SA) (“the Act”) requires a vendor of land to serve on a purchaser a statement in a prescribed form, and to do so at least ten clear days before settlement. In brief, the purpose of the statement is to inform the purchaser of the purchaser’s right under s 5 of the Act to give a written notice of the purchaser’s intention not to be bound by the contract (a cooling-off notice) and to give the purchaser particulars of certain matters of which particulars are required by regulation: see s 7 of the Act.
In relation to the right to rescind the contract by giving notice of the purchaser’s intention not to be bound by the contract, Form 1 states:
Time for service
The cooling-off notice must be served –
(a)if this form is served upon you before the making of the contract – before the end of the second clear business day after the day on which the contract was made; or
(b)if this form is served on you after the making of the contract – before the end of the second clear business day from the day on which this form is served.
The “cooling-off notice” there referred to is the notice that the purchaser must serve if the purchaser wishes to give notice under s 5 of the Act of the purchaser’s intention not to be bound by the contract.
Mr Birdseye made alterations to the Schedule to each contract. He changed the amount of the deposit in each case from $12,000 to $5,000. Mr Stephens had marked a box on each Schedule so as to indicate that the deposit was payable “[o]n or before the signing of this Agreement”. Mr Birdseye altered each Schedule so that the deposit was payable “[o]n the next business day following the expiration of the ‘cooling-off’ period…”. Mr Stephens had provided that the settlement date was to be 25 June 2003. Mr Birdseye altered this to 10 July 2003. A box in each Schedule was marked by Mr Stephens so as to indicate that in the alternative, the settlement date would be “such other day as is mutually agreed, in writing, by the Vendor and Purchaser”. No other date was mutually agreed.
By clause 3.1.1 of each contract the deposit was to be paid to the Trust Account of the Vendor’s agent.
Mr Birdseye signed the contracts and returned them to Mr Stephens with one of the Form 1 Statements only. The vendor accepted the contracts in the form proposed by Mr Birdseye. The vendor signed the contracts on 28 May 2003, and on the same day Mr Stephens posted a copy of the contracts to Mr Birdseye.
As the Form 1 had been provided to Mr Birdseye before the contracts were signed by the vendor, his right to cool off under s 5 of the Act expired at the end of the second clear business day after the day on which the contracts were made. That meant that the time for payment of the deposits expired on the third business day after the day on which the contracts were made.
With the letter dated 28 May 2003 Mr Stephens sent to Mr Birdseye a fresh copy of Form 1. The single Form 1 that he sent to Mr Birdseye now related to both contracts. The letter asked Mr Birdseye to sign the Form 1 (to acknowledge receipt of the documents) and to return it to Mr Stephens with a cheque for the amount of the two deposits of $5,000 each.
Mr Birdseye signed the Form 1 and sent it to Mr Stephens. He did not send a cheque in payment of the deposits.
The appeal has proceeded on the basis that Mr Birdseye’s entitlement to cool off expired on 30 May 2003, which was a Friday. This meant that the deposits were payable on Monday 2 June 2003, the next business day.
At trial there was an issue as to whether the Form 1 had been duly served on Mr Birdseye, because it was sent to him by ordinary post rather than by “certified mail” as provided by s 17(b) of the Act as it stood at the relevant time. The Judge found that the Form 1 was duly served despite certain errors in the document. That finding was not challenged on appeal.
Mr Birdseye did not exercise his right to give notice of an intention not to be bound by the contracts. His evidence makes it clear that he wanted to proceed with the contracts.
Mr Birdseye did not pay the deposit to the agent’s trust account by 2 June 2003. The Judge made the following findings about dealings between Mr Birdseye and Mr Stephens thereafter. The Judge said:
[75]In about June, the plaintiff telephoned Mr Stephens in order to ascertain whether he had received the Vendor’s Statement. The plaintiff said that he needed to know about receipt of the Vendor’s Statement so that he could determine the date when the cooling-off period expired and therefore, the date when the deposit was due to be paid under the contracts.
[76]The plaintiff said Mr Stephens told him that he had not received the documents and he would re-send them. The plaintiff said that he did not receive the further documents. At the time that settlement was due on 10 July 2003, the plaintiff had not heard further from Mr Stephens. Mr Stephens was absent on holidays from about mid July to mid August 2003.
The reference to the “Vendor’s Statement” is a reference to Form 1. The date on which Mr Stephens received the signed Form 1 from Mr Birdseye had no effect on the expiry of the cooling-off period.
On 8 September 2003 Mr Stephens wrote to Mr Birdseye. He wrote:
I have been advised by the vendor that due to the non compliance of the terms of contract (clause 7.1.2) to give notice that the contract has been terminated.
Due to the original settlement date being changed to the 10^th July and after various phone calls, the deposit has still not been received.
Mr Birdseye replied by facsimile on 12 September 2003. He said:
I have been here waiting to hear that the cooling-off period has expired so that I could pay the deposit.
The Broker said she didn’t have the forms when she rang and would organise new forms. I will pay $30,000 to your broker ASA you tell me her bank A/C while I wait for the forms.
On 16 September Mr Birdseye paid $30,000 into the account of the broker who had been retained by Mr Stephens to act for the vendor.
Were the contracts terminated for failure to pay the deposit?
In Brien v Dwyer (1978) 141 CLR 378 Barwick CJ described a deposit (in the context of a contract for the sale of land) as an “earnest of performance”: at 385 and 386. Gibbs J said that the primary purpose of a deposit was as “a guarantee that the purchaser means business”. Stephen J described its purpose in similar terms at 398, as did Jacobs J at 401 and Aickin J at 407.
The purpose and character of a deposit were relied on by each member of the Court in Brien to support a conclusion that upon failure by the purchaser to pay the deposit when required by the contract, the vendor was entitled to rescind the contract without prior notice to the purchaser, and without giving to the purchaser a notice that made time for payment of the deposit of the essence of the contract: Barwick CJ at 385, Stephen J at 398, Jacobs J at 401 and Aickin J at 407. As Gibbs J said at 393:
It was not necessary for the vendor, before he terminated the contract, to give notice requiring payment of the deposit within a reasonable specified time. The time for payment of the deposit was, as I have held, fixed by the contract, and the condition that the deposit be paid upon the signing of the agreement was an essential term going to the very root of the contract, the breach of which would immediately entitle the vendor to terminate the contract. …
These aspects of the reasoning of the members of the High Court in Brien were referred to with approval by Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ in Romanos v Pentagold Investments Pty Limited [2003] HCA 58; (2003) 217 CLR 367 at [19]-[20].
The status of a contractual term requiring the payment of a deposit, and the consequences of a failure to make payment as required, are matters that depend on the construction of the agreement in question in each particular case. But the purpose of a deposit, and the common understanding that failure to pay a deposit as required entitles a vendor to terminate a contract immediately, are matters to be borne in mind when considering the meaning of the contractual provisions in question in this case.
The relevant contractual provisions are set out in the reasons of Anderson J.
The issue in this case is whether those provisions are to be understood as exclusively regulating the consequence of a failure by Mr Birdseye to pay the deposits as required by the contracts. If the provisions of clause 7.1 do exclusively regulate that situation, they have the effect of denying the vendor the entitlement it has independently of rights conferred by clause 7.1 to rescind for non-payment of the deposit without prior warning, and without giving Mr Birdseye notice requiring his default to be remedied within three business days (clause 7.1.2) and without giving a notice to complete (clause 7.1.3). The District Court Judge considered that clause 7.1 did exclusively regulate the consequence of the failure to pay the deposit as required: [2007] SADC 130 at [111].
The statutory provision for a purchaser’s right to “cool off” in certain circumstances, circumstances that applied in this case, does not in my opinion deprive a deposit of its character as an earnest of performance, or as security for performance. The right to “cool off” gives a purchaser an opportunity to reflect on the contract in question before becoming bound to proceed or, more accurately, before making a decision whether or not to give notice of intention not to be further bound by the contract. The failure to exercise the right to “cool off” (if available) indicates that the purchaser intends to proceed with the contract. But the common practice of providing for a deposit reflects the well established practice of treating the payment of a deposit as a form of security for performance by the purchaser. The deposit is an amount that the vendor will be entitled to forfeit upon default by the purchaser, even if a vendor can prove no consequential loss: see Commissioner of Taxation v Reliance Carpet Co Pty Limited [2008] HCA 22; (2008) 82 ALJR 968 at [26]-[27].
In light of the significance of the requirement for the payment of a deposit, one should not too readily conclude that the provisions of clause 7.1 of the contract in question are intended to deprive the vendor of the right to rescind the contract without further notice in the event of a failure to pay the deposits as required by the contract. One must bear in mind that the provisions of clause 7.1 might be intended not to limit the vendor’s entitlements in any way, but to augment them or to provide an alternative to them. As Gleeson CJ, Gaudron and Gummow JJ said in Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 at [23]:
Thus, an express provision for termination for breach in certain circumstances may be regarded as designed to augment rather than to restrict or remove the rights at common law which a party otherwise would have had on breach.
(Footnote omitted)
In a footnote to this passage their Honours refer to two decisions each of which, in relation to a contract for the sale of land, apply and illustrate that very point. The decisions are Holland v Wiltshire (1954) 90 CLR 409 at 414-416 Dixon CJ, at 423 Taylor J and Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117 at 135 Powell J. It is not necessary to refer to the decisions in any detail, because they do no more than illustrate the application of the principle referred to in the particular circumstances.

The contention by Mr Wells QC, counsel for Mr Birdseye, is that the consequences of Mr Birdseye’s failure to pay the deposits are to be determined exclusively by reference to clauses 7.1.1, 7.1.2 and 7.1.3 of the contracts. In his submission the contracts denied to the vendor the right to rescind without further notice because of Mr Birdseye’s failure to pay the deposits as required.
The proper construction of clause 7.1 is not easily resolved. I agree that clause 7.1.2 confers on the vendor a right or entitlement not significantly different from the right or entitlement that would ordinarily arise on failure to make payment of a deposit as required. On the other hand, clause 7.1.2 makes sense as providing a mechanism for the vendor, as an alternative to immediate rescission, to allow a limited time to the purchaser to remedy the default, knowing that the contract will “automatically terminate” if the purchaser does not remedy the default within three business days. The provision in clause 7.1.2 that the vendor may act under that clause “without Prejudice to any other legal rights or remedies the Vendor may have”, if it appeared as the opening clause of clause 7.1.2, would make it clear that clause 7.1.2 is additional to any other rights that the vendor might have. In the position where it is, it appears to do no more than preserve rights consequential upon termination of the contract or rights to damages that might arise from a default by the purchaser falling within clause 7.1.2.
In the end, I am not persuaded that clause 7.1 should be construed as removing the right to rescind the contract because of Mr Birdseye’s failure to pay the deposit. That right is an important protection for a vendor. To so read it would be to put a significant limit on the rights of the vendor. On balance, I conclude that clause 7.1.2 should be treated as an additional remedy available to a vendor.
In my opinion the letter of 8 September 2003 was apt to exercise the vendor’s entitlement to terminate the contracts. The reference to clause 7.1.2 was not appropriate. But the tenor of the letter is clear. It is to the effect that the vendor has terminated the contracts. The letters informed Mr Birdseye of that fact. In that sense, the tenor of the letter is apt – it communicates a decision already made by the vendor and the legal consequence of that decision.
Delay by a vendor in exercising the right to terminate for failure to pay a deposit is capable of depriving a vendor of that right. In Brien Barwick CJ said at 386:
Of course, if a vendor is aware of the failure to pay the amount of the stipulated deposit, he cannot delay in exercising what, in my opinion, is his undoubted right of rescission of the contract. If he takes steps in performance of the contract without knowing whether or not the deposit has been paid, the ability validly to rescind the agreement might have to be decided upon general grounds in the particular circumstances. If, without taking any such steps, a vendor fails to pursue his right to rescind, a court of equity might possibly be prepared to treat his inactivity as inordinate and as having itself led the purchaser into some position of disadvantage, in the particular circumstances of a case. But, in my opinion, the right to rescind, arising at the very moment of the execution of the contract is not lost otherwise than by the conduct (including, perhaps, in an appropriate case, the inaction) of the vendor.
Mr Birdseye justified his failure to pay the deposits by claiming that he did not understand when his right to “cool off” expired. In some way that I cannot follow he attempted to relate the expiry of that right to the receipt by Mr Stephens of the Form 1, signed by Mr Birdseye and posted to Mr Stephens shortly after 28 May 2003. But in my opinion Mr Birdseye’s misunderstanding of the situation cannot excuse his failure to comply with the provisions of the contracts. Although Mr Stephens failed to correct Mr Birdseye’s misunderstanding, I do not accept that that can alter the consequences of Mr Birdseye’s default. It appears that he spoke to Mr Stephens some time during June, but by then he was already in default. In my opinion nothing that occurred between Mr Stephens and Mr Birdseye between 2 June 2003 and 8 September 2003 had the effect of denying the vendor its entitlement to terminate the contracts. The mere delay by the vendor does not, of itself, deny the vendor that entitlement.
For those reasons I conclude that the contracts were validly terminated by the vendor by Mr Stephen’s letter of 8 September 2003. As will appear, the termination of the contracts were overtaken by later events. However, I have thought it appropriate to deal with this issue because of the attention it received at trial, and in submissions on appeal.
An estoppel arises
By letter dated 23 September 2003 Mr Stephens wrote to Mr Birdseye enclosing a copy of each of the contracts and a new Form 1 relating to both contracts, which he asked Mr Birdseye to sign and then return the original to Mr Stephens. The Form 1 continued to describe the contracts as dated 16 May 2003, but it is clear that the contracts referred to were those signed by the vendor on 28 May 2003.
With the documents was a document headed “Addendum”, with particulars inserted to indicate that it related to the contracts in question. It stated:
The date for settlement of the above contracts will be the 17^th October 2003.
It was signed by representatives of the vendor. The letter asked Mr Birdseye to sign the addendum, and to return it to Mr Stephens. Mr Birdseye did not do so.
From 23 September 2003 the vendor conducted itself on the basis that the contracts remained on foot. Another way of putting it is to say that the vendor conducted itself on the basis that the vendor no longer relied on its earlier termination of the contracts. The conduct on the part of the vendor is outlined in the reasons of Anderson J. In due course the vendor went so far as to serve on Mr Birdseye a notice to complete on 27 October 2003, calling upon Mr Birdseye to complete the transactions on 10 November 2003.
From at least mid October 2003 Mr Birdseye acted on the same basis. In particular, in late October 2003 and in early November 2003, he made payments to the broker’s trust account, apparently on account of the purchase price. These payments are explicable only on the basis that Mr Birdseye treated the contracts as still on foot.
It is not necessary to refer in any further detail to the relevant conduct. It reflects an assumption on each side that they were in a continuing contractual relationship, the terms of which were to be found in the contracts that had passed between them. Each of them subsequently purported to exercise rights which would exist only if that assumption were correct.
In my opinion as a result of this conduct an estoppel arose of the kind described as an estoppel by convention. In Con-Stan Industries of Australia Proprietary Limited v Norwich Winterthur Insurance (Australia) Limited (1985-1986) 160 CLR 226 Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ said at 244:
The final question is whether the parties are bound by an estoppel by convention because their business relationships were conducted on the footing that the broker alone was liable to the insurer. If so, Norwich cannot maintain the present action. Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on a convention between the parties has often been recognized: Thompson v Palmer (1933) 49 CLR 507 at p 547; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, at pp 657, 675-677; Legione v Hateley (1983) 152 CLR 406, at pp 430-431; Amalgamated Investment & Property Co Ltd (In liq) v Texas Commerce International Bank Ltd [1982] QB 84, at pp 121, 126, 130-131; Spencer Bower and Turner, Estoppel by Representation 3^rd ed. (1977), pp 157-177. …
However, in Con-Stan the conventional estoppel relied upon was found not to operate. The second reason for so deciding was as follows (at 244-245):
Secondly, just as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact: Greer v. Kettle [1938] AC 156, at p 170; Spencer Bower and Turner, Estoppel by Representation 3rd ed., pp. 167-168. The state of affairs relied on by Con-Stan is that the parties conducted their business relationship on the basis that the broker was alone liable to the insurer for the premiums. That is clearly an assumption as to the legal effect of their conduct, and not an assumption of fact. The submission with respect to estoppel accordingly fails.
In that case Con-Stan had attempted, by estoppel, to establish an implied term in a contract of insurance negotiated through a broker. The implied term on which Con-Stan sought to rely was that payment of the premium to the broker discharged Con-Stan’s obligation to pay the premium, or that the broker alone was responsible for payment of the premium. Whatever one makes of the difficult distinction between matters of law and matters of fact, that looks like an attempt through estoppel to establish not an assumed state of affairs, but a matter of law, namely, a term to be implied into a contract.
In the present case Mr Birdseye relies on the fact that from September 2003 the parties conducted their relationship on a basis, or conducted themselves with reference to each other on a basis, that was explicable only if the contracts remained on foot. While the existence of a contract is, in a sense, a matter of law, it is also in another sense a matter of fact. In most cases in which an estoppel is relied upon, perhaps in all, the purpose of the estoppel is to establish or lead to a legal consequence. To my mind it is not straining language to say, in the present case, that Mr Birdseye relies upon the existence, as a matter of fact, of the contractual relationship, and points to the conduct of the parties as explicable only on the basis of the existence of that fact.
It appears to me that the present case is consistent with the influential summation of the relevant principle by Dixon J in Thompson v Palmer (1933) 49 CLR 507 and in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641. In Thompson v Palmer Dixon J said at 547, in the course of an extended discussion of the relevant principles:
The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct …
(emphasis added)
In the present case, Mr Birdseye points to the purported exercise of rights by the vendor which could exist only if the contracts were still on foot. In Grundt v Great Boulder Dixon J referred to the passage from his reasons in Thompson v Palmer set out above, and continued (at 676):
It is important to notice that belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs. A tenant may know that his landlord's title is defective, but by accepting the tenancy he adopts an assumption which precludes him from relying on the defect. Parties to a deed sometimes deliberately set out an hypothetical state of affairs as the basis of their covenants in order to create mutual estoppel. …
Again, in the present case it appears to me that the parties adopted as an assumption the continuing legal effect of the contracts that they had signed. The illustration which Dixon J gives in this passage appears to me to indicate that the relevant principle cannot exclude matters of law.
In Waltons Stores (Interstate) Limited v Maher (1987-1988) 164 CLR 387 at 415, speaking of this category of estoppel Brennan J said:
The assumed state of affairs to which a party may be bound to adhere may be more than a state of mere facts; it may include the legal complexion of a fact as well as the fact itself, ie, a matter of mixed fact and law.
This passage from the reasons of Brennan J encapsulates the distinction that I have attempted to draw, and the basis upon which I understand the principle to rest. On that same page, a little earlier in his reasons, Brennan J had said:
If the estoppel relates to the existence of a contract between the parties, the legal relationship between the parties is ascertained by reference to the terms of the contract which has been assumed to exist. If, in the assumed state of affairs, the contract confers a cause of action on the party raising the estoppel, the cause of action may be enforced. The source of legal obligation in that event is the assumed contract; the estoppel is not a source of legal obligation except in the sense that the estoppel compels the party bound to adhere to the assumption that the contract exists. …
That passage also illustrates the point that I seek to make.
In short, I do not understand the decision of the High Court in Con-Stan to reject or deny the possibility of an estoppel such as is asserted in the present case. In particular, I do not understand the reasons of their Honours in that case to be contrary to the point made by Brennan J in Waltons Stores v Maher, that the relevant state of affairs may include a matter of mixed fact and law. The opposite view appears to me to be contrary to the reasoning of Dixon J in Thompson v Palmer and Grundt v Great Boulder, upon which the principle itself is based.
Learned commentators have argued that subsequent decisions of the High Court establish that the doctrine in question extends to assumptions of law. The High Court decisions that are said to support this proposition are referred to in Meagher, Heydon and Leeming’s Equity Doctrines and Remedies (4^th ed, Butterworths LexisNexis, Australia, 2002) at para [17-020]. The decisions are Waltons Stores v Maher, Foran v Wight (1989) 168 CLR 385, Commonwealth of Australia v Verwayen (1990) 170 CLR 394 and David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. The text also refers to observations made by Gummow J (as a judge of the Federal Court) in Caboche v Ramsay (1993) 119 ALR 215 at 238 and by Hodgson CJ in Eq in Hilton Hotels (Australia) Pty Ltd v Sunrise Resources (Australia) Pty Ltd (2000) 9 BPR 17,495 at [71]. If the decision in Con-Stan is to be taken literally, and denies the operation of estoppel by convention in the circumstances of this case, then my earlier conclusion is wrong. It is for the High Court, and not for this Court, to decide whether or not what their Honours said in Con-Stan is to be modified. I emphasise that my reasoning proceeds on the basis that, properly understood, their Honours did not intend to exclude a situation such as the present in which the existence of contractual relationship can fairly be described as “an assumed state of fact” even though that assumed state of fact has, in the words of Brennan J, a “legal complexion”.
In my opinion the vendor and Mr Birdseye were bound by the assumption on which they acted. With all respect to Anderson J, I do not agree that it is open to the Court, in the light of the circumstances of the case, to hold that Mr Birdseye is precluded from relying on the estoppel created by the conduct of the vendor by its agent. While in a particular case the conduct of the party asserting such an estoppel might mean that the estoppel has come to an end, I do not understand the relevant legal principle to be one that gives the Court a discretion in this respect.
The vendor cannot now depart from the assumption on which the parties have acted. The vendor led Mr Birdseye to proceed on the basis that the contracts remained on foot. The vendor is solely responsible for this. After the vendor proceeded on the basis that the contracts remained on foot, Mr Birdseye made substantial payments on account of the purchase price ($45,000 in all) and ultimately obtained the funds to enable him to settle. He subsequently incurred the cost of legal proceedings brought to enforce performance of the contracts. Once one acknowledges that the parties have, from a certain time, proceeded on the basis that the contracts remained on foot, it is not easy to see why either one of them should thereafter be permitted to resile from the common assumption and return to and rely on the state of affairs as it was beforehand.
To the extent that the vendor relies upon the failure of Mr Birdseye to settle under the contracts as a reason for permitting it to depart from the common assumption, the answer is that Mr Birdseye’s conduct is to be dealt with by reference to the rights of the parties under the contracts. If Mr Birdseye was in breach of his obligations under the contracts, the remedy in favour of the vendor is to be found by the award of contractual remedies, not by permitting the vendor to depart from the common assumption that the contracts remained in force.
I add that there is no suggestion here that the contracts are not in writing or do not meet the requirements of the Act. The contracts the subject of the estoppel are the original written contracts between the parties, including the forms required by the Act.
I consider that the rights of the parties are to be determined on the basis that the contracts remained in force. The parties also proceeded on the basis that the payments by Mr Birdseye to the broker discharged his obligation to pay a deposit in respect of each contract. The vendor made no further complaint about his failure to do so. The contracts provided for the parties to agree on an alternative settlement date, but this they never did. Mr Birdseye did not sign the “Addendum”. Had he done so, no doubt that would have amounted to an agreement to settle on 17 October 2003.
I consider that it is an implied term of the contracts that, failing any agreement between the parties, settlement would take place within a reasonable time. Such a term is to be implied as a matter of necessary implication to ensure that the contracts are workable. If such a term were not implied, the contracts would be unworkable because either party could frustrate the other by refusing to agree to an alternative date for settlement.
On that point I respectfully differ from the trial Judge who said that a settlement date could be fixed only with the agreement of both parties: [2007] SADC 130 at [122].
Was the vendor’s Notice of Termination effective?
On 18 November 2003 the solicitor for the vendor sent to Mr Birdseye a notice purporting to terminate the contracts because of Mr Birdseye’s failure to complete. The operative part of the Notice read as follows:
Take notice that the Contracts for the Sale of Land … are terminated pursuant to clause 7 as from 18 November 2003 due to the failure to settle on 10 July 2003 and 17 October 2003 in accordance with the contractual terms and Notice to Complete on 27 October 2003.
The Judge found that this Notice was ineffective. She so found because of errors and deficiencies in the Notice to Complete of 27 October 2003, on which the vendor relied. The errors and deficiencies are summarised by Anderson J in his reasons at [275]. The Judge found also that the vendor was not ready, willing and able to complete on 17 October 2003: [2007] SADC 130 at [147]. On the Judge’s approach, the basis for a valid Notice to Complete on 27 October 2003 was not made out. The Judge also found that there were a number of defects in that Notice: [2007] SADC 130 at [151].

I arrive at the same conclusion as the Judge, but by a different route.
The parties dealt with each other on the basis that they were bound by contracts which, in the circumstances, called for settlement within a reasonable time. As from about September 2003, the position was the same as if the contracts were open contracts, not providing a time for settlement. Referring to such a contract, in Louinder v Leis (1982) 149 CLR 509 at 527 Mason J said:
There is nothing in all this to deny the correctness of the Green v Sevin principle in its application to open contracts. There the existence of unreasonable delay, this being the relevant breach of contract, is an essential qualification for the giving of a notice. In this case because the notice itself must allow a reasonable time for completion, the party at fault, having been guilty of unreasonable delay, is entitled to a further period, being a reasonable time for completion. Because the initial period of delay is no more than a breach of a non-essential time stipulation, without more it cannot found an inference of repudiation.
The majority of the Court agreed with the reasons of Mason J: Gibbs CJ at 511, Stephen J at 515, Wilson J at 529.
Before the vendor could rescind because of Mr Birdseye’s failure to settle, it was necessary for the vendor to give to Mr Birdseye a Notice that allowed him a reasonable time to complete and, in that Notice or in a subsequent Notice, it was necessary for the vendor to allow Mr Birdseye a further time to complete if he failed to complete within the time originally specified. It was open to the vendor to state that failing completion in accordance with the Notice, the vendor would rescind the contracts. In effect, it was necessary for the vendor to allow Mr Birdseye a reasonable time for completion, as the contracts did not specify a time for completion, and then a further time after which the contracts would be rescinded for failure to complete within a reasonable time: see Butt The Standard Contract for Sale of Land in New South Wales (2^nd ed, LBC Information Services 1998) at [15.11] and following.
The Addendum that accompanied the letter of 23 September 2003 did not purport to be a notice calling for settlement within a reasonable time. It is to be understood as an invitation to Mr Birdseye to agree to a new settlement date. He did not do so.
In any event, the Judge found that on 17 October 2003 the vendor was not itself ready to settle. That finding undermines the effect of the Notice to Complete that the vendor gave to Mr Birdseye on 27 October 2003: see Foran v Wight at 396 Mason CJ, at 424 Brennan J, at 433 Deane J, at 450-451 Dawson J, at 455 Gaudron J. The obligation of the vendor to deliver a transfer and the obligation of Mr Birdseye to pay the price were concurrent and mutually dependant. To be entitled to give the Notice, the vendor had to show that it was ready, willing and able to perform its obligation on 17 October 2003.
As well, the Notice was based upon Mr Birdseye’s “failure to fulfil the terms of the extension of the contract and complete on the 17^th of October 2003 …”. Mr Birdseye had not agreed to the proposed settlement date, as I have already said. He was under no contractual obligation to settle on 17 October 2003. The vendor had not given a notice that claimed to fix 17 October 2003 as the date for settlement, allowing a reasonable time for completion.
The Notice to Complete just referred to was sent to Mr Birdseye on 27 October 2003, 14 days before 10 November 2003, the time fixed for settlement. In my opinion this was not a reasonable time for completion, nor did the Notice purport to be a notice fixing a reasonable time for settlement.
All of this leads to the conclusion that due to a series of mistakes, the vendor failed to establish its entitlement to terminate the contracts on 18 November 2003 by reason of a failure to settle on 10 November 2003.
The Judge found that the Notice to Complete was “invalid and ineffective” because of various deficiencies in it and in the preceding Notices: [2007] SADC 130 at [157]. This conclusion was not challenged on appeal. It is not necessary for me to consider whether that conclusion is correct.
Accordingly, at the end of November 2003 the contracts remained on foot.
Repudiation by conduct of Mr Birdseye?
The vendor submits that Mr Birdseye’s conduct in failing to settle on or by 18 November 2003 (the date of the Notice of Termination) amounted to a repudiation of his contracts with the vendor.
Mr Livesey QC submits rightly that if Mr Birdseye’s conduct amounted to a repudiation of his contracts with the vendor, the vendor is entitled to rely on that repudiation as a ground for terminating the contracts on 18 November 2003, even though the vendor did not rely on that repudiation as a ground for terminating the contracts. In Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 the High Court affirmed the following statement of the law by Dixon J in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 377-378:
It is well established, however, that a servant's dismissal may be justified upon grounds on which his master did not act and of which he was unaware when he discharged him … It is true that the agreement between the appellant and the respondent does not amount to a contract of service. But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulations to rely upon a breach of conditions, committed before he so failed or so refused, by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition whether he was aware of it or not when he himself failed or refused to perform the stipulations of the contract.
In Concut Gleeson CJ, Gaudron and Gummow JJ said that in this passage Dixon J had identified “… a rule of general application with respect to the discharge of contract by breach”: Concut at [29]. The same general rule was accepted by McHugh J at [42] and by Kirby J at [51].
The submission by Mr Livesey appears to be that Mr Birdseye had delayed unreasonably, and to such an extent as to amount to a repudiation of the contracts.
I agree that unreasonable delay can constitute a repudiation of contractual obligations if the delay amounts to, or gives rise to an inference of, a refusal to perform the contract.
In Holland v Wiltshire (1954) 90 CLR 409 at 420 Kitto J said:
The express repudiation however, was only one incident in a course of conduct by which the purchasers confronted the vendor with a clear and continuing refusal to perform the contract. Even if the refusal conveyed by the solicitor had never been given, it might well have been that the inference would have arisen from the whole course of the matter that the purchasers were in truth refusing to proceed. Delay or neglect without more, if continued long enough, may amount to a refusal; and the other party is not bound to allow an unlimited time after the day named for performance of the contract …
As I understand it, it is this approach that Mr Livesey invokes. But I bear in mind the following observations by Barwick CJ and Jacobs J in Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286 at 302:
Even if the purchaser is in breach of some term of the contract (not being an essential term) and even if the purchaser is guilty of unreasonable delay a failure to complete does not of itself entitle a vendor to rescind unless time has been made of the essence of the contract. The purchaser's actions may amount otherwise either expressly or by inference to a repudiation of the contract which entitles the vendor to rescind but the passage of time does not of itself do so because time is not and has not been made an essential term of the contract. The only exception to this may be such gross and protracted delay that the purchaser must be taken to have repudiated the contract. That is a special case more easily found in contract of a kind where time is usually of the essence. Though it is not impossible it is rare in the case of a sale of land where time is not an essential term.
In the present case, time was not made of the essence by the vendor. The delay by Mr Birdseye was not great. The vendor contributed to that delay. I am not satisfied that the conduct of Mr Birdseye, to the extent that it was productive of delay, leads to a conclusion that he was manifesting an intention not to be bound by the contracts.
There was conduct on the part of Mr Birdseye pointing the other way. For example, he made payments to the account of the broker, apparently on account of the purchase price. There were indications in his conduct that his inaction or delay was, in part, attributable to an erroneous understanding of his contractual obligations. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1977-1978) 138 CLR 423 at 432, Stephen, Mason and Jacobs JJ said:
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. …
There are statements to the same effect in Green v Sommerville (1979) 141 CLR 594 at 601 by Barwick CJ and at 611 by Mason J.
But is this a case in which Mr Birdseye’s conduct, assessed objectively, points to a conclusion that he was willing to perform the contracts, but only as and when it suited him, and not as and when the contracts obliged him to perform? Such conduct may amount to a repudiation of a contract. As Mason CJ said in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1988-1989) 166 CLR 623 at 634:
There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way.
The same point was made by Brennan J at 643 when he said:
However, a reservation on the part of the promisor that he may perform the promise if it suits his convenience to do so is not inconsistent with repudiation of the contract or promise. …
See also Deane and Dawson JJ at 658-659.
I remind myself that in considering the submission by Mr Livesey, I must assess Mr Birdseye’s conduct objectively. That is the case whatever form the alleged repudiatory conduct takes. It is a question of what inference a reasonable person would draw from the conduct in question. As Brennan J said in Laurinda at 647:
Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. …
The same approach was taken by Mason CJ at 633 and by Deane and Dawson JJ at 657-658.
For these purposes I must consider events from about 23 September 2003, when Mr Stevens sent fresh copies of the contracts to Mr Birdseye. At that stage, by estoppel, the parties became bound by contracts under which there was an obligation to settle within a reasonable time. I bear in mind that by then Mr Birdseye had paid $30,000 into the trust account of the broker. The vendor appears to have treated that as payment of the deposits. I say this because the vendor did not thereafter complain about a failure to pay the deposits to the trust account of the agent, as required by the contracts.
Thereafter, about two months of inaction on the part of Mr Birdseye ensued. During this time Mr Birdseye made further payments to the broker’s account. He did not acknowledge the proposal to settle on 17 October 2003. He did not respond to the notice to complete on 10 November 2003. But the vendor also contributed to the delays, as the Judge pointed out. True, it was open to Mr Birdseye to put an end to the delays, by obtaining funding and by offering to settle. But it is one thing to make that point, and another thing, in the circumstances, to say that his conduct indicated that he was not willing to perform his contractual obligations other than when it suited him to do so. Anderson J relies in particular on Mr Birdseye’s failure to arrange finance sooner than he did. But that is in a context in which the vendor had not given an effective notice to complete, requiring him to be in a position to settle. The same comment applies to Mr Birdseye’s failure to deliver transfers to the vendor. While Mr Birdseye’s conduct is to be assessed objectively, it is to be assessed in the context of what the vendors were doing and not doing.
The Judge dealt with the question of repudiation in some detail: Birdseye v The Registrar General of Lands Titles Offices and W & R Pty Ltd [2007] SADC 130 at [163]-[181]. She noted that Mr Birdseye’s conduct was to be considered objectively: at [166]. She noted that it was a question of whether Mr Birdseye’s conduct demonstrated that he would settle only if and when it suited him to do so: at [166]. It may be that at times the Judge took into account Mr Birdseye’s subjective state of mind: see, for example, at [178] and at [181]. Nevertheless, confining myself to an objective assessment of Mr Birdseye’s conduct, I agree with the Judge’s conclusion that in all the circumstances, including the action and inaction of the vendor, Mr Birdseye’s conduct did not demonstrate to a reasonable person in the position of a vendor that he was willing to settle only if and when it suited him to do so: [2007] SADC 130 at [181]. Nor do I consider that the time that elapsed, about two months in all, amounted to such a substantial or gross delay as to give rise to an inference that Mr Birdseye would settle only if and when it suited him to do so.
For those reasons, I do not agree that Mr Birdseye’s conduct constituted a repudiation of the contracts upon which the vendor can now rely.
Specific performance
The Judge found that Mr Birdseye was ready, willing and able to settle under the contracts from 5 December 2003: [2007] SADC 130 at [190].
The Judge was not persuaded that Mr Birdseye was at fault in relation to settlement of the contracts during the latter part of 2003, nor was she satisfied that Mr Birdseye “caused or otherwise engineered” the delays that occurred: [2007] SADC 130 at [204].
On these topics, I agree in substance with the findings of fact made by Anderson J at [243]. I consider that the evidence points to the conclusion that Mr Birdseye was, for one reason or another, content to allow time to pass by between September 2003 and late November 2003. To say that is not to find that he has acted unlawfully or improperly, merely that it suited him to make use of the delays that occurred. A significant aspect of this is that at no stage during the latter part of 2003, at least until late November 2003, did Mr Birdseye make any particular effort to proceed to settlement. I agree with Anderson J that the evidence discloses that Mr Birdseye did not have the funds necessary to settle until late November 2003 or early December 2003, and that he knew that. I agree that in this respect his evidence was unsatisfactory. This does not ignore the fact that Mr Birdseye wished to proceed with the contracts, and indeed from time to time made payments to the broker on account of the deposit and on account of the purchase price. But I agree with Anderson J that the evidence supports a conclusion that Mr Birdseye made use of the delays that occurred, and that the explanation for this is that he knew that he did not yet have available to him the funds required to settle. The evidence also supports the conclusion that it suited Mr Birdseye not to disclose to the vendor the fact that, until November 2003, he did not have the money necessary to settle.
As the contracts remained on foot in early 2004, it was open to the Court to award specific performance in favour of Mr Birdseye.
But was it appropriate for the Court to make such an order?
In answering that question, the Court should have regard to the conduct of the parties from September 2003 when they adopted the position that the contracts remained on foot as between them. I consider that Mr Birdseye’s failure to pay the deposit in June 2003, and his failure to settle on 10 July 2003, are to be put to one side. These events occurred before the estoppel arose. The vendor proceeded on the basis that the contracts remained on foot, and made no complaint (until later in the piece) about the earlier failure to pay the deposit and to settle on 10 July 2003. Moreover, neither party was ready to settle on 10 July 2003.
The history is one of inaction and delay by Mr Birdseye indicating that he was content to exploit the delay that occurred. But it cannot be ignored that on the other side there was also some inaction by the vendor (through its agent), and ineffectual attempts by the vendor to bring about a settlement under the contracts. But as to the latter point, it needs to be borne in mind that the vendor was trying to bring to completion contracts in relation to which Mr Birdseye was showing little inclination to settle.
There is no doubt that the Court has power to refuse to grant specific performance, having regard to the past conduct of the party who seeks specific performance. But this is not an unfettered discretion, in the exercise of which the Court makes an overall assessment of the fairness or propriety of the conduct of the respective parties. The discretion is more confined than that.
The principles by which a court proceeds in this respect are conveniently summarised in Spry, Equitable Remedies (7^th ed, Lawbook Co, 2007) at 245-248 where the author states:
The maxims that a plaintiff in equity must approach the court with clean hands and that he who seeks equity must do equity are often used in a purely rhetorical manner in cases where the refusal of relief may better be justified on more precise grounds. So many cases where the absence of clean hands is referred to may be explained by the presence of fraud, or misrepresentation, or illegality, or a breach of contract leading to a lack of readiness or willingness on the part of the plaintiff to perform his obligations. These matters have already received consideration, and it has been seen that, for example, it is not correct to regard either a lack of honesty on the part of the plaintiff or breaches of contract by him as a necessary bar to relief. So, for instance, where the defendant has waived a right to rescind that arises through the fraud of the plaintiff a court of equity may see fit, in the exercise of its discretion, to award specific performance.
Nonetheless there are cases that are not readily explicable on any of the more limited grounds that have already been considered here, where nonetheless the plaintiff is denied specific performance according to the settled practice of courts of equity. It may be said of these cases that they fall into two main categories. In the first category, the plaintiff is shown to have materially misled the court or to have abused its process, or to have attempted to do so. In the second category are cases where the grant of the relief that the plaintiff seeks would enable him to achieve a dishonest purpose and where in all the circumstances it appears to the court to be inequitable to grant the particular relief in question. These cases may indeed be said to depend ultimately on a general principle that is directed against unconscionable conduct or the absence of clean hands. But whilst this general principle is susceptible of fresh applications in appropriate circumstances, care should be taken not to extend it to cases where, by implication, it has already been held not to apply.
…
In the cases that are within these general principles the court may in its discretion hold it to be unjust that the plaintiff should obtain the relief that he seeks. It has already been noted that the requirement that the plaintiff should approach the court with clean hands involves a principle of great width. Hence new classes of cases may be expected to arise from time to time where the circumstances require specific performance to be refused on this ground. Yet it is important to stress two limitations on the operation of the doctrine of clean hands. In the first place, the general requirement of clean hands, that is, of fair and honest behaviour in relation to the relief sought, has in many respects been particularised, and to that extent defined and restricted, by narrower rules relating to fraud and unfairness, for example, and by the doctrines of laches and of acquiescence. In the second place, courts with equitable jurisdiction do not judge the moral qualities of litigants in the abstract. A plaintiff who has behaved unconscionably may be refused one remedy but granted another, because in the first case there is, but in the second case is not, a sufficient connexion between the behaviour in question and the particular relief that is sought to render equitable intervention unjust.
(Footnotes omitted)

In the present case there is no suggestion that Mr Birdseye is now other than ready and willing to perform his contractual obligations. The vendor did not establish that the making of an order would cause it hardship: [2007] SADC 130 at [209]-[211]. The objection by the vendor to an order for specific performance rests upon the failure to settle on the part of Mr Birdseye. The cases make it clear that it is not necessary for a plaintiff seeking specific performance to prove that in the past the plaintiff has strictly and literally complied with all of his contractual obligations. But in any event, in the present case the vendor has not shown that after September 2003 Mr Birdseye was in breach of any essential obligation under the contracts, or indeed of any other obligation. The focus of the submission by the plaintiff, other than the submission relating to the failure to pay the deposits and the failure to settle on 10 July 2003, is that Mr Birdseye took advantage of the delays that occurred to avoid the difficulty that would have arisen from his inability to settle until finance was available in early December 2003.
As I have already said, I agree in substance with the findings of Anderson J. I consider that the District Court Judge erred in accepting the submission that Mr Birdseye was confused or did not understand what was happening. And it is also true to say that the vendor contributed to the delays that occurred, although, as I have already said, Mr Birdseye could have put an end to any delays by proceeding to settlement, had he had the funds.
Mehmet v Benson (1964-1965) 113 CLR 295 dealt with an instalment contract, and a plaintiff seeking specific performance who had been late in making a number of payments. It was argued that the Court should refuse to order specific performance in his favour. In dealing with this issue, Barwick CJ said at 307-309:
That the plaintiff was in default in payment of the instalments of the price and of the interest on the unpaid balance of it (time not being of the essence) though relevant to that question does not establish that he was not in the relevant sense ready and willing to perform the contract. If it were otherwise a purchaser in substantial default of inessential terms could never be granted specific performance. Indeed, the significance of the distinction between essential and inessential terms is derived from the fact that a person in breach of inessential terms may be granted specific performance. " ... A plaintiff in equity may even have actually broken his contract in the letter and yet succeed, if the substance remains": per Isaacs and Rich JJ in Fullers' Theatres Ltd. v. Musgrove.
The question as to whether or not the plaintiff has been and is ready and willing to perform the contract is one of substance not to be resolved in any technical or narrow sense. It is important to bear in mind what is the substantial thing for which the parties contract and what on the part of the plaintiff in a suit for specific performance are his essential obligations. Here the substantial thing for which the defendant bargained was the payment of the price: and, unless time be and remain of the essence, he obtains what he bargained for if by the decree he obtains his price with such ancillary orders as recompense him for the delay in its receipt. To order specific performance in this case would not involve the court in dispensing with anything for which the vendor essentially contracted.
Of course, the plaintiff must not by his unreadiness or unwillingness to perform have disowned his obligation to do so, or abandoned his rights to the benefit of the contract. But it is the essential terms of the contract which he must be ready and willing to perform. He seeks a transfer of the interest in land, the subject of the contract: the counterpart obligation is the payment of the price. In considering the question of the plaintiff's readiness and willingness in this respect in this case there are many factors. His default in paying the instalments of the price, whilst not conclusive, is amongst these factors. …
In my opinion, notwithstanding the defaults of the plaintiff in the payment of the instalments of price, he was not unready or unwilling to perform the contract in its essential terms: specific performance ought to have been granted. …
(Footnotes omitted)
McTiernan J agreed with Barwick CJ at 309. At 314-315 Windeyer J said:
But if, notwithstanding earlier breaches, the contract remained on foot, then it seems to me a plaintiff is not necessarily barred from having a decree for specific performance if those breaches, not having resulted in a valid rescission, can be made good by the payment of interest. …
In Green v Sommerville (1979) 141 CLR 594 the purchaser failed to settle on the due date. The vendors allowed her into possession, paying rent, in the expectation that she would soon be able to complete. This arrangement continued for about ten months, after which the vendors gave the purchaser a notice requiring her to complete. The parties agreed that settlement should be fixed at 30 May 1977. Then a dispute arose as to the amount of the price to be paid. The vendors gave notice of rescission, relying on the failure of the purchaser to settle. The purchaser brought an action for specific performance. The purchaser had tendered the amount that she admitted was due. In the end result the Court found that the vendor’s Notice to Complete was not effective to bring about a rescission of the contract. The Court also found that the purchaser was in breach of the contract in failing to pay interest that was due on the agreed settlement date of 30 May 1977, but that that obligation was not interdependent with the vendor’s obligation to transfer the land. The Court also found that at the commencement of suit, the purchaser was ready and willing to complete, although she was in error in denying that she was liable to pay the interest claimed by the vendors. The issue was whether the purchaser was entitled to an order for specific performance, notwithstanding her erroneous view of her obligation to pay interest. The Court held that she was. The Court found that the purchaser was ready and willing to perform her essential obligation under the contract, the payment of the balance of the purchase price. The Court proceeded on the basis that although she was wrong in relation to the question of interest, she was ready and willing to perform the contract on its true construction. As it turned out, both parties had been incorrect as to the amount of interest payable. Mason J, with whom two other members of the Court agreed, said at 610:
Does the respondent's failure to pay the amount of interest due on settlement, though not a breach of an essential term, disentitle her to specific performance on the ground that she was not ready and willing? In my opinion, it does not. It is well settled that a plaintiff in a suit for specific performance is not required to show that he has strictly complied with all his obligations under the contract; it is enough that he has performed and is ready and willing to perform the substance of the contract …
He then referred to the decision in Mehmet v Benson (above).
In Bahr v Nicolay [No 2] (1987-1988) 164 CLR 604 Mason CJ and Dawson J, after holding that the appellant had an enforceable claim against the respondent, considered whether relief by way of specific performance should be granted. They said at 619:
It is said that, in general, the plaintiff in an action for specific performance must establish that he has performed the contractual obligations to be performed on his part before the commencement of the action and that he is ready and willing to perform his future obligations under the contract: see Jones & Goodhart, Specific Performance (1986), p 49; Fry on Specific Performance, 6th ed. (1921), p 435. …
But the plaintiff is not required to show that he has complied strictly with all his obligations under the contract (Fullers' Theatres Ltd v Musgrove) or that he is ready and willing to comply strictly with his future obligations. …
(Footnotes omitted)
Their Honours then referred to the decision in Mehmet v Benson, noting at 620:
In that case the purchaser obtained specific performance despite his failure to pay an instalment of the purchase price in time, a failure which would have entitled the vendor, had he chosen, to terminate the contract. Specific performance secured to the vendor the consideration promised to him by the purchaser, namely the purchase price, compensation being awarded for the purchaser's delay in making payment. …
In the end they joined in allowing the appeal, on the basis that the appropriate finding was that the appellant would be able to pay the purchase price, even though the trial Judge and the Full Court on appeal had found otherwise. On this point see also Wilson and Toohey JJ at 640-644 and Brennan J at 658-660.
I have considered the reasons of Young CJ in Eq in Mulkearns v Chandos Developments Pty Ltd [2003] NSWSC 1132; (2003) 11 BPR 21,277. In the passage referred to by Anderson J, His Honour was considering whether a defaulting purchaser was entitled to relief against forfeiture. The test for the grant of such relief is a stricter one, as I understand the law on this topic. There is nothing in the reasons of the Court of Appeal inconsistent with the approach that I have taken: see Chandos Developments Pty Ltd v Mulkearns [2008] NSWCA 62 at [98]-[109].
The evidence supports a conclusion that Mr Birdseye was not ready or willing to settle under the contracts until early December 2003. However, it must equally be acknowledged that he did not in fact breach any essential term of the contracts. The time for settlement was not made an essential term of either contract. He was able to take advantage, in his own interests, of the vendor’s inability to compel him to settle. He was not frank with the vendor, but it cannot be said that he actively misled the vendor.
I agree with the trial Judge that there are no later circumstances that support a claim that the Court should decline to order specific performance. That claim is and must be based on events in the latter part of 2003.
Having carefully considered the matter, I am not persuaded that the trial Judge was wrong. In the end, the criticism of Mr Birdseye is that he exploited, to his own advantage, the failure of the vendor to require him to complete, and the failure to do so in a legally effective manner. I am not persuaded that it was not open to the Judge to conclude that in those circumstances, an order for specific performance should be made.
I agree with the Judge on the question of interest.
Conclusion
For those reasons I would dismiss the appeal.
DUGGAN J: I agree with the reasons for judgment of the Chief Justice.
I add these observations.
Estoppel
The nature of estoppel by convention is summarised in Spencer Bower, The Law Relating to Estoppel by Representation, (3^rd ed):[1]
This form of estoppel is founded, not on a representation of fact made by the representor and believed by the representee, but on an agreed statement of facts the truth of which has been assumed, by the convention of the parties, as the basis of a transaction into which they are about to enter. When the parties have entered into their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction each will be estopped against the other from questioning the truth of the statement of facts so assumed.
[1] Spencer Bower & Turner, The Law Relating to Estoppel by Representation (3^rd ed, 1977), p157-160
In Con-Stan Industries of Australia Proprietary Limited v Norwich Winterthur Insurance (Australia) Limited (Con‑Stan)[2] the Court stated that estoppel by convention requires the assumed state of affairs to be an assumed state of fact. The Chief Justice in the present case has commented on the authorities decided since then which provide support for the argument that the doctrine extends to questions of law. He expressed the same view in Acil v England[3] where he pointed out that the reasoning in Con-Stan appears to be out of step with more recently expressed views by members of the High Court.[4]
[2] (1986) 160 CLR 226 at 244-245
[3] (unreported, Supreme Court of South Australia, Doyle CJ, 1 November 1995)
[4] Ibid at [32]. See also Equuscorp Pty Ltd v Wilmoth Field Warne (a firm) [2007] VSCA 280 at [72]‑[73].
In The Bell Group Ltd (In Liq) v Westpac Banking Corporation (No 9)[5] (Bell) Owen J also discussed developments in the law since Con-Stan and expressed the view that a promissory estoppel by representation or an estoppel by convention can arise from an assumption of law. He pointed out that in Waltons Stores (Interstate) Ltd v Maher[6] Brennan J was of the view that the assumed state of affairs to which a party might be bound by way of estoppel in pais (which includes estoppel by convention) can relate to a matter of mixed fact and law. Owen J also referred to the observation of Deane J in Foran v Wight[7] that estoppel by conduct extends to a representation or induced assumption of law and fact. Owen J observed that this view had been accepted as applying to estoppel by convention in Government Employees Superannuation Board v Martin[8] and Sumampow v Mercator Property Consultants Pty Ltd.[9]
[5] [2008] WASC 239
[6] (1988) 164 CLR 387
[7] (1989) 168 CLR 385, 435
[8] (1997) 19 WAR 224
[9] [2005] WASCA 64 at [180]-[181]
In MK & JA Roche Pty Ltd & Ors v Metro Edgley Pty Ltd & Anor[10] Hodgson JA (Beazley JA and Ipp JA concurring) held that there could be an estoppel as to rights and not merely as to facts. He referred to EsleaHoldings Ltd v Butts[11] and Heggies Bulkhaul v Global Minerals Australia.[12]
[10] [2005] NSWCA 39 at [71]
[11] (1986) 6 NSWLR 175 at 185-189
[12] (2003) 59 NSWLR 312 at [147]-[154]
In the present case the assumption relied upon involves a question of law and fact. There is now a body of authority to support the view that an assumption in this category can be relied upon for the purposes of an estoppel by convention.
The requirements necessary to attract the operation of this category of estoppel are discussed in the judgment of Owen J in Bell and Brereton J in Waterman v Gerling Australia Insurance Co Pty Ltd.[13]
[13] (2005) 65 NSWLR 300
In Bell[14] Owen J referred to the requirement that:
There must be at least a demonstrable acceptance of a particular state of things as the foundation for the dealings of the parties. There has to be a course of dealing between the parties, that is to say, acts or conduct that impinge upon their mutual affairs.
[14] [2008] WASC 239 at [3521]
Further, the person to be estopped must have contributed in some way to the creation or continuation of the assumption so as to make it unconscionable for that party to depart from the understood basis of dealing between the parties.[15]
[15] Ibid at [3523]; See also Thompson v Palmer (1933) 49 CLR 507 per Dixon J at 547
Finally, the plaintiff must prove detriment in the event of a departure from the assumption.[16]
[16] MK & JA Roche v Metro Edgley Pty Ltd [2005] NSWSC 810 at [72]
The events which are of particular relevance to the claim of estoppel put forward by the purchaser, Mr Birdseye, commenced on 23 September 2003. It was on this date that Mr Stephens, the agent for W & R Pty Ltd (the vendor) sent new Form 1 notices which referred to the original contracts to Mr Birdseye. He also nominated a new date for settlement which was in the form of an addendum to each contract.
It is necessary to refer to events which took place earlier in September 2003 to put this action by Mr Stephens into context.
Mr Stephens wrote to Mr Birdseye on 8 September 2003 advising him that the contracts were terminated. The letter pointed out that the deposit had not yet been received. Mr Birdseye responded on 12 September 2003 by advising Mr Stephens that he had been waiting to hear that the cooling‑off period had expired so that he could pay the deposit. He said he would pay $30,000 to the broker and asked for details of her bank account. On 16 September 2003 Mr Birdseye paid $30,000 into the trust account of the broker, Ms Patterson.
On 22 September 2003 the vendor received advice from its solicitors that there were irregularities in the service of forms on Mr Birdseye; that Mr Birdseye had “every right to proceed with the sale”; and that he could force the vendor to complete the contracts through the courts if necessary. The solicitors advised their client that a deposit of $30,000 had been paid and they recommended the service of new forms and the fixing of a new settlement date.
The apparent consequence of this advice was the letter from Mr Stephens to Mr Birdseye on 23 September 2003 which as mentioned, enclosed an addendum and Form 1 notices which must be served by the vendor on a purchaser pursuant to s 7 of the Land and Business (Sale and Conveyancing) Act 1994. A new settlement date of 17 October 2003 was nominated. Due to a series of mishaps there was no settlement on that date.
It is clear that, at this stage, both parties were proceeding on the assumption that the vendor was not treating the notice of 8 September 2003 as having terminated the contracts. The discussions between the parties were on the basis that the contracts were on foot and that, despite the difficulties which had been encountered, settlement was the next step.
Further confirmation of this understanding was provided by the notice to complete forwarded to Mr Birdseye by the vendor’s solicitors on 27 October 2003. The notice advised of a new date for settlement, namely, 10 November 2003. The litany of errors which had taken place in relation to the transaction continued with this letter which referred to properties at 7‑9 Jubilee Road, Streaky Bay. This was not the correct address of the properties which were the subject of the transaction. However, the sending of the notice was a further indication to Mr Birdseye that the vendor was treating the original contracts as enforceable.
Mr Birdseye’s response was to pay two instalments of $10,000 into the trust account of Ms Patterson, the broker, on 28 October 2003 and 3 November 2003 respectively. Further payments of $20,000 on 6 November 2003 and $5,000 on 10 November 2003 followed.
Settlement did not take place on 10 November 2003 and, by letter dated 18 November 2003, Mr Birdseye was advised by the vendor’s solicitors that the contracts had been terminated.
I agree with the reasoning of the Chief Justice which led him to conclude that the notice of 18 November 2003 was not effective and that the contracts remained on foot as at the end of November 2003. This was the clear and unambiguous basis upon which the parties proceeded and it created an estoppel by convention.
Repudiation
It is apparent that, at the time he received the letter of 23 September 2003, Mr Birdseye had not secured the loan which was necessary in order for him to complete. However, he paid further amounts into the broker’s account in what appears to have been part payment of the purchase price. He continued in his attempts to arrange finance. After rejection by the National Australia Bank he applied for a loan from the Commonwealth Bank. As I have said, he did not settle on 10 November 2003, but the notice of termination sent to him on 18 November 2003 was ineffective. He was given conditional approval for a loan on 26 November 2003 and formal approval was given in about late December 2003.
In my view there is no doubt that, during this period, Mr Birdseye was intent on purchasing the properties. However, he was unable to arrange funding until late December.
There was delay on Mr Birdseye’s part, but there was no contractual requirement to settle at a fixed time. He was entitled to a reasonable time for completion. In my view the delay was not unreasonable in the circumstances and, in particular, it does not support the conclusion that he was unwilling to settle. It is for these and the other reasons set out in the judgment of the Chief Justice that I agree with his conclusion that Mr Birdseye’s conduct did not constitute a repudiation of the contract.
Clean Hands

Mr Birdseye entered into the contracts without any condition as to finance and there is no evidence available, other than his say-so, that he could have settled at any time. He asserted that he could settle upon two or three weeks notice. Mr Birdseye’s assertions as to his ability to settle are not borne out when one considers the difficulties he had in finally obtaining finance. In fact the evidence points to a contrary conclusion because finance was only granted after many complications and set backs, and then only after Mrs Birdseye came to the party by agreeing to provide additional security by way of guarantee.
Mr Birdseye did not actually apply for any finance until he made an application to the National Australia Bank sometime in early November 2003. That was, of course, after the second of the dates nominated for settlement by W & R, namely, 17 October 2003. His cross-examination illustrated through his unsatisfactory answers that he knew that he was not likely to get finance from the National Australia Bank, which had refused the application for finance sometime between 5 and 11 November 2003. Mr Birdseye was vague in the extreme in his answers in cross-examination on this topic. The refusal of the bank to provide finance is confirmed by Mr Henchcliffe from the National Australia Bank.
It was not until 7 November 2003 that Mr Birdseye actually applied to the Commonwealth Bank of Australia for finance. To make the application Mr Birdseye was forced to change banks and have his whole financial history reviewed by the new bank. He clearly knew at that stage that he was not likely to obtain finance from National Australia Bank. The application to the Commonwealth Bank was not finally approved until after Mrs Birdseye made her property available by way of security and gave a guarantee. It was around 19 December 2003 when these events occurred, that is, the involvement of Mrs Birdseye, but even then the approval still took further time. As Mr Livesey points out, although Mrs Birdseye gave evidence, she was never asked whether she would have allowed her property to be used for security, or whether she would have given a guarantee, prior to that date in December. The only conclusion available from all the evidence is that Mr Birdseye could not settle until either late in December 2003 or early January 2004.
The trial judge’s findings
The judge found that it was not necessary for Mr Birdseye to have the ability to settle at all times between 28 May 2003 and 10 November 2003. In any event, she found that she was not satisfied that his reason for failing to settle was related to the lack of funding. Her Honour found specifically at [181]:
[181]I am not satisfied that the plaintiff’s real reason for not settling on either of the proposed settlement dates, was that he did not have funding. I am not prepared to infer from the plaintiff’s statements and conduct, viewed from the perspective of a reasonable person in the position of the company, that he repudiated the contracts. It was not necessary for him to be ready, willing and able to settle at all times during 2003. In my view, the conduct of the plaintiff throughout 2003 was of someone who was willing to settle at the appropriate time. The “appropriate time” had not arisen prior to 5 December 2003 for the reasons I have given.
Her Honour also found at [184]:
[184]In my view, in order to obtain specific performance, it is necessary for the plaintiff to establish that he was ready, willing and able to perform each contract at the date of the hearing, although readiness, willingness and ability at an earlier time may be relevant to discretionary considerations. Carydis v Merrag Pty Ltd [2007] NSWSC 1220 at [33]-[38].]
Finally, she also found at [185]:
[185]If the relevant time is the date when the proceedings were commenced,[f/n] namely 12 November 2004, I find that the plaintiff was ready, willing and able to settle on each contract, as at that date. He was also ready, willing and able to settle as at 23 November 2004, the settlement date nominated by the plaintiff. Meagher, R. Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 4^thed at 674, Gurney v Gurney (No 2) [1967] NZLR 922 at 925; and Adelaide Brighton v Ostabridge [2005] NSWSC 737.
Whilst it may be correct to say, as Her Honour did, “It was not necessary for him to be ready, willing and able to settle at all times during 2003”, it is nevertheless a relevant consideration in the exercise of the discretion in deciding whether W & R is estopped and whether an order for specific performance was appropriate. This was acknowledged by Her Honour at [184]. The best way of establishing that a party is not ready and willing to perform a contract is to establish a breach of contract. In this case the relevant breaches were the failure to pay the deposit and the failure to settle. In addition, Mr Birdseye’s conduct in never informing W & R that he was unable to settle because of lack of finance has to be considered as against the whole background of the matter and in particular when he actually made his application for finance.
The question of any potential misconduct by Mr Birdseye has been decided in his favour by the judge. Having reviewed the evidence in this matter, I am not convinced that this is the correct conclusion. In my view, Mr Birdseye has acted to misrepresent the true position, namely, that he had the funds available to settle on 10 July 2003 when he entered into a cash contract in May 2003. From that point on, it seems to me that his actions in delaying for his own advantage have not been properly reflected in the reasons of the trial judge. Clearly W & R would not have persisted with their attempts to re-organise settlement in the second half of 2003 if they had known the true position regarding Mr Birdseye’s lack of finance.
It seems to me that the “real reason” for Mr Birdseye not settling was his inability to find the finance. There was no logical reason why Mr Birdseye could not have co-operated in arranging settlement around 17 October 2003 if he had the ability to settle. The transfer document contained an incorrect reference, but that was easily remedied and could have been the subject of an agreement to settle within a few days, had Mr Birdseye desired that result. He could easily have instructed the broker to finalise the matter. The same applies to the later settlement date.
When a purchaser by his or her conduct has not co-operated in seeking, for instance, a necessary consent upon which a contract is conditional, he or she could not expect to be granted specific performance. It seems to me that in this situation Mr Birdseye, by refraining from making any application for finance until November 2003 and by his own admission that he was not in a position to settle prior to December 2003, is unable to demonstrate to the court that he was ready and willing to settle at any relevant time between May and December 2003. In fact, Mr Birdseye could not perform the contracts at any relevant time until December 2003.
Unfairness to W & R
Her Honour found at [200]:
In my view, there was no illegal or unconscionable conduct by the plaintiff. Indeed, during 2003, the plaintiff conveyed his willingness to complete the contracts once the documentation was in order.
In addition to this Her Honour found that the company did not take any action and that Mr Birdseye had paid a total sum of $75,000 into the accounts of the broker. Some of the amounts were paid into the trust account and others were paid into the office account. The amounts were deposited without notice or identification, and Ms Patterson gave evidence that she had to contact her bank to identify from where the money had come.
Her Honour then found at [204]:
I am not satisfied that the delays were the fault of the plaintiff. I am certainly not satisfied that the plaintiff caused or otherwise engineered the delays whilst he endeavoured to secure the necessary funds to complete the contracts.
And further, Her Honour found at [205]:
I am not satisfied that any of the delays alleged by the company resulted in any unfairness to the company. Errors in relation to documents presented to the plaintiff by the company, meant that it was necessary for them to be re-drawn and re-served.
As I have indicated, the whole of the evidence of Mr Birdseye, despite his maintaining that he was always two or three weeks away from obtaining finance, shows that he had no access to the necessary finance until December 2003. With respect to the learned trial judge, it is my view that the findings above are not supported by the evidence. Furthermore, contrary to Her Honour’s findings, it is my view that there was unfairness to the company. The unfairness resulted from Mr Birdseye’s failure to inform W & R of his inability to settle earlier than December 2003 and then only on the eve of the trial through his amended defence. Although Mr Birdseye conveyed an apparent willingness to complete the contracts once the documents were in order, the fact is that he could not. To that extent he misled the vendor.
Although I have regarded the contracts as having been validly terminated by W & R, the further efforts of its agents took place in the setting that they believed Mr Birdseye had the necessary finance to settle. Whilst those events had no legal effect in relation to the terminated contracts, the conduct of Mr Birdseye is relevant as a defence to his claim for estoppel, as I have discussed earlier. It is also relevant to the repudiation argument advanced by Mr Livesey which I will deal with later in these reasons.
It is my view that the evidence shows that Mr Birdseye, whether he engineered the delays or not, certainly took advantage of the delays. He really had no choice. He had signed a cash contract and had no funds available. In the circumstances, the question is whether he acted unfairly and without clean hands in failing to disclose this fact to W & R. Whilst I accept Her Honour’s advantage in seeing and assessing the witnesses, I am basing my views on the objective facts and Mr Birdseye’s admissions and concessions in cross-examination. The documentation as to the specific time when the deposit was to be paid is quite clear. This is relevant to Her Honour’s finding as to the suggested confusion of Mr Birdseye and as to the real reasons for him failing to settle on the contracts. This is a case where the findings of the judge have to some extent been based on the credibility of witnesses. It is my view that Her Honour has not properly considered those parts of the evidence of Mr Birdseye in areas that adversely affect his credibility.
This court can in those circumstances examine the evidence and draw its own conclusions: see Devries v Australian National Railways Commission (1993) 177 CLR 472 and State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306.
My conclusion is that because of his conduct Mr Birdseye is precluded from relying on the representations of W & R to create an estoppel, whatever the effect of those representations might be. The court should not enforce an estoppel arising from the conduct of W & R. No representation of W & R led Mr Birdseye to act to his detriment because he knew that settlement could not take place. That was because he had no funds to settle, and moreover, he had made no appropriate application to seek funds. It is my view that in seeking equitable relief Mr Birdseye has not come to the court with clean hands.
His payment of money into the broker’s accounts was his own folly. He did not make those payments because of any misrepresentation. He knew when he made those payments that he could not settle. He hoped in some way that it might buy him some time in which to seek finance. Mr Birdseye did not act to his detriment as a result of any conduct of W & R.
Repudiation of the contracts by Mr Birdseye
W & R also claimed in its notice of appeal that Mr Birdseye’s failure to settle at any of the times nominated by W & R was conduct which amounted to a repudiation of the contracts. It was argued that regardless of whether the notice of termination was effective, Mr Birdseye, by his failure to settle and by his conduct generally, manifested an unwillingness to perform the contracts.
It is necessary to look again at the evidence to determine if Mr Birdseye’s conduct was repudiatory. As the cases make clear, the whole of the factual background is to be viewed objectively and an actual intention to repudiate is not necessary. See, for instance, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 as approved in Koompahtoo Local Aboriginal Land Council v Sanfire (2007) 82 ALJR 345.
The trial judge dealt with the question of repudiation in her reasons. Her Honour summarised the arguments of W & R in her reasons at paragraphs [163] to [170]. She then dealt with the law at paragraphs [171] to [175] inclusive. I agree with Her Honour’s summation of the law relating to repudiation as set out in those paragraphs.
Her Honour then proceeds to make the findings which I have set out earlier in these reasons, commencing at paragraph [181]. She was not prepared to find that the real reason for Mr Birdseye’s failure to settle was his lack of funding. I have already indicated that I disagree with that finding.
Mr Livesey relied on the statements of the High Court in Laurinda where Mason CJ at pages 633-634 refers to the observations of Fullagar J in Carr v J.A. Berriman Pty Ltd (1953) 89 CLR 327 at 351 and Gibbs CJ in Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626.
Mason CJ in Laurinda says at 634:
There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so.
Mr Wells contends that Mr Birdseye was ready to carry out his obligations when everything was in order and therefore it was not a case of “only if and when” it suited him. I agree with that submission insofar as I consider that this matter does not come within the first limb. That does not mean, however, that there could not be a repudiation under the second limb. Mason CJ says further at 634:
But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party’s obligations and not in any other way.
Mr Livesey also relied on the reasons of Deane and Dawson JJ in Laurinda at pages 657 to 659. Their Honours there also refer to Fullagar J in Carr v Berriman. Their Honours then refer to Lord Dunedin in Forslind v Bechely-Crundall (1922) SC (HL) 173 at 190 where His Lordship described “a shilly-shallying attitude in regard to the contract” and what Lord Shaw of Dunfermline at page 192 called “procrastination ... persistently practised”.
Mr Wells submits that even if there were acts of repudiation by Mr Birdseye, they were not accepted by W & R. The sequence of events which I regard as relevant is set out in my discussion on estoppel under the heading of “Conduct by Mr Birdseye” at [243]. As I have indicated, it is my view that Mr Birdseye was not able to perform. He simply could not settle prior to December 2003. That was of his own making because he had chosen not to apply for finance. That meant that he had no hope of settling on either of the earlier dates suggested by W & R.
I will examine the facts from an objective viewpoint. The relevant facts, in my view, as at the date of the notice of termination, are related to Mr Birdseye’s inability to complete the contracts at that time, namely, 18 November 2003. I include the lack of any attempt to actively seek finance from the National Australia Bank, the lack of any funds as at that time from the Commonwealth Bank, the fact that he did not assist or co-operate in any way to help arrange a new settlement date, including the failure to return the addendum, the fact that he gave no instructions to his broker to assist with arranging settlement, and finally his lack of tender of the necessary memoranda of transfer.
Mr Birdseye was required under the terms of each contract to provide an executed memorandum of transfer. Pursuant to clause 4.1 and specifically 4.1.1 of the contracts he was required to deliver a transfer, properly executed, not less than seven days before settlement date. He did not do so because he was unable to settle. If Mr Birdseye had advised W & R of the true position and said, “I cannot settle because I do not have the money”, W & R could no doubt have regarded that as conduct amounting to repudiation.
When the notice of termination was given on 18 November 2003 Mr Birdseye had no prospect of obtaining finance from the National Australia Bank and had transferred his efforts to the Commonwealth Bank. It was impossible for any settlement to occur at around that time because of his failure to obtain finance.
Acts of repudiation may include conduct described by Gleeson CJ, Gummow, Heydon and Crennan JJ in Koompahtoo at [44] 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”. The footnote for the above proposition refers to Mason CJ in Laurinda at 634.
Accordingly, it is my view that, when viewed objectively, Mr Birdseye repudiated the contracts when he evinced an intention through his conduct to only perform the contracts in a manner substantially inconsistent with his contractual obligations.
As indicated earlier, a notice to complete was served on Mr Birdseye by W & R on 27 October 2003. A new settlement date of 10 November 2003 was nominated by W & R. Mr Birdseye still had no ability to settle on 10 November 2003. Both the notice to complete and the later notice of termination contained errors within the documents.
Her Honour dealt with the requirements of a valid notice to complete and found that the notice was defective. It did not, for instance, identify the breach or default relied on. The notice wrongly described the vendors. The judge found that it could not be relied on by W & R for the reasons set out at [151] to [157] inclusive. I agree with the majority of the reasons of the judge in those paragraphs. However, I do not agree with the judge’s conclusion at [157]. It is my view that the notice of termination was valid to mark the time when W & R accepted the repudiatory acts of Mr Birdseye, albeit that the notice contained errors.
In the view that I have taken it is not necessary to consider the alternative contention based on the notice of termination.
I have reached the view that W & R’s termination of the contracts was justified by the objective acts of repudiation previously described. It is not necessary for W & R to have been aware of all of the repudiatory conduct when it gave the notice of termination. As Dixon J noted in Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 378 quoting from Greer J in Taylor v Oakes Roncoroni & Co (1922) 127 LT at 269:
... It is a long established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not ...
Although W & R was not aware of all of Mr Birdseye’s conduct, the notice of termination remains valid for the purpose of showing that W & R accepted the acts of repudiation (see Koompahtoo at [44]).
Specific Performance
The remedy of specific performance is most often ordered in transactions involving the sale of land. Before an order for specific performance will be made the court will normally consider whether damages are an adequate remedy. Mr Birdseye disclaimed any entitlement to damages but no reason has been given for this.

The discretionary factors to be taken into account in assessing whether it is appropriate to grant specific performance include the conduct of the plaintiff. Generally, a court would be unlikely to grant the remedy to a plaintiff whose case is unmeritorious. I have decided that Mr Birdseye’s case is unmeritorious because I have found that he breached the contracts by his failure to pay the deposits. In addition I have found that his conduct precludes him from relying on an estoppel against W & R. I have also found that his conduct amounted to a repudiation of the contracts.
Mr Livesey, in his written outline of submissions, raises four matters in relation to the decision to grant specific performance. First, he submits that Mr Birdseye breached two essential terms of the contract, being the failure to pay the deposit and the failure to settle on the nominated settlement date in the contracts. These are important aspects in considering whether to order specific performance.
The trial judge did not consider the question of Mr Birdseye’s breach of contract in her decision to grant specific performance because she came to a different conclusion on these breaches.
I have read the draft reasons of Doyle CJ, who considers that the breaches of contract should be put to one side. That is because he finds that the events occurred before the estoppel arose. I have come to a different view on estoppel. Even if I am incorrect on that aspect, I consider that at least the breach in failing to pay the deposit is still relevant in deciding whether to order specific performance because it was a serious breach of an essential term of the contract.
Secondly, whereas Mr Birdseye claimed that he was always ready, willing and able to settle between May and December 2003, the evidence called and his admissions in cross-examination show that he did not have the funds to settle. He did not admit this fact until he filed amended pleadings on the eve of trial in June 2007. I have concluded that the judge erred in her consideration of this aspect.
Thirdly, Mr Livesey points to two further opportunities when Mr Birdseye could have settled, namely, on 17 October 2003 and 10 November 2003 or, it seems, at any time between July 2003 and October 2003 had he chosen to give his broker the necessary instructions, and had he made arrangements to have funds in place to enable him to settle. I have regarded this as conduct which is relevant to the decision as to whether to order specific performance.
Finally, Mr Livesey points to the fact that the specific performance order was granted on the basis of the negotiated prices in 2003 but that the grant by the judge in 2007 only allowed for payment of interest at default rates between November 2003 and November 2004.
An attempt was made by W & R to show that the blocks were, at the time of trial, valued at $200,000 each and therefore the purchase price, if specific performance was to be granted, should be at that increased value.
The judge found that the evidence was not sufficient to amount to expert valuation evidence. It was simply information contained in an email discussing possible values. I agree with Her Honour’s conclusion as to this aspect. W & R was deprived of the opportunity to offer the land for re-sale because it was led to believe that Mr Birdseye was in a position to settle. An adjustment could be made in any award of default interest for the whole of the period of delay if specific performance were appropriate, but that is not necessary in view of my conclusions.
Mr Livesey submits that the orders made for specific performance are an injustice to his client. He submits that the enforcing of transfers at the 2003 values with only a limited interest payment, when considered in the context of the purchaser’s breaches, the failure to settle at later dates nominated and the delay which has taken place, works a hardship against W & R which should warrant the refusal of relief. Mr Livesey relies on the following statement from Spry Equitable Remedies 7^th edition at 198:
Specific performance is not refused merely because inconvenience or even hardship to the defendant would be caused thereby. But if the hardship suffered by the defendant, if specific enforcement took place, would be so much greater than the detriment that would be suffered by the plaintiff if he were confined to remedies and damages that it would be oppressive and unjust to grant relief, specific performance is denied. In these regards there must be a balancing of the interest of the parties; and indeed, the court takes into account other matters as well, such as the manner in which the grant of relief would affect third persons or any advantage that the plaintiff may have taken of the defendant at the time of entry into the material agreement, in order to determine what course is most reasonable in all the circumstances. (Footnotes omitted)
Mr Wells points out in response to Mr Livesey’s argument regarding specific performance, that it is a serious allegation to suggest that someone has sought the relief of the court with unclean hands. It was submitted that this was not a case where Mr Birdseye was claiming protection for his own wrong. Mr Wells relied on the decision of Meyers v Casey (1912) 17 CLR 90 at 123 and 124, where Isaacs J said:
It is altogether different from the cases where the right relied on, and which the Court of equity is asked to protect or assist, is itself to some extent brought into existence or induced by some illegal or unconscionable conduct of the plaintiff, so that protection for what he claims involves protection for his own wrong. No Court of equity will aid a man to derive advantage from his own wrong, and this is really the meaning of the maxim.
Mr Wells submits that the delays in 2003 were not occasioned by any behaviour or conduct on the part of Mr Birdseye which was unconscionable, unreasonable or inequitable. Mr Wells points to the finding of the trial judge to the effect that W & R was largely the author of its own situation. Her Honour found that this included both inaction and the provision of inaccurate and defective documentation by W & R.
However, the judge does not deal with the matters I have raised earlier where I have considered that Mr Birdseye has taken advantage of the delays and failed to disclose his inability to settle. I consider that he has not acted with clean hands.
The trial judge found in relation to clean hands that “there was no illegal or unconscionable conduct by the plaintiff” [200]. Her Honour further found at [206] that “any alleged delays [of Mr Birdseye] during 2004 were not unreasonable or unconscionable”.
However, at [197] the trial judge noted:
Prior to 18 December 2003, the plaintiff was unable to acquire the two blocks of land in question, despite his contractual obligation to do so.
And at [198]:
A week before the hearing, the plaintiff first admitted that he was only ready, willing and able to settle after 5 December 2003.
At [199]:
The plaintiff was less than frank about his failed efforts to obtain funding from the NAB or his inability to obtain funding from the CBA, prior to December 2003. The company also pointed to what it said were the plaintiff’s false statements and half truths. (footnotes omitted)
I have approached the question of specific performance on the basis that Mr Birdseye was in breach of the contracts. If that is wrong then I have found that he was not ready, willing and able to settle on the contracts at any relevant time. In those circumstances, I have concluded that he is not entitled to an order for specific performance.
As referred to earlier, the High Court in Tanwar refused specific performance for three contracts for the sale of land because of the purchaser’s breach of a clause for which time was of the essence. In Romanos, a case heard consecutively with Tanwar, specific performance was also refused for three contracts for the sale of land due to the purchaser’s failure to pay the deposit in a timely manner. It was found that there was no “unconscionability” (Romanos at [25], [52] and [64]) by the vendor relying on the purchaser’s breach to terminate the contracts. In this case, no similar “fraud, accident, mistake or surprise” (Tanwar at [58] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ quoting from Lord Wilberforce in Shiloh Spinners Ltd v Harding [1973] AC 691 at 723) could be attributed to W & R in its decision to terminate the contracts.
Young CJ in Mulkearns v Chandos Development Pty Ltd [2003] NSWSC 1132 took the “whole history” of a defaulting purchaser into account in refusing to grant relief against forfeiture and make an order for specific performance. There were appeals and cross-appeals to the Full Court but both were dismissed. At [68] Young CJ found that the whole history of the purchaser’s conduct did not show a person ready and able to complete. His Honour said:
It did not pay the deposit in full. It did not pay the occupation fee until after the proceedings were commenced and it was virtually forced on it as a term of obtaining an interlocutory injunction.
His Honour went on to say that the plaintiff was willing to take any technicality believed open to him in order to postpone settlement.
In Mulkearns, the plaintiff was denied specific performance in relation to a contract for the sale of land because of its conduct. This was, as I have already indicated, because of the “whole history” of the purchaser as described by Young CJ at [68].
It is my view that the history in this matter as summarised earlier shows that Mr Birdseye was not a person who was ready, willing and able to complete because, throughout the relevant period, he had no finance. For the purpose of dealing with the submissions on his conduct, his inability to settle is a relevant discretionary consideration. It is not to the point, in exercising the discretion, that at a later time, when proceedings were issued, he was then in a position to complete.
Like the plaintiff in Mulkearns, Mr Birdseye was willing to take any technicality open to him to delay the time of settlement because he knew he could not settle. It is for that reason, amongst others, that I consider that the judge erred in awarding him specific performance of the contracts. When taken in conjunction with his earlier breaches of contract, the discretionary balance is against such an order. I refer again to the comments I made in my consideration of repudiation earlier in these reasons. To use the words of their Lordships in Forslind Mr Birdseye demonstrated a “shilly-shallying attitude” and “procrastination ... persistently practised” in relation to settlement.
Mr Wells submitted that although not permitted as part of the proposed notice of contention, some aspects of his argument relating to relief against forfeiture were still relevant on the question of whether specific performance should have been ordered. He referred to that part of his submission in writing which related to part of the factual background which he contended was still relevant in considering whether to grant specific performance.
Mr Wells submitted that the trial judge accepted that Mr Birdseye was genuinely mistaken in relation to the expiration of his cooling-off rights and therefore his understanding of the correct time for the payment of the deposit. I have indicated that I consider this finding by the judge is not justified on the evidence. Mr Wells submitted that apart from the letter of 8 September 2003, there was no specific request made for the deposit, nor was any attempt made to terminate the contract at about that time. The proper course would have been to return the amounts other than the deposit. To the contrary, as Mr Wells suggests, there were certain actions taken which could tend to indicate that the vendor wanted the contract to remain on foot and wanted to proceed to settlement. I have dealt with these matters earlier in these reasons. I have taken these matters into account.
Similar discretionary considerations apply in any event in considering whether to grant relief against forfeiture or whether to order specific performance. Those matters in turn are the matters which I have already dealt with in considering whether there is an estoppel against W & R.
In view of the decision not to permit an argument based on relief against forfeiture in the proposed notice of contention, it is not necessary to consider Mr Wells’ analysis of the High Court decisions in Legione v Hateley (1983) 152 CLR 406, Ciavarella v Balmer (1983) 153 CLR 438 and Stern v McArthur (1988) 165 CLR 489.
Conclusion
For the reasons I have set out, it is my view that the judge erred in her characterisation of Mr Birdseye’s conduct. It is my view that his conduct was such that he is precluded from enforcing an estoppel against W & R and is not entitled to an order for specific performance. Mr Birdseye, although originally seeking an order for damages for breach of contract, abandoned that claim by an amendment to his statement of claim during the trial. No reason has been given for the abandonment of his damages claim, so that he relies solely on specific performance of the contracts as his remedy.
The contracts were lawfully terminated by the letter of 8 September 2003 and none of the events that followed affect this position. W & R is therefore entitled to damages. I would allow the appeal and would remit the matter to the District Court for the judge to hear and determine W & R’s claim for damages for Mr Birdseye’s breach of contract.