Peter Martiniello v Landallia Pty Ltd [1995] ACTSC 24 (17 March 1995)

SUPREME COURT OF THE ACT

PETER MARTINIELLO v. LANDALLIA PTY LTD
No. SC557 of 1994
Number of pages - 8
Sale of land

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
MASTER A HOGAN

CATCHWORDS

Sale of land - Vendor and Purchaser - Notice to Complete - ACT Law Society form of Contract - Unit Titles - Clause 21, subclauses (2) and (3) - "Effective notice under subclause (2)" - "Within 14 days after the day of service of the notice".

Radcliffe v Bartholomew (1892) 1 QB 161
Stewart v Chapman (1957) 2 KB 792

HEARING

CANBERRA, 6 December 1994
17:3:1995

Counsel for the Plaintiff: Mr J. Harris

Instructing Solicitors: Vandenburg Reid Solicitors

Counsel for the Defendant: Mr R. Arthur

Instructing Solicitors: Hill and Rummery

ORDER

THE COURT ORDERS THAT:

1. The application for declaratory relief be dismissed.
2. Liberty to apply for further directions on 2 days notice.
3. If the action has not been listed for directions beforehand, direct
that it be so listed on 31 March 1995.

DECISION

MASTER A HOGAN In action SC 557 of 1994, commenced by writ, the plaintiff, Mr Martiniello, sought relief in respect of two written agreements for sale and purchase of home units at Kingston. The plaintiff was in each contract the purchaser, and the first defendant, Landallia Pty Ltd, was the vendor.

2. In action SC 579 of 1994, commenced by originating summons, Landallia Pty Ltd was the plaintiff and Mr Martiniello was the defendant. The relief sought was the determination of the questions:

1) whether the agreements for sale had been validly terminated by the
plaintiff, and
2) whether the plaintiff was entitled to forfeit the deposits paid
under the agreements for sale.

3. On 9 September 1994 orders were made by consent that the proceedings be consolidated and that the jurisdiction of the Court in respect of certain relief sought in a Notice of Motion dated 25 August 1994 be exercised by the Master.

4. In summary, that relief sought was a declaration that the agreements for sale were validly terminated by Landallia Pty Ltd on 2 December 1993.

5. This is the determination of that application for declaratory relief.

6. In these reasons I refer to Landallia Pty Ltd as the vendor and to Mr Martiniello as the purchaser.

7. The evidence consisted of a Statement of Agreed Facts, and a bundle of agreed documents.

8. The agreements for sale were in the form of the 1977 edition of the ACT Law Society's standard agreement for sale of unit titles, with a typed schedule and additional conditions numbered 26 to 34. They each bore date, and were entered into on, 12 March 1992.

9. Clause 21 of the agreements, as amended in each case, is as follows:

21. Default Notices:
(1) Subclause (2) applies only if a date for completion is fixed in
Schedule Item 14.
(2) If completion of this agreement is not effected in accordance with
subclause 2(3), either party may on the date fixed for completion or
at any time thereafter (unless in the meantime the agreement has been
rescinded or has become void) give to the other party notice in
writing to complete the transaction in accordance with this clause but
such notice shall only be effective if the party giving the same at
the time the notice is sent is either ready, willing and able to
complete or is not so ready, willing and able by reason only of the
default or omission of the other party to this agreement.
(3) Upon service of an effective notice under subclause (2) the
parties agree it shall thereupon be an express term of this agreement:
(a) that the party to whom the notice is given shall complete the
sale within 14 days after the day of service of the notice
(excluding the day of service).
(b) that the party to whom the notice is given shall appoint a time
during business hours and a date within the specified period
and a place within Canberra convenient to the other party and
complete the sale, and
(c) in respect of the period in paragraph (a) time shall be of the
essence of the agreement but without prejudice to any
intervening right of rescission by either party.
(4) Unless this agreement provides otherwise the Seller shall give
written notice to the Buyer of any alleged default in the observance
or performance of any obligation imposed upon the Buyer under or by
virtue of this agreement (other than failure to complete) in
consequence of which the Seller claims to be entitled to take action
under clause 22. Such notice shall specify the alleged default and
shall call upon the Buyer to rectify the default within 7 days or such
longer period as the Seller allows in the notice and shall inform the
Buyer that the Seller intends to take action for default in the event
of non-compliance.
(5) Upon service of an effective notice under subclause (4) the
parties agree that it shall be an express term of this agreement that
the Buyer shall rectify the default within the time stated in
subclause (4) or such longer period as the Seller allows in the notice
after the day of service of the notice (excluding the day of service)
and in respect of such period time shall be of the essence of this
agreement but without prejudice to any intervening right of rescission
by either party.
(6) If the Buyer does not comply with the terms of an effective notice
served by the Seller under this clause then the provisions of clause
22 shall apply.
(7) If the Seller does not comply with the terms of effective notice
served by the Buyer under this clause then the Buyer may elect either:
(a) to enforce against the Seller without any further or other notice
under the agreement such rights and remedies as may be available to
the Buyer, or
(b) without prejudice to any right of the Buyer to damages, to give
notice in writing to the Seller forthwith to repay to the Buyer any
deposit and any money paid on account of the Total Purchase Price but
on compliance with the notice the Buyer shall no longer be entitled to
any right to specific performance of the agreement and shall return
forthwith all papers in his possession belonging to the Seller.
(8) The party serving a notice under this clause may at the request or
with the consent of the other party extend the term of the notice for
one or more specifically stated periods of time and thereupon the term
of the notice shall be deemed to expire on the last day of such
extended period or periods and the notice shall operate as though this
clause stipulated such extended period of notice in lieu of that
stated above and time shall be of the essence of the agreement
accordingly.

10. Clause 2 dealt with the terms of payment. Subclause 2(3) was as follows:

(3) Completion of this agreement shall be effected as stated in
Schedule Item 14 or, if any necessary consent has not then been given,
within 7 days after the date upon which the consent is given and if
Schedule Item 14 is not completed, within a reasonable time.

11. The schedule, item 14, read, "Item 14. Date for completion: see Condition 29."

12. Condition 29 was one of the additional conditions. It read:

29. Completion.
Completion of this agreement shall take place on the day ten (10)
days from whichever is the later of the undermentioned dates:-
(a) The date of written notice to the Buyer's Solicitors of the
registration of the Units Plan, or
(b) The date of notice to the Buyer of this issue of the Certificate
of Occupancy or Use for the unit.
Should completion of the within agreement not take place within the
period stipulated in Item 14 hereof the Seller, in addition to any
other rights or remedies conferred upon it by this agreement and
without further notice to the Buyer, shall be entitled to interest on
the unpaid balance of purchase moneys at the rate of eighteen percent
(18%) per annum calculated on a daily basis from the day following the
expire of the period allowed for completion to the day of completion
inclusive and any such interest moneys shall be payable on completion.
The parties hereto agree that time shall be of the essence in respect
of the date for commencement of payment of interest pursuant to this
condition.

13. Subclause 21(2) therefore applied, and it was one of the agreed facts that all conditions precedent to the entitlement of the vendor to serve a Default Notice under Clause 21 had been met prior to 15 November 1993.

14. On 15 November 1993 the solicitors sent a letter and accompanying document in respect of each agreement to the purchaser's solicitors by placing them in the box of the purchaser's solicitors at the Canberra Document Exchange. The purchaser's solicitors received each of those documents on 16 November 1993.

15. Each letter was dated 15 November 1993, and, after reference to the matter and relevant unit number, read, "We refer to the above matter and as instructed now enclose Notice to Complete."

16. Each of the accompanying documents read as follows, with appropriate reference to the number of the subject unit:

NOTICE TO COMPLETE
TO: Peter Martiniello
AND: Vandenberg Reid Solicitors
WHEREAS:
A. By Agreement for Sale ("the Agreement") dated the 12th March 1992
Landallia Pty Limited ACN 051 496 863 being a company incorporated
in the Australian Capital Territory and having its registered
office at c/- Dellavedova Hollands Bears and Co, 17 Barry Drive,
Turner in the Australian Capital Territory ("the Seller") agreed to
sell to Peter Martiniello of 20 Winstanley Street, Chapman in the
Australian Capital Territory ("the Buyers") all the residue
unexpired of the Crown Lease in Register Volume 1344 Folio 41 of
the land being Block 53 Section 26 Unit - Units Plan 917 in the
Division of KINGSTON in the Australian Capital Territory and known
as Unit - "Somerset".
B. The date for completion of the Agreement as set out in the Schedule
Item 14 of the Agreement was in accordance with condition 29 of the
Agreement for sale.
C. The Agreement was not complied with in accordance with sub-clause
2(3) of the Agreement and the Seller is not in default under the
Agreement and is ready willing and able to complete or could do so
but for some default of omission of the Buyer.
NOW TAKE NOTICE that the Seller appoints 1st December 1993 at
2.30 p.m. as the time at the Land Titles Office, Ground Floor, White
Industries House, Allara Street, Canberra City in the Australian
Capital Territory as the place at which to complete the Agreement.
This Notice is given pursuant to Clause 21 of the Agreement.

17. Each notice was signed by the vendor's solicitor. One was dated 1 December 1993, and the other 15 November 1993, but counsel for the purchaser did not submit that the obvious clerical error in dating had any effect on the efficacy of the notice dated 1 December 1993.

18. There was no further communication between the parties between 16 November 1993 and 1 December 1993, and neither agreement was completed on or before 2 December 1993.

19. On 2 December 1993 the vendor's solicitors sent, and on 3 December 1993 the purchaser's solicitors received, a letter in the following terms:

"We refer to our Notice to Complete which expired on the 1st December
1993 and note that we have not heard from you in relation to this
matter.
Accordingly our client terminates the Agreement for Sale pursuant to
Clause 22 of the Agreement."

20. The first submission of Counsel for the defendant is that the notices given in this case were not effective because they did not give the purchaser notice to complete the sale within 14 days after the day of service, excluding the day of service.

21. Counsel were in agreement that the effect of these agreements was to do away with the need to give a notice which in Equity would have the effect of making time of the essence, which is the type of notice much litigated in New South Wales and elsewhere, in cases where the contract has not specifically made time for the doing of some act of the essence of the contract.

22. That is true. The scheme of the agreements is such that if an effective notice is given it is the contract itself which makes time for completion of the essence, and it is the contract which fixes the time. There is no need for the Notice to purport to make time of the essence, and there can be no argument about whether the period specified in paragraph 21(3)(a) is reasonable or not. The clause was obviously drafted in order to avoid litigation about those aspects of Notices to Complete.

23. The scheme of the clause must be carefully analysed. By subclause (3) certain consequences follow upon service of an effective notice under subclause (2). Those consequences are:

(a) the receiver of the notice must complete the sale within the time
specified;
(b) the receiver of the notice must appoint a time and place for
settlement; and
(c) the time specified for completion in paragraph 3(a) is of the
essence of the agreement.

24. If each of the Notices given was "an effective notice under subclause (2)" then those consequences followed.

25. It was the obligation of the receiver of the Notice, under paragraph 3(b), to appoint the time and place for settlement. I think it follows that it was the purchaser who had the right to appoint that time and place. The purchaser could have chosen any time during business hours. He was entitled to choose any date within the specified period. It must be remembered that the vendor, in the circumstances of this case, was entitled to give the notice only if it, the vendor, was ready willing and able to complete. That means that it had to be so in control of the muniments of title as to be able to deliver them in exchange for the purchase price at any time and on any date within the period. The only aspect about which the vendor's convenience was to be considered was that the place for completion had to be within Canberra and convenient to the vendor.

26. The vendor, in my opinion, was not entitled to fix the date, time and place for completion. It follows that the appointment set out in the notices was of no effect.

27. It also follows from the analysis of subclauses (2) and (3) that it is not necessary for a notice under subclause (2) to fix a time or a period for completion. The period within which completion is to take place is fixed by paragraph 3(a). The fixing of the time and date within that period is a right of the receiver of the Notice.

28. Did the fixing of the time and date by the vendor in the Notices have the effect that they were not "effective - under subclause (2)"? In my opinion they would not be effective under subclause (2) if they fixed a time for completion which was less than the time allowed by the contract. That time is "within 14 days after the day of service of the notice (excluding the day of service)". This is the precise point of the submission by counsel for the purchaser.

29. The day of service was 16 November 1993. That date is excluded. It would be excluded by the common law even if the contract did not explicitly so provide: Radcliffe v Bartholomew (1892) 1 QB 161; Stewart v Chapman (1957) 2 KB 792. The succeeding 14 days comprise 17 November to 30 November inclusive. Contrary to counsel's submission they did not extend to 1 December.

30. The notices did not therefore call upon the purchaser to complete within a shorter time than that allowed by the contract, and they were not ineffective on that account.

31. The question still remains whether each notice was an effective notice under subclause (2). It was headed "Notice to Complete". It was addressed to the purchaser and to his solicitors. It recited some explanatory matter. It then proceeded, in terms, to require the purchaser to take notice that the vendor appointed the time and place for settlement, which was something the vendor had no right to do. It then stated that the notice was given pursuant to clause 21 of the agreement.

32. If the appointment of the time and place of settlement is regarded as surplusage and severable, what is left? The document is headed "Notice to Complete", and states "This Notice is given pursuant to clause 21 of the agreement."

33. At best, such a document could be construed as being a notice to complete the transaction referred to in the recitals.

34. But subclause (2) requires the notice to be "Notice in writing to complete the transaction in accordance with this clause", namely clause 21.

35. As a matter of pure grammar the phrase "in accordance with this phrase" could be read as governing the word "give".

36. But such a construction would not only be inelegant. If that meaning were intended a careful drafter would write "may give to the other party, in accordance with this clause, notice in writing to complete the transaction."

37. But when the machinery provisions of subclause (3) are taken into account, it is apparent to my mind that the phrase "in accordance with this clause" is deliberately placed so as to govern the type of completion that the receiver of the notice is being given notice to effect.

38. The simplest way of giving such a notice would be to state "Take Notice that you are required to complete this transaction in accordance with Clause 21 of the Agreement." On receipt of such a notice, and on reading clause 21, a party would know with precision what had to be done, within what time, and when and where.

39. Other forms of words may possibly be devised, though it is usually a sound principle of drafting to follow the words of the legislation or contract. The giver might indicate a list of places that would be convenient. But unless it is to that effect a notice is not, in my opinion, an effective notice under subclause (2).

40. No matter how they are read, the notices in this case did not require the purchaser to "complete the transaction in accordance with clause 21." Clause 21 gives the right to serve such a notice. They purported to be given pursuant to that clause. But they were still not the sort of notice that complied with the requirements of clause 21.

41. I therefore refuse to declare that the agreements for sale were validly terminated by Landallia Pty Ltd on 2 December 1993. In my opinion they were not.

42. The parties should have an opportunity to consider this decision and my reasons. There are other matters still outstanding in the consolidated actions. The parties should be heard on the question of costs.

43. I grant liberty to apply on 2 days notice for further directions. If the action has not been listed beforehand for directions, I direct that it be so listed on 31 March 1995.