Petrie v Dwyer [1954] HCA 75; (1954) 91 CLR 99 (13 December 1954)

HIGH COURT OF AUSTRALIA

PETRIE v. DWYER [1954] HCA 75; (1954) 91 CLR 99

Vendor and Purchaser (Q.)

High Court of Australia
Dixon C.J.(1), Fullagar(1) and Kitto(1) JJ.

CATCHWORDS

Vendor and Purchaser (Q.) - "Contract of sale of land" - Statutory regulation of vendor's right to rescind - Exclusion of other remedies in cases covered by statute - Definition - "Agreement . . . where . . . terms . . . provide that . . . payment . . . shall be extended over a period of time" and "any such sale of land" - Not fulfilled where balance of purchase money over deposit payable in one sum - Meaning of "such" - Notice that vendor "intends to rescind" - Not constituted by immediately operative notice of rescission - Contract - Sale of land - Time of essence - Non-completion by purchaser on due date - Waiver - Subsequent negotiation for extension - Vendor's insistence on strict rights unless payment of additional sum by purchaser - Non-acceptance of condition by purchaser - Right to rescind for non-completion by due date not affected - The Contracts of Sale of Land Act of 1933 (24 Geo. V. No. 26) (Q.) ss. 3, 13 (1) (a).

HEARING

Melbourne, 1954, October 12;
Sydney, 1954, December 13. 13:12:1954
APPEAL from the Supreme Court of Queensland.

DECISION

December 3.
THE COURT delivered the following written judgment:-
This is an appeal against a judgment of the Supreme Court of Queensland contract for the sale of land. The contract was in writing. It bears date 5th March 1951, but it is now common ground that it was executed on 12th March 1951. The purchase price of the land was 1600 pounds. A deposit of 100 pounds was paid on the signing of the contract, and it was provided that "the purchaser agrees to pay to vendor the balance of purchase money, namely 1500 pounds, in exchange for a registrable transfer in favour of purchaser together with relevant documents free of all encumbrance within sixty days of execution of this contract." The due date for payment of the balance was thus 11th May 1951. (at p103)

2. Clause 9 of the contract provides: - "If the purchaser shall neglect or fail to pay his deposit or any instalment of purchase money or part thereof or any interest or shall fail to comply with any agreement on his part herein contained then (subject to the Contracts of Sale of Land Act of 1933 so far as the said Act may apply) the vendor shall be at liberty to rescind this contract." By cl. 20 it was provided that time should in all cases and in every respect be deemed to be the essence of the contract. (at p104)

3. The balance of purchase money was not paid on 11th May. On 8th May the vendor's solicitors wrote to the purchaser a letter purporting to rescind the contract for non-payment on the due date. This letter appears to have been written under a mistake, occasioned by the fact that the contract bears date 5th March. It might perhaps have been treated as a repudiation by the vendor, but it was not so treated, and nothing appears now to turn on it. The plaintiff gave evidence that, between 8th May and 24th May, he had some conversations by telephone with the office of the defendants' solicitors, in which he requested that the time for completion should be extended. The evidence was very unsatisfactory, and the learned trial judge found that an agreement, which had been alleged in the defence, to extend the time to 24th May was not established. All that the plaintiff appears to have been told is that the vendors would consider extending the time on condition of receiving 200 pounds over and above the contract price. This condition the plaintiff declined to accept. On 25th May the defendants' solicitors wrote to the plaintiff a letter in which they said that the contract was cancelled, and the deposit forfeited. This letter gives some colour to the plaintiff's allegation that there had been an agreement to extend the time for completion to the 24th May, because it purports to "confirm" a telephone conversation of the same day at which the plaintiff was informed that the vendors were not prepared "to grant any further extension of time", and it speaks of a failure to pay the balance of purchase money "by yesterday". The letter, however, is not inconsistent with the evidence that negotiations had taken place on the basis of a proposal that a further 200 pounds should be paid as the price of an extension of time, and the finding of his Honour that the alleged agreement was not proved appears to be fully justified. It was admitted that on or about 18th June the plaintiff tendered to the defendants a bank cheque for 1526 pounds, but this tender was refused. It appears from the evidence that the plaintiff was not before that date able to find the money which the contract required him to pay. (at p104)

4. On the facts summarized above, it was assumed by Hanger J., and assumed in the argument before us, that - apart from a statute to which it will be necessary to refer - the plaintiff could not maintain a claim for specific performance. The assumption appears to be correct. The position at law and in equity in such cases is explained by Lord Parker of Waddington in Stickney v. Keeble (1915) AC 386, at pp 415, 416 ; see also Carr v. J. A. Berriman Pty. Ltd. [1953] HCA 31; (1953) 89 CLR 327, at pp 348, 349 . Here time was expressly made of the essence of the contract, and the contract must be regarded as effectively rescinded both at law and in equity by the letter of 25th May, unless it is established that before that date the defendants had elected not to exercise the right given by cl. 9 to rescind for non-completion on the due date. No doubt, the continuance of negotiations on the footing that the contract is still subsisting after that date would generally warrant the inference that there had been such an election. "If time be made the essence of the contract, that may be waived by the conduct of the purchaser; and if the time is once allowed to pass, and the parties go on negotiating for completion of the purchase, then time is no longer of the essence of the contract": Webb v. Hughes (1870) LR 10 Eq 281, at p 286 ; and see Hipwell v. Knight [1835] EngR 890; (1835) 1 Y & C Ex 401 (160 ER 163) . No such "waiver", however, is established here. The vendors had, on 8th May, indicated an intention to adhere to the stipulation as to time, and, although the notice of that date was ineffective, they did not thereafter depart from that intention. If it be true to say that "negotiations" proceeded after 11th May, the vendors' attitude seems to have been that they would insist on their strict rights unless the plaintiff was prepared to pay 200 pounds more than the contract price for the land. They were not "negotiating for the completion of the purchase" in accordance with the terms of the contract other than those relating to time, but really saying no more than that they would consider an offer by the plaintiff to purchase for a price other than that fixed by the contract. The basic assumption was not that the contract was alive but that the vendors were not bound by it. It is impossible to say that they were electing not to rescind for non-completion on the day. So far as the rules of common law and equity go, the contract was effectively rescinded by the vendors on 25th May. (at p105)

5. The plaintiff, however, relies on a Queensland statute, the Contracts of Sale of Land Act of 1933, which is referred to in cl. 9 of the contract. This statute is remarkably ill-conceived and remarkably ill-drawn, but its obvious purpose is to place a purchaser of land under certain classes of contract in a position more advantageous than that which he would enjoy at common law or in equity. Why this should have been thought necessary or desirable need not be considered. The rules of equity are generous to such a purchaser, and the caveat system under the Real Property Acts provides machinery for the protection of his equities. But the statute is obviously the work of one not versed either in law or in equity. Its invocation by the plaintiff in the present case raises two questions. The first is whether the contract is one of the class with which the relevant provisions of the Act deal. If this question is answered in the affirmative, the second question arises, which is whether those provisions operate to destroy the effect of the "rescission" of 25th May. Hanger J. decided the first question in favour of the plaintiff, and the second against him. In the view which we take, it is convenient to deal with the second question first. (at p106)

6. The provisions on which the plaintiff relies are contained in s. 13 of the Act. That section, so far as material, is in the following terms: - " (1) Notwithstanding anything in any Act or law or rule or process of law to the contrary, and notwithstanding the terms, stipulations, and conditions of any contract of sale of land, where the purchaser has paid off an amount from the consideration for the sale of the land concerned, and the purchaser shall fail to continue to comply with the terms and conditions of the contract of sale or make default in the payment of the instalment or instalments therein, the following conditions shall apply: - (a) The vendor may give notice to the purchaser in the prescribed form or according to the practice of the court that he intends to rescind the contract. (b) Such rescission shall not take effect until the expiration of thirty days from the date of such notice, or such further time as the court may in its discretion direct in any particular case, and on application by the purchaser in that behalf. (2) At any time within the said period of thirty days (or extended time as the case may be) upon payment or tender by the purchaser to the vendor of the amount due under the contract of sale at the date of such notice of intention as aforesaid, or upon the payment of any instalment or instalments due by the purchaser at such date, or upon the performance or tender of performance of any other term or condition of the contract of sale (where the failure to make such payment or non-performance of such term or condition entitled the vendor to give such notice of intention to rescind the contract) and payment to the vendor of any reasonable expenses necessarily incurred by him herein, no action shall be taken by the vendor to rescind the contract of sale concerned, and the contract shall continue in force as if no default had occurred. (3) If, however, within the prescribed period the purchaser neglects or fails to take such action as is set forth in subsection two of this section the vendor may rescind such contract of sale. (4) Notice to the purchaser by the vendor as aforesaid shall be given in writing by the owner to the purchaser, delivered either personally or by registered post, directed to the purchaser at his last known place of business or residence. A notice so posted shall be taken to have been given at the time when the registered letter would in the ordinary course be delivered." A form of notice has been prescribed by regulations made under the Act (reg. 39). The form states that the vendor intends to rescind the contract unless the purchaser, on or (sic) before the expiration of thirty days "remedies" his "failure or default". One would have expected him to be required to remedy his failure or default within thirty days, but, by the time one reaches reg. 39, one's capacity for being surprised is exhausted. (at p107)

7. The learned trial judge appears to have thought that to give to s. 13 the effect for which the plaintiff contended involved reading the word "may" in sub-s. (1879) 4 QBD 245 (a) as meaning "shall" and he did not think it possible so to read that word. He referred to Reg. v. Bishop of Oxford (1879) 4 QBD 245 . But no such question as that which arose in Reg. v. Bishop of Oxford (1879) 4 QBD 245 arises here. Clearly the vendor is not required to give any notice under s. 13. But what the section sets out to do, in our opinion, is to prescribe the means, and the only means, by which a vendor may effectively rescind for breach a contract which falls within the section. The section is, of course, extremely badly drawn. In expression and in arrangement it is both elliptical and illogical. But the intention can, we think, be gathered without much difficulty. The words which give the key to the meaning are the words "the following conditions shall apply." The two clauses which begin with the word "notwithstanding" do not refer to provisions qualifying a vendor's right to give a notice of intention to rescind. Such provisions are not to be expected to occur in a contract. Those two clauses refer to rights of rescission which exist at law or by virtue of some special provision in a contract, and the section is saying "Whatever the law says, and whatever the contract says, the vendor's right to rescind for breach is governed by the following conditions." And "the following conditions" are really not only the conditions set out in sub-s. (1) but those set out in sub-ss. (2), (3) and (4) also. (at p107)

8. The result of the above construction is that, if s. 13 applies to the contract in the present case, the vendor was not entitled to rescind except upon giving the prescribed notice and upon noncompliance by the purchaser with that notice. No such notice was given. It follows that the contract has never been effectively rescinded, but is still subsisting. (at p108)

9. We think that the conditions on which s. 13 is itself expressed to operate exist in this case. The purchaser should, we think on the assumption that s. 13 applies to the contract at all be held to have "paid off an amount from the consideration" in the shape of the deposit, and to have "failed to continue to comply with the terms of the contract" within the meaning of the section. It remains, however, to consider whether the contract in this case is one to which s. 13 applies at all. It applies, in our opinion, only to "contracts of sale of land" as defined in the Act. The term "contract of sale of land" is defined by s. 3 as meaning: "An agreement for the sale and purchase of land where the terms of the sale provide that the payment by the purchaser for the land shall be extended over a period of time: the term also includes any such sale of land where the instrument of sale is not a registrable instrument under 'The Real Property Acts, 1861 to 1887'," This muddled and dubious "definition" is of a piece with the rest of the Act. Both branches of it raise difficulties. With regard to the first branch, the words "extended over a period of time" suggest that the draftsman had in mind a contract under which a balance of purchase money over and above a "deposit" is payable by instalments, as distinct from a contract under which the balance is payable in full after a period regarded as reasonable for investigation of title, requisitions, &c. The language used is perhaps not incapable of including the latter class of case as well as the former. But, if it does include the latter class of case, it includes, practically speaking, all contracts for the sale of land, so that no "definition" was necessary. Is it possible, on the other hand, to give to the words "extended over a period of time" any definite meaning which will exclude the latter class of case? The second branch of the "definition" is even more difficult: it is indeed practically unintelligible. If the word "such" merely refers back to "any agreement for the sale and purchase of land", then the second branch of the definition merely means "and all other contracts for the sale of land", for no contract is registrable under the Torrens system. If, on the other hand, it refers back to some limited (though perhaps extremely wide) class of contracts mentioned in the first branch, then it adds nothing whatever to the definition. (at p108)

10. Hanger J., very naturally, was content to accept the view expressed by Macrossan C.J. and Mansfield S.P.J. (Matthews J. expressing no opinion on the question) in Morris v. Forrester-Jones (1950) QSR 252, at pp 261-262, 263 . Dealing with a contract which was, as Hanger J. thought. not distinguishable from the contract in the present case, their Honours were of opinion that it fell outside the first branch, but within the second branch, of the definition in s. 3. We agree that such a contract as the present contract falls outside the first branch of the definition, but we are, with respect, unable to agree that it falls within the second branch. (at p109)

11. The requirement of the definition that "the payment by the purchaser for the land" shall be "extended over a period of time" seems inappropriate to the case where the only reason for postponing payment in full is to allow for investigation of title or for the obtaining of the consent of some authority to the contract. Both the word "extend" and the words "over a period" strongly suggest that the cases envisaged are cases where payment of a balance is to be made in more than one amount, and where the postponement of payment is made for the accommodation of the purchaser. The only thing that is clear about the whole Act is that it is intended for the protection of a purchaser, and we think that the wording of the definition makes it at least fairly clear that it is in cases of that kind that the purchaser is to be protected. In our opinion, what the definition contemplates is the case where the purchaser is required to make a payment or payments (apart from a "deposit") without receiving a conveyance or transfer in exchange therefor. In effect this means that we regard payment of the purchase price as "extended over a period of time" if that price is made payable in two or more instalments. We think that this view is to some extent supported by the reference to "the instalment or instalments" in s. 13 (1950) 82 CLR 282 . The word "instalment" is a non-technical term, which even the draftsman of this Act may be expected to have understood. It seems to be contemplated that at least one "instalment" will be payable, and the word is obviously inappropriate to a case where the whole of a balance over and above deposit is payable in one sum. (at p109)

12. The first branch of the definition, construed as we would construe it, does not cover the contract in the present case. Nor do we think that that contract comes within the second branch of the definition. It is impossible, in our opinion, to regard the word "such" as referring to anything but the limited class of sales described in the first branch of the definition. In H. Jones & Co. Pty. Ltd. v. Kingborough Corporation [1950] HCA 11; (1950) 82 CLR 282 (to which Hanger J. refers in his judgment) very strong reasons existed for attributing to the word "such", in one of the statutes there considered, a meaning which was not its natural meaning in the context. No such reasons exist here. On the contrary, considerations of the scope and purpose of the statute are opposed to attributing the wider reference to the word "such". We have said that the second branch of the definition appears to us to be almost unintelligible. It may be that the draftsman had in mind instruments which were not contractual in form but, while purporting actually to convey land, were not immediately registrable. It is unnecessary, however, to express any concluded opinion about this. (at p110)

13. An argument against the view which we have taken of the first branch of the definition may be found in s. 5 of the Act. Section 4 provides that, save as thereinafter provided, "every owner who sells to any person any land on terms of sale so that the payment thereof is spread over a period of time" shall provide security in manner specified - presumably for the due performance of the contract on his part. The language of this section seems to cover clearly enough all cases which would fall within the first branch of the definition of "contract of sale of land" in s. 3. Section 5, however, then provides that "nothing in s. 4 shall be construed to extend to" a considerable number of specified cases. One of those cases is "(d) a sale of land where the balance of purchase money is payable upon the production of documents required to complete the transfer of the land under the Real Property Acts to the purchaser". The "balance of purchase money" referred to may be taken to mean the balance payable over and above a deposit, and par. (d) thus covers such a case as the present. And it may be said that, when we find a particular class of contract expressly excluded from the Act for limited purposes, the proper conclusion is that it was intended to include that class of contract in the definition for the general purposes of the Act. In the case of a reasonably well drawn Act such an argument might carry a good deal of weight. But, in such an Act as this, inferences of intention based on apparently logical grounds cannot be drawn with any confidence. And an examination of s. 5 shows that the suggested inference cannot really be drawn from par. (d) of that section. For it seems clear that the case mentioned in par. (e), and probably those mentioned in pars. (f) and (g) also, would be outside s. 4 even if it had not been expressly so provided. It cannot, therefore, in any case, safely be inferred that the case mentioned in par. (d) would have been included if it had not been expressly excluded. (at p110)

14. Although we have not been able to accept the view of the learned judge either on the effect of the definition in s. 3 or on the effect of s. 13, our opinion is that s. 13 does not apply to the contract in this case, and it follows that that contract was effectively rescinded and the plaintiff's action rightly dismissed by Hanger J. (at p111)

15. One point must be mentioned in conclusion. We have proceeded throughout on the footing that the letter of 25th May was not a notice complying with the requirements of s. 13 (1950) QSR 252 . We think that it was not such a notice. It was not a "notice in the prescribed form", nor do we think that it was a notice that the vendor intended to rescind the contract. It purported to be immediately effective to bring the contract to an end, and it is not, in our opinion, the kind of notice contemplated by s. 13 at all. So far as the decision in Morris v. Forrester-Jones (1950) QSR 252 is inconsistent with this view, we think that that case was wrongly decided. (at p111)

16. The appeal should be dismissed. (at p111)

ORDER

Appeal dismissed with costs including the costs of the application to Matthews J. by summons dated 23rd September 1954.