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High Court of Australia |
MEHMET v. BENSON [1965] HCA 18; (1965) 113 CLR 295
Vendor and Purchaser
High Court of Australia
Barwick C.J.(1), McTiernan(2) and Windeyer(3) JJ.
CATCHWORDS
Vendor and Purchaser - Contract for sale of land - Time of the essence - Payment of price by instalment on stipulated dates - Interest payable on outstanding balance - Failure to pay instalment or interest on stipulated date or thereafter - Acceptance by vendor of part of purchase price after failure - Negotiations and discussions between parties - Notice by vendor purporting to rescind - Time in respect of payment of this instalment no longer of essence by date of notice - Notice ineffective - Effect of available act of bankruptcy by purchaser - Acquiescence in defective notice to complete - Non-payment of later instalments - Whether time of essence in respect of later instalments - Suit for specific performance by purchaser - Delay in commencing - Laches - Purchaser's readiness and willingness to perform - Relevant time for readiness and willingness - Form of pleading.
HEARING
Sydney, 1964, December 7, 8;DECISION
1965, April 15.2. By the contract which was dated 20th December 1956, the plaintiff agreed to pay the price, some 16,000 pounds, by instalments, of which the first, a sum of 3,000 pounds, was to be paid on signature of the contract and by way of a deposit. A further instalment of 3,000 pounds was payable about two months later and thereafter the balance of the price was payable by six yearly instalments of 1,500 pounds each payable on a stated day of the year, with a final payment of 1,000 pounds on a stated day in 1964. Interest upon the unpaid balance of purchase money was payable quarterly at 7%, reducible to 6% for prompt payment. The plaintiff was said by the contract to attorn tenant to the defendant from week to week of the property sold until payment of the principal and interest as agreed, but the amount of the rental was not stipulated though it was said to be payable weekly and to be accepted in satisfaction of interest. (at p300)
3. At the time of the making of the contract the plaintiff was in fact occupying part of the premises erected upon the land as a tenant to the defendant. It was stipulated by the agreement that the plaintiff should occupy a further portion of the premises as such a tenant at an agreed rental and otherwise upon like terms to those applying to the existing occupation. (at p300)
4. By the express terms of the contract the plaintiff became entitled on the signature of the contract to the rents and profits of the undivided moiety and obliged from that date to bear all outgoings in relation thereto: but, until fifty per cent of the price had been paid, the defendant was to remain in sole control of the management of the premises. (at p300)
5. Clause 26 of the contract announced that "Time shall be of the essence of the contract". By cl. 12 of the contract the defendant was given the right, amongst other things, to rescind the contract if the plaintiff should fail to comply with the conditions of the contract. By cl. 30 the defendant was given the right to require the immediate payment of the full balance of the price if any of the instalments of the price or any interest should be unpaid for seven days after the due date for payment thereof: and, apparently as part of the grant of that right, it was said "and any extensions of time given to the purchaser by the vendor for the payment of any overdue instalment or instalments shall not prejudice the rights of the vendor under this agreement". (at p300)
6. The parties contemplated that they would, but in fact did not, enter into partnership, presumably, as his Honour the learned trial judge thought, for the management and development of the premises erected on the land: but nothing now turns on this fact. (at p300)
7. The plaintiff paid the first two instalments of 3,000 pounds each but only part of the first instalment of 1,500 pounds by its due date in 1958. However, he paid part of the balance of it in 1958 and a sum which amounted to the final balance of it in April 1959. He paid interest as agreed up till August 1958. He claimed that he had, but failed to convince the trial judge that he had, paid further moneys on account of the purchase price and interest. (at p301)
8. An instalment of 1,500 pounds fell due on 28th February 1959. It was not paid: nor was any further interest paid by the plaintiff. Thereafter during 1959, however, not only did the defendant accept 500 pounds as purchase money, but in addition to recurrent requests made of the plaintiff on behalf of the defendant for further payments on account of principal and interest, discussion took place between the parties as to the amount payable on full settlement of the purchase price under the contract, an event which for a period after the middle of 1959 they both considered might possibly take place towards the end of that year. (at p301)
9. However, the plaintiff was not in a financial position at that time either to pay the full balance of the price, or to make up by a cash payment the then arrears of instalments of the price and of interest. In November 1959 he made a proposal for bringing himself up to date in these respects by a payment of cash supplemented by an order on a purchaser to whom he had sold some land, directing that purchaser to pay a further amount to the defendant out of the price to fall due for such land. But the defendant, by a notice dated 9th November 1959, which was before his receipt of the plaintiff's proposal, purported to rescind the contract for the plaintiff's failure to pay the instalment which fell due in the preceding February, and to pay the interest which had accrued due since August of the preceding year. By the same notice he purported to forfeit all moneys which had been paid by the plaintiff on account of the price. (at p301)
10. Between the signature of the contract and the date of this notice, rentals of the premises, including those paid by the plaintiff as a tenant occupying part thereof, were paid into a joint account in the names of the parties. Out of it the outgoings of the premises were met and the net proceeds were distributed from time to time to the parties equally. Some of the moneys paid by the plaintiff in performance of the contract had been drawn by him from this source as it was intended by the parties should be the case. But after the giving of the notice of rescission the defendant collected all the rentals paid by tenants of the premises and retained them on his own account; and the plaintiff ceased to pay rent for the portion occupied by him, and neither made nor offered to make any further payments under the contract of sale. (at p302)
11. As at the date of the notice of rescission given by the defendant and within six months of it, the plaintiff had committed an act of bankruptcy and a petition for the sequestration of his estate was pending. Subsequently, but not till September 1960, this petition was dismissed. (at p302)
12. A caveat was lodged by the plaintiff with the Registrar-General at an early stage after the signature of the contract to protect his interest in the land as purchaser of the undivided moiety. In the middle of 1960 an unconditional order was made by the Supreme Court in Equity for the removal of this caveat. (at p302)
13. Later in 1960 the defendant took proceedings to eject the plaintiff from the premises, proceedings which were resisted by the plaintiff and which stretched through 1961. In November of that year the present suit for specific performance was launched and came for hearing in October 1963, with the result I have mentioned. (at p302)
14. The basis on which his Honour dismissed the suit was that the plaintiff had not been at all times ready and willing to perform the contract and that he was guilty of laches and delay to a disentitling degree. He gave relief against the forfeiture of the instalments of purchase money, treating only 1,000 pounds of the initial payment of 3,000 pounds as a deposit in earnest of performance, but set off against the amount of the instalments repayable by the defendant under his order, the amount of the unpaid rental for those portions of the premises which the plaintiff had occupied through the period of the contract and up to the date of decree. He also ordered the necessary accounting enquiries to replace the parties in their respective positions as part of the relief against forfeiture. (at p302)
15. His Honour found himself able to determine this suit without deciding whether or not the contract had been rescinded by the defendant's notice of rescission given in November 1959. He assumed for the purpose of his consideration of the rights of the parties, that that notice was ineffective. With respect, I am unable to follow this course. I think that the resolution of that question is indispensable to the determination of the suit. (at p302)
16. As I have said, cl. 26 of the contract states that time shall be of the essence. There was nothing in the nature of the property sold, or in the circumstances of the sale, which would suggest that time for the payment of the instalments of the price was of the essence in the sense that to compel the defendant to convey notwithstanding delay in the payment of instalments, for which period interest at the agreed rate should be paid, would be inequitable. But, much as one suspects that the inclusion of cl. 26 in a contract of this kind might have been thought of as a mere formality and that its consequences were little understood by the parties, its presence is compelling and leaves a court of equity with no option but to give effect to it. I do not think that by any process of construction it could be said not to apply to the payment of the instalments of purchase money. Therefore the failure to pay an instalment precisely on the due date the defendant a right to terminate the contract unilaterally. But for this right to be available to the defendant the understanding of the parties as to the essential nature of the time for payment of the instalments must be maintained. If the party entitled to insist on the essential quality of the stipulated time leads the other party to understand that its essentiality is not being maintained, time for payment will cease to be essential without some further circumstance, such as a proper notice in that behalf, apt to restore its essential quality. The loss of the essential quality of the time for payment may thus happen by the party entitled to rescind doing some act inconsistent with his insistence on the essential quality of time. (at p303)
17. The notice of rescission was given under cl. 12 of the contract, that is to say, for failure to comply with the conditions of the contract. It was evidently assumed that time for payment of the 1959 instalment of the price and of the unpaid interest still remained of the essence: but in my opinion it did not. The defendant had accepted money on account of the price after the failure to pay the 1959 instalment and the arrears of interest. It is nothing to the point that the amount of money accepted on account of the price was either intended to be or could have been appropriated by the defendant to the unpaid balance of the 1958 instalment of the price. To accept any money on account of the purchase price was inconsistent with the retention of a right to rescind for non-payment of an instalment of the price on its due date. There were also the other acts on the part of the defendant in 1959 to which I have referred and which were themselves inconsistent with the retention of a right to rescind for failure to observe the precise time for payment of the instalment of the price and of interest on the unpaid balance thereof. (at p303)
18. It was submitted by the defendant that his acceptance of the balance of the 1958 instalment in April 1959 was no more than an extension of time to pay that instalment; and that the final words of cl. 30 of the contract prevented that extension from forfeiting the defendant's right to rescind for the non-payment of the 1959 instalment. But, even if the words quoted from cl. 30 are of general application (which to my mind is far from certain), the failure to insist on due payment of the 1958 instalment and the acceptance of the balance of it out of time did not amount in my opinion to an extension of time within the meaning of the words of the clause. (at p304)
19. Though ineffective for the express reason for which it was given, the notice of rescission may be operative because of some other then existing fundamental breach. See British and Benningtons Ltd. v. North Western Cachar Tea Co. Ltd. (1923) AC 48, at pp 71, 72 ; Shepherd v. Felt and Textiles of Australia Ltd. [1931] HCA 21; (1931) 45 CLR 359 . The defendant now submits that the existence at the date of the notice of an available act of bankruptcy justified the giving of the notice so that it effectively rescinded the contract. (at p304)
20. If, of course, time had remained of the essence of the contract, the defendant might have been in a position to refuse the tender of the instalment by the plaintiff whom he knew to have committed an available act of bankruptcy and thereafter terminate the contract for failure to pay the instalment by the contract date. But as time for payment of the 1959 instalment, in my opinion, was no longer of the essence of the contract, the plaintiff's inability during the continuance of the act of bankruptcy to make an effective payment rises no higher, in my opinion, than his failure to do so; for which, of course, unilateral recission was not open. See Jennings' Trustee v. King (1952) 1 Ch 899 , a case of an act of bankruptcy before the date set by the contract for completion. Consequently, in my opinion, the mere existence of an available act of bankruptcy within the defendant's knowledge did not entitle the defendant to rescind out of hand. Other steps were open to the defendant, which being taken, might have placed him in such a position at a later date. But no other steps were taken. (at p304)
21. In my opinion, therefore, the notice of rescission was inoperative and the contract remained on foot thereafter. The vendor had not called up the balance of the purchase money and the purchaser remained only under an obligation to pay the arrears of the instalments of the price and the arrears of interest and to pay the further instalments as they fell due. (at p304)
22. Thus, whilst he was entitled to do so (see Turner v. Bladin [1951] HCA 13; (1951) 82 CLR 463 ) the plaintiff was not necessarily called upon to institute any proceedings straightway upon receipt of the vendor's invalid notice of rescission. In my opinion he could have tendered his payments from time to time according to his contract and awaited the contractual date for completion. Fitzgerald v. Masters [1956] HCA 53; (1956) 95 CLR 420 and Lamshed v. Lamshed [1963] HCA 60; (1963) 109 CLR 440 are not, in my opinion, to the contrary. (at p305)
23. But the plaintiff was not entitled to do nothing; I agree with the learned trial judge that the plaintiff was not entitled simply to sit back, taking no action and making no payments. These considerations are important when considering whether the plaintiff must be taken to have acquiesced in the notice of rescission or as abandoning any equitable right he might have had or whether he was ready and willing to perform, or whether the plaintiff was guilty of laches or delay in instituting his suit for specific performance. (at p305)
24. But, apart from any intention to acquiesce in the notice of rescission which might be attributed to him because of his inaction, it was of course possible for the plaintiff to have actually accepted the inoperative notice of rescission as a repudiation of the contract by the defendant. The contract would then have been discharged by the plaintiff's acceptance. However, there was no material in the case to support such an acceptance by the plaintiff: and there was no finding to that effect. On the contrary, the plaintiff appears to have maintained throughout his right to complete the purchase, albeit in his own time according to his circumstances. (at p305)
25. The next question is whether the time for payment of the instalments falling due in February 1960 and 1961 remained of the essence of the contract. A mere extension of time where a new date for performance is substituted for the contracted date does not result in time ceasing to be of the essence either for performance of the obligation in respect of which the extension is granted or in respect of the performance of other obligations: Barclay v. Messenger (1874) 30 LT 351, at p 354 ; Solomons v. Halloran (1906) 7 SR (NSW) 32, at p 47 ; Tropical Traders Ltd. v. Goonan [1964] HCA 20; (1964) 111 CLR 41, at pp 53-55 . But it is otherwise where one party by his conduct gives the other ground to believe that precise performance on time as contracted will not be insisted upon. The waiver which is constituted by such conduct may be simply as to the time for performance of one or more specific obligations or it may be as to the time for performance of all further obligations remaining to be performed at specified times. The extent of the waiver will be a question of fact in the circumstance of each case. In this case, in my opinion, the acts of and done on behalf of the defendant to which I have already referred, coupled with the nature of the contract and its subject matter, lead me to the conclusion that probably from some time in 1958 but certainly from the middle of 1959 neither party considered that time was of the essence of the contract in respect of the payment of instalments of price or of the payment of interest. It was probably only the knowledge of the commission of the act of bankruptcy and apprehension of the possible consequences for the defendant of a sequestration order being made against the plaintiff that stimulated the giving of the notice of rescission in November 1959. In my opinion, in default of some notice in that behalf, time was not of the essence of the contract as to the payment of instalments of the price in November 1959 or at any time subsequent thereto. Payment of the instalments of 1960 and 1961 on the stipulated dates was therefore not an essential term of the contract. (at p306)
26. In the period from November 1959, when the defendant gave his notice of rescission, until the date of the commencement of the suit, the defendant took no further step to bring the contract to an end. He relied on his notice of November 1959 and sought to take advantage of the consequences which he thought flowed from it. He had the caveat removed and took proceedings to eject the purchaser. The plaintiff's conduct in this period was such that the defendant became entitled to take action, which being taken might have resulted in the termination of the contract, although if any such action had been taken by the defendant other significant action might have been taken by the plaintiff. But the defendant preferred not to take any such action, holding the view, erroneously as I think, that he had terminated the contract. (at p306)
27. The contract in my opinion remained on foot at the date of suit, the plaintiff being in default in respect of three instalments of price, those for 1959, 1960 and 1961, and in respect of interest on the outstanding balance accruing since August 1958, perhaps less his proportion of the net income of the premises since November, 1959. But he was not in breach of an essential term so as to preclude the Court ordering specific performance. (at p306)
28. His Honour's reasons for refusing specific performance were, first, that the plaintiff was not ready and willing between November 1959 and November 1961 to pay the instalments of the price as they fell due and, second, that he was guilty of laches in not sooner commencing a suit for specific performance. (at p306)
29. To take the second of these matters first, in my opinion, with every respect to his Honour, the delay in this case was not, in its circumstances, of that order which is necessary to found a defence of laches. As I have said, the plaintiff was not under any necessity to commence proceedings upon receipt of the defendant's invalid notice. But if he was not paying or tendering payment of the instalments of the price, a time must arrive when if he was to claim the assistance of equity notwithstanding his default in payment of these instalments, he should act by commencing suit. I do not think that that time had arrived in November 1959: but it did arrive at some time later, perhaps during the following year. The period which elapsed from that time when on this view he ought to have taken action, till the commencement of the suit was, in my opinion, not so considerable as to warrant the refusal of relief by specific performance, particularly where no disadvantage to the defendant, incapable of remedy by the form of decree, flowed from the plaintiff's delay. Also the pendency of the sequestration proceedings cannot be left out of account. (at p307)
30. The remaining question is whether it should be held that the plaintiff was not ready and willing to perform his part of the contract. In deciding that the plaintiff was not ready and willing, the learned judge took the view that the time for payment of the 1960 and 1961 instalments remained of the essence of the contract. I have already indicated my respectful dissent from this view. Had his Honour thought that time in these respects had ceased to be essential, he might have taken a different course in the exercise of his discretion. (at p307)
31. 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 [1923] HCA 12; (1923) 31 CLR 524, at p 550 . (at p307)
32. 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. (at p308)
33. 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. For a substantial period the plaintiff was under the disability of an available act of bankruptcy, of which no doubt the defendant might have sought to profit but did not. The concession of the plaintiff in Jennings' Trustee v. King (1952) 1 Ch, at p 909 that so long as it is available, an act of bankruptcy must prevent a purchaser from succeeding in specific performance, because he cannot make an effective payment in return for the conveyance, is justified by the two cases to which Harman J. in that case refers. But neither of these cases, nor any others which I have been able to discover, would justify the conclusion that after the act of bankruptcy had ceased to be available, and in default of any effective action by the other party to bring the contract to an end meantime, a purchaser otherwise entitled to succeed must be denied specific performance because during the period the act of bankruptcy was available he was unable to complete. (at p308)
34. Further, the plaintiff during 1960 and 1961 was engaged in resisting efforts on the part of the defendant to dislodge him from his possession, efforts which, as I view the case, were unwarranted so far as they depended on the notice of rescission given in November 1959. He appears to have insisted on his right to perform the contract, though as to the instalments of price, tardily. But in his suit he offers to perform by paying the full balance of the price before the contracted time, cf. Berners v. Fleming (1925) 1 Ch 264 and Baird v. Magripilis [1925] HCA 49; (1925) 37 CLR 321, at p 330 . (at p308)
35. 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. However, having regard to the time which has elapsed during this litigation, the decree should be passed and entered with a minimum of delay. Liberty should therefore be reserved to the respondent to apply to the Supreme Court so soon as the decree for specific performance is passed and entered for an order fixing the time and place for completion of the agreement, the plaintiff being placed on terms to pass and enter the decree with the utmost despatch. (at p309)
36. As I am of opinion that the agreement had not been rescinded and that it ought now to be specifically performed, the question as to the terms on which relief against forfeiture should be granted which was debated before his Honour, and dealt with in his judgment, does not arise. In the ordinary course, therefore, it would be unnecessary for me to, and I would not, express any view as to the correctness of his Honour's decision in that respect. However, having regard to the course taken by the parties at the hearing of the suit and in the event that the agreement is hereafter rescinded for default by the purchaser in performance of the decree for specific performance and circumstances arise in which it is necessary to decide the question whether relief against forfeiture should be given and on what terms, I feel I should add that I agree with his Honour's view that unpaid rental due by the plaintiff ought to be deducted from any sum which otherwise would be payable to him under the terms on which relief against forfeiture is granted. (at p309)
37. In my opinion, this appeal should be allowed. (at p309)
38. The respondent's cross-appeal should be dismissed. In my opinion, his Honour was not in error in treating only so much of the initial payment of 3,000 pounds as representing ten per cent of the purchase price as a deposit in earnest of performance. (at p309)
McTIERNAN J. In my opinion this appeal should be allowed. I agree with the reasons of the Chief Justice. (at p309)
WINDEYER J. I shall state only the salient facts as I see them. At the end of September 1959, and apparently until November, both the appellant, whom I shall call the purchaser, and the respondent, the vendor, regarded the contract of 23rd December 1956 as being still on foot notwithstanding that instalments of purchase money were much in arrears. The purchaser had paid 7,500 pounds of the purchase money, nearly half the total price, and until about August 1958 he had also paid interest on the unpaid balance. Throughout 1959 he was in financial difficulties. By October and November bankruptcy proceedings against him were pending. He could not pay the amounts then falling due under the contract. On 9th November, the vendor, purporting to be relying upon the terms of the contract, gave notice to the purchaser that the contract was at an end and that the purchaser had forfeited to him, the vendor, all the moneys that he had paid. The ground relied upon in the notice was the purchaser's failure to pay the sum of 1,500 pounds, being the instalment of purchase money due on 28th February 1959, and interest amounting to 540 pounds due at 20th August 1959. But as I see the facts, the vendor had by his conduct waived a strict compliance with the provisions for times of payment. The witness Champion said that almost weekly throughout 1959 he asked the purchaser to pay what was owing - that always he replied that he was not then able to do so. These repeated requests for payment of amounts long overdue were, in the circumstances, inconsistent with the contractual stipulations as to time being still essential. This case is not like one in which there was an extension of time for payment of a particular instalment until some specified date. Nor is it like one where the purchaser could rely upon nothing more than the acceptance of some payments after their due dates as displacing an obligation to pay instalments on time. It is one in which the vendor by his conduct - by continued failure, however induced, to insist upon payment at the stipulated times and continued assertions of a readiness to accept payment out of time - must be deemed to have waived the condition that time was to be essential: cf. Tropical Traders Ltd. v. Goonan [1964] HCA 20; (1964) 111 CLR 41 ; and see Carr v. J. A. Berriman Pty. Ltd. [1953] HCA 31; (1953) 89 CLR 327 per Fullagar J. (1953) 89 CLR, at pp 348, 349 . The vendor had thus by his conduct precluded himself from abruptly rescinding. He could, of course, have given notice that he would rescind unless the overdue amounts were paid within some limited time and future instalments on their due dates. Had he done that, he would have put a period to leniency and limited the consequences of past latitude, and made time again essential. It seems from an affidavit made by the vendor's solicitor - not in these proceedings but in those for the removal of the purchaser's caveat - that in June 1959 the purchaser's solicitor was told that the vendor would withhold any action to enforce payment for six weeks, as the purchaser proposed to sell another property and from the proceeds to discharge the whole debt. Direct evidence of this conversation was not given in these proceedings. In any event it did not, I think, in the circumstances make time again of the essence of the contract. The six weeks elapsed and negotiations continued still on the basis that the contract was on foot; and nothing more was said to suggest that time was essential. I consider, therefore, that the notice of rescission and of forfeiture was not effective to put an end to the contract. (at p311)
2. What then is the position? The general rule - and I certainly would not wish to cast any doubt at all upon it - is that when a vendor purports to rescind, the purchaser, if he wishes to attack the validity of the rescission, should launch his attack promptly by seeking specific performance. The reason for this rule is that if one party to a contract gives notice that he does not intend to perform it and the other does not promptly take proceedings, "equity will consider him to have acquiesced in the abandonment of the contract, and will leave the parties to their remedies at law": Parkin v. Thorold [1852] EngR 535; (1852) 16 Beav 59, at p 73 [1852] EngR 535; (51 ER 698, at pp 703, 704) . It would be inequitable if he were to lie by, for the vendor would then be left indefinitely in the position of not knowing whether he could safely deal with the property on the assumption that the contract was at an end. In Sharp v. Milligan [1856] EngR 721; (1856) 22 Beav 606 (52 ER 1242) Romilly M.R. said, "I certainly have always acted on the principle of Heaphy v. Hill [1824] EngR 413; (1824) 2 Sim & St 29 (57 ER 255) and Southcomb v. The Bishop of Exeter [1847] EngR 796; (1847) 6 Hare 213 (67 ER 1145) , which determine that no person is at liberty to hold an agreement for a purchase hanging over another's head for a great length of time and then to bring it forward. . . . In those cases there was a contract entered into, which had not, for a long period, been acted on at all, and after a considerable lapse of time, one of the parties to the contract sought to obtain the benefit of it, and enforce it against the other, on which this Court said, you must come speedily for a specific performance, or not at all" (1856) 22 Beav, at p 612 (52 ER, at p 1244) : and see Huxham v. Llewellyn (1873) 21 WR 570, 766 ; Fitzgerald v. Masters [1956] HCA 53; (1956) 95 CLR 420, at pp 432-434 ; Lamshed v. Lamshed [1963] HCA 60; (1963) 109 CLR 440, at p 453 . But this rule, which depends upon the general doctrines of laches, does not mean that in all circumstances a purchaser must be denied a decree for specific performance if he does not seek it with alacrity after hearing that the vendor does not consider himself bound by his contract. For example, a purchaser's claim is not barred by a failure to commence a suit promptly if the purchaser is in actual possession of the property and is asserting a right as purchaser to retain possession and refusing to acquiesce in the vendor's purported rescission: see Mills v. Haywood (1877) 6 Ch D 196 . On the other hand, the mere assertion of a claim, unaccompanied by any steps to enforce it, will not keep alive an equity that would otherwise be barred by laches: Lehmann v. McArthur (1868) LR 3 Ch App 496 . (at p312)
3. In the present case the purchaser was at relevant times in occupation, and remained in occupation, of portion of the premises of which he was by his contract to become co-owner with the vendor. His possession was, however, as tenant not as purchaser, although as to part of the premises his tenancy was referrable to a clause in the contract. In August 1959 he had caused a caveat to be lodged to protect his interest as purchaser. The vendor took no action to have this caveat removed until July 1960. He then took out a summons under the Real Property Act and in August 1960 the Chief Judge in Equity ordered that the caveat be removed. Notwithstanding this, the appellant remained in actual occupation carrying on his business as a greengrocer upon the premises, and he continued to assert a right to be there. Then followed two years of litigation interspersed with negotiations until this suit was commenced in November 1961. The vendor sought to recover the premises pursuant to a notice to quit, but the purchaser, relying upon the Landlord and Tenant Act, refused to relinquish possession, yet did not pay rent. Proceedings in the magistrates' courts were carried by the purchaser on appeal to the Supreme Court, and an attempt was made to carry them further to this Court. In this state of affairs the vendor could scarcely have thought that, because the purchaser did not at once bring a suit for specific performance, he had acquiesced in the rescission of the contract or assented to the proposition that his rights under it were at an end. On the contrary, it must have been apparent that he was proving stubborn in his assertions and was strenuously disputing the vendor's claim to have rescinded the contract and forfeited the moneys he had been paid. Moreover, it is not clear on the evidence that throughout 1960 and 1961 there was on the vendor's part a consistent adherence to the view that the contract had been terminated in November 1959. The vendor's agent apparently continued to demand and accept rent for the premises as a whole, including the rear part of the ground floor which the purchaser held as weekly tenant under the contract. And he also, it seems, sought payment of outstanding instalments of purchase money. The evidence of the agent Champion on this point is not altogether consistent. At one point he said that after November 1959 he made no further demands for purchase money outstanding. But later he said that he had called regularly at the premises asking for arrears of interest and for instalments of the purchase price until about two years before the date when he gave evidence, namely 22nd October 1963. And he said more than once, and quite explicitly, that he called weekly "right through to November 1961 asking for principal and interest". He stopped calling, he said, only because he thought there was "no chance of getting anything". Efforts to collect instalments of the purchase price until November 1961, the time when this suit was instituted, do not accord with a view that the contract had in November 1959 been effectually brought to an end and payments made under it forfeited. Nor do they accord with the view that times for payment were being insisted upon as of the essence of the contract. In short when all the circumstances are considered, and they are most unusual, it seems to me that the defence of laches fails. (at p313)
4. His Honour, however, thought there was another ground in addition to the plaintiff's delay on which specific performance should be refused. That was that the plaintiff, the purchaser, had not proved the allegations in par. 5 of his statement of claim, which was in the following terms: "The plaintiff is and always has been ready and willing and hereby offers to carry out the said agreement on his part so far as the same remains to be performed by him". His Honour did not find that when the suit was commenced or at the date of the hearing the purchaser was in fact ready and willing to complete the purchase. But he did not find that he was not. What his Honour did find is that he was not ready and willing to meet his obligations under the contract in November 1959 and February 1960. He said, "he cannot now be allowed to say that that period of earlier unreadiness and unwillingness has become irrelevant. It seems to me that this situation points out the significance of the necessary allegation in a claim for specific performance, that the plaintiff not only is ready and willing, but has at all times been ready and willing to perform the contract". (at p313)
5. He said too, "I do not think that the plaintiff is entitled to succeed in his claim for specific performance. I base this conclusion primarily on the ground that he has not shown that he was, at the time of the commencement of this suit and at all times, ready and willing to perform the contract on his part. I do not think that there is any evidence before me that between November 1959 and November 1961, he was ready and willing to perform the contract. I think the evidence establishes that in November 1959, at a time when the notice of purported rescission was given, he was not ready and willing to pay the moneys that were then presently due under the contract". (at p313)
6. The finding that the plaintiff was not ready and willing to meet his obligations on the dates stipulated in the contract is supported by the evidence: and the plaintiff clearly failed to prove the allegation in the statement of claim in this sense. But, with respect to his Honour, I think that there should be some qualifications to the conclusion at which he arrived. He fully appreciated that the readiness and willingness that a plaintiff must show relates only to essential terms, and that a defendant cannot rely upon the unreadiness of the plaintiff to perform what he, the defendant, has waived. But he thought that, in this case, any waiver by the vendor of stipulations as to time went only to the non-payment of moneys, instalments and interest, that had become due and owing before November 1959; that it did not extend to later instalments. I appreciate this view of the facts. But, for reasons that I have given, I agree with the opposite view that the Chief Justice has expressed: see Hunter v. Daniel [1845] EngR 560; (1845) 4 Hare 420 (67 ER 712) . (at p314)
7. Paragraph 5 of the statement of claim seems to be the result of an undiscriminating copying from a precedent. It stands alongside other averments apparently inserted because they too appear in precedent books notwithstanding that in this case they seem to be far from the truth. One is that the plaintiff had at the date of the statement of claim paid the interest in accordance with the agreement; the other that he had since 1956 repeatedly requested the defendant to carry out the agreement, but that the defendant had refused to do so. Neither of these averments was made out; but that is not fatal to the appellant. Paragraph 5 stands in a somewhat different position. It is necessary that the plaintiff in an action for specific performance should allege in his pleading and prove at the hearing his readiness and willingness to perform the contract on his part: and readiness involves an ability to perform it: Ellis v. Rogers (1884) 29 Ch D 661, at p 667 ; McDonald v. McMullen (1908) 25 WN (NSW) 142 ; Alam v. Preston (1938) 38 SR (NSW) 475 ; Bando v. Goldberg (1944) 62 WN (NSW) 87 ; King v. Poggioli [1923] HCA 11; (1923) 32 CLR 222, at p 247 . At the date when the suit is commenced the plaintiff must then be in a position to say that he is ready and willing to do at the proper time in the future whatever in the events that have happened the contract requires that he do: see Fullers' Theatres Ltd. v. Musgrove [1923] HCA 12; (1923) 31 CLR 524, at p 549 . And he must show too that he has performed or been ready and willing to perform the terms of the contract on his part: see Fry on Specific Performance, 6th ed. (1921) p. 435. 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. An allegation in the terms of par. 5 of the statement of claim is not a novelty in equity pleading: see, for example, Van Heythuysen, Equity Draftsman, 2nd ed. by Hughes (1928), vol. 1, p. 15. No doubt it negatives any suggestion that the plaintiff had ever repudiated the contract. But, generally speaking, it is I think sufficient that the plaintiff in a purchaser's suit should allege that he is presently ready and willing and offers to pay the purchase money and that it is not strictly necessary in every case for him to go further: see e.g. Drewry, Forms of Claims and Defences in the Chancery Division (1876) p. 12. If some conditions had earlier been waived in the plaintiff's favour and therefore not complied with, it is inappropriate to allege that he was always ready and willing to perform them. It were better in such a case to allege that, save in so far as performance of any condition was waived or excused by the defendant, the plaintiff had performed, or been always ready and willing to perform, the contract on his part according to its terms. However that may be, I do not think that in this case the appellant should have been refused specific performance because he did not prove all that he alleged. The case is difficult and unusual. I would, however, allow the appeal and substitute for the decree of the Supreme Court a decree for specific performance. But, as I am not convinced that the appellant is now ready and willing to complete the contract, I think there should be a proviso to meet the situation if he should prove to be unready promptly to complete the contract by payment in full. To that end the respondent should be expressly enabled to apply to the Supreme Court to fix a date for completion. If the appellant is not then ready to complete, the Supreme Court could make a decree for rescission. In the view I take it is unnecessary to consider in detail the terms on which his Honour granted relief against forfeiture. But I see no reason for thinking that, specific performance having been refused, relief on those terms ought not to have been given, or that terms similar in general effect would be inappropriate if the appellant proves unready to complete. (at p315)
8. I would allow the appeal and dismiss the cross-appeal. (at p315)
ORDER
Appeal allowed with costs.Cross-appeal dismissed with costs.
Decree of the Supreme Court set aside and in lieu thereof Declare that the agreement between the appellant and the respondent - Exhibit 'A' in the suit - ought to be specifically performed and order accordingly.
Declare that up to the month of April 1959 the appellant had paid on account of purchase money the sum of 7,500 pounds and no more.
Direct an enquiry -
(a) as to the amount of rents and profits received by the
respondent from the land comprised in certificate of
title, volume 2241, folio 148, from the date of the said
agreement up to the date of completion (including
moneys paid into the joint account in the names of the
appellant and respondent with the National Bank of
Australasia Ltd., Wollongong Branch);
(b) as to the outgoings paid or payable in respect of the
said land from the date of the said agreement up to the
date of completion, including amounts paid out of the
said joint account;
(c) as to the amount of rent due and payable and unpaid
from the date of the agreement to the date of completion
by the appellant to the respondent in respect of his
occupation of part of the said land;
(d) as to the amount of interest payable and unpaid by the
appellant to the respondent up to the date of completion
on the unpaid balance of purchase money under the
said agreement.
Order -
(1) that one-half of the balance of the rents and profits
received by the respondent from the said land less the
outgoings
paid in respect thereof (and less any amount already
paid to the appellant out of the said joint account), as on
each quarter day for the payment of interest by the appellant
on the balance of purchase money under the said agreement,
be credited as on each such quarter day to the appellant
against such interest accruing due under the agreement,
and in the event that the amount of any such balance shall
exceed the interest and arrears of interest due on any such
quarter day, the amount of such excess shall be credited,
to the appellant as on that day as on account of the balance
of purchase money.
(2) that the appellant pay to the respondent on completion,
in addition to the balance of purchase money and interest
thereon, one-half of the rent found to be due by the appellant
to the respondent.
(3) that the appellant be on terms to pass and enter the
decree for specific performance with the utmost despatch
and that the respondent be at liberty to apply to the Supreme
Court so soon as the decree is passed and entered to fix a
date and place for the completion of the said agreement.
Liberty to apply to the Supreme Court for any further order or direction in
carrying out the decree for specific performance.
Each party to bear his own costs of the suit in the Supreme Court up to the date of decree.
All further costs to be reserved for the consideration of the Supreme Court.
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