Firmstone & Anor v Estate Property Holdings Pty Ltd & Anor [2011] HCATrans 216 (12 August 2011)

Last Updated: 13 December 2011

[2011] HCATrans 216

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S130 of 2011

B e t w e e n -

MERVYN FIRMSTONE

First Applicant

SYBIL FIRMSTONE

Applicant

and

ESTATE PROPERTY HOLDINGS PTY LTD

First Respondent

LUMLEY GENERAL INSURANCE LTD

Second Respondent

Application for special leave to appeal

CRENNAN J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 AUGUST 2011, AT 1.48 PM

Copyright in the High Court of Australia

MR D.L. WARREN: May it please the Court, I appear with my learned friend, MR M. LAZARUS, for the applicants. (instructed by Herat Solicitors)

MR M.R. ELLIOT: May it please the Court, I appear for the first respondent. (instructed by Horton Rhodes)

MR M.H.W. ADIE: May it please the Court, I appear for the second respondent. (instructed by TurksLegal)

KIEFEL J: Thank you. Yes, Mr Warren.

MR WARREN: Your Honour, this matter arises out of a conveyancing transaction and the matter of principle which we say should attract the favourable determination of this application to this Court is the question that if time in a contract has been made of the essence either by way of a notice to complete or in the contract itself and one party intimates that he is unable to settle at the appointed time, must that intimation amount to a repudiation in order to relieve the other party from being in a position to settle.

KIEFEL J: Your client was not able to complete originally, is that the position?

MR WARREN: My client was not able to complete, but the question that the Court of Appeal did not focus on was whether the failure to complete or the intimation – to use the word as found in Peter Turnbull – the intimation did not constitute a repudiation. There was no finding of repudiation. The Court of Appeal and the trial judge both seemed to have adopted a lesser test, that if there is an intimation, if that intimation does not amount to repudiation, does that still relieve, in this case, the vendor from being in a position to settle. It is clear that if there was an anticipatory breach, the party, the innocent party, the vendor, could have terminated, and that was where the question of intimation was discussed by Chief Justice Dixon in Peter Turnbull.

There, it was a case where oats were to be delivered to a ship nominated by the plaintiff, but the other party to the contract was not in a position to deliver them to the place nominated and said they could only deliver them not to Sydney but to Melbourne. His Honour the Chief Justice dealt with it at page 246 of the judgment, which is found at [1954] HCA 25; 90 CLR 235, but he did say that the plaintiff may have elected to treat the matter as one of anticipatory breach of contract but did not do so, so the contract remained on foot.

CRENNAN J: But here the purchaser was unable to complete.

MR WARREN: Here the purchaser did not say he was unable to complete. The facts were that the purchaser initially, in response to a notice to complete, asked for a further period of time. That time was granted to the 27 June and on 27 June he asked for a further extension of time which request was refused. At no stage were the words uttered “I cannot complete or I am unable to complete”.

KIEFEL J: The finding was one of implied intimation that it would be useless to tender performance, was it not?

MR WARREN: But one comes back, was that implied intimation? Was that a repudiatory act? There may have been an implied intimation, accepting that, but was that implied intimation sufficient to say - - -

KIEFEL J: Is it necessary to characterise it in one way or another if it was sufficient that the vendor did not have ready itself?

MR WARREN: That is the point that we say should be determined by this Court.

KIEFEL J: That is a question of fact, is it not?

MR WARREN: No. It is, as a matter of law, where is the test? Is the test one of repudiation or is there an implied intimation which falls short of repudiation sufficient to enable the other party to be absolved from having to get ready to settle? Now, in the two cases before this Court, Peter Turnbull, that was a case where there was a repudiation because, as his Honour the Chief Justice then said, the contract could have been terminated for anticipatory breach, therefore, the action was repudiatory. In the other case - - -

CRENNAN J: But all these cases turn on their facts and if you go to application book 66, paragraph 135 to 138, his Honour Justice Young deals with the situation on these particular facts and he makes reference to:

a conveyancing custom that purchasers’ solicitors make contact with the vendor’s solicitors concerning settlement.

Then his Honour refers to the primary judge having an appreciation of that aspect of the facts and then you get the conclusion on page 67, paragraph 138. Now, can you identify error there in terms of what you are putting to us?

MR WARREN: Yes. Can I just deal with the second case of Foran v Wight. That was case where Justice Needham, the trial judge, found that there had been repudiation and the case went to the High Court on the basis that there was a repudiation. Now, in this case, there were the three matters that went before the court and in the Firmstone matter, as your Honour correctly referred to – that was at paragraphs 129 to 138 – his Honour Justice Young dealt with Amaya at 140 to 143 and subsequently with the Sakar and Islam matter at 144 onwards. What his Honour said was at 131:

The primary judge held at [64] that the intimation of futility was most clear in the case of Mr Firmstone’s contract. His solicitor told the vendor’s solicitors that they would be contacted to arrange a settlement date as soon as the purchaser’s solicitor was in a position to do that. However, no such contact to arrange a settlement date was made. Instead the solicitor asked for more time.

But contrary to that, his Honour said, at application book 59, paragraph 94:

There may well be a duty to seek out the vendor and complete, but there is no legal obligation to keep the vendor informed as to whether the purchaser intends to attend for settlement at the time and place fixed by the vendor in its notice to complete.

Or, we would say, when time has been made of the essence. So, in that sense, the purchaser did not have to notify the vendor when time is of the essence of what it was doing and that is where we say, if it did notify and said we cannot complete, one has the repudiation, one has anticipatory breach.

CRENNAN J: But we are in the area of intimation.

MR WARREN: But does intimation have to amount to repudiation because the Court of Appeal - - -

CRENNAN J: Well, it is for you, is it not, to persuade us that repudiation is always necessary in the context of an intimation because there would be a competing argument that repudiation may only be necessary in limited circumstances, such as an innocent party terminating prior to completion. I feel uncertain, I must say, as to how you draw out of Foran v Wight this requirement that in order to have an intimation sufficient for the benefit of the vendor, it must amount to a repudiation.

MR WARREN: There has been no case in the High Court, or indeed that I can find, where it is said that an intimation can be less than a repudiation. Generally, the two come hand in hand. An intimation that one cannot settle to discharge the other person from being in a position to settle, to make himself ready to settle, if that is not a repudiation, then there is a lesser test that conveyancers now have to face, that one can intimate that there is a problem with settlement but that intimation does not necessarily amount to a repudiation and if that is the test, then the asking for further time when a notice to complete has been issued may constitute an intimation that a party cannot settle, but it is certainly not, without more, a repudiation and this Court has never determined that issue. Foran v Wight went off on a different concept, but in that case the Court still found and accepted the trial judge’s finding that there was a repudiation.

KIEFEL J: But you do not need a repudiation in the case of reliance based upon what amounts to a representation. You are in the area of estoppel or waiver.

MR WARREN: Yes, and that is what Justice Deane was talking about in Foran v Wight but - - -

KIEFEL J: What you need is, for what amounts to in an implied representation, to be clear enough for a person to be able to rely upon it, the clarity of it. That is not the same as a repudiation in the legal sense.

MR WARREN: Well, an implied representation – yes, mere silence can, in some instances, constitute a representation and that was drawn out very clearly in the other two matters before the Court of Appeal of Amaya, Sakar, and Islam.

KIEFEL J: Yes.

MR WARREN: There Justice Young dealt with the Amaya Case at page 67 of the application book at paragraph 142, and there he said that the silence:

impliedly intimated that the purchasers would not be attending at any settlement.

Now, is silence in that sense - - -

KIEFEL J: Silence is always silence with the circumstances of the particular case, so it is silence taken in the context of what was happening and what was to be expected of people according to, inter alia, conveyancing practices.

MR WARREN: But one then has the other aspect, with respect, that if somebody issues a notice to complete, that person issuing it has waived requirements of, in this case, the purchaser to prepare a transfer. That was Fekala v Castle Constructions referred to by the trial judge in the Court of Appeal. So if you issue a notice to complete, you bring it upon yourself to get yourself ready for settlement and the importance, as far as a person being in default, in respect of a notice to complete is that if they do not complete when time has been made of the essence, they have lost the right to seek specific performance and, therefore, the consequences of the intimation or losing that right, we say, they are all bound up and there needs to be, certainly as far as the practice of conveyances is concerned – because this matter has been the subject of some academic comment.

I handed to your Honours a copy of Peter Butt’s real property articles in the Australian Law Journal where he refers to this case and finishes off his comment by saying “Whether these views are correct awaits another day.” Clearly we have not heard the last of the issues. So, is there an estoppel moving on the facts, and we would say, in the circumstances, there is not sufficient estoppel but, nevertheless, if there is to be an intimation, one still uses the words of repudiation because otherwise one has a situation where, if a party repudiates, then it is clear that the other party can act on that repudiation and terminate, or if it does not keep the contract on foot. An intimation is a lesser test and, in those instances, it can relieve the vendor from being in a position of having to settle.

The second point that was raised was the question of reliance and there there were two aspects of reliance and that was the conveyancing custom that purchasers’ solicitors made contact with the vendor’s solicitors. It was not put as high as a conveyancing custom by the trial judge. He referred to usual conveyancing procedures but not a custom. In any event, there was no evidence by the solicitor as to just what that solicitor said or thought or when he was ceasing to get ready for settlement. The other aspect of - - -

CRENNAN J: You are straying away now from matters of principle, surely.

MR WARREN: It puts a flavour on the entire case. I can appreciate, your Honour, that that becomes more factual. The principal argument is the first one that I have espoused and that is a question of repudiation. The other point is the requirement – what is the construction of regulation 155 of the Environmental Planning and Assessment Regulations? Regulation 155(2) says that the occupation certificate “must be accompanied by a fire safety certificate”.

His Honour Justice Young dealt with that at page 53 of the application book and he posed the question, which we say was the correct question, that under the regulations that the occupation certificate must be “within the meaning of the Environmental Planning and Assessment Act”, and 155(2) says that it must accompany it and the word “must” should be given its normal meaning. So even though it may be a valid certificate issued under 155, it is clear that if it is not accompanied by the fire safety certificate, it is not within the meaning of the regulation.

CRENNAN J: If you look at application book 99, there is a response to this argument in paragraph 25 made by the first respondent and that is to the effect that the contract had been varied “so as to set a completion date which was not dependent upon service of an occupation certificate.”

MR WARREN: That was an issue before the trial judge and it was not dealt with by the Court of Appeal because the court came to the view that the certificate was a valid certificate within the meaning of the Act. The issue before the trial judge was dealt with at – his Honour Mr Justice White did indicate that because of the change from a notice to complete to time being made of the essence of the contract, that is a variation of the contract, that there was no requirement to then serve a further certificate. That was an issue where his Honour did not – sorry your Honour, I do apologise, it is here and I just cannot find it. But his Honour the trial judge, did refer to it.

The Court of Appeal dealt with that at application book 51, paragraph 52, and that was before the trial judge. That is the conclusion he came to but it was not addressed by the Court of Appeal, as I said, because they made a finding the certificate was.....served. But, in my submission, under the term of the contract, even if a contract is varied and the date is made of the essence, that does not vary the further obligations of the parties if an existing obligation remains outstanding. That must still be complied with and, therefore, one must still carry out the obligations even if the parties have made time of the essence.

CRENNAN J: Yes, thank you.

This application essentially involves the application of well-settled principles to findings of fact and no question of general public importance arises. The merits of the application are not advanced further by grounds numbered 6 and 7 in the draft notice of appeal. Accordingly, the application does not warrant a grant of special leave to appeal

The application for special leave to appeal is refused with costs.

AT 2.12 PM THE MATTER WAS CONCLUDED