~ . * JUDGMENT No. S54 B21 CATCHWORDS VENDOR AND PURCHASER - Specific performance of contract for sale of land - tame not of essence - failure of vendor to obtain registration of units by due date - validity of notice of rescission by vendor - waiver - unconscionable conduct. C.S.8S. INVESTMENTS PTY. LIMITED Appellant - and - LOPIRON PTY. LIMITED Respondent CORAM: FISHER, GALLOP AND DAVIES JJ. 19 OCTOBER 1987 CANBERRA IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION No. A.C.T. G3 of 1987 ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: C.S.S. INVESTMENTS PTY. LIMITED Appellant - and - LOPIRON PTY, LIMITED Respondent MINUTES OF ORDER JUDGES MAKING ORDER B FISHER, GALLOP & DAVIES JJ. WHERE MADE CANBERRA DATE OF ORDER 19 OCTOBER 1987 THE COURT ORDERS THAT: 1. The appeal be allowed for the purpose of deleting from the order under appeal the order that there be judgment for the plaintiff for damages for breach of contract to be assessed. 2. The issue as to damages be remitted to the trial judge. 3. The appeal otherwise be dismissed with costs to be paid by the appellant to the respondent. Note: Settlement and entry of orders 15 dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. A.C.T. G3 of 1987 ) ) ) ) DISTRICT REGISTRY ) ) ) GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: C.5.5. INVESTMENTS PTY. LIMITED Appellant - and - LOPIRON PTY. LIMITED Respondent REASONS FOR JUDGMENT CORAM: Fisher, Gallop and Davies JJ. 19 October 1987 Fisher J.: This 15 an appeal by C.S.S. Investments Pty. Limited ("C.S.5.") from a decision of the Supreme Court of the Australian Capital Territory given on 24 December 1986. This decision was given in proceedings commenced in that Court by the respondent to this appeal, Lopiron Pty. Limited ("Lopiron") seeking primarily specafic performance of an agreement for sale and purchase made on 26 September 1985 ("the agreement") wherein C.S.S5. was the vendor and Lopiron was' the purchaser. The trial judge in his judgment declared that upon 2. the true construction of the agreement and in the events that had happened C.S.S. was not entitled to rescind the agreement. He therefore ordered that it be specifically performed and gave certain consequential directions for completion of the agreement. Further he entered judgment for Lopiron for damages for breach of contract to be assessed. By its notice of appeal C.S.S. primarily contended that 1t was entitled to rescind under the express terms of the agreement. Lopiron filed a notice of contention pursuant to 0 52 r 22(3) of the Rules of this Court contending in the alternative that C.S.S. was too late in the circumstances in giving notice of rescission. However Lopiron did not address separate argument in support of this notice of contention. The trial judge dealt with the facts in detail and with great care and I propose only to reiterate those which I see as significant. It is fair to say that his findings of primary facts were challenged only toa limited extent, 1f at all. Rather counsel for the appellant mainly directed his challenge to the conclusions which the trial judge drew from those facts. The agreement which was the subject matter of the proceedings related to the sale by C.S.S. to Lopiron of the residue unexpired of the leases of certain units specified in a draft Units Plan attached to the agreement which were erected on Block 2 Section 65 at Weston in the Australian Capital Territory. The purchase price was §2,415,000.00. The dispute between the parties centred around two clauses in the agreement. Clause 17 provided, to the extent presently relevant Unregistered Units Plan: (1) This clause applies if, at the date of this agreement, the Units Plan has not been registered (2) If the Units Plan is not registered by the date set out in Schedule Item 12 either the Seller or the Buyer may by written notice served on the other within 14 days thereafter rescind this agreement and thereupon the provisions of clause 23 shail apply." Schedule Items 12 and 14 stated - "Item 12 Date for Registration of Units Plan 1f not already registered 3lst January 1986. Item 14 Date for completion. Within 14 days of notification to the Buyer of registration of the Units Plan." Clause 23 provided: 1" Rescission of Agreement: If this agreement 1s rescinded (as distanct from terminated) pursuant to any expressed right to rescind (as distinct from a right to terminate) conferred by this agreement the rescission shall be deemed to be a rescission from the beginning and: (1) the deposit and all other money paid by the Buyer hereunder shall be refunded to him, and (2) neither party shall be liable to pay the other any sum for damages, costs or expenses." The agreement comprised first three printed pages comprising 25 clauses, second a schedule headed "Agreement for Sale (Unit Title) - The Schedule" which was a printed form completed with information peculiar to this transaction, part in type and part hand-written, and finally a sheet headed "Special Condition" which again was partly typed and partiy hand-written. 4. The agreement did not generally provide that time was to be of the essence and the only express reference to such a provision was to be found in clause 21 thereof which clause enabled either party to give the other default notices requiring completion or rectification within a specified time. The agreement provided that upon the giving of such a notice time became of the essence. Otherwise, and in particular in relation to clause 17, time was not expressed to be of the essence. It was accepted by the parties both before the trial judge and on the appeal that C.S.S. as the vendor carried the obligation to obtain both approval and ultimately registration of the Units Plan. This 15 to my mind made abundantly clear by the terms of the Unit Titles Ordinance 1970 wherein "the lessee" is required to apply for approval, item 14 of the schedule to the agreement set out supra and the terms of Form 6 i1n the lst Schedule of the Real Property (Unit Titles) Ordinance 1970 requiring the "registered proprietor" to apply for registration. Before the trial judge most of the evidence and argument centred on the fact that this registration was not obtained by the time specified in the agreement, namely 31 January 1986. The fact that 1t was not obtained by this date was a direct result, 1t was said, of the delay in obtaining before registration the surrender of existing sub-leases by sub-lessees and execution and acceptance by them of new sub-leases. However what was not explained was why the parties chose this procedure which surrenders rather than that expressly provided for in the Real Property (Unit Titles) Ordinance. 1970, namely a consent by the 5. sub-lessees to the registration. In this regard I refer to 5.9 of the Ordinance and the form of consent in the schedule thereto. Crucial happenings with the dates thereof between the date of the agreement 26 September 1985 and the date of registration of the Units, namely 7 February 1986, can be summarized as follows. The agreement was, as abovementioned, dated 26 September 1985. On the same date Lopiron agreed to grant to Messrs Ivankovic and Segon, directors of C.S.S., a right of first refusal with respect to units 9, 13 and 14 should Lopiron desire to sell within 12 months of completion of the agreement. On 16 October 1985 the survey office advised the solicitors for C.S.S. that the Units Plan satisfied its requirements. At about this time and certainly no later than 23 October 1985 the solicitor for Lopiron, Mr. Macphillamy, became aware that there was a 5erious dispute between Mr. Segon, a director of C.S.S., and a Mr. Stefopoulos, the sub-lessee of unit 9. The trial judge said that Mr.Segon was "obsessed with the desire" to have the ownership of unit 9 50 that he might continue his dispute with Mr. Stefopoulos on the footing most favourable to him. Knowledge ef these circumstances may well have prompted Mr. Macphillamy to offer to obtain the surrender of 3 sub-leases, including that of Mr. Stefopoulos, and the execution of appropriate new sub-leases. On 18 December 1985 the Assistant Secretary, Business Leases in the Department of Territories, advised pursuant to s.18 of the Unit Titles Ordinance 1970 Mr. Wayne Barker, solicitor for C.S.S. who had the carriage of the 6. application for registration, that he was in a position to approve C.S.S.'s application for approval to sub-divide the subject land. Thereafter all that was required was the completion of the "documentation formalities" and the lodgement of these documents for registration. Also on 18 December 1985 Mr. Macphillamy wrote to the solicitors for two of the sub-lessees (he was the solicitor for the third), seeking surrenders of the existing sub-leases and the execution of fresh sub-leases. Certain negotiations which it is not necessary to relate followed between Mr. Macphillamy and the solicitors for the two sub-lessees. On 15 January 1986 Mr. Macphillamy requested Mr. Wayne Barker to lodge such documents as he had with the Registrar of Tatles, but Mr. Barker would not accede to this request as he was concerned that the lodgment fees would be forfeited if all the surrenders could not be obtained. On 17 January 1986 Mr. Barker went on leave returning on 27 January 1986. On 20 January a director of Lopiron, Mr. Packering, asked Mr. Segon to instruct his solicitor to lodge all available documents, pending receipt of the surrender executed by Mr. Stefopoulos. However the answer given was to the effect that the solicitor had decided to lodge all documents together. On 24 January Mr. Macphillamy forwarded 3 surrenders and two new sub-leases plus an "executed memorandum of sub-lease from our client to P.A. Stefopoulos". On the same date these surrenders were sent by courier to Mr. Segon at Maroochydore in Queensland but not received by him until 28 January 1986 because of an intervening long week-end. These 7. documents were received in Canberra on 29 January 1986 and Mr. Pickering again sought an assurance from Mr. Segon that an urgent registration would he requested. Likewise Mr. Macphillamy pressed Mr. Barker to seek the registration of the plan with the request that it be dealt with on an urgent basis. However the latter said he was not prepared to do so without instructions. The documents were duly lodged by Mr. Barker at 2.59 p.m. on 30 January 1986 without a request that they be dealt with on an urgent basis. On 7 February 1986 the Unit Plan was registered. On or about that day, and again on 11 February 1986 Mr. Segon requested that Mr. Pickering grant C.S.S. an extension of the period of 14 days referred to in the agreement as the period in which either party could exercise the right of rescission. He sought in each instance an extension of 14 days but both requests were rejected. On 13 February 1987 Mr. Segon advised Mr. Barker that c.S.S. desired to exercise its raght of rescission. At that date Mr. Barker had since 7 February 1986 taken certain further action in lodging the new sub-leases for stamping on 11 February. On 14 February 1986 a document exercising C.S.S8's apparent right of rescission was delivered to Lopiron. The document recited the relevant background facts and in particular that the Units Plan was not registered by 31 January 1986 and then said: "Now Take Notice In pursuance of clause 17(2) of the Agreement the Seller hereby gives notice that it rescinds the Agreement the Units Plan not having been registered by the date set out in Schedule Item 12 of the Agreement." The above is not a exhaustive statement of the facts but suffices to indicate the circumstances in which the trial judge posed for himself what he saw as the crucial question, namely whether C.S.S. had done all that it was reasonably and properly required to do to enable registration of the Units Plan to be effected by 31 January 1986. He held that, as a matter of law, there was an implied condition in the agreement that a party seeking to rescind it because the Units Plan had not been registered should have done all that was reasonable and proper on ats part towards effecting registration. He cited Butts v. O'Dwyer (1952) 87 C.L.R. 267 at p.283 as authority for this his starting point. His finding was that C.S.S's failure to request registration as a matter of urgency was a failure in the duty impliedly imposed on it by the agreement. The consequence of this was, he said, that C.S.S. could not properly take advantage of that failure to give notice of rescission. He was also of the opinion that the requests of Mr. Segon made after 31 January 1986 to Mr. Pickering for an extension of the time in which notice of rescission might be given constituted an unequivocal election to confirm the agreement. He found it unnecessary to decide upon the submission of counsel for Lopiron that the notice of rescission given on 14 February 1986 was ineffective because prior thereto on 7 February 1986 the Units Pian had been registered. 9. It is my opinion that, except for the problem concerning the award of damages, a matter to which neither counsel referred until it was taken up by the Court, the appeal must be dismissed. For the reasons set out hereunder this was in my opinion a case in which 1t was appropriate for an order of specific performance and that a court of equity would so order. The trial judge was asked to declare that C.S.S. was not entitled to rescind and he acceded to this request. Such a declaration however in my opinion was not an essential pre-condition to an order for specific performance. Even if the declaration had not been made and C.S.S. had been, as a matter of law, entatled to exercise its right to rescind, it would still have been open toa Court of Equity, in appropriate circumstances, to order that the agreement be specifically performed. Indeed, even if the agreement had been properly "terminated" by the rescission, such a court could have ordered C.S.S. as vendor to complete upon terms similar to those in the agreement. On the hearing of the appeal, counsel for C.S.S. contended that the finding of the trial judge that Mr. Barker had not acted reasonably to expedite the registration of the Units Plan was incorrect, being contrary to the evidence. He reinforced this submission by emphasizing that the onus of proof in this regard lay upon Lopiron. Furthermore he contended that the only reason for the plan being lodged late was the dilatory conduct of the solicitor for lLopiron. He said that this solicitor was responsible for all delays up to 29 January 1986 and the further delays on that and the succeeding day. The delay on the latter two days arose, he contended, out of the failure to 10. pass on expeditiously to Mr. Barker the fresh Stefopoulos sub-lease. Iam not prepared however to depart from the trial judge's findings on these questions of fact. They are abundantly supported by the evidence. The trial judge was justified in concluding that Mr. Barker failed to act reasonably to obtain registration of the plan. I am less certain whether this finding standing alone necessarily warrants a declaration that C.S.S. was in consequence not entitled to rescind the agreement, for such a declaration, being a discretionary remedy, does not in my view follow automatically from the finding of failure on Mr. Barker's part. However for the reasons hereafter my concern in this regard is of no material significance. Counsel for C.S.S. further contended that the contract conferred on his client the right in law to rescind if the plan was not registered by 31 January and that a Court of Equity would not intervene to deny the exercise of this right. In my opinion this is a case the circumstances of which make it very clear that equity would intervene and make an order for specific performance. Moreover such an order could properly be made irrespective of the propriety of the declaration and without necessarily placing blame upon Mr. Barker for the failure to obtain registration by the due date. It follows that it is my view that the emphasis in this matter should be placed on the claim for specific performance rather than on the question whether C.S.S. was entitled to rescind the agreement. ll. It is clear that Lopiron's essential claim was for completion of the purchase of the leases, to which end 1t sought the order for specific performance. It contended, correctly in my Opinion, that it came to the Court with clean hands, ready and willing to perform. The declaration which 1t sought was only incidental to the enforcement of the agreement for sale. The granting of a declaration 15 also a discretionary remedy and in this regard I refer to the joint judgment of the High Court in Slee and Another v. Warke (1952) 86 CLR 271. The Court said of declaratory judgments at page 279: "But we are of opinion that we should call attention to the statement of Viscount Maughan in London Passenger Transport Board v. Moscrop £1942] A.C. 332 at page 344 that 'it has been stated over and over again, and also, an this House, that the jurisdiction to give a declaratory judgment should be exercised with great care and jealousy'..., and 'with extreme caution'." The High Court went on to say: "The purpose of the present action is not to obtain a construction of a contract which will determine the future rights and obligations of the parties, but to enforce the completion of a sale pursuant to the exercise of an option to purchase, and i1t does not appear to us to be a case in which a declaration of right should have been made except as incidental to the enforcement of the contract either by way of specific performance or damages." Doubtless Courts have in more recent years shown less reluctance to make declaratory orders (Forster v. Jododex Aust. Pty. Ltd. (1972) 127 CLR 421, Neita Epping Pty. Ltd. v. Phillips 1974 3 ALR 151). However that the power to make a declaratory order is discretionary and should not be exercised as a matter of course was emphasized by Lord Radcliffe in Ibeneweka v. Eqbuna €19641] 1 WLR 219 at page 225 - "After all, it 15 doubtful if there is more of principle anvolved than the undoubted truth that the power to 12. grant a declatation should be excercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restriction on the award of a declaration." In the present matter it might be said that there are no circumstances which require the making of the declaration, in that in equity an order for specific performance might well be made notwithstanding the fact that C.S.S. was in law entitled to rescind. Certainly the declaration was incidental to the primary relief sought by Lopiron namely, specific performance of the agreement for sale and purchase. Counsel for C.S.S. contended that his client should not be denied the entitlement to exercise his legal right to rescind and thereby to bring to an end its agreement to sell. It 15 however a fundamental principle of equity that it will in appropriate circumstances decree specific performance where this can be done without injustice to the parties, particularly when it 15 relieving against the consequence of a non-essential breach. In this matter the relevant "breach" was that registration was not obtained within the specified time and was in my opinion a breach of a non-essential term. In Stickney v. Keeble and Another £1915] A.C. 386 Lord Parker said at page 415 - "In such cases, however, equity having a concurrent jurisdiction did not look upon the stipulation as to tame in precisely the same light. Where it could do 50 without injustice to the contracting parties it decreed specific performance notwithstanding failure to observe the time fixed by the contract for completion, and as an incident of specific performance relieved the party 13. in default by restraining proceedings at law based on such failure. This 15 really all that is meant by and involved in the maxim that in equity the time fixed for completion is not of the essence of the contract, but this maxim never had any application to cases in which the stipulation as to time could not be disregarded without injustice to the parties, when, for example, the parties, for reasons best known to themselves, had stipulated that the time fixed should be essential, or where there was something in the nature of the property or the surrounding circumstances which would render it inequitable to treat it as a non-essential term of the contract. It should be observed, too, that it was only for the Purposes of granting specific performance that equity aun this class of case interfered with the remedy at law. A vendor who had put it out of his own power to complete the contract, or had by his conduct lost the right to specific performance, had no equity to restrain proceedings at law based on the non-observance of the stipulation as to time." On the matter of relief against the consequences of non-essential breaches Mason J. (as he then was) said in Perri and Another v. Coolangatta Investments Pty. Ltd. (1982) 149 CLR 537 at 554 - "Was time of the essence in relation to that provision? The distinction between essential and non-essential terms is one which has been traditionally made for the purpose of determining whether breach of a term justifies rescission. It 15 a distinction which had particular importance for the exercise of the equitable jurisdiction to relieve against the consequence of strict adherence to time stipulations in contracts. Equity would relieve against rescission based on mere breach of a non-essential term not amounting to repudiation and would grant specific performance. Would equity likewise relieve against termination of a contract for non-fulfilment of a contractual condition? The answer must be 'Yes', when the termination 15 based on breach of a non-essential term which does not amount to a repudiation of the contract." In Legione v. Hateley (1983) 152 C.L.R. 406 at p.444 Mason & Deane JJ. said, when dealing primarily with relief 14. against forfeiture - "Underlying the approach taken 1n the Dagenham (Thames) Dock Case ((1873) LR 8 Ch.App 1022) and Kilmer's Case (£19133 AC 319) is an expansive view of the equitable jurisdiction to relieve against forfeiture. This in turn conforms to the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct - see Story,Commentaries on Equity Jurisprudence, 12th ed. (1877), vol.2, par.1316." In Leqione v. Hateley the respondent was seeking relief against forfeiture of her equitable interest as purchaser under an agreement for sale. Such a forfeiture was the consequence in law of the exercise of the vendor of its right of rescission. Mason and Deane JJ. were of opinion that in some circumstances it could be unconscionable to allow a party to insist upon upon its right to rescind. On this aspect their reasoning 1s relevant to the present matter. At page 447 they said: "But if there be fraud, mistake, accident, surprise or some other element which would make it unconscionable or inequitable to insist on forfeiture of the purchaser's interest under the contract because he has not performed in strict accordance with its terms there is no injustice to the innocent party in granting relief against forfeiture by means of specific performance with or without compensation. Cheney v. Libby (1890) 134 U.S. 68 (33 Law. Ed. 8183. provides an illustration of an unconscionable rescission. There the Court ordered specific performance of a contract for the sale of land, time being of the essence, when the purchaser had failed on the due date to pay an instalment of purchase price in dollars, the stipulated mode of payment. The purchaser had been misled by the vendor's conduct into thinking that another form of Payment would be accepted because it had been accepted by the vendor inthe past. Once he knew the vendor refused to accept the payment, the purchaser promptly tendered payment in dollars, though the due date for Payment had passed. The Court said (1890) 134 U.S., at p.78 C33 Law.Fd., at p.B23]: 15. 'Even where time is made material, by express stipulation, the failure of one of the parties to perform a condition within the particular time limited, will not in every case defeat his right to specific performance, 1f the condition be subsequently performed, without unreasonable delay, and no circumstances have intervened that would render it unjust or inequitable to give such relief. The discretion which a court of equity has to grant or refuse specific performance, and which 15 always exercised with reference to the circumstances of the particular case before it, (Hennessy v. Woolworth, (1888) 128 U.S. 438 at p.442 £32 Law.Ed. 500, at p.5023 may, and of necessity must, often be controlled by the conduct of the party who bases his refusal to perform the contract upon the failure of the other party to strictly comply with its conditions.' After noting that forfeiture of the contract would enable the vendor 'to take advantage of his own wrong' (1890) 134 U.S., at p.79 C33 Law. Ed. at p.823], the Court went on to say (1890) 134 U.S. at p.80 £33 Law. Ed., at p.824] that the provision of the contract - 'cannot be applied where the efficient cause of the failure of the party seeking specific performance to comply strictly and literally with the contract was the conduct of the other party'." On page 449 after stating that only in exceptional circumstances would specific performance be granted at the instance of a purchaser who was in breach of an essential condition, they went on to say: "Whether the exceptional circumstances exist 1n a given case hinges on the existence of unconscionable conduct. It is impossible to define or describe exclusively all the situations which may give rise to unconscionable conduct on the part of a vendor in rescinding a contract for sale. None the less it may be said that where the conduct of the vendor, though not creating an estoppel or walver, has effectively caused or contributed to the purchaser's breach of contract there 1s ground for exercising the jurisdiction to relieve. And if 1t also appears that the object of the rescission 1s not to safeguard the vendor from adverse consequences which he may suffer as a result of the contract remaining on foot, but merely to take unconscientious advantage of the benefits which will fortuitously accrue to him on forfeiture of the purchaser's interest under the contract, there will be even stronger ground for the exercise of the jurisdiction." 16. In Ciavarella v. Baimer (1983) 153 CLR 438 the full High Court in a joint judgment made reference to _Legione v. Hateley at p.453 - "Moreover, in Legione v. Hateley the material an evidence strongly indicated unconscionable conduct on the part of the vendor in seeking to insist on rescission of the contract in circumstances where the statement of the vendor's solicitors had helped lull the purchaser into a belief that the vendor would accept completion, provided it took place within a few days, and where the consequence of rescission was that the vendor would reap the benefit of the very valuable improvements which the purchaser had effected to the property." In my opinion it is unconscionable conduct on the part of the vendor in this matter in seeking to insist upon rescission. Alternatively the provision that registration must have been effected by 31 January 1986 was in respect of that date a non-essential term of the contract and equity would relieve against non-fulfilment by ordering specific performance. A fortiori it would so relieve in circumstances where it was the obligation of the vendor to obtain registration by that date. In Legione v. Hateley Mason and Deane JJ. indicated some questions the resolution of which would determine whether specific performance would be ordered. These questions were specified in a context very different in 2 important aspects from the matter before this Court, namely in circumstances where it was the purchaser who was in breach of a condition and where that condition was essential. In the present matter it cannot be said that Lopiron was in breach and my opinion is that the condition that registration be obtained by a certain date was not an 17. essential condition. Notwithstanding these significant differences it is useful to note their comments at p.449 and to note that in this matter none of the questions can be answered adversely to Lopiron. "In the ultimate analysis the result in a given case will depend upon the resolution of subsidiary questions which inevitably arise. The more important of these are: (1) Did the conduct of the vendor contribute to the purchaser's breach? (2) Was the purchaser's breach (a) trivial or slight, and (b) inadvertent and not wilful? (3) What damage or other adverse consequences did the vendor suffer by reason of the purchaser's breach 7? (4) What is the magnitude of the purchaser's loss and the vendor's gain 1f the forfeiture is to stand? (5) Is specific performance with or without compensation an adequate safeguard for the vendor?" Such relevant circumstances in this matter are most exceptional and all favour an order that specific performance of the contract of sale be granted at the insistance of Lopiron. They can be recited as follows. The condition concerning obtaining of registration prior to the specified date was not an essential consideration, time being neither expressly or by implication of the essence. Moreover it was not seen by C.S.S. to be essential in that subsequent to the specified date it twice requested of Lopiron an extension. The trial judge correctly found that it was the fault of C.S.S. that the condition was not performed by the due date. By the time C.S.S. sought to bring the contract to anend by rescinding, the registration had been obtained seven days earlier and its solicitor in reliance thereon had lodged the Stefopoulos sub-lease for stamping. There was no evidence of any loss or other adverse consequence which C.S.S. would suffer if it Was required to complete the sale. Even if, contrary to my view, ait is too harsh to 18. conciude that these circumstances indicate unconscionable conduct on the part of C.5.S. ain insisting upon rescission, there is no doubt that they indicate that no injustice is caused to that party in ordering it to complete the sale. In that case, the principles stated by Lord Parker in Stickney v Keeble supra and Mason J. in Perri v Coolangatta Investments supra are relevant to establish that equity will relieve against rescission. In my opinion the trial judge correctly ordered specific performance of the agreement for sale and on this aspect the appeal must be dismissed with costs. In his order the trial judge also directed that "there be judgment for the plaintiff for damages for breach of contract to be assessed". In my opinion this issue should be remitted to the trial judge for further consideration, notwithstanding the fact that this direction was not referred to in the Notice of Appeal. There was however no reference to this topic in the trial judge's reasons for judgment and no indication of the basis upon which he made the order. It should therefore be set aside. In my opinion the orders of the Court should be that: 1. the appeal be allowed for the purpose of deleting from this order under appeal the order that there be judgment for the plaintiff for damages for breach of contract to be assessed. 2. the 15sue as to damages be remitted to the trial judge. 19. 3. otherwise the appeal be dismissed with costs to be paid by the appellant to the respondent. I certify that this and the '8 preceding pages are a true copy of the Reasons for Judgment of Mr. Justice Fisher. . Associate -€_t-t+1~Ce Dated: 19 October 1987 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G3 of 1987 DISTRICT REGISTRY eee ee ew GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: C.S.S. INVESTMENTS PTY. LIMITED Appellant AND: LOPIRON PTY. LIMITED Respondent CORAM: Fisher, Gallop and Davies JJ. DATE: 19 October 1987. REASONS FOR JUDGMENT GALLOP J. I have had the benefit of reading in draft form the respective reasons for judgment of Fisher and Davies JJ. I agree with their reasons and the orders proposed, and have nothing to add. I certify that this 1s a true copy of the Reasons for Judgment of the Hon. Mr Justice Gallop. Associate: © /..4c6bs 7 curt Date: 19 October 1987 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A.C.T. G3 of 1987 GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: C.S.S. INVESTMENTS PTY LIMITED Appellant AND: LOPIRON PTY LIMITED Respondent CORAM: Fisher, Gallop and Davies JJ. DATE: 19 October 1987 PLACE: Canberra REASONS FOR JUDGMENT DAVIES J.: This 1S an appeal from a judgment of a single judge of the Supreme Court of the Australian Capital Territory which declared that the appellant, C.S.S. Investments Pty Limited ("C.S.S.") was not entitled to rescind an agreement made between c.S.S., as vendor, and the respondent, Lopiron Pty Limited ("Lopiron"), as purchaser, for the sale and purchase of certain A.C.T. leasehold, being a block of units, and which ordered that the agreement be specifically performed and carried = into execution. -2- It 1s unnecessary to discuss the facts at any length for they are set out in detail in his Honour's judgment. described the agreement as follows:- His Honour "By an agreement made in writing on 26 September 1985 and described as "Agreement for Sale (Unit Title)" c.S.S. Investments Pty Limited (the defendant) agreed to sell and Lopiron Pty Limited (the plaintiff) agreed to purchase what All the described in the agreement as 'Unit Title: was residue unexpired of the leases in respect of all the units in the draft Units Plan attached [t]hereto erected on Block 2 Section 65 at Weston in the Australian Capital Territory for the sum of $2,415,000.00.' " Sub-clauses (1) and (2) of Clause 17 the agreement read:- 'Unregistered Units Plan: (1) This clause applies if at the date of this agreement, the Units Plan has not been registered. (2) If the Units Plan is not registered by the date set out in Schedule Item 12 either the Seller or the Buyer may by written notice served on the other within 14 days thereafter rescind this agreement and thereupon the provisions of clause 23 shall apply.' Schedule Item 12 read: "Date for registration of Units Plan if not already registered 3lst January 1986' Clause 23 of the agreement read: '23. Rescission of Agreement: If this agreement 1s rescinded (as distinct from terminated) pursuant to any expressed right to rescind (as distinct from a right to terminate) conferred by this agreement the rescission shall be deemed to be a rescission from the beginning ands -3- (1) the deposit and all other money paid by the Buyer hereunder shall be refunded to him, and (2) neither party shall be liable to pay the other any sum for damages, costs or expenses.'" The units plan was not registered by 31 January 1986 as contemplated by Schedule Item 12, but was registered on 7 February 1986. On 14 February 1986 the solicitor for C.S.S. served upon the solicitor for Lopiron a notice that C.S.S. rescinded the agreement "the units plan not having heen registered by the date set out in Schedule Item 12 of the agreement". The principal ground upon which his Honour concluded that the rescission was not valid and that the agreement ought to be specifically performed was that C.S.S. and its solicitor, Mr Wayne Barker, had not taken all reasonable and proper steps to obtain registration of the units plan by 31 January 1986. The learned trial Judge was correct in implying into the agreement an obligation on the part of the vendor to do all things that were reasonable and proper to be done to obtain registration of the units plan by 31 January 1986. In Butt v. McDonald (1896) 7 Q.L.d. 68 at 70-71, Griffith C.J. said:- "It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract." -4- Likewise in Butts v. O'Dwyer (1952) 87 C.L.R. 267 at 279-280, Dixon C.J., Williams, Webb and Kitto JJ. said:- " so.e.e.. the parties may enter into a transfer subject to a condition that 1t 1S not to become effective unless the Minister's consent has been obtained. Prima facie this would import an obligation on the part of the person giving the transfer to do all that was reasonable on his part to the end that the Minister's consent might be obtained. Such a condition could be either express Or implied. There is in the present case no express condition as in Roach v. Bickle (1915) 20 C.L.R. 663, but we think that such a condition should be implied. It has been held in cases too numerous to mention both before and after the classic statement of Bowen L.J. in the case of The Moorcock (1899) 14 P.D. 64, at p.68, that the law raises an implication from the presumed intention of the parties where it 1s necessary to do so in order to give to the transaction such efficacy as both parties must have intended that it should have." See also Mackay v. Dick (1891) 6 App. Cas. 251 at 263, Secured Income Real Estate (Australia) Limited Ve St. Martin's Investments Pty Limited (1979) 144 C.L.R. 596 at 607-8 and Earle Cameron (Industrial) Pty Limited v. Comprador Properties Pty Limited (1986) N.S.W. Conv.R. 55-305, p.56,826. In the last mentioned case Hodgson J. said, at p.56,832, that the implied obligation included an obligation "to act with reasonable promptitude". In determining whether all reasonable and proper steps have been taken, the knowledge and acts of the vendor's solicitor are deemed to have been those of the vendor and the knowledge of the vendor is attributed to the vendor's solicitor. In Sargent -5- v. A.S.L. Developments Ltd (1974) 131 C.L.R. 634 at 658-9, Mason J. said:- "As against a third party the law imputes to a principal knowledge gained by his agent in the course of, and which is material to, a transaction 1n which the agent is employed on behalf of the principal, under such circumstances that it is the duty of the agent to communicate it to the principal. In the words of James L.J. in Vane v. Vane (1873) 8 Ch. App.383, at p.399, "the actual knowledge of the agent through whom an estate 1s acquired is ... equivalent to the actual personal knowledge of the principal". In my view this principle applies to information acquired by a solicitor in the course of acting for his client in a conveyancing matter (Dixon v. Winch [1900] 1 Ch.736). The solicitor is to be regarded as the alter ego of the client and the rights of the other Party to the contract cannot be made to depend upon the diligence or lack of diligence exhibited by the solicitor ain his dealings with his' client." See also Stephen J. at p.649. The agreement for the sale and purchase was executed on 26 September 1985. By 16 October 1985, the requirements of the Survey Office had been satisfied. Thereafter 1t was necessary to obtain the approval of the Minister. By letter dated 18 December 1985, the Assistant Secretary, Business Leases, of the Department of Territories advised the solicitors for C.S.S. that he, as a delegate of the Minister, was in a position to approve formally the application to subdivide the vendor's property into unit titles. The formal consent was subsequently given. What delayed the lodgment of documents for registration was the need to obtain the written consent to the registration of the units plan of every person having a registered estate or -6- interest in the lease. See s.9(1)(d) Real Property (Unit Titles) Ordinance 1970 (A.C.T.). AS many of the units were occupied under sub-leases which had been granted for terms of 5 years and as those sub-leases had been registered, 1t was necessary to obtain the consent of several sub-lessees. No doubt to ensure that the sub-leases coincided with the units plan, the solicitor for C.S.S., Mr Wayne Barker, and the solicitor for Lopiron, Mr Chris Macphillamy, agreed that the sub-lessees should be approached to obtain not consents to the registration of the units plan but surrenders of their sub-leases, on the undertaking that on the registration of the units plan fresh sub-leases of the units would be granted. As one of the sub-lessees, Mr Stefopoulos, was 1n dispute with C.S.S., 1t was agreed between Mr Barker and Mr Macphillamy that Mr Macphillamy would seek to obtain the surrender of the Stefopoulos sub-lease, as well as the surrender of sub-leases of two other sub-tenants with whom we are not concerned in this appeal. Mr Macphillamy commenced negotiations with the solicitors for Stefopoulos on 18 December 1985 immediately he was notified that the Assistant Secretary had advised that he would approve the application to sub-divide. The learned trial Judge held in his judgment that Mr Macphillamy ought to have acted more promptly, but it does not appear to me that this finding ought to stand in the light of the evidence of Mr Macphillamy that he considered it inappropriate to approach Stefopoulos' solicitors until he knew that the Minister would approve the application to -7- sub-divide. He was aware that his client had already approached Stefopoulos informally. Once aware of the delegate's approval, Mr Macphillamy acted promptly and effectively. Mr Macphillamy was not asked by Mr Barker to act with any greater expedition. On 23 December 1985, the solicitors for Stefopoulos advised Mr Macphillamy by letter that Stefopoulos would have no objection in principle to the surrender of the existing sub-lease and grant of a new sub-lease, if the new sub-lease was to be granted not by C.S.S. but by Lopiron. Their letter stated inter alia:- "It came aS a surprise however, to note your proposal that our client surrenders his present Sublease in favour of one in your standard form but with the present registered proprietors. Ordinarily, this would not present difficulties, but as you might recall our client and the present registered proprietors are in dispute over a number of matters and it 1s felt that 1t would be lnappropriate to alter our client's position without first resolving those differences. The writer had been under the impression that the fresh Sublease was to be with your client, namely the purchaser of the building. The writer would be happy to discuss the matter further with you. To assist those discussions, would you please detail for us the principals and shareholders of Lopiron Pty. Limited." Further negotiations took place and an arrangement was concluded for the surrender of Stefopoulos' sub-lease and the grant of a new sub-lease from Lopiron for the remainder of the term and also as to certain additional undertakings that Lopiron would give. A letter of 24 January 1986 from Mr Macphillamy to the solicitors for Stefopoulos stated inter alia:- -8- "We refer to our telephone discussions earlier this afternoon and write to confirm the following matters :-— . our client, Lopiron Pty Limited, will on the settlement of the purchase of the building of which these premises form part, collect $1,036.00 from CSS Investments Pty Limited; . our client will hold the amount referred to in the previous point as a security deposit in accordance with the terms of your client's sublease from our client; . our client will, following completion of the purchase of the above property, arrange for the body corporate to grant your client an exclusive licence to use the metal shed and potato peeler located upon the common property; . our client acknowledges that upon registration of the units plan the flu located in your client's premises will be [unreadable] property." On that date, 24 January 1986, which was a Friday, Mr Macphillamy obtained a surrender of the sub-lease executed by Stefopoulos and also a replacement sub-lease from Lopiron to Stefopoulos executed by Stefopoulos though not then by Lopiron. On the same day, Mr Macphillamy delivered to Mr Barker the surrender of the sub-lease and a copy of the proposed new sub-lease. On the same day, 24 January 1986, Mr Barker sent those and other documents to Queensland to a director of C.S.S., Mr J. Segon, for execution. For some reason, the documents were delayed by the courier service, perhaps because the Australia Day weekend intervened and Monday, 27 January 1986, was a holiday. In any event, Mr Segon received the documents including the copy of the proposed sub-lease from Lopiron to Stefopoulos. c.s.s. -9- duly executed the documents which it had to execute, including the surrender of the sub-lease by Stefopoulos, and those executed documents were received by Mr Barker on the morning of 29 January 1986. Mr Barker had an appointment to lodge the documents in the Titles Office at 2.30 p.m. on 29 January 1986 but cancelled that appointment as he did not have in his possession at the time the sub-lease from Lopiron to Stefopoulos executed by both parties. He accordingly made a new appointment to lodge at 3.30 p.m. on 30 January 1986 and intended to lodge at a time when he had in his possession the sub-lease from Lopiron to Stefopoulos executed by the parties. Mr Barker gave this evidence:- "Now, you could have lodged, could you not, the surrenders of the sub-lease first thing on 29 January 1986 with all the other documents necessary for registration of the units? --- I would not have lodged the surrender of sub-lease to Stefopoulos until such time as I had in my control the replacement sub-lease executed by Lopiron. Why was that? --- Because I think it would be wrong of me to have used that surrender without there being within my control a= properly executed replacement sub-lease. I felt that I owed that duty to the solicitors who acted for those surrendering tenants. Did you inform Mr Macphillamy of your view in that regard? --- No, I did not." -10- The learned trial Judge found as a fact that had Mr Barker at the time of lodgment of the documents in the Titles Office requested an extremely urgent dealing and explained the reason why registration by 31 January 1986 was required, the probability was that the unit titles would have been examined with urgency and would have been registered on 31 January 1986. In making this finding, the learned trial judge relied upon the evidence of the Deputy Registrar of Titles, Mr R.P. Makkinga, whose oral evidence supported a written statement by Mr Makkinga which was received in evidence. Mr Makkinga, in his statement, addressed the question whether, had a request for urgency been made at the time of the lodgment of the plan on 30 January 1986, the units plan would have been registered on 3] January 1986. He stated:- "My opinion is that the Units Plan could have heen registered by 3lst January 1986 having regard to Staff resources available at the time in the Land Titles Office and other work priorities. My answer 1s however qualified to the extent of factors outside of the control of the Land Titles Office as previously mentioned." In his oral evidence, Mr Makkinga confirmed that had the Titles Office had early notice prior to the lodgment of the documents, that would have assisted examination and registration of the unit title. He also confirmed that there was a practice in the Titles Office of receiving requests for urgent dealing and of dealing with matters on the basis of urgency and also of dealing with matters on the basis of extreme urgency 1f adequate reasons for -ll- such exceptional treatment were provided. He said that the fact that a $2.3 million contract for the sale of a building turned on the registration of a units plan by 31 January 1986 would have been a sufficient reason for treating the matter as extremely urgent. Having regard to the evidence of Mr Makkinga, a person well qualified to give evidence on this aspect, his Honour's finding was correct. No other witness spoke with the same authority on this point as did Mr Makkinga. The vendor's obligation to do all things that were reasonable and proper to be done by it to achieve registration of the units plan included an obligation to deal expeditiously with and to seek expedition by others with registration where such expedition 1s necessary to achieve registration by the contracted date. This, Mr Barker did not do. In the first place, he did not seek an urgent consideration by the Titles Office of the units plan though he had been pressed by Mr Macphillamy to do so. Mr Barker adopted the stance that, while he would not seek to delay registration, he would not take any step to expedite it. Mr Barker gave this evidence:- "I suggest to you that on or about 30 January, Mr Macphillamy said to you that, 'I want you to request the registration be dealt with on an urgent basis.' Do you recollect Mr Macphillamy making that statement to you? --- Yes, I know that he wanted me to lodge it with an urgency request. -12- And is it correct that you said, 'I am not prepared to do that without my client's instructions.?!' --- Yes. And the fact is that you did not make any request for urgency after having spoken with Mr Segon; is that correct? --~ I just lodged it in the normal way." Secondly, Mr Barker had in his possession by the morning of 29 January 1986 all the documents that were required for registration. He took the view that he ought not to lodge these documents which included the surrender of the sub-lease from Stefopoulos until he had in his hand the sub-lease executed by Lopiron, On this aspect, the learned trial Judge concluded, and I agree with him, that as the sub-lease had been executed by Stefopoulos and had been delivered by Stefopoulos' solicitors to Mr Macphillamy it was Mr Macphillamy's obligation and not Mr Barker's to ensure that the sub-lease from Lopiron to Stefopoulos was duly executed. Mr Barker was in a position to lodge on the morning of 29 January when he had received all relevantly executed documents that needed to be lodged and he was under no duty to Stefopoulos to stay lodgment. Indeed, in my opinion, he was as solicitor for the vendor, 1f under any duty to Stefopoulos, under the duty which he owed to the purchaser, namely, to obtain registration of the units plan by 31 January 1986 if reasonably that could be achieved. -13- Thirdly, the units plan and all supporting documents other than the surrenders of the sub-leases were in Mr Barker's hands well before 29 January. There 1s no reason why copies of those documents could not have been supplied by Mr Barker to the Titles Office for an examination on an informal basis long before. And Mr Barker had in his possession all the surrenders of the sub-leases duly executed by the sub-lessees and they were in his possession by 24 January. Again there 1S no reason why copies of those documents could not have been made available to the Titles Office for examination well prior to lodgment. Mr Barker chose not to do all that he reasonably could to obtain registration of the units plan by 31 January. He did not alert the Titles Office to the need for expedition. He did not make any enquiry of the Titles Office as to how best the matter should be handled to achieve registration by 31 January and he did not seek an expeditious and urgent dealing by the Titles Office of the matter. In the circumstances, the vendor C.S.S. was in breach of its obligation under the agreement and will not be permitted to rely upon the failure to achieve registration by 31 January as a ground for rescission on its part. The principle is of long standing. In New Zealand Shipping Company v. Societe de Ateliers et Chantiers de France [1919] A.C. 1 Lord Finlay said at pp.6-7:- -14- "It is a principle of law that no one can in such case take advantage of the existence of a state of things which he himself produced. This 1s 1llustrated by the case of Roberts v. Wyatt (1810) 2 Taunt 268, 276. There the plaintiff had purchased an estate, and 1t was provided in the contract that the vendors should make out a good title, and on or before December 21, 1808, on receiving from the plaintiff the purchase-money, execute a legal conveyance of the fee-simple. There was a proviso that 'in case the vendors could not deduce a good and marketable title, such as the purchaser or his counsel should approve, or if the purchaser should not pay the purchase money on the appointed day, the agreement should be utterly void.' An abstract was sent to the plaintiff by the defendant, who was the vendors' solicitor. The abstract was sent back to the defendant for the purpose of having the title cleared up. The defendant said that the objections to the title could not be met, and refused to return the abstract, asserting that the contract was void under the proviso. Sir James Mansfield, Chief Justice, in the course of his judgment said: 'Something has been argued on the construction of the proviso that in case the vendor could not make a title, the contract should be void. But in order to adapt that defence to the present case, the argument must be, that if the defendant says he cannot answer the objections, it shall be absolutely void at the choice of either party. But that is not so: the meaning 1s, that if the seller cannot make a good title by the time mentioned, the contract shall be void as against him, and the plaintiff has a right to be off his bargain. So, e contra, if the plaintiff does not pay the money, the defendant may avoid the contract; but the plaintiff cannot say, I am not ready with my money, therefore I will avoid the contract; nor can the seller say, my title is not good, therefore I shall be off. And the word 1s, 'if they cannot make,' so it must appear by sufficient proof that they cannot make a title.'" At p.8 Lord Finlay said:- "The decisions on the point are uniform and are really illustrations of the very old principle laid down by Lord Cooke (Co. Litt. 206b) that a man shall not be allowed to take advantage of a condition which he himself brought about." -15- See also Suttor v. Gundowda Pty Ltd (1950) 81 C.L.R. 418 at 440-2. More recent cases which have considered the application of the principle and which also touch upon the burden of proof, an issue which it is not here necessary to consider, are Brauer & Co. (Great Britain) Ltd. v. James Clarke (Brush Materials) Ltd. {1952} 2 All E.R. 497, Barber v. Crickett [1958] N.Z.L.R. 1057, Zieme v. Gregory [1963] V.R. 214 at 223, Adina Constructions Pty Ltd v. Whitehead (1976) 1 B.P.R. 9173 and Earle Cameron (Industrial) Pty Limited v. Comprador Properties Pty Limited cited above. It is useful to turn to other aspects of the case that were not dealt with by the learned trial Judge. When Lopiron received the surrender of the sub-lease from Stefopoulos' solicitors and agreed to grant a replacement sub-lease to Stefopoulos, when the surrender and the replacement sub-lease executed by Lopiron were handed over to Mr Barker prior to his lodging the surrender in the Titles Office on 30 January and when C.S.S. accepted the surrender of the sub-lease from Stefopoulos, which it did by executing the surrender of the sub-lease and on 30 January lodging it for registration in the Office of Titles, both parties, C.S.S. and Lopiron, each waived any right unilaterally to rescind the agreement should registration of the units plan not be effected by 31 January. In particular, C.S.S., which took the benefit of the surrender of the Stefopoulos sub-lease, was precluded by its action from -16- bringing about a situation whereby the replacement sub-lease from Lopiron to Stefopoulos could not take effect. C.S.S. was aware that the replacement sub-lease and the additional terms agreed upon by Lopiron could not be given effect 1f the agreement between C.S.S. and Lopiron was rescinded by C.S.S. for failure to obtain registration of the units plan by 31 January. Despite Mr Barker's belief that time was too short to obtain registration of the units plan by 31 January, C.S.S. accepted the Stefopoulos surrender and took advantage of it by lodging it for registration on 30 January. A party to a contract which contains a term which enures to the benefit of that party, as did the right which the contract gave to C.S.S. to rescind should the units plan not be registered by 31 January, may waive its right to rely upon that term. The walver may be express or it may be implied from conduct. It may be implied from conduct when the party makes a choice between two inconsistent courses. A party to a contract is not permitted to approbate and reprobate. In the present case, C.S.S. was faced with two inconsistent courses of action. It could accept the surrender when 1t did or it could refuse to accept the surrender believing it to be then too late to achieve registration of the units plan by 31 January 1986, as Mr Barker believed. Acting as it did, C.S.S. waived its entitlement to bring about the situation whereby the terms upon which the surrender of the sub-lease was -l17- given, namely that there be a replacement sub-lease from Lopiron and additional undertakings by Lopiron, could not be given effect. The actions of C.S.S. were inconsistent with the retention of a right to rescind. It will not be permitted to take the benefit of the surrender and at the same time to bring about the situation whereby the replacement sub-lease from Lopiron to Stefopoulos could not take effect. Apposite to the facts of the case 1s the statement by Cockburn C.J. 1n Stirling v. Maitland (1864) 5 B. & S. 840 at p.852:- "I look on the law to be that, 1f£ a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there 1S an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative." That passage was set out in the judgment of Latham C.J. in The Banking Case (1948) 76 C.L.R. 1 at p.245 and in several of the judgments in Southern Foundries (1926) Ltd v. Shirlaw [1940] A.c. 701. It was described by Viscount Maugham at p.712 as a well known principle and by Lord Atkin at p.717 as well established law and a positive rule of law. The same concept finds expression in the principles of waiver. As Isaacs J. said in Craine v. Colonial Mutual Fire Insurance Co. Ltd (1920) 28 C.L.R. 305 at 326:- -18- "'Waiver' 1s a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions (see per James L.J. in Pilcher v. Rawlins 7 Ch.App.259 at pp.268 et seqq.. It 1s a conclusion of law when the necessary facts are established." That waiver by C.S.S. was given further effect during Pebruary 1986 when, by its actions, C.S.S. elected to affirm and to continue with the agreement. On 7 February 1986, C.S.S. attended to a requisition with respect to the units plan and, on attending to that requisition, obtained registration of the units plan on that date thereby finally ensuring that 1t obtained the benefit of the surrenders of the sub-leases including the surrender by Stefopoulos. On 11 February, Mr Barker lodged the replacement sub-lease from Lopiron to Stefopoulos in the Stamps Office for stamping. And, about that time, the managing director of C.S.S., Segon, negotiated with the managing director of Lopiron for the purchase by C.S.S. from Lopiron of the Stefopoulos unit, presumably subject to the Stefopoulos sub-lease. Those steps were all steps which amounted to an election to affirm the agreement at a time when, on the terms of the agreement, C.S.S. had the right to rescind. Again, the principle applies that a party to a contract may not approbate and reprobate and, having chosen to affirm the contract, C.S.S. will not be permitted to rescind. As Gavan Duffy C.J. and Starke J. said in Wendt v. Bruce (1931) 45 C.L.R. 245 at 253:- "Now, a man who has his option whether he will affirm a particular act or contract must elect either to affirm or to disaffirm it altogether; he cannot adopt that part which 1s for his own -19- benefit, and reject the rest: he cannot blow hot and cold. And the election once made is finally made. (See notes to Smith v. Hodson (1790) 2 Sm. L.C. 12th ed. 146; Scarf v. Jardine (1882) 7 App. Cas.345 at p.360.)" Dixon J. said at p.257:- "But ... the party not in default cannot himself exercise rights which he possesses only if the contract continues on foot and, after he has done so, treat the contract as nevertheless discharged by default. The law enables him to choose between rights; and that choice 1s exercised, whatever he may desire, when he proceeds to do what he could only lawfully do in virtue of one of the two sets of rights between which he may elect. 'Whether he intended 1t or not, if he has done an uneguivocal act - I mean an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way - the fact of his having done that unequivocal act to the knowledge of the persons concerned is an election.' (per Lord Blackburn, Scarf v. Jardine (1882) 7 App. Cas., at p.361.)" See also the discussion in Sargent v. ASL Developments Ltd, cited above. Plainly the acts of C.S.S. both before and after 31 January 1986 were inconsistent with its right to rescind the agreement should the units plan not be registered by 31 January 1986. By its acts and those of its solicitor, 1t waived its right to rescind and elected to affirm the agreement. Finally, this appeal should not be disposed of without mentioning Lopiron's claim that C.S.S., 1n serving the notice of rescission, acted wrongfully, arbitrarily, capriciously and -20- unreasonably. This pleading permits reliance upon the principle that equity will relieve against rescission if what was sought to be done was unconscionable. It 1S not necessary to deal at any length with the principles governing unreasonable or unconscionable conduct. Recently, courts have reinforced the principles which were stated un the mid 19th century in Story''s Commentaries on Equity Jurisprudence, paras. 1312-1316, including the statement 1n para. 1316 that:- "The whole system of Equity Jurisprudence proceeds upon the ground that a party, having a legal right, shall not be permitted to avail himself of it for the purposes of injustice or fraud, or oppression, or harsh and vindictive injury." See Shiloh Spinners Ltd v. Harding [1973] A.C. 691, especially at 722-3. In Legione & Another v. Hateley (1983) 152 C.L.R. 406, Mason and Deane JJ. said, at p.444:- "Underlying the approach taken in the Dagenham (Thames) Dock Case (1873) L.R. 8 Ch. App. 1022 and Kilmer's Case [1913] A.C. 319 1S an expansive view of the equitable jurisdiction to relieve against forfeiture. This ain turn conforms to the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconcionable conduct - See Story, Commentaries on Eguity Jurisprudence, 12th ed. (1877), vol.2, par.1316." -21- See also Ciavarella v. Balmer (1983) 153 C.L.R. 438 at 453-4, and the views of Mason, Wilson and Deane JJ. 1n Commercial Bank of Australia Ltd v. Amadio (1983) 151 C.L.R. 447. At p.461, Mason J. said:- "Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct. In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of eguity, cannot be enforced because to do so would be inconsistent with equity and_== good conscience." See also the useful discussion of "Forfeiture and Certainty: The High Court and the House of Lords" by W.M.C. Gummow in Essays in Equity, Editor P.D. Finn. Had all other grounds failed Loniron, this 1s a case where equity would intervene to prevent unjust and unconscionable behaviour on the part of C.S.S.. Such behaviour encompasses its failure to take all steps that reasonably could and should have been taken to obtain registration of the units plan by 31 January, the acceptance and lodgment of the Stefopoulos' sub-lease at a time when Mr Barker believed it too late to obtain registration by 31 January, the answering of the requisition and the obtaining of registration of the units plan on 7 February, the lodgment for stamping of the Lopiron to Stefopoulos sub-lease on 11 February 1986, the negotiations between C.S.S. and Lopiron for the purchase by C.S.S. of the Stefopoulos unit after the -22- registration of the units plan, the failure by C.S.S. to give notice of rescission until after the registration of the units plan and also the reason why C.S.S. decided to rescind, namely that it wished to retain the Stefopoulos unit so as to carry on its long-standing dispute with him. As the learned trial Judge said:- "Mr Segon wished, 1t might also be said that he was obsessed with the desire, to have the ownership of Unit 9 so that he might continue his dispute with Mr Stefopoulos on the footing most favourable to him." The decision to rescind was not induced by the failure to obtain registration of the units title by 31 January 1986. It was brought about because C.S.S. wished to retain ownership of the Stefopoulos unit, a matter to which 1t was not entitled under its agreement with Lopiron and which 1t would lose if the agreement of 26 September 1985 proceeded. These matters constitute exceptional circumstances which make it unjust and unconscionable that C.S.S. should have given notice of rescission and permit the making of an order for specific performance of the agreement notwithstanding the service of the notice of rescission. For these several reasons therefore, the declaration that C.S.S. was not entitled to rescind the agreement and the order that the agreement be specifically performed were correct. -23- In the course of the hearing of the appeal, it was noticed, however, that the learned trial Judge had included in his order, an order that "In addition [to specific performance] there be judgment for the plaintiff for damages for breach of contract to be assessed." There was no reference to this matter in his Honour's reasons for judgment. A purchaser may 1n an appropriate case obtain an order for specific performance and in addition an order for damages for the breach of a contractual term as to time. Sholl J., in Bosaid v. Andry [1963] V.R. 465 at p.485, referred to:- " eee cases where the Court grants' specific performance and adds damages for such things as delay in completion: see for example Griffin v. Mercantile Bank (1890), 11 L.R. (N.S.W.) Eq. 231, at pp.252-4 and 258-262. In those cases, the plaintiff asserts that the contract 1s on foot, but claims and obtains damages for the breach by the defendant of a term or terms, the breach of which he was not able to treat or has not elected to treat aS going to the root of the contract." See also Rainer1i v. Miles [1981] A.C. 1050 and Jones and Goodhart on Specific Performance pp.231-2. However, the agreement of 26 September 1985, which did not make time of the essence, specified that completion should be within 14 days of notification to Lopiron of the registration of the units plan. There was no evidence before the learned trial Judge that, after such notification, a notice to complete was served on C.S.S. by Lopiron or that Lopiron tendered the purchase > eee -24- price or a form of transfer which C.S.S. refused to execute. Yet, as Holland J. said in Frankcombe v. Foster Investments Pty. Ltd. [1978] 2 N.S.W.L.R. 41 at p.48:- "In the absence of contrary provisions in the contract, the obligations of each party = on settlement are dependent and concurrent, that 1s, a party failing on his part to perform 1s not in breach unless the other party has~ tendered performance of his obligations: see Stonham's Vendor and Purchaser, pp.927, 931, paras. 1832, 1841; Voumard's Sale of Land, 2nd ed., p.532; Palmer v. Lark [1945 Ch.182, at pp.184,185; Michael Realty Pty. Ltd. v. Carr, [1975] 2 N.S.W.L.R. 812, at pp.829-831; [1977] 1 N.S.W.L.R. 553 at p.571 per Mahoney J.A." In the circumstances, 1t 1S not apparent on what basis the order for damages to be assessed was made or whether such an order should be made. In my view, that part of the order should be set aside and the issue as to damages should be remitted to the learned trial Judge. In my opinion, therefore:- (1) the appeal should be allowed to the extent that the order under appeal 1s varied by deleting therefrom the order that "In addition there be judgment for the Plaintiff for damages for breach of contract to be assessed." (1i) the issue as to damages should be remitted to the learned trial Judge. (1ii) the appeal should be otherwise dismissed. -25 (iv) the appellant should pay the respondent's costs of the appeal. I certify that this and the ate preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Davies. Associate: J Geshe Date: 19 October 1987 Counsel for the appellant: Solicitors for the appellant: Counsel for the respondent: Solicitors for the respondent: Date of hearing: Mr J.A. Griffin O.C. with Mr K.J. Crispin Mazengarb and Leyshon Mr P.G. Hely Q.C. with Mr T.M. Johnstone Crossin & Co. 17 July 1987