ACOUSTIC and FELTS PTY LTD v MISTHOS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE and SHELLER JJA and WADDELL AJA 2 April 1996, 2 April 1996 [1996] NSWCA 8 Sale of Land Interpretation of special condition in contract — meaning of "either". Waddell AJA This appeal concerns a contract for the sale of land dated 8 May 1989 whereby the appellant as vendor agreed to sell to the respondents as purchasers an industrial strata title unit at Silverwater for a price of $323,000.00, which included a deposit of $17,000.00. CL4(a) of the special conditions in the contract provided this agreement is subject to and conditional upon: "4. This Agreement is subject to and conditional upon: (a) Within five (5) months of the date hereof the vendor obtaining the due registration with the Land Titles Office of a Strata Plan of Subdivision substantially in accordance with the Plan annexed hereto and marked "A" and all costs and expenses of a (sic) incidental to the preparation approval and registration of the said Plan shall be borne by the vendor PROVIDED THAT where lodgment of the Plan for registration as a strata Plan with the Land Titles Office is delayed by virtue of strikes, lockouts, industrial disputation and/or inclement weather, the said period of five (5) months shall be extended for each day that the building works are affected by such strikes, lockouts, industrial disputation and/or inclement weather, and a statement by the vendor's Architect stating the said number of days shall be final and conclusive proof of delay. Where either of the time stipulations appearing herein have expired either party shall have the right by notice in writing to the other rescind this Agreement whereupon the deposit shall be refunded by the vendor to the purchaser and interest thereon dealt with in accordance with Clause [blank] hereof and neither party shall have any claim whatsoever against the other. The vendor covenants to use its best endeavours to do all things and to execute all documents necessary to comply with the provisions of this clause." The purpose of CL4(a) is made plain by CL12-CL16 of the special conditions. This was to take into account the circumstances that the building in which the strata unit was proposed to be situated was yet to be constructed by the vendor. It is common ground that CL4(a) falls into two parts, the first of which ends with the word "delay" after which there should be a full stop. The second part commences with the words "Where either of the time stipulations". It is convenient to refer to the first and second parts of the clause when it comes to analyse what should be its interpretation. On 10 October 1989 the respondents by their solicitor purported to rescind the contract relying on CL4(a) on the basis that the five month period mentioned in the condition had previously expired on 8 October. However, on 19 September 1989 the appellant's solicitors had notified the respondents' solicitors that "Due to inclement weather this project has been delayed by well in excess of one month and registration of the strata plan should be completed by the end of October". 2 UNREPORTED JUDGMENTS At the trial, evidence by the architect and building supervisor established that as at 8 October 1989 the architect would have issued a statement that an extra 20 days was required due to weather (18 days), and industrial disputes (2 days). On this basis, the proviso extended the time to 28 October, that is, after the purported rescission. The linen plan was lodged with the Council on 9 October and the plan of subdivision certified by the Council on 7 October. It was registered on 14 November. The appellant's response to the purported rescission of 10 October is contained in its solicitor's letter of 8 October, which rejected it, referred to CL4(a), and said that the architect had certified a total of 145 days delay. By letter of 22 November 1989 the appellant's solicitors notified the respondents' solicitors that the strata plan had been registered, gave particulars of title and called for submission of a transfer. After a reminder on 1 December the appellant's solicitors, on 18 December, served a notice to complete on 3 January 1990. Nothing further appears to have been done until a reminder by the appellant's solicitors on 27 August 1991 and an assertion by the respondents' solicitors of 29 August that the appellant had breached CL4(a) and that they were awaiting instructions for proceedings to recover the deposit. Then on 30 October the appellant's solicitors served an updated s70 certificate, and under cover of a letter dated 1 November, sent a notice to complete on 25 November. By letter dated 7 November 1991, the respondents' solicitors stated they had briefed Counsel to draft proceedings for recovery of the deposit. There was evidence to establish that the appellant was ready, willing and able to complete at the time and place appointed, but no one appeared for the respondents. Consequently, by letter dated 26 November 1991, the appellant's solicitors purported to terminate the contract. The appellant commenced proceedings claiming forfeiture of the deposit and damages, obviously on the basis that it had terminated the contract by its notice of 26 November 1991. The respondents cross-claimed for relief, claiming that they had validly rescinded the contract by the notice of 10 October 1989 and were entitled to a return of the deposit. Alternatively, the respondents sought an order for the return of the deposit pursuant to s55(2)A of the Conveyancing Act 1919 and ancillary relief. Other ancillary relief of an alternative nature was claimed, which need not be mentioned. When the matter came before Bryson, J in the Equity Division the only issue raised by these claims of relief which was determined was the question of whether the respondents had validly terminated the contract by their notice of 8 October 1989. His Honour found that they had done so, and dismissed the appellant's claim. His Honour upheld the respondents' cross-claim for a return of the deposit under the general law and ordered the appellant to repay the deposit with interest. Put shortly, his Honour accepted submissions to the effect that under CL4(a), the purchaser could rescind the contract on the expiry of either of the two time periods mentioned in the first part of the clause, that is, either after the period of five months from the date of contract had elapsed, or after the extension of that period in accordance with the proviso. His Honour took the view that this was the proper interpretation of the clause because of the use of the expression "either of the time stipulations appearing herein". URJ ACOUSTIC and FELTS PTY LTD v MISTHOS (Sheller JA) 3 For the appellant, it is submitted that while the wording of this part of the clause is unsatisfactory, its meaning must depend upon the fact that the clear meaning of the first part of the clause is that the agreement is subject to and conditional upon registration of the strata plan within five months of the date of the contract, which period shall be extended for the number of days of relevant delay. It is submitted that this necessarily is a stipulation of only one period of time, the length of which depends upon whether or not there was relevant delay. With great respect to Bryson, J, in my opinion the first part of the clause clearly expresses a condition to which the agreement is subject. Its wording can only mean that it is a condition of the contract that registration of the strata plan must be obtained within the period of five months unless delay in the progress of the building occurs, in which case that period is to be extended for the period of the relevant delay. This consideration is the foundation upon which the meaning of the second part of the clause is to be determined. The second part provides the remedies which are to accrue to the parties when registration has not occurred in accordance with the condition. It is to be noted that insofar as the purchasers were at a disadvantage (because they could not know what delay had occurred), the concluding words of the clause provide a covenant by the vendor in effect to do all things necessary to enable the parties to consider their position under the clause. The purchasers would have had a right to require the vendor to have the architect certify the delay and in the absence of compliance with a reasonable request of this kind would have had an opportunity of determining the contract. In my opinion, although the second part of the clause is not happily expressed, the words "either of the time stipulations" have a clear meaning. They should be read as if words were added in parenthesis after them to the effect "whichever is applicable". An alternative approach submitted by the appellant was to reduce those opening words to the singular so they would read "where the time stipulation appearing herein has expired". I regard the insertion of the words I suggest as doing less violence to the language employed, and as recognising that, in a clumsy way, that is no doubt what the draftsman of the clause intended. This conclusion means that it was not open to the respondents to terminate the agreement pursuant to CL4(a) before 20 days after 8 October 1989, that is, after 28 October. Accordingly, in my opinion, the rescission upon which the respondents rely of 11 October 1989 was premature and of no effect. For these reasons, I propose that the appeal should be allowed, that the orders below should be set aside, and the proceeding returned to the Equity Division to determine the issues in the proceeding which have not so far been dealt with. The respondents should pay the appellant's costs of the appeal. Clarke JA I agree. I would only add that, as Starke, J said in Curry v Glen (1936) 54 CLR 445 at 453, the word "either" is not so intractable a word that the intention of the parties must be defeated by its use. I agree with the orders proposed. Sheller JA For the reasons that have been given by the other members of the Court, I agree with the orders proposed. Clarke, JA: I add to the orders made by Waddell, AJA an order that the costs of the first trial are to be in the discretion of the Judge who conducts the re-hearing, and an order that the respondents are to have a certificate under the Suitors Fund Act in respect of the costs of the appeal. 4 UNREPORTED JUDGMENTS Appeal allowed, orders set aside, proceeding returned to the Equity Division to determine issues in proceeding not yet dealt with. Respondents to pay appellant's costs of appeal. Costs of first trial at discretion of Judge conducting re-hearing, respondents to have certificate under the Suitors Fund Act in respect 5 of appeal costs. Counsel for the appellant: DL Warren Solicitors for the appellant: Diamond Peisah and Co 10 Counsel for the respondent: JA Jobson Solicitors for the respondent: Countouris Adresakis