Australia & New Zealand Banking Group Ltd v Wrenport Pty Ltd & Jurycastle Pty Ltd (in liq) [1995] QCA 140

IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 69 of 1994 Brisbane [ANZ Banking Group v. Wrenport & Jurycastle] BETWEEN AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Applicant) Appellant AND WRENPORT PTY. LTD (First Respondent) First Respondent AND JURYCASTLE PTY. LTD (In Liquidation) (Second Respondent) Second Respondent McPherson J.A. Pincus J.A. Davies J.A. Judgment delivered 11/04/95 Separate concurring reasons for judgment by McPherson, Pincus and Davies JJA. APPEAL DISMISSED WITH COSTS. CATCHWORDS MORTGAGE - Enforcement of Mortgage - Conditional contract - Crown lease - Whether mortgage secured payment of money and interest due under contract - Rescission under a condition subsequent - Rawson v. Hobbs (1961) 107 C.L.R. 466; McDonald v. Dennys Lascelles Ltd. (1933) 48 C.L.R. 457 - Whether contract contained agreement to repay and reconvey "simultaneously and interchangeably" - Wrongful repudiation. Counsel: P.D. McMurdo Q.C., with him I.R. Perkins, for the appellant P. Lyons, with him J. Kimmins, for the first respondent -- 1 of 27 -- 2 B. Hollas for the second respondent Solicitors: Minter Ellison Morris Fletcher for the appellant McInnes Wilson & Jensen for the first respondent Sly & Weigall Cannan & Peterson for the second respondent. Hearing Date: 11 October 94 -- 2 of 27 -- IN THE COURT OF APPEAL [1995] QCA 140 SUPREME COURT OF QUEENSLAND Appeal No. 69 of 1994 Brisbane Before McPherson J.A. Pincus J.A. Davies J.A. [ANZ Banking Group v. Wrenport & Jurycastle] BETWEEN AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Applicant) Appellant AND WRENPORT PTY. LTD (First Respondent) First Respondent AND JURYCASTLE PTY. LTD (In Liquidation) (Second Respondent) Second Respondent REASONS FOR JUDGMENT - McPHERSON J.A. Judgment delivered the 11th day of April 1995 This is an appeal from a decision given in an application made by Australia & New Zealand Banking Group Limited, which is the appellant in this Court. The relief sought in the originating summons, but refused by the Chamber Judge, was a declaration that the applicant was entitled to enforce a mortgage no. K848401X executed by the respondent Wrenport Pty. Ltd in favour of Jurycastle Pty. Ltd over a pastoral holding lease no. 35/1642; and a further declaration that the mortgage secured payment by Wrenport of $600,000 and interest under a contract dated 2 October 1991 between Wrenport and Jurycastle. In the alternative the Bank claimed that Wrenport was obliged to reconvey the lease -- 3 of 27 -- 2 to Jurycastle irrespective of whether any sum was paid to Wrenport. The Crown lease in question, which is over Long Island in the Port Curtis District, is for a term of 30 years commencing on 1 April 1971. It was originally issued under the Land Act 1962 to Dalcolmah Pastoral Company, but by May 1990 it had been transferred to and vested in Jurycastle. On 2 October 1991 Jurycastle agreed to sell and transfer the lease to Wrenport under a written contract which, in addition to the leasehold interest and existing improvements on the land, included plant, equipment and stock. The special conditions of contract provided in cl.2.1 for payment of a purchase price of $1,470,000, of which $30,000 was payable as a deposit and the balance in three instalments on specified dates on or between 14 October 1991 and 31 March 1994. It will be necessary later to refer in detail to the terms of cl.2.1. At present it is enough to say that the instalments were payable as follows: (a) $670,000 on 14 October 1991; (b) $170,000 on 31 March 1992; and (c) $600,000 on 31 March 1994. There was provision in cl.2.3 for interest on the unpaid balance from time to time of the purchase price. Although cl.2.1 meant that the full price would not be paid until 31 March 1994 when the final instalment of $600,000 fell due, there was provision in cl.2.4 for completion by the transfer of the lease and delivery of possession in exchange for a memorandum of mortgage to be executed by Wrenport in respect of the instalment of -- 4 of 27 -- 3 $170,000 due on 31 March 1992, and for a separate memorandum of mortgage in respect of the final instalment of $600,000 due on 31 March 1994. Completion date was 14 October 1991, which was when the first instalment of $670,000 was payable. By cl.25 of the standard printed conditions forming part of the contract, time was expressed to be of the essence of the contract in all respects. Although completion date was 14 October 1991, completion in fact seems not to have taken place until 15 November 1991. It may be inferred that that was also when Wrenport paid the first instalment of $670,000 and delivered the two memoranda of mortgage called for by cl.2.4. The mortgage securing the second instalment of $170,000 payable on 31 March 1992 is not the subject of these proceedings, but only the mortgage securing the third instalment, which the appellant Bank now claims the right to enforce. It was executed by Wrenport as mortgagor in favour of Jurycastle as mortgagee on 4 October 1991, and, together with transfer to Wrenport, registered under the Land Act on 6 February 1992. The money secured by the mortgage is described as follows: "The sum of $600,000.00 (hereinafter referred to as 'the principal monies') being the balance of purchase price payable pursuant to contract of sale dated 2 October 1991 between the mortgagee as vendor and the mortgagor as purchaser and payable on 31 March 1994". The mortgage, which was registered as no. K848401X, was itself the subject of a transfer in statutory form executed by Jurycastle on 8 October 1991 to the appellant Bank and registered under the Land Act on 6 February 1992 as no. 848404F. Written notice, dated 8 October 1991, of the -- 5 of 27 -- 4 transfer was given by the Bank to Wrenport at settlement on 15 November 1991. In passing, it may be noted that a mortgage of a Crown lease is transferable under s.275 of the Land Act. As with land under the Torrens system, it operates as a statutory charge having effect under s.276 of the Act only as a security for the sum of money secured and not as a transfer or assignment of the land itself. However, unlike Torrens land, there is no provision in the Land Act comparable to s.65 of the Real Property Act 1861 or s.62 of the Land Titles Act 1994 automatically vesting other rights and powers of the mortgagee in the transferee. For that purpose, a specific particular assignment of the mortgage debt may be needed. See Carello v. Jordan [1935] St.R.Qd. 294, 322-323, 344. Sykes & Walker : The Law of Securities (5th ed.), at 112. It may perhaps be doubted whether in the circumstances disclosed here an assignment to the Bank of the mortgage debt would, within the meaning of s.199(1) of the Property Law Act, have been an "absolute" assignment, but it was nevertheless capable of amounting to an effective assignment in equity of a future indebtedness. Not all the relevant documents are before us, but on appeal no point was raised about the efficacy of the transfer of the debt. It is therefore legitimate for present purposes to proceed on the footing that title to the instalment of $600,000 payable on 31 March 1994 has been vested in the Bank. The notice given to Wrenport on 15 November 1991 would serve to prevent further equities arising between the original debtor and -- 6 of 27 -- 5 creditor, to which an assignment of the debt would otherwise be subject. See 32 Halsbury, 4th ed., para.654, at 299-300. Once the property sold was transferred and future instalments of price were secured by mortgage, one would ordinarily expect the rights and obligations of the parties to be regulated by the mortgage rather than by the contract of sale in which it had its origin : cf. Johnstone v. Veitch [1957] Q.W.N. 18. However, the terms in which the consideration is stated in mortgage no. K848401X describe the principal moneys secured as being due pursuant to the contract dated 2 October 1991 between Jurycastle and Wrenport for sale of the lease; and the parties accept that, even after transfer and mortgage, the Bank's right to the debt continued to rest on and to be governed by the terms and conditions of the contract itself. The critical provision of the contract is cl.2.1 of the special conditions, which provide: "2.1 Notwithstanding the provisions hereinbefore contained the balance purchase money shall be paid as follows:- (a) As to the sum of six hundred and seventy thousand dollars ($670,000.00) on the 14th October, 1991. (b) As to the sum of one hundred and seventy thousand dollars ($170,000.00) on the 31st day of March, 1992. (c) As to the sum of six hundred thousand dollars &$600,000.00) on the 31st day of March, 1994. Provided however that the payment of the balance purchase price of seven hundred and seventy thousand dollars ($770,000.00) by instalments on the 31st day of March, 1992 and March, 1994 as described in (b) and (c) above shall be subject to the grant of the purchasers by the 31st March, -- 7 of 27 -- 6 1992; of: (I) A renewal of the existing pastoral holding lease no. 35/1642 for a term of not less than thirty years; or (II) (a) A special lease for tourism purposes for a term of not less than thirty years of an area of not less than forty acres at the northern end of the subject property to facilitate construction of eight self contained cabins in accordance with the approval referred to in special condition 5 hereof, and (b) A special lease for grazing purposes for a term of not less than thirty years over that part of Long Island presently the subject of the pastoral holding lease no. 35/1642 situated north of the river dissecting Long Island with the exception of that area referred to in clause 2 (II)(a) hereof, Failing which the purchaser may at its option rescind the contract by notice in writing to the vendor whereupon the vendor shall within forty- five days of receipt of such notice repay to the purchaser all monies paid by way of deposit or part purchase price together with all interest paid thereon by the purchaser along with the value of all improvements to the subject property made by the purchaser after the 31st day of March, 1992 and in the absence of agreement as to the value of such improvements as determined by a registered valuer appointed for that purpose by the President for the time being of the Queensland Law Society." It is common ground that neither of the events specified in paras.(I) and (II) of cl.2.4 had taken place by 31 March 1992, and also that on 1 April 1992 Wrenport gave to the solicitor for Jurycastle an effective notice of rescission of the contract under that clause. The notice went on to demand repayment of all moneys paid by way of deposit or purchase price, with interest, and the value of -- 8 of 27 -- 7 improvements to the subject property made by Wrenport. It required payment to be made by Jurycastle within 45 days in accordance with cl.2.1. The period of 45 days expired on or about 18 May 1994. The money demanded has not been repaid. As Jurycastle was wound up as insolvent on 1 February 1993, there appears to be little prospect of the money coming from that quarter. Wrenport is naturally unwilling to reconvey the property without being repaid; and, as transferee of the mortgage, the Bank is presumably reluctant to make the repayment itself. The parties are thus content to stand on their legal rights, which fall to be determined primarily according to the proper interpretation of cl.2.1 of the contract. Under that clause, the obligation on Wrenport's part to pay the third instalment of $600,000 on 31 March 1994 was subject to fulfilment of the conditions in paras. (I) or (II) of that clause. The weight of authority suggests that a contractual provision in the general form of cl.2.1 takes effect as a condition subsequent or resolutive condition rendering the contract, or the obligation of the parties to perform it, liable to be defeated at the option of the parties, or, as in this case, of the purchaser alone. See Suttor v. Gundowda Pty. Ltd (1950) 81 C.L.R. 418, 441-442; Gange v. Sullivan (1966) 116 C.L.R. 418, 428; Perri v. Cooloongatta Investments Pty. Ltd (1982) 149 C.L.R. 537, 542-543; 551-553. The precise effect of electing to exercise the option has not always been uniformly stated in -- 9 of 27 -- 8 decisions on the point. Subject to particular contextual indications, it has been described somewhat indiscriminately as having the consequence of "avoiding", "terminating", or "annulling", the contract : see, for example, Perri v. Cooloongatta Investments Pty Ltd. (1982) 149 C.L.R. 537, 545, 554. Clause 2.1 here uses the word "rescind"; but it is an expression that is capable of meaning either rescission ab initio (from the beginning) or rescission in futuro (only as to the future). The distinction is relevant here because of the impact of rescission on the obligations of the parties. The terms of cl.2.1 suggest that the rescission envisaged by the parties is to have a restitutionary outcome. By cl.2.1 all moneys paid by the purchaser, including the deposit and interest, are to be repaid by the vendor; and the purchaser is to reconvey to the vendor title "to the said property", meaning the leasehold interest, together with the stock, plant and machinery transferred to it. By cl.2.1 the vendor is obliged to pay for improvements, to be ascertained by a valuer, made by the purchaser after a particular date. What is contemplated is similar to, if not broader than, the result that would be achieved following a rescission in equity. There are few authorities on the effect of a contractual provision for rescission. However, the resemblance to Rawson v. Hobbs (1961) 107 C.L.R. 466 is in some respects quite marked. There Dixon C.J. and Windeyer J. considered that the purchasers' right to restitution -- 10 of 27 -- 9 arose in equity in consequence of the vendor's inability to transfer the title contracted for. Only Kitto J. regarded the rights of the parties as being governed by the express provisions of cl.12 of the contract in that case. Clause 12 spoke of the purchasers at their option annulling the sale, "in which case all moneys paid by the purchasers on account of the purchase price shall be refunded to them ...". According to his Honour's view (107 C.L.R. 466, 489): "The annulment makes the contract void ab initio, cl.12 being in the nature of a resolutive condition, the operation of which does not depend, as does rescission under the general law, upon the possibility of a substantial restitutio in integrum". Elsewhere in his reasons (107 C.L.R. 466, 490), Kitto J. described the right of the purchasers to recover payment as "not equitable relief". It is noteworthy, however, that all members of the Court concurred in the order made on the appeal, which contemplated a full restitutionary adjustment between the parties. Rawson v. Hobbs was a case in which title to the property had never been transferred; but the result in the present case would be to require reconveyance by Wrenport of the lease repayment to it of the money paid to Jurycastle on account of the purchase moneys. Such an outcome is no more than cl.2.1 itself requires. The real question is whether, in giving effect o the contractual right to rescind, Wrenport is entitled to insist, as it does, on repayment in exchange for a reconveyance, and in the meantime to retain possession of the land. -- 11 of 27 -- 10 For the appellant Bank, Mr McMurdo Q.C. submitted that the correct view of the matter was that, independently of cl.2.1, transfer of the lease to Wrenport was at all times conditional on payment in full of the purchase moneys; and that, on the contract coming to an end without such payment, Wrenport was at once obliged at law to reconvey to Jurycastle without requiring contemporaneous repayment of what it had previously paid as purchaser. The submission was based on McDonald v. Dennys Lascelles Limited (1933) 48 C.L.R. 457, where the High Court held that a vendor under a contract for the sale of land which was terminated before completion, was liable to repay instalments of purchase money already received. In those circumstances, Dixon J. (with whom Rich and McTiernan JJ. agreed) said (at 477): "[the vendor's] title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract." Mr McMurdo contended that, by analogy with the case of purchase money, Wrenport's title to the land in this case was conditional on subsequent completion of the contract, with the consequence that upon rescission Wrenport as purchaser became liable in law to reconvey to Jurycastle immediately and without receiving repayment. The decision in McDonald v. Dennys Lascelles Limited does not go so far as to hold that at common law the title of a purchaser to whom land has been transferred remains conditional until payment of the whole of the price. All it decided was that instalments of purchase money paid or falling due under a contract cannot be retained or recovered -- 12 of 27 -- 11 by the vendor when such a contract is rescinded or terminated at law. The reason is that transfer of title is regarded as the consideration for which such payments are made, with the consequence that a payment in anticipation of transfer is recoverable if the contract goes off before title is transferred. See Wright v. Newton (1835) 3 C.M. & R. 124; 150 E.R. 53; Palmer v. Temple (1839) 9 Ad. & E. 508; 112 E.R. 1304; Coffey v. Clifton (1924) 24 S.R. (N.S.W.) 168; affd. Clifton v. Coffey (1924) 34 C.L.R. 434. What was said by Dixon J. in McDonald v. Dennys Lascelles Limited (1933) 48 C.L.R. 457, at 478-479, recognises an obligation on the part of the purchaser to reconvey the land; the purchaser, as his Honour accepted, "cannot have the land and its value too". It does not follow that on termination of the contract there is an obligation at law to reconvey without receiving repayment of purchase moneys in exchange. There is a passage in the judgment of Starke J. in McDonald v. Dennys Lascelles Limited which may be thought to imply that the obligations on either side are mutual and reciprocal. His Honour said the vendor was entitled to the return of his land, "but is bound to restore any moneys paid or property transferred to him" under the contract. There is nothing in any of the judgments of the majority to suggest that the duty to reconvey the land is independent of or antecedent to the obligation of repaying the purchase money. At common law the right to recover purchase moneys paid under a contract of sale of land not completed by conveyance -- 13 of 27 -- 12 or transfer of title arises because there has been a total failure of consideration, which gives rise to a claim for moneys had and received. Wright v. Newton (1835) 3 C.M. & R. 124. Title to the land transferred could not be recovered by that form of action. Modern conceptions of restitution may render a purchaser liable for the value of the land retained without paying the price : Pavey & Matthews Pty. Ltd. v. Paul (1986) 162 C.L.R. 221; and cf. Koellner v. Breese (1909) 9 S.R. (N.S.W.) 457; but, to enforce a reconveyance, the intervention of equity would be needed. It is difficult to see any justification in equity or at law for enforcing a reconveyance without requiring repayment of the purchase moneys in exchange. Such a result would not sit comfortably with notions of either equity or restitution. In Palmer v. Lark [1945] Ch. 182, 184, Vaisey J. thought it a "fundamental principle" that the payment of the purchase money and the delivery of the conveyance are to be "simultaneous acts performed interchangeably". His Lordship was there formulating the terms of an order for specific performance of a contract to sell land. Hence, if in the present case the assistance of the courts is needed to compel Wrenport to reconvey, the order may be expected to incorporate a provision like that adopted in Palmer v. Lark. If, therefore, the proper view of cl.2.1 is that it envisages a form of rescission and restitution ab initio, Jurycastle would not be entitled to have the lease transferred back to it without repaying the purchase moneys in exchange. -- 14 of 27 -- 13 From the report of Palmer v. Lark [1945] 1 All E.R. 355, the contract enforced in that case seems clearly enough to have been an "open" one, so that what was said there is largely a reflection of the ordinary implications made by law in a contract of that kind : cf. Segacious Pty. Ltd. v. Fabrellas [1991] 1 Qd.R. 471, 479. There are sound reasons why the provisions of cl.2.1 should be subject to a similar implication. It is possible to view that clause as embodying or giving rise to an agreement to repay and reconvey in the event of the option to rescind being exercised. In the statement of claim delivered by Wrenport in its action no. 495 of 1992 against Jurycastle it is pleaded as a "reconveyance contract". Mr Lyons Q.C. submitted that cl.2.1 was a provision which was intended by the parties to survive the avoidance or termination of other contractual obligations resulting from exercise of the option to rescind. He suggested that in that respect the clause resembled the provision for arbitration considered in Heyman v. Darwin Ltd. [1942] A.C. 356. There seems little doubt that this is so. If it were not, the provision in cl.2.1 for valuation of improvements would be deprived of all effect. As with the contractual provision in Rawson v. Hobbs (1961) 107 C.L.R. 466, in the view that was adopted of it by Kitto J., cl.2.1 is intended to define and regulate the rights of the parties not only to rescission, but also after it has taken place. It contains provisions by which the parties undertake to repay and reconvey, which form part of their agreement. It is -- 15 of 27 -- 14 therefore proper to describe cl.2.1 as an agreement to repay and reconvey. It does not, in express terms, make repayment and reconveyance interdependent; but it accords with the ordinary expectation of the parties and implication of law in such a case that they should be performed "simultaneously and interchangeably". It follows that, on rescission taking place under cl.2.1, Wrenport was not bound to retransfer the lease to Jurycastle without receiving in return the payments it had made and was entitled to recoup under that clause. According to cl.2.1, the agreement to repay and reconvey ought to have been performed 45 days after receipt of notice of rescission, which was 18 May 1992. However, on 14 April 1992, Jurycastle's solicitor wrote asserting that Wrenport was in breach of its obligation, which he alleged was to reconvey forthwith upon rescission. In response, solicitors for Wrenport replied by letter dated 7 May 1992 claiming that Jurycastle had by its solicitor's letter of 14 April repudiated the contract in cl.2.1 to reconvey the land. In consequence no further attempt has been made to carry it out. In the light of these events, there are two possible views of the current status of the agreement to reconvey. One is that it subsists as an agreement to repay and reconvey within a reasonable time. The essentiality of time under cl.21, if it survived the rescission, ceased when the parties failed to perform on time on 18 May 1992. The better view appears to be, however, that Jurycastle wrongly -- 16 of 27 -- 15 repudiated before that date by insisting on immediate reconveyance; and that Wrenport, by its solicitors' letter of 7 May 1992, accepted that repudiation and brought the agreement for repayment and reconveyance to an end. If that is so, Wrenport is now the beneficial as well as the legal owner of the Crown lease. It has achieved that result without paying the full price contracted for, and in particular without paying the instalment of $600,000 that was originally due on 31 March 1994. Of course, it may equally be said that Wrenport has never received the benefit of fulfilment of cl.2.1. It is possible that it may be subject to some independent legal liability for restitution in accordance with the principles laid down in Pavey & Matthews Pty. Ltd. v. Paul; but that is not something that calls for decision here. What seems clear is that Wrenport is not liable under the contract of sale with Jurycastle for the instalment of $600,000 that was payable on 31 March 1994 under the contract. That amount ceased to be payable when the contract was rescinded under cl.2.1 on 1 April 1992. It follows that mortgage no. 848401X in favour of the Bank does not secure payment by Wrenport of that sum, and that the Bank is not entitled to enforce the mortgage against Wrenport for default in payment of that sum. It is also clear that Wrenport is not presently obliged to reconvey the lease to Jurycastle. The learned judge below therefore was correct in refusing the relief sought. The appeal should be dismissed -- 17 of 27 -- 16 with costs. -- 18 of 27 -- 3 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 69 of 1994 Brisbane Before McPherson J.A. Davies J.A. Pincus J.A. [ANZ v. Wrenport Pty. Ltd. and Jurycastle Pty. Ltd. (in liq.)] BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Applicant) Appellant AND: WRENPORT PTY. LTD. (First Respondent) First Respondent AND: JURYCASTLE PTY. LTD. (IN LIQUIDATION) (Second Respondent) Second Respondent REASONS FOR JUDGMENT - DAVIES J.A. Judgment delivered the 11th day of April 1995 The facts relevant to this appeal are set out in the judgment of McPherson J.A. which I have had the advantage of reading. I adopt what he has said in that respect. The relief sought by the appellant below and in this Court consisted of declarations: 1. That the appellant is entitled to enforce registered mortgage No. K84801X dated 4 October 1991 executed by the first respondent in favour of the second respondent over Crown leasehold land. 2. That the mortgage presently secures, amongst other -- 19 of 27 -- 4 things, the payment by the first respondent of the sum of $600,000 and interest thereon presently owing by the first respondent under a contract between the respondents for the sale by the second to the first respondent of the lease. 3. Alternatively that the first respondent is presently obliged to reconvey the lease to the second respondent irrespective of whether any sum is paid to the first respondent. In the Court below it was submitted by the second respondent that the appellant had no standing to seek the relief sought in 3. The learned primary judge rejected that submission and that question is not in issue before this Court. It was common ground between the parties, I think correctly, that whether the appellant is entitled to the relief which it seeks depends upon the construction of cl.2.1 of the contract between the respondents and its application to the facts. Although McPherson J.A. has set out that clause fully in his judgment I propose to repeat it here because the questions in issue involve some analysis of its terms. "2.1 NOTWITHSTANDING THE PROVISIONS HEREINBEFORE CONTAINED THE BALANCE PURCHASE MONEY SHALL BE PAID AS FOLLOWS:- (A) AS TO THE SUM OF SIX HUNDRED AND SEVENTY THOUSAND DOLLARS ($670,000.00) ON THE 14TH OCTOBER, 1991. (B) AS TO THE SUM OF ONE HUNDRED AND SEVENTY THOUSAND DOLLARS ($170,000.00) ON THE 31ST DAY OF MARCH, 1992. (C) AS TO THE SUM OF SIX HUNDRED THOUSAND DOLLARS ($600,000.00) ON THE 31ST DAY OF MARCH, 1994. -- 20 of 27 -- 5 PROVIDED HOWEVER THAT THE PAYMENT OF THE BALANCE PURCHASE PRICE OF SEVEN HUNDRED AND SEVENTY THOUSAND DOLLARS ($770,000.00) BY INSTALMENTS ON THE 31ST DAY OF MARCH, 1992 AND MARCH, 1994 AS DESCRIBED IN (B) AND (C) ABOVE SHALL BE SUBJECT TO THE GRANT TO THE PURCHASERS BY THE 31ST MARCH, 1992; OF:- (I) A RENEWAL OF THE EXISTING PASTORAL HOLDING LEASE NO. 35/1642 FOR A TERM OF NOT LESS THAN THIRTY YEARS; OR (II) (a) A SPECIAL LEASE FOR TOURISM PURPOSES FOR A TERM OF NOT LESS THAN THIRTY YEARS OF AN AREA OF NOT LESS THAN FORTY ACRES AT THE NORTHERN END OF THE SUBJECT PROPERTY TO FACILITATE CONSTRUCTION OF EIGHT SELF CONTAINED CABINS IN ACCORDANCE WITH THE APPROVAL REFERRED TO IN SPECIAL CONDITION 5 HEREOF, AND (b) A SPECIAL LEASE FOR GRAZING PURPOSES FOR A TERM OF NOT LESS THAN THIRTY YEARS OVER THAT PART OF LONG ISLAND PRESENTLY THE SUBJECT OF THE PASTORAL HOLDING LEASE NO. 35/1642 SITUATED NORTH OF THE RIVER DISSECTING LONG ISLAND WITH THE EXCEPTION OF THAT AREA REFERRED TO IN CLAUSE 2 (II) (a) HEREOF, FAILING WHICH THE PURCHASER MAY AT ITS OPTION RESCIND THE CONTRACT BY NOTICE IN WRITING TO THE VENDOR WHEREUPON THE VENDOR SHALL WITHIN FORTY- FIVE DAYS OF RECEIPT OF SUCH NOTICE REPAY TO THE PURCHASER ALL MONIES PAID BY WAY OF DEPOSIT OR PART PURCHASE PRICE TOGETHER WITH ALL INTEREST PAID THEREON BY THE PURCHASER ALONG WITH THE VALUE OF ALL IMPROVEMENTS TO THE SUBJECT PROPERTY MADE BY THE PURCHASER AFTER THE 31ST DAY OF MARCH, 1992 AND IN THE ABSENCE OF AGREEMENT AS TO THE VALUE OF SUCH IMPROVEMENTS AS DETERMINED BY A REGISTERED VALUER APPOINTED FOR THAT PURPOSE BY THE PRESIDENT FOR THE TIME BEING OF THE QUEENSLAND LAW SOCIETY AND IN SO ACTING SUCH VALUER SHALL ACT AS AN EXPERT AND NOT AS AN ARBITRATOR AND THE DECISION OF SUCH VALUER SHALL BE FINAL AND BINDING UPON THE PARTIES. THE COSTS OF SUCH VALUATION SHALL BE BORNE EQUALLY BETWEEN THE PARTIES. THE PURCHASER SHALL AT THE COST OF THE VENDOR RECONVEY TO THE VENDOR ALL RIGHT TITLE AND INTEREST IN AND TO THE SAID PROPERTY TOGETHER WITH THE STOCK, PLANT, MACHINERY, EQUIPMENT AS HEREIN DESCRIBED." 1. The relief sought in paragraph 1 On the facts which were not disputed both alternative conditions stated in the proviso to cl.2.1 failed and the -- 21 of 27 -- 6 first respondent sent to the second a notice in writing on 1 April 1992 purporting to rescind the contract pursuant to that clause. Although the first respondent did not pay the sum of $170,000 due under cl.2.1(B) on 31 March 1994 it was not submitted by the appellant that this disentitled the first respondent from giving that notice, with whatever effect it otherwise had. The appellant submits however that, notwithstanding the terms of the clause ("the purchaser may ... rescind the contract by notice in writing"), the giving of that notice was not sufficient to rescind the contract. That required in addition, it is submitted, reconveyance of the property and repayment of the monies already paid. In my view that submission misconstrues the clause. By its terms, referred to above, the parties envisaged that, upon the giving of notice, the contract of sale, that is the rights and obligations to give effect to the sale, would come to an end and that, upon that occurring ("whereupon"), the mutual obligations to repay monies already paid and to reconvey the lease would arise. The appellant sought to derive some support for its argument in this respect from a passage in the judgment of Dixon J. (as he then was) in McDonald v. Dennys Lascelles (1933) 48 C.L.R. 457 at 477. His Honour there said: "When a contract stipulates for payment of part of the purchase price in advance, the purchaser relying on the vendor's promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract." -- 22 of 27 -- 7 No doubt that statement is correct as a general proposition, not just with respect to the vendor's rights and obligations, but also with respect to those of the purchaser. Generally a purchaser cannot retain land, conveyed to him or her before the whole of the purchase price has been obtained, unless that balance is paid when the time comes for completion. But that general proposition does not assist the appellant here where the contract expressly deals both with termination upon non-fulfilment of conditions subsequent and the consequential mutual obligations to repay and reconvey. Once the contract for sale came to an end the amount, payment of which the mortgage secured, ceased to be payable. There was thereafter no obligation to enforce. For those reasons the relief sought in paragraph 1 must be refused. 2. The relief sought in paragraph 2 What I have said so far also requires refusal of this relief. 3. The relief sought in paragraph 3 There is no doubt that mutual obligations arose in consequence of the first respondent's rescission; on the part of the first respondent to reconvey the property together with any stock, plant, machinery and equipment described in the contract; and on the part of the second respondent to repay the monies paid with interest and to pay the value of any improvements to the property made by the first respondent. -- 23 of 27 -- 8 The second respondent's obligation is stated to arise within 45 days of receipt of the notice. No time is expressed for compliance by the first respondent of its obligation. But plainly the contractual intention was that the obligations should be concurrent and inter-dependent. The second respondent did not and was plainly unable to perform its obligation to repay. The first respondent was not obliged to reconvey irrespective of whether or not the second respondent performed its obligation. The relief sought in paragraph 3 must therefore also be refused. What I have said so far may not, of course, necessarily dispose of the rights and obligations of the first and second respondents to one another but it is sufficient to dispose of the present proceedings. I agree that the appeal should be dismissed. -- 24 of 27 -- 9 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 69 of 1994. Brisbane Before McPherson J.A. Davies J.A. Pincus J.A. [ANZ v. Wrenport & Anor] BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Applicant) Appellant AND: WRENPORT PTY LTD (First Respondent) First Respondent - and - JURYCASTLE PTY LTD (IN LIQUIDATION) (Second Respondent) Second Respondent REASONS FOR JUDGMENT - PINCUS J.A. Judgment delivered 11/04/1995 I have read the reasons of McPherson JA and those of Davies JA and agree with their Honours' conclusions. Clause 2.1 of the sale contract entitled the purchaser, in the events that happened, to rescind, and that it did. Then the vendor was obliged under the clause to repay to the purchaser what had been paid under the contract, and some other moneys. Further, the purchaser was required to reconvey title; obviously, the vendor's and purchaser's obligations were intended to be concurrent. -- 25 of 27 -- 10 These mutual obligations not having been fulfilled, the question is whether the vendor's assignee, which has only the vendor's rights, is entitled to be paid the balance of the purchase price. By the terms of cl. 2.1, the purchaser's only obligation under the contract is to participate in the exchange of its title for so much of the purchase price as has been paid. But a question arises whether that obligation has been affected by events following on the purchaser's notice of rescission under cl. 2.1. On 1 April 1992 the purchaser gave the vendor "formal notice of rescission of the contract" and demanded repayment of the moneys mentioned in cl. 2.1. On 6 April the vendor demanded reconveyance of the title, and on 13 April the purchaser nominated 18 May as the "date for settlement". But that nomination was, on 14 April, rejected by the vendor. On 22 April the purchaser reiterated its nomination of 18 May as the date for settlement and set out details of what it proposed should be done at settlement. On 28 April, according to a letter of 7 May, the vendor asserted that it did not accept that the purchaser had the right to nominate 18 May as the date for settlement. By the letter of 7 May the purchaser asserted that the vendor's letter of 14 April was a repudiation and an anticipatory breach; the letter said that the purchasers accepted that repudiation and terminated the agreement. What was thus terminated was not, as it appears to me, merely the agreement set out in cl. 2.1, under which the purchaser was to reconvey the property, but the whole contract. If this is correct, then the purchaser, and perhaps the vendor also, is presumably entitled to have orders made of the kind discussed in Rawson v. Hobbs (1961) 107 C.L.R. 466, to restore the parties so far as practicable to their original positions; somewhat paradoxically, the purchaser's rescission on account of the vendor's -- 26 of 27 -- 11 repudiation of its obligations under cl. 2.1 has, if effective, re-created mutual rights to have a restoration of positions, of the kind which cl. 2.1 contemplated. But if that is so, and the vendor is entitled to such relief against the purchaser, that does not affect the outcome of the appellant assignee's claims. The appeal must be dismissed. -- 27 of 27 --