Civoken v Madden Grove Developments [2006] VSC 283
After a trial on liability only, Whelan J in the Commercial List of the Supreme Court of Victoria held that purchasers of land on which a retirement village was to be built, whose stated grounds of termination failed, validly terminated because the vendor had repudiated the contract and, further, had committed serious and irremediable breaches of intermediate terms, so that no notice under condition 5 of Table A was needed [15], [465], [605].
What the court decided
A contract of sale dated 28 June 2000 made Civoken Pty Ltd and Stones Sharp Financial Services Pty Ltd ("SSFS") purchasers, and Madden Grove Developments Pty Ltd ("MGD") vendor, of the Madden Grove land [10]. MGD was formed by Primelife Corporation Ltd (the second defendant) and Mr Sudholz (the third defendant) [2], [3], [4]. By a letter dated 13 August 2004 the purchasers served a "Rescission Notice" [269]. It required the default to be remedied within 14 days, failing which the contract might be rescinded under general condition 6(2) of Table A, set out in a schedule to the Transfer of Land Act 1958 (Vic) [270].
Special condition 7.2 required MGD to commence the works as soon as practicable, and recorded intended commencement dates without obliging MGD to meet them [364]. The breaches the notice relied on were therefore not established [371], [430]. MGD had, however, failed to lodge and pursue the Application (as defined), and amended the Plans (as defined) contrary to special condition 7.5 [378], [431]. It failed to exercise its best endeavours to procure the Planning Permit (as defined) because the permit it was pursuing was not the one the contract provided for [382], [605]. The complaint about the quality of its planning efforts failed [383], [384], [385]. No oral variation arose from the purchasers' silence, because nothing said was an offer or acceptance and variations had to be in writing and signed [405]. Election and waiver failed for want of knowledge and unequivocal conduct [406]. Estoppel failed because MGD relied on no assumption induced by the purchasers, whose conduct was passive and not clear and unambiguous [416], [417], [418], [419].
His Honour noted that repudiation is not to be lightly found, particularly in the context of the sale of land [441]. Viewed objectively, MGD's conduct conveyed that it "was simply not prepared to take its relevant obligations seriously" [444]. The purchasers had treated the contract as at an end since August 2004, which is all that acceptance of a repudiation requires [446]. Further, the terms breached were intermediate terms rather than conditions, but the breaches were sufficiently serious to justify termination [435], [436]. The purchasers were entitled to rely on grounds of which they were unaware when they terminated [432], [445].
Condition 5 of Table A, incorporated by general condition 9.1, bars the exercise of rights arising from a default until a notice to remedy is served and not complied with [429]. It was irrelevant to termination for repudiation, as MGD accepted [447]. A notice provision directed to giving an opportunity to remedy cannot operate if the default is incapable of remedy [459]. Lodging a compliant application in 2004, after four years on a different course, would not have "put matters right for the future" [462]. Applying Wickman, his Honour concluded that the breaches were truly irremediable, so the absence of a condition 5 notice did not preclude reliance on them [464].
The deposit, for which no date was fixed, was payable within a reasonable time after execution and so was the first relevant payment [580]. The part of the residue payable after stage 1 was the second, making the contract a terms contract [584]. The vendor's statement did not include the information required for a terms contract [585]. MGD did not establish the section 32(7) requirements, though no dishonesty or unreasonableness was found [589]. The purchasers were therefore entitled to rescind under section 32(5) of the Sale of Land Act 1962 (Vic) [608].
The claims under section 52 of the Trade Practices Act 1974 (Cth) failed, save for one [606]. That claim rested on the misleading representation that the prospective vendor was a wholly owned subsidiary of Primelife, and Mr Sudholz was liable for aiding and abetting it [607]. His Honour said he would hear the parties on the further disposition of the proceeding [613].
Why it matters
A purchaser whose stated ground fails may still terminate if the vendor's conduct is repudiatory, or if its breaches justify termination and are incapable of remedy, so that a notice provision such as condition 5 cannot operate. Leaving the deposit date blank helped make the contract a terms contract; readers should check the current text of the Sale of Land Act. The conclusions turn heavily on findings of fact made at a trial on liability only [15].
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.