Brien v Dwyer
141 CLR 37822 ALR 485
(Judgment by: AICKIN J)
Between: BRIEN
And: DWYER
Judges:
Barwick C.J.
Gibbs J.
Stephen J.
Jacobs J.
Aickin J.
Subject References:
Vendor and Purchaser
Judgment date: 14 December 1978
Sydney
Judgment by:
AICKIN J
I have had the advantage of reading the reasons for judgment prepared by the Chief Justice and I agree with his conclusion that the appeal should be dismissed. I am in general agreement with his reasons for that conclusion, but there is one point on which I prefer to state my own reasons separately, and another on which I add some further comments.
I agree that there is no warrant for qualifying the words in cl. 1 by such expressions as "or within a reasonable time thereafter" or for reading "upon" as meaning "on or after". The words are "upon the signing of this agreement", but the obligation which they impose may be effectively discharged by the purchaser making payment to the estate agent before the counterparts are exchanged, or when both parties sign the one document contemporaneously. It is not until the standard form document is signed by both parties, or signed copies exchanged, that there is anything which answers the description "this agreement" in cl. 1, and it is not until then that any obligation on either party arises. No doubt it would be unusual for both parties to sign the contract, or exchange signed parts, in the presence of the estate agent, but if that occurred payment of the deposit then and there would constitute compliance with the terms of cl. 1 of what would at that moment become a contract.
It appears clear in principle that if payment were made in advance of the formation of the written contract, it would be held by the estate agent for the purchaser until the contract was signed by both parties or separate parts exchanged: Sorrell v. Finch [1977] AC 728 . Upon exchange of parts or contemporaneous signatures it would become "the deposit" and as such would be held by the estate agents in accordance with the terms of the contract. No doubt prudent solicitors for vendors and for purchasers are concerned to ensure that the deposit is paid before exchange of parts so as to protect the interests of their respective clients.
This view accords with the nature of a deposit under a contract for the sale of land as an earnest given by the purchaser to bind the bargain and as security for its performance. It is thus the basis on which the purchaser obtains then and there an equitable interest in the land. See Howe v. Smith (1884) 27 Ch D 89, esp at p 101 and Soper v. Arnold (1889) 14 App Cas 429, esp at p 435 , per Lord Macnaghten.
It follows that, if the deposit is not paid "upon the signing of this agreement" in the sense which I have described above, the purchaser is in breach of the contract the moment it comes into existence, and that the vendor may thereupon rescind. There is, in my opinion, no basis upon which it can be said that the vendor must give notice before doing so. The breach is a fundamental one, going to that which is required at the very moment of formation of the contract. There is here no room for the application of the general equitable rule that time is not of the essence except where expressly made so. Here the payment of the deposit is part of the mode of formation of the contract and as a result the time for payment of the deposit is by necessary implication of the essence of this form of contract .
In construing a standard form of contract in common use, matters of convenience to both parties are a legitimate matter for consideration if more than one construction is open. In a transaction of this kind it is a matter of convenience, and indeed of practical necessity, that the parties should know at the moment of formation of the contract exactly what these obligations are and when they are to be performed. That need is not met by the implication of an imprecise standard such as a "reasonable time" for there is in this context no standard by which to measure what is reasonable. Moreover such a view would not give to the vendor the protection of the deposit as a convenient security for performance. Forfeiture of the deposit for failure by the purchaser to complete has long been an integral part of contracts for the sale of land and is provided for in this contract. If the obligation to pay the deposit does not arise until the expiration of a reasonable time and can then be enforced only on the giving of reasonable notice, one of its principal purposes is defeated and the vendor left to the expensive and inconvenient remedy of an action for damages.
The view which I have expressed above leads in this case to the same conclusion as the view of the Chief Justice and it is hard to visualize circumstances in which the two views would produce different results under this form of contract.
The other aspect of this case on which I wish to add to what the Chief Justice has said is the post-dated cheque. In my opinion, the giving of a post-dated cheque with express instructions not to present it for payment did not constitute compliance with the contract requiring payment and permitting it to be made by cheque, quite part from the time at which it was given to the estate agents. No doubt a post-dated cheque is a valid instrument - see Bills of Exchange Act 1909-1973 (Cth), s. 18 (2) (Bills of Exchange Act, 1882 (UK), s. 13 (2)) and this was so before the passing of the latter Act. However, it is not a "cheque" within the meaning of the Bills of Exchange Act which by s. 78 (1) defines a cheque as a "bill of exchange drawn on a banker payable on demand". I take that to be the ordinary meaning of the term; hence the need for the adjective "post-dated". It is, I think, clear that a post-dated cheque is a bill of exchange payable at a future date. There is no authority for the proposition that it becomes a cheque properly so-called when the date which it bears arrives. It is established that for stamp duty purposes it may then be received in evidence when stamped only as a cheque and not as a bill of exchange, but that is not because it has become a cheque, but because the view has been taken that if an instrument appears on its face to be correctly stamped when tendered that is sufficient to make it admissible - see Royal Bank of Scotland v. Tottenham [1894] 2 QB 715 and the case there cited. In so far as the view of Griffith C.J. (when Chief Justice of Queensland) in Magill v. Bank of North Queensland (1895) 6 QLJ 262 might suggest a contrary view of the nature of a post-dated cheque, I am respectfully of opinion that the decision of the Court of Appeal of New Zealand in Pollock v. Bank of New Zealand (1901) 20 NZLR 174 is to be preferred .
What was done with the post-dated cheque was not done with the knowledge of, nor on behalf of, the vendor. It was done at the behest of the purchaser and did not fall within the authority of the estate agents under the contract of sale which they had arranged. I can see no warrant for regarding it as affecting the position of the vendor. The vendor had not in any way acquiesced in what was done, nor did his delay in checking whether the deposit had in fact been paid in accordance with the contract operate as a waiver or in any way to the prejudice of the purchaser.