Brien v Dwyer
141 CLR 37822 ALR 485
(Judgment by: STEPHEN 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:
STEPHEN J
When Mrs. Brien agreed in February 1973 to buy from the Dwyers their house at Byron Bay she promised, by cl. 1 of the contract of sale, that she would "upon the signing of this agreement pay as a deposit to the Vendors' agent herein named as stakeholder the sum of $1,600". She signally failed to keep her promise. Nothing was paid in February and when in early March her husband, a local solicitor who acted for her in the transaction, sought to take advantage of a provision of cl. 1 which permitted payment by cheque, the cheque for $1,600 which he gave to the vendors' agent he post-dated to 1st April. The 1st April came and went and, for the reasons described in the several judgments of my brothers, it was not until 10th May that the sum of $1,600 was first credited in the agent's trust account ledger card and a receipt issued for it. Only on 11th May did the agent bank the cheque, which was on the same day cleared by the bank on which it was drawn.
Until about 11th May the Dwyers knew nothing of all this. When they learned that the deposit had not been paid, their solicitors on 11th May notified Mr. Brien of their clients' termination of the contract pursuant to cl. 16, a clause which entitled the vendor to terminate upon the purchaser defaulting in performance of any contractual obligation.
The question for the Court is whether the Dwyers were entitled to thus terminate the contract. That Mrs. Brien was some two and a half months late in payment of the deposit is undisputed. Her default began when she failed to pay the stipulated deposit "upon the signing of this agreement". The different shades of meaning which have been assigned to this expression by those before whom this case has come demonstrate how uncertain is the language. Joining, as I must, the ranks of those who essay its interpretation, I would adopt the meaning attributed to it in the reasons for judgment of Jacobs J. and I do so for the reasons there expressed. It is to be hoped that some change can be made to the present standard form of contract of sale so as clearly to express whatever was in fact the precise intention of its authors. As Jacobs J. makes clear, his view does not contemplate the giving of any notice so as to fix a reasonable time for payment of the deposit and in the present case it is quite clear that the deposit was not paid within the time required by cl. 1 of the contract. The handing over, days later, of a postdated cheque did not come near to being compliance with cl. 1; even the advent of 1st April did not improve the position since the estate agent appears to have held the cheque even after that date on terms that it should not be presented for payment. Only on 10th May was the agent told that he might bank it, which he did the following day .
The evidence leaves quite uncertain the sequence of events on 11th May, whether the notice of termination did or did not precede the banking of the cheque, but I do not think it matters: if a post-dated cheque, given subject to an additional suspensory condition, could ever involve payment by cheque within cl. 1, it would have been the purchaser's instruction, given to the agent on 10th May, that the cheque might now be banked, and not anything occurring the next day, that would be significant. However, in the present circumstances I need not decide whether such an instrument can ever become a payment by cheque within cl. 1 because I have concluded that once the purchaser defaulted in payment of the deposit that default was decisive. The vendors thereupon became entitled to terminate the contract and might only lose that entitlement by waiver or, perhaps, by the operation of some form of estoppel, neither of which finds any support from the facts of this case. It cannot, I think, avail Mrs. Brien that on 10th May, a day before notice of termination, the agent had in his possession a cheque which he was then authorized to present for payment, or that by the following day the cheque had been banked and the agent's trust account credited with the full amount of the deposit. Once the breach of contract occurred, as it had months earlier, only some act or omission on the vendors' part could deprive them of their entitlement to terminate: there was no such act or omission, there scarcely could be in view of their ignorance of the breach, and accordingly the purchaser's breach subsisted as one which the vendors could rely upon to terminate the contract despite the purchaser's later payment of the deposit.
This inexorable effect of the purchaser's default in timely payment of the deposit is due to the quite special character of a purchaser's promise to pay a deposit. Expressed as a promise, as it is in the present contract, it should not, I think, be regarded as a condition precedent to the formation of contractual relations between the parties - compare Myton Ltd. v. Schwab-Morris (1974) 1 WLR 331 , at p 336; [1974] 1 All ER 326 , at p 330 per Goulding J. - but rather as a condition subsequent, as Wootten J. treated it in his examination of the authorities in Alarm Facilities Pty. Ltd. v. Jackson Constructions Pty. Ltd. (1975) 2 NSWLR 22 . However it is a condition subsequent of a quite special character. As is made clear in the authorities to which Hutley J.A. referred in his reasons for judgment in this case, a deposit is indeed "an earnest to bind the bargain", a "guarantee that the purchaser means business". In Watson v. Healy Lands Ltd. (1965) NZLR 511, at p 516 Woodhouse J. described a deposit as having "the character of a security arranged to ensure the due performance of the contract . . . payment of the deposit is regarded as fundamental to the contract proceeding . . . failing to meet this initial obligation . . . is not merely a failure to meet the first requirement of the contract, but it is a failure to provide the agreed security for the further performance of other obligations". It is this special character of a deposit which requires that a purchaser's failure to pay a deposit at the time and in the manner stipulated in the contract entitles the purchaser then and there to terminate the contract - and see Frampton v. McCully (1976) 1 NZLR 270, at p 277 .
It is also because of this character which a deposit bears that a purchaser's tardy payment of deposit, unaccompanied by waiver of the breach by the vendor, will not avoid the consequence of the breach involved in that tardiness, namely the vendor's entitlement to terminate the contract. The vendor acquired this entitlement as soon as the breach occurred and no unilateral act on the part of the purchaser can deprive him of it. The position is no different from that of an unfulfilled contingency, precedent or subsequent, upon the timeous fulfilment of which is made to depend the coming into effect, or continuance in being, of the contractual relationship. In relation to such contingencies Needham J., held, in Gilbert v. Healey Investment Pty. Ltd. (1975) 1 NSWLR 650 , that performance of the contingency out of time did not, in the absence of waiver, prevent the other party from thereafter avoiding the contract. His Honour relied upon what their Lordships had said in Aberfoyle Plantations Ltd. v. Cheng [1960] AC 115 , at pp 124-125 . There is, I think, no occasion for the drawing of any distinction between such cases and the instant case.
Although, in my view, the purchaser's obligation to pay the deposit at the stipulated time was not an act upon which formation of contractual relationships between the parties was made contingent, its exact performance was essential. Once the obligation was breached, the vendors were free to bring the contract to an end. Because of its requirement of exact performance, there was no way in which a breach of the obligation could subsequently be made good. To regard some tardy doing of the promised act of payment of a deposit as equivalent to its punctual performance is to ignore the element of time. This element cannot be ignored, since without it a deposit will no longer possess those qualities which give to it its special character and importance in contracts for the sale of land.
I would dismiss this appeal.