Foran v Wight
168 CLR 38588 ALR 413
(Judgment by: DAWSON J)
Between: Foran
And: Wight
Judges:
MASON CJ
BRENNAN J
DEANE J
DAWSON JGAUDRON
Subject References:
Vendor and Purchaser
Judgment date: 15 November 1989
Canberra
Judgment by:
DAWSON J
The appellants were the purchasers and the respondents were the vendors under a contract dated 24 December 1982 for the sale of land at Ebenezer in New South Wales for the sum of $75,000. The contract provided for completion on or before 22 June 1983 and further provided that "in this respect" time should be of the essence. A special condition of the contract required the vendors to attend to the registration of a right of way before completion.
The purchasers experienced some difficulty in obtaining finance, but, having obtained a loan from National Westminster Finance Australia Limited, instructed a solicitor to act on their behalf. On 20 June 1983 the purchasers' solicitor rang the vendors' solicitor and informed them that finance had been arranged for Wednesday, 22 June 1983. He asked "What time can we settle on that day?" The vendors' solicitor replied "We have a problem here. We won't be able to settle on Wednesday 22nd June because the Right of Way which we are required to give under one of the Special Conditions in the Contract is not registered as yet." The purchasers' solicitor then said "What went wrong? You had six months or more in which to register the Right of Way." The vendors' solicitor replied "We have had problems with the neighbours of Mr Wight and his solicitor has mucked us around." The purchasers' solicitor asked "What stage has the registration of the Right of Way reached?" and the vendors' solicitor replied "I don't know. I'll have to check that. What is your attitude to settling this matter some time after Wednesday when the Right of Way will be registered?" The purchasers' solicitor responded "You realize that time is of the essence in the contract. I cannot say anything in relation to that and will have to seek instructions. I can't enter into any further discussions in relation to settlement."
It appears that no attempt was made upon either side to settle on 22 June 1983. As they had intimated, the vendors were unable to settle on that day . On 24 June 1983 the purchasers served a notice of rescission upon the vendors based upon the vendors' default in failing to register the right of way, to provide a good title to the property and to complete the sale in accordance with the requirements of the contract.
The right of way was not registered until 22 July 1983 and there was correspondence between the solicitors in which the vendors' solicitor sought completion of the contract and the purchasers' solicitor maintained that the purchasers had rescinded the contract. On 30 November 1983 the purchasers filed a summons claiming a declaration that the contract had been rescinded by them and the return of the deposit of $7,500 paid under the contract. Subsequently the purchasers added a claim for relief from forfeiture of the deposit pursuant to Conveyancing Act 1919 (NSW). The purchasers also claimed damages, but apparently this claim was not pursued upon trial. The vendors filed a cross-claim seeking an order for specific performance of the contract together with declarations that the purchasers were not able to complete the contract, that by reason thereof they were not entitled to rely upon the essential time condition in the contract, and that the notice of rescission of 24 June 1983 was invalid. By an amended cross-claim the vendors sought a declaration that they had validly terminated the contract and that they were entitled to forfeit the deposit. They also claimed damages.
The reference in the cross-claim to the purchasers' inability to complete was a reference to the financial position of the purchasers upon the date fixed for completion. The loan from National Westminster Finance Australia Limited was for $56,000, $11,500 less than the whole of the purchase price minus the deposit, and the purchasers had to find the balance. The learned trial judge found that they did not have the whole of the balance nor was it available to them by 22 June 1983, the date fixed for completion.
The trial judge found that on 20 June 1983 the vendors indicated to the purchasers that they could not settle on 22 June 1983. He regarded this as a repudiation of the contract which was accepted by the purchasers, albeit after the time for completion had passed and notwithstanding the purchasers' inability to complete for lack of finance. Thus he regarded the purchasers as having validly rescinded the contract. Upon this basis he ordered the return of the deposit to the purchasers and it was unnecessary to consider the claim under Conveyancing Act.
The term of the contract requiring completion on or before 22 June 1983 was, by express provision, an essential term. Clearly enough, by indicating on 20 June 1983 that they would not be complying with it, the vendors were in anticipatory breach of the contract and had thereby repudiated it .
In Afovos Shipping Co. v. Pagnan & Flli (1983) 1 WLR 195 , at p 203; [1983] 1 All ER 449 , at p 455, Lord Diplock suggested that anticipatory breach of a contract by one party occurs only where "the threatened non-performance would have the effect of depriving (the) other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the primary obligations of the parties under the contract then remaining unperformed. ... The non-performance threatened must itself satisfy the criteria of a fundamental breach." Perhaps Lord Diplock was intending to suggest that an anticipatory breach of an essential (or fundamental) term need not necessarily amount to repudiation. On the other hand, perhaps he was recognizing that an anticipatory breach must be fundamental before it can amount to repudiation, whether it is fundamental because it is the breach of an essential term or for some other reason. An essential term is a term which the parties have agreed, or which the law says, goes to the root of the contract. See Suisse Atlantique Societe d'Armement Maritime SA v. N.V. Rotterdamsche Kolen Centrale [1967] 1 AC 361 , at pp 421-422; Shevill v. Builders Licensing Board (1982) 149 CLR 620 , at pp 625-627; Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB 26 , at pp 63-64; D.TR Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. (1978) 138 CLR 423 , at pp 430-431. In Laurinda Pty. Ltd. v. Capalaba Park Shopping Centre Pty. Ltd. (1989) 63 ALJR 372, at p 380; 85 ALR 183 , at p 195, Brennan J. thought that anticipatory breach may amount to repudiation whether it is of an essential term or otherwise goes to the root of the contract. I see no reason to doubt that view. It is in accordance with the decision of this Court in Huppert v. Stock Options of Australia Pty. Ltd. (1965) 112 CLR 414 and the observation of Dixon C.J. in Rawson v. Hobbs (1961) 107 CLR 466 , at p 480.
Repudiation by way of anticipatory breach by a party to a contract does not put an end to the contract unless the other party accepts the repudiation and rescinds the contract. Although he may do so, the other party does not have to accept the repudiation. He may continue to treat the contract as on foot and hold the party guilty of repudiation to the performance of his obligations. If those obligations remain unperformed when the time for performance arrives, the anticipatory breach will be converted into an actual breach. If the other party keeps the contract alive, he does so not only for his own benefit but also for the benefit of the party guilty of repudiation. The latter may, upon giving reasonable notice , withdraw his repudiation and complete the contract and, subject to a qualification with which I shall deal, the other party remains bound by the contract, enabling the repudiating party to take advantage of any breach by the other party or any supervening event which would discharge him from liability. If the other party elects to rescind, the rescission is, of course, not ab initio . He is entitled to maintain an action for damages for the anticipatory breach, the damages being calculated by reference to the loss which he would suffer by the breach becoming actual, subject to any opportunity to mitigate his loss in the meantime. See Hochster v. De la Tour (1853) 2 El & Bl 678 (118 ER 922); Frost v. Knight (1872) LR 7 Ex 111, at p 112; Avery v. Bowden (1856) 6 El & Bl 953 (119 ER 1119); Peter Turnbull & Co. Pty. Ltd. v. Mundus Trading Co. (Australasia) Pty. Ltd. (1954) 90 CLR 235 .
It is, I think, clear that the anticipatory breach of a contract amounting to repudiation cannot, if the repudiation is not accepted, continue beyond the time for performance. At that point, the failure to perform becomes an actual and not an anticipatory breach and the remedies available are for actual, rather than anticipatory, breach. See Peter Turnbull, at p 251.
I have said that there is a qualification to the proposition that a party who elects not to accept the repudiation of a contract remains bound by the terms of the contract to perform the obligations which it imposes upon him. Whilst the contract remains on foot for both parties, if the repudiation by one party makes it futile or pointless for the other party to attempt to perform an obligation, the law does not require him to do so. The obligation remains - it does not disappear from the contract - but the other party is treated as if he had performed it in the limited sense that he is absolved from the consequences which would otherwise flow from his non-performance. This principle, which emerged before the doctrine of anticipatory breach was formulated in 1853 in Hochster v. De la Tour, was originally justified as being common sense, although it has latterly been seen as the early recognition of the now developed notions of estoppel.
In Jones v. Barkley (1781) 2 Dougl. 684 (99 ER 434), which preceded the doctrine of anticipatory breach, the plaintiffs were under a contractual obligation to assign an equity of redemption and execute a release in consideration of a sum of money to be paid by the defendant. The defendant refused to perform his part of the bargain. At p 694 Lord Mansfield said (pp 439-440 of ER):
"If ever there was a clear case, I think the present is. One needs only state what the agreement, tender, and discharge, were, as set forth in the declaration. It charges, that the plaintiffs offered to assign, and to execute and deliver a general release, and tendered a draft of an assignment and release, and offered to execute and deliver such assignment, but the defendant absolutely discharged them from executing the same, or any assignment and release whatsoever. The defendant pleads, that the plaintiff did not actually execute an assignment and release; and the question is, whether there was a sufficient performance. Take it on the reason of the thing. The party must shew he was ready; but, if the other stops him on the ground of an intention not to perform his part, it is not necessary for the first to go farther, and do a nugatory act."
In Ripley v. M'Clure (1849) 4 Ex 345 (154 ER 1245), also decided before the doctrine of anticipatory breach had emerged, the plaintiff had agreed to sell and the defendant to buy part of a cargo of tea to be exported from China. The goods were to be delivered to Belfast at a certain price, payable on delivery. It was held that a refusal by the defendant before the arrival of the cargo to perform his part of the agreement would dispense with the plaintiff's obligation to deliver the goods. Parke B. put it in terms of waiver, saying at pp 359-360 (p 1251 of ER):
"By an express refusal to comply with the conditions of the contract of purchase, the defendant must be understood to have said to the plaintiff, 'You need not take the trouble to deliver the cargo to me, when it arrives at Belfast, as purchaser, for I never will become such;' and this would be a waiver, at that time, of the delivery, and, if unretracted, would dispense with the actual delivery after arrival."
And in Cort v. The Ambergate, Etc., Railway Company [1851] 17 QB 127 (117 ER 1229), the plaintiffs, who jointly manufactured railway chairs, sued for breach of a contract to manufacture and supply certain chairs to the defendants. The defendants, having accepted and paid for some of the chairs, told the plaintiffs not to supply any more as they would not accept or pay for them. The plaintiffs averred that they were ready and willing to perform the contract but were prevented from doing so by the defendants, an allegation which was traversed by the defendants. At p 144 (p 1236 of ER), Lord Campbell C.J. observed:
"In common sense the meaning of such an averment of readiness and willingness must be that the noncompletion of the contract was not the fault of the plaintiffs, and that they were disposed and able to complete it if it had not been renounced by the defendants. What more can reasonably be required by the parties for whom the goods are to be manufactured? If , having accepted a part, they are unable to pay for the residue, and have resolved not to accept them, no benefit can accrue to them from a useless waste of materials and labour, which might possibly enhance the amount of damages to be awarded against them."
At p 148 (p 1237 of ER), Lord Campbell continued:
"Upon the whole, we think we are justified, on principle and without trenching on any former decision, in holding that, when there is an executory contract for the manufacturing and supply of goods from time to time, to be paid for after delivery, if the purchaser, having accepted and paid for a portion of the goods contracted for, gives notice to the vendor not to manufacture any more as he has no occasion for them and will not accept or pay for them, the vendor having been desirous and able to complete the contract, he may, without manufacturing and tendering the rest of the goods, maintain an action against the purchaser for breach of contract; and that he is entitled to a verdict on pleas traversing allegations that he was ready and willing to perform the contract, that the defendant refused to accept the residue of the goods, and that he prevented and discharged the plaintiff from manufacturing and delivering them."
It may be thought that in that passage there are indications that the final destination of the principle would be found to lie in estoppel. There could be no claim by the plaintiffs based upon the delivery of the goods, but the defendants were, by reason of their representation, precluded (or estopped) from alleging that the plaintiffs were not ready or willing to deliver them.
Similar indications are to be found in Peter Turnbull & Co. Pty. Ltd. v. Mundus Trading Co. (Australasia) Pty. Ltd. In that case the defendant had contracted to sell oats to the plaintiff to be loaded in Sydney, during the months of January and February 1951, on a ship or ships to be nominated by the plaintiff. The defendant was having difficulty supplying the oats but persisted up to 28 February in saying that it could perform the contract by shipment in Melbourne, thus intimating to the plaintiff that it was useless to pursue the conditions of the contract applicable to shipment in Sydney and that the plaintiff need not do so. Dixon C.J. pointed out (at p 245) that in the court below the case was treated as "one in which the contract had been kept open by the plaintiff notwithstanding the defendant's intimation of its inability to perform it, with the consequence that the plaintiff was bound to fulfil the conditions on its part to be fulfilled". But, as Dixon C.J. noted, the case was not as simple as that. The intimation by the defendant and the course pursued by it was an "additional element" (at p 246) which brought into application other principles of law. Although he did not speak in terms of estoppel, clearly enough what Dixon C.J. was referring to as an additional element was the representation by the defendant that it was pointless for the plaintiff to nominate a ship for shipment in Sydney and the reliance of the plaintiff upon that representation in not making such a nomination. That was the circumstance which brought into play the principle of law which Dixon C.J. expressed, at pp 246-247, as follows:
"Now long before the doctrine of anticipatory breach of contract was developed it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof ... But a plaintiff may be dispensed from performing a condition by the defendant expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the plaintiff acts upon the intimation it is just as effectual as actual prevention."
In the course of his concurring judgment, Kitto J. referred to the case of Laird v. Pim (1841) 7 M & W 474 (151 ER 852) where the vendor of land sued for damages for non-payment of the purchase price. The defendants had been let into possession by the plaintiff vendor but had refused to pay the purchase money or complete. The plaintiff pleaded that he was ready and willing to make a good title and would have tendered a proper conveyance had the defendants not discharged him from doing so. A plea in response by the defendants that no conveyance had ever been made or executed to the defendants was held to be bad. At p 485 (p 857 of ER), Parke B. said that "the plaintiff is substantially in the same situation, for the purpose of recovering the money, as if all had been done on his part which he engaged to do. It does not follow that he shall recover the whole purchase-money, but he is in the same situation for the purpose of recovering damages for the non-payment of the price, as if all had been done by him."
It is necessary to deal with the decision in Braithwaite v. Foreign Hardwood Company [1905] 2 KB 543 , more for the difficulty which it has caused than for the light which it shed upon the relevant principles. In that case, the plaintiff, who lived in British Honduras, contracted to sell a quantity of Honduras rosewood to the defendants by instalments. Payment was to be by cash against bill of lading. While the first consignment was on the sea, the defendants repudiated the contract and refused to accept any rosewood upon the ground that the seller had committed a breach of a collateral oral agreement not to supply rosewood to any other person in the trade. Ultimately the trial judge found that there was no such collateral agreement. After the defendants' repudiation of the contract, the plaintiff's agent informed the defendants that he had received the bill of lading for the first instalment, but the defendants again wrote refusing to take the bill of lading on the basis of their previous repudiation. When the first consignment of rosewood arrived, the plaintiff sold it as against the defendants and sought to recover the difference in price from them by way of damages. The trial judge, Kennedy J., found that the repudiation of the contract by the defendants was wrongful and that it was accepted by the plaintiff, presumably when the first consignment was sold. But he also found that a portion of the first consignment was not in accordance with the contract and that the defect would have entitled the defendants to repudiate the contract with respect to that consignment had they not previously wrongfully repudiated it. He awarded damages to the plaintiff, making allowance for the defective wood. No question arose with respect to a second consignment which was, in the absence of any collateral agreement, wrongly rejected by the defendants.
On appeal, Collins M.R., somewhat inexplicably in view of the finding of Kennedy J. to the contrary, treated the defendants' repudiation of the contract as not having been accepted by the plaintiff. Upon that basis he expressed the view that the act of the defendants in refusing to take the bill of lading absolved the plaintiff from the obligation of delivering rosewood in accordance with the specifications of the contract. Cozens-Hardy L.J. agreed with Collins M.R.
Mathew L.J., who purported to be of the same opinion, dealt with the matter (as appears from the report in (1905) 74 LJ KB 688, at pp 693-694) upon the basis that the plaintiff accepted the defendants' repudiation of the contract. He then described as "astonishing" the suggestion made by the defendants that, having discovered that their repudiation was wrongful, "they are entitled to fall back upon and to re-open the matter of the first consignment , and to say that, as they have since discovered that the plaintiff would have been in a difficulty as to the delivery of that consignment, he was not in a position to perform the conditions precedent with respect to that consignment, and therefore cannot claim any damages with respect of it."
There have been various explanations of the decision in Braithwaite: see, e.g., Taylor v. Oakes, Roncoroni and Co. (1922) 127 LT 267; British and Beningtons Ltd. v. N.W. Cachar Tea Co. and Others [1923] AC 48 ; Bowes v. Chaleyer (1923) 32 CLR 159 . Whatever explanation is the correct one, the reasons of the majority in Braithwaite may be interpreted as offering support for the proposition that where a contract is repudiated by a party to it, the other party, if he does not accept the repudiation and affirms the contract, is thereby absolved from tendering further performance under the contract, at all events unless and until the repudiation is withdrawn. Put in that way, that proposition has now been found unacceptable by the House of Lords in Fercometal v. Mediterranean Shipping Co. (1988) 3 WLR 200 ; [1988] 2 All ER 742 . In that case, Lord Ackner, whose reasons were those of the House, favoured an interpretation of Braithwaite whereby after the first general repudiation by the defendants, there was an offer by the plaintiff to tender the bill of lading in relation to the first consignment, which was refused. Upon this view that refusal constituted a second repudiation by the defendants "which was accepted by sale in the market, thereby making it irrelevant to consider any question of waiver of conditions precedent" (at p 210; p 750 of All ER). Upon that basis, Braithwaite does not support the above proposition for which it appears to be authority. On the other hand, if that explanation is incorrect and Braithwaite does support that proposition, then, in the opinion of Lord Ackner, it is wrong. In his view, which he expresses at p 212 (pp 751-752 of All ER), the correct exposition of the law is as follows:
"When A wrongfully repudiates his contractual obligations in anticipation of the time for their performance, he presents the innocent party B with two choices. He may either affirm the contract by treating it as still in force or he may treat it as finally and conclusively discharged. There is no third choice, as a sort of via media, to affirm the contract and yet to be absolved from tendering further performance unless and until A gives reasonable notice that he is once again able and willing to perform. Such a choice would negate the contract being kept alive for the benefit of both parties and would deny the party who unsuccessfully sought to rescind, the right to take advantage of any supervening circumstance which would justify him in declining to complete."
This statement of the law, by itself, does not accommodate the earlier cases beginning with Jones v. Barkley to which Lord Ackner had earlier made reference. These cases, he said at p 205 (p 745 of All ER), "were concerned to absolve the 'innocent party' from the need to render useless performance, which the repudiating buyer had indicated he no longer wanted". The principle established by these cases may or may not be thought to provide a via media, but it is not possible to ignore them. Nor did Lord Ackner do so. However, in recognizing them, he categorized them as cases of estoppel. Thus at p 212 (p 752 of All ER), he says:
"Of course, it is always open to A, who has refused to accept B's repudiation of the contract, and thereby kept the contract alive, to contend that in relation to a particular right or obligation under the contract, B is estopped from contending that he, B, is entitled to exercise that right or that he, A, has remained bound by that obligation. If B represents to A that he no longer intends to exercise that right or requires that obligation to be fulfilled by A and A acts upon that representation, then clearly B cannot be heard thereafter to say that he is entitled to exercise that right or that A is in breach of contract by not fulfilling that obligation."
Turning to Fercometal itself, it is not difficult to see why Lord Ackner chose to deal first with the doctrine of anticipatory breach as a separate issue and then to introduce a qualification by way of estoppel. Indeed, it may be inaccurate to speak of estoppel as a qualification for it rests upon its own principles, irrespective of whether those principles have previously been given express recognition in the context of anticipatory breach. In Fercometal, charterers entered into a charterparty with the owners of a vessel for the carriage of a cargo of steel from Durban to Bilbao. There was no time stipulated for the loading of the vessel, but the charterers were given the option of cancelling the charterparty should the vessel not be ready to load on or before 9 July 1982. Upon forming the view that the vessel would not be available for loading by 9 July, the charterers on 2 July purported to cancel the contract. That cancellation was premature and constituted a repudiation of the charterparty by way of anticipatory breach. The owners continued to assert the availability of the vessel. On 8 July, despite the owners' assertion that the vessel was available for loading, it was clear that it was not and on 12 July the charterers sent a further cancellation notice. The owners advanced a claim for dead freight against the charterers, based upon a contention that the repudiation constituted by the first and wrongful cancellation, although not accepted, absolved the owners from any responsibility of having their vessel ready by the cancelling date, thus disentitling the charterers from cancelling on or after that date and enabling the owners to pursue their claim.
Clearly in that situation, there was, to use the words of Dixon C.J. in Peter Turnbull, no "additional element" which, the contract having been kept alive, could have relieved the owners of their obligations under it. Thus, speaking in the language of estoppel, Lord Ackner concluded that there was no finding of any representation by the charterers that they no longer required the owners' vessel to arrive on time let alone that the owners were induced thereby not to make the vessel ready to load by 9 July.
There is, in truth, no difference between the "additional element" of which Dixon C.J. spoke and the requirements of the law of estoppel, even taking the strictest view of those requirements. It is, perhaps, curious that this has not been spelt out before in the cases, but promissory estoppel is involved and the influence of the decision in Jorden v. Money (1854) 5 HLC 185 (10 ER 868) has been strong. The preservation of the doctrine of consideration was thought to depend upon the maintenance of a distinction between a representation of existing fact and a representation as to future conduct (or promise), allowing estoppel based upon the first and denying it based upon the second. But even if the notion of promissory estoppel was thought to undermine the doctrine of consideration, it never entirely disappeared. The principle which survived was expressed by Lord Cairns in Hughes v. Metropolitan Railway Co. (1877) 2 App Cas 439, at p 448, in a familiar passage as follows:
"...it is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results - certain penalties or legal forfeiture - afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties."
The same principle was expressed by Bowen L.J. in Birmingham and District Land Company v. London and North Western Railway Co. (1888) 40 Ch D 268, at p 286, as follows:
"... if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by a Court of Equity to enforce the rights until such time has elapsed, without at all events placing the parties in the same position as they were before."
Certainly so much as is contained in those passages has been accepted in Legione v. Hateley (1983) 152 CLR 406 and, even within those limits, the doctrine of promissory estoppel requires no adaptation to describe the situation of a party to a contract who has been led, by an intimation of the other party who has committed an anticipatory breach, to believe that it is useless to perform his obligations under the contract and has accordingly refrained from doing so. Of course, this Court has gone further in Waltons Stores (Interstate) Ltd. v. Maher (1988) 164 CLR 387 in discerning a broader foundation for promissory estoppel and in giving it an application beyond the context of pre-existing contractual rights. For present purposes it is unnecessary to rely upon that case. It is enough to say that the principles of promissory estoppel as they were accepted in Legione v. Hateley are indistinguishable from the principles expounded in the line of cases beginning with Jones v. Barkley. There would seem to be little point in maintaining a distinction any longer.
I should add that although the purchasers were the plaintiffs in the action, this does not offend against the traditional view that estoppel cannot found an action - can be used only as a shield and not as a sword. Even upon that view, a plaintiff may rely upon an estoppel if he has an independent cause of action and the estoppel upon which he relies is in answer to a defence raised by the defendant rather than part of the cause of action itself: see Waltons Stores (Interstate) Ltd. v. Maher, at p 400.
Under the contract, the obligation of the purchasers to pay the purchase price or the balance of the purchase price was simultaneous with the obligation of the vendors to deliver a conveyance. That is to say, they were mutual or concurrent obligations, the performance of each being conditional upon the performance of the other: Palmer v. Lark (1945) Ch 182, at pp 184-185; Dainford Ltd. v. Smith (1985) 155 CLR 342 , at p 365; Sunbird Plaza Pty. Ltd. v. Maloney (1988) 62 ALJR 195, at p 206; 77 ALR 205 , at p 223. Not only were there concurrent obligations to settle but, an essential time having been fixed for settlement, there was an obligation on each side to settle within that time. The vendors intimated, however, that they could not settle within that time and impliedly intimated that it would be useless for the purchasers to attempt to do so. Unless there was some reason preventing them from doing so, the purchasers were entitled to rely upon the representation of the vendors as absolving them from tendering the purchase price within the stipulated time. In Mahoney v. Lindsay (1980) 55 ALJR 118, at p 119; 33 ALR 601 , at p 603, Gibbs J., relying upon Peter Turnbull, expressed the situation as follows:
"The main argument submitted on behalf of the appellant was that in the circumstances it was not proved that the respondents had been absolved from their obligation to seek out the vendor and tender the purchase money. However, if one party to a contract prevents the other from fulfilling a condition of the contract, that is equivalent to performance by the latter."
The reason why it is said that the purchasers were not entitled to rely upon the vendors' representation is that they, the purchasers, were not ready and willing to perform their obligations because they did not then have the finance to enable them to do so. Of course, the date for settlement had not arrived at the time the vendors repudiated the contract and, as will appear, it is necessary to consider the purchasers' obligation at that time with that fact in mind. But I shall return to that aspect of the matter shortly. First it is necessary to settle the question whether the purchasers were under any obligation to prove, as plaintiffs, that, notwithstanding the vendors' repudiation, they were ready and willing to perform their obligations under the contract. Of course, readiness and willingness implies not only disposition, but also capacity: De Medina v. Norman (1842) 9 M & W 820, at p 827 (152 ER 347, at p 350).
In any action for breach of contract, the readiness and willingness of the plaintiff to perform those mutual obligations remaining to be performed on his part under the contract is a condition precedent to his right to recover: see Hensley v. Reschke (1914) 18 CLR 452 . Under the old rules a plaintiff was required to plead that he was ready and willing but under the present rules that fact is implied with the effect that he is not required to prove it unless the defendant puts it in issue. In that event, the burden of proving readiness and willingness rests upon the plaintiff. See Supreme Court Rules 1970 (NSW) Pt 15, r.11.
But what if the breach is anticipatory rather than actual? The authorities have given conflicting answers to this question, but it is now clear that in cases of repudiation as well as actual breach, readiness and willingness on the part of the plaintiff is part of his cause of action. The position was clearly stated in D.TR Nominees Pty. Ltd. v. Mona Homes Pty. Ltd., at p 433:
"A party in order to be entitled to rescind for anticipatory breach must at the time of rescission himself be willing to perform the contract on its proper interpretation. Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach ..."
Nevertheless there are those who have held a contrary view. In Bowes v. Chaleyer (at p 198), Starke J. said:
"No doubt, if a party repudiates a contract and the repudiation is accepted and acted upon by the other party, then the latter is relieved from proving readiness and willingness on his part to perform the contract."
See also per Higgins J. at p 192. A similar view was expressed in Taylor v. Oakes, Roncoroni and Co. (1922) 127 LT 27, and by Lord Atkinson in British and Beningtons Ltd. v. N.W. Cachar Tea Co. and Others [1923] AC 48 , at p 66. And support for the proposition is to be found in the judgment of Collins M.R. in Braithwaite v. Foreign Hardwood Company, at pp 551-552, and in Y.P. Barley Producers Ltd. v. E.C. Robertson Pty. Ltd. (1927) VLR 194, at p 209.
The error in these cases lay, I think, in attempting to carry too far the principle that the repudiation by one party of a contract may absolve the other party from the obligation of tendering useless performance. No doubt that principle, when it applies, may reduce the extent, or alter the nature, of the readiness and willingness which a plaintiff is required to show, but there is no reason why it should eliminate the requirement entirely. A party should not be able to sue for breach if he is unable or unwilling to carry out his part of the bargain; where, in other words, he is not the innocent party. Even where a party has been absolved by the repudiating party from performing his future obligations under the contract he must show that at the time of the repudiation he was ready and willing to complete the contract had it not been repudiated. But in proving his readiness and willingness where he has been absolved from tendering performance he may not have to prove a great deal . For example, in Cort v. The Ambergate, Etc., Railway Company the plaintiffs could and did prove that they were ready and willing to manufacture railway chairs in accordance with their contract at the time it was repudiated by the defendants. But they were not required to prove that they had taken steps to manufacture the chairs in order to be able to tender them.
Dixon J. recognized the limited scope of the readiness and willingness required of a plaintiff in the case of anticipatory breach of a contract. In Psaltis v. Schultz (1948) 76 CLR 547 , at p 560, he expressed it in this way:
"To be ready and willing to perform a contract a party must not only be disposed to do the act promised but also have the capacity to do it. But the tenor of the promise will show when and how the act is to be performed and it is to that time and mode of performance that the capacity and disposition to fulfil the promise are to be directed. It is enough that he is not presently incapacitated from future performance and is not indisposed to do, when the time comes, what the contract requires."
And in Rawson v. Hobbs Dixon C.J. returned to the question. At pp 480-481 he said:
"It is hardly necessary to say that once there has been a renunciation of a contract or of future performance of an essential obligation thereof by one contracting party, the other if he elects to treat that as an anticipatory breach discharging the contract is relieved from all further obligation to perform on his side and in consequence need not thereafter be ready and willing to do what would otherwise be his part. But that is not the question. What is the question is whether up to that point he must not be ready and willing to proceed with the contract and, as and when the time comes to do his part, so far as it is of the essence, to perform the contract on his side. ... One must be very careful to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his part when his turn comes, simply because his incapacity to do so is not necessarily final or logically complete."
In this case, the purchasers did not accept the vendors' repudiation of the contract but terminated the contract for actual breach. But the vendors' implied intimation to the purchasers that there was no point in their attempting to tender the purchase price on the due date was sufficient to alter the nature of the readiness and willingness which the purchasers were required to prove, that being put in issue by the vendors. They were not required to show that upon the day stipulated for settlement they were ready and willing to tender the purchase price. They were absolved from the obligation of placing themselves in a position to be able to tender the purchase price upon that day by reason of the representation of the vendors two days earlier. All that the purchasers were required to show was that at the time of the repudiation, that is, at the time they were absolved from future performance, there was not a "substantial incapacity" on their part or a "definitive resolve or decision" against the performance of their obligations.
The question whether the purchasers satisfied this onus is not without some difficulty because the trial judge directed his attention to the situation on the date stipulated for settlement rather than the situation two days before. However, the purchasers did not have to prove that they could have raised the amount needed to complete the financing of their purchase by the time stipulated for settlement. They merely had to prove that, at the time of the defendants' repudiation, two days before the settlement date, they were not incapacitated from raising that amount and had not resolved or decided against doing so. That was a relatively light burden to discharge and, upon the evidence, I think that the plaintiffs did discharge it. There is nothing in the trial judge's findings which requires a contrary conclusion.
Treating the situation as one giving rise to an estoppel, it can be seen that the vendors, by indicating their inability to settle and their intention of not doing so, represented to the purchasers that they did not require them to tender the purchase price and would not hold them in breach of contract for not doing so. The purchasers in reliance upon that representation did not tender the balance of the purchase price and would, upon the date fixed for settlement, have been in breach of contract if the vendors had not been estopped from denying the truth of their representation. Thus, in relying upon the vendors' representation the purchasers placed themselves at risk of non-performance - in a position of detriment - unless the vendors were kept to their word. The vendors were estopped.
Had the purchasers pursued their claim for damages, the question may have arisen whether, notwithstanding that at the time of the vendors' repudiation they were ready and willing to proceed with the contract and to perform their future obligations as they fell due, the purchasers were nevertheless unable to prove their loss. Subsequent events may have established that the balance of the purchase price was unavailable to them by the time settlement was due: cf. The Mihalis Angelos [1971] 1 QB 164 . Had the purchasers claimed damages and been unable to prove their loss for this reason, they would have been entitled only to nominal damages.
But the purchasers seek only to recover the deposit paid by them. That is not a claim for damages: Christie v. Robinson (1907) 4 CLR 1338 , at p 1361. It is a claim for money had and received and is based upon an imputed promise to repay, the money having been paid for a consideration that has wholly failed: Blackburn v. Smith (1848) 2 Ex 783 (154 ER 707); Sinclair v. Brougham [1914] AC 398 , at pp 454-455; Christie v. Robinson, at p 1349. The purchasers are entitled to the return of the deposit.
I would allow the appeal.