Foran v Wight
168 CLR 38588 ALR 413
(Judgment by: MASON CJ)
Between: Foran
And: Wight
Judges:
MASON CJBRENNAN J
DEANE J
DAWSON J
GAUDRON
Subject References:
Vendor and Purchaser
Judgment date: 15 November 1989
Canberra
Judgment by:
MASON CJ
This appeal raises an important question of principle. It concerns the entitlement of purchasers under a contract for the sale of land to terminate the contract and recover their deposit following a statement by the vendors shortly prior to completion that they would be unable to complete on the date fixed for completion, completion on that date being an essential term of the contract, in circumstances in which the purchasers did not treat that repudiation as an anticipatory breach but terminated the contract after the time fixed for completion in consequence of the vendors' failure to complete on the appointed day.
The facts may be shortly stated. By a contract dated 24 December 1982 the vendors agreed to sell and the purchasers agreed to buy a parcel of land at Ebenezer for $75,000. The contract provided for payment of a deposit in the sum of $7,500 on execution of the contract. This sum was paid, leaving a balance of $67,500 to be paid on completion. The contract fixed 22 June 1983 as the date for completion, time being of the essence in this respect.
The contract contained a number of special conditions, one of which was in these terms:
"The Purchaser shall not make any requisition, objection or claim for compensation in respect of Right of Way 3 metres wide shown on the draft Plan attached hereto and marked with the letter 'A' and draft 88B Instrument attached herewith and marked with the letter 'B'. The Purchaser acknowledges that he is aware that the attached draft Plan and draft 88B Instrument have not been registered and the Vendor warrants that he will attend to the registration of the said Plan together with 88B Instrument prior to completion."
On 20 June 1983, two days before the date fixed for completion, the solicitor for the purchasers telephoned the solicitor for the vendors. The primary judge (Needham J.) accepted the evidence given by the purchasers' solicitor of the terms of the conversation and his Honour's findings on this matter were accepted by the New South Wales Court of Appeal.
The terms of the conversation are recorded in the judgment of Street C.J. in this way:
"The purchasers' solicitor said that he had just received word that finance had been arranged for Wednesday, 22 June 1983 and asked, 'What time can we settle on that day?'. The vendors' solicitors replied, 'We have a problem here. We won't be able to settle on Wednesday 22 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 said, 'What went wrong(?) You had six months or more in which to register the Right of Way' and 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? We can't settle without the Right of Way'. The purchasers' solicitor responded, 'You realise 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'."
Nothing was done by the vendors or the purchasers until two days after the date fixed for completion. Then, on Friday, 24 June, the purchasers executed and served a notice of rescission addressed to the vendors in these terms:
"With reference to the Contract for Sale by you to us dated 24th December 1982 in relation to the Property described as Lot 8 Deposited Plan 227211 in Tizzana Road Ebenezer Certificate of Title Volume 10340 Folio 84 and in consequence of your default under the said contract in registering a Plan Of Right Of Way together with 88B Instrument in providing a good selling title to the said property and in completing the sale in accordance with the requirements thereof, We hereby give you Notice that the said purchase is hereby rescinded and we require repayment to us of the amount of the deposit paid without deduction and without prejudice to our rights to claim damages costs or expenses in respect of the default."
The right of way referred to in the earlier conversation and in the notice, which was required to be registered prior to completion, was not in fact registered until 22 July 1983. The vendors were thus unable to complete the contract on the date fixed for completion.
There was further correspondence between the solicitors in 1983 and 1984. In that correspondence the vendors sought to enforce completion and the purchasers maintained that they had validly terminated the contract. This correspondence culminated on 28 September 1984 when the vendors entered into a contract selling the property to other purchasers for the price of $68,000.
Meantime, on 30 November 1983, the purchasers issued out of the Supreme Court of New South Wales a summons, which was later amended. The amended summons sought a declaration that the purchasers had validly terminated the contract, another declaration that they were entitled to the return of the deposit and an order that the vendors return the deposit to the purchasers, and a further declaration that they were entitled to relief against forfeiture of the deposit under Conveyancing Act 1919 (NSW). In an amended cross-summons filed on the day of the hearing before Needham J. the vendors sought declarations that the purchasers were not able to complete the agreement, that by reason thereof the purchasers were not entitled to rely on the essential time condition fixing the date for completion, that the purported notice of rescission dated 24 June 1983 was invalid and that in the events that had happened the vendors had validly terminated the contract and were entitled to forfeit the deposit. The amended cross-summons also claimed damages.
One major issue of fact at trial concerned the ability of the purchasers to complete the contract on 22 June 1983. The purchasers' case was that as at 20 June they had in place funding arrangements and resources which would have enabled them to pay the outstanding balance of $67,500. Needham J. held that he was not satisfied that those arrangements and resources would in fact have funded the required amount. His Honour said:
"I accept that they had arranged for finance from Nat. West. in the sum of $56000 and that that sum, assuming that the plaintiffs and their solicitor acted expeditiously, would have been available on Wednesday, 22 June. Mrs Foran, the female plaintiff, in an affidavit, claimed that she had a sum in excess of $15000 available to her in the ANZ Bank at Guildford. However, in cross- examination, it appeared that only the sum of $1783.42 or so of that was her own money, and she gave no evidence to indicate that she had any right to make use of any of the other accounts with that bank.
The male plaintiff gave some evidence in the witness-box that he would have been able to obtain some $7000 from his mother, but that came at the heel of the hunt, and I find it difficult to accept without some further evidence that that amount of money was available. The male plaintiff's evidence, in my opinion, is somewhat suspect, from the suggestion he had made to the defendant as to the amount of purchase price in the contract. A further source of finance was said to have been the potentiality of the plaintiffs to obtain further moneys under an overdraft granted by the bank to their company, which carried on business as plumbers. The evidence established that the limit of the overdraft was $20000, but Mr Foran said that frequently he overdrew that figure up to the extent of $36000 or $37000, that is, that the overdraft went to the sum $36000 or $37000. It appears from the balance-sheets of that company that, as at 30 June, the company was in overdraft to the bank in the sum of between $36000 and $37000, and the suggestion from the plaintiff that he could have drawn a cheque to meet a balance of some $10000 required under the contract was not, to me, convincing, in the absence of any evidence from the bank manager that such a cheque would have been honoured."
In the result, his Honour was not satisfied that the purchasers had discharged the onus of establishing that they were able to complete on the date fixed for completion.
However, his Honour held that this finding was not relevant to the purchasers' claim for relief. His Honour concluded that the vendors' indication that they could not settle on 22 June entitled the purchasers to treat that statement as a repudiation and to terminate the contract on that account. His Honour concluded that the purchasers acted with adequate promptitude and regarded the occurrence of the time for completion in the meantime as irrelevant to the purchasers' exercise of the right to terminate for repudiation.
On appeal, the Court of Appeal (Street C.J. and McHugh J.A.; Kirby P. dissenting) came to a different conclusion. The Court of Appeal was of the opinion that the purchasers terminated the contract, not for anticipatory repudiation, but for failure to complete on the essential date. The majority held that a party to a contract, in order to be entitled to terminate for non-completion on an essential date, must show that it was ready and willing to complete on that date. For this reason the purchasers were not entitled to relief and the contract continued on foot. The Court of Appeal set aside the orders made by the trial judge and ordered that the amended summons be dismissed and declared that the vendors had validly terminated the contract and were entitled to forfeit the deposit. The Court of Appeal declared that the purchasers were liable for damages for breach of contract and the matter was referred to the Master for assessment of damages.
The purchasers' case in support of their appeal in this Court was that they terminated for actual breach, that breach being the natural consequence of the antecedent anticipatory breach, and that the only relief which they sought was a declaration that the contract had been terminated and an order for the return of their deposit. The purchasers contended that the vendors' fundamental anticipatory breach on 20 June relieved the purchasers from their obligation to tender the balance of the purchase money on 22 June and entitled them to terminate for actual breach, once that occurred on 22 June, without the necessity of proving a tender of performance or even that they were ready and willing to perform on that date. The purchasers further submitted that the finding of the primary judge fell short of a finding that they were unable to complete and that in any event the evidence fell short of establishing that this was the case.
The vendors filed a notice of contention challenging, amongst other things, the finding that the words uttered by the vendors' solicitor on 20 June gave rise to a repudiation by them entitling the purchasers to terminate the contract. However, they did not appear on the hearing of the appeal and, although they filed an outline of argument prepared by counsel, it did not deal with all the points made in support of the appeal.
It is convenient to begin with the challenge to the primary judge's finding that the purchasers had not discharged the onus of establishing that the arrangements that they had made before 20 June would have enabled them to complete the contract on 22 June. Once the purchasers' ability to complete on 22 June was put in issue, the onus was on them as the plaintiffs to establish that they would have been ready and willing to perform the contract on 22 June had it not been for the vendors' repudiation: AN.AC v. Robinson (1977) VR 87; see also Bahr v. Nicolay (No. 2) (1988) 164 CLR 604 , at pp 620-621.
Even if, as will appear, the vendors' repudiation absolved the purchasers from any obligation to continue their efforts to procure finance, it may become necessary to determine whether they would have been able on the date for completion to provide the outstanding balance of the purchase price, $67,500. Needham J. accepted that $56,000 would have been available on 22 June. Having considered the financial arrangements made by the purchasers, the financial position of the purchasers and those associated with them, in particular the likelihood of funds becoming available by 22 June, his Honour concluded that the purchasers had failed to satisfy the onus of proof. True it is, as Kirby P. pointed out, that experience instructs us that last-minute arrangements might be made and the purchasers discontinued efforts to procure finance after the vendors' repudiation on 20 June. However, it was for the purchasers to prove what arrangements might have been made and whether they might have come to fruition. Needham J. found that the evidence did not establish that finance was likely to be forthcoming and I am not persuaded that his decision on this issue was incorrect. I therefore approach the case on the footing that the purchasers were not and would not have been ready and willing to complete the contract on 22 June. The trial judge did not attribute a single cause to that failure of the purchasers, but was clearly of the view that they would not have been ready and willing to complete, regardless of the vendors' repudiation.
In the circumstances of this case, for reasons which I shall state later in this judgment, the relevant question for determination by the primary judge was whether there was a substantial incapacity on the part of the purchasers to complete on the due date. However, at no stage in the proceedings in the courts below, or for that matter in this Court, was the issue for decision formulated by the purchasers in this way. On the particular facts of this case I am inclined to think that the primary judge's finding amounted to one of substantial incapacity. But, in any event, I do not consider that, having regard to the way in which the case was conducted, the issues should be reformulated and decided afresh by this Court.
The starting point of our consideration of the principal question agitated by the vendors lies in the concurrent findings of fact made by the courts below. The inevitable consequence of Needham J.'s finding that the vendors' solicitor stated on 20 June that they would not settle on 22 June was that the vendors thereby committed an anticipatory breach of an essential term of the contract. The breach was then anticipatory because it amounted to a refusal by the vendors to perform an essential term of the contract before the time for performance had arrived. The breach was a repudiation which entitled the purchasers at their election to treat the contract as at an end, subject to the court's power to grant relief in respect of any termination which happens to be unconscionable or inequitable (see Legione v. Hateley (1983) 152 CLR 406 , at pp 429, 447-449; Stern v. McArthur (1988) 165 CLR 489 ; Laurinda Pty. Ltd. v. Capalaba Park Shopping Centre Pty. Ltd. (1989) 63 ALJR 372; 85 ALR 183 ), or to keep it on foot (see Peter Turnbull & Co. Pty. Ltd. v. Mundus Trading Co. (Australasia) Pty. Ltd. (1954) 90 CLR 235 , at pp 250-251).
It was not necessary for the purchasers to show that the breach of the essential term was also a fundamental breach in the sense in which that expression was explained by Lord Diplock in Afovos Shipping Co. v. Pagnan & Flli (1983) 1 WLR 195 , at p 203; [1983] 1 All ER 449 , at p 455, before they acquired a right to terminate the contract. However, if it were necessary to consider the question, I would regard the anticipatory breach as fundamental. The law has traditionally treated completion on the date fixed for completion, where time is of the essence, as being a matter of vital importance to the parties. And the vendors' solicitor gave no indication that the delay in registration of the right of way would be negligible.
But the purchasers did not terminate for anticipatory breach. The notice of rescission made no mention of the statement made by the vendors' solicitor on 20 June that the vendors would be unable to complete on the due date. Instead the notice referred to the failure to register the right of way and to provide a good selling title and to complete in accordance with the requirements of the contract. More importantly, if the purchasers wished to terminate for anticipatory breach they should have done so "while the period specified by the contract for performance is unexpired", to use the words of Kitto J. in Peter Turnbull, at pp 250-251. It follows that the purchasers terminated for actual breach, that is, for the vendors' failure to complete on the day fixed for completion. It matters not that the actual breach occurred shortly after the anticipatory breach and that the notice was given only four days after 20 June. The fact is that the purchasers allowed the time for performance to pass without electing to terminate and of necessity they relied on the actual breach, that breach being the natural consequence of the antecedent anticipatory breach.
A failure by the innocent party to treat an anticipatory breach of an essential term as a repudiation and to terminate the contract has the effect of leaving the contract on foot, in which event it remains in force for the benefit of both parties, just as it would if the anticipatory breach had never occurred, subject to a qualification to which I shall refer in a moment. The parties then remain bound by the contract and the repudiating party may rely on any supervening circumstance which justifies his non-performance of the contract when the time for performance arrives: Bowes v. Chaleyer (1923) 32 CLR 159 , at pp 169, 197-198; Peter Turnbull, at pp 250, 261. The qualification is that, if the repudiating party by his refusal to perform or other conduct intimates to the innocent party that he need not perform an obligation which is a condition precedent to the performance by the repudiating party of his obligation, and does not retract that intimation in time to give the innocent party an opportunity to perform his obligation, that party may be excused from actual performance of the condition precedent. The repudiating party then waives complete performance of the condition precedent and his conditional promise becomes unconditional. The term "waiver" is generally used where one party by words or conduct relieves the other party from timely fulfilment of a condition or performance of a promise, time being of the essence of the contract: Peter Turnbull, at pp 247, 251. The precise nature and extent of this qualification is critical to the outcome of the present case.
In a contract for the sale of land, the vendor's obligation to deliver a good title and the purchaser's obligation to pay the purchase money are concurrent and mutually dependent obligations in the sense that they are "simultaneous acts to be performed interchangeably": Palmer v. Lark (1945) Ch 182, at pp 184-185; Michael Realty Pty. Ltd. v. Carr (1977) 1 NSWLR 553, at p 571; Frankcombe v. Foster Investments Pty. Ltd. (1978) 2 NSWLR 41, at p 48. Generally speaking, a party in breach of such an obligation cannot terminate for the other party's breach. But a party may be excused or absolved from performance of his concurrent obligation by conduct on the part of the other party amounting to a waiver or dispensation with performance. A repudiation by that party of his concurrent obligation may constitute such a waiver or dispensation. In that event the party excused or absolved from performance may terminate the contract and sue for damages.
In the context of concurrent and mutually dependent obligations it was recognized as early as the eighteenth century that a party who was ready and offered to perform his part of the contract could maintain an action against the party who refused or neglected to perform his part. In Kingston v. Preston (1773), as noted in 2 Dougl. 689 (99 ER 437), Lord Mansfield said (at p 691 (p 438 of ER)):
"... if one party was ready, and offered, to perform his part, and the other neglected, or refused, to perform his, he who was ready, and offered, has fulfilled his engagement, and may maintain an action for the default of the other."
The principle thus established was that the plaintiff, being unable to prove actual performance, had to prove that the defendant had refused to perform (thereby dispensing with performance by the plaintiff) and that he (the plaintiff) was ready and willing to perform and would have performed but for the dispensation. In this context readiness and willingness imports ability, as well as disposition, to perform: De Medina v. Norman (1842) 9 M & W 820, at p 827 (152 ER 347, at p 350); Peter Turnbull, at p 253. Repudiation by one party amounting to a waiver of performance by the other party does not entitle that party to enforce the contract on the notional footing that he has actually performed his part of the contract; it merely entitles him to recover such damages as he may have sustained by losing the benefit of the contract: Laird v. Pim (1841) 7 M & W 474 (151 ER 852); Peter Turnbull, at pp 252-253.
The principle enunciated in Kingston v. Preston was applied in Jones v. Barkley (1781) 2 Dougl. 684 (99 ER 434) to a case in which an agreement provided that the plaintiffs would execute and deliver a release and an assignment of an equity of redemption, upon which the defendant was to make payment of 611. The plaintiffs averred readiness and willingness to complete. They had tendered to the defendant a draft assignment and release which they offered to execute, the defendant then absolving them from execution. The defendant pleaded that the averment failed because execution was a condition precedent to payment. It was held that the plaintiffs need only show that they were ready and willing. In the words of Lord Mansfield (at p 694 (p 440 of ER)):
"... 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."
All that was excused in Jones v. Barkley was the delivery of executed documents; in all other respects the plaintiffs were required to have been ready and willing to deliver the documents contracted for. See also Goodisson v. Nunn (1792) 4 TR 761 (100 ER 1288); Morton v. Lamb (1797) 7 TR 125 (101 ER 890). All these cases involved actual rather than anticipatory breach, but that consideration does not affect the statements of principle they contain relating to dispensation.
A waiver of a condition precedent arising from the defendant's repudiation did not entirely relieve the plaintiff from showing that he was ready and willing; the plaintiff was dispensed from the need to do that which the defendant had indicated would be pointless. He was not excused from showing that at the time of repudiation he was ready and willing to complete the contract had it not been repudiated by the defendant: see Dawson, "Waiver of Conditions Precedent on a Repudiation", (1980) 96 Law Quarterly Review 239, at pp 244-245. So, in Ripley v. M'Clure (1849) 4 Ex 345 (154 ER 1245) a buyer repudiated before the time for performance a contract to purchase tea. The plaintiff pleaded that he was ready to deliver in accordance with the contract and would have performed but for the repudiation. It was held that the refusal to perform, unretracted down to the time for performance, was a waiver of the seller's need actually to deliver the goods. Parke B. observed (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."
His Lordship went on to say (at p 361 (p 1251 of ER)):
"(A)fter the time that the delivery was excused, and the defendant refused to receive ... readiness and willingness ... is wholly immaterial."
The jury expressly found that the plaintiff was willing to deliver according to the contract down to the time of the defendant's refusal: at p 353 (p 1248 of ER).
The defendant appealed: M'Clure v. Ripley (1850) 5 Ex 140 (155 ER 60). In dismissing that appeal, Patteson J. expressed a different view in these terms (at p 146 (p 63 of ER)):
"The declaration would be good enough without any averment of readiness and willingness, supposing there were only an averment of discharge, and that averment were traversed and found for the plaintiff. The assessment of damages would be on the nonperformance of the contract, and not upon the question, whether the plaintiff was ready and willing or not."
This approach to the question seems not to have been followed in the later cases until it was revived in Taylor v. Oakes, Roncoroni and Co. (1922) 127 LT 267, especially by Atkin LJ., at p 272.
The same question arose for decision in Cort v. The Ambergate, Etc., Railway Company [1851] 17 QB 127 (117 ER 1229). There the defendant buyer informed the plaintiffs that it would accept no more iron chairs under a contract for the manufacture of such chairs. The plaintiffs treated themselves as discharged and commenced proceedings against the defendant for wrongfully refusing to accept the chairs. The plaintiffs pleaded that, from the making of the contract until the defendant's refusal, they were ready and willing to perform but that they had been discharged from further performance by the defendant's repudiation. The defendant denied that its renunciation before the time for performance excused the plaintiffs from the need to show that they were ready and willing to perform at the time for performance. It was held that the plaintiffs' averment was sufficient. Lord Campbell C.J. said (at p 144 (p 1236 of ER)):
"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."
These comments reflect not only the observations of Parke B. (in preference to those of Patteson J.) but also the earlier remarks of Tindal C.J. in Pontifex v. Wilkinson (1845) 1 CB 75 (135 ER 464) where the plaintiffs agreed to manufacture and fit certain fittings for a fixed price. It was argued that the defendant refused to permit the plaintiffs to complete the manufacture and "absolutely discharged them from proceeding". Tindal C.J., delivering the judgment of the Court, held (at pp 90-91 (p 470 of ER)) that the two issues (a) readiness and willingness and (b) whether the defendant discharged the plaintiffs from completing the contract, were no more than one issue, namely,
"whether the non-completion of the contract proceeded from the wrongful act and conduct of the plaintiffs in refusing to finish, or of the defendant in not permitting them to finish the goods according to the terms of the contract."
The inference is that the defendant's conduct did not absolve the plaintiffs from any failure to be ready and willing of which that conduct was not the sole cause. Accordingly, the issue was whether the plaintiffs refrained from performing their promise in reliance on the defendant's conduct or for an independent cause.
Two other cases indicate that proof of readiness and willingness went to the existence of the cause of action; its materiality was not confined to the recovery of substantial damages. In Smith v. Wilson (1807) 8 East 437 (103 ER 410) the plaintiff's action failed because he was unable to establish that he was ready and willing to perform. In Griffith v. Selby (1854) 9 Ex 393 (156 ER 167) the defendant, having entered into an agreement to buy wrought iron goods solely from the plaintiff, later decided to buy the goods from another source. The plaintiff sued for damages, averring that he had always been ready and willing to supply the goods. The defendant contended that, if the plaintiff supplied the goods, the goods would not have been fit and proper for the purpose contemplated by the contract. It was held that this would be a defence, if established, so that it was for the jury to decide whether the plaintiff was able to perform.
The doctrine of anticipatory breach was first recognized in Hochster v. De la Tour (1853) 2 El & Bl 678 (118 ER 922). This explains why in the earlier cases there was no attempt to distinguish between actions for actual breach and actions for anticipatory breach. The principles expounded in the cases were considered to apply to instances of actual breach. However, as Dixon C.J. noted in Peter Turnbull (at p 247), Ripley v. M'Clure "might at a later date have been decided as a case of anticipatory breach".
In the context of actions to recover damages the principles stated in such cases as Jones v. Barkley and Cort v. The Ambergate, Etc., Railway Company have been enunciated and applied by Australian courts. So, in Hensley v. Reschke (1914) 18 CLR 452 , Barton J. referred (at pp 462, 463) to the purchaser's readiness and willingness to complete as a "condition precedent" to his right to recover damages in the sense of special damages. Likewise, Isaacs and Rich JJ. stated (at pp 467-468) that the purchaser would have no right to claim damages unless he was ready and willing to pay the purchase money at the relevant time. In the course of discussing this point, their Honours said (at p 467):
"If Gunson (the purchaser) were suing Mrs. Reschke (the vendor) for damages an averment of his readiness and willingness to pay his purchase money would under Order XX, rule 13, be implied ... But that would be so because the condition would go to the cause of action." (my emphasis)
Subsequently, in Cohen & Co. v. Ockerby & Co. Ltd. (1917) 24 CLR 288 , where buyers brought an action against the sellers for damages for non-delivery of goods, Isaacs J. discussed the buyers' right to sue on the footing that they had been absolved from performing their obligation, concurrent with the sellers' obligation to deliver, to establish a local credit with a bank to enable the sellers to obtain payment. His Honour said (at p 298):
"In my opinion Byrne v. Van Tienhoven ((1880) 5 CPD 344) goes to show that a party so absolved, though he may defend an action against him, by merely showing he was so absolved, yet, if he sues the other party whose refusal he relies on, he must show he was ready and willing to perform his part, had he not been absolved from actual performance. 'Readiness and willingness' is in that case a condition precedent."
Later, in Bowes v. Chaleyer this Court held that judgment must be given for the defendant (the buyer) in an action for damages for breach of contract for the sale of goods brought by the seller where the plaintiff had affirmed the contract, after repudiation by the buyer before the time for performance, on the ground that the plaintiff was not ready and willing to perform the contract according to its terms - he had not arranged for shipment of the goods as promised - and he was not absolved from performance by the repudiation: see at p 198. And in Henry Dean & Sons (Sydney) Ltd. v. P. O'Day Pty. Ltd. (1927) 39 CLR 330 Knox C.J. said (at p 336):
"The meaning of the averment of readiness and willingness is that the non-completion of the contract was not the fault of the plaintiff and that he was disposed and able to complete it if it had not been renounced by the defendant (Cort v. Ambergate etc. Railway Co.)."
Henry Dean & Sons was not followed by the House of Lords on another point: see Gill & Duffus SA v. Berger & Co. Inc. [1984] AC 382 , at p 392.
Properly understood, the English and Australian cases to which I have referred and the statements which they contain (other than those of Patteson J. in M'Clure v. Ripley) support the view that the readiness and willingness requirement goes to the existence of the plaintiff's cause of action. Failure by the plaintiff to prove that element in his cause of action resulted in a verdict and judgment for the defendant: see Smith v. Wilson; Bowes v. Chaleyer. Such a failure did not result in an award of nominal damages. Absent proof of readiness and willingness, the plaintiff had no cause of action.
The prevailing rules and forms of common law pleading in the eighteenth and nineteenth centuries, which necessarily reflected the principles of substantive law as applied by the courts, demonstrated that the courts treated readiness and willingness as being material to the existence of the plaintiff's cause of action. The plaintiff was required to aver in his declaration the material elements in his cause of action. These elements included satisfaction or performance of all conditions precedent. Thus the plaintiff was required to aver performance of any condition precedent to, or concurrent with, performance of the defendant's promise. Just as the plaintiff was required to plead and prove readiness and willingness in a suit for specific performance, so at common law he had to plead and prove that he was ready and willing in an action for damages for breach of contract. It followed that proof that the plaintiff was ready and willing to perform his obligation on which performance of the defendant's promise was expressed to be conditioned was regarded as being essential to the plaintiff's cause of action. See also Jefferson v. Paskell [1916] 1 KB 57 , at p 74; Lloyd, "Ready and Willing to Perform: The Problem of Prospective Inability in the Law of Contract", (1974) 37 Modern Law Review 121.
When it became necessary to frame a declaration where the defendant had dispensed with performance by the plaintiff of a mutually dependent and concurrent obligation, it was natural and logical for the pleader to mould the usual form of declaration to the new situation by averring his excuse for non-performance in lieu of performance. But he was still required, in conformity with the authorities already mentioned, to allege (and prove) that he was ready and willing to perform that obligation; see Bullen and Leake, Precedents of Pleadings, 3rd ed. (1868), p 61; Chitty's Treatise on Pleading, 7th ed. (1844), vol 1, p 335.
It is perhaps not surprising that with the passing of the strict rules of pleading the courts came to make occasional statements suggesting that readiness and willingness was relevant not so much to the establishment of a cause of action as to the assessment of damages. That is especially so when one considers that the majority of cases involve claims for damages. But the fact that the principles governing assessment of damages necessarily raise questions as to whether the plaintiff would have been able to perform the contract in any event should not lead us to lose sight of the more fundamental importance of the readiness and willingness requirement. The relevance of the requirement in a damages context is discussed in Y.P. Barley Producers Ltd. v. E.C. Robertson Pty. Ltd. (1927) VLR 194, at pp 212-214. Notwithstanding such considerations, when the defendant has dispensed with performance by the plaintiff of a mutually dependent and concurrent obligation, it remains for the plaintiff to show, not that he was ready and willing to perform, but that he would have been ready and willing to perform had the defendant not dispensed with performance.
Mahoney v. Lindsay (1980) 55 ALJR 118; 33 ALR 601 , though it was a purchasers' action for specific performance and not an action for damages, illustrates the point. The purchasers succeeded, although they did not seek out the vendor and tender the purchase money. The primary judge found that the vendor's solicitor had indicated that it would be useless for the purchasers to attend with the purchase money since the vendor did not intend to perform his part of the contract. The purchasers were ready and willing to complete and would have completed but for the vendor's dispensation.
Peter Turnbull was a more complicated case. There the buyer recovered damages for non-performance by the seller of a contract for the sale of oats, notwithstanding non-fulfilment by the buyer of a condition requiring the nomination of a ship in February for delivery f.o.b. and the giving of fourteen days notice of the ship and shipping date. It was held that in the circumstances, including a repudiation of the contract by the buyer before the time for performance had arrived, the seller had dispensed the buyer from performance of these conditions. The action was for damages for actual, not anticipatory, breach of the contract, the buyer having elected to keep the contract on foot. Dixon C.J. observed (at p 246) that it was always the law that, if a contracting party prevented the other party from fulfilling a condition precedent, it was equal to performance. His Honour went on to say (at pp 246-247):
"(A) plaintiff may be dispensed from performing a condition by the defendant ... 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."
His Honour referred to Lord Mansfield's comments in Jones v. Barkley and recited Lord Campbell C.J.'s account in Cort v. The Ambergate, Etc., Railway Company of Ripley v. M'Clure.
Dixon C.J. did not address the question whether readiness and willingness goes to the existence of the cause of action or only to damages. As his Honour pointed out (at pp 245-246), the case was not confined to a simple anticipatory refusal to perform followed by an election by the seller not to treat the contract as discharged for breach. Because the buyer's conduct involved more than that, it brought other principles of law into play. The buyer insisted that it could perform the contract only in one way, by substituting a shipment in Melbourne for the contracted shipment in Sydney. By seeking the seller's co-operation in securing this substitution and maintaining that it could not perform the contract according to its terms, the buyer clearly intimated to the seller that it need not pursue the conditions applicable to shipment in Sydney. The seller left the contract on foot subject to a continued intimation that only by a substituted performance could the buyer carry it out. Dixon C.J.'s stated reason for disagreeing with the Supreme Court's view that the seller must fail because it was not ready and willing to complete was that the buyer intimated that it would be useless to take steps to comply with the contract and excused the seller from doing so "at and from a time when the (seller) could still have fulfilled it": see at p 248.
Kitto J. adopted a similar approach. His Honour also made the point (at p 254) earlier made by Tindal C.J. in Pontifex v. Wilkinson (at pp 90-91 (p 470 of ER)) and Lord Campbell C.J. in Cort v. The Ambergate, Etc., Railway Company (at p 144 (p 1236 of ER)) that the question of readiness and willingness was an aspect of the larger question whether non-completion of the contract proceeded from the wrongful act or conduct of the defendant or of the plaintiff.
But it is the judgment of Dixon C.J. in Rawson v. Hobbs (1961) 107 CLR 466 that demonstrates the true significance of the plaintiff's readiness and willingness in an action for damages for breach of contract arising out of the plaintiff's acceptance of an anticipatory repudiation. The Chief Justice (at pp 480-481) evidently approved, subject to a slight qualification, the discussion of readiness in Lord Sumner's speech in British and Beningtons Ltd. v. N.W. Cachar Tea Co. and Others [1923] AC 48 , at pp 70-72. In that case Lord Sumner (with whom Lord Buckmaster and, it seems, Lord Wrenbury and Lord Carson agreed) had been concerned to reject the notion, apparently favoured by Lord Atkinson (at pp 62-66) and supported by the Court of Appeal decision in Braithwaite v. Foreign Hardwood Company [1905] 2 KB 543 (see also Taylor v. Oakes, Roncoroni and Co. and Continental Contractors Ltd. v. Medway Oil & Storage Co. Ltd. (1925) 23 Ll L Rep 124, at p 133), that a repudiation by a buyer under a contract for the sale of goods excused the seller from the performance of all conditions precedent, including readiness and willingness. His Lordship denied (at p 71) that Braithwaite decided:
"that a buyer, who has repudiated a contract for a given reason which fails him, has, therefore, no other opportunity of defence either as to the whole or as to part, but must fail utterly."
His Lordship continued (at pp 71-72):
"If he had repudiated, giving no reason at all, I suppose all reasons and all defences in the action, partial or complete, would be open to him. ... (B)ut I do not see how the fact, that the buyers have wrongly said 'we treat this contract as being at an end, owing to your unreasonable delay in the performance of it' obliges them, when that reason fails, to pay in full, if, at the very time of this repudiation, the sellers had become wholly and finally disabled from performing essential terms of the contract altogether."
In Rawson v. Hobbs, Dixon C.J. pointed out (at p 481) that when a party seeks to justify termination before the time for performance on the ground of anticipatory breach or renunciation, the question is whether up to the time when he elects to treat himself as no longer bound he is "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". The Chief Justice went on to point out that this was not the case when the party was acting under "a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires". Moreover, with reference to the position of the non-repudiating party, his Honour said:
"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."
His Honour had earlier referred (at p 481) to the plaintiff posited by Lord Sumner, who "had become wholly and finally disabled from performing essential terms of the contract altogether", observing that a party in that situation "cannot recover from the opposite party to the contract if the latter at that point renounces the contract on his side".
Implicit in this view of the concept of readiness and willingness in the context of an action for damages for anticipatory renunciation is the proposition that the action will be dismissed if the plaintiff was not, immediately before acceptance of the renunciation, in a position to complete on the day appointed for completion. It is a view that is consistent with the proposition that a party who refuses to perform a contract can justify his action by pointing to grounds that justify his refusal even if at the time of refusal he was unaware of the existence of those grounds: Shepherd v. Felt and Textiles of Australia Ltd. (1931) 45 CLR 359 , at pp 377-378; Rawson v. Hobbs, at pp 480, 491; D.TR Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. (1978) 138 CLR 423 , at pp 431-433; Sunbird Plaza Pty. Ltd. v. Maloney (1988) 62 ALJR 195, at pp 200, 207-208; 77 ALR 205 , at pp 213, 225-226; Universal Cargo Carriers Corporation v. Citati [1957] 2 QB 401 , at pp 443-446. And, as Rawson v. Hobbs itself demonstrates, the incapacity of one party to complete the contract is a lawful ground of termination by the other party before the time for performance.
In my opinion it is not possible to read the judgment of Dixon C.J. in Rawson v. Hobbs as stating that readiness and willingness is material only to the assessment of damages. The propositions stated by his Honour are of a more fundamental character, deriving, as they do, from the traditional concept of readiness and willingness as a material element in the existence of the plaintiff's cause of action. Nor do I think that it is possible to regard his Honour's remarks as having no application to the entitlement of a party to terminate a contract for breach. A party who is disabled from suing for damages because he is not ready and willing to perform in the sense discussed above cannot exercise a right to treat himself as discharged from the contract on the ground that the other party is in breach of an essential term or is otherwise in fundamental breach of the contract. As Stephen, Mason and Jacobs JJ. observed in D.T.R. Nominees (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."
The approach taken by Dixon C.J. and by Lord Sumner in British and Beningtons is to be preferred to that pursued in Braithwaite, Taylor v. Oakes, Roncoroni and Co., Continental Contractors and by Lord Atkinson in British and Beningtons. The former approach conforms to that adopted in the eighteenth and nineteenth century cases, subject to the qualification, which is appropriate to cases of election to terminate for anticipatory breach, that readiness and willingness after termination of the contract is immaterial. As anticipatory breach was not foreseen before Hochster v. De la Tour, it is logical and proper to confine the requirement of readiness and willingness to the period down to the moment before the party elects to accept the anticipatory renunciation. In this way the established principle is given an application which fits the new situation to which it is directed. The contrary approach is inconsistent with the strong stream of earlier authority and generates unsatisfactory results, including those suggested by Lord Sumner. In passing, I should mention that in the United States it has been held that the plaintiff must show readiness and willingness as a material element in his cause of action for anticipatory breach: Yale Development Co. v. Aurora Pizza Hut, Inc. (1981) 420 NE 2d 823.
Braithwaite has very recently sustained a mortal wound at the hands of the House of Lords: see Fercometal v. Mediterranean Shipping Co. (1988) 3 WLR 200 , at p 212; [1988] 2 All ER 742 , at p 751, where Lord Ackner treated it as an instance of acceptance of an anticipatory breach before the time for performance, or alternatively, if it was a case of actual breach, as being wrongly decided. From what I have already said, there are other reasons for declining to regard it as a persuasive decision. Indeed, even on the issue of quantification of damages, it now seems to be at odds with Gill & Duffus SA v. Berger & Co. Inc.
On this aspect of the case it remains for me only to mention the alternative approach advocated in such cases as Pontifex v . Wilkinson and adopted by Lord Campbell C.J. and Kitto J., namely, to ask the question whether the contract went off through the wrongful default and conduct of the plaintiff or the defendant. If the issue is to be looked at in this way the result would be no different, as indeed the discussion in the judgments makes clear. Insistence on the plaintiff being ready and willing is a means of ensuring that a plaintiff will not succeed in an action for breach of contract if the contract has gone off through his wrongful default or conduct. The burden this places on a plaintiff will vary from case to case. But it will generally be true to say that a plaintiff relying on anticipatory breach or claiming the benefit of some dispensation with complete performance will be faced with a burden capable of being displaced without undue expense or inconvenience. Moreover, it would be arbitrary and unjust if a plaintiff who could not show that he did not cause the contract to go off were able to succeed in an action against a defendant who has been open and forthcoming about the difficulties he is facing in his own performance. There are therefore good reasons in policy for the position revealed by the authorities.
Accordingly, in relation to termination for actual breach, the principle is that established by the earlier decisions - the plaintiff is required to show that he was ready and willing to perform the contract if it had not been repudiated by the plaintiff. In other words, the requirement is that the plaintiff be ready and willing to perform except to the extent that the defendant dispensed with his performance. In the case of an anticipatory renunciation accepted by the plaintiff, the requirement of readiness and willingness extends only up to the time of acceptance because then the earlier repudiation results in an early termination of the contract. Accordingly, in the case of actual breach the requirement of readiness and willingness is more stringent; it continues through to the time for performance. That is because the termination of the contract does not antedate the time for performance. Subject to this difference and to the possibility of a difference in the onus of proof, the principle to be applied in the case of actual breach is consistent with that to be applied in the case of termination for anticipatory breach. The difference in the onus of proof arises because in the case of termination for anticipatory breach the plaintiff will generally be able to show at the time of termination that he would have been able to perform at the time for performance by demonstrating that he was not then disabled or incapacitated from such performance. As Dixon C.J. noted in Rawson v. Hobbs, at p 481, 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".
However, in the present case, the anticipatory breach of the vendors was not accepted. The case is one of termination for actual breach. The time for determining whether or not the purchasers would have been ready and willing to perform the contract had it not been for the dispensing conduct of the vendors is therefore the time for performance. The purchasers have not discharged the onus of showing that at that time they would have been so ready and willing. It follows that the purchasers are unable to justify their termination by reference to the ordinary principles of contract law. It is necessary now to turn to the doctrine of estoppel in order to ascertain whether the application of that doctrine enables the purchasers to succeed.
In Fercometal, Lord Ackner, speaking for the House of Lords, recognized that the defendant might be estopped from relying on the plaintiff's non-performance of a condition precedent or concurrent condition. Fercometal is authority for the proposition stated by Lord Ackner (at p 212; pp 751-752 of All ER) in these terms:
"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."
With respect to the possible operation of the doctrine of estoppel, Lord Ackner said (at p 212; p 752 of All ER):
"(I)t 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 on 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."
His Lordship went on to point out (at p 212; p 752 of All ER) that there was no finding of any relevant representation by the repudiating charterers in that case and that the non-readiness of the owners to load on the material date was in no way induced by the charterers' conduct, but was the result of the owners' decision to load other cargo first.
So far as the present case is concerned, on the primary judge's findings, the vendors through their solicitor represented to the purchasers through their solicitor that they could not and would not complete the contract on the date fixed for completion. The representation was not retracted and continued until the time stipulated for completion. The representation fell into two parts: first, a representation as to a future fact - that they would not complete; secondly, a representation as to an existing fact - that they could not complete, due to non-registration of the right of way. By expressing the representations in this way, I run some risk of expressing inadequately the vendors' attitude as it was stated by their solicitor in the critical conversation. From the terms of that conversation, it seems that the vendors wished to proceed with the contract, but with a later date for completion substituted for 22 June. However, what is important, and perhaps critical, judged from the perspective of applying the doctrine of estoppel is that the vendors impliedly intimated that it would be pointless or futile for the purchasers to tender performance of the contract. It is that intimation upon which an application of the doctrine of estoppel stands or falls. Whether that intimation amounts to a representation of future fact or existing fact is a fine question, but as will appear, it is not a question which I need to determine.
Not every anticipatory repudiation of a contract amounts to a representation to the other party that it would be pointless for him to complete the contract. So much plainly appears from Dixon C.J.'s discussion of the buyer's repudiation and conduct in Peter Turnbull (at pp 245-246). His Honour was at pains to emphasize that the buyer's conduct involved more than a simple repudiation, in particular its endeavours to secure the seller's co-operation in a substituted shipment in another port. Although his Honour did not speak explicitly of estoppel, his insistence on looking for clear evidence of waiver is characteristic of the traditional insistence on a clear and unambiguous representation as a necessary foundation for an estoppel: see Legione v. Hateley, at pp 435-437, and the cases there cited. Granted that a representation relied upon as an estoppel must be clear and unambiguous, the representation in the present case satisfies that requirement, despite the fact that it arises from the repudiation itself in the setting in which it was communicated by the vendors' solicitor to the purchasers' solicitor and, unlike in the case of Peter Turnbull, the representation did not take the form of a request.
There is a long line of authority to support the proposition that, in order to ground a case of common law estoppel by representation, the representation must be as to an existing fact, a promise or representation as to future conduct being insufficient: Legione v. Hateley, at p 432; Waltons Stores (Interstate) Ltd. v. Maher (1988) 164 CLR 387 , at p 398. In Waltons Stores Wilson J. and I pointed out (at p 399) that if there was a basis for holding that common law estoppel arises where there is a mistaken assumption as to future events, it was to be found in reversing Jorden v. Money (1854) 5 HLC 185 (10 ER 868) and in accepting the powerful dissent of Lord St. Leonards in that case. In the absence of argument we declined to embark on that course and instead decided the case by reference to promissory estoppel which extends to representations or promises as to future conduct: see Legione v. Hateley, at p 432; Waltons Stores, at pp 399, 451-452, 459. On further reflection it seems to me that we should now recognize that a common law estoppel as well as an equitable estoppel may arise out of a representation or mistaken assumption as to future conduct. To do so would give greater unity and consistency to the general doctrine of estoppel. Moreover, the clear acceptance by the Court in Waltons Stores of the doctrine of promissory estoppel makes this course inevitable. After all, it was the apprehension that representations as to future conduct, unsupported by consideration, would invade the territory of promises for valuable consideration that led to the confinement of common law estoppel to representations of existing fact. Given the recognition of promissory estoppel and the fact that the doctrine may preclude the enforcement of rights at least between parties in a pre-existing contractual relationship, the dam wall has fractured at its most critical point with the result that we should accept that a representation or a mistaken assumption as to future conduct will in appropriate circumstances create a common law estoppel as well as an equitable estoppel.
In Waltons Stores Wilson J. and I (at p 404) referred to and applied the underlying principle that the courts will grant relief to "a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it'": Grundt v. Great Boulder Pty. Gold Mines Ltd. (1937) 59 CLR 641 , at p 675; see also Thompson v. Palmer (1933) 49 CLR 507 , at p 547. The same principle may be applied to the purchasers in this case if they acted to their detriment on the faith of the representation by not tendering performance on 22 June. The estoppel would operate to protect the purchasers from a claim by the vendors that the purchasers' failure to tender performance constituted a breach of contract and, as well, to enable the purchasers to maintain their termination of the contract on the footing that the vendors, not the purchasers, were in breach of the contract.
This brings me to the question whether the purchasers acted to their detriment in reliance upon the vendors' representation. The purchasers acted in reliance upon the representation by not continuing their efforts to procure finance and by not tendering performance on 22 June. Whether they did so to their detriment is the critical issue. If, in any event, quite apart from the making of the representation, the purchasers would have been unable to tender performance on that date, due to the inadequacy of their financial resources, there can be no basis for concluding that they were induced by the representation to act to their detriment. As Dixon J. observed in Grundt, at pp 674-675:
"(The) purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice."
Even if it were accepted, as Lord Denning stated in W.J. Alan & Co. v. El Nasr Export [1972] 2 QB 189 , at pp 213-214, and Brikom Investments v. Carr (1979) QB 467, at p 482, that detriment need not be proved as a separate element, over and above reliance, in order to found an estoppel, at least in the case of promissory estoppel if that were to continue to be regarded as being in a special category, it is clear in the present case that the reliance which Lord Denning required in those cases is not present.
My conclusion adverse to the purchasers on the issue of readiness and willingness denies that the purchasers sustained a relevant detriment in consequence of their reliance upon the representation. Although it might be true to say that, as a result of the vendors' intimation, the purchasers lost the chance of tendering the purchase price and therefore were subjected to the requirement that they demonstrate that they would have been ready and willing to perform but for that intimation, the evidence reveals that that chance would have come to nothing. The purchasers cannot by invoking the doctrine of estoppel avoid the need to show that the vendors' conduct caused them not to perform the contract.
The contract went off for two reasons: first, because the purchasers lacked the financial resources to complete on the appointed day; secondly, because the vendors were unable to complete on the appointed day as the right of way could not be registered in time. Accordingly, the failure of the contract was as much due to the purchasers' incapacity as that of the vendors. But in order to terminate the contract the purchasers needed to show that the vendors were at fault. The consequence is that the purchasers did not validly terminate the contract. In this situation it might at first seem just and fair that the purchasers should recover their deposit but it is conceded that, if the purchasers did not validly terminate, the vendors' later termination of the contract was valid and it was not contested, in this event, that the purchasers' claim to recover the deposit should fail. In any case, so long as the contract continued on foot, it governed the relations between the parties and there is no basis in these circumstances for an appeal to the law of quasi-contract.
In the result I would dismiss the appeal.