Following our article concerning the decision of Jaswil Property ATF Jaswil Unit Trust v Barrak Corporation, the purchaser appealed and the Court of Appeal recently handed down a decision in Barrak Corporation v Jaswil Property.

The case involved a sale of land where an apartment building was to be constructed.  The purchaser was late in completing and, following the issue of a notice to complete, the vendor purported to terminate the contract.  A key issue which prevented completion was that the form of Transfer prepared by the purchaser and signed by the vendor was not in registrable form and hence not accepted by the purchaser’s lender when an attempted settlement took place.

The specific problem was that the transfer did not contain execution language stating that the execution was in accordance with s127 of the Corporations Act.  The vendor’s solicitor, who was also the director of the vendor, had executed the Transfer absent the required language and, as the vendor was a company, the purchaser’s lender refused to accept the Transfer.

In her decision at first instance, Bergin CJ focused on the purchaser’s failure to issue a correct Transfer and hence be ready to settle the contract.  Ultimately her Honour granted relief to the purchaser on terms that the purchaser pay the vendor’s costs.  The Court of Appeal, however, reached a conclusion that the Contract had not been validly terminated by the vendor.

It is settled law that a party who seeks to terminate a contract for a breach of an essential stipulation, must themselves be willing and able to complete the contract.

In this case the Court of Appeal found that the vendor, at the time of issuing the notice of termination, was not ready, willing and able to complete the Contract in accordance with the notice to complete, specifically because the vendor had not provided a Transfer with the correct execution clause.

As a result, the vendor could not have fulfilled his obligations under the contract at the time.  The Court of Appeal was concerned that the vendor had failed to bring to the purchaser’s attention that the execution clause in the Transfer was flawed.

The vendor was ordered to pay the purchaser’s costs both of the appeal and of the lower Court proceedings with the matter remitted to the Supreme Court for an assessment of damages suffered by the purchaser.

This decision highlights the importance of vendors ensuring that the form of Transfer, though generally prepared by a purchaser under a contract, is correct and free from errors if the vendor is seeking to rely on a Notice to Complete and Notice of Termination following the failure of a purchaser to complete the transaction.

For more information please contact ERA Legal.