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Is Time of the Essence in Queensland?

Published on February 28, 2014 by Matthew Rafferty

This case examined the time for settlement under the Queensland standard form contract for sale of land. The property was $1.35 million home on the Gold Coast.

The contract contained the following clauses:

  •  Clause 5.1(1) provided that settlement must occur between 9am and 5pm on the settlement date.
  • Clause 6.1 provided that time was of the essence in the contract, except regarding any agreement between the parties about the time for settlement.

The Vendor nominated 3pm as the time for settlement, however reserved its rights to settle at any time on that day by including in the correspondence:

“Notwithstanding that a specific time, date and place for settlement is arranged whether by mutual agreement or otherwise, any such arrangement shall be deemed tentative, and we reserve our clients’ right to effect settlement at any time on the day appointed pursuant to the terms of the contract.”

The Purchaser arrived at the place for settlement at 3pm. The Vendor was not able to settle at that time because their mortgagee was not ready. The Purchaser said their instructions were to only wait until 3.05. The Vendor’s mortgagee not ready until 3.20.

The Purchaser left at 3.05. The Vendor phoned the Purchaser at 3:10 and asked them to come back. They didn’t come back.

At 4:36, the Vendor sent a fax stating that the Purchaser was in fundamental breach by failing to settle before 5pm and the Vendor reserved its rights.

The sale did not settle and the parties went to court.

The Purchaser argued that the Vendor was not ready at the scheduled time (3pm), and so the Purchaser was entitled to rescind. The Purchaser also argued that they might have been able to settle sometime between 4.36 and 5pm, however, upon receipt of the Vendor’s fax, they understood that the Vendor was not willing to settle. The Purchaser considered that they should be excused from the obligation to settle on that day due to the Vendor’s default.

The Court rejected the Purchaser’s argument. The Court found that the fax did not indicate that the Vendor was not ready willing and able to settle, but just reserved the Vendors rights if settlement did not occur. The Vendor had made an attempt to contact the Purchaser to settle after 3pm, which was ignored by the Purchaser.

The Court also found that the Purchaser was never ready willing and able itself. The Purchaser’s failure to be ready willing and able to settle by 5pm was a breach of an essential term. In addition, the Vendors failure to be ready at precisely 3pm did not give the Purchaser a right to rescind.

The Vendor initially sought specific performance, however the Purchaser continued to show no sign of being prepared to settle, so the Vendor terminated the contract and claimed the $135,000 deposit.

Traditionally, in Queensland, time for settlement has been strictly enforced. The practice of arranging a settlement time, and reserving rights to settle at anytime on the settlement date is a new but common practice in Queensland conveyancing. This case seems to affirm this new practice.

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