Even the most seasoned sales agents and lawyers can come unstuck when it comes to the calculation of periods of time for the performance of time critical contract obligations.
A new dimension to the hazard of this deceptively simple exercise appeared in the course of a recent dispute involving the auction sale of a Sunshine Coast residence where the buyer contended “days” were to be counted out in blocks of 24 hours.
The 22 February contract specified settlement in 60 days and provided as an “essential term”, a special condition that the seller would give a pool safety certificate to the buyer 7 days prior to settlement.
At 5:03 pm on 15 April 2020 – the due date for the delivery of the certificate – the buyer’s solicitor notified his counterpart opposite that client Peter Lloyd terminated the deal by reason of the seller’s failure to deliver the certificate as required.
At 6:31 pm that evening the seller’s solicitor sent the sought-for certificate attached to an email in response.
He followed up the next day with correspondence confirming delivery of the certificate on the date required and notified that he expected the buyer to complete the buy of the Minyama home on the due date of settlement, 22 April.
That didn’t happen. The seller issued proceedings in Queensland’s Supreme Court seeking Lloyd’s specific performance of the contract.
When the matter came before Justice Helen Bowskill, her honour started by addressing REIQ standard condition 10.4.
She was concerned in particular with the application of sub-clause (5) which specifies that “notices given by facsimile, personal delivery or email between 5 pm on a Business Day and 9 am on the next business day will be treated as having been given or delivered at 9 am on the second day”.
Was the required certificate a “notice”? If not, was sending it by email after 5:00 pm on the due date sufficient compliance with the special condition?
“What was required to be provided under the special condition was a certificate, not a notice”, she noted, observing too that there were numerous contract provisions referring to the giving of notices and others to the delivery of documents or statements.
Noting that clause 10.4 (5) referred to “business days” but the special condition to ordinary days, her honour went on to conclude “There is no apparent reason why the special condition should be construed that if the certificate was provided after 5:00 pm on a business day, it should be treated as not given until 9:00 am on the following business day”.
The buyer further contended that “seven days prior to settlement” effectively meant seven consecutive periods of 24 hours prior to the latest time settlement could be performed on 22 April, ie 4:00 pm.
By countback of seven consecutive 24 hr periods, Lloyd submitted the last moment for compliance with the obligation was 4:00 pm on 15 April.
The seller responded by reminding the court that where a contract specifies a day for performance of an obligation, the obliged party has until the end of that day – ie midnight – to perform it.
Her honour agreed.
“A ‘day’ is in its ordinary sense a calendar day running from midnight to midnight,” she ruled. “As a general rule, the law takes no account of fractions of a day”.
And given the time for settlement on the settlement date was not itself of the essence, “it would be artificial,” Justice Bowskill concluded “to construe the special condition by reference to a period of time comprising blocks of 24-hours prior to a particular event when there is no certainty about that what time that event will occur and where it is open to change”.
“Whilst there may be circumstances in which as a matter of construction of the particular contract, the reference to a period of days may properly be construed by reference to periods of 24-hours from or prior to a particular event, such a construction is not apt in this case”.