Lawyers skilfully avoid the sudden death consequences of last-minute delays in documentation or showing up late to a settlement location by specifying that any agreement to a time for settlement does not detract from their entitlement to complete at any later time that day.
This practice was put to the test in a recently published Supreme Court decision concerning the sale of a $1.35 million Isle of Capri home on the Gold Coast.
The May 2012 contract was due to complete on 25 September at 3 PM at the offices of a settlement agent at Southport.
When buyer’s solicitors MBA arrived, their clerk was informed by the settlement officer that the release would not be available for a further 15 minutes . There had been some confusion over the location of settlement and the release was in the course of being repatriated to the settlement venue. The MBA clerk declined to wait any more than five minutes for it to arrive and notified the sellers’ representative there present, of those instructions.
Shortly afterwards, sellers’ solicitor Anthony Robinson called his MBA counterpart and asked that the clerk be returned to the settlement location, reminded him that the sellers had reserved their rights to settle at any time up to 5 PM and insisted on performance of the buyer’s obligation to settle before day’s end.
Robinson did not however appoint any new time for settlement, nor did he call for any tender of the purchase price: both points taken by the buyer to support its argument before the court.
The MBA clerk not having returned for settlement, the following day Robinson notified them that his client held the buyer in fundamental breach of contract and reserved the sellers’ rights.
MBA countered to the effect that the seller’s inability to provide the release at the appointed time was itself the a breach of its obligations under the contract, entitling the buyer to terminate.
Noting that clause 6.1 of the standard REIQ contract specifically provides that time is not of the essence with respect to any agreement between the parties on a time of day to settle, the court ruled that the seller’s “inability to settle at 3 PM did not give the buyer the right to rescind”.
Robinson was held to have lawfully terminated by reason of the buyer no-show later in the day and his client sellers could pull in the deposit of $135,000 which the agent, Lucy Cole Prestige Properties at Broadbeach, was ordered to disgorge to them.
The judgment does not refer to whether or not the agent recovered any part of the commission due, as may well have been the case under some versions of agent appointments.
This decision was unanimously upheld on appeal in which judgment was delivered on 24 May 2012.