Imprecision in the language used to specify the date for approval of finance and settlement date, was the source of a dispute before Brisbane’s District Court concerning a $1.125 million sale of a southern downs rural property, near Warwick.

The 6 November 2012 contract specified finance notification by “21 days from the contract date”. But it was the further stipulation for settlement “14 days from finance approval”, that created the doubt that brought the matter to litigation.

The buyer Habi Pty Ltd, sought summary judgment for recovery of its $80,000 deposit after it purportedly terminated the contract on the ground that the seller had “failed to settle”.

The term “finance approval” is not itself defined in the standard form residential land contract. And correspondence between the parties created confusion as to whether “finance approval” was the date of notification on 28 November or the actual date of approval, 23 November.

Simple arithmetic had settlement due on 7 December. But by extension of the confusion over finance, there was a corresponding misunderstanding over whether settlement was due then or on 11 December.

The court accepted that the confusion had been sufficient to justify the seller’s Mr & Ms Edilbi  in thinking that the due date was in fact 11 December by which date it had arranged a release of the mortgage and the charge over plant and equipment in favour of a former owner and was in all respects ready to settle.

But the seller further contended there was no longer any time-of-the-essence obligation to complete on that day and that settlement could just as efficaciously have occurred the following day. The buyer’s termination was thus – so its case ran – premature.

Implicit in the arguments was that the need to count days to measure the finance approval and settlement periods – rather than have the due dates clearly specified – was prone to error and made it likely that both the buyer and seller would seek the other’s confirmation of their own tentative date calculations.

Their communication regarding dates – in language such as “subject to your confirmation” and “we propose” –  was in many respects the antithesis of conduct evidencing that they always intended “time to be of the essence”.

In the end the court was of the view that the contest also involved issues of credit. The summary judgment application was dismissed and a trial of the time-is-of-the-essence contest, will proceed in the coming months.

Habi Pty Ltd v Global Group Enterprises Pty Ltd [2013] QDC 055 Brisbane Jones DCJ 27/03/2013


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