David and Judith Tynan contracted to sell their 29 Lawrence St, St Lucia home in October 2010 for $7 million with settlement to be effected 12 months later secured by personal guarantees from the directors of the corporate buyer, Philip and Anna-Maria Sciacca.

A number of variations were entered into during the course of the transaction and two months before the specified settlement date, a deed of rescission was proposed to accommodate the buyer’s request that a “replacement contract” be entered into, presumably to allow the property to be acquired by an associated entity.

The deed was prepared containing the express provision that the original contract would remain binding on the parties such until such time as the “replacement contract” had been duly executed and became binding.

The Tynans’ solicitors sent the deed and “replacement contract” to their counterparts opposite on 6 October 2011 but no action had been taken on them by the due date of settlement of the original contract on 10 October 2011 .

Neither party attended or tendered for the settlement that day nor did either of them – presumably because of the proposed deed of rescission – make any preparatory steps leading towards it.

The Tynans then put the buyers on notice that they required settlement of the original contract on 16 November.

Two days before, the buyers’ by their solicitors notified it was not in a position to settle and they did not require the vendors to “tender”.

They conveyed to the sellers that the buyer was resorting further afield for sufficient funds to complete and requested consideration be given to extending the settlement date.

No settlement extension was offered.

Without further news from the buyers as to their readiness to complete, the seller’s solicitors notified by fax  on the morning of 16 November, that their client had terminated the contract and had forfeited the deposit.

The home was eventually re-sold for $4.8 million, a loss of just under $2 million on sale price.

The buyer and the guarantors defended the sellers’ summary judgment application on the basis that the preparation by the seller’s solicitors of the rescission deed and “replacement contract” evidenced an “abandonment” and separately, a “discharge” of the original purchase contract.

Not so, said the applications judge for the reason that the rescission negotiations “were explicitly on the footing that until a new contract was signed, the 2010 contract with binding”.

The buyer’s side further contended that the termination sent by facsimile at 9:57 am  on the date appointed for settlement was premature and therefore ineffective because the buyer had – by virtue of the standard contract conditions – until 5 pm that day to tender for settlement.

There had been no actual breach at the time of the purported termination – so their argument ran – and therefore “no failure to complete on the agreed date” as specified in REIQ standard residential sales condition 9.

This contention was upheld by the applications judge in relation to the liquidated damages allowed for in clause 9 but the defence was however, inoperable as regards any claim for common law breach damages including those arising out of an anticipatory breach .

The court was satisfied the buyer had  intimated “in the clearest possible terms that it would be pointless for the vendors to attend settlement because the purchaser was not in a position to settle. Those intimations were of an intention not to perform the original purchase contract”.

The guarantors raised the same distinction as regards actual breach in relation to the guarantee document which extended liability to them, so they argued, only “if the buyer breaches the contract”. His Honour thought there was no reason why the guarantee clause would not also extend to an anticipatory breaches.

The appeal judges accepted the seller had done everything needed of it and that it had been ready willing and able to settle within the parameters of the contract and that the solicitors’ notification that the buyers were not in a position to settle equated to a repudiation that entitled the seller to then terminate.

The summary judgment in favour of the sellers for their $2.8 million resale loss was upheld: the buyer and its guarantors “had no real prospect of successfully defending” the claim.

Filmana Pty Ltd & Ors v Tynan & Anor [2013] QCA 256 Brisbane Margaret McMurdo P and Holmes and Muir JJA 10/09/2013


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