Vendor Allowed to Rescind Agreement Due to Non-Payment

OUTCOME: Allowed

High Court of Australia Kitto, [COMPANY] v [NAME] [1964] HCA 20

ORDER Appeal allowed with costs. Order of the Supreme Court discharged. In lieu thereof order as follows:

1. Declare that the agreement for sale referred to in the statement of claim was validly rescinded by the plaintiff on 15th January 1963 and that the defendants have no right, title or interest in or to the land or improvements the subject of the said agreement.

2. Counterclaim of the defendants dismissed as regards specific performance and damages.

3. Order that the defendants pay the plaintiff's costs of the action and counterclaim in the Supreme Court, such costs to be taxed as one action on the basis of a sum involved of £15,000.

4. Liberty to apply.

Action remitted to the Supreme Court for further hearing of the counterclaim as regards relief against forfeiture of purchase moneys paid under the said agreement.

Cur. adv. vult.

The following written judgments were delivered:—

1964, March 23 Kitto J.

This is an appeal from a judgment of the Supreme Court of Western Australia ([NAME].) dismissing a claim by the appellant for a declaration that a certain agreement for sale made between it and the respondents on 6th January 1958 had been lawfully rescinded by it, and upholding a counterclaim by the respondents for specific performance of that agreement.

The agreement provided for the sale by the appellant and the purchase by the respondents of two lots of land in Perth of which the appellant is the registered proprietor. The agreed price was £47,500, payable by a deposit of £10,000 (£500 before the signing of the agreement and £9,500 on 6th January 1958), four sums of £5,000 each payable at twelve monthly intervals from the date of the agreement, and the balance, £17,500, sixty months from that date. The agreement provided for the payment by the respondents of interest at 5½% per annum on the balance of purchase price outstanding, the interest to be payable on the same days as the annual instalments of purchase price. It is clear, I think, that the annual instalments here referred to include the final payment of £17,500. Of the remaining stipulations of the agreement four only need be mentioned. Clause 5 provided that possession should be given and taken on the date of the agreement, and that the sale should be deemed to have taken place as from that date. By cl. 11 it was agreed (inter alia) that if the purchasers should fail to pay the deposit or the balance of the purchase money or any other moneys payable at the respective times appointed all moneys paid by them should be absolutely forfeited to the [NAME] and it should be lawful for the [NAME] to rescind the contract without notice. By cl. 12 it was agreed that time should be of the essence of the contract in all respects. Clause 14 provided that upon payment in full of the balance of purchase money and all other moneys payable under the contract the appellant at the cost and expense of the respondents should execute a proper registrable transfer of the land and do all that was necessary on its part to secure the registration thereof.

Notwithstanding the stipulation that time should be of the essence, the provisions of the agreement as to times for the making of the payments were not precisely adhered to from the beginning. The £9,500 balance of deposit was paid and accepted on 7th January 1958 although payable one day earlier. The first three instalments were paid three, thirteen and five days late respectively. The fourth instalment was paid a few days early. Apparently interest to the due date of each of these instalments was paid with the instalment. The last day for making the final payment, 6th January 1963, was a Sunday. That fact did not give the respondents an extra day: Halsbury's Laws of England, 3rd ed. vol 37, p. 97, par. 172. The payment was not made on or before that day, and the appellant became entitled according to the terms of the agreement to rescind the contract as soon as 6th January had passed. However, it did not at once purport to do so. On Monday, 7th January 1963, the respondents' secretary and accountant, a man named [APPELLANT], interviewed the [NAME] secretary, one [APPELLANT]. [APPELLANT] gave [APPELLANT] a cheque for £962 10s. 0d., being the amount of interest under the contract for the twelve months ended 6th January, and told him that the respondents, being unable to pay immediately the £17,500 that had fallen due on that day, requested an extension of time for three months. [NAME] accepted the interest and said that the request would be considered by the [NAME] board of directors that day. Next morning, [NAME] gave [COUNSEL] the answer by telephone. He pointed out, evidently to the surprise of [APPELLANT], that because of the respondents' default the appellant was entitled to rescind the contract; but he said that in order to give the respondents a further opportunity of finding and paying the money the appellant would not exercise its power to rescind the contract until Monday, 14th January 1963. He added that the respondents (scil. if a payment before 14th January were to prevent rescission) would have to "pay something for the additional accommodation"—they would have to pay an extra £50 to cover additional interest, costs and expenses. On the following day, 9th January, [NAME] by letter substantially repeated to the respondents what he had said by telephone. The portion of the letter which is important for present purposes was in these terms: "In order to give you an opportunity of finding the money, and subject to the payment of an additional £50 to cover further interest and the Company's costs and expenses, the Company will not take action under the contract until Monday, 14th January, but this must be regarded as an act of grace on the part of the Company, and without prejudice to and in no way varying the Company's right to the strict enforcement of the contract".

The respondents did not reply, and they allowed 14th January to go by without making any payment. On 15th [NAME], pursuant to a resolution of the board, gave them notice in writing that the appellant had exercised "the powers under the agreement dated 6th January 1958", had forfeited all moneys paid, and had rescinded the agreement "in so far as it imposes any obligation on the [NAME]". Notwithstanding the words last quoted, it is clear that the letter constituted an election to rescind the contract.

The question for decision is whether this purported rescission was effectual. The respondents say that it was not, for reasons which may be summarized under four heads: (1) by accepting late payments in the years 1959, 1960 and 1961, or alternatively by accepting those late payments and then granting the extension of time for payment of the £17,500, the appellant either made the stipulation that time should be of the essence no longer applicable in respect of the £17,500 or created a promissory estoppel against insisting that the stipulation was still applicable in respect of the balance; (2) by accepting on 7th January the payment of £962 10s. 0d. for interest, or alternatively by granting the extension of time to 13th January, the appellant bound itself by an election not to rescind for non-payment of the £17,500 on 6th January; (3) time never became of the essence in respect of 13th January; and (4) the appellant was precluded by s. 3 of the Landlord and Tenant Act, 1912 W.A. from rescinding the contract without first giving a notice in accordance with that section.

The learned judge of first instance held that by voluntarily accepting late payments in the years 1959, 1960 and 1961 the appellant indicated to the respondents and induced them to believe that the clause of the contract as to time being of the essence would not be enforced against them, and thus either "waived" the clause or created an equitable estoppel against relying upon it. As his Honour acknowledged, however, no evidence was called in regard to the late payments, and consequently the case must be decided without any information as to the circumstances in which any of them was accepted. In particular we do not know whether anything was said between the parties in respect of any of them. His Honour said he assumed that the payments were accepted by the appellant without complaint or protest. Perhaps they were; but from the bare fact of the acceptance of late payments of three out of four annual instalments of £5,000 each it does not follow that in respect of the final payment of £17,500 the appellant was giving the respondents to understand that they might safely rely upon its treating cl. 12 of the contract as no longer in force. I can see no justification for such a conclusion. Each acceptance of a late payment operated, of course, as an election by the appellant not to rescind the contract for non-payment of the relevant amount on its due date; but to read into the acceptances, considered either separately or as a whole, something promissory or some inducement to a belief in relation to future payments is, I think, to take an unwarranted step. It may be that repeated acquiescence by one party to a contract in non-observances by the other of stipulations as to time may amount, when considered in the light of particular circumstances, to an assent to time being treated for the future as not of the essence, notwithstanding a provision in the contract that it is of the essence; and in such a case it may not matter whether the result is described as a promissory estoppel or a waiver or a variation of the contract by mutual, though tacit, consent. But it is not a valid general proposition that wherever some instalments are accepted late without demur the party accepting them is precluded in respect of later instalments from insisting upon the agreement that time shall be of the essence: see [NAME] v. [NAME] [1] . In the present case there is nothing to support the conclusion unless that general proposition be correct. The learned judge mentioned a statement made by [NAME] in evidence, referring to the fact that none of the payments had been made on the exact date, that they "took it to mean that a day here and there didn't matter as that had always been our dealings with [COMPANY]". His Honour accepted this evidence and thought that the respondent's belief was both honest and reasonable in view of what had occurred in the past. Honest it may well have been, but reasonable I think with respect it was not, assuming as we must that "our dealings with [COMPANY]" meant only the acceptance of the unpunctual instalments. It is a strong thing to place upon a few days' indulgence in respect of instalments payable during the course of a contract a construction which means that in relation to the time for completion of the payment of purchase price a stipulation that time shall be of the essence may be regarded as abandoned. I do not think that such a construction can properly be placed upon the [NAME] conduct in accepting the late instalments in the present case.

1. [1948] 1 [NAME]. 91, at pp. 94-96.

Nor do I think that a conclusion to the effect that cl. 12 was waived or dispensed with is assisted by adding to the acceptance of late instalments the granting on 8th January of an extension of time until 13th January for payment of the balance of purchase money. On the contrary, the extension was granted with a plain intimation, both in the telephone conversation and in the letter of the following day, that the appellant was insisting upon its strict rights under the contract except to the extent of the indulgence it was offering. In the face of the letter the respondents had no reasonable ground for a belief that if they should fail to pay the £17,500 and an additional £50 before 14th January they could still count on being allowed further time.

The real questions which arise in relation to the granting of the extension are first whether it amounted to a binding election not to rescind for non-payment of the £17,500 on 6th January, and secondly, if it did amount to such an election, whether it was ineffectual to fix 13th January as a date in respect of which time was of the essence. In [NAME] v. [COMPANY]. [1] , the Privy Council proceeded on the footing that the [NAME] in that case could not insist that time was of the essence after having given an extension of time for payment of an instalment. The case is clear authority for the proposition that a stipulation making time of the essence may be rendered no longer applicable by the granting of an extension of time in particular circumstances; but it is not authority for the more general proposition that every grant of an extension of time deprives such a stipulation of effect for the future. Counsel had cited to their Lordships the case of [NAME] v. [NAME] [2] , in which [NAME[NAME]. dealt with the effect of an extension of time under a contract making time of the essence and held that "a mere extension of time, and nothing more, is only a waiver to the extent of substituting the extended time for the original time, and not an utter destruction of the essential character of the time" [3] . This was a pronouncement upon a point which had been one of difference between Lord [NAME] and Lord [NAME] in [NAME] v. [NAME] [4] , Sir [NAME] accepting the opinion of the latter in accordance with the view of Lord [NAME]. [NAME]: [NAME] on Vendors and Purchasers 14th ed. (1862), p. 270. It is hardly to be supposed that Lord [NAME], who delivered the judgment in [NAME] [1] , would have intended to overrule without even mentioning it a case which for forty years had stood as settling a point formerly disputed at so high a level. Evidently the time clause was disregarded because of something special in the facts. That is the explanation of the case which was adopted in later cases in the Privy Council: [NAME] v. [NAME] [2] ; [NAME] v. [NAME] [3] : "The stipulation as to time being of the essence of the contract did not apply as the facts stood". The authorized report does not reveal what the material facts were, but the report in the Law Journal [4] is more informative. Three days before an instalment became payable the purchaser requested the vendors to draw upon him for the amount of the instalment and interest at five days after sight. This was done and the purchasers accepted the bill. Thirteen days after the contract date for payment of the instalment the purchaser requested the vendors to hold the bill for ten days, and they agreed to do so. The purchaser, believing that this gave him three days' grace after the end of the ten days, made no arrangements to meet the bill; and on the day after the expiration of the ten days he wrote to the vendors that the bill would be paid on a day four days later still. The vendors then called the deal off. But by that time (as appears from the report of the counsel's argument) the bill was outstanding in the hands of the vendors' bankers; and the cases of [NAME] v. [NAME] [5] and In re a Debtor; Ex parte the Debtor [6] were cited to the Privy Council, presumably as showing that at the time of the purported determination of the contract there was subsisting and binding upon the vendors an agreement, implied from the making and acceptance of the bill, that the debt should not be enforced while the bill was in the hands of a third party. It is hardly surprising that Lord [NAME] treated the provision that time should be of the essence as irrelevant to the determination of the appeal, and considered only the equitable jurisdiction to relieve against forfeiture of the purchase moneys paid and (though he did not discuss this separately) to decree specific performance notwithstanding a rescission which was valid according to the terms of the contract.

1. [1913] [NAME]. 319. 2. (1874) 43 L.J. Ch. 449. 3. (1874) 43 L.J. Ch., at p. 456. 4. (1852) 16 Beav. 59 [51 E.R. 698]. 5. [1913] [NAME]. 319. 6. [1916] 1 [NAME]. 275, at pp. 279, 280. 7. [1916] 2 [NAME]. 599, at p. 604. 8. (1913) 8 L.J.P.C. 77. 9. [1898] 1 Q.B. 1. 10. [1908] 1 [NAME]. 344.

The authority of [NAME] v. [NAME] [7] is therefore unimpaired by [NAME] v. [COMPANY]. [1] . In Fry on Specific Performance 6th ed. (1921) par. 1126, p. 523, the case is described as having decided that the letter by which the vendors there agreed to an extension of time for payment was "only a qualified and conditional waiver of the original stipulation". This, in my opinion, is an accurate way of describing the action of the appellant in the present case in allowing the respondents time to pay the final balance of purchase money. Time being of the essence the appellant became entitled, as soon as 6th January 1963 had passed, to elect for or against rescinding the contract. Any act done by it and consistent only with the continuance of the contract on foot the law would hold to constitute an election against rescinding; and an election once made could not be retracted. But the appellant was not bound to elect at once. It might keep the question open, so long as it did nothing to affirm the contract and so long as the respondents' position was not prejudiced in consequence of the delay: [NAME] v. [NAME]. [1] ; [NAME] v. [NAME] [2] . By telling the respondents it would not rescind before Monday, 14th January, and that they would have to pay £50 for the additional accommodation to cover interest, costs and expenses, the appellant did no more than promise that it would not elect to rescind the contract before 14th January and that if the £17,500 and the additional £50 should be paid before that date the contract would stand affirmed. In the language of Fry L.J. in [NAME] v. [NAME] [3] , "this was not a stipulation postponing the time for completion generally, but merely limiting the exercise of a consequential power" [4] .

1. (1874) 43 L.J. Ch. 449. 2. [1913] [NAME]. 319. 3. (1871) L.R. 7 Exch. 26, at pp. 34, 35. 4. (1882) 7 App. Cas. 345, at p. 360. 5. (1884) 27 Ch.D. 89. 6. (1884) 27 Ch.D., at pp. 103, 104.

The granting of the extension of time, therefore, far from constituting an election by the appellant to affirm the contract, was the announcement of an intention to refrain from electing either way until either the £17,500 should have been paid or 14th January should have arrived. Not that election is a matter of intention. It is an effect which the law annexes to conduct which would be justifiable only if an election had been made one way or the other: [NAME] v. [NAME] [5] ; [NAME] v. [COMPANY]. [6] . But the solicitor's telephone message of 8th January and his letter of the 9th were not of such a nature as to be justified only on the footing of an election made, and it cannot be said that there were any negotiations between the parties of such a kind as to imply that the contract was not to be rescinded and accordingly was proceeding to completion: cf. [NAME] v. [NAME] [7] .

1. (1882) 7 App. Cas. 345, at p. 361. 2. (1920) 28 [NAME]. 305, at p. 325. 3. (1954) 91 [NAME]. 99, at p. 105.

It has been contended that the [NAME] acceptance of the £962 10s. 0d. for interest on 7th January 1963 should be considered an election by it to affirm the contract. If the sum had included interest for any period beyond 6th January, acceptance of the payment would necessarily have implied the existence of the contract after that date and would therefore have constituted an election not to rescind. But the sum consisted only of interest for the year ended 6th January 1963. The respondents had had possession of the premises for that year, and by cl. 2 of the contract the interest was made payable at the end of it. For the respondents a submission was made that the appellant could not have recovered the interest save by suing on the contract, and that therefore by accepting the payment it treated the contract as still on foot. If the payment had been of an instalment of the price, the contention might well have been correct, even though the instalment were one which the contract had made payable specifically on 6th January, for only on the basis that the appellant was still bound by the sale could he assert a right to any part of the price: see per Dixon J. in [COMPANY]. v. [NAME] [1] , and cf. [NAME] v. [NAME] [2] . But the right to interest on unpaid purchase money is correlative with the right to possession: cf. [NAME] v. [NAME] [3] . The interest is analogous to a sum for rent or use and occupation: [NAME] v. [NAME] [4] . Accordingly the £962 10s. 0d. being interest in respect of a completed period of possession, would have been recoverable by the appellant even after an election to rescind: cf. [NAME] v. [APPELLANT]. [5] . By accepting payment of it, therefore, the appellant did not elect against terminating the contract.

1. (1946) 72 [NAME]. 435, at pp. 464, 465. 2. (1880) 6 V.L.R. (L.) 117, at pp. 125-127. 3. (1905) 5 [NAME].) 382, at p. 386. 4. [1921] V.L.R. 14, at p. 17. 5. (1933) 48 [NAME]. 457, at p. 476.

The point raised by the respondents under the Landlord and Tenant Act, 1912 W.A. remains. It is a short point. Sub-section (1) of s. 3 in effect (I need not quote the exact words) lays down as a condition precedent to the enforceability of a right of re-entry or forfeiture for breach of a covenant or condition of a lease, first, that the lessor shall have given the lessee a notice specifying the breach, requiring the lessee to remedy it if it is capable of remedy, and requiring the lessee to make compensation in money for the breach, and, secondly, that the lessee shall have failed within a reasonable time to comply with the notice. Then [NAME]. (2) confers on the Supreme Court a jurisdiction to grant relief to a lessee where his lessor is proceeding to enforce such a right of re-entry or forfeiture. These provisions, if they stood by themselves, would of course have no application to such a case as the present, for the contract, though entitling the respondents to immediate possession so as to create a tenancy at will, is not a lease. But [NAME]. (6) provides that the section applies to "any right or option to purchase any land where the purchaser is in possession of the land". By its statement of claim, the appellant claimed not only a declaration that its rescission of the contract was lawful but also an order for possession of the land. It did not, before commencing the action, give the respondents any notice that could be regarded as complying with [NAME]. (1).

On these facts the respondents found a contention that by the conjoint operation of [NAME]. (1) and (6) the appellant was disentitled to maintain the action. They say that they had a right to purchase the land, and none the less so because they were under an obligation to purchase it. That is to say their contention treats the completion of the purchase as the exercise by them of a right to purchase, and it interprets [NAME]. (6) as intending to apply the provisions which [NAME]. (1) and (2) make in respect of a lease to every contract for the purchase of land under which the purchaser is in possession. The contention is open to the objection that a provision having that intention would almost certainly have been expressed in terms of a binding contract and not only of a right or option to purchase. And there is the verbal but not insignificant objection that the contention treats the word "purchase" as being used in two senses: whereas the expression "option to purchase" must refer to the bringing into force of a binding obligation on the owner to sell, the expression "right to purchase" is treated as referring to or including the carrying into execution of an already binding contract of purchase. There is no reason in this context for regarding "right" and "option" as used in contrast to one another. It would be a sufficient explanation of their both being employed (though I do not say it is historically the correct explanation) that the case is covered of a right to purchase created by will as well as one created by contract, both words being used, notwithstanding that they overlap, to ensure comprehensiveness. A possible meaning to give the sub-section in its setting is that where a person is in possession of land under any instrument (not being a lease) which entitles him at his election to bring into force a binding obligation upon the owner of the land to convey it to him in exchange for money, the section applies mutatis mutandis as if the instrument were a lease. Such a case might possibly occur where there is a share-farming agreement under which an option is given to a share-farmer in possession: contrast [NAME] v. [NAME] [1] to which [NAME]. has referred me. But this construction does not seem to be supported by the historical considerations which are examined in the judgment of [NAME]., and I am content to accept his construction of [NAME]. (6) as being the most natural. On either view the provision is not directed to a case such as the present, and the respondents' attempt to rely upon it fails.

1. [1962] [NAME]. 465.

In the result I am of opinion that not only was the [NAME] rescission of the contract on 15th January 1963 valid according to the terms of the contract but, since it was a rescission for non-payment on a date as to which time was of the essence, the case is not one in which equity will decree specific performance notwithstanding the rescission. A declaration that the contract was validly rescinded by the appellant on 15th January 1963 should be made, and the respondents' counterclaim for specific performance dismissed; but the action should be remitted to the Supreme Court to enable consideration to be given to the question of granting the respondents on equitable terms relief against the forfeiture of purchase moneys paid: see [NAME] v. [NAME] [2] .

1. [1916] 1 [NAME]. 275.

The appeal should accordingly be allowed.

[NAME[NAME].

I have had the opportunity of considering the reasons prepared by [NAME[NAME]. and I agree with his reasons and conclusions in relation to the principal matters discussed upon the hearing of the appeal. I wish, however, to express my reasons for thinking that the argument that s. 3 of the Landlord and Tenant Act, 1912 applies to this case should be rejected.

The contention upon the appeal was that the operation of the section is in no way restricted to the regulation of the rights, inter se, of lessors and lessees but applies generally to any executory contract for the purchase of land where, under the terms of the contract, the purchaser is in possession or, indeed, even where the purchaser has been permitted to enter into possession pending completion. The section follows the form of s. 94 of " The Property Law Act, 1908 " of New Zealand and some support for the respondents' proposition is to be found in two cases decided in that country—[NAME] v. [NAME] [3] and [NAME] v. [NAME] [4] . In the latter case, which was concerned with the sufficiency of a notice given pursuant to s. 94 by the [NAME] of certain lands, [NAME]. merely observed that "[NAME] v. [NAME] [3] is an authority for the proposition that s. 94 applies to an agreement for sale and purchase of land when the purchaser is in possession under the agreement" [1] . In the earlier case, which was also concerned with a contract for the sale of land, [NAME]. disposed of the point in the following manner: "The next question to be considered is whether the case comes within the provisions of s. 94 of The Property Law Act, 1908. Sub-section (6) of that section provides that the section applies to any right or option to purchase any land where the purchaser is in possession of that land. The plaintiff in the present case had a right to purchase the land in question, and he was in possession thereof. His case came, therefore, within the scope of the section" [2] . But in the present case more reliance was, perhaps, placed by the appellant upon the still earlier case of [APPELLANT] v. [APPELLANT] [3] . This case was, however, decided under s. 25 of the Supreme Court Act, 1882 and the precise question which arose for determination was whether the words "right to purchase" in that section included the right of a lessee under a clause in a lease giving him an option to purchase the freehold upon certain specified conditions. The question was resolved in the affirmative but, additionally, a majority of the Court expressed the opinion that the section applied also to any contract of sale where the purchaser was in possession. That section was, it seems to me, in a much more general form than s. 94 of the latter Act. It was as follows: "[ADDRESS] may on motion relieve against a forfeiture of any lease or of any right to purchase (where the purchaser is in possession) for the breach of any covenant, condition, or agreement, if the Court is of opinion that such breach has been committed through accident or mistake, without fraud or gross negligence, and that no injury has happened to the landlord or [NAME] other than can be compensated in damages, and may in granting such relief order the person relieved to pay such damages and costs as to the Court may seem meet". It will be noticed that this was a general provision appearing in a section not designed primarily or merely to regulate the rights of lessors and lessees yet, nevertheless, it seems to have influenced the view taken concerning the operation of [NAME]. (6) of s. 94 of The Property Law Act. ([NAME] v. [NAME] [4] .) However, I think there is much to be said on general principles for the proposition that [NAME]. (6) of that section and of s. 3 of the Landlord and Tenant Act, 1912 W.A. appear as provisions designed to extend the protection initially given to lessees by the leading provisions of the section. That this is the true effect of the section may be thought to emerge from a close consideration of the language of that sub-section. What the section in general purports to do is to restrain the unconditional exercise by lessors of certain rights. Sub-section (1) provides that those rights of a lessor "shall not be enforceable by action or otherwise" unless and until the lessor has served upon the lessee a notice of the character specified "and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation therefor in money to the satisfaction of the lessor". But what are the rights the exercise of which are so restrained? They are the right of a lessor to re-enter upon the land demised and his right to forfeit the term "under any proviso or stipulation in the lease for a breach of any covenant or condition in the lease". But these restraints on the exercise of a lessor's rights would not, standing alone, protect the lessee against any so-called forfeiture of an option to purchase contained in the lease and it is this circumstance with which, I think, [NAME]. (6) concerns itself. There is nothing in [NAME]. (6) to require that [NAME]. (1) shall, in the case of any right or option to purchase land, be read subject to any modification and the protection afforded in the case of any right or option to purchase is, in the language of [NAME]. (1), a protection against forfeiture under any proviso or stipulation in the lease for a breach of any covenant or condition in the lease. It is, I think, impossible to read the operative provisions of [NAME]. (1) in any other way and, accordingly, the respondents' contention on this aspect of the case should be rejected. So understood [NAME]. (6) operates to extend the area of protection initially provided by [NAME]. (1) and is just as much ancillary to that provision as is [NAME]. (7) which excludes from [NAME]. (1) covenants and conditions of the character specified in the later sub-section. Consideration of the framework of the section in my view fortifies this conclusion though the section is not without difficulties as are illustrated by other New Zealand cases to which we have referred.

1. [1909] 28 [NAME]. 667. 2. [1929] [NAME]. 560. 3. [1909] 28 [NAME]. 667. 4. [1929] [NAME]., at p. 565. 5. (1909) 28 [NAME]., at pp. 670, 671. 6. (1901) 20 [NAME]. 141. 7. [1931] [NAME]. 1143, at p. 1152.

In my opinion the appeal should be allowed and an order made in the form proposed by [NAME].

I have had the advantage of reading the judgment of [NAME[NAME]. with which I am in complete agreement.

Upon the main point, it appears to me on principle that a [NAME] becoming entitled to rescind for non-payment of purchase money upon the stipulated date for payment, who does no more than give the purchaser the opportunity to pay within a limited time thereafter, is not thereby electing not to rescind for non-payment on the due date nor is he representing that time is not of the essence; rather he is intimating that he intends to exercise his right to rescind unless payment is made within the time of grace. [NAME[NAME].'s examination of the cases disposes of the contention that authority has established the contrary and requires the decision that a [NAME] who shows such forbearance has inevitably done so at the expense of his contractual right to rescind.

I agree that the appeal should be allowed.