Vendor Entitled to Terminate Conditional Sale Contract After Reasonable Time

OUTCOME: Dismissed

High Court of Australia Gibbs C.J. [NAME], [NAME], [NAME] and [NAME]. [NAME] v [COMPANY] [1982] HCA 29

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

May 11 Gibbs C.J.

This is an appeal from a decision of the Supreme Court of New South Wales (Court of Appeal). The respondent company was [NAME], and the [NAME] were [NAME], under a [NAME] made on 7 April 1978 for the sale of land at Cronulla in New South Wales for a price of $220,000. The [NAME] provided for payment of a deposit of $22,000 on the signing of the agreement but in fact the deposit had already been paid before the [NAME] was signed. No time was fixed for completion of the sale, and the [NAME] did not expressly provide that time was of the essence of the [NAME]. Clause 6 of the special conditions of the [NAME] provided as follows: "This [NAME] is entered into subject to [NAME] completing a sale of their property No. [ADDRESS], [NAME]."

The [NAME] did not enter into a [NAME] for the sale of their property at [NAME] until 9 March 1979 and that [NAME] was not completed until 13 June 1979. The learned trial judge in effect found that the [NAME] had not made reasonable endeavours to sell their property at an earlier date. He found that they had put the property on the market at a price that was too high and had acted unreasonably in not reducing the price to a reasonable level until January 1979. He did not make any finding as to the date on which a reasonable time for performance of special condition 6 expired, but he did find that a reasonable time had expired by 29 September 1978, when the present proceedings were commenced. Before that date the respondent had pressed the [NAME] to complete the [NAME], and had given them two notices to complete. The second of those notices was given on 17 July 1978, and required completion by 8 August 1978. When the sale had not been completed by that date the respondent on 10 August 1978 gave a notice rescinding or terminating the [NAME]. The learned trial judge did not decide whether a reasonable time for completion had elapsed by 17 July 1978, or whether the respondent was entitled to give a notice to complete on that day, for he held that once a reasonable time for the fulfilment of special condition 6 had elapsed without that condition having been either fulfilled or waived, it was not necessary for the respondent to give a notice to complete. He accordingly declared that the [NAME] had terminated on 29 September 1978 and ordered repayment to the [NAME] of the deposit. His decision was affirmed by the Court of Appeal.

In my opinion special condition 6 made the completion of the sale of the property at [NAME] a condition precedent to the performance of certain of the obligations of the parties under the [NAME], including the obligation of the respondent to complete the sale. It has sometimes proved difficult to decide whether a particular condition of a [NAME] should be classified as a condition precedent or a condition subsequent, and as [NAME] has pointed out in "The Contractual Concept of Condition", Law Quarterly Review, vol. 69 (1953) 485, at p. 506, if the words "precedent" and "subsequent" are to make sense they must be connected with a definite point of reference; since they express a relationship in time, the question which must be asked is "Precedent to what? Subsequent to what?" However, provided the effect of a condition is clearly understood, its classification may be merely a matter of words. The condition in the present case was not a condition precedent to the formation of a binding [NAME]. It is clear that a binding [NAME] came into existence immediately upon signature, and that the parties to it were from that moment subject to certain obligations. For example, the [NAME] became liable to pay a deposit. Further, there was implied a promise by the [NAME] that they would do all that was reasonable to find a [NAME] for the [NAME[NAME] property and to complete a sale to him. It was held in [NAME] v. [NAME] [1] that a term of that kind should be implied in a [NAME] for the sale of land which contained a condition making the sale subject to [NAME] disposing of his business within ninety days; and that decision is consistent with authority, including decisions of this Court: [NAME] v. [NAME] [2] ; [NAME] v. [NAME] [3] . The fact that a promise of this kind is implied is quite inconsistent with the notion that no binding [NAME] has come into existence.

1. [1957] [NAME]R. 153. 2. (1952) 87 [NAME]. 267, at p. 280. 3. (1960) 105 [NAME]. 521, at p. 526.

In [COMPANY]. v. [NAME] [4] , where a [NAME] of sale was expressed to be conditional on [NAME] obtaining a renewal of certain leases, it appears from the judgment of Lord [NAME] that it was thought that the condition was one on whose fulfilment the formation of a binding [NAME] of sale depended. If that view of the condition was correct, it can only be because of particular provisions peculiar to the [NAME] there considered. However, the correctness of what Lord [NAME] said on this point was doubted in [COMPANY]. v. [NAME] [5] , and I respectfully share those doubts. It seems to me that the condition was one on which the performance of the relevant obligations under the [NAME] depended rather than a condition precedent to the formation of a binding [NAME]. On the other hand in [NAME] v. [NAME] [6] the [NAME] of sale contained the words "And providing that the transfer of [NAME]'s block goes through in reasonable time". [NAME]. held that this was a condition subsequent [7] . [NAME] [NAME]., with, I think, more accuracy, said that the completion of the transfer was not a condition precedent to the operation of the agreement [8] . If it was right to say that the condition was a condition subsequent, that may have been because the [NAME] provided for possession being given on a date which might arrive before the condition had been performed [9] . However as [NAME]. pointed out [10] , in one sense the stipulation might be a condition precedent to the performance of a particular term of the [NAME], while in another sense it was a condition subsequent in relation to the whole [NAME], since the failure of the stipulation would have entitled [NAME] to retire from the transaction altogether. There are other authorities which illustrate the difficulty of attaching a label to conditions of this kind. In [NAME] v. [NAME] [11] and [NAME] v. [NAME] [12] conditions making the [NAME] conditional upon the [NAME] obtaining a loan were held to be conditions subsequent, whereas in [NAME] v. [NAME] [13] a similar condition was held to be a condition precedent to the formation of a binding [NAME]. The latter case accepted the view taken in [COMPANY]. v. [NAME] that no binding [NAME] came into existence until the condition was fulfilled. That view must, as I have indicated, depend on particular terms of the [NAME]; on the other hand, the description of the condition as a condition subsequent may be a mere matter of terminology, and may reflect an unwillingness to describe a condition as a condition precedent unless the formation of a binding [NAME] depends on its fulfilment. Nevertheless, it probably does not matter in the present case whether the condition is described as "precedent" or "subsequent", provided that it is understood that its non-fulfilment did not prevent a binding [NAME] from coming into existence but did have the effect that the respondent was under no obligation to complete the sale unless the condition was fulfilled or waived.

1. [1960] [NAME]. 115. 2. [1968] 1 Ch. 94, at p. 116. 3. (1926) 37 [NAME]. 529. 4. (1926) 37 [NAME]., at pp. 536, 538. 5. (1926) 37 [NAME]., at pp. 541, 544. 6. (1926) 37 [NAME]., at p. 536. 7. (1926) 37 [NAME]., at p. 540. 8. [1963] [NAME]R. 214. 9. [1975] [NAME]R. 102. 10. [1966] N.Z.[NAME]. 527.

Special condition 6 did not fix any time within which the sale of the property at [NAME] was to be completed, nor did it fix a date for completion of the sale. In [COMPANY]. v. [NAME] [14] it was said that in such a case the condition must be fulfilled within a reasonable time. This statement is clearly correct; it is entirely consistent with the principle that "An implication of a reasonable time when none is expressly limited is, in general, to be made unless there are indications to the contrary": [NAME] v. [COMPANY]. [15] .

1. [1960] [NAME]., at p. 124. 2. (1946) 73 [NAME]. 1, at p. 13.

The condition was in my opinion one for the benefit of the [NAME], who were therefore entitled to waive it, but since there was no waiver before proceedings were commenced that question need not be further considered.

Although by September 1978 a reasonable time had elapsed, the condition had not then been fulfilled. The question then arises whether the respondent was entitled to terminate the [NAME] without first giving to the [NAME] a notice requiring them to fulfil the condition, or to perform the [NAME], within a reasonable time. [COMPANY]. v. [NAME] is authority that no notice is necessary when the [NAME], expressly or by implication, fixes a date by which the condition is to be fulfilled. Their Lordships laid down the rule applicable to such a case as follows [16] : "where a conditional [NAME] of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles." Their Lordships did not explain why equitable principles are inapplicable. The explanation given by [NAME], in his work on The Law of [NAME] 4th ed. (1975), p. 570, is that the equitable principle that time is not of the essence of the [NAME] does not apply, because "until the condition is performed the whole existence of the [NAME] remains in doubt". However, their Lordships went on to say that if they had accepted counsel's argument that [NAME] was entitled to a reasonable time to fulfil the condition, they would have been disposed to agree that time, not being originally of the essence of the [NAME], could not be made so by service of a notice when [NAME] had not been guilty of any delay or default such as had to be shown in order to entitle the [NAME] to serve such a notice [17] . Those observations, as [NAME]. said in [NAME] v. [NAME] [18] "certainly tend towards the view that, if no time is fixed for completion and a condition is to be satisfied within a reasonable time, the equitable requirements as to notice apply". Again, however, their Lordships did not explain why the equitable principles might apply in the one case but not in the other.

1. [1960] [NAME]., at p. 125. 2. [1960] [NAME]., at p. 128. 3. [1978] 2 N.Z.[NAME]. 261, at p. 271.

In [NAME] v. [NAME] [19] , [NAME]. said that he strongly thought "that a right to put an end to the [NAME] or to refuse to perform it would not arise thereunder automatically without some warning notice from [NAME], fixing a reasonable limit of time for completion." [NAME]. may have been of a similar opinion [20] . These remarks were obiter, because in that case it was held that the condition was performed within a reasonable time.

1. (1926) 37 [NAME]., at p. 542. 2. (1926) 37 [NAME]., at pp. 539-540.

In [NAME] v. [NAME] [21] a [NAME] for sale contained a provision that the [NAME] was subject to the [NAME] obtaining a certain development approval of the local council and that in the event of the council not granting such approval by 31 May 1965 the [NAME] was to be at an end. By 31 May 1965 the council's approval had not been given and the [NAME] had not waived the condition. It was held that the [NAME] did not automatically come to an end. [NAME] and [NAME] [NAME]. said [22] :

Whilst the effect of a condition must in every case depend upon the language in which it is expressed and a decision upon the meaning of one condition cannot determine the meaning of a different condition, the authorities cited do show a disposition on the part of the courts to treat non-fulfilment of a condition such as that here under consideration as rendering a [NAME] voidable rather than void in order to forestall a [NAME] from gaining some advantage from his own conduct in securing, or contributing to, the non-fulfilment of a condition bringing the [NAME] to an end. Accordingly we are prepared to treat non-fulfilment of the condition as rendering the [NAME] voidable rather than void. Barwick C.J. was of a similar opinion [23] . The authority principally relied on by the Court was [NAME] v. [COMPANY]. [24] , a case of condition subsequent. It was not suggested in either of those cases that it was necessary to give any notice to complete. The non-fulfilment of the condition gave the party not in default a right to avoid the [NAME], but if that party did not exercise the right the other party might enforce the [NAME] against him. In [NAME] v. [COMPANY]. the attempt to cancel the [NAME] was made too late, since the condition had been fulfilled in the meantime [25] . It appears to have been assumed that no notice to complete need be given before the right to avoid the [NAME] was exercised. In both cases however a time for fulfilment of the condition was expressly fixed by the [NAME]. 1. (1966) 116 [NAME]. 418. 2. (1966) 116 [NAME]., at p. 441. 3. (1966) 116 [NAME]., at p. 429. 4. (1950) 81 [NAME]. 418. 5. (1950) 81 [NAME]., at p. 442.

[NAME] v. [COMPANY]. and [NAME] v. [NAME] are consistent with [COMPANY]. v. [NAME], and support the view that where a conditional [NAME] fixes the date by which the condition is to be fulfilled the [NAME] may be terminated if the condition has not been fulfilled when that date arrives, and that it is unnecessary to give any prior notice to the other party. The question is whether a similar conclusion should be reached when no time for fulfilment of the condition is fixed by the [NAME], and it accordingly must be performed within a reasonable time. There is little authority on the question, and it must be approached from the standpoint of principle. The condition with which we are concerned is not one which it was entirely in the power of the [NAME] to fulfil. Although they might use their best endeavours to find a [NAME] and complete a sale, it still remained necessary for them to find someone prepared to buy. Although, in fact, the [NAME] did not make reasonable efforts to satisfy the condition, it is impossible to say that they must have effected a sale within a reasonable time if they had made all reasonable endeavours to do so. It seems inappropriate that one [NAME] should be able to give a notice requiring the other to complete a sale, when that other party has not promised to do so (his promise only being to do all that was reasonable) and when it is not necessarily within his power to do so. The doctrines of [NAME] enable a [NAME] to obtain specific performance notwithstanding his failure to carry out his obligations within a stipulated time, when that time is not of the essence of the [NAME]. The party not in default has a corresponding power to limit a particular time within which the other contracting party is to perform his obligations. These principles have recently been discussed by this Court in [NAME] v. [NAME] [26] . They apply, in my opinion, only where the party to whom a notice may be given is under a contractual obligation to act. In the present case no doubt the [NAME] might have been given a notice requiring them to make reasonable efforts to sell, but they could not have been required to make a sale, for that was beyond their power. Moreover, a notice can only be given when the party to whom it is addressed is either in breach of [NAME], or guilty of unreasonable delay. A [NAME] might have made all reasonable efforts but yet have been unable to complete a sale, and in that situation [NAME] would not be able to give a notice to complete, and would, if the [NAME]' argument is correct, be bound indefinitely to a [NAME] that might never result in a sale.

For these reasons I consider that when the time has elapsed for performance of a condition which is not a promissory condition, but a condition precedent to the obligation to complete a [NAME] of sale, either party, if not in default, can elect to treat the [NAME] as at an end if the condition has not been fulfilled or waived, and that it is not necessary first to give a notice calling on the party in default to complete the [NAME] or fulfil the condition. What I have said is, of course, subject to any sufficient indication of a contrary intention in the words of the [NAME] itself. The conclusion that I have reached is supported by the judgment of Lord [NAME] in [COMPANY]. v. [NAME] [27] , with whose reasoning I respectfully agree. It accords also with the judgment of [NAME]. (as he then was) in In re Longlands Farm [28] , a decision whose authority on this point is weakened by the fact that a notice to complete had in fact been given. A contrary view was taken in [NAME] v. [NAME] [29] by Cooke J., who considered that a notice making time of the essence is necessary. Although in [COMPANY]. v. [NAME] [30] an erroneous view may have been taken of the nature of the condition there considered, nevertheless, in my respectful opinion, it was correct to hold that the time fixed by the [NAME] for performance of the condition was not to be extended by reference to equitable principles, and the same conclusion should be reached when the condition is to be performed within a reasonable time.

1. [NAME], p. 509. 2. 1975 [NAME]. (Notes). 3. [1968] 3 [NAME]. 552. 4. [1978] 2 N.Z.[NAME]. 261. 5. [1960] [NAME]. 115.

In the present case the learned trial judge was plainly correct in holding that a reasonable time for the fulfilment of special condition 6 had expired by September 1978. In the view that I have formed, it was then open to the respondent to avoid the [NAME] without first giving any notice limiting a reasonable time for completion. By instituting the proceedings, before the condition had been either fulfilled or waived, the respondent sufficiently evidenced its election to avoid the [NAME].

I would dismiss the appeal.

[NAME[NAME].

[NAME] would dismiss this appeal for the reasons appearing in the judgment of [NAME]., which I have had the advantage of reading.

[RESPONDENT[NAME].

By a [NAME] dated 7 April 1978 the respondent agreed to sell and the [NAME] agreed to buy certain land at Cronulla near Sydney for the sum of $220,000 payable as to $22,000 by way of deposit on the signing of the [NAME] and as to the balance on completion. The [NAME] was in the Law Society and Real Estate Institute form (1972 copyright) with special conditions. It did not fix a time for completion. Special condition 6 provided: "This [NAME] is entered into subject to [NAME] completing a sale of their property No. [ADDRESS], [NAME]."

On 8 May 1978 the respondent's solicitors, who had furnished particulars of title on 10 April, informed the [NAME]' solicitors that the respondent was concerned at the delay because it wished to purchase another property. The [NAME]' solicitors replied stating that every endeavour was being made to sell the property at [NAME]. On 15 May the respondent's solicitors spoke of terminating the [NAME] and on 8 June they threatened to give a notice to complete, repeating their threat on 23 June. On 30 June a notice to complete was given. It has been treated as being ineffective.

On 17 July, following further correspondence and conversations between the solicitors, the respondent served a notice to complete the [NAME] on 8 August 1978. On 10 August it purported to terminate the [NAME], relying on non-compliance with the notice. On 29 September the respondent commenced proceedings in the Supreme Court for a declaration that the [NAME] had been effectively terminated on or about 10 August, a declaration that the deposit had been forfeited and an order for removal of a caveat that had been lodged on behalf of the [NAME].

In February 1979 the [NAME] indicated that they were willing to complete the sale. Their change of attitude was due to the willingness of their [COMPANY] to provide finance. Although at that time they had not succeeded in selling the house at [NAME], they indicated their willingness to waive special condition 6. The respondent continued to insist that it had validly terminated the [NAME]. As it happened, the property at [NAME] was subsequently sold, completion of the sale taking place on 13 June 1979. Before that sale was completed, on 21 March 1980, the [NAME] cross-claimed for specific performance of their [NAME] with the respondent in the Supreme Court proceedings.

From the evidence given in the proceedings it appears that the house at [NAME] was placed on the market in March 1978. The [NAME] sought the advice of a number of agents who told him that the price which he wanted, $189,000, was the very top of the market. Nevertheless the property was advertised for sale in April and May 1978 for $189,000. On 24 May the [NAME] advertised the property at $179,000. Later in July and August he reduced the price to $169,000. This continued to be the advertised price until January 1979. No offers to purchase were received and few people fully inspected the property. Later in 1978 a formal evaluation was obtained and the house was then advertised and later sold at $155,000.

At first instance [APPELLANT]. found that the [NAME] was not a reliable witness. He further found that it was the [NAME] who fixed the price and altered it from time to time. [NAME] concluded that he did not act reasonably at all times and that it was unreasonable on his part not to reduce the price earlier than he had when no offers and few inspections arose, particularly when the respondent had expressed anxiety about lack of progress as early as May 1978. [NAME] found that a reasonable time had expired by September 1978, that a notice to complete was unnecessary and that all the respondent needed to do after a reasonable time had expired was to avoid the [NAME]. [NAME] made a declaration that at the time of the commencement of the proceedings the [NAME] was terminated and by consent ordered the return of the deposit to the [NAME].

An appeal to the Court of Appeal was dismissed. [NAME]. (with whom [NAME]. agreed) held that [NAME] follows the law in giving effect to a time stipulation in a non-promissory condition ([RESPONDENT]. v. [RESPONDENT] [31] ) and that the respondent was entitled to treat the [NAME] as at an end upon the expiration of a reasonable time from the making of the [NAME], special condition 6 not having been fulfilled within that time. [NAME[NAME].A. thought that the special condition was a condition in the classic sense, non-fulfilment giving rise to an option to terminate. [NAME] concluded that, even if the respondent did not have an option to terminate for non-fulfilment of the condition, it was entitled to succeed because the [NAME] failed to complete within a reasonable time.

1. [1960] [NAME]. 115, at p. 126.

The [NAME]' case is directed at the Privy Council decision in [NAME]. The [NAME] invite us not to follow [NAME] or to distinguish it.

Accordingly, it is convenient to begin by ascertaining what the case decided. By a conditional agreement made on 8 November 1955 the appellant agreed to sell a rubber estate of 1,336 acres. At the time the appellant had a good title to 1,154 acres only and it was negotiating to renew its leases to the remaining 182 acres, the seven leases to that area having previously expired. Clause 4 of the agreement provided:

The purchase is conditional on [NAME] obtaining a renewal of the seven (7) leases so as to be in a position to transfer the same to the [NAME] and if [NAME] is unable to fulfil this condition this agreement shall become null and void and [NAME] shall refund to the [NAME] the deposits already made .The agreement stipulated that completion was to take place on or before 30 April 1956, a date which was subsequently extended by the [NAME] to 31 May 1956. The condition was not fulfilled by 11 June 1956 when the [NAME] brought an action claiming the return of the deposits paid. The Judicial Committee held that the condition in cl. 4 had to be performed at latest by 30 April 1956 or by the extended time granted by the [NAME] and, accordingly, the respondent was entitled to the return of his deposits. Until the condition was fulfilled there was no [NAME] of sale to be completed, and by fixing a date for completion the parties impliedly agreed that the [NAME] must have become absolute through performance of the condition by that date at the latest.

Lord [NAME] stated the relevant principles [32] :

(i) Where a conditional [NAME] of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date; (ii) where a conditional [NAME] of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time; (iii) where a conditional [NAME] of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles. 1. [1960] [NAME]., at pp. 124-125.

Lord [NAME] [33] went on to say " that the reason for taking the date fixed for completion by a conditional [NAME] of sale as the date by which the condition is to be fulfilled " is " that until the condition is fulfilled there is no [NAME] of sale to be completed, and accordingly, that by fixing a date for completion the parties must by implication be regarded as having agreed that the [NAME] must have become absolute through performance of the condition by that date at latest." According to [NAME] the same result ensued when the [NAME] fixed a date for performance on the part of the [NAME] of his part of the bargain by payment of the purchase money.

1. [1960] [NAME]., at p. 126.

One question provoked by Lord [NAME] choice of language is whether he was referring to a condition precedent to the formation of a [NAME] or a condition precedent to the duty to perform obligations imposed by a [NAME]. The passage which I have just quoted perhaps suggests that he was thinking of a conditional [NAME] in the sense that there was a condition precedent to completion. So does the passage where [NAME], discussing the respondent's argument, noted that it stressed that [NAME]'s obligation to sell and the [NAME]'s obligation to buy were expressed to be subject to the condition [34] . However, he then stated that it "was a condition precedent on the fulfilment of which the formation of a binding [NAME] of sale between the parties was made to depend". And, when discussing the consequences of the appellant's argument, he said [35] :

The [NAME] would have been obliged to perform his part of the bargain on or before April 30, 1956, by paying the balance of the purchase-money before there was any binding [NAME], and with no assurance that a binding [NAME] would ever emerge. He concluded the discussion by stating: It is unnecessary to enlarge on the confusion which would thus have resulted in the event of the agreement ultimately being avoided for non-fulfilment of the condition. 1. [1960] [NAME]., at p. 128. 2. [1960] [NAME]., at p. 130.

The same tendency to hover between two different concepts is evident in the judgment of [NAME[NAME]. in In re [NAME].; [NAME] v. The Company [36] , a decision on which Lord [NAME] relied heavily. [NAME]. spoke of the condition there as one "upon which the validity of the [NAME] as one sale depends" [37] , saying "the very existence of the mutual obligations is dependent on the performance of the condition", and later described it as "a condition precedent to the validity of a [NAME] for sale of land" [38] .

1. [1929] 1 Ch. 277. 2. [1929] 1 Ch., at p. 282. 3. [1929] 1 Ch., at p. 283.

In this situation the area in which [NAME] stands as an authority should be closely circumscribed. I am not disposed to regard it as having authority beyond its own facts or as expressing any general principle applying to conditions other than non-promissory conditions which are precedent to the formation of a [NAME]. It has been pointed out that judges have displayed much ingenuity in distinguishing [NAME].

The decision of this Court in [NAME] v. [NAME] [39] and that of the Court of Appeal in [COMPANY]. v. [NAME] [40] are illustrations of a different approach. In [NAME] it was held that the term "providing that the transfer of [NAME]'s block goes through in reasonable time" in a [NAME] for the sale of a block of land was a condition subsequent, not a condition precedent. In [NAME] the [NAME] contained a condition which made the sale subject to [NAME] obtaining the consent of the landlord to the assignment of the lease to the [NAME], the residue of the lease being the subject of the sale. [ADDRESS] decided that the landlord's consent to the assignment of the lease was no more than a mere matter of title, the [NAME] being an unconditional [NAME] of sale. Danckwerts L.J. expressed doubt as to the correctness of the Privy Council's characterization of the condition in [NAME] [41] .

1. (1926) 37 [NAME]. 529. 2. [1968] Ch. 94. 3. [1968] Ch., at p. 116.

This divergence in approach calls for some discussion of the nature of conditions generally and of the characteristics of special condition 6 in particular. There is an obvious difference between the condition which is precedent to the formation or existence of a [NAME] and the condition which is precedent to the obligation of a party to perform his part of the [NAME] and is subsequent in the sense that it entitles the party to terminate the [NAME] on non-fulfilment. In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding [NAME] which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on fulfilment of the condition and non-fulfilment entitles him to terminate.

Conditions precedent within the first category may produce different consequences. In most cases, but perhaps not in all, a party may be able to withdraw from the transaction before fulfilment of the condition. But in each class of case, the transaction creates no enforceable rights in respect of the subject matter of the transaction unless the condition is fulfilled because, until the occurrence of that event, there can be no binding [NAME]. There is also a problem in classifying a transaction which imposes an obligation on a party not to do anything which will prevent fulfilment of the condition. Even if it is to be placed in the first category, that consisting of conditional contracts — and I have some difficulty in placing it there — it yields no enforceable rights with respect to the subject matter of the transaction unless and until the [NAME] is fulfilled, though the obligation not to prevent fulfilment of the condition will be enforceable in the event of its breach.

Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a [NAME]. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding [NAME] unless the event in question happens. Instead, it is appropriate in conformity with the mutual intention of the parties to say that there is a binding [NAME] which makes the stipulated event a condition precedent to the duty of one party, or perhaps of both parties, to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties.

For these reasons the condition will not be construed as a condition precedent to the formation of a [NAME] unless the [NAME] read as a whole plainly compels this conclusion.

In the present case it is the language of special condition 6 alone which supports this result. By relating the condition to entry into the [NAME] the clause seems to suggest that the formation or existence of the [NAME] itself is dependent upon completion of the sale of the [NAME[NAME] property. But the condition is capable of being read as a provision which conditions the performance of the obligations of one or both parties on fulfilment of the condition and the tradition in this Court is to so construe provisions of this kind — see [NAME] [42] ; [NAME] v. [COMPANY]. [43] ; [NAME] v. [NAME] [44] . Moreover, it is clear enough that the condition was inserted for the protection of [NAME], to guard against the possibility that they would lack adequate finance. It was certainly not inserted for the protection of [NAME]. Consequently, it is a condition which may possibly be capable of waiver by [NAME], though this is not a point which needs to be decided.

1. (1926) 37 [NAME]. 529. 2. (1950) 81 [NAME]. 418, at p. 443. 3. (1978) 141 [NAME]. 378, at pp. 393, 397-398.

In the Court of Appeal, [NAME[NAME].A. thought that special condition 6 was not devoid of a promissory element. It relates to an event the occurrence of which, though not probably in the control of [NAME], is closely affected by their actions and efforts. It would be absurd to suggest that the parties contemplated that [NAME] could refrain from making any effort to sell. That would be to give [NAME] what in substance amounted to an option to withdraw. I am therefore inclined to read the clause as imposing an implied obligation on [NAME] to make all reasonable efforts to sell the [NAME[NAME] property.

The conclusion to be drawn then is that the clause expresses a condition which is precedent to the [NAME]' duty to perform the [NAME], non-fulfilment of which entitles them to terminate the [NAME], rather than as a condition precedent to the formation of the [NAME]. Instead of saying that the condition contains a promissory element I should prefer to say that the promise is the subject of an implied term which is associated with the condition, though perhaps not forming part of it.

It seems that in the courts below the parties were united in the view that [NAME], as well as [NAME], could terminate for non-fulfilment of the condition. On the other hand, as I have said, the clause was inserted for the protection of the [NAME] and it is probably unnecessary to concede to the respondent for its protection an equivalent right to terminate for non-fulfilment of the condition. It seems to be sufficiently protected by relying on its rights to insist on completion of the [NAME] within a reasonable time and by taking such action as it may in that event. Even so, the fact that the clause draws no distinction between the parties and is not expressed to condition only [NAME]' obligation to complete, together with their implied obligation to make all reasonable efforts to sell the [NAME] property, provide strong ground for thinking that the respondent as well as the [NAME] had a right to terminate on non-fulfilment of the condition. This does not necessarily deny a right in the [NAME] to waive the benefit of the clause, the respondent's right of termination for breach, like the [NAME]', subsisting so long as there is no waiver by the appellant.

The provision is not one which on non-fulfilment works a termination of the [NAME] of its own force without notice. If the clause were a self-executing provision its operation might cause very great confusion. It is preferable to view it as a provision which entitles the party to terminate by notice in the event of non-fulfilment, so that it has an operation similar to that of the clause discussed in Gundowda [45] . The consequence is that, if on non-fulfilment neither party exercises the right to terminate, the [NAME] continues on foot.

1. (1950) 81 [NAME]., at pp. 440-442.

As the [NAME] does not fix a time for completion it would accord with general principle to say that completion must take place within a reasonable time. In this case what is a reasonable time for completion needs to be measured with special condition 6 in mind. The clause does not specify a time within which the [NAME] property is to be sold.

Accordingly, it contemplates that there should be such a sale within a reasonable time. But it seems obvious that the parties envisaged that in the ordinary course of events the sale of the [NAME] property would be completed before the [NAME] could be called upon to complete the purchase of the subject property. The mutual intention was that the [NAME] could only be compelled to complete if they had received the proceeds of sale of the [NAME] property. The consequence is that a reasonable time for completion must necessarily be somewhat longer than the reasonable time allowed for the purpose of fulfilment of special condition 6.

Was time of the essence in relation to that provision? The distinction between essential and non-essential terms is one which has been traditionally made for the purpose of determining whether breach of a term justifies rescission. It is a distinction which had particular importance for the exercise of the equitable jurisdiction to relieve against the consequence of strict adherence to time stipulations in contracts. [NAME] would relieve against rescission based on mere breach of a non-essential term not amounting to repudiation and would grant specific performance. [NAME] likewise relieve against termination of a [NAME] for non-fulfilment of a contractual condition? The answer must be "Yes", when the termination is based on breach of a non-essential term which does not amount to a repudiation of the [NAME].

The expression of a provision in the form of a condition precedent endows it with the character of essentiality. However, when the condition looks to the happening of an event within a reasonable time, it leaves open the question whether this character of essentiality attaches to the time within which the condition is to be fulfilled. Provisions requiring something to be done within a reasonable time are not considered to be essential unless expressly or impliedly made so. There is a natural reluctance on the part of courts to classify a provision which looks to the happening of an event within a reasonable time as one which makes time of the essence, more particularly when that time is implied and is not expressed. The reason is of course that it is undesirable that the rights of the parties should rest definitively and conclusively on the expiration of a reasonable time, a time notoriously difficult to predict. One object of the development of the requirement that a notice should be given fixing a reasonable time for performance as an essential preliminary to rescission is the perceived need to promote greater certainty and a better understanding by parties of their rights and obligations. There is no very strong ground for saying that the reasonable time contemplated by special condition 6 was of the essence. The clause itself contains no reference to time. This is not surprising because the time needed to complete the sale of real estate is particularly difficult to estimate. And there is nothing in the structure of the [NAME] or in the relationship of the clause to the ultimate obligation to complete the purchase within a reasonable time, this time itself not being of the essence, to compel a different conclusion.

In many situations the giving of a notice relating to the non-fulfilment of a condition would serve little or no purpose, as, for example, when the happening of the event stands quite outside the control of the party to whom the notice is given. [NAME] itself was such a case. That is not so here. Although the happening of the event calls for the concurrence and co-operation of a [NAME] of the [NAME] property, the willingness to sell and the efforts of the [NAME] were important contributing factors to the completion of the sale.

For this and other reasons earlier discussed [NAME] does not govern this case. In saying this I should not wish it to be thought that I am generally in favour of construing time stipulations in contractual conditions as non-essential. Far from it. Quite apart from [NAME] [46] itself, [NAME] v. [NAME] [47] and In re Longlands Farm [48] show us that conditions which stipulate the date by which an event is to conclude will commonly be regarded as making essential fulfilment by that date.

1. [1960] [NAME]. 115. 2. (1966) 116 [NAME]. 418. 3. [1968] 3 [NAME]. 552.

On the view which I take of this [NAME] the respondent could not require the [NAME] to complete until a reasonable time had elapsed within which to complete the sale of the [NAME] property. The primary judge found that a reasonable time had expired by September 1978, without making a specific finding on the question whether a reasonable time had elapsed by 17 July, when the second notice to complete was given requiring completion on 8 August 1978. It is, I think, implicit in [NAME]'s findings that he rejected the respondent's case that a reasonable time had elapsed by 17 July, a rejection with which I agree. [NAME[NAME].A. seems to have been in error in stating that the parties accepted that a reasonable time had so elapsed. But even if that were so the giving of a notice in relation to special condition 6 may well have been an essential preliminary for insistence on completion.

In the result my conclusion is that the respondent did not validly rescind the [NAME] by its notice given on 10 August 1978 and I would therefore allow the appeal.

[NAME[NAME].

On 7 April 1978 the [NAME] contracted to purchase land from the respondent for the sum of $220,000. The [NAME] did not name a date for completion. It is therefore appropriate to imply a term that the sale was to be completed within a reasonable time, having regard to the circumstances of the case as they would have appeared to the parties at the date of [NAME]. The dispute between the parties centres upon the effect to be given to a special condition contained in the [NAME], reading as follows: "This [NAME] is entered into subject to [NAME] completing a sale of their property No. [ADDRESS], [NAME]." No date was specified in the [NAME] for the fulfilment of this condition, and it is common ground that the time available for its fulfilment was limited to a reasonable time.

It is said that some importance attaches to the proper characterization of the special condition, as to whether it is a condition precedent or a condition subsequent, and that the applicability of the principle established by the Judicial Committee in [COMPANY]. v. [NAME] [49] may depend upon the answer.

1. [1960] [NAME]. 115.

In [NAME] v. [NAME] [50] , [NAME[NAME]. said:

I venture to think that the ambiguous labels precedent and subsequent, when applied to conditions, are seldom of real help in solving issues in this branch of [NAME] law. Certainly they can be positively misleading unless the meaning of what is being said is made specific by explaining to what the condition in question is seen as precedent or subsequent. I entirely agree. If it matters at all, the special condition in this case may be described with accuracy as either a condition subsequent to the formation of the [NAME] or as a condition precedent to an obligation in either party to proceed to completion. The obligation to complete is contingent on the fulfilment of the condition, but in the meantime there is a conditional [NAME] in existence from which neither party is at liberty to withdraw at will. Interim obligations were undertaken by both parties. [NAME] had to make good its title to sell, and [NAME] were obliged to pay the deposit and make all reasonable efforts to bring about a sale of the [NAME] property. 1. [1978] 2 N.Z.[NAME]. 261, at p. 267.

Speaking for myself, I have difficulty in assigning the decision in [NAME] to the very limited category of cases dealing with conditions precedent to the formation of a [NAME]. It seems to me that when Lord [NAME] [51] spoke of a condition precedent, he was speaking of the condition in that case as precedent to the coming into existence of a binding [NAME] of sale. As [NAME]. remarked in [COMPANY]. v. [NAME] [52] , after referring to Lord [NAME] words,

The distinction, of course, is there drawn between a [NAME] and a [NAME] of sale, and that particular distinction is one which derives from the long-used phraseology, almost the traditional phraseology, such as that to be found in [NAME] on [NAME], 22nd ed. (1964), p. 111, and in [NAME]' Sale of Goods 14th ed. (1963), p. 243. 1. [1960] [NAME]., at pp. 128, 130. 2. [1968] Ch. 94, at p. 121.

Again, in In re [NAME].; [NAME] v. The Company [53] , [NAME[NAME]. refers to a "condition upon which the validity of the [NAME] as one sale depends" (sic " one of sale ") and to a "condition precedent to the validity of a [NAME] for sale of land" (my emphasis) [54] .

1. [1929] 1 Ch. 277, at p. 282. 2. [1929] 1 Ch., at p. 283.

In my opinion, therefore, the general character of the conditions in [NAME] and [NAME] are indistinguishable from the condition in the present case. Nevertheless, there is some difficulty in applying the principle of those cases to an open [NAME], namely, one where there is no specific date fixed either for the fulfilment of the condition or the completion of the [NAME]. In both cases, the [NAME] specified the date for its completion. In each case, however, the statement of principle extends to cases where no date is fixed. In [NAME] [55] , [NAME[NAME]. emphasizes the demand for certainty in relation to conditional contracts, saying

[NAME] has, I think, never applied its liberal views as to time to such a condition. If a date is mentioned, the condition must be exactly complied with. If a date is not mentioned, the condition must be fulfilled within a reasonable time .But surely the very implication of a reasonable time denies certainty, and one of the functions which a notice to complete issued after the lapse of a reasonable time may serve is to substitute the certainty of a specific date for the uncertainty of a reasonable time. It is true that in In re Longlands Farm [56] , [NAME]. characterized the [NAME] in that case as a [NAME] conditional on one party obtaining planning permission, and held that the condition was to be fulfilled within a reasonable time. He held further that the period must be determined as at the date of the [NAME] and that on the expiry of the period the other party was entitled to treat the [NAME] as at an end. However, that decision, while plainly in accord with the merits of the case, may be open to some question: see per [NAME[NAME]. in [NAME] [57] . 1. [1929] 1 Ch., at p. 282. 2. [1968] 3 [NAME]. 552. 3. [1978] 2 N.Z.[NAME]., at p. 270.

Furthermore, I am not satisfied that [NAME] provides authority for the proposition that on the expiration of a reasonable time allowed by implication for the fulfilment of a condition a party may thereupon without more declare the [NAME] to be void. As I have said, their Lordships were dealing with a [NAME] which specified a date. It was a date fixing the time for payment of the purchase price by the [NAME], and the real issue between the parties was as to the relationship which the time for fulfilment of the condition bore to that date. Nevertheless, after mentioning the overriding importance of the intention of the parties as expressed in, or to be implied from, the language they have used, their Lordships continued [58] :

But, subject to this overriding consideration, their Lordships would adopt, as warranted by authority and manifestly reasonable in themselves, the following general principles: (i) Where a conditional [NAME] of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date; (ii) where a conditional [NAME] of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time; (iii) where a conditional [NAME] of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles. The authorities to which their Lordships then refer are [NAME] v. [NAME] [59] and [NAME] [60] . The former case was one in which the [NAME] specified a date for completion but there was no time specified for fulfilment of the condition. [ADDRESS] of Appeal held that the completion date provided the limit of time for the condition to be fulfilled. The case therefore answered to the first of the general principles adumbrated in [NAME]. In [NAME], [NAME[NAME]. was also dealing with a conditional [NAME] which fixed a specific date for completion. 1. [1960] [NAME]., at pp. 124-125. 2. [1900] 1 Q.B. 694. 3. [1929] 1 Ch. 277.

It is the second of the three principles stated in [NAME] which purports to cover the present case, but it will be noted that it takes us no further than the conclusion that the condition must be fulfilled within a reasonable time. The statement of principle provides no guidance as to the next step, which is how the uncertainty inherent in the implication of a reasonable time which is unspecified as to any particular date is to be resolved in the interests of fairness to both parties. It is that function that a notice would serve. I find some confirmation for my view that [NAME] does not decide the present case in the discussion of the decision by [NAME]. in [NAME] [61] , where after citing [NAME] [62] [NAME] concludes:

Although their Lordships did not go as far as positively deciding the point, their observations certainly tend towards the view that, if no time is fixed for completion and a condition is to be satisfied within a reasonable time, the equitable requirements as to notice apply. 1. [1978] 2 N.Z.[NAME]., at p. 271. 2. [1960] [NAME]., at p. 128.

It is important to recognize and maintain the distinction between a [NAME] which is subject to a condition which requires for its fulfilment a decision from a person other than a party to the [NAME], and an unconditional [NAME]. It is in the context of the latter that we have become accustomed to the operation of equitable principles which afford relief against the strict application of time stipulations which are not of the essence, requiring in that regard the service of a notice to perform or to complete as the case may be before rescission or specific performance will be enforced. In such cases there is necessarily one party who is in breach of an obligation under a [NAME] which the [NAME] rightly expects to proceed to completion. If the [NAME] is not carried through to completion, then the party in default will lose the deposit and, depending on the circumstances, may or may not be liable in damages.

There can be no such firm expectation in a conditional [NAME]. Neither party can be sure of the [NAME] proceeding to completion, for it does not lie in the will of either party to ensure the fulfilment of the condition. This case is an instance of a conditional [NAME] where there is to be implied a collateral promise by the [NAME] to make reasonable endeavour to sell the [NAME[NAME] property. A breach of that implied term may entitle the respondent to an action for damages. Nevertheless, compliance with the term cannot guarantee that a [NAME] at a satisfactory price will be found. The completion of the [NAME] is dependent, in the absence of a waiver, on the prior fulfilment of a condition as to which it does not lie fully within the capacity of the [NAME] to effect. The agreement between the parties is subject to the prior sale of the [NAME[NAME] property. If on the expiration of a reasonable time that property has not been sold, then either party may initiate the steps which are necessary to the termination of the agreement: cf. [NAME] v. [COMPANY]. [63] . There being no default, the deposit will be refunded.

1. (1950) 81 [NAME]. 418, at p. 441.

In my opinion, it is to be implied from the agreement that should the [NAME] property not be sold within a reasonable time, then the fate of the [NAME] will be resolved according to the action which may be taken by either party. [NAME] may elect to waive the condition, it being one wholly for their benefit, and proceed to completion, thereby holding [NAME] to its [NAME]. Alternatively, provided that they have acted reasonably in their attempts to sell the property, they may rely on the non-fulfilment of the condition to bring the [NAME] to an end, and recover their deposit. On the other hand, [NAME] may force the issue simply by serving a notice to complete. I do not think it appropriate to contemplate a notice to [NAME] requiring them to fulfil the condition, because the time agreed for that will have expired, and in any event it does not lie within the capacity of [NAME] to fulfil it. The effect of a notice to complete is to give [NAME], should they wish to waive the condition, the opportunity to finalize the transaction; alternatively, it serves to crystallize in the minds of both parties a common date on which the [NAME] will come to an end for non-fulfilment of the condition. In the latter case, noncompliance with the notice to complete will not fix [NAME] with any default such as would deprive them of the right to the return of their deposit, although as I have said, a failure to make reasonable efforts to sell the property may expose them to an action for damages.

I believe that this construction of the relationship between the parties is wholly consistent with the decision of this Court in [NAME] v. [NAME] [64] . In that case a [NAME] for the sale of land was subject to a condition "that the transfer of [NAME]'s block goes through in reasonable time". [NAME] argued that the condition was a true condition precedent, with the result that [NAME] incurred no obligation to carry out the [NAME] until the condition had been performed. It was also argued that time was of the essence of the [NAME], or alternatively that if that were not so then in any event the transfer of the [NAME]'s block had not gone through in reasonable time. [ADDRESS] rejected each of these submissions. Knox C.J. said [65] :

With regard to the stipulation as to the transfer going through within a reasonable time, I think it is clear on the construction of the [NAME] that this was not a condition precedent. It provides that the performance of the [NAME] shall be subject to the happening of an event which is to happen, if at all, at a future time which cannot be precisely specified. Unless that event happens neither party is to be compelled to perform the [NAME] in its entirety, the promise of each being subject to or defeasible upon the condition expressed.

With regard to the second objection it is enough to say that, in the absence of any stipulation that time shall be of the essence of the [NAME], there is nothing in the circumstances to justify the conclusion that the parties intended that time should be essential.

The third objection, in my opinion, fails because in all the circumstances of the case the transfer of [NAME] block to [NAME] did go through within a reasonable time.

See also per [NAME[NAME]. [66] , and [NAME]. [67] . [NAME[NAME]. [68] said, with reference to the right to avoid the [NAME] for non-fulfilment of the condition: I strongly think that a right to put an end to the [NAME] or to refuse to perform it would not arise thereunder automatically without some warning notice from [NAME], fixing a reasonable limit of time for completion. 1. (1926) 37 [NAME]. 529. 2. (1926) 37 [NAME]., at p. 536. 3. (1926) 37 [NAME]., at pp. 539-540. 4. (1926) 37 [NAME]., at p. 544. 5. (1926) 37 [NAME]., at p. 542.

There are therefore two questions to be determined, upon the answers to which the efficacy of the notice to complete served 17 July 1978 and the subsequent termination of the [NAME] on 10 August will rest. The first is the period of time, that the parties would have agreed in March or early April 1978 was a reasonable time to allow for the [NAME] property to be sold. This is a matter of inference from all the circumstances. The second question is whether the notice to complete allowed a reasonable time for completion.

Although contracts were not exchanged until 7 April 1978, the deposit of $22,000 was paid some time before that, and the [NAME] property was put on the market in March. The nature of the condition, namely, one which operates wholly in favour of the [NAME], suggests that a reasonable time will be just that and no more. In other words, fairness to [NAME] requires that it be determined rationally but without undue latitude. [NAME] remains at risk that, in the event of the condition being unfulfilled, the sale will not proceed and it will have to return the deposit. It will then have suffered for the period in question the loss of its freedom to deal with its property without receiving any adequate remuneration for such loss. It would be unjust to require its hands to be tied for a period longer than would have been anticipated when the [NAME] was made to be reasonably necessary to allow the condition to be fulfilled: [NAME] [69] ; [COMPANY]. v. Burnley Borough Council [70] . The [NAME] argue that the difficulties of effecting a sale of a waterfront property during the winter months would have been present to the minds of the parties. I am unable to accept the contention, since it would require [NAME] to have bound itself to a sale which could not be expected to be completed until well into the following summer which was then many months away.

1. [1929] 1 Ch., at p. 282. 2. [1978] [NAME]. 904, at p. 929.

The finding of the learned trial judge was expressed in the following sentence in his reasons: "[NAME] do not assert that a reasonable time had not expired by September 1978, and I am of the opinion that the proper conclusion on the evidence is that a reasonable time had by then expired." This conclusion supplied the ground for a finding in favour of the plaintiff [NAME], and [NAME] referred to the fact that the plaintiff had taken action to avoid the [NAME] by its notice of termination dated 10 August 1978 and by commencing the proceedings for a declaration on 29 September 1978. [NAME] took the view that a notice to complete was unnecessary, so that he did not have to direct his mind specifically to the question whether a reasonable time had elapsed by the 17 July, the date when the notice to complete was served. I do not think that the finding to which I have referred supplies any implication that [NAME] rejected [NAME]'s claim that a reasonable time had expired by the middle of July; it was sufficient to rely on what was common ground between the parties, that, whether or not a reasonable time had expired by July, it had certainly expired by September.

In my opinion, a reasonable time for the sale of the [NAME] property had expired by the middle of July. It is immaterial to seek for an explanation for the non-fulfilment of the condition, but no doubt it lies in the finding of the learned trial judge that the [NAME] did not make reasonable efforts to effect a sale. Putting oneself in the shoes of the parties as they negotiated their agreement in March, it seems to me that a period of four months would have been the very most that the [NAME] could have persuaded [NAME] to accept.

The final question is whether the period of twenty-two days allowed in the notice to complete was a reasonable time. In my opinion, it was. I have in mind the function of such a notice in the context of a conditional [NAME] where the time for the fulfilment of the condition has expired. I also have regard to the fact that from May 1978 [NAME] was pressing the [NAME] to complete, and made no secret of its wish for an early settlement. The circumstances of the particular case will always be most relevant: cf. [NAME] v. [NAME] [71] .

1. [1915] [NAME]. 386, at pp. 419, 426.

For these reasons, I conclude that the decisions, though not the reasoning, of the learned trial judge and the Court of Appeal were correct and ought to be affirmed.

I would dismiss the appeal.

[NAME].

[NAME]. [NAME], the [NAME], owned a property at [NAME]. They wished to sell that and to buy another at [ADDRESS], Cronulla. The Cronulla property was owned by [RESPONDENT]., the respondent. On 7 April 1978 [NAME]. [RESPONDENT], [NAME], and [COMPANY]., [NAME], exchanged contracts for the purchase and sale of the Cronulla property for the price of $220,000. They used the printed form of [NAME] approved by the [COMPANY] and the [NAME] to which they added an annexure containing terms designated "Special Conditions". Special Condition 6 (hereafter "the stipulation") reads as follows: "This [NAME] is entered into subject to [NAME] completing a sale of their property No. [ADDRESS], [NAME]."

[NAME] did not enter into a [NAME] to sell their [NAME] property until 9 March 1979. That sale was not completed until 13 June 1979. In the proceedings in the Supreme Court of New South Wales out of which this appeal arose, [NAME]. found that a reasonable time for the completion of a sale of the [NAME] property had expired by September 1978. [NAME] found that the failure by [NAME] to complete the sale of their [NAME] property within a reasonable time was caused by their listing of the property for sale at an unreasonably high price and by their continued seeking of an unreasonably high price until January 1979. [COMPANY]. was pressing for completion of the sale of the Cronulla property from May 1978, and ultimately served a notice dated 17 July 1978 requiring [NAME] to complete the [NAME] on or before 8 August 1978. When [NAME], relying on the stipulation, declined to complete the [NAME] in accordance with the notice, [NAME] served a notice of rescission dated 10 August 1978 the material part of which read:

now take notice that [NAME] pursuant to every power available to [NAME] hereby rescinds and/or terminates the [NAME] and relies upon:—

(a) the [NAME]'s failure to complete in accordance with the [NAME] and the said Notice to Complete, and

(b) the expiration of a reasonable time under Special Condition 6 of the [NAME].

On 29 September 1978, [NAME] filed a summons seeking a declaration that on or about 10 August 1978 it had effectively terminated the [NAME] for the sale of the Cronulla property. [NAME] had commenced proceedings, but before they had sold the [NAME] property, [NAME] approached their [COMPANY] and made arrangements for finance to complete the purchase of the Cronulla property. On 27 February 1979, [NAME]' solicitors, purportedly waiving the benefit of the stipulation, wrote to [NAME]'s solicitors seeking completion of the sale "at 3.00 p.m. on the 15th March next or at such other time as shall mutually be agreeable". [NAME]'s solicitors replied that [NAME] had terminated the [NAME] by the notice of rescission of 10 August 1978. On 21 March 1980, [NAME] cross-claimed for specific performance of the [NAME]. [NAME]. found that the [NAME] had terminated before [NAME] had commenced proceedings on 29 September 1978 and made a declaration accordingly. An order was made that the deposit of $22,000 be repaid by [NAME] to [NAME]. The cross-claim failed. [NAME]' appeal to the Court of Appeal was dismissed.

[NAME] submitted in this Court that the [NAME] was not avoided before they waived the benefit of the stipulation and that, upon waiving the stipulation, they were entitled to insist upon performance of the [NAME]. The case turns upon the effect of the stipulation.

The stipulation conditions the obligations of either party to proceed with the sale of the Cronulla property; it specifies the event — namely, the completion of the sale of the [NAME] property — upon the occurrence of which the obligation to proceed with the sale of the Cronulla property is contingent. The stipulation does not affect [NAME]' obligation to pay the deposit on the signing of the agreement (cl. 1); perhaps it does not affect [NAME]' obligation to tender to [NAME] an appropriate instrument of transfer for execution by it (cl.

4. The stipulation is at once a condition precedent to the obligations of the parties to complete the [NAME] and a condition subsequent to the whole [NAME] so that the non-occurrence of the specified event would entitle [NAME] to avoid it. The clause which was considered in [NAME] v. [NAME] [72] was of the same kind. In that case a [NAME] for the sale of a grazing property contained a proviso "that the transfer of [NAME]'s block goes through in reasonable time". [NAME]., referring to that proviso as the "second stipulation", said of it [73] :

But it may be a condition precedent to the performance of a particular term of the [NAME], which is of common occurrence. In one sense the second stipulation is of that nature, because there was no obligation on [NAME] to transfer unless [NAME] first transferred his holding in reasonable time. But in another sense it is a condition subsequent in relation, not to a particular term, but to the whole [NAME], as a binding obligation, that is, as a defeasance, because failure of the second [stipulation] would have entitled [NAME], to retire from the transaction altogether. In the present case, [NAME] asserts that it did retire from the transaction, and it is necessary first to consider whether there was a non-fulfilment of the stipulation which entitled it to do so. 1. (1926) 37 [NAME]. 529. 2. (1926) 37 [NAME]., at p. 540.

The purpose of the stipulation is to ensure that [NAME] should have the proceeds of the sale of their [NAME] property before their obligation to pay the balance of the purchase price for the Cronulla property becomes absolute. The substance of the stipulation is a condition for the benefit of [NAME] and they may waive it if they choose. But the limit of the time within which the stipulation is to be fulfilled ensures for the benefit of [NAME] as well as for the benefit of [NAME], "[NAME] being interested to know for how long his liability was to remain unresolved" (per [NAME[NAME]. in [NAME] v. [NAME] [74] ). When [NAME] and [NAME] are each under a contingent obligation to complete a [NAME] of sale, the fulfilment of the contingency or the entitlement to avoid the obligation is of equal interest to both parties.

1. (1966) 116 [NAME]. 418, at p. 443.

Though the stipulation specifies the event upon the occurrence of which the obligations to complete cease to be contingent, the stipulation contains no promise that the event will occur. Until the event occurs or [NAME] waive the benefit of the stipulation ([NAME] v. [NAME] [75] ) neither party is entitled to a decree of specific performance of their respective obligations to complete the sale ([NAME] v. [NAME] [76] ) and [NAME] have no equitable interest in the property which is the subject of the [NAME] ([NAME] v. [COMPANY]. [77] ).

1. (1966) 116 [NAME]., at pp. 430, 443. 2. (1967) 116 [NAME]. 344, at p. 350. 3. (1964) 114 [NAME]. 656.

Assuming that the [NAME] remained on foot until 27 February 1979, when [NAME] purportedly waived the benefit of the stipulation, the obligations to complete the sale of the Cronulla property did not become unconditional before that date. In the absence of waiver of the stipulation, the obligations to complete remained contingent upon the completion of the sale of the [NAME] property. Of course, [NAME] had the carriage of the sale of their [NAME] property, and the stipulation imported an obligation upon them to do all that was reasonable on their part in order that a sale of that property might be completed ([NAME] v. [NAME] [1] ; [NAME] v. [COMPANY]. [2] ). But that was the extent of their promissory obligation under the stipulation. Their obligation was not to complete a sale of their [NAME] property but to do all that was reasonably to be done to that end.

1. (1952) 87 [NAME]. 267, at p. 280. 2. (1964) 114 [NAME]., at p. 661.

In the confusion of the promissory and contingent effects of the stipulation lie the seeds of difficulty in this case. The risk of confusion is great, because completion of a sale is the usual consequence of taking reasonable steps to that end. But there is a real distinction between the completion of a sale and the steps taken to achieve it, and the observance of the distinction goes far towards avoiding the difficulty. This is not a case where [NAME] promise that a condition precedent to the obligation to complete will be fulfilled. Where such a promise is made, whether by [NAME] or [NAME], specific performance may be decreed against the promisor without waiting for fulfilment of the condition: cf. [NAME] v. [NAME] [3] . But where the occurrence of an event upon which the obligations to complete are contingent is not promised, the mere nonoccurrence of the event is no breach of [NAME], and the court will not decree completion of the [NAME] absolutely. In such a case, a decree must be limited to the performance of any promise affecting the occurrence of the contingency, and further performance decreed only subject to the contingency: see [NAME] v. [NAME] [4] .

1. (1960) 105 [NAME]. 521. 2. (1967) 116 [NAME]. 344.

If the event does not occur because of the default of a party, however, the [NAME] ordinarily has an option of avoiding the [NAME] ([NAME] v. [COMPANY]. [5] ). [NAME] v. [NAME] [6] , [NAME], [NAME] and [NAME]. stated the general principle:

Whilst the effect of a condition must in every case depend upon the language in which it is expressed and a decision upon the meaning of one condition cannot determine the meaning of a different condition, the authorities cited do show a disposition on the part of courts to treat non-fulfilment of a condition such as that here under consideration as rendering a [NAME] voidable rather than void in order to forestall a [NAME] from gaining some advantage from his own conduct in securing, or contributing to, the non-fulfilment of a condition bringing the [NAME] to an end. 1. (1950) 81 [NAME]. 418, at p. 441. 2. (1966) 116 [NAME]., at p. 441.

In the present case, the event specified in the stipulation did not occur until June 1979, some fourteen months after [NAME] and [NAME] had exchanged contracts. [NAME] had complained of the failure on the part of [NAME] to do what was reasonable to effect a sale of their [NAME] property and, having demanded completion of the [NAME], [NAME] gave notice of rescission of the [NAME] on 10 August and issued a summons on 29 September 1978. [NAME] was an [NAME] and its desire to avoid the [NAME] was manifest on or before 29 September 1978, [NAME] submitted that [NAME] was not entitled to rescind and did not do so.

It was submitted that [NAME]. was wrong to find that a reasonable time for the completion of a sale of the [NAME] property had expired before September 1978. It was conceded that the stipulation required completion of the [NAME] sale within a reasonable time from the making of the subject [NAME], and in my view that concession was rightly made. The interests of both parties in resolving their respective contingent obligations under the [NAME] require that a limit be placed upon the time during which the contingency should occur. As there is no reason why a different implication as to time should be made in respect of a contingent condition from the implication made in respect of a promissory condition, a reasonable time is implied in the absence of indications to the contrary: see [NAME] v. [COMPANY]. [7] . This conclusion accords with the opinion of the Judicial Committee in [COMPANY]. v. [NAME] [8] as to the time for fulfilment of a condition when the [NAME] fixes no time for completion of a sale. In such a case, said Lord [NAME] [9] , "the condition must be fulfilled within a reasonable time".

1. (1946) 73 [NAME]. 1, at p. 13. 2. [1960] [NAME]. 115. 3. [1960] [NAME]., at p. 124.

What is a reasonable time is a question of fact and depends upon the circumstances. Its limit is determined by reference to what is fair to both parties. In [NAME] v. [NAME] [10] , [NAME]. denied that the [NAME] was entitled to such a time for the transfer of his block to go through as would be unfair to [NAME]: "I think, as I have said, that "reasonable time" connotes as a limit the unfairness of further delay to [NAME]." That limit is co-extensive with the limit beyond which [NAME] would not go in giving relief to a [NAME] in default. [NAME] continued [11] :

If that is right, the legal and the equitable standard is the same. If, however, a more rigid legal standard is to be applied to the construction of the words, something further may be necessary. If, for instance, as urged, [NAME] must be regarded as the only contemplated transferor and, therefore, unable to call in aid the minority of [NAME] as a valid element in the measure of reasonable time, then the contention becomes a claim for strict time limit. In that case the equitable doctrine of time not being primarily of the essence would apply, because there are no reasons for displacing it ([NAME] v. [NAME] [12] ). Whichever way this point is viewed, it fails. It is not necessary in this case to consider whether equitable rules will give relief to either party when a fixed time for the fulfilment of a contingent condition expires. [NAME]. in In re [NAME].; [NAME] v. The Company [13] nor the [NAME] [14] thought that they did. Of present relevance is the observation of [NAME]. that there is no conflict between law and [NAME] as to the measure of time which is reasonable for the fulfilment of a contingent condition. In [NAME] v. [NAME] [15] , [NAME]. said: The legal construction of the [NAME] is, and must be, in [NAME] the same as in a Court of law. A Court of [NAME] will indeed relieve against, and enforce, specific performance, notwithstanding a failure to keep the dates assigned by the [NAME], either for completion, or for the steps toward completion, if it can do justice between the parties, and if (as Lord Justice Turner said in [NAME] v. [NAME] [16] ), there is nothing in the "express stipulations between the parties, the nature of the property, or the surrounding circumstances," which would make it inequitable to interfere with and modify the legal right. This is what is meant, and all that is meant, when it is said that in [NAME] time is not of the essence of the [NAME]. This passage was cited with approval by Lord [NAME] in [NAME] v. [NAME] [17] . Whether one adopts a strict or an equitable construction — to adopt the dichotomy in the judgment of [NAME[NAME]. — the time for fulfilling the contingent condition expires when further extension would be inequitable. 1. (1926) 37 [NAME]., at p. 539. 2. (1926) 37 [NAME]., at pp. 539-540. 3. (1867) [NAME]. 3 Ch. 61. 4. [1929] 1 Ch. 277, at p. 282. 5. [1960] [NAME]., at p. 125. 6. (1867) [NAME]. 3 Ch., at p. 67. 7. (1853) 3 [NAME]. 284 [ 43 E.R. 112]. 8. [1981] [NAME]. 1050, at p. 1082.

[NAME[NAME]. expresses no error of principle in ascertaining when the reasonable time expired, but it was submitted that upon the facts his finding should be set aside. It appears that the [NAME] property, which was on the waterfront, had some unattractive features and that it was hard to sell waterfront properties in the winter months which intervened between the exchange of contracts in April and the issue of the summons at the end of September. The disadvantages are material to the price which the property might reasonably be expected to fetch and [NAME] found that the price sought by [NAME] before January 1979 was unreasonably high. That finding can hardly be challenged in the light of the price obtained for the property when the sale was made in March 1979. As to the unfavourable winter market, [NAME] could not reasonably have been expected to allow the winter months to pass in order that [NAME] could have the benefit of the more favourable sale prospects of the ensuing summer. There is no reason to disturb [NAME]'s finding. Upon that finding, the time for fulfilment of the stipulation expired by September 1978.

Then it was submitted that [NAME] could not avoid the [NAME] unless it had given a notice to complete and the notice had not been complied with. The notice of 17 July 1978 was given before the expiration of the time limited for fulfilment of the stipulation and called for performance of the [NAME] before the expiration of that time. Further, it was submitted, [NAME] seeking to avoid the [NAME] was bound to give a notice to complete after that time expires, affording [NAME] a further reasonable time for compliance with the demand in the notice. These submissions suggest a confusion between the consequence of nonfulfilment of a contingent condition and the consequence of breach of a promissory term. A notice to complete insists upon performance by a party in default to whom the notice is given of an obligation binding upon him. It can have no application to a situation where the party to whom it is given is under no obligation to perform. And here, of course, [NAME] was not seeking performance by the [NAME] after 10 August 1978.

In the present case, when the time limited for fulfilment of the stipulation passed, [NAME] did not come under an obligation to complete. That obligation remained contingent on their completion of a sale of the [NAME] property. [NAME] was then entitled to say: "As you have not completed the sale of your [NAME] property, our [NAME] is still contingent. I have waited long enough. Our sale is off." Thereafter, [NAME] was not seeking to rescind the [NAME] for breach by [NAME] of their obligations; it was seeking to rescind the [NAME] because the event upon which the obligations of both parties were conditioned had not occurred. The ground on which it sought to rescind the [NAME] affected the formation of obligations to complete, not their performance. No notice to complete was called for.

It cannot be argued that it was inequitable for [NAME] to avoid the [NAME] without giving a further notice of its intention to do so. By its notice of 10 August 1978, it purported to avoid the [NAME] on the ground that the time for fulfilment of the stipulation had expired. It did not resile from that position at any time. [NAME] had adequate notice that [NAME] intended to avoid the [NAME] if the stipulation were not fulfilled within a reasonable time. By September 1978 it had become inequitable to hold [NAME] to the [NAME], and it elected to avoid it. It is not necessary to determine whether the notice of 10 August 1978 had a continuing operation, so that when the reasonable time for fulfilment of the stipulation expired [NAME]'s entitlement to avoid the [NAME] was exercised. On 29 September 1978, after that time expired, [NAME] issued and served its summons. That was clear notice of its election to avoid the [NAME] if the election had not been made earlier. A summons does not in itself affect the rights of the parties, but its issue and service may involve an election which affects those rights (Ogle v. [COMPANY]. [18] ).

1. (1976) 136 [NAME]. 444, at p. 460.

The [NAME] was avoided. [NAME]' waiver of the stipulation came too late. Its cross-claim for specific performance therefore fails. The return of the deposit to [NAME] was consented to and no question as to that arises on this appeal. The appeal should be dismissed with costs.