In brief – Notice to complete ineffective but
interest still payable
The recent case of Bone v Wallalong Investments (No.2) in the Supreme
Court of NSW involved a purchaser who did not have finance and was
not able to settle on the due date, but was able to avoid direct
liability for breach of contract.
However, when an extension of time was granted pursuant to a
deed of variation of contract, there was a guarantee given by three
directors of certain of the buyer's obligations. Some of the
obligations were still held to be enforceable by the vendor.
Contract for sale of rural property in 2005
The contract was entered into in January 2005 for the sale of a
The date for completion was 9 August 2005 but, by agreement, it
was extended to 9 February 2006.
The variation of the contract was documented by a deed and,
pursuant to that deed, interest was to be paid for the delay in
The purchaser failed to complete in February 2006 and there were
numerous extensions granted.
Vendor issues notice to complete in 2010
The situation was that ultimately, some four years later, in
February 2010, the vendor issued a notice to complete.
The purchaser contended that the vendor was not ready, willing
and able to settle, that the vendor was not entitled to issue a
notice to complete and that the vendor's purported termination
of the contract after the expiry of the period under the notice to
complete, was in fact ineffective.
Was the vendor ready, willing and able to settle?
The Supreme Court's decision is summarised in the three
First right of refusal not exercised
The fact that there was a caveat on the title, with regards to a
first right of refusal, did not make the answers to the
requisitions given by the vendor inaccurate.
A copy of the caveat was attached to the contract and there has
been significant correspondence establishing that the first right
of refusal was not exercised so, therefore, the answer to the
requisition, even if it was technically incorrect, could not be
held to have misled the purchaser in any way. Therefore, this issue
did not mean the vendor was not ready to settle.
Venue changed the day before settlement
The notice to complete required settlement in Broadmeadow (a
suburb of Newcastle).
However, the day before settlement, the vendor's solicitor
indicated that settlement had to take place at Espreon, a legal
agent in Sydney, due to matters that had to be attended upon at the
settlement. The vendor attended settlement but the purchaser did
The vendor's representative had acted correctly in attending
at settlement but, as the notice to complete had specified a place
for settlement, and as the vendor had then changed this only the
day before settlement, it was held that reasonable notice had not
been given to the purchaser to be able to attend settlement at the
As the vendor had not attended settlement at the place for
settlement appointed by the notice to complete (but in fact
attended at the Sydney office of Espreon), it was held that the
vendor was not ready, willing and able to settle.
Therefore, the notice to complete was ineffective.
Interest obligations held to be valid
The interest obligations under the deed of variation of the
three guarantors was held to be valid and the vendor could still
claim this amount from the guarantors (which totalled several
Useful lessons for property lawyers and conveyancers
There are many practical lessons from this decision.
These are the major ones:
Make sure that your notices to complete merely state what they
have to state. In other words, what they should state is that the
party issuing the notice to complete is ready, willing and able to
settle, that time for settlement is being made of the essence and
what the consequences are of not complying with the notice to
Make sure that plenty of notice is given to parties in relation
to the venue for settlement and the giving of settlement figures,
so that the courts do not hold that giving some of this information
the day before settlement is unreasonable.
Make sure that your answers to requisitions (seen by many
people as a mere formality) are correct and accurate, so as to not
to afford a party seeking to avoid contractual obligations the
ability to do so on a technicality.
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).