Conveyancers and property law practitioners should be aware of two recent cases where greater care in checking documents for accuracy could have prevented both cases from reaching the courts:
Party issuing Notice to Complete must be “ready, willing and able”
Conveyancers and practitioners acting for parties to a contract for sale need to ensure that if they serve a Notice to Complete on the other party, that they themselves are ready, willing and able to complete at the relevant completion date. Failure to do so is likely to result in an adverse finding against them for breach of contract and damages.
In the recent Court of Appeal decision of Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) NSW ConvR ¶56-362;  NSWCA 32 (per Beazley P, Sackville and Emmett AJA) the decision of the primary judge was overturned. The vendor was found to have been in breach of the contract because of the following order of events:
• The purchaser (Jaswil) failed to complete the Contract for Sale on the settlement date of 30 January 2015.
• The vendor (Barrak) served a Notice to Complete on 2 February 2015, making time of the essence and that settlement take place on or before 17 February 2015.
• The parties attended settlement on 16 February 2015, and all the documentation was in order except for the transfer which had been executed by Barrak as an individual instead of by Barrak on behalf of the company, Barrak Corporation Pty Ltd, who was the vendor.
• Jaswil attempted to reschedule settlement for the following day (17 February 2015), but Barrak cancelled as it was unable to arrange for the bank to attend as the outgoing mortgagee which required three days’ notice.
• Importantly, Barrak did not withdraw its Notice to Complete regardless of its position as being unable to complete within the timeframe stipulated in its own notice (17 February 2015).
• Jaswil served a Notice to Complete on 20 February 2015.
• Barrak served a Notice of Termination on 26 February 2015.
• Jaswil commenced proceedings for relief against termination of contract on 6 March 2015.
The vendor was responsible for checking the transfer that the purchaser had erroneously completed as being executed by an individual rather than by an individual on behalf of the vendor company, pursuant to s 127 of the Corporations Act 2001 (Cth), to ensure that it was in registrable form at the time of settlement.
The vendor should have withdrawn the Notice to Complete following its failure to complete because of the defective transfer following the failed settlement attempt on 16 February 2015. Because the vendor was not ready, willing and able to complete the contract by 17 February 2015 in compliance with its own Notice to Complete, it was in breach of contract and not entitled to serve a Notice of Termination on the purchaser.
Conveyancers and practitioners should carefully check all documentation prior to settlement including transfers completed by the purchaser to ensure that the execution clause reflects the legal identity of the vendor. If the vendor is a corporation rather than an individual, the requirements of s 127 of the Corporations Act must be complied with.
Parties seeking to make time for settlement of the essence where the other party has failed to complete on time should carefully consider their obligation to be ready, willing and able to complete at all times up to and including the date specified in their Notice to Complete before they serve such a notice. In this case the financial institution (outgoing mortgagee) could not be re-booked for attendance at settlement the following day due to its own procedural requirement for three days’ clear notice for attendance.
Rectification of contract for sale — GST payable by purchaser
Conveyancers and practitioners acting for parties to a sale of commercial property at auction need to ensure that the contract for sale accurately reflects the parties’ respective positions with respect to liability for GST. Prospective purchasers, particularly at auction, should review and seek advice ahead of the auction with respect to whether GST will be included or excluded from the sale price (highest bid), to clarify any uncertainty.
If the sale is a taxable supply and GST is payable on top of the sale price, ie GST-exclusive as was the case in the recent decision of SAMM Property Holdings Pty Ltd v Shayne Properties Pty Ltd  NSWSC 362, then it may be prudent to include an additional clause in the contract to avoid the confusion that arose here. This case has been reported in the New South Wales Conveyancing Law & Practice as (2016) NSW ConvR ¶56-363.
In summary, the contract was ambiguous as to whether GST was payable, and the court (Stevenson J) found that the sale price was GST-inclusive:
• The box on the front page for GST: “yes in full” was crossed, yet no amount was stated as the sale price was unknown ahead of the auction.
• Clause 13.2 provided: “Normally, if a party must pay the price … to the other party under his contract, GST is not to be added to the price ….”
The auctioneer announced prior to the auction that the sale would be a taxable supply and that GST would be payable in addition to the winning bid. The critical evidence for the vendor was the oral evidence of the auctioneer to this effect (corroborated by witnesses) which was backed up by email confirmation sent a couple of days after the auction.
The purchaser was represented at the auction by its agent who understood the auctioneer’s announcement as not varying the contract, which indicated that the price included GST. The agent did not make his own enquiries about the treatment of GST in the contract prior to the auction as instructed and indeed the purchaser had not reviewed the contract nor received advice in relation to it prior to the auction.
The purchaser’s agent made the highest bid but as it was under the reserve price, negotiations ensued. During negotiations the agent for the vendor showed the purchaser’s agent a letter from the vendor setting the reserve price as “$3,500,000 + GST”.
Rectification is available where there is “clear and convincing proof” that by reason of the common mistake of the parties, the document they have signed does not “embody the final intention of the parties”: Franklins Pty Ltd v Metcash Trading Ltd  NSWCA 407.
The evidence of the auctioneer was crucial where it was “… clearly stated that GST was payable above and beyond the sale price”.
Further, the purchaser’s agent had seen the vendor’s reserve price letter during negotiations which stated the amount “… + GST”.
Accordingly, the parties’ common intention was found to be that the sale price was exclusive of GST and that GST would be payable by the purchaser, and the contract was rectified accordingly.
The vendor admitted at the trial that it had not properly reviewed the contract prior to the auction and that it had not fully appreciated that the effect of the contract was that the sale price was in fact GST-inclusive. In order to make GST-exclusive and payable on top of the auction sale price, a special condition to this effect was needed to be included in the contract.