DTR Nominees Pty Ltd v Mona Homes Pty Ltd

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Citation: (1978) 138 CLR 423

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 553-555 [22.65]

Contents

Background facts

  • The Vendor [DTR] had a contract for sale of land with the Purchaser [Mona].
  • The Vendor was supposed to subdivide the land before the transaction took place.
  • The Vendor interpreted the contract incorrectly, assuming that he can subdivide the land in two stages.
  • The Purchaser wanted to rescind the contract because of the Vendor's way of differing from the contract.
  • Both parties argued that the other repudiated the contract (the Purchaser arguing that the Vendor acted inconsistently and insisted on an erroneous view, the Vendor arguing that the termination of the Purchaser was wrongful and therefore he is deemed as repudiating).

Legal issues

Judgment

  • The Purchaser claims that the conduct of the Vendor shows that he has an erroneous interpretation of the contract and is not willing to act in accordance with the true construction on the contract. Therefore, he is repudiating.
  • This principle of law is true in some cases - "no doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms[1]."
  • However, it is possible that the erroneous party would be willing to perform the contract according to the actual interpretation once he is notified that he has misinterpreted the contract. In those cases, he will not repudiating.
  • In this case, the Vendor did not realise that the Purchaser insists on a different way. No attempt was made by the Purchaser to tell the Vendor that he has misinterpreted the contract and therefore could be deemed repudiating. Maybe of the Purchaser has told him, he would have acted properly.
  • The Vendor thus did not repudiate the contract, and the termination was wrongful.
  • Similarly, the Vendor claimed that the termination was wrongful and thus the Purchaser is repudiating.
  • However, the Purchaser wasn't repudiating the contract...he was only rescinding the contract on the basis that his assumption that the Purchaser is repudiating.
  • This means they did not actually repudiate the contract...they repudiated the Vendor's misinterpreted version of the contract.
  • This repudiation, when the Vendor is the party at error, does not entitle the Vendor to the right to terminate, because he is not 'an innocent party'.
  • This means neither sides repudiated, and the contract was still ongoing at the time they thought it was over.
  • However, by now, the parties should be deemed as having mutually abandoned the contract.

References

  1. (1978) 138 CLR 423, 432
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