Hollows v Scofield [2006] FJSC 10; CBV0007U.2005S (19 October 2006)

IN THE SUPREME COURT OF the FIJI ISLANDS
AT SUVA

CIVIL APPEAL NO. CBV0007 OF 2005S
(Fiji Court of Appeal No. ABU0011 of 2005S)

BETWEEN:

REX BASIL HOLLOWS
Petitioner

AND:

JERALD EDWARD SCOFIELD
Respondent

Coram: The Hon Justice Daniel V Fatiaki, President of the Supreme Court
The Hon Justice Robert French, Judge of the Supreme Court
The Hon Justice Kenneth Handley, Judge of the Supreme Court

Hearing: Tuesday, 17th October 2006, Suva

Counsel: G O’Driscoll for the Petitioner
I Roche for the Respondent

Date of Judgment: Thursday, 19th October 2006, Suva

REASONS FOR JUDGMENT

1. The following are the full reasons of the Court for dismissing this petition for special leave to appeal on 17th October 2006.
   
2. By his amended petition Rex Hollows sought special leave to appeal from a judgment of the Court of Appeal given on 25 November 2005 dismissing an appeal from the judgment of the High Court given on 8 December 2004.
   
3. The proceedings arise out of the termination of an agreement between Mr Hollows and the respondent, Jerald Scofield, for the purchase of just over 96 acres of land including Naisoso Island near Nadi. The purchase price was F$5 million.
   
4. The agreement dated 19 November 2003 was evidenced by an email sent by Mr Scofield’s solicitors to Mr Hollow’s solicitors in the following terms:
   

"We confirm that if the further payment of US$100,000.00 is made to the same account and recorded as a credit in that account by 1700hrs (Seattle time) on November 28, 2003 the agreement is restored but varied as follows:-

(i) it will be then unconditional with the Purchaser being bound to pay on Settlement Day the balance of the purchase price and half of any tax secured to the Commissioner by Charge 149861 with a maximum liability in respect of the latter of F$350,000.00.

(ii) Settlement Day will be February 1, 2004.

(iii) the US$150,000.00 then having been paid will comprise a deposit forfeitable by the Vendor in the event of default by the Purchaser but will in the event of settlement being completed when due comprise part payment of the purchase price to the extent of the sum in Fiji dollars that US$150,000.00 would buy in Suva at the rate first published by Westpac on Settlement Day."

The "restoration" of the prior agreement, subject to the variation set out in the email, appears to have constituted a new contract incorporating by reference the terms of its predecessor.

5. Although all necessary transfers were signed and ready for delivery on 11 February 2004, settlement was not offered or requested by Mr Hollows. In a conversation between the solicitors on 16 February 2004 Mr Hollows’ solicitor told Mr Scofield’s solicitor that he had not heard from Mr Hollows since a letter of 26 January 2004. Although Mr Hollows had assured him that the purchase price was coming he did not know when it would arrive. Mr Scofield’s solicitor told Mr Hollows’ solicitor that time was of the essence and that Mr Scofield would "come down hard" on Mr Hollows if the promised funds did not materialise.
   
6. On 27 February 2004 Mr Scofield’s solicitor sent a notice to Mr Hollows’ solicitors by facsimile making time of the essence and requiring settlement on or before 5 March 2004. The notice was also a notice of default. Its substantive text was:
   

"On behalf of Mr Scofield we hereby give notice to the Purchaser under the above contract making time of the essence and requiring settlement on or before Friday March 5, 2004.

In the event that the Purchaser fails to settle within that time the vendor will regard the Purchaser as being in default and will, if that default continues for the space of 7 days, rescind the agreement and forfeit as deposit the monies already paid."

There was no response from Mr Hollows or his solicitors and settlement was neither sought nor tendered.

7. On 15 March 2004 Mr Scofield’s solicitors sent Mr Hollows’ solicitors a further letter which stated:
   

"The Purchaser having been in default for more than the space of 7 days, the Vendor hereby rescinds the agreement for sale."

8. Mr Hollows lodged caveats on 30 March 2004.
   
9. On 29 June 2004 Mr Hollows instituted proceedings in the High Court in which he claimed specific performance and damages in relation to the agreement. He also applied ex parte for an extension of the caveats.
   
10. On 18 October 2004, Mr Scofield not having filed a defence, Mr Hollows filed an application by way of summons seeking summary judgment for specific performance and damages in default of defence. He also sought by motion an extension of the caveats.
    
11. The summons and the motion came on for hearing before Connors J on 3 November 2004. There was no oral evidence and no request for the cross examination of any witness. Oral argument was presented supplemented by written submissions.
    
12. The judge identified as the fundamental issue whether or not Mr Scofield had validly terminated the agreement of 19 November 2003.
    
13. Clause 11 of the agreement provided that:
    

"Save for the effect of the provisions of clauses 9 and 10 of this agreement time shall be of the essence of this agreement."

Clause 9 provided:

"If the Purchaser shall make default in payment of any moneys when due or in the performance or observance of any other stipulation or agreement on the Purchaser’s part herein contained and if such default shall continue for the space of seven (7) days from the due date then and in any such case the Vendor without prejudice to any other remedies available to the Vendor may at the Vendor’s option exercise all or any of the following remedies namely:-

(a) enforce this present agreement in which case the whole of the purchase money then unpaid shall become due and at once payable; or

(b) rescind this agreement for sale and thereupon all moneys theretofore paid or under the terms of sale applied in reduction of the purchase money shall be forfeited to the Vendor as liquidated damages; or

(c) sue for specific performance of this agreement; or

(d) due for special and general damages."

14. The judge referred to the time limits established by Mr Scofield’s notice which, on 27 February 2004, required settlement by 5 March 2004 and provided that if default continued for seven days after 5 March, the contract would be rescinded. He held that the time fixed for compliance, considering the history of dealings between Messrs Scofield and Hollows and the terms of the agreement, was reasonable. The notice met the other requirements for making time of the essence and gave rise to the right to terminate.
    
15. It followed that the agreement of 19 November 2003 had been validly rescinded and that Mr Hollows no longer had a caveatable interest in the subject land. Mr Hollows’ notice of motion and summons were dismissed with costs.
    
16. In dismissing the appeal, the Court of Appeal referred to the matters relied upon by Mr Hollows’ counsel in support of a submission that the time given in the notice of 27 February 2004 was unreasonable.
    
17. Although Mr Hollows’ counsel accepted in the Court of Appeal that it is necessary to look at all the circumstances of the case in determining the reasonableness of a notice to complete, he relied on an observation of the High Court of Australia in Sindel v Georgiou (1983) 154 CLR 661, 670 where it was stated:
    

"... strong circumstances must be shown to justify the giving of a notice to complete which allows less than fourteen days for completion."

He contended for 28 days as the time which would have been reasonable having regard to all the circumstances of the case. Mr Scofield’s counsel referred to what he called the "factual matrix" of the case as supporting the reasonableness of the time allowed for compliance with the contract.

18. Their Lordships said (at [53]):
    

"We are not persuaded that the Judge erred in finding that the time given to the appellant to complete was reasonable in all the circumstances of this case. It was a conclusion reasonably open to the Judge on the evidence before him. We accept that the appellant was given less than the 14 days referred to in Sindel v Georgiou (Supra) but at the end of the day each case must be decided on its own facts, and here the time given was reasonable having regard to the facts of this case. We do not consider that the Judge needed to hear oral evidence before reaching a conclusion on the reasonableness on the time in the notice. He had sufficient evidence to reach his conclusion."

19. They went on to refer to the history of the dealings between the parties and what it called Mr Hollows’ "track record". They stated (at [58]):
    

"For these reasons, we therefore reject the submission that the notice of 27 February 2004 gave an unreasonable amount of time for the appellant to comply. We find that it was clear and unequivocal in its terms. It made it plain to the appellant that the respondent might elect to treat the contract as [sic] an end at the conclusion of the time given unless there was compliance."

20. The other relevant matter raised on behalf of Mr Hollows in the Court of Appeal was that the judge was wrong in not ordering a full hearing of the action and maintaining the caveats in the meantime. Counsel for Mr Hollows evidently conceded, in opening that appeal, that if the agreement had been validly terminated the substratum of his case disappeared. There would be no basis for his action for specific performance as there would be no contract to enforce and there would be no caveatable interest. The statement of claim included an allegation that Mr Hollows had carried out work on the land. However no relevant equitable relief was claimed on this basis nor were any submissions in that regard put to the judge, or the Court of Appeal.
    
21. The Court of Appeal acknowledged that it is generally inappropriate to determine the rights of parties in a summary manner but cited Re Peycher’s Caveat [1954] NZLR 285, 286 for the proposition that the Court will order summary removal where it is patently clear that there was no valid ground for maintaining the caveat. The Court held that the onus was on Mr Hollows to satisfy the judge that there were sufficient grounds for maintaining the caveats. In their view the judge was correct in determining the issue summarily. On the undisputed evidence before him it was "patently clear" that Mr Scofield had given a valid notice making time of the essence and had subsequently rescinded the agreement, leaving no agreement and no caveatable interest.
    
22. The appeal was dismissed. Orders were made for the caveats to be removed as from midnight on 1 December 2005.
    

The petition for special leave

23. A petition for special leave to appeal against the decision of the Court of Appeal was lodged on behalf of Mr Hollows on 22 December 2005. Shortly before the hearing of the petition Mr Hollows changed solicitors. An amended petition for special leave was filed on 13 October 2006 and the amendment was allowed, without opposition, at the commencement of the hearing. We observe that this is an unusual course. It must not be thought that the Court will lightly entertain such late amendments in future. The original petition failed to address the requirements for the grant of special leave and did not even attempt to identify the special leave questions upon which the petitioner relied. It read as though it were a notice of appeal to the Court of Appeal.
    
24. The amended petition had the virtue of at least endeavouring to identify two special leave points as follows:
    
    1. Whether an effective period of four days is a reasonable time for the completion of a contract.
    2. Whether the determination of the existence of a caveatable interest on affidavit evidence rather than a full trial was appropriate.
       

These two "special leave" points have only to be stated to be exposed as hopeless.

25. Section 7(3) of the Supreme Court Act 1998 provides:
    

"In relation to a civil matter (including a matter involving a constitutional question), the Supreme Court must not grant special leave to appeal unless the case raises –

(a) a far-reaching question of law;

(b) a matter of great general or public importance;

(c) a matter that is otherwise of substantial general interest to the administration of civil justice."

26. The first special leave point could not rise higher than a contention that the period of 14 days referred to in Sindel v Georgiou somehow reflected a minimum requirement of reasonableness in the time for compliance specified in notices to complete contracts for the sale of land. However the High Court of Australia said in that case at 670:
    

"The determination of what is a reasonable time for completion of a contract for the sale of land, judged in the light of the circumstances of the particular case, is very much a matter of impression."

27. In Ajit v. Sammy [1967] 1 AC 255 the Privy Council upheld the validity of a 6 day notice to complete, and held (p 258) that:
    

"the question of whether the notice was sufficient was a pure question of fact."

28. In this case Clause 11 made time of the essence of the contract, subject to the effect of Clauses 9 and 10. These dealt respectively with default by the purchaser and the vendor. This meant that time for completion on 1 February 2004 was originally of the essence.
    
29. If the purchaser was in default Clause 9 entitled the vendor to give the purchaser a notice of default and if this continued for a further 7 days the vendor could then rescind. Accordingly the case does not raise any question about the reasonableness of the time allowed for completion in a notice which seeks to make time of the essence for completion. It concerns the effect of a particular clause which enabled the vendor to give the purchaser, who was already in default under a time of the essence contract, a final opportunity to remedy the default and settle before he rescinded the contract.
    
30. The second special leave point turned on whether it was appropriate for the judge to determine the existence of a caveatable interest on affidavit material. No objection was taken to the course adopted and it does not appear that the primary facts were in dispute. The legal effect, if any, of the improvements made by Mr Hollows on the land was not raised. This is not a case in which his Honour decided disputed questions of primary fact on affidavit material. What was in contention was the legal consequences of the undisputed history of the dealings between the parties.
    
31. In the circumstances, no issue of principle emerges which would warrant the grant of special leave on this aspect of the case.
    

Conclusion

32. For the preceding reasons the Court was of the view that the petition should be dismissed with costs. The orders of the Court were:
    
    1. The petitioner has leave to amend the petition in terms of the amended petition filed on 13 October 2006.
       

2. The amended petition is dismissed.

3. The petitioner is to pay the respondent’s costs of the petition.

Hon Justice Daniel V Fatiaki
President of the Supreme Court

Hon Justice Robert French
Judge of the Supreme Court

Hon Justice Kenneth Handley
Judge of the Supreme Court

Solicitors:

O’Driscoll and Seruvatu Lawyers, Suva for the Petitioner

Howards, Suva for the Respondent

CBV0007U.05S