In the recent decision in Namrood v Ebedeh-Ahvazi  NSWCA 310, Mr Ebedeh-Ahvazi (Vendor) undertook earth works on a vacant lot he owned in Sydney. Council took issue and issued various notices requiring the Vendor to cease work and remediate the property.
The property was then placed on the market and purchased at auction for $1.46 million.
The contract of sale contained a special condition which provided that the Vendor would restore the property to the condition it was in before the unauthorised works by ‘completion’.
A separate term used in the contract was ‘completion date’, defined as 20 June 2015.
As the works had not been completed by the ‘completion date’, the purchaser served a notice requiring the Vendor to comply with its obligations under the contract. After protracted correspondence between the parties, the purchaser issued a notice to rescind the contract. The Vendor argued that the purchaser did not validly terminate and attempted to compel the purchaser to complete the purchase. When completion did not take place, the Vendor terminated and resold the property, keeping the deposit.
Court of Appeal
The Court of Appeal found that the purchaser was not entitled to terminate for breach of the contract as the Vendor was only required to fulfil its obligations by the time of settlement – reflecting the language in the contract by ‘completion’. The ‘completion date’ of 20 June 2015, was as the court found, not agreed as the date of settlement.
As is often the case in matters regarding the interpretation of a contract, the conclusion was reached due to the language and drafting of the contract. The contract drew a distinction between the terms ‘completion date’ and ‘completion’ being the date on which title to the property would be transferred to the new owner. The parties had chosen ‘completion’ and not the ‘completion date’ as the time by which the vendor was required to complete the works.
It is always prudent to review a contract of sale prior to bidding or submitting an offer paying close attention to any special conditions and defined terms.
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