Aboriginal Objects, Defect of Title & the Court of Appeal

The appellants, (the vendors), and the first to fourth respondents, (the purchasers), entered into a contract for the sale of land in Byron Bay in July 2015. The fifth respondent, guaranteed the performance of the purchasers under the contract.

Although the land has total size of 30 acres, zoning constraints limit its commercial development potential to a lot of around 7 acres situated on which was a memorial stone and plaque placed by the NSW Government as part of the Australian Bicentenary celebrations in 1988 referring to a nearby burial site of two Aboriginal elders. Whether any Aboriginal remains were buried on the land, and the precise location of any such remains, was not known.

The special conditions of the contract provided that completion of the sale was subject to preconditions; and if completion did not occur “by the completion date, without default by the vendor” the purchasers were liable to pay default interest.

Between July and September 2015, the purchasers raised a number of objections and requisitions on the basis that Aboriginal remains located on the land being “Aboriginal objects” within the meaning of the National Parks and Wildlife Act 1974 (NSW), constituted a defect in the vendors’ title.

The vendors sought further information from the purchasers about their claim that there were any Aboriginal objects on or in the land nominating 5 August 2015 as the date for completion.

Settlement did not take place on that date. The vendors then issued two notices to complete and demanded payment of default interest calculated from 5 August 2015.

In response, the purchasers gave a notice to perform challenging the validity of the vendors’ notices and requiring the vendors to submit corrected settlement figures and making time of the essence. The vendors did not comply with the purchasers’ notice to perform.

On 25 September 2015, the purchasersw gave notice purporting to terminate the contract for repudiation. On 6 October 2015, the vendors purported to terminate the contract on the basis that the purchasers’ notice of termination amounted to repudiation of the contract

At first instance the court held the purchasers were entitled to terminate the contract on the following grounds: the vendors had repudiated the contract by failing to adequately address the purchasers’ requisition; by erroneously insisting on payment of default interest. Additionally the presence of Aboriginal objects on the land entitled the purchasers to terminate the contract

The Court of Appeal in allowing the vendors’ appeal held that the purchasers had repudiated the contract. The vendors had not displayed an intention to no longer be bound by the contract through their response to the purchasers’ requisitions. As the requisitions, were invalid and based on the “plausible contention” that there were Aboriginal objects on the land, they were sufficient to address the requisition.

There were no Aboriginal objects on the land, and in light of the development constraints already affecting the land, even if the memorial stone and plaque were an “Aboriginal object” their presence was not a material or substantial matter giving the purchasers the right to terminate.

Additionally the vendors had a reasonable basis for maintaining their claim for default interest and did not erroneously insist on completion in the face of a clear explanation of the true position
Having found that the purchasers were not entitled to terminate the contract, the Court held that the purchasers had repudiated the contract and gave judgment for the vendors.

The Court determined that the purchasers were not entitled to a return of their deposit under s 55 of the Conveyancing Act 1919 (NSW) as they had not demonstrated any injustice. The fifth respondent, as guarantor of the purchasers’ performance under the contract, was also liable to the vendors.

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