Second Notice to Complete Revives Terminated Agreement – Contract Sale of Land

A vendor who has terminated a contract for the sale of land should be wary of serving a second notice to complete because the second notice revives the agreement that has been terminated.

In Rona v Shimden [2005] NSWSC 818 a vendor under a contract of sale claiming to have terminated the contract, gave notice to complete which was expressed to be without prejudice to its contention that the contract was terminated. White J at [86] analysed the position as follows:

The giving of a notice to complete may give rise to an estoppel which precludes the party giving the notice from asserting that the contract has been terminated. Here, the purchaser did not do anything consequent upon the service of the notice which could create such an estoppel. Estoppel aside, the service of a notice to complete without prejudice to a prior notice of termination takes effect as an offer to revive the agreement, capable of being accepted by performance in accordance with the terms of the notice to complete: Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 at 9184, 9187.

In Naval and Military Club v Southraw [2008] VSC 593 Byrne J accepted this analysis. See: also Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd & Ors [2014] VSC 57.

 

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Is a purchaser of land bound by covenants in a lease?

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When premises are sold the question often arises as to whether a tenant can enforce  covenants contained in the lease against the new owner?

At common law, unaffected by statute, an assignee of the reversion is not bound by any of the covenants and conditions of the lease. See: In re Hunter’s Lease [1942] 1 Ch 124 at 128.

In Victoria, s 142 of the Property Law Act 1958 altered this position and an assignee of the reversion is bound by covenants contained in the lease that “touch and concern” the land.

In Specialist Diagnostic Services Pty Ltd v Healthscope Ltd [2010] VSC 44 Croft J held that a restraint of trade clause contained in a lease did not “touch and concern” the leased land and therefore did not bind the assignee of the reversion.

The case contains a detailed analysis of the type of covenants that “touch and concern” land (see [52] – [67]). In broad terms any covenant that affects the landlord as a landlord or the tenant as a tenant will probably be within the class of covenants that touch and concern the land.

 

See: Bradbrook, Coft & Hay Commercial Tenancy Law, 3rd ed, paragraph 15.20, p. 483.

 

My clerk can be contacted via this link for bookings  http://www.greenslist.com.au/

 

 

Property Law ( Sale of Land) – Everything must be in writing

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It is extraordinary how often lawyers overlook the cardinal rule when dealing with land:

anything intended to have legal effect must be in writing. See: s.53 of the Property Law Act 1958 and s.126 of the Instruments Act 1958.

 

The most overlooked rule appears to be that where an agent is to sign a contract or enter into an agreement that will affect an interest in land the agent must also be authorised in writing to sign the contract or enter into the agreement.

In Federation Properties Pty Ltd v Tzioras [2001] VSC 135 Byrne J held that a contract for the sale of land was unenforceable because the agent who made the contract had not been authorised in writing.

Lawyers settling court proceedings should be particularly careful about ensuring that they have written instructions to sign terms of settlement. See: Grummitt v Natalisio  [1968] VR 156; Collin v Holden [1989] VR 510.

 

 

My clerk can be contacted via this link for bookings  http://www.greenslist.com.au/