The recent case of Sentinel Orange Homemaker Pty Ltd v Davis Investment Group Holdings Pty Ltd (in liq) considered whether a contract had been validly terminated or whether the conduct instead amounted to repudiation of the contract. In this case the parties entered into a contract for the sale of land. The Respondent contended that it was entitled to a deposit in accordance with a special condition 13.4 of the contract because it validly exercised its right of termination under that provision. The Applicant contended that the respondent had not validly terminated the contract pursuant to the special condition, but rather, its assertion that the contract had been terminated amounted to repudiation of the contract and on that basis the Applicant claimed that it was entitled to the deposit.
The Applicant established that the Respondent breached the ‘all reasonable endeavours’ obligation under special condition 13.3 and that such default relevantly caused the condition precedent to not be satisfied on the agreed date.
The Court found that the respondent could not rely upon non-satisfaction of condition precedent as the basis for their exercise of the right of termination under the special condition clause. Hence, the Respondent’s termination of the contract was invalid and ineffective, and they were not entitled to claim the deposit, or any interest earned thereon.
Additionally, the Respondent’s conduct in maintaining that the contract was no longer on foot and consequently refusing to proceed to settlement of the contract, amounted to repudiation. Thus, the deposit was forfeited to the Applicant.