Agricultural and Rural Finance v Atkinson [2006] NSWSC 202

In relation to a covenant for punctual payment Young CJ in Eq held:

True it is that some payments were only one or two days late, but an obligation to pay punctually has been held in cases associated with covenants in mortgages. In Leeds & Hanley Theatre of Varieties v Broadbent [1898] 1 Ch 343, the English Court of Appeal held that payment “punctually” meant payment on the day fixed for payment and payments after that date was not good payment and this has been followed ever since; see eg Sperry Rand Australia Ltd v Arrandale Properties Pty Ltd [1979] VR 409.

In relation to an implied duty of good faith His Honour held:

There is no reason to superimpose an additional “good faith” term and business efficacy does not require it. In this I believe I am in tune with what Kirby and Callinan JJ said in Royal Botanic Gardens & Domain Trust v South Sydney City Council (2002) 76 ALJR 436 at 452-3 and 482.

In relation to the rule that a party cannot rely on his own misconduct for advantage His Honour noted:

There is certainly a rule that a person cannot rely on his or her own misconduct to gain an advantage. So far as the law of contract is concerned, the operative versions of the rule are:

  • Where a contract of sale says that it is to become void if something does not happen a person whose fault brings about the non-happening of the event cannot rely on it and the contract is only voidable at the option of the innocent party
  • If liquidated damages are payable on the non-happening of a certain event by a certain day then a person who has done an act which must substantially delay completion cannot seek liquidated damages.
  • If a person can terminate contract A if contract B comes to an end, then the liberty to terminate contract A is only to be exercised if it is not the fault of the person giving the notice that contract B came to an end.

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