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Do Aboriginal Objects contribute to a defect in land title?

CaseFlash 05 September 2017

In Mehmet v Carter [2017] NSWSC 1067 the Plaintiff (Purchaser) terminated a contract for the sale of land after claiming that the Defendant (Vendor) failed to remedy defects in title resulting from the presence of Aboriginal Objects on the land. The Court held that the objects did not constitute a defect in title and that by terminating the contract based on the alleged defect, it was the Purchaser who had repudiated the contract.

Factual Background

The parties entered into an agreement for the purchase of land near Byron Bay on 6 July 2015. The remains of two Indigenous persons from 1890 and 1922 were buried on the plot of land.

Relying on the National Parks and Wildlife Act 1974 (NSW) the Purchaser argued that the remains constituted an Aboriginal Object which became the property of the Crown and could not be ‘harmed’. The Purchaser claimed that this would alter the scope for re-development of the property and that the presence of objects on the land that the vendors did not own was a defect in title.

The Purchaser refused to settle the contract until the alleged defect in title was removed. The Vendor refused to do so and sent a notice to complete which was ultimately not complied with. A second notice to complete was sent with the settlement sum increased to include added interest for the failure to settle by the completion date.

The Purchaser argued that the Vendor’s refusal to resolve the defect in title and insistence on added interest indicated repudiatory conduct and used this to terminate the contract. The questions which arose in court were whether the Aboriginal objects were a defect in title and whether the Purchasers were entitled to terminate the contract.

Defect in Title and Aboriginal Objects

The Purchaser argued that the subject matter of the land in question included everything within the boundaries of the land stipulated in the contract. It was further argued that title to the property was required to be given to the Purchaser free of the Crown’s interest in the Aboriginal objects.

The Court held that it was difficult to attribute an intention within the contract that the objects would be conveyed to the Purchasers even though the objects were, by statute, not owned by the Vendor. Whilst the Court found that as a matter of language the contract was capable of being read as including everything physically located within the boundaries of the property, it ought not to be read in such a way. The Court reaffirmed the principle that a commercial contract should be constructed in a way reasonable business persons would have understood the contract to have meant. The Court held that reasonable business persons in the position of the parties would not have understood the contract to provide an obligation that the Vendor sell to the purchaser any objects that were not actually owned by the Vendor.

Thus, the Court ruled in favour of the Vendor and found that the Purchaser was incorrect in their assertion that there was a defect in title.

Repudiation

Though the Court found that the Vendor incorrectly applied an increased interest payment to the revised settlement sum, it also ruled that such conduct did not amount to repudiation. The Court was emphatic in its summary of the law regarding repudiation by highlighting that it is a serious matter that is not to be found lightly or inferred. Simply operating under the mistaken belief that they were entitled to charge interest did not indicate the Vendor’s intention to no longer be bound by the contract or show that they were willing to only proceed in a manner that was inconsistent with the contract.

Lessons

  1. It is difficult to prove a defect in title when the objects in question are not actually owned or under the control of the Vendor.
  2. Exercising a right to terminate a contract for repudiation should be done with caution. A contract that is wrongfully terminated for alleged repudiation can in fact be repudiatory conduct in itself and so the Purchaser is in breach.

Gary Newton, Partner
Sydney

Khushaal Vyas, Law Clerk 
Sydney

CaseFlash 05 September 2017
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