Piva v Sportiva Macchina International [2006] VSC 321
In the Commercial List of the Supreme Court of Victoria, Hargrave J held that a buyer of a racing car under a contract subject to finance, which fixed no time for paying the instalment to be financed, was not excused from completing because he stopped seeking finance well before a reasonable time expired and did not prove that further efforts would have been useless [86], [94], [112], [115], [119].
What the court decided
Mr Piva, a solicitor and car enthusiast, sued for return of the Ferrari that was to be his trade-in on a car from Sportiva [1], [5]. Sportiva counterclaimed for specific performance, later amending to seek damages after reselling the car for less [64], [68]. His Honour found that Mr Piva's facsimile was an offer rather than a mere invitation to treat, and that Sportiva accepted it [69], [71], [72], [73]. The issue was whether his obligation to pay a first instalment of $580,000 was conditional on first obtaining finance for that amount [78]. The facsimile provided that the balance of the purchase price would be paid on 3 April 2006 [87]. The contract did not stipulate any time for payment of the first instalment [86]. His Honour accepted that the completion date was varied from 3 April to 9 May 2006 [123].
Rejecting Sportiva's submission that the references to finance were for information only, his Honour held that a reasonable person would have understood Mr Piva to be offering to buy the car if he obtained finance for the first instalment [79], [80].
Where a purchaser's obligation to complete is conditional on finance, a requirement to take all reasonable steps to obtain the finance is implied [85]. His Honour rejected Sportiva's submission, based on Aberfoyle Plantations Ltd v Khaw Bian Cheng, that finance had to be obtained by the completion date, because the parties intended the first instalment to be paid before completion [92], [93]. Where a condition imposes an obligation to do an act without fixing a time, the court will imply a reasonable time [94].
He rejected Mr Piva's submission that a reasonable time expired at Christmas 2005, holding that subsequent conduct is irrelevant to interpretation and was in any event equivocal [95], [96], [97]. Rejecting reliance on earlier quick approvals, his Honour noted that the 360 NGT finance took three and a half months [98], [100]. He concluded that the parties should be taken to have intended that Mr Piva have the same time as that finance had taken, allowing for the Christmas interruption [102]. He found that a reasonable time expired on 23 February 2006 [103].
Although Mr Piva acted reasonably in his initial attempt to obtain finance, it was unreasonable for him to stop when he did [104]. Because he ceased by 9 January 2006 at the latest, six weeks before a reasonable time expired, his Honour found that he did not act reasonably in endeavouring to obtain finance [112]. In Zieme v Gregory Hudson J had left open whether proof that no efforts could succeed would let a purchaser avoid the contract [109]. The onus of establishing that further efforts would have been useless was on Mr Piva, and he called no expert evidence [113], [115]. His Honour declined to infer from incomplete anecdotal evidence that Mr Piva could not have obtained finance from another financier [119].
Mr Piva contended that Sportiva's tender of the car on 3 April 2006 was non-conforming, being early and not including extra wheels and tyres [122], [128]. His Honour distinguished Bowes v Chaleyer, the mistaken tender meaning only that Mr Piva was not then in breach [128], [131]. Under Foran v Wight, a vendor that does not accept a purchaser's unambiguous repudiation need not tender performance on the completion date [132]. Mr Piva repudiated the contract by 6 February 2006 at the latest, when Sportiva had not decided against performing and was not incapacitated from doing so [133]. The pleaded estoppel was treated as abandoned and in any event was not established [135]. Judgment was given for Sportiva on its counterclaim, with orders and costs to be heard later [137].
Why it matters
A purchaser relying on a finance condition who stops seeking finance well before a reasonable time expires is not excused from completing [112]. Any claim that further efforts would have been futile must be proved by the purchaser, and the judgment did not decide that such proof would excuse completion [113], [115]. If no date is fixed for the financed payment, the court may imply a reasonable time judged by the circumstances at contracting, not later dealings [94], [96]. Fixing a date for satisfying any finance condition avoids that inquiry.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.