on 12-02-2018 04:52 PM
We recently had to issue a Notice to Complete. Initially completion was to occur within PEXA but with a Notice to Complete which makes the completion time essential we couldn't envisage how a PEXA settlement would work.
1. How do you make time of the essence if PEXA automatically slips the completion time back 1 hour when a party isn't ready to complete. Does that become a waiver by the other party that is ready to complete. ?
2. If all our are documents signed and ready to complete then the other party alters something in the workspace, the documents would become unsigned. If this occurred at the completion time then our client would be deemed not ready to complete and this would give the other party the right to terminate the contract?
With all transactions expected to be paperless by July 2019 PEXA will need to accommodate settlements that have made time of the essence. No slipping the settlement time, no altering documents after within a set period before the completion time.
Has anyone else faced this issue or would like to raise other factors that need to be considered?
on 13-02-2018 05:15 PM
Thank you that was interesting. It doesn't address how to enforce completion when time is of the essence. It also raises the issues of documents becoming unsigned and parties not being ready and suggests that in some cases you should consider returning to a paper settlement.
on 14-02-2018 11:32 AM
With respect to time being of the essence you should probably look into the drafting of your notice to complete. Normally, a notice to complete (in NSW) would stipulate a date on or before which completion must take place. A notice to complete frequently nominates a time and place on that date on or before which settlement is to take place. This was necessary in a paper world where all parties needed to attend a settlement. I'd suggest to you that the date is the essential term, not necessarily the time at which settlement takes place. In any event, your notice to complete if drafted appropriately could provide for slippages in settlement time in PEXA. You may wish to refer to the judgment of Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at 299 which may provide some clarity in relation to notices to complete. You should research this and come to your own conclusions.
In relation to issues with a PEXA settlement it pays to consider what actions you would take if it were a paper settlement. What would you do if the other party failed to attend? What would you do if they informed you that they couldn't attend at the nominated time but, could do an hour later?
With respect to the documents becoming unsigned as the result of the changes by the defaulting party, I doubt very much that the actions of a defaulting party in those circumstances would entitle the defaulting party to terminate the contract. The innocent party is still innocent, it is only through the actions of the defaulting party that they have become not-ready to settle. I suggest that maintaining a vigil on your PEXA workspace is these circumstances is a good idea. This is an issue that requires some research and possibly judicial consideration before there is a definitive answer.