A plaintiff seeking specific performance must establish that he has himself fulfilled every obligation imposed upon him by the contract, which is a condition precedent to the obligation of the defendant. Here payment of the instalments of purchase money at the precise times fixed by the contract was explicitly stated to be of its essence, and it is only on payment that the vendor agrees to convey. The efficacy in equity of a stipulation making time of the essence of a contract of sale and purchase now admits of no doubt: Fry on Specific Performance, 4th ed., p. 466. Breach of such a condition precedent disentitles the defaulter to the remedy of specific performance: Pomeroy's Equity, 2nd ed., 455; Pomeroy on Contracts, 335, 336, 379.

That the purchaser's default did not ipso facto render the contract void is manifest, because the vendor, though not in default, would in that event be deprived by the act of the defaulting purchaser of his right to enforce performance: Lloyd v. Collett (1793), 4 Ves. 689n. The result is that the purchaser's default merely rendered the contract voidable at the option of the vendor. That it became so voidable is clear: Hunter v. Daniel, 4 Hare 420.

Then arise the questions: whether the vendor is bound to assert immediately his intention to exercise some particular right which the default has given him; whether he must, at all events, do so before the purchaser offers to perform the term in respect to which he has made default; or whether he may wait until the purchaser tenders such performance, and then refuse acceptance and rescind the contract.

There can be no doubt that by doing any act, after the default, which involves or implies the continued existence of the contract, the party entitled to rescind waives such right. He may lose his right as well by acquiescing in the defaulter assuming a position consistent only with the subsistence of the contract. And a purchaser, though a defaulter, has a right to call upon a vendor to exercise his election to rescind or to stand by the contract: Smith v. Wallace, [1895] 1 Ch. 385. But I find no authority

for the proposition that where default has been made by a purchaser under a contract in which time is of the essence, the vendor, without demand of any kind, is bound, at the peril of losing his right, to give immediate notice to the defaulter that he elects to rescind, or even to give such notice before tender of performance

D. C. 1908

LABELLE

V.

O'CONNOR.

Anglin, J.

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LABELLE

υ.

O'CONNOR.

Anglin, J.

is made by the defaulter. He must not, of course, use his position unfairly; he must not play fast and loose; but what is there to impose upon him the obligation of seeking out the defaulter and giving him some notice for which the contract does not stipulate? In Clough v. London and North Western R.W. Co. (1871), L.R. 7 Ex. 26, in which the Court dealt with an option or right of election to rescind for fraud, Mellor, J., in delivering the judgment of the Court (Byles, Blackburn, Mellor, and Lush, JJ.), said, at pp. 35-6: "Neither can we see the principle or discover the authority for saying that it is necessary that there should be a declaration of intention to rescind prior to the plea."

It is also true, no doubt, that a default under a contract in which time is of the essence "does not oust the Court of its jurisdiction, or make it impossible for the Court to grant specific performance after the expiry of the time stipulated for. The Court will certainly as a general rule hold a party to such a contract bound to perform it within the time limited for its performance, but it will admit him to shew a good and valid reason for its nonperformance at the time; as, for instance, that he did all that in him lay in order to its performance:" McSweeney v. Kay, 15 Gr. 432, 439. And upon this ground a very trifling default was excused in that case. In Cudney v. Gives (1890), 20 O.R. 500, 503, the like doctrine is enunciated. But, in the absence of any act of waiver on the part of the vendor, or of conduct indicative of acquiescence in the purchaser's delay, the Court cannot, out of mere indulgence to the purchaser, overlook substantial non-compliance with the stipulations as to time when of the essence of the contract in respect of matter in the nature of a condition precedent: Wells v. Smith, 2 Edw. Ch. 78. And it must be borne in mind that delay short of what should be taken as evidence of an intention on his part to repudiate the contract, will suffice to disentitle a plaintiff to the equitable remedy of specific performance: Howe v. Smith, 27 Ch. D. 89, 95. Especially must this be the case where not only has time been expressly made of the essence of the contract, but adequate reasons for such a stipulation by the vendor were communicated to the purchaser when the contract was entered into. Where the bargain of the parties is of such a character, it would, indeed, be tantamount to making a new contract for them were the Court to entertain a suit for specific

performance after a really substantial default had occurred; and where, as here, the property is speculative in character, "it would be very dangerous to permit parties to lie by, with a view to see whether the contract will prove a gaining or a losing bargain; and, according to the event, either to abandon it, or, considering the lapse of time as nothing, to claim a specific performance, which is always the subject of discretion:" Alley v. Deschamps (1806), 13 Ves. 225, 228.

"The consequences of disappointment in the receipt of purchase money at the appointed time may in many cases be so serious and ruinous that a purchaser not ready with the price according to his contract, ought, I think, to shew a very special case for the interference of the Court against the vendor:" Gee v. Pearse (1848), 2 De G. & Sm. 325, 346; Aberaman Ironworks v. Wickens (1868), L.R. 5 Eq. 485, 507. If this be so where time is not of the essence of the contract, how much more is it so where the parties have expressly made time essential?

In the present case there was certainly no waiver by the vendors of any right which accrued to them upon the purchaser's default, nor was there any acquiescence by them in his delay. On the contrary, what took place between Labelle and O'Connor on the 1st January, as set forth in the judgments of my Lord the Chief Justice and my brother MacMahon, was, in my opinion, tantamount to a notification to Labelle that, unless O'Connor, after consulting Blanchet, should change his mind and advise Labelle to that effect, the default would not be waived, and the stipulation as to punctual payment would be insisted upon; in other words, that the instalments overdue would not be accepted at a later date, which necessarily meant that the vendors would treat the contract as rescinded. If the vendors were required to signify to the purchaser their election to rescind, before the latter offered to make good his default, the stand which O'Connor took in the January interview was, in my view, a sufficient signification that the vendors did elect to rescind. Even if O'Connor did say that he would inform Labelle by mail of Blanchet's views (which O'Connor denies) and failed to write him, that was neither a waiver of the vendor's rights nor an acquiescence in the purchaser treating such rights as waived; nor did it warrant Labelle in assuming that, in the absence of a communication from O'Connor,

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1908

LABELLE

V.

O'CONNOR.

Anglin, J.

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1908

LABELLE

V.

O'CONNOR.

Anglin, J.

he might deem the default waived and the contract still subsisting. There is nothing shewn to excuse Labelle's delay in payment from the 15th November to the 23rd April; certainly nothing from which he could infer that tender made on the latter date would be accepted or would be sufficient. It is also significant that when tender of his cheque was refused by O'Connor on the 23rd April, Labelle appears to have demanded repayment of the $100 which he had paid on account of the purchase money.

Although the vendors cannot, I think, be said to have resold the property before the insufficient tender of the 23rd April was made, they had, in my opinion, a right to refuse to carry out the contract and to rescind it.

The appeal must, therefore, be allowed and the action dismissed.

The statement of claim does not ask for a return of the first instalment of $100 paid on account of the purchase money.

For the vendors it is argued that this money is forfeited, and they rely upon Howe v. Smith, 27 Ch. D. 89; Fraser v. Ryan (1897), 24 A.R. 441; Jackson v. Scott (1901), 1 O.L.R. 488. If it were a deposit, no doubt this would be the case. In the contract in the present case, however, the $100 to be paid upon the execution of the agreement is spoken of not as a deposit, but as a payment on account of or an instalment of the purchase money, and there is no provision for the forfeiture of moneys already paid upon subsequent default. In Cornwall v. Henson, [1900] 2 Ch. 298, at p. 302, Webster, M.R., says: "I feel very great doubt whether the doctrine of Howe v. Smith would apply to a case in which the purchase money was to be paid in instalments." In Jackson v. Scott there was an express provision for the forfeiture of all moneys paid on account of purchase money. In Fraser v. Ryan, though both a deposit and an instalment of purchase money subsequently paid were held to have been forfeited, the distinction between a deposit and an instalment of purchase money was not adverted to.

The reasons why, without any express provision, money paid as a deposit should be forfeited, while money paid merely on account of the purchase price should, upon rescission for default, be returned to the purchaser, are obvious. The former money is paid as a guarantee that the purchaser will not make default

Though

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1908

LABELLE

บ.

Anglin, J.

and from the nature of the payment forfeiture upon default is implied. To moneys paid merely as an instalment of purchase money the character of a guarantee is not attached, and upon rescission, the consideration for the payment being extinguished, O'CONNOR. in the absence of an express provision for forfeiture, restitution is a natural consequence. Had the plaintiff in his pleadings asked this relief, I should have thought him entitled to it. not claimed in the pleadings, it was sought at bar, and, I think, having regard to all the circumstances of this case, we shall do substantial equity if we direct that the defendants credit this amount upon the costs which the present judgment awards them. While allowing the appeal and dismissing the plaintiff's action with costs, I would, therefore, direct that upon such costs be credited the sum of $100 paid by the plaintiff on account of the purchase money. Were this payment in fact a deposit, I should have been disposed to give the defendants their costs against the plaintiff only on condition that it was returned or that they should agree to credit the amount upon such costs: Gee v. Pearse, 2 De G. & Sm. 325.

E. B. B.