Case: Sunbird Plaza Pty Limited v Maloney [1988] HCA 11 ; (1988) 166 CLR 245 
Outcome: discussed
That the obligation, subject to a revealed contrary intention, to pay the purchase price accrues fully only on settlement was reiterated in Sunbird Plaza Pty Limited v Maloney [1988] HCA 11 ; (1988) 166 CLR 245. In that case, the vendors sought recovery against guarantors of a contract for the sale of land in respect of which an order for specific performance had been made consequent upon repudiation by the purchaser. The proper construction of the guarantee was held not to support a conclusion that the guarantors were liable. Mason CJ (with whom Deane, Dawson and Toohey JJ agreed) said the following at 253-254: The general rule, stated by Dixon J in McDonald v Dennys Lascelles Ltd [1933] HCA 25 ; (1933) 48 CLR 457 , at p 476, is that a vendor of land cannot sue for the price before the contract is completed by conveyance, unless the price is expressed to be payable on a fixed day, not being the day fixed for completion. Here the balance of the purchase price was payable "upon settlement". Settlement has not taken place and there has been no conveyance of the property sold. Once this is accepted, the appellant is faced with a daunting task in making good the submission that the respondent guarantors are liable under their joint and several guarantee to pay the balance of the purchase price and interest thereon, notwithstanding the absence of an accrued liability on the part of the purchaser to make the payment . [emphasis added] In the same case, Gaudron J (with whose reasons in this respect Mason CJ (and so also the other members of the Court) agreed) at 267-268 also referred to McDonald v Dennys Lascelles [1933] HCA 25 ; 48 CLR 457. 45 Thus, whilst there is a promise in an executory contract to pay the balance of the purchase price on settlement, there is no "debt" ( McDonald v Dennys Lascelles ) and no "accrued liability on the part of the purchaser to make the payment" (see Mason CJ in Sunbird Plaza 166 CLR at 254), until completion. This is not to deny, however, that the purchaser's interests will be protected in equity consistent with the nature and extent of the terms of the contract of sale: Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489 at 522-23, and that the promise can be otherwise seen as unqualified. 46 These cases were applied by von Doussa J (with whose reasons Jenkinson and Spender JJ agreed) in Gasparin v Commissioner of Taxation (1954) 50 FCR 73. That case concerned the question as to when income was derived from the sale of allotments of land. It was held that each allotment remained trading stock on hand until settlement. After referring to McDonald v Dennys Lascelles , Sunbird Plaza and Automatic Fire Sprinklers Pty Limited v Watson [1946] HCA 25 ; (1946) 72 CLR 435 at 463-464 (as to which case, see below), von Doussa J said at 77 that these cases reflected a general rule about unsettled contracts of sale. His Honours said that at the end of the year of income in question: ...there were no debts owing by the purchasers to the joint venturers. In each case the promise to pay the balance of the purchase price "at settlement" remained executory until settlement occurred at which time a conveyance was executed, accepted and delivered to the purchaser. Until these events there was no accrued liability on the part of the purchaser to pay the balance of the purchase price. [emphasis added] 71 In Woolcombers the taxpayer, in the year of income, entered forward contracts for the purchase of wool that had been shorn or was yet to be shorn. The standard form contracts provided for property in the wool to pass from the woolgrower to the taxpayer upon payment, being 14 days after delivery. The contract provided expressly for the possibility of the grower needing to dispose of the sheep because of drought, flood or disease. In such circumstances, failing agreement as to how many sheep to sell, the matter of disposal would be the subject of arbitration. Thus, the promise to pay for wool to be delivered in the future was made in the year of income (1988). The wool was delivered and paid for in the following year of income. An indemnity as to delivery and quality was given by the grower. In the previous 12 years, all such forward contracts, with one exception, had been completed by the growers. The contracts were to meet contracts by way of on-sales for export entered by companies related to the taxpayer. (It is to be recalled, at this point, that the principle dealt with in Gasparin and Sunbird Plaza was not limited to contracts for the sale of land. The discussion by Dixon J in Automatic Fire Sprinklers 72 CLR at 463-464 made that clear.) 77 As I have said earlier, the application of the principles in Sunbird Plaza to the question of "incurred" has force, unconstrained by authority. So to conclude would lead to a certain harmony in timing between recognition of derivation of income and the incurring of an outgoing. It would give expression to the long-recognised underlying legal analysis in cases such as McDonald v Dennys Lascelles, Automatic Fire Sprinklers, and Sunbird Plaza . It would conform more clearly with the views of Barwick CJ in Nilsen Developments [1981] HCA 6 ; 144 CLR 616. Nevertheless as a single judge, I am clearly bound by Raymor and Woolcombers. The essence of the argument, as I apprehend it, that was put to the Full Court in Woolcombers , was put to me, though, perhaps, in a somewhat more developed form. Unless the last passage that I have quoted above entitles me to find differently, on the authority of both Raymor and Woolcombers , I should find that the obligation to pay the purchase price on settlement was incurred at the time of the exchange of contracts.