Case: DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 ; (1978) 138 CLR 423
Outcome: applied
Paal Wilson [1983] 1 AC at 915C-916D Lord Diplock discussed the entry of both parties to an executory contract into a 'new contract' which he styled 'the contract of abandonment'. He explained that in such a case, each party promises by words or conduct to release the other from further performances of obligations on its part which remain to be performed, including the obligation to pay damages. And in Australian law the parties to a contract can so conduct themselves that they can be seen to have mutually abandoned or abrogated the contract; for example where neither takes any steps to perform over a period: see Summers v The Commonwealth [1918] HCA 33 ; (1918) 25 CLR 144 at 151-152 per Isaacs J; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 ; (1978) 138 CLR 423 at 434 per Stephen Mason and Jacobs JJ; Foran 168 CLR at 422-423 per Brennan J. In DTR Nominees 138 CLR at 433 Stephen, Mason and Jacobs JJ held that for a party to be entitled to rescind for anticipatory breach, he must be at the time of rescission himself be willing to perform the contract on its proper interpretation. They said: 'Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach, and indeed could profit from his misinterpretation of the contract, as the appellant seeks to do in this case when it claims forfeiture of the deposit and damages.' 29.4 Findings regarding Allphones' entitlement to terminate I am of opinion that a similar principle must apply in a case like the present, where both parties were, at the time at which Allphones sought to terminate, in breach in a way amounting to repudiation of their obligations. Allphones was not an innocent party, any more than Hoy Mobile. I am satisfied that Allphones considered itself to be free to account for commission as and when it pleased and in the way it pleased, regardless of its contractual obligation pay the whole amount of MTSC due to Hoy Mobile on the construction of the franchise agreement I have found. Each had engaged in dishonest conduct towards the other in a way which evinced an intention not to be bound. The deliberate concealment from the franchisees, including Hoy Mobile, of the true amounts paid to Allphones as commission for those activations is evidenced in the various emails to which I have referred and the conduct described by Mr Nicoll in his evidence. That conduct places Allphones' behaviour outside that of a party who is seeking to perform the contract according to its terms, but acting on an incorrect interpretation of it: cp DTR Nominees 138 CLR at 432 per Stephen, Mason and Jacobs JJ. The intention to conceal payments from the franchisees demonstrated a consciousness on Allphones' part that the revelation of what it was doing would be seen, correctly, by the franchisees as a fundamental departure from the conventional understanding of how their commissions were earned. Allphones was not seeking to perform the contract according to its terms, but rather was seeking to perform it as and when it pleased and in the manner it pleased. Thus, at the time at which Allphones learnt of Hoy Mobile's fraudulent conduct, Allphones itself was evincing an intention not to be bound and to perform the franchise agreement as and in the manner it pleased. Although it was carrying out some of its obligations, it was concealing the existence of other obligations from Hoy Mobile, conscious that Hoy Mobile was asking for more detail about the way in which its commission had been calculated.