A legal principle that is crucial in the conveyancing process is that of ‘time is of the essence’, which essentially means that on any date upon which a deadline falls, each party to the conveyance has until 5pm to fulfill their requirement for that particular deadline.
Time is of the essence plays its biggest role in the settlement of a property, with the REIQ standard conditions of the sale contract providing that, “settlement must occur between 9am and 5pm on the Settlement Date”.
In Caprice Property Holdings Pty Ltd v McLeay & Anor  QCA 125 the Queensland Court of Appeal found that this principle of ‘time is of the essence’ is to be upheld even where an alternative agreement has been made between the buyer and the seller.
In this case the buyer and seller had agreed for settlement of the property to occur at 3pm on the Settlement Date. However the 3pm settlement time rolled around and the seller was still in the process of organizing a release of mortgage from their bank.
The buyer believed that as the seller was unable to settle at the agreed time of 3pm then they were entitled to terminate the contract, due to the seller being in breach of the contract. They buyer refused to re-attend settlement 10 minutes later when the seller had obtained a release of mortgage. The buyer stated that the seller had breached the contract by not being able to settle at 3pm as agreed.
The seller subsequently started court proceedings to force the Buyer to purchase the property, as they were not entitled to terminate due to the ‘time is of the essence' principle, which provided that they had until 5pm to settle the property. The fact that the seller was ready, willing and able to settle the property by 3:30pm meant that the buyer breached the contract by terminating it early.
The court agreed with the seller in this case, stating that even though they had agreed upon a settlement time of 3pm, the fact that the contract is subject to the ‘time is of the essence’ principle, it allows for settlement to be delayed and as long as it occurs before 5pm on the Settlement Date then a breach of the contract has not occurred. Therefore the buyer had no right to terminate the contract as they did.