When a Notice to Complete fails: Lessons from a recent case for Vendors & Purchasers

A recent Supreme Court of Tasmania decision, [2026] TASSC 21 (available here), highlights the significant risks of issuing a Notice to Complete while a party remains in breach of its own contractual obligations. The case also serves as a reminder that an incorrect interpretation of a contract will not necessarily amount to repudiation where the party remains willing and able to perform the contract according to its proper construction.

The facts

The parties entered into a contract for the sale of a rural property, together with livestock and other chattels.

Disputes arose regarding the proper interpretation of certain special conditions, including obligations relating to the removal of title covenants and the provision of a deed of first refusal. As settlement approached, the Vendors issued a Notice to Complete and subsequently purported to terminate the contract when settlement did not occur. However, the Vendors had themselves failed to comply with certain contractual obligations, including the provision of documents required under the contract.

The Purchaser commenced proceedings seeking specific performance of the contract and damages. The Supreme Court of Tasmania was therefore required to determine whether the contract remained enforceable, whether the Vendors had validly terminated it, and whether the Purchaser was entitled to compel completion of the sale. Ultimately, the Court found largely in favour of the Purchaser and ordered specific performance of the contract.

Practical lessons

The decision provides several important lessons for parties involved in property transactions:

Lesson 1: Draft special conditions carefully

The dispute arose largely because a covenant-removal clause provided that the Vendors “agree to the removal of covenants” rather than expressly stating who must undertake and bear responsibility for the removal process.

Lesson 2: Don’t assume a mistaken interpretation amounts to repudiation

The Vendors argued that the Purchaser’s insistence on an incorrect interpretation of the covenant-removal clause amounted to repudiation and relieved them of any obligation to complete.

The Court rejected that argument. While the Purchaser’s interpretation was incorrect, its conduct demonstrated a continuing willingness to complete the contract according to its true meaning. An incorrect legal position will not necessarily amount to repudiation unless it is accompanied by a refusal to perform the contract as properly construed.

Lesson 3: Before issuing a Notice to Complete, check your own house is in order

The Court found that the Vendors’ failure to provide the required State Revenue Office documents constituted a breach of contract. As a result, the Purchaser was not obliged to complete on the settlement date nominated in the Notice to Complete.

Lesson 4: Settlement prerequisites matter

Documents that may appear procedural or administrative can be critical preconditions to settlement. In this case, the failure to provide the required State Revenue Office documents undermined the Vendors’ ability to insist on completion and ultimately contributed to the failure of their termination strategy.

Lesson 5: Termination is high-risk

The Vendors thought they were terminating for Purchaser default, but the Court held the termination itself amounted to a further repudiation. Hence, parties contemplating termination should proceed with caution. An invalid termination may itself constitute repudiatory conduct, exposing the terminating party to claims for specific performance, damages and costs.

Conclusion

This is a timely reminder that parties seeking to enforce strict contractual rights must first ensure they have complied with their own obligations.

The decision reinforces two important principles: a mistaken contractual interpretation will not necessarily amount to repudiation, and a party in breach may be unable to rely on a Notice to Complete or subsequent termination.

Before taking settlement enforcement steps, parties should carefully review their contractual and statutory obligations to minimise the risk of an unenforceable termination and costly litigation.

This article and case review is current as at the date of publication. It may no longer be accurate if the decision is appealed or reviewed, or is affected by subsequent court decisions.