Principles applicable to election

According to Kenneth Martin J (at [257]) in Armada Balnaves Pte Ltd, the following is a non-exhaustive summary of principles relating to election:

1.   An act amounting to an election between inconsistent rights must be unequivocal.

2.  The electing party should know of the facts which give rise to their right to elect between alternative rights, or at least be taken to have known of such facts.

3.  Notwithstanding principle 2 above, the nature of a curial assessment of conduct that is alleged to constitute an election as between inconsistent rights is always an objective one.  The assessment made is never subjective as regards what the electing party actually knew.

4.    Concerning a party electing as between alternative rights conferred under a contract and correlative questions over delay in exercising a contractual right, Jordan CJ in O'Connor (in a passage later applied by Brennan J in Immer) said this at page 261:

     ... where there has been no intimation of avoidance, the question whether delay, after knowledge of the facts giving rise to avoidability, or things said or acts done during the delay, constitute such an election to go on with the contract as puts an end to the right to avoid, depends upon 'the length of the delay and the nature of the acts done during the interval, which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy'.  (my emphasis in bold)

     (Jordan CJ in turn had been referring to Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 240).

5.   The effects of a delay resulting from a party not exercising a contractual right to avoid (a contract) must be assessed by reference to such period of delay viewed within the bespoke context of the particular contract whose terms provide the underlying subject matter.  (Jordan CJ in O'Connor had continued to address the counterpart situation of a reliance on acts done as constituting a suggested irrevocable election not to avoid.)

6.   An election as between inconsistent rights, once made and communicated, is irrevocable.

7.   An election made as between inconsistent rights needs to be communicated by the electing party to the recipient party.

8.   The party confronted with a choice as between the exercise of alternative and inconsistent rights is not bound to elect at once.  That party is entitled to keep the question open, so long as they do not affirm the contract and do not cause prejudice to the other party.

9.   Words or conduct which do not communicate an exercise of a right to choose as between alternative rights or remedy, but merely involve the recognition of a contract, will not amount to an election to affirm the contract.

10. The essence of a common law election made as between inconsistent rights, requires the electing party to be 'confronted' with mutually exclusive courses of action as between which that party must in fairness to the other party, make their choice. (See Immer per the plurality(Deane, Toohey, Gaudron & McHugh JJ) at page 41, who applied observations from Spencer Bower and Turner's The Law Relating to Estoppel by Representation(3rd ed, 1977) at page 313).

11. As demonstrated inthe facts underlying the decision in Immer, the confrontation, which in turn generates the necessity for a party making a choice as between inconsistent rights, is not merely the act of affirming the agreement involved, but is as well the abandonment by that party of the other right (on the facts of Immer, the right to rescind).

12. An abandonment will be more readily inferred in certain circumstances such as, for instance, where the required choice arises once and for all.  Again, as stated by the plurality in Immer at page 42:

     ... The point is that where the right to rescind is a continuing one, it is not so readily concluded that the party entitled to rescind has abandoned that right completely as opposed to taking no action to exercise the right at the time in question.  (my emphasis in bold)

     See also BrennanJ in Immer at page 30:

     ... Where a contract can be terminated at the option of a promisee, the right to terminate is not necessarily lost by the promisee doing any act consistent with the continuance of the contract.  If the act is also consistent with the reservation of a right to terminate in certain events, the right to terminate is not lost by doing the act … (my emphasis in bold)

     Brennan J there was referring to the position of the vendor in Tropical Traders, who had allowed further time to a defaulting purchaser of property who had not settled(with time being of the essence in that contract).  The vendor did not lose the right to rescind merely by allowing that purchaser the additional time.  The Tropical Traders vendor was held not to have affirmed, but 'merely to limit the exercise of its power to rescind.'

13. In Immer at page 42, the plurality drew attention to earlier remarks by Mason J (as his Honour then was) in Sargent.  Mason J at page 656 had observed, concerning elements essential towards assessing a party's binding election, that:

     The question is complicated because in some instances election may take place as a matter of conscious choice with knowledge of the existence of the alternative right and in other cases it may occur when the law attributes the character of an election to the conduct of a party.

     The plurality in Immer clarified Mason J's observation in Sargent at page 42, saying:

     But, in drawing this distinction, Mason J was focusing on the dichotomy between awareness of the right to rescind and awareness of the facts giving rise to the right.  We do not read that passage from his Honour's judgment as implying that a party to a contract who is aware either of the right to rescind or of facts giving rise to a right to rescind will necessarily be held to have elected to affirm a contract if he or she acts on the basis that the contract remains on foot.  Such an implication is at odds with the notion of being confronted with the necessity of making a choice.  In the present case it cannot truly be said that Immer was confronted with the necessity of making a choice at the time the letter in question was written, even less that it was abandoning for all time its rights under cl 7 of the deed.  (my emphasis in bold)

14.  The Immer plurality left open '[t]he precise roles which a mistake in the mind of a party said to have made an election and an awareness by the other party of that misapprehension will play in this context' as the Immer appeal did not call for a consideration of that question.