Chapter 14 - The commercial provisions in the Judicature Act 1908
Section 90: Stipulations in contracts as to time
Section 90 of the Judicature Act 1908 provides that the equitable rule regarding stipulations in contracts as to time prevails over the common law rule.
At common law, a stipulation as to time was generally considered to be of the essence of the contract and the contract could be terminated if the time condition was breached.415
In equity, a stipulation as to time is deemed not essential to a contract unless the contract explicitly provides this, or it must necessarily be implied that this is what is intended, or if the defaulting party had been given reasonable opportunity to comply.416
When time is not of the essence in a contract, the breach of a time condition does not entitle the innocent party to repudiate the contract. Nor does it prevent the party in default from suing for specific performance. However, under section 90 the innocent party may recover damages for the breach of the stipulation as to time.417
In summary, time will not be of the essence unless:418
(a)the contract expressly provides that time conditions must be strictly complied with (express provision);
(b)the nature of the subject matter of the contract or surrounding circumstances show that the parties intended that time was of the essence (necessary implication); or
(c)the party who has been subjected to unreasonable delay gives notice to the party in default making time of the essence.
Section 90 was based on section 25(7) of the Supreme Court of Judicature Act 1873 (UK) – that is, the legislation that effected the procedural and administrative fusion of the courts of common law and equity in England. Section 90 of the Judicature Act 1908 was one of a number of provisions directed at resolving conflicts between common law and equitable rules that existed at the time of the legislation. It was first introduced in New Zealand as section 8 of the Law Amendment Act 1882, and is reinforced by section 99 of the Judicature Act 1908, which provides that generally in cases of conflict between the rules of common law and equity, the equitable rule is to prevail.419
Section 90 is referred to in several recent judgments. The Supreme Court referred to this provision in Mana Property Trustee Ltd v James Developments Ltd, a case regarding a contract for sale of land and whether a provision regarding the exact size of the land was essential to the agreement.420 The Supreme Court used section 90 to show that time for settlement is generally not of the essence in a land sale contract.421 In Steele and Roberts v Serepisos,422 Tipping J quoted Cooke J’s judgment in Hunt v Wilson423 where section 90 was discussed. In Hunt, it was decided that the equitable approach, as set out in section 90, applied where there was no fixed date for the completion of a contract. In Steele, the Supreme Court found that because section 90 indicated the equitable approach prevailing over common law, notice had to be provided if the time stipulation in a contract without a fixed date for completion was to become essential.424 Section 90 has also been referred to in several High Court cases regarding contracts for sale of land.425
We have not found any evidence of problems with the current operation and use of section 90. However, there is a question as to whether section 90 is actually necessary, given that section 99 would give the equitable rule primacy in any case.
Another example of a provision that made it clear that a specific rule of equity applied in place of a common law rule was section 30 of the Property Law Act 1952. In the 1991 paper reviewing this Act, the Law Commission suggested that section 30 was not necessary, given the general provision in section 99 of the Judicature Act 1908.426 The provision was subsequently repealed.
Section 90 varies the common law, and is consistently relied upon by the courts in the interpretation of contracts. We therefore consider that the retention of the more specific rule in section 90 is useful, despite section 99 generally giving primacy to rules of equity over common law, as it clarifies the position in specific circumstances. There is a danger that a repeal of section 99 could cause confusion and erroneously give the impression of a change to the legal position. Our preliminary view is therefore that section 90 should be retained in legislation, but the Courts Bill is unlikely to be the best place for this.
Do you agree that section 90 of the Judicature Act, which relates to stipulations in contracts as to time, should be retained, or is section 99 sufficient?
Parker v Thorold (1852) 16 Beav 59; 51 ER 698; Bowes v Shand (1877) 2 App Cas 455, [1874-80] All ER Rep 174; Reuter Hufeland & Co v Sala & Co (1879) 4 CPD 239 (CA); Sharp v Christmas (1892) 8 TLR 687 (CA); and Hartley v Hymans  3 KB 475,  All ER Rep 328.
For instance, Arranmore Developments v Zeeland Developments Ltd HC Auckland CIV-2009-404-4342, 19 May 2010; Garton Holdings Ltd v Ngahina Trust HC Wellington CIV-2008-485-1234, 26 August 2008; Portside Apartments Ltd v Breakers Gisborne Ltd (2008) 9 NZCPR 578 (HC); Fowke v Rhodes HC Christchurch M259/00, 21 March 2001.