Exceptional Sunrise P/L v Jones & Anor [2008] QSC 190

SUPREME COURT OF QUEENSLAND CITATION: Exceptional Sunrise P/L v Jones & Anor [2008] QSC 190 PARTIES: EXCEPTIONAL SUNRISE PTY LTD ACN 093 828 785 (plaintiff) v DAVID FRANCIS JONES and BETTY NEVA JONES (defendants) FILE NO/S: BS No 9155 of 2007 DIVISION: Trial Division PROCEEDING: Trial ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 26 August 2008 DELIVERED AT: Brisbane HEARING DATE: 21 August 2008 JUDGE: de Jersey CJ ORDERS: 1. Dismiss the originating application filed 12 October 2007; 2. Declare that the defendants lawfully terminated their contract with the plaintiff dated 17 May 2004 at or about 8:32 am on 3 September 2007; 3. Order that caveat number 710974374 in respect of lot 1 on registered plan 94961, County of Stanley, Parish of Burpengary, title reference 16514032, be removed; 4. Order that the plaintiff pay the defendants’ costs of and incidental to the proceeding as follows; a) up to an including 12 March 2008, to be assessed on the standard basis, and b) after 12 March 2008, to be assessed on the indemnity basis Grant liberty to apply for variation of that costs order within seven days, should the plaintiff be so advised 5. Order that the operation of this judgment be stayed until 4pm on 2 September 2008 or until further earlier order CATCHWORDS: CONTRACT FOR SALE OF LAND – conditional on development approval – right of termination by purchaser on non-fulfilment, to be exercised by a particular time – not exercised – further right in vendor to terminate in that circumstance – purchaser purported to waive the condition, but after the cut off date – whether that denied vendor the -- 1 of 9 -- 2 right of termination subsequently exercised Donaldson v Bexton [2007] 1 Qd R 525; [2006] QCA 559, cited Gange v Sullivan (1966) 116 CLR 418, considered COUNSEL: T J Bradley for the plaintiff M K Stunden for the defendants SOLICITORS: Holding Redlich for the plaintiff Phillips & Lowes Solicitors for the defendants [1] de Jersey CJ: The plaintiff and the defendants entered into a contract in writing, dated 17 May 2004, providing for the defendants’ sale to the plaintiff of land comprising lot 1 in Delaney Road, Burpengary, for the sum of $900,000. The contract is in the form of the fifth edition of the Real Estate Institute of Queensland and Queensland Law Society “contract for houses and land”. [2] Special condition 3 rendered the contract subject to the plaintiff’s obtaining a development approval. That was not forthcoming. The defendants contend that they validly terminated the contract. The plaintiff contends that it had previously waived the benefit of the special condition, and that the contract remained on foot. The plaintiff lodged a caveat over the land. It seeks a declaration that it has an equitable interest in the land sufficient to support that caveat, and an order for the specific performance of the contract. The defendants seek a declaration that they lawfully terminated the contract, and an order for the removal of the caveat. Contractual provisions [3] In its original form, the contract included these special conditions, among others: “3. This contract is subject to and conditional upon the Buyer/s obtaining from the local Authority and/or any other relevant authority within 4 months, after satisfying Special Condition 1.a Development Approval which is wholly satisfactory to the Buyer/s. In the event that all such approvals are not obtained or not accepted by the local Authority having jurisdiction either orally from a representative/s of the local Authority or in writing from the local Authority, within this period and the Buyer/s has applied for a Development Approval, the period to obtain such approval shall be extended by two further months. … 6. It is agreed between the parties that Special Condition 3. is for the sole benefit of the Buyer/s and may be waived by the Buyer/s at any time on or before the completion date of this Contract of Sale. … 9. The date for completion of this contract will be 30 days after the date that the Buyer/s advises the Seller in writing that it has Development Approval.” -- 2 of 9 -- 3 [4] The parties amended the contract on or about 17 November 2004, replacing those special conditions numbered 3, 6 and 9 with a new special condition 3 as follows: “3 Contract Conditional on Development Approval 3.1 This contract is conditional upon the Buyer obtaining development approval upon terms wholly satisfactory to the Buyer by 29 April 2005 (“the Approval Date”). 3.2 In the event that the Buyer does not obtain a satisfactory development approval by the Approval Date the Buyer may terminate the Contract and any deposit paid will be refunded to the Buyer by the deposit holder. The notice pursuant to this clause must be given by the Seller by 1:00pm on the Approval Date. 3.3 If the Buyer has not provided notice pursuant to clause 3.2 the Seller will be entitled to terminate this Contract and any deposit must be refunded to the Buyer by the deposit holder. 3.4 If the Buyer obtains satisfactory development approval the Buyer must give notice to the Seller by 1:00pm on the Approval Date. 3.5 If the Buyer provides notice pursuant to clause 3.4 the date for settlement will be 30 days after the date upon which notice is given to the Seller. 3.6 The Buyer is entitled to waive the benefit of special condition 3. If the Buyer waives the benefit of special condition 3 the date for settlement will be 30 days after the date the Seller receives written notice of the waiver of special condition 3. 3.7 This is an essential term of the Contract. 3.8 This clause is for the benefit of the Seller and Buyer.” [5] The “approval date” under cl 3.1 was changed from time to time by agreement, and then on 14 August 2007, the defendants offered a further extension on these terms: 1. The Approval date for the purposes of cl 3.1 be Friday 31 August 2007; 2. the time for the Buyer’s notice under cl 3.2 be by 1:00pm on Friday 31 August 2007; 3. the time for the Buyer’s notice under cl 3.4 2 be by 1:00pm on Friday 31 August 2007; 4. the date for settlement under cl 3.5 be 14 days after the date upon which notice is given to the Seller; -- 3 of 9 -- 4 5. the date for settlement under cl 3.6 be 14 days after the date the Seller receives the Buyer’s written notice of its waiver of Special Condition 3; 6. in all respects time to remain of the essence; 7. clauses 3.7 and 3.8 to remain in place; 8. if the contract does not proceed to settlement all payments made by the Buyer to the Seller including the deposit [to be] non-refundable, and in that regard the references in Special Condition 3 to any deposit being refunded to the Buyer by the deposit holder [to] be amended as detailed in [the plaintiff’s solicitor’s] correspondence of 25 January 2006. [6] The plaintiff agreed to amend the contract accordingly, save that the period under paras 4 and 5 above was to be set at 30 not 14 days. The defendants accepted that modification on 15 August 2007. Relevant subsequent events [7] What then transpired may conveniently be taken from the plaintiff’s counsel’s outline. There was no dispute about relevant matters of fact. [8] On 28 August 2007 the plaintiff, by its then solicitor, sought a further extension of the Approval Date. At about 12:32 pm on 31 August 2007 the defendants, by their then solicitors, rejected that proposal. [9] At 2:06 pm on 31 August 2007, the plaintiff’s solicitor sent an email to the defendants’ solicitors saying: “My client waives the benefit of Special Condition relating to Development Approval. Settlement is now scheduled for 30 days from today.” [10] At about 8:32 am on 3 September 2007 the defendants’ solicitors sent a fax to the plaintiff’s solicitor. It was erroneously dated 3 August 2007. It read: “With reference to the above matter we note that advice was not received from your client with respect to this contract within the specified time. Accordingly, this contract is now at an end.” [11] At 11.14 am on 3 September 2007 the plaintiff’s solicitor forwarded his 31 August email to the email address of Mr Gregory Lane, the principal of the defendants’ solicitors then responsible for the transaction. At 11.43 am the plaintiff’s solicitor -- 4 of 9 -- 5 then sent a fax to the defendants’ solicitors, apparently attaching a copy of the email of 31 August 2007. The letter stated, in part: “My client will be seeking relief against forfeiture by an order for specific performance notwithstanding your client’s election to terminate which my client disputes.” [12] Later on 3 September 2007 the plaintiff’s solicitor sent another fax to the defendants’ solicitors: “Given that you have not withdrawn the purported termination, I will [be] filing a caveat tomorrow morning. I do find it extraordinary that if the deadline was 1:00 pm on 31 August 2007, why no advice was given to me on the afternoon of 31 August 2007 rather than on the morning of 3 September 2007.” The same text was also sent by email at 5:01 pm that day. [13] At about 10:21 am on 4 September 2007 the defendants’ solicitors sent a fax to the plaintiff’s solicitor, saying: “We again draw your attention to the amended Clause 3 of the Special Conditions, detailed in our correspondence to you of the 14th August 2007, and in particular the times stipulated in clauses 3.2 and 3.4 of the amended Clause 3. The specific requirements of the time for the giving of notice were again repeated at the foot of the second page of our correspondence of 14 August 2007. Clearly, your e-mail advice of the 31st instant was delivered after the specific time agreed to between the parties and therefore is not in compliance with the agreed terms of the contract (as amended), and as such our client has terminated the contract.” [14] On 6 September 2007 the plaintiff lodged a caveat over the title to the property claiming: “An equitable interest in the land as a purchaser under a Contract of Sale dated 17th May 2004 in which the Caveator is the buyer and the Caveatee is the seller.” The caveat forbids the registration of any instrument affecting the property until the caveat is withdrawn. Issues [15] The issues which arose, with respect to special condition 3, were these: (a) whether the defendants’ attempt at termination on 3 September 2007 amounted to an effective termination, or whether it should be regarded as -- 5 of 9 -- 6 no more than an erroneous assertion that the contract had been terminated automatically because the plaintiff did not give notice under cl 3.2; (b) whether prior to the defendants’ attempt at termination the plaintiff had effectively waived the benefit of special condition 3, by the 2:06 pm email of 31 August 2007. [16] Matter (b) raised two more particular questions: (i) whether a waiver under cl 3.6 had to be communicated by 1 pm on 31 August 2007: the plaintiff’s “fallback” position was that a waiver was to be implied from the plaintiff’s not having given the cl 3.2 notice; and (ii) whether a waiver could in any event be communicated by means of email, bearing in mind cl 10.4 of the “terms of contract”, which provides: “10.4 Notice (1) Notices under this contract must be in writing and may be given by a party’s solicitor; (2) Notices are effectively given if: (a) delivered or posted to the other party or its solicitor; or (b) sent to the facsimile number of the other party or its solicitor. (3) … (4) Notices sent by facsimile will be treated as given when the sender obtains a clear transmission report. (5) … (6) Notices or other written communications by a party’s solicitor (for example, varying the Inspection Date, Finance Date or Settlement Date) will be treated as given with that party’s authority.” Observations on special condition 3 [17] Whereas the contract originally gave the plaintiff the right to waive the requirement for the development approval at any time up to the completion date, and provided that the condition was for the sole benefit of the plaintiff, the new special condition provided that the condition was for the benefit of both parties, and fixed 1 pm on 31 August 2007 as the cut off time by which the plaintiff might terminate the contract for want of the development approval. The new condition also fixed that as the time by which the obtaining of any approval “must” be notified to the defendants. -- 6 of 9 -- 7 [18] Accordingly, while cl 3.1 spoke of obtaining development approval by 31 August, the subsequent clauses 3.2 and 3.4, refined that position by specifying 1 pm on that date as the time by which the position in relation to development approval was to be regarded as established one way or the other, so that the consequent rights in the parties then crystallized and were known. [19] When cl 3.8 contemplated benefit to the defendants, the parties presumably envisaged the benefit to the defendants in knowing the potential fate of the contract by 1 pm that day, and of course the potential benefit of the defendants being able to terminate the contract under cl 3.3. [20] To answer a submission advanced by Mr Bradley who appeared for the plaintiff, I think it unlikely that the parties contemplated, as potentially significant, the period from 1 pm on 31 August to the following midnight. To counter a contention that a potential benefit might be waived only while it remained outstanding or current, Mr Bradley submitted that because a development approval could theoretically have been forthcoming between 1 pm and midnight on 31 August, the plaintiff could effectually waive the benefit of a right to terminate (for want of development approval) at any time after 1 pm but before midnight, so that the purported waiver at 2:06 pm was effectual. But as I have said, the parties apparently intended that the issue of the development approval be resolved one way or the other by no later than 1 pm on 31 August. That is, I consider, the necessary conclusion to be drawn from clauses 3.2 and 3.4 read in conjunction with 3.1. One must read special condition 3 as a whole, not in piecemeal fashion. Analysis [21] The benefit which the plaintiff purported to waive, by the 2:06 pm email, was the right to terminate the contract under special condition 3.2 because development approval had not been obtained. But to exercise that right to terminate, the plaintiff was obliged to give notice of termination by 1 pm on 31 August. That was not done. The right to terminate was consequently lost at that time, and by 2:06 pm, there was nothing left to waive. The purported waiver by the 2:06 pm email was therefore of no effect. [22] Because, prior to 1 pm on 31 August, the plaintiff had not waived the benefit of special condition 3 or given notice of termination under cl 3.2, the defendants gained a right to terminate the contract under cl 3.3. They purported to exercise that right by the fax sent at 8:32 am on 3 September 2007, which read: “…we note that advice was not received from your client with respect to this contract within the specified time. Accordingly, this contract is now at an end.” [23] That amounted to the defendants’ avoidance of the contract, by exercise of the right to terminate under special condition 3.3 consequent upon the absence of notice from the plaintiff under cl 3.2. Nothing had happened in the meantime to deprive the defendants of that right to terminate. -- 7 of 9 -- 8 [24] As to the form of the fax, it was not necessary for the defendants to use the word “terminate”. Stating that the contract was “now at an end”, having correctly identified the anterior circumstances establishing the right to terminate, amounted to a clear avoidance of the contract. At 10:21 am on 4 September the defendants’ solicitors by fax reaffirmed that termination. [25] Donaldson v Bexton [2007] 1 Qd R 525, paras 1, 8, 36, 42, 47, 51, 52, 55, 63, supports the conclusion that these defendants were not deprived of their right to avoid the contract, a right which crystallized at 1 pm on 31 August, by the plaintiff’s subsequent attempt at waiver, an attempt made prior to the defendants’ termination three days later. See also Gange v Sullivan (1966) 116 CLR 418, 443 per Windeyer J. I do not consider that the present position is distinguishable from that which obtained in Donaldson v Bexton on the bases advanced by Mr Bradley. The critical point is the one advanced by Mr Stunden, who appeared for the defendants, that “although cl 3.6 did not express any time by which waiver had to be made, it can be construed sensibly to be exercisable at the latest by the time fixed for the fulfilment of cl 3.1 by reference to cl 3.2 and 3.4, namely 1 pm”. In other words, you cannot “waive” a benefit after that benefit has ceased to exist. As said by Jerrard JA in Donaldson v Bexton, supra, para 8, “after the date for completion of the condition had passed, waiver became irrelevant. There was nothing to waive…” [26] Mr Bradley submitted, however, that an implied waiver of the right to terminate was to be drawn from the very circumstance that the plaintiff did not give notice under cl 3.2, that “waiver” therefore having occurred at 1 pm on 31 August. [27] Accepting for argument that a waiver may ordinarily be implied from the conduct of a party, that mere failure would not in this case warrant an inference of waiver. The plaintiff may have been hedging its bets, hoping either that development approval would be forthcoming, or that, with time possibly ceasing to be of the essence, the plaintiff might derive a further subsequent opportunity for termination should no approval ultimately eventuate. [28] That said however, any waiver in this case needed to be communicated by notice, in writing, in conformity with cl 10.4. That is because special condition 3.6 requires “written notice of the waiver” to be given to the defendants. That had to be accomplished by 1 pm on 31 August – and was not. Conclusion [29] I conclude that the defendants lawfully terminated the contract at or about 8.32 am on 3 September 2007. It follows that the plaintiff’s claim for specific performance must be dismissed, and the caveat removed. [30] It has been unnecessary for me to deal with the submission that the communication of the “waiver” by email was, because that medium was used, ineffectual. (The submission did I feel gain strength from the requirement in special condition 3.6 that “written notice of the waiver” be given, and the absence, in cl 10.4, of any reference to email communication.) -- 8 of 9 -- 9 Orders [31] There will be orders as follows: 1. dismiss the originating application filed 12 October 2007; 2. declare that the defendants lawfully terminated their contract with the plaintiff dated 17 May 2004 at or about 8.32 am on 3 September 2007; 3. order that caveat number 710974374 in respect of lot 1 on registered plan 94961, County of Stanley, Parish of Burpengary, title reference 16514032, be removed; 4. order that the plaintiff pay the defendants’ costs of and incidental to the proceeding as follows: a) up to an including 12 March 2008, to be assessed on the standard basis; and b) after 12 March 2008, to be assessed on the indemnity basis. Grant liberty to apply for variation of that costs order within 7 days, should the plaintiff be so advised. 5. order that the operation of this judgment be stayed until 4pm on 2 September 2008, or until further earlier order. -- 9 of 9 --