Associated Developers (Aust) Pty Ltd v Allied & General Pty Ltd [1994] QSC 203 (1994) Q.Conv.R. 54-458

':f+_. State Reporting Brl;~g TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION :~j THOMAS J No WRT 1089 of 1994 ASSOCIATED DEVELOPERS AUSTRALIA PTY LTD and ALLIED AND GENERAL PTY LTD BRISBANE .. DATE 16/08/94 JUDGMENT 1 REVISED COPIES ISSUED State RopoO:ing Bureau Dateo2 ')/ g--1 Plaintiff Defendant 4th Floor, The Law Courts, George Street, Brisbane. Q. 4000 Telephone: (07) 227 4360. Facsimile: (07) 227 5532 -- 1 of 12 -- 160894 T 1/RZB M/T 4519/94 (Thomas J) HIS HONOUR: I publish my reasons. The first formal order should be leave to amend the application to incorporate the questions of law and other matter contained in the proposed amendment to notice of motion which I shall mark as Exhibit 1 and place with the papers. The questions are answered respectively, "Yes," "yes," and, "no," and I propose, 10 subject to any submission, to order in terms of paragraphs 1 and 2 of the writ of summons with costs of the motion and the action to be taxed. HIS HONOUR: I think I have already indicated the orders that will be made and I shall simply add liberty to apply. ___ ...;;_ 20 30 40 50 2 60 JUDGMENT -- 2 of 12 -- IN THE SUPREME COURT OF QUEENSLAND BRISBANE No. 1089 of 1994 Before Mr. justice Thomas BETWEEN: AND: ASSOCIATED DEVELOPERS (AUST) PTY LIMITED (A.C.N. 057 917 076) ALLIED AND GENERAL PTY LTD (A.C.N. 001 923 673) Plaintiff Defendant judgment delivered 16/08/94 CATCHWORDS: Counsel: Solicitors: Hearing date: LAND SALE CONTRACT - waiver of condition - whether purchaser unilaterally entitled to waive performance of condition A. Morris Q.C. for the Applicant/Defendant B. O'Donnell Q.C. for the Respondent/Plaintiff Minter Ellison Morris Fletcher for the Applicant/Defendant McCullough Robertson for the Respondent/Plaintiff 09/08/94 -- 3 of 12 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN: AND: ASSOCIATED DEVELOPERS (AUST) PTY LIMITED (A.C.N. 057 917 076) ALLIED AND GENERAL PTY LTD (A.C.N. 001 923 673) JUDGMENT- THOMAS I. Judgment delivered 16/08/94. No. 1089 of 1994 Plaintiff Defendant The present application commenced as a motion to remove the plaintiff's caveat. During argument an amendment was permitted which will permit the determination of the primary question on which the action depends, and in turn the disposition of the whole action. This is much preferable to an interlocutory decision concerning the caveat followed by a trial in due course. The fate of the action depends upon the proper construction of a land sale contract. I shall refer to the plaintiff as the purchaser and the defendant as the vendor. The contract, dated 2 February 1993, was for the sale of approximately 14.7 hectares of vacant land at Acacia Ridge for a price of $2.5 million. The deposit was $10,000. The time for completion was dealt with by a special annexure described as -- 4 of 12 -- 2 "Annexure A". It comprises seven paragraphs (A-G). Paragraphs A and B record the vendor's agreement, in effect, to co-operate to allow the purchasers to make effective application for subdivision of the land into not less than 160 allotments. Paragraph C provides that all costs of the proposed rezoning and subdivisional exercise will be paid by the purchaser. Clauses D and F (to be quoted hereunder) make the contract conditional upon the obtaining of certain rezoning and subdivision approvals "suitable to the purchasers" and deal with the question of a settlement date. Paragraph E makes the contract conditional upon the purchaser's obtaining of suitable downstream drainage. Paragraph G contains the agreement of the purchaser to obtain the services of a local consultant and to endeavour to expedite all proceedings necessary to satisfy the contract. The clauses most directly relevant, D and F state: "(D) This contract is subject to and conditional upon the rezoning of the land to residential A zoning suitable to the purchasers and the Local Authority approving the application for subdivision into not less than 160 separate residential allotments on ordinary terms and conditions suitable to the purchasers and gazettal of the Plan of Subdivision by the relevant Authority or whatever other authorisation are required or necessary to allow for lodgement of the said Plan of Subdivision for registration at the Department of Freehold Land Titles on or before the 30th day of June 1994. (F) Having said all that the purchasers agree to settle 28 days after receipt of all approvals referred to in (D) above." (I have not reproduced deletions which are still legible, and do not regard these as sufficiently material to any question of construction. However words are included which have been introduced through asterisked footnotes). The contract also contained a clause making time of the essence. The time prescribed for satisfaction of condition D was "on or before 30th June 1994". The necessary approvals were not obtained on or before that date. -- 5 of 12 -- 3 just before that date, namely on 29th June 1994, the purchaser advised the vendor that it "waives the benefit of special conditions 'D"'. The vendor immediately advised that it did not regard that condition of the contract as one which could be unilaterally waived by the purchaser, and by letter of 1st July 1994 alleged that as special condition D had not been satisfied, the contract was at an end. This was, I think, a sufficiently clear indication of election to terminate for the non-fulfilment of a condition subsequent. The real question of course is whether the need for its fulfilment had already been waived by the purchaser. The question whether one party may unilaterally waive the need for fulfilment of such a condition is commonly (though not invariably) answered by inquiring whether the condition is one that operates solely in favour of that party, or alternatively whether it is for the benefit of both parties (Sandra Investments Pty. Ltd. v. Booth (1983) 153 C.L.R. 153, 159; Dorellyn Pty. Ltd. v. All a in (1984) 2 Qd.R. 93, 107). Counsel for the vendor submitted that Sheridan v. Nikolic (1982) Qd.R. 725 binds me to conclude that the present clauses (notably D and F) are not exclusively for the benefit of the purchaser, and that they are incapable of being waived or unilaterally dispensed with (ibid. p.728). In that case the contract was conditional inter alia upon the lodgment of a plan of subdivision being lodged in the Titles Office by a prescribed time. The date for completion was specified as within 14 days of notification of registration of such plan. The Court concluded that the relevant condition could not be regarded as exclusively for the benefit of the purchasers. This conclusion plainly proceeded from the circumstance that the only provisions of the contract for determining the date at which completion was to be effected and -- 6 of 12 -- 4 possession to be given and taken, were of no effect unless the condition was fulfilled (p.728). The same approach was again taken in Sandra Investments Pty. Ltd. v. Booth (1983) 2 Qd.R. 233, 236-239, where McPherson J. who delivered the leading judgment, noted the existence of some decisions that might be thought difficult to reconcile with Sheridan v. Nikolic, including Gough Bay Holdings Pty. Ltd. v. Tvrwhitt Drake (1972) V.R. 195, and certain passages in Gange v. Sullivan (1966) 116 C.L.R. 418. The clauses in question made the contract "conditional upon the approval of the Beaudesert Shire Council to a plan of subdivision satisfactory in all respects to the purchaser within six months from the date hereof. In the event that such approval is not obtained then the purchaser may at their option cancel this contract." It further provided that "settlement shall take place within 30 days of the Vendor's receipt of such approval..." The Full Court applied Sheridan v. Nikolic and by a parity of reasoning, concluded that because the date for completion depended on the date of obtaining the approval, the condition was not exclusively for the benefit of the purchaser. Accordingly it could not be waived by the purchaser. The decision in Sandra Investments v. Booth (above) was reversed by the High Court (Sandra Investments Pty. Ltd. v. Booth (1983) 153 C.L.R. 153). I have examined the reasoning in each Court in an attempt to ascertain which observations are obiter and which must be taken to be part of the ratio. There are difficulties in identifying the ratio of decisions which deal with the proper constructions of particular contracts. It seems to me that reasoning which is the basis of a conclusion which leads to a particular legal effect being given to particular words may comprise part of the ratio, and may bind courts lower in the hierarchy to adopt -- 7 of 12 -- 5 that line of reasoning when the essential facts or words are not properly distinguishable. The reasoning of the Full Court in Sheridan v. Nikolic was applied by the Full Court in Sandra Investments [1983] 2 Qd.R. 133 at 236-8. The Full Court reasoned that because the timing of the date for completion was tied to the fulfilment of the condition and to nothing else, the condition could not be regarded as solely for the benefit of the purchaser and could not be waived by him. The Court relied on its reasoning in Sheridan v. Nikolic p.236F-G. It also relied on its interpretation of the majority judgment in Gange v. Sullivan: (pp.237-8). In Sandra Investments Gibbs C.]. (with whom Mason, Murphy and Brennan JJ. agreed) took a different view both of the point in question and of the effect of the majority judgment in Gange v. Sullivan. In their view: "The judgments of all the members of the Court in that case (Gange) support the view that a condition may be for the benefit of a purchaser, who may insist on performance of the contract regardless of the fulfilment of the condition, notwithstanding that the contract expressly fixes the date for completion only by reference to the time when the condition is fulfilled. The judgments are consistent with the conclusion I have reached in the present case" (p.161). (The opposite view of the effect of the majority judgment in Gange had been suggested by the Full Court ([1983] 2 Qd.R. 233 at 237D-238C). The ultimate point of departure in Sandra is encapsulated in the following passage from the judgment of Gibbs C.J .: "Of course, every case of this kind must depend upon the particular words of the contract in question. The provisions of cl.24 show unequivocally that the parties intended that the consequence of a failure to obtain the council's approval should be that the purchaser would have the option either to cancel the contract or to proceed to carry it into effect." -- 8 of 12 -- 6 However, equally pertinent is the discussion which led to that conclusion. As a Judge sitting at first instance, I confess to considerable difficulty in determining whether I am bound, by a parity of reasoning with Sheridan v. Nikolic to regard the necessary connection between paras. D and F with the fixation of a settlement date as virtually conclusive of the question, or whether I should regard the reasoning of that decision as falsified by the High Court decision in Sandra Investments. In the end I have concluded that the essential reasoning of the High Court in Sandra is inconsistent with the thesis of Sheridan v. Nikolic and of the Full Court in Sandra. The point whether a condition that would otherwise be capable of unilateral waiver by the benefited party will lose that quality merely because the completion date is fixed by reference to the occurrence of the condition is of considerable practical importance, and it is desirable that it be settled by a court of authority. Once that factor is removed (i.e. fixation of completion date only by reference to time of fulfilment of condition), the vendor really has no case left, and it is difficult to see any good reason for reaching a different view from that taken of the condition in Gange v. Sullivan. I shall however consider some alternative bases upon which mutual benefit is sometimes alleged to arise. The circumstance that fulfilment of a condition will resolve uncertainty attending the performance of the contract does not entail such a direct benefit to the vendor that the condition cannot be waived without his agreement. As the majority in Sandra Investments pointed out, merely because fulfilment of a condition will "affect" the vendor, does not mean that he will "benefit" from the condition, such that it cannot be waived without his concurrence. -- 9 of 12 -- 7 The point was further discussed by Brennan J. in Perri v. Coolangatta Investments Pty. Ltd. (1982} 149 C.L.R. 537, 565: "The substance of the stipulation is a condition for the benefit of the purchasers and they may waive it if they choose. But the limit of the time within which the stipulation is to be fulfilled ensures [sic] for the benefit of the vendor as well as for the benefit of the purchasers, 'the vendor being interested to know for how long his liability was to remain unresolved' (per Windeyer J. in Gange v. Sullivan (1966} 116 C.L.R. 418, at p.443}. When vendor and purchaser are each under a contingent obligation to complete a contract of sale, the fulfilment of the contingency or the entitlement to avoid the obligation is of equal interest to both parties." The present case is typical of a very common contractual situation where the obtaining of a consent from the third party (such as a local council} will enhance the use and value of the land to the purchaser if he or she completes the contract (cf. Koikas v. Green Park Construction Pty. Ltd. (1970} V.R. 142, 148}. In many such cases there is no disadvantage to the vendor if the purchaser eliminates the condition, and it may truly be said that the purchaser is the sole beneficiary of the condition. The vendor will get the same benefits under the contract, and from its point of view the only effect of waiver of the condition is to make the contract more certain of completion. The mechanism for completion is not defeated by the circumstance that the purchaser has waived the benefit of the condition, as a result of which there is no date upon which the approval is notified. Gibbs C.J. observed in Sandra (p.158}: "Once it is decided that the purchaser can choose to allow the contract to remain on foot, notwithstanding that the council's approval is not obtained, there is no difficulty in holding that completion shall take place within a reasonable time from the date on which the purchaser exercises its option." (cf. Wilson J. ibid, p.164; and Havenbar Pty. Ltd. v. Butterfield (1974} 133 C.L.R. 449} -- 10 of 12 -- 8 Counsel for the vendor submitted that a sufficient interest or benefit might be found in the additional security the vendor would have in relation to completion if the approvals were obtained. He submitted that the vendor's lien would be enhanced during the 28 days settlement period if the property's value were enhanced by actual approval. I do not regard this as a relevant benefit or interest, and Gibbs C.J. refused to accept similar arguments in Sandra (pp.159-160). It was further contended for the vendor that since the Sandra cases the Full Court has reaffirmed the decision in Sheridan v. Nikolic, namely in Dorellyn v. Allain (1984) 2 Qd.R. 93. I do not think that that case purports to do so. On my view of this contract, condition D was for the benefit of the purchaser, and prior to 30 June 1994 the purchaser might elect to proceed with the contract regardless of fulfilment of the condition. If the condition were not fulfilled or waived before 30 June 1994, then after that date either the vendor or the purchaser might elect to terminate the contract. (Gange v. Sullivan at 442.1, and 443.3, Perri v. Coolangatta Investments Pty. Ltd. at p.565.6.) It follows that the purchaser validly waived the need for fulfilment of the condition on 29 June 1994, and was entitled to call for settlement within a reasonable time. The vendor's repudiation of the contract a few days later makes it unnecessary further to pursue whether the nomination was reasonable. The purchaser is entitled to a decree of specific performance. Questions of law raised for the opinion of the Court (a) Whether on the true construction of the contract, special condition D (in Annexure A thereto) is a provision the benefit of which may be waived by the plaintiff as purchaser under that contract prior to midnight 30 June 1994? -- 11 of 12 -- 9 Answer: Yes (b) Whether the plaintiff as purchaser under the said contract validly and effectively waived the provisions of the said special condition D by its solicitors' letter of 29 June 1994? Answer: Yes (c) Whether the defendant as vendor under the said contract validly and effectively terminated the same, by its solicitors' letter of 1 July 1994? Answer: No Order in terms of paras. 1 and 2 of the Writ of Summons with costs of the motion and the action to be taxed. -- 12 of 12 --