Emery v Spencer [1994] QSC 52 [1995] 1 Qd R 247

State Reporting Bureau TRA'"'-NSCRIPT OF PR()CEEDINGS (Copyright in !his transcript is vt'Sil'<l in the Crown. Copies tht.'rcof must not be made or sold wiihout the wrilten authority of the Director, Stale Hcporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION KIEFEL J No 1585 of 1990 GEORGE EDWARD EMERY and JANET ELIZABETH EMERY and KEITH STANLEY SPENCER and AUDREY JOAN SPENCER BRISBANE .. DATE 04/03/94 JUDGMENT REVl3ED COPi;::S ISSUED Plaintiffs Defendants 7. 1 -!ill F!uur. File 1.:111 ( ·ourt'. (,'eorgc ."itrcct, JJrislwnc. (). .JOOO 'Jdcplwnc: (07) 227 .J360. 1-:IC.~imile: (07) 227 5532 -- 1 of 16 -- 040394 rgc (Kiefel J) HER HONOUR: In this action there will be judgment for the plaintiff. The defendants' defence and counterclaim will be dismissed. I publish my reasons. The only order I consider is necessary is that the deposit moneys of $8,000 presently paid into Court be paid out to the solicitors for the plaintiffs together with accretions, if any, and the solicitor's receipt therefor shall be sufficient. The order for costs will include an order that the defendants pay the plaintiffs' costs of and incidental to the action, including reserv~costs, to be taxed in the event of dispute. HER HONOUR: I will note your undertaking, Mr Mcintyre, on behalf of the plaintiff that the deposit moneys that have been paid by the defendants will be released forthwith. 2 10 20 30 40 50 60 -- 2 of 16 -- ··' >. IN THE SUPREME COURT OF QUEENSLAND BETWEEN: GEORGE EDWARD EMERY and JANET ELIZABETH EMERY KEITH ST ANLEY SPENCER and AUDREY lOAN SPENCER JUDGMENT - KIEFEL I No. 1585 of 1990' Plaintiffs Defendants judgment Delivered: 4th March, 1994 Catchwords: Counsel: Solicitors: Hearing Dates: Contract - Sale of land - Condition of Local Authority approval for construction of improvement - clause 18(b) REIQ contract 1982 - By-Laws 8.1, 8.4, 8.6 of the Standard Building By-Laws to the Building Act (1975) - election - Rescission repayment of deposit moneys. Mrs D. Mullins for the plaintiff MrS. Couper for the defendant Messrs Mclntyre Cantwell for the plaintiff Messrs GPS Spencer Woodhead for the defendants 27th and 28th October, 1993 -- 3 of 16 -- ( \ ()' / IN THE SUPREME COURT OF QUEENSLAND BETWEEN: GEORGE EDWARD EMERY and JANET ELIZABETH EMERY KEITH STANLEY SPENCER and AUDREY lOAN SPENCER JUDGMENT - KIEFEL I Delivered the 4th March, 1993 No. 1585 of 1990 Plaintiffs Defendants On 5th August 1990 the plaintiffs agreed to purchase from the defendants a house property at 31 Macadamia Street, Victoria Point, for the sum of $314,000. The sum of $8000 was paid by way of deposit that day. Completion of the contract was agreed to take place on 30th September 1990 and time was of the essence of the contract. The purchase by the plaintiffs was conditional upon the sale of their property at Victoria Point, the sale by them to the defendant of further land described as Lot 1 on Registered Plan No. 225878 for $65,000 (to be completed at the same time as that with respect to Macadamia Street) and upon the sale of either of Lot 2 or Lot 3 on the same registered plan, on terms satisfactory to the plaintiffs, within a stipulated period. There is no issue with respect to the fulfilment of the condition relating to the sale of the Victoria Point property. Lot 2 was eventually sold by the plaintiffs to the defendants, a contract being signed on 8th September 1990. -- 4 of 16 -- '' 2 The plaintiffs seek a declaration that the Macadamia Street contract was validly terminated by them and an order for repayment of the deposit moneys. The defendants initially sought orders for specific performance of that contract and of the contracts with respect to Lots 1 and 2. In the meantime however Lot 1 has been sold to a third party for the sum of $75,000 and the defendants now seek only damages with respect to it. A later plan of subdivision affecting Lot 2 has now reduced the land capable of being conveyed and the parties have agreed that the value of that land has been reduced by some $4000. c On 11th September 1990 the plaintiffs (whom I shall continue to refer to as the "purchasers") solicitors wrote to the defendants' (the "vendors") solicitors and C: advised that their clients terminated the contract in accordance with the provisions of c1.18(b) of the written agreement. That agreement was in the form of the REIQ contract 1982 and c1.18(b) provided: "18. PROPERTY ADVERSELY AFFECTED. Should it be established that at the date of this contract - ·•········ (b) All perm1sswns consents and approvals required from the relevant local authority or other body having jurisdiction for the construction of the improvements on the land (other than a certificate which the Vendor is required to deliver under clause 2 hereof) have not been obtained or having been obtained have not been complied with in all respects; and any such facts are not disclosed in the special conditions or elsewhere herein the Purchaser may by notice in writing to the Vendor given not later than three days prior to the date for completion terminate this contract in which event all deposit and other moneys received by the Vendor or the Stakeholder on account of the purchase price shall be refunded to the Purchaser by the Vendor or the Stakeholder as the case may be but without interest costs or damages and the same shall be accepted by the Purchaser in full and final satisfaction of all claims. -- 5 of 16 -- / 3 The vendor hereby authorises the Purchaser or his Solicitor to inspect all records relating to the property hereby sold held by the relevant local authority or other body maintaining any such records and will if requested by the Purchaser sign an appropriate authority." The contract was silent as to any permissions consents or approvals-required, but not obtained. In their letter of 11th September 1990 the purchasers identified an outstanding building requisition as falling within this category, but by 14th September had added reference to a pergola which had been constructed on the land { and a patio which had been enclosed, both of which improvements. it was said required the consent or approval of the local authority, the Redland Shire Council, ( ) and it was on these two bases that the action proceeded. By-Law 8.1 of the Standard Building By-Laws prescribed by the schedule to the Building Act 1975-1978 provided that before the erection of a building is commenced plans and specifications shall be submitted to the local authority. The plans are then considered by the local authority and if it is satisfied that the / \ \_) proposed works complied with the By-Laws it is to approve the building work "by approving in writing the plans, drawings and specifications" (By-Law 8.6). Section 30A of the 1978 Amendment Act prohibited the erection of a building or other structure without first obtaining -approval where the Standard Building By-Laws required approval and provided that an application for such approval was to be made in a manner prescribed by those By-Laws. A "building" was defined (By-Law 1.3) as "a fixed structure that is wholly or partly enclosed by walls and is roofed and includes any part of a building". The enclosed patio clearly falls within that definition. What has been described as a "pergola" comprised a trellis which was partly roofed and partly enclosed by a garden wall on one side, that wall extending -- 6 of 16 -- 4 to part of another side. It was not suggested that these features were insufficient to bring it within the definition. In these circumstances approvals were required from the local authority with respect to improvements. It was however argued by the vendor that these provisions did not conclude the question, since By-Law 8.4 provided for dispensation from the requirement of plans. In relevant parts it provided: "8.4 Local Authority may dispense with submissions of plans, specifications and applications in some circumstances. Notwithstanding anything to the contrary in this Part the L-ocal Authority may, if it sees fit, dispense with the necessity for the submission of - (b) plans and specifications to make minor alterations in an existing building; or (c) an application and plans and specifications for the erection of a building or other structure to be used exclusively for the purpose of a green-house, conservatory, summer-house, private boat- house, fuel shed, tool-house, cycle shed, aviary, milking bail, hay shed, stable, fowl-house, pigsty, barn or the like or a swimming pool (being of a capacity less than 10 000 1)." · By-Law 8.4, it was submitted, extended to the structure referred to as the pergola in evidence by its reference to a structure to be used exclusively for the purpose of a "summerhouse". The term summerhouse is not defined. I would take it, in an English setting, to refer to a structure situated in a garden where respite from hot summer afternoons would be had and where perhaps refreshment was taken. The plaintiffs submitted that the structure was simply an enclosure of and cover over a barbecue, the ·evidence suggesting that it was built around an existing barbecue. Such a facility is often utilised for entertainment in outdoor areas in Queensland. In a Queensland context I would not be inclined to read the term "summerhouse" () c -- 7 of 16 -- 5 narrowly so as to exclude this structure from the types of structure intended to be covered by that pat of the By-Law. With respect to the enclosed patio I understood the defendants to submit that the enclosure amounts to a "minor alteration" in an existing building, which would then attract the provision for dispensation in by-Law 8.4(b). I shall therefore deal with both improvements as having attracted the provisions for dispensation of the requirement of plans provided for in By-Law 8.1. If there had in fact been such a dispensation by the Council, or an officer to ( .. whom that power was delegated (as contemplated by s.64A of the 1978 Amendment Act) it could hardly be said that the omission consent or approval was then "required" within the meaning of the By-Laws or c1.18 of the contract. There would be no plans for the Council to consider in the process of approval. Whilst the defence alleged express, though oral, approval of both the pergola and patio by a Council officer, a Mr Johnston, to the then owner and builder the defendant did not call evidence as to this but in circumstances where I do not draw any inference from ( ) that failure. The evidence which was led was to the effect that the pergola and patio enclosure as constructed complied in all respects with the requirements of the Standard Building By-Laws, which might raise the possibility that dispensation could, or at least was more likely to, have been given if the matter had been raised. A bricklayer engaged in the construction process also gave evidence that Mr J ohnston attended the site periodically during construction and it was during this period that at least the pergola was constructed. The files of the Redland Shire Council relating to the property were tendered in evidence and Council officers were called to explain them and their method of search. Reference to them and to the applications and approvals appearing in them -- 8 of 16 -- 6 does not disclose that any applications or plans were lodged nor that any approvals or dispensations with respect to the two building works were given. Mr Couper for the vendors however submitted that the purchasers are required by cl.16 to do more than show a mere absence of approval by reference to the file. In his submission they are required to show the absence of any dispensation. To discharge this onus, the argument proceeds, would require reference to a system of invariable recording of dispensation. Since no-one suggested the file was a complete record of the r inspector's notes or that it was even the practice of inspectors to record on-site \._____ approvals the purchasers must, it was submitted, fail. The phrase "should it be established that at the date of this contract" C appearing in cl.18(b) seems to require that it be the fact at that date that necessary permissions consents and approvals have not been obtained and that if, following notice given by the purchasers terminating the contract, that fact is put in issue, that the purchasers will necessarily be able to prove that fact to the satisfaction of the Court. This was the view expressed by Stephen J. in Sargent v. ASL 0 Developments Ltd (1974) 131 C.L.R. 634, 640-641 and although His Honour was ,-- concerned with a clause which additionally required that the state of affairs existing \___ at date of contract be established "prior to completion", those considerations do not affect the general operation of the phrase. Mr Couper however sought to elevate the requirement that it be "established" to something more definite and referred to Vines v. Djordjevitch (1955) 91 C.L.R. 512, 521. There however the High Court was concerned with the word "established" appearing in a section of an Act concerning judgments which might be entered against the Nominal Defendant where the identity of a motor car could not be "established". That conclusion precipitated the need to - I -- 9 of 16 -- 7 give notice to the Minister, a step which the proviso to the section required to be fulfilled before the injured person could claim the benefit of the principal provision. In that context the word "established" was held to mean "ascertain definitely or with reasonable certainty" but I do not see that that meaning can be imported into the context of cl.18 since there is nothing in the clause's language or in its operation to require it. What is or is not seen to be required by the By-Laws, having regard to By-Law 8.4, used to be dealt with on the technical distinction between an exception in a principal enacting provision and a separate proviso - the former needing to be negatived but a proviso not: Vines v. Djordjevitch (supra) 519. The approach now adopted is to consider the substance of the By-Law's provisions and its real effect upon the operation of other By-Laws: Vines v. Djordjevitch (supra) at 519, 520; Kingshott v. Goodyear Tyre & Rubber Co Australia Ltd (No. 2) 1987 8 N.S.W.L.R. 707; Bangue Commerciale S.A., en liquidation v. Akhil Holdings Ltd (1990) 169 () C.L.R. 279, 285; Avel Pty Ltd v. Multicoin Amusements Pty Ltd (1990) 171 C.L.R. 88, 105, 119. Here the general requirement of the By-Laws or the obligation created by By-Laws 8.1 and 8.6 is to provide plans and specifications (and in the case of a summerhouse an application) for the local authority's consideration. By-Law 8.4 is not to be seen as an element or part of that general obligation (see for example Waiters v. Public Transport Corporation (1991) 173 C.L.R. 349, 411 and Avell Pty Ltd v. Multicoin Amusements (supra) at p.119). It operates when there are special facts present, when the type of structure proposed is not substantial or when the building works are only minor. Its effect, when it then operates, is to displace By- Law 8.1 as a source of obligation whilst recognising that it has that effect. -- 10 of 16 -- 8 "But in whatever form the enactment is cast, if it expresses an exculpation, justification, excuse, ground of defeasance or exclusion which assumes the existence of the general or primary grounds from which the liability or right arises but denies the right. or liability in a particular case by reason of additional or special facts, then it is evidence that such an enactment supplies considerations of substance for placing the burden of proof on the party seeking to rely upon the additional or special matter." (Vines v. Djordjevitch (supra) 519, 520). Contrary to the vendor's submissions I consider then that if it is contended By-Law 8.4 has the effect that no approvals were required, it is incumbent on the vendors to show that it was in fact brought into operation. The vendor's evidence fell well short of such proof. It has not even been shown that such a dispensation was sought. Even if I assumed for the moment that that was likely. the case, the vendors have not established that it was given. The question of the authority and practice of the inspectors concerning structures which had been erected without approval was canvassed with the supervising building inspector of the Council who was then the supervisor of Mr J ohnston, to whom I have referred. That witness gave evidence that inspectors at this time were encouraged to resolve, on site if possible, any unapproved additions or work amounting to variations and report back to him in relation to any matters not resolved. Resolution however did not mean that the inspectors were given power to approve on site. The witness' reference to "resolution" extended merely to the inspector encouraging the parties to provide plans and to obtain the Council's approval. With respect to minor amendments such as the patio enclosure might be considered to be, it appears that inspectors themselves may have had power to approve these amendments but again it was only consequent upon receipt of an application to that effect. The vendors are -- 11 of 16 -- 9 unable to show any application for either the pergola or the patio enclosure having been made let alone any Council officer turning their mind to it. A further question arises as to the state of the purchasers' knowledge at the time steps were taken by them towards completion of the contract and prior to their notice terminating the contract. On 16th August 1990 the purchasers' solicitors wrote to their clients providing some general advices as to the conveyance and requesting information including that ( \, as to whether "there are any structures on the property e.g. pergola, carport, garden shed or obvious alterations to existing rooms to enable us to check that the same ( ) have had the relevant Council approval." The purchasers had inspected the property prior to signing the contract and Mr Emery was aware of the existence of the pergola and the enclosure of the patio. . Although he was well placed to conduct a search himself, he did not peruse the Council file prior to receiving his solicitors' advices which followed. On about 27th August the purchasers' solicitors received a ( \ "' letter dated 22nd August from the Redland Shire Council detailing plans which had been approved with respect to the property. Those advices (which concluded with a disclaimer as to their accuracy or completeness) were forwarded to the purchasers by their solicitor on 28th August with the two plans which had accompanied the Council's letter. Those plans appear to relate to the third listed approval, for stairs, in 1983. The outline of the dwelling house on those plans does not convey anything concerning an approval for an enclosure to the patio nor did it show a pergola. None of the approvals listed expressly refer to these improvements though the first approval for "dwelling" did not have an accompanying plan to indicate just what was included within it. It is to be recalled that there is no suggestion that the purchasers -- 12 of 16 -- 10 knew when the patio or pergola were constructed. The solicitors' covering letter to the purchasers contained the following request as to the plans enclosed: "We ....... should be pleased if you would advise whether there are any further illegal structures thereon." The solicitor however explained that the reference to "further" was not intended to convey that there was existing information as to whether any structures were in fact unlawful and was simply an error in use of language. A response to that letter was not immediate. In the meantime the purchasers cwere attempting to sell Lots 2 and 3 and from what follows it seems they probably needed to sell both to be in a position, financially, to settle. On 8th September they were unsuccessfully auctioned and following that Lot 2 was sold by private contract to the defendants. Early in the following week and probably on 11th September Mr Emery spoke with his solicitor. They discussed an outstanding requisition which had been referred to in the Council's letter, relating to a footing inspection. It was upon that basis .that the solicitors were then instructed to give the notice of that date terminating the contract. Between the time of receipt of the letter of 22nd August and 1st September the plaintiffs had, through their solicitors, requested further time to obtain approval of finance indeed until 12th September and this had been granted by the vendor. At or shortly after the letter of 11th September was sent the purchasers' solicitors had some reservations concerning the sufficiency of the ground set out in that letter as a basis for terminating the contract. They then proceeded to make enquiries of the Council as to the Council procedures on inspection of footings. In this process the solicitor attended to view the Council plans and noticed the absence of any plans relating to the pergola. Mr Emery had made some mention on a previous occasion of -- 13 of 16 -- ( \ 11 that structure (the solicitor places this in the few days preceding 11th September although it is possible that it happened quite early indeed by the letter of 16th August unless the reference to a· pergola was coincidental). She then contacted Mr Emery and they both attended and searched the Council file together. On 14th September 1990 following those searches, the solicitor wrote to the vendors' solicitors advising that her clients confirmed the termination and noting now the bases provided for by the existence of the two unauthorised building works. The vendors submit that Mr Emery, on 28th August and on 8th September (the dates respectively of request for an extension of time for finance and entry into (') contract of Lot 2) had sufficient knowledge to determine whether or not to proceed with the contract and that the purchasers' actions show that they chose to continue. Of the two actions undertaken by the purchasers, and which are said to be conduct consistent only with an intention to keep the agreement on foot, the sale of Lot 2 seems to me to come the closest. The request for an extension of time for ( . .J finance does not seem to me to be inconsistent with the retention of the right to rescind. Indeed the difficulty with a clause such as 18(b) is that it is intended to ; maintain a right in the purchaser to rescind up to three days prior to completion. The difficulty in these circumstances in inferring a necessary abandonment of that right was referred to in Immer (No. 145) Pty Ltd v. Uniting Church in Australia Property Trust (NSW) (1993) 67 A.L.J .R. 537, 545. The answer sometimes may lie in the quality of the knowledge possessed, coupled with the nature of the conduct in question (see Sargent v. ASL Developments Ltd (supra) 646 per Stephen ] .). Here however I do not consider that it has been proved that the purchasers had the requisite knowledge. -- 14 of 16 -- 12 Certainly Mr Emery was aware of the existence of the structures at the date of contract. It may well be, given his background in particular, that it occurred to him that such structures are not always approved. At various points in his evidence he conceded that this occurred to him as a possibility. When he received the Council letter and the plans dated 22nd August that possibility may have been heightened. Indeed he even said that he expected that this might be the case. I accept however that he was not satisfied to act on the basis of the letter and without confirmation. The information so far provided could not in my view have been described as "clear" and such as to found an election. That the information available must present a ., . C> C' 'clear if not a necessary inference is well established: see Builder's Trustee and , Executor Co Ltd. v. Commonwealth Homes and Investment Co Ltd. (1942) 65 C.L.R. 603,617 and Sargent v. A.S.L. (supra) 642. The information available did not disclose what had been included in the initial approval for the dwelling. Mr Emery gave evidence that he did not treat the letter as necessarily complete in that there may have been subsequent applications, to which of course the letter did not refer. c Whatever confusion existed in the earlier evidence given by Mr Emery there remains the solicitor's evidence as to the sequence of events. She had had no response to her C. letter of 28th August from the Emerys when she wrote asking for their advice on 6th September. The first occasion on which she then spoke to them was 11th September. If the position were one from which a clear inference could be drawn one would have expected either the solicitor or her clients to have discussed this since it provided a stronger basis to sustain a termination. It was suggested in cross-examination that the purchasers did not ever have a real concern about the structure. That may have been so, at least initially. The motivation to terminate the contract may have -- 15 of 16 -- 13 proceeded from other, financial, considerations. But I do not think that is to the point. The vendors had agreed that should they not identify absent approvals or permissions relating to the property by way of special condition or otherwise, and should the purchasers ascertain that there were such matters outstanding at any time up to completion, the purchasers were to have the right to determine the contract. Lastly, the vendors submitted, in reliance upon Clegmere Pty Ltd. v. ( .. ' Samspring Pty Ltd. (1993) 2 Qd. R. 399, 406, that the notice effecting termination of the contract need be particular, which I take to mean that the wrong bases were relied upon in the initial letter advising of the purchasers' intentions. That case however dealt with the specific requirements by notice of s.49 of the Building Units & Group Titles Act 1980, and is not I think of application here. The general principle referred to in Shepherd v. Felt and Textiles of Australia Ltd (1931) 45 C.L.R. 359, 378 (and see Minion v. Graystone Pty Ltd (1990) 1 Qd.R. 157, per McPherson J .) is· against the submission. The Defendants' defence and counter-claim fails. The plaintiffs are entitled to judgment and to orders with respect to payment of deposit monies. -- 16 of 16 --