David Jones Ltd, Re; Re Zuccala Pty Ltd [1993] QSC 313

1"· .. :~ State Reporting Bureau ~'--' " 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 MOYNIHAN J OIS No 513 of 1993 Pc·.·:::::-0 CO?!ES 13SUED S~s.!e i~.-~ ,: ~: ~.:;·~g 8 :.:rea.u IN THE MATTER OF AN APPLICATION BY DAVID JONES LIMITED UNDER ORDER 64 RULE 1A OF THE SUPREME COURT RULES IN THE MATTER OF A CONTRACT OF SALE BETWEEN DAVID JONES LIMITED AND ZUCCALA PTY LTD BRISBANE .. DATE 1 5 I 1 0 I 9 3 JUDGMENT •.(>.~------------------------------------ -- 1 of 10 -- 151093 mar (Moynihan J) HIS HONOUR: For the reasons I now publish, the applicant is entitled to a declaration that on the proper construction of the contract of 27 July 1989, as subsequently varied, the balance deposit of $630,000 is now due and payable, unless there is some consideration of which I am presently not aware, 10 and to its costs of and incidental to the application to be taxed. 20 30 40 50 60 JUDGMENT 2 -- 2 of 10 -- ( ( IN THE SUPREME COURT OF QUEENSLAND 0/S No. 513 of 1993 IN THE MATTER OF AN APPLICATION BY DAVID JONES LIMITED UNDER ORDER 64 RULE 1A OF THE SUPREME COURT RULES AND IN THE MATTER OF Counsel: A CONTRACT OF SALE BETWEEN DAVID JONES LIMITED AND ZUCCALA PTY LTD JUDGMENT - MOYNIHAN J Delivered the 15th day of October, 1993 Mr Callinan QC & Mr Murphy for the Applicant Mr Fraser QC for the Respondent Solicitors: Gadens Ridgeway for the Applicant Hearing Date: Minter Ellison Morris Fletcher for the Respondent 10 May, 1993 -- 3 of 10 -- ( (; IN THE SUPREME COURT OF QUEENSLAND 0/S No. 513 of 1993 IN THE MATTER OF AN APPLICATION BY DAVID JONES LIMITED UNDER ORDER 64 RULE 1 A OF THE SUPREME COURT RULES AND IN THE MATTER OF A CONTRACT OF SALE BETWEEN DAVID JONES LIMITED AND ZUCCALA PTY LTD JUDGMENT - MOYNIHAN J Delivered the 15th day of October, 1993 The applicant (David Jones Limited) is the vendor of land in Townsville on which a commercial building is erected. The respondent (Zuccala Pty Ltd) is the purchaser. The applicant seeks a declaration that on the proper constitution of the contract as varied a balance deposit of $630,000 is due and payable. lt is pertinent to trace the relevant variations. The contract document is dated 27 July, 1989. Condition of sale 1 provided as to a deposit in these terms:- The vendor's agent shall be the stakeholder unless another person is named in Item G. The deposit shall be paid by the purchaser to the stakeholder forthwith upon the execution hereof by the purchaser. If the deposit or any part of it is paid by cheque which is not duly honoured on presentation the purchaser shall immediately thereupon be in substantial breach of this contract and the vendor may terminate this contract and forfeit the deposit. Whether or not the vendor terminates this contract the vendor shall be entitled to recover as a liquidated debt from the purchaser so much of the deposit as has not been paid by the purchaser. If the vendor has not -- 4 of 10 -- 2 terminated this contract at the time of recovery of that amount then he shall pay the amount recovered to the stakeholder under this contract. The deposit shall be retained by the stakeholder until completion when it shall be accounted for to the vendor. Any moneys payable to the vendor by the purchaser or the stakeholder shall be paid to the vendor or as the vendor's solicitor shall in writing direct. Condition 2 provided:- The balance of the purchase price shall be paid on the date for completion stated in Item 0 in exchange for possession (such possession to be vacant except for tenancies stated in Item M) together with a duly executed transfer in favour of the purchaser capable of immediate registration (after stamping) in the appropriate office free from encumbrances except as set out in Item Land accompanied by the instrument of title except as provided in clause 8 and in the case of the land being subject to any tenancies referred to in Item M a notice (prepared by the vendor) in conformity with Section 13 of the Residential Tenancies Act 1975 (if that act applies) together with the vendor's executed and stamped copies of all instruments (if any) evidencing such tenancies. If the improvements sold may not be lawfully occupied unless there has issued a Certificate of Approval under the Fire Safety Act 1974 and/or a Certificate of Classification under the Standard Building By-Laws 1975 appropriate to the uses stated in Item H the vendor shall procure and deliver to the purchaser such or both of those certificates as may be required to permit occupation of the improvements sold for such stated use and deliver the same to the purchaser in exchange for the balance of the purchase price in addition to the documents abovementioned. If the date stated in Item 0 falls on a Saturday, Sunday or public holiday in the place for completion then unless Item 0 designates such date as a Saturday a Sunday or by the name of the public holiday completion shall take place - (a) on such other day as may be agreed by the parties; or in default of such agreement - (b) on the day other than a Saturday Sunday or public holiday next following the date stated in Item 0. Item G nominated as stakeholder the vendor's agent, Jones Lang Wootton. Item 0 said to see Condition 30. Item 0 referred to Condition 29 under the title "DATE FOR COMPLETION." In the contract as originally executed, Condition 29 provided:- The date for completion of this contract shall be that date being three hundred and sixty-five (365) days from the date of this contract provided always that the vendor at its election may by notice in writing to the purchaser (such notice to be given not later than thirty (30) days prior to the aforesaid completion date) elect to extend the completion date to a date being on or before seven hundred and thirty (730) days from the date of this contract. () -- 5 of 10 -- 3 Condition 30 provided:- On the execution of this contract the purchaser shall in accordance with Clause 1 of this contract pay to the stakeholder the sum of SEVENTY THOUSAND DOLLARS ($70,000.00) in part payment ofthe deposit moneys and thereafter on the date that this contract shall become unconditional in accordance with clause 31 herein the purchaser shall pay to the stakeholder the further sum of SIX HUNDRED AND THIRTY THOUSAND DOLLARS ($630,000.00) representing balance deposit moneys payable pursuant to this contract. The $70,000 was paid. lt will be apparent from the form of declaration sought that the $630,000 has not been. Condition 31 is headed "CONDITIONAL CONTRACT" and provided:- This contract of sale is subject to and conditional upon the vendor being satisfied on or before one hundred and twenty ( 120) days from the date of this contract that an alternate site for the relocation of the vendor's business presently being conducted by the vendor on the property the subject of this contract shall be available for use by the vendor from the date of completion of this contract. If the vendor for any reason is not satisfied aforesaid the vendor shall on that date being one hundred and twenty ( 120) days from the date of this contract notify the purchaser (and the purchaser shall accept such notification and make no objection in relation thereto) that this contract shall be null and void and thereafter the purchaser shall be refunded all deposit moneys paid by the purchaser pursuant to this contract together with all interest accrued thereon. Condition 23 provides that time is of the essence and was not varied. Nor ( .. was Condition 9, which provides for interest on "any moneys (including the deposit) payable under the contract but not paid when due." As I have said, the contract was subsequently varied, in fact this occurred more than once. There is no issue about the variations as distinct from their effect. The terms of the first variations are established by an exchange of correspondence between the respective solicitors towards the end of November, 1989. The existing Condition 29 was deleted and a new Condition 29 was inserted. Condition 31 was deleted. -- 6 of 10 -- 4 The new condition 29 provides:- The date for completion of this contract (the completion date) shall be that date being 365 days from the date that the vendor obtains building approval from the relevant local authority upon terms and conditions satisfactory to the vendor for the construction of a department store/commercial and retail premises (the 11 building approval) on the alternate site which the vendor has chosen the relocation of the vendor's business (the 11 alternate site 11 ) presently being conducted by the vendor on the property the subject of this contract notwithstanding the aforesaid it is recognised between the parties that the purchaser desires the completion date to be prior to the aforesaid 365 day period and in this regard the vendor warrants that it shall do all that it reasonably can to ensure that the building to which the building approval relates (the building) is expeditiously constructed and the purchaser shall if notified in writing by the vendor that the building has been completed to its satisfaction complete this contract of sale on or before 30 days from such notice PROVIDED ALWAYS that the vendor at its election may by notice in writing to the purchaser (such notice to be given not later than thirty (30) days prior to the aforesaid completion date) elect to extend the completion date by a further 365 days PROVIDED HOWEVER that if the building approval has not been granted to the vendor on or before two (2) years from the twentieth day of November 1989, either party may elect by notice in writing to the other party, to terminate this contract and PROVIDED FURTHER that if the building approval is granted to the vendor upon terms and conditions not satisfactory to the vendor the vendor may forthwith upon receipt of the building approval elect to terminate this contract by notice in writing to the purchaser. In fact it seems that the variations were agreed on at a meeting of the parties on 20 November, 1989 and were confirmed in writing by an exchange of c\~ (! letters dated 23 November and 27 November. The 120 days referred to in the (J original Condition 29 expired on 24 November. In July and August·of 1991 there was a further variation as a consequence of an exchange of correspondence; the period of two years referred to in Condition 29 was amended to three years. In their letter of 8 July the vendors solicitors wrote:- Our client instructs us that it recently met with your client to discuss the sale of the property and we understand that our respective clients agreed that the two year period referred to in the twenty-second line of Clause 29 as set out in our letter be amended to three years. -- 7 of 10 -- (, 5 We request that you confirm in writing that if the Building Approval has not been granted to our client on or before three years from the Twentieth day of November 1989 either party may elect by notice in writing to the other party to terminate the Contract and also that if the Building Approval is granted to our client upon unsatisfactory terms and conditions our client may forthwith upon receipt of the Building Approval elect to terminate the Contract by notice in writing to your client. The purchaser's solicitors replied that the "amendments proposed in your letter are acceptable ... " On 23 November, 1992 the vendor's solicitors wrote to the purchaser's solicitors advising that a building approval had been obtained in relation to the alternative site on 18 January, 1992, that the completion dated would be 14 ( January, 1993 and that the vendor required an extension of completion date to 15 (/ January, 1994. The letter requested that the purchaser's solicitors confirm that their client had paid the balance of the deposit to the stakeholder. lt was subsequently agreed that the date for completion be 12 January, 1994. In a letter of 18 December, 1992 the purchaser's solicitors maintained that the balance of the deposit moneys were not payable: "as the provisions which would have triggered that payment were deleted by the amendment. The initial deposit will thereafter remain as balance purchase moneys to be paid in accordance with clause 2." lt is true that Condition 30 provided that the balance deposit moneys became payable once the contract had become "unconditional in accordance with Clause 31." That condition has not been varied. Clause 31 was deleted in November 1989. A fresh condition as to completion was inserted by the new Clause 29 in terms of a building approval "on terms and conditions satisfactory to the vendor." On 23 November, 1992 the vendor's solicitors advised the purchaser's solicitors to the effect that that condition had been satisfied by the -- 8 of 10 -- 6 approval of 18 January, 1992. Up to that time the contract as amended had continued on foot. I think it became conditional upon the vendor's solicitors notifying the purchasers that a building approval, impliedly at least on terms and conditions satisfactory to the vendor, had been obtained. lt is true that Condition 30 speaks of the balance deposit becoming payable upon the contract becoming unconditional in accordance with Clause 31. lt seems to me, however, that the "general tenor of the provisions of the contract;" Secured Income Real Estate (Australia) Ltd -v- St Martin's Investment Pty Ltd (1979) 144 CLR 597 at 609, is C that the deposit provisions remained intact, subject to any adjustments reflected in the agreed variations. These did not deal with the provisions of conditions ( 1 dealing direct with the payment of the deposit. Moreover, the agreed variations continued the position that the contract was conditional and the condition, albeit differently expressed, continued to relate to the availability of an alternate site for the development of the vendor's business. lt is true that literally the obligation to pay the balance deposit is specified in terms of Clause 31. I do not think, (~ however, there is any difficulty in discerning that what was intended was that the balance of the deposit was payable on the occasion of the fulfilment of the current condition as to a suitable alternate site. The alternative would be to render Clause 30 devoid of consequence once Condition 31 was deleted. This is so notwithstanding that the parties dealt with the variations in explicit terms and did not concern themselves of any variation of Condition 30. The variations which occurred do not express an agreement to leave that portion of Condition 30 dealing with the balance deposit "a meaningless or defunct provision;" c.f. Watson & Anor -v- Phipps ( 1986) 60 ALJR. 1 (PC). What C, -- 9 of 10 -- ( ( 7 the parties intended by the variations is clear enough. They were variations as to the conditions in relation to an alternate site- not as to the payment of the deposit. In the event, therefore, the applicant is entitled to a declaration that on the proper construction of the contract 27 July, 1989 as subsequently varied, the balance deposit of $630,000 is now due and payable, and to its costs of and incidental to the application to be taxed. -- 10 of 10 --