Eamon Pty Ltd, Rador Pty Ltd & Blackedged Pty Ltd v Sanwa Home Australia Pty Ltd [1992] QCA 53

IN THE COURT OF APPEAL [1992] QCA 053 OF THE SUPREME COURT OF QUEENSLAND No. 690 of 1991 Before the Court of Appeal The President Mr Justice Pincus Mr Justice Davies BETWEEN: EAMON PTY. LTD. First Respondent (First Plaintiff) AND: RADOR PTY. LTD. Second Respondent (Second Plaintiff) AND: BLACKEDGED PTY. LTD. Third Respondent (Third Plaintiff) AND: SANWA HOME AUSTRALIA PTY. LTD. (formerly BALFIELD PTY. LTD.) Appellant (Defendant) JUDGMENT OF THE COURT Delivered the 3rd day of April, 1992 The appellant is the purchaser under three interdependent contracts of sale dated 23 June 1990, by which the appellant agreed to purchase from the respondents land at the Gold Coast for a total consideration in excess of $26 million dollars. The present appeal is brought from an order made by de Jersey J. on 13th March 1992, which was consequential upon a judgment pronounced by Robin A.J. on 4 October 1991, whereby it was adjudged and declared that the contracts of sale are valid and subsisting and ought to be specifically performed and carried into execution and it was -- 1 of 17 -- 2 ordered that the respondents (the plaintiffs in the action) or the appellant (defendant) "be at liberty to apply for further orders or directions relating to the matters herein and ... that leave be reserved to all parties to move for the making of such further orders for the purpose of specifically performing the said agreement as circumstances may require ... ". An appeal by the appellant to the Full Court of the Supreme Court of Queensland from the judgment of Robin A.J. was dismissed on 11 December 1991, and the appellant has made an application for special leave to appeal to the High Court of Australia which is set for hearing next Friday, 10 April 1992. In the meantime, the parties have engaged in a number of tactical skirmishes as the appellant has persisted in its efforts to escape from the contracts. The contracts are subject to a number of special conditions which are required to be satisfied by the date of completion. By sub-clause 4(a), each is subject to and conditional upon rezoning of the land (with the exception of a section of Labrador Street). By clause 5, each is subject to and conditional upon the permanent closure of the section of Labrador Street and its rezoning to the same zone as the other land sold. Neither of these requirements had been satisfied by 29 March 1991, the original date for completion according to the contracts. However, Robin A.J. held that the effect of correspondence between the parties prior to 29 March 1991 was that completion was no longer required to be effected that day and that the contracts had become "open ones in which completion is due within a reasonable time". His Honour continued: "The conclusion that the time for completion of the contracts has become "within a reasonable time" is sufficient to dispose of the action. No party has taken steps to nominate a date for completion. Only when a date is fixed will it be possible to say whether by reason of circumstances existing then, or perhaps at an earlier time, any right to terminate any of the contracts arises. As things stand, it is only the defendant which -- 2 of 17 -- 3 has evinced any interest in terminating. On the basis that the date for completion is some uncertain date in the future, it is impossible to say that the plaintiffs collectively or individually have repudiated their obligations, or are precluded from due performance of all relevant obligations when the time comes. Each of the plaintiffs is entitled to the order for specific performance which it seeks. ... Since no date for settlement has been fixed by the procedure set out in the March variation or by action of the plaintiffs or otherwise, there is no completion date which the defendant has failed to meet, notwithstanding its repudiatory attitude. ... It is open to the court to fix a date for completion. The parties will have an opportunity to be heard in respect of that date and any appropriate directions." The matters referred to in the last sentence of the quoted passage were not attended to prior to the dismissal of the appeal by the Full Court, by which time the Commission of Robin A.J. as an acting Judge of the Supreme Court had expired. Although the requirements relating to rezoning and road closure had not been satisfied prior to 29 March 1991, the section of Labrador Street had been closed and Orders in Council with respect to rezoning had been gazetted prior to the trial of the action before Robin A.J.. One such Order in Council was gazetted on 27th April and the other was gazetted on 11 June 1991. Before Robin A.J., the appellant contended, in the alternative, that if completion of the contracts was no longer required to be effected on 29 March 1991, 11 June 1991 had been fixed as the date for completion, with time being of the essence, and that the requirements of special conditions 4 and 5 had not been satisfied by that date because of the alleged invalidity and inefficacy of the Orders in Council. Although he had concluded not only that completion of the contracts was no longer required to be effected on 29 March 1991 but that the contracts had become "open ones in which completion is due within a reasonable time", Robin A.J. went on to deal with the appellant's alternative argument. He said: -- 3 of 17 -- 4 "Other points were argued upon which I consider I ought to express a view in case my interpretation of the variation agreement is in error, and to obviate certain disputes which may otherwise arise when completion is due." His Honour upheld the legality and efficacy of the Order in Council gazetted in April and later said: "In light of my determination that the contracts remain on foot, that the date of completion is yet to arrive, and that the original Order in Council approving rezoning constitutes compliance by the plaintiffs with their contractual obligations in this respect, this question of the validity of the second Order in Council relating to rezoning of the road area is entirely hypothetical. I consider I ought to refrain from pronouncing upon it finally. ...". Robin A.J. then went on to consider another special condition of the contracts which required demolition and removal of an hotel on part of the land before completion unless the appellant otherwise required. He said: "As I have determined that no date for completion under the contracts was ever fixed apart from the original date, which was effectively vacated by 11 March, 1991, the plaintiffs cannot be said to be in breach in respect of non demolition. ... Much time at the trial was spent exploring the plaintiffs' justification or lack of justification for leaving the Grand Hotel intact. While it is unnecessary for me in the circumstances to make any finding on this subject, it is probably appropriate that I do so, in case my interpretation of the variation agreement and conclusion that the contracts became and remained contracts requiring completion within a reasonable time is in error. ... I find that justifiable apprehension on the plaintiffs' part that the defendant would not settle was the sole reason for non demolition of the hotel. If the matter has to be decided, I would find that at all times since, at the latest, the beginning of 1991, the defendant has evinced a lack of disposition to complete the contracts at an early date, if at all, and that the plaintiffs have been absolved from having actually to carry out their promise to demolish -- 4 of 17 -- 5 throughout this period. ... The defendant claimed a right to rescind as at 12 June, 1991. Rescission being the act of `an innocent party' I view the defendant as not entitled to rescind. I do not accept that for present purposes demolition of the hotel, which I regard as constituting a special definition of what was required by way of the giving of vacant possession in this case, is to be treated as other than a concurrent obligation with the others which represented part of completion, for purposes of the limitation of the class of those who may rescind, as discussed in cases such as Ireland v. Leigh (1982) Qd.R. 145 and Segacious Pty. Ltd. v. Fabrellas (1991) 1 Qd.R. 471". Although the various matters decided against it by Robin A.J. were raised by the appellant in its notice of appeal to the Full Court, its appeal was conducted on a more limited basis. The parties have tendered to this court a statement of agreed facts concerning the course of the appeal in the Full Court. As a corollary to its submission that completion of the contracts was required on 29 March 1991, the appellant by its counsel there accepted that, if completion on 29 March was not required, the appellant could not succeed in that appeal. The appellant did not contend in the alternative before the Full Court that 11 June 1991 had been fixed as the date of completion. It apparently accepted that, if completion of the contracts was not required to be effected on 29 March 1991, the contracts had become "open ones in which completion is due within a reasonable time", in which event even if the existing Orders in Council and gazette notices were invalid, the respondents might obtain the gazettal of a further Order in Council prior to any date for completion which was subsequently fixed. Although it subsequently sought an adjournment to consider its position further, during the course of the hearing the appellant by its counsel informed the Full Court that it did not wish to argue matters relating to the validity of the Orders in -- 5 of 17 -- 6 Council on that appeal. The Full Court agreed with Robin A.J. that there is "... now no contractually fixed date for completion, and no operative provision for arriving at any such date," and that, accordingly, "... the contracts have ... become `open' contracts in which the law implies an obligation on the part of vendors and purchaser to complete within a reasonable time." The Full Court also held that "... his Honour was correct in declaring that the contracts ought to be specifically performed and carried into execution. Until a date for completion is fixed pursuant to the decree, a final order for specific performance is inappropriate ... . To this end the formal judgment appropriately confers liberty to apply for further orders for the purpose of specifically performing the contract." The reasons for judgment of the Full Court then continued: "In the meantime the vendors on 15 April 1991 succeeded in effecting closure of Labrador Street. At the trial they claimed to have secured the requisite rezoning of the subject land by virtue of Orders in Council dated 27 April 1991 and 11 June 1991. An attack on the legal validity of those instruments was rejected by his Honour. Likewise, it was said that by failing to demolish and remove the hotel buildings the vendors had evinced an unwillingness to perform the contracts. Their reluctance to do so is, however, excusable in the light of the purchaser's demonstrated unwillingness to complete the contracts by providing and paying the purchase moneys. The purchaser was consequently not itself in any position to determine the contract by reason of breach on the part of the purchaser ... . But in any event these obligations, if that is what they really are, are expressed in cll.4(a) and 26 in terms that require their performance either ` by the date for completion' or `prior to completion' of the relevant contracts. Until, therefore, a fresh date for completion is fixed and has arrived, it is not in law possible for the purchaser to assert that the vendors are in breach, or that they are unwilling, unable, or not ready to perform the contracts in accordance with their terms ...". It is unnecessary for present purposes to discuss the -- 6 of 17 -- 7 appellant's application for special leave to appeal to the High Court beyond noticing one curious feature. According to the proposed notice of appeal, the appellant does not intend to argue that the date for completion of the contracts was 29 March 1991, the point upon which it relied in the Full Court, but instead seeks to argue that 11 June 1991 was fixed for completion and the conditions had not been fulfilled and that, accordingly the appellant was entitled to terminate the contracts. This was the point which it did not argue in the Full Court. Prior to the appellant filing its application for special leave to appeal to the High Court, the parties appeared before Byrne J. on 19 December 1991 on an application by the respondents for the court to fix a date for completion and to make further orders for the performance of the contracts. Many of the orders, including the date for completion (3 February, 1992) were agreed, but other matters were disputed. The appellants sought to have its obligation to make payments under the contract to the respondents made conditional upon satisfaction by the respondents of the requirements specified in clauses 4 and 5 of the contracts. The respondents opposed the insertion of such a condition in the order, which Byrne J. refused. However, in accordance with a direction by Byrne J., the respondents' solicitors wrote a letter dated that day to the appellant's solicitors in the following terms: "The plaintiffs acknowledge that the defendant's rights pursuant to special conditions 4 and 5 of each of the contracts are unaffected by the absence of any express reference to the plaintiffs' obligations thereunder in the order of Byrne J made 19 December 1991." In the same letter, the respondents went on to state: "The plaintiffs, of course, assert: - (a) that they have complied with special conditions 4 and 5 of the said contract; and (b) that your client is estopped from disputing such compliance." No appeal was brought by the appellant from the orders made by Byrne J. on 19 December 1991. -- 7 of 17 -- 8 On 31 January 1992, this court dismissed an application by the appellant for a stay of execution of the Full Court's judgment pending the determination of the appellant's application for special leave to appeal to the High Court of Australia. Prior to 3 February, 1992, the respondents caused the demolition and removal of the hotel. On 3 February 1992, representatives of the parties met at the offices of the solicitors for the respondents. The respondents tendered performance of the contracts. The appellant raised no objection to the performance tendered by the respondents but did not itself seek to complete. Instead, a letter was delivered pointing out that time had not been made of the essence as required by Byrne J.'s order. On 19 February 1992, the appellant gave the respondents notice to complete on the following day, with time expressed to be of the essence. Representatives of the parties met at the offices of the solicitors for the Respondent in accordance with that notice on 20 February 1992, and the respondents offered to tender performance. The appellant refused performance, basing its refusal upon its insistence as a prerequisite of performance that the respondents accepted that time was of the essence of the obligation to complete. Neither on 3 nor 20 February, 1992, did the appellant assert that its non-completion of the contracts was based upon the respondents' omission to satisfy the requirements stated in clauses 4 and 5 of the contracts. Nor did the appellant take any further step to establish that those requirements had not been satisfied. On the following day, 21 February 1992, the appellant served further notices to complete requiring completion on 10 March 1992 with time expressed to be of the essence. On 10 March 1992, representatives of the parties attended at the office of the solicitors for the respondents and the respondents again tendered performance. The -- 8 of 17 -- 9 appellant again did not complete. Once again, it did not refuse completion on the basis that the requirements of conditions 4 and 5 of the contracts had not been satisfied. Although it had given notice to complete on 10 March 1992 and made time of the essence, the appellant did not have the necessary money available. Meanwhile, on 4th March 1992, the respondents had filed the application which led to the order from which the present appeal is brought. That application initially came before de Jersey J. on 9 March 1992, when he adjourned it to 11 March to await the outcome of the appellant's notice to the respondents requiring completion on 10 March. On 11 March, the appellant also filed an application, returnable that day, for an order that the appellant be granted leave to terminate the contracts of sale. That application was based upon the appellant's contention, supported by an affidavit by a Town Planner, that the requirements of conditions 4 and 5 of the contracts had not been satisfied. de Jersey J. dismissed the appellant's application. He said that "... the three town planning points ... relied upon ... for the purchaser raised ... very complicated factual and legal considerations inappropriate for resolution in a summary way here. I have not, though, found it necessary to go into those in any great depth, because to my mind there is an ultimate answer to the purchaser's claim ... ". That answer, His Honour said, was that the appellant had not demonstrated "... any ability - or willingness, for that matter -" to make the payments required of it under the contracts in the event that the respondents properly performed their part. No appeal has been brought by the appellant from the order of de Jersey J. dismissing its application for termination of the contracts. de Jersey J. then considered the respondents' application and again referred to the "... three town -- 9 of 17 -- 10 planning-type points" as the only matters which the appellant was able to assert to resist the orders sought by the respondents. His Honour continued: "They were the points dealt with by Judge Robin when he was an Acting Judge of this Court, adversely to the purchaser, when he decreed that there be specific performance. As I have said earlier, it may have been strictly unnecessary for him to do that, but his determination on that point is useful to me. I have already said that I could not now reach a view by my own process of reasoning on those points because they are of a complicated factual and legal nature, but I am content to rely on Judge Robin's assessment to help me determine now whether I should conclude that a Morgan v. Brisco order be made. I have a discretion, of course, whether or not to make such an order ... . Mr Sofronoff, who appears for the purchaser, sought to distinguish this case from the situation which confronted the court in Morgan v. Brisco by pointing out that here the town planning points are still in the nature of outstanding questions, but I think they have been determined sufficiently to enable me to conclude whether the purchaser probably believed that there was nothing in them. I think that this purchaser could not have had any substantial belief in the validity of those points and I think that the purchaser, if not evading its obligation to settle in this case, is certainly playing, if I may be pardoned for resorting to the vernacular, a game of ducks and drakes which the court should not countenance. I will therefore make an order of the character of that made in Morgan v. Brisco". On 13 March, after further argument concerning the form of the orders to be made on the respondents' application, de Jersey J. made the orders which are the subject of the present appeal, which essentially enabled the respondents to deposit to the credit of the action the documents which they are required to provide to the appellant to complete the contracts and obliged the appellant, upon service of a copy of the order of de Jersey J. and an affidavit verifying that the documents had been deposited, to pay the balance purchaser price and other monies payable under the contracts. On 19 March 1992, the appellant appealed to this Court which, on 24 March, granted an interim stay of execution which has been continued until further order. -- 10 of 17 -- 11 Before this Court, the respondents submitted that, subject to the outcome of the proceedings in the High Court, the appellant is estopped from relitigating the validity and efficacy of the Order in Council of April 1991, which it was said had been established by the judgment of Robin A.J. which was affirmed by the Full Court. According to the respondents, His Honour determined not only that there was no date for completion fixed but that, in any event, the requirements imposed by conditions 4 and 5 of the contracts had been satisfied. The appellant pointed, as an indication to the contrary, to His Honour's statement that: "Other points were argued upon which I consider I ought to express a view in case my interpretation of the variation agreement is in error, and to obviate certain disputes which may otherwise arise when completion is due." Further, as has been noted, although the conclusion of Robin A.J. with respect to the validity of the Orders in Council was not challenged before it, the Full Court seems not to have rejected the possibility that those issues might arise for future determination. On the other hand, read as a whole, the reasons for judgment of Robin J.A. tend to support the respondents' view, including his statement that "the original Order in Council approving rezoning constitutes compliance by the plaintiffs with their contractual obligations in this respect ... ." Further, His Honour did not merely declare that the contracts were valid and subsisting, but ordered that they be specifically performed and carried into execution without any suggestion that the parties' obligations to complete were or might be conditional upon the future satisfaction of the requirements provided for by clauses 4 and 5 of the contracts: cf. Butts v. O'Dwyer (1952) 87 CLR 267. We were told that the Full Court was not asked to vary the decree even if it otherwise dismissed the appeal, and it did not do so. Although Byrne J., who had been a member of the Full Court, on 19 December 1991 directed the respondents to -- 11 of 17 -- 12 deliver a letter acknowledging that the appellant asserted that those issues were still alive, he proceeded to make unconditional orders for the completion of the contracts. It is unnecessary to determine whether or not the appellant is estopped as the respondents contend. There is another ground upon which this appeal must fail. Irrespective of whether or not any particular issue has been finally determined against the appellant (subject to the ultimate disposition of the proceedings in the High Court), the Court has ordered that the contracts be specifically performed and carried into execution. The orders of Byrne J. on 19 December 1991 and de Jersey on 13 March 1992 are merely ancillary orders to give effect to that decree in the changing circumstances which have emerged. Those circumstances do not include any change in the position with respect to the validity and efficacy of the Order in Council. Whether or not any particular issue has been decided in favour of the respondents so that the appellant cannot again raise it, (subject to the outcome of the proceeding in the High Court) the Court has ordered both parties to perform the contract under its control. Its power includes power to make an order dissolving the decree of specific performance and terminating the contract at the instance of either party if it is established that it would be just to do so in the circumstances. Unless that is established, it has power to make such orders to carry the contracts to completion as are just in all the circumstances: cf. Johnson v. Agnew (1980) AC 367. That was the power which Byrne J. exercised when he fixed a date for completion and made orders with respect to the exchange of documents and money. As has been noted, there was no appeal from his orders. That was also the power which fell for exercise by de Jersey J. in the different circumstances which were established before him. At no time in the period between the initial judgment delivered by Robin A.J. and the orders made by de Jersey J. on 13 March 1992, did either party establish a basis for the -- 12 of 17 -- 13 Court to dissolve the decree and terminate the contracts. The appellant's only attempt at such an exercise, the application which it made to de Jersey J. on 11 March 1992, failed and there has been no appeal. The only remaining question is whether the particular orders made by de Jersey J. were just in all the circumstances. As His Honour recognised, his power was discretionary. The appellant relied only upon its assertion that the Orders in Council are invalid and inefficacious and upon the circumstances that that was an issue remaining to be determined and sought to be raised in its application for special leave to appeal to the High Court. While that circumstance may appropriately be brought to account in assessing what is just between the parties, it is not an absolute bar: see the final paragraph in the statement of the facts in the report of the second judgment in Morgan v. Brisco (1886) 32 Ch.D. 192, 193. Given the history of the litigation, it is not surprising that de Jersey J. exercised his discretion in the way in which he did. The conclusion that the appeal should be dismissed has been reached without consideration of the validity and efficacy of the Order in Council which Robin A.J. found satisfied the rezoning requirements in the contracts. The respondents sought to have the Court rule that conditions 4 and 5 of the contracts had been satisfied. The appellant was opposed to such a course although, if it had succeeded in persuading the Court that Robin A.J. was wrong, it would have considerably improved its claim to have the order of de Jersey J. from which the appeal is brought set aside. The appeal is dismissed with costs and the stay of execution is discharged. Subject to any further written submissions by either party prior to 10.00 a.m. on Monday, 6 April 1992, the appellant should be provided with a further opportunity to perform the contracts and, for that purpose, the formal orders will include a provision extending the time for payment and compliance with the -- 13 of 17 -- 14 appellant's other obligations under the order of de Jersey J. to 4.00 p.m. on Monday 6 April, 1992. -- 14 of 17 -- 15 IN THE COURT OF APPEAL OF THE SUPREME COURT OF QUEENSLAND No. 690 of 1991 BETWEEN: EAMON PTY. LTD. First Respondent (First Plaintiff) AND: RADOR PTY. LTD. Second Respondent (Second Plaintiff) AND: BLACKEDGED PTY. LTD. Third Respondent (Third Plaintiff) AND: SANWA HOME AUSTRALIA PTY. LTD. (formerly BALFIELD PTY. LTD.) Appellant (Defendant) The President Mr Justice Pincus Mr Justice Davies Judgment of the Court Delivered on 3rd April, 1992 THE APPEAL IS DISMISSED WITH COSTS AND THE STAY OF EXECUTION IS DISCHARGED. SUBJECT TO ANY FURTHER WRITTEN SUBMISSIONS BY EITHER PARTY PRIOR TO 10.00 A.M. ON MONDAY, 6 APRIL 1992, THE APPELLANT SHOULD BE PROVIDED WITH A FURTHER OPPORTUNITY TO PERFORM THE CONTRACTS AND, FOR THAT PURPOSE, THE FORMAL ORDERS WILL INCLUDE A PROVISION EXTENDING THE TIME FOR PAYMENT AND COMPLIANCE WITH THE APPELLANT'S OTHER OBLIGATIONS UNDER THE ORDER OF DE JERSEY J. TO 4.00 P.M. ON MONDAY 6 APRIL, 1992. -- 15 of 17 -- 16 IN THE COURT OF APPEAL OF THE SUPREME COURT OF QUEENSLAND No. 690 of 1991 Before the Court of Appeal The President Mr Justice Pincus Mr Justice Davies BETWEEN: EAMON PTY. LTD. First Respondent (First Plaintiff) AND: RADOR PTY. LTD. Second Respondent (Second Plaintiff) AND: BLACKEDGED PTY. LTD. Third Respondent (Third Plaintiff) AND: SANWA HOME AUSTRALIA PTY. LTD. (formerly BALFIELD PTY. LTD.) Appellant (Defendant) JUDGMENT OF THE COURT Delivered the 3rd day of April, 1992 MINUTE OF ORDER: The appeal is dismissed with costs and the stay of execution is discharged. Subject to any further written submissions by either party prior to 10.00 A.M. On Monday, 6 April 1992, the appellant should be provided with a further opportunity to perform the contracts and, for that purpose, the formal orders will include a provision extending the time for payment and compliance with the appellant's other obligations under the order of de Jersey J. to 4.00 p.m on Monday 6 April, 1992. -- 16 of 17 -- 17 CATCHWORDS: Counsel: Mr W. Sofronoff Q.C. with him Mr S. Doyle for the Appellant Mr P. Keane Q.C. with him Mr P. O'Shea for the Respondents Solicitors: Messrs. Morris Fletcher and Cross for the Appellant Messrs. Corrs Chambers Westgarth for the Respondents Hearing Date: 1st April, 1992 -- 17 of 17 --