Bluestone Pty Ltd, Re; ex parte Wilispa Pty Ltd [1992] QSC 344

IN THE SUPREME COURT OF QUEENSLAND o.s. No. 919 of 1992 Before Mr. Justice Ambrose AND: IN THE MATTER of the Real Property Act 1861 (as amended) IN THE MATTER of a Caveat lodged by BLUESTONE PTY. LTD. ACN 055693233 Ex parteWILISPA PTY. LTD. ACN 010886334 REASONS FOR JUDGMENT - B. W. AMBROSE J. Delivered the Twenty-fifth day of September 1992. COUNSEL: SOLICITORS: Mr. P. McMurdo for the Applicant. Mr. A.J.H. Morris for the Respondent. Sly & Weigall Cannan & Peterson for theApplicant. MacDonnells for the Respondent. HEARING DATE: 17th September 1992. -- 1 of 13 -- IN THE SUPREME COURT OF QUEENSLAND AND: o.s. No. 919 of 1992 IN THE MATTER of the Real Property Act 1861 (as amended) IN THE MATTER of a Caveat lodged by BLUESTONE PTY. LTD. ACN 055693233 Ex parteWILISPA PTY. LTD. ACN 010886334 REASONS FOR JUDGMENT - B. W. AMBROSE J. Delivered the Twenty-fifth day of September 1992. This is an application by the owner and registered proprietor of certain land near Cairns for the removal of a caveat lodged by Bluestone Pty. Ltd. claiming to be entitled to an estate in fee simple as purchaser of that land under a contract of sale dated 26th June 1992 between Wilispa as vendor and Bluestone as purchaser. The respondent has instituted an action to enforce its claim. There is a contest between Wilispa and Bluestone as to whether what purports to be a contract between them is in fact a contract. Wilispa, asserts that to be binding on it the contract had to be signed by two of its directors and in fact only one signed it. Accepting however that the existence of an enforceable contract between Wilispa and Bluestone is at least a substantial issue that may be litigated in the action recently taken by Bluestone against Wilispa for specific performance, it is -- 2 of 13 -- 2 necessary to consider some of the terms of the alleged contract in the context of affidavit material relied upon by the parties. If, as the material suggests, after one of the directors of Wilispa had purported to sign by way of acceptance on behalf of Wilispa the offer constituted by written contract form already signed on behalf of the purchaser, then having regard to the effect of s. 164 of the Corporations Law it is arguable that if the director of the purchaser, when handed the contract form signed by a director of the vendor company, was not informed that under the Articles of Association of the vendor company, the acceptance of the purchaser's offer had to be signed by two directors rather than one as on the face of the contract was purportedly done, then there is a substantial issue on that matter at least to be determined between the parties. Other objections taken by the applicant to the maintenance of the caveat are based on the assumption that the contract signed by one of the directors of the applicant vendor is in fact a contract which binds it. For the applicant it is contended that on its face the contract is subject to two conditions of a kind to which reference is made in Duncan and Weld "The Standard Land Contract in Queensland" 2nd Ed. (1984) pp. 157-159. For the applicant it is contended that ell. 7 and 11 to the extent that they have any effect relevant to this application, give the purchaser "a mere equity and not an equitable estate in the land". In support of this proposition the applicant relies upon what was said in Dimbury Pty. Ltd.'s caveat [1986] 2 Qd.R. -- 3 of 13 -- 3 348 and Re Premier Freehold Pty. Ltd.'s caveat [1981] Qd.R. 547 and Bosca Land Pty. Ltd.'s caveat [1976] Qd.R. 119. In my view examination of those authorities shows that the nature and effect of the conditions there analysed are quite different from the nature and effect of the conditions in the present contract which is the foundation of the respondent's claim to maintain its caveat. In those cases some further step had to be taken before it was possible in law for the land, the subject of the contract, to be transferred to the purchaser. The conditions were not of a kind that could be waived by one or both parties so that a transfer of the land could be effected. In Dimbury the contract related to portion of land that had not at that time been subdivided. Until local authority approval was given the land, the subject of the contract, could not be transferred to the purchaser. At the time of the contract and indeed at the time of the application before Connolly J. as that learned Judge observed: "The only decree which could at any relevant time have been made in the suit for specific performance which was instituted at the end of October 1985 ... would be an order 'requiring both parties to use their best endeavours to obtain such an approval'." If the approval was not obtained then it was simply not possible for the land to be transferred to the purchaser and consequently it could not be said that the purchaser upon execution of the contract obtained an equitable estate in the land. Premier Freehold's case involved a similar legal situation where at the time the contract was made to sell a building unit, -- 4 of 13 -- 4 the registration of the building unit plan had not been effected and therefore it was impossible for the owner of the unit in question to effect a legal transfer of it. In that case Kelly J. held that the purchaser did not get an equitable interest in the land - whatever may have been the contractual obligation on the parties to the contract to see that eventually the unit, became transferable at law consequent upon the registration of the building units plan. Similarly in the Bosca Land's case the land, the subject of the contract, was part of a proposed subdivision. At no relevant time had the subdivision been completed and therefore there could be no obligation on the vendor to transfer that piece of land which could only lawfully be transferred when the subdivision had been completed. Dunn J. at pp. 121-122 referred to authorities to which reference was later made in Dimbury and Premier Freehold, and adopted the observation of the High Court in Brown v. Heffer (1967) 116 C.L.R. 344 at 350 which dealt with a case where the contract for the disposition of land was conditional upon Ministerial consent in these terms: "The specific performance which will be granted before the Minister's consent has been obtained is not specific performance of the obligation to convey or transfer for that obligation has not yet arisen ... Accordingly until the consent has been obtained and the purchaser's interest being 'commensurate only withwhat would be decreed to him' does not extend to ownership of the land and the interest of the vendor is not yet converted into a right to receive money inplace of the land." Clauses 7 and 11 of the contract impose conditions relating to the assumption by the purchaser of rezoning obligations of the vendor owed to the relevant local authority. They have nothing -- 5 of 13 -- 5 to do with the ability of the vendor at the time the contract is entered into to convey the whole of that land, the subject of the contract, irrespective of what the outcome of the vendor's rezoning application or the enforcement of security given to the local authority to secure compliance with rezoning conditions may be. On my examination of the material there is nothing to suggest that there is any impairment of the ability of the vendor to transfer the freehold title to the contract land to the purchaser by reason of matters relevant to its rezoning. In this respect the present case is quite different from any of the authorities to which the applicant has referred. Similarly with respect to the condition imposed by cl. 11(b) of the contract. Clause 11(a) provides: "CLAUSE 11(a) The parties hereto acknowledge and agree that the vendor is at the date hereof negotiating with its joint venturers Elders Finance Ltd. (Elders) the amount of money payable to Elders to secure the release of mortgage security over the property hereby sold and various collateral securities." Clause 11(b) provides: "CLAUSE 11(b) This contract is subject to and conditional upon the vendor entering into an agreement with Elders with respect to matters referred to in (11(a)) hereof on terms and conditions satisfactory to the vendor on orbefore the date thirty days from the acceptance of this contract." I have set forth the terms of ell. 11(a) and (b) because cl. 11 is the basis upon which another argument is advanced by the applicant for the removal of the caveat. However insofar as that clause makes the contract conditional, it seems to me to -- 6 of 13 -- 6 have nothing to do with the legal capacity of the vendor to transfer to the purchaser the whole of its estate in the land, the subject of the contract. In my view as is the case with respect to the condition to be found in ell. 7(d)(i) and (ii) it is not a condition of the kind considered in the cases to which I have already referred. In my view the existence of these conditions in the contract does not render the contract a conditional contract of the sort considered in Duncan and Weld or in any of the three authorities to which I have referred. I hold therefore that any interest which the respondent has in the land by virtue of the terms of the contract in issue is a caveatable interest. The third contention of the applicant is that in the circumstances the respondent has defaulted in payment of the deposit to which the applicant is entitled under the contract and therefore the applicant was and is entitled to terminate the contract. It is contended that such termination has been effected by letter and indeed that the institution of the proceedings to remove the caveat should be treated as a termination of the contract by the applicant. Clause 4 of the contract provides: "4. Completion: The date for completion shall be the later of: a) 14 days (fourteen days) from the date on which this contract becomes unconditional pursuant toclause 11. b) The date upon which the conditions referred to inclause 7(d) of these special conditions are fulfilled." -- 7 of 13 -- 7 On the material it is clear that the vendor has not entered into an agreement with Elders in respect of the matters referred to in cl. 11(a) within thirty days of the acceptance of the offer (assuming that the signature of vendor apparently appended to one of the directors of the the offer constituted the applicant's acceptance). However it is equally clear that the applicant has never sought to enter into such an agreement on any terms. In my view to the extent that the condition to be found in cl. 11(b) has not been satisfied it is arguable that it is solely as a consequence of the failure of the applicant to attempt to reach an agreement with Elders that has led to this result. In my view in the circumstances it is arguable that any non-compliance with the condition to be found in cl. 11(b) of the contract is attributable only to the conduct of the applicant in not making the slightest effort or attempt to reach agreement with Elders Finance Ltd. of the sort contemplated by cl. 11. In my view on general principle it is arguable that the failure to arrive at an agreement with Elders satisfactory to the vendor to which cl. 11(b) refers cannot be relied upon by the applicant to avoid its obligations as vendor under the contract because that failure results from the failure of the vendor to attempt to make such an agreement. The evidence is silent as to the circumstances in which the failure of the condition found in cl. 7(d) of the contract has arisen - if it has arisen. What seems to be clear is that the vendor has not made any attempt either with or without the purchaser to apply to the local authority with a view to assigning the obligations of the vendor to the purchaser. -- 8 of 13 -- 8 In essence the date specified for completion of the contract between the vendor and the purchaser could only ever arise if the vendor took steps reasonably available to achieve the result contemplated in those clauses. The completion date was to be the later of the two dates contemplated under cl. 4. A perusal of ell. 7 and 11 of the contract demonstrates that both vendor and purchaser were to take steps to achieve the results contemplated in those clauses "as soon as practicable after the execution hereof", to use the phraseology to be found in cl. 7{d)(i)(l). Arguably the law would imply a term similar in content to that to which I have referred in cl. 11(a) having regard to the time limit of thirty days to be found in cl. 11(b). The position then is reached on the material before me that by reason of the inactivity at least of the applicant, no time for completion of the contract can be calculated from its express terms. The reason for this is that the vendor has taken no steps to achieve the results contemplated by ell. 7 and 11 of the contract. The time for completion is expressed in such a way as to be calculable only upon the achieving of the later of those two results. While it is true that time is of the essence of the contract, it seems to me at least arguable that the failure of the applicant to make any attempt to achieve either of the results by which time for completion may be calculated has the effect of waiving compliance with the time constraint imposed by the contract. It is clear that both cl. 7 and cl. 11 were regarded by the parties to the contract as imposing conditions which were at -- 9 of 13 -- 9 least for the benefit of the applicant and perhaps also for the benefit of the respondent. It would be unprofitable to descend into a detailed consideration of the material to speak more precisely of the nature of those conditions on this application. The failure of parties to the contract to maintain timely compliance with contractual obligations because that is essential to the performance of those contractual obligations, does not mean that the contract in issue ceases to be enforceable because there has been no express time fixed for completion. It is at least arguable that in the circumstances of this case either party could give to the other a notice making time for completion an essential term of the contract. An action could certainly be instituted to compel the applicant to take all reasonable steps ·to achieve compliance with ell. 7 and 11 to the extent that it was able to do so. I am unpersuaded on the case mounted for the applicant that the respondent does not in fact have a caveatable interest in the land, the subject of the contract, on the assumption that it shows that there is or was a valid contract made between the applicant and the respondent consequent upon one of the applicant 1 s directors appending his signature to the respondent 1 s offer. It is quite unnecessary for me upon an application of this sort to attempt to determine in a final way the matters which I have traversed. It suffices to support the maintenance of the caveat for the respondent to show that upon the whole of the evidence there is a serious question to be tried as to the -- 10 of 13 -- 10 obligation of the applicant to specifically perform contractual obligations under the contract in issue. In my view the respondent has demonstrated on the material that there are substantial issues to be tried. To turn to the balance of convenience, it is contended for the applicant that the respondent in effect is a "two dollar company". The parties have not placed before me any information to demonstrate what .financial backing the respondent has. For all it appears in the material it may be a shelf company used by some wealthy development corporation for the purpose of developing the land, the subject of this contract. Provided the rights of the applicant can be protected by securing a proper undertaking as to damages from the respondent, I take the view that the balance of convenience comes down in favour of the respondent. The respondent has offered to pay into court a sum the equivalent of the deposit under the contract- $320,000. In fact under the terms of the contract that deposit was to be paid within two days of the date when the contract became unconditional pursuant to cl. 11(b). It is quite clear on the material that the applicant has repudiated any contractual obligation to the respondent on various grounds. The principal factual matter raised was whether when the director of the applicant handed to its real estate agent the contract form which he signed he told the agent that the contract required the signature of a second director in Adelaide before it would be binding on the applicant. According to the respondent, the agent told it no such thing. It is the -- 11 of 13 -- 1 1 contention of the respondent that having regard to the effect of s. 164 of the Corporations Law, if for some reason the vendor's agent did not inform the purchaser's director of the requirement to have a second director of the applicant execute the contract, that would suffice to prevent the applicant relying upon any argument based upon a requirement of its Articles of Association that the contract be signed by two directors. Neither party put the Articles of Association of the applicant in evidence in any event. I have come to the conclusion that the offer of counsel for the respondent to pay into court the sum of $320,000 being the equivalent of the deposit payable under the contract is a sufficient securing of the applicant against any damage which it might suffer by reason of the caveat should the respondent fail in the action which it has instituted for specific performance of the agreement. I therefore make the following orders: 1. I refuse the application to have removed immediately the caveat lodged by the respondent on 7th July 1992 being caveat no. T610394T. 2. I order that if the sum of $320,000 not be paid into court within seven days the caveat be removed. 3. The said sum of $320,000 is to be paid out only upon order of the court made upon application by one of the parties hereto upon notice to the other party. 4. I record that counsel for the respondent has given the usual undertaking as to damages on the basis that the caveat be not removed by order of the court. -- 12 of 13 -- 12 I give the parties liberty to apply. I will hear argument from the parties on the question of costs. -- 13 of 13 --