Court of Appeal (WA)|2010-02-08|Before: Owen JA

CONDOR DEVELOPMENTS PTY LTD -v- HELSBY [2010] WASCA 16 (8 February 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

BETWEEN : CONDOR DEVELOPMENTS PTY LTD (ACN 105 199 880)

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : HELSBY -v- CONDOR DEVELOPMENTS PTY LTD [2008] WASC 264

Contracts - Interpretation - Building contract - Contract for construction of apartment block - Appellant entitled to terminate contract if specified conditions not satisfied - Whether conditions satisfied - Effect of viability condition - Turns on own facts

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451

Sunworld Enterprises Pty Ltd v Lacco [2009] WASCA 175

The Commonwealth of Australia v Verwayen (1990) 170 CLR 394

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

2 PULLIN JA: I generally agree with Newnes JA's reasons. I agree with his Honour's conclusion that each of the Amalgamation Condition, the Planning Condition and the Building Licence Condition was satisfied only if the relevant event or events occurred within the stipulated times.

3 I also agree with his Honour's construction of cl 2.5 which means that the appellant was only entitled to consider whether or not Condor Tower was viable and if not to terminate the Agreement under cl 2.5.5.1 where all conditions had been satisfied. Not all conditions were satisfied. The result is that I agree with Newnes JA that the primary judge correctly found that the appellant's notice of termination of 28 June 2008 was ineffective to terminate the Agreement. I would likewise dismiss the appeal.

4 NEWNES JA: This is an appeal against the decision of Templeman J concerning the proper construction of an agreement for the sale of an apartment in a development known as Condor Tower, to be built by the appellant. The respondents purchased the apartment 'off the plan'. The question before his Honour was whether the appellant had validly terminated the agreement pursuant to a provision which, in certain events, enabled the appellant to do so if it decided the development was not viable. The respondents contended that the appellant's notice of termination was out of time and ineffective. The primary judge found for the respondent.

5 The case was conducted on the basis of a statement of agreed facts.

6 By an agreement in writing made on 8 March 2005 (the agreement), the respondents agreed to purchase from the appellant, for the sum of $495,000, an apartment (identified as proposed Apartment 103) in a building described as Condor Tower, which was to be constructed by the appellant at 22 St George's Terrace, Perth. The agreement was expressed to be subject to a number of conditions. Relevantly, it was conditional upon approval being obtained for the amalgamation of the land on which Condor Tower was to be built, upon planning approval being obtained for the development, and upon the grant of a building licence. It was also subject to the appellant achieving pre-sales of apartments in Condor Tower to the total value of $55 million.

7 The agreement provided that it automatically terminated if the conditions as to planning approval and the building licence were not satisfied within certain stipulated time periods. If the conditions as to amalgamation or pre-sales were not satisfied within the stipulated time period, the appellant was entitled to terminate the agreement within 10 days of the expiration of that time period.

8 The agreement further provided that, upon the satisfaction of the last of the conditions to be satisfied, the appellant was entitled to reach an opinion as to whether the development was viable and, if it decided it was not, it could within 10 days, by written notice to the respondents, terminate the agreement.

9 The appellant obtained planning approval on 21 April 2004 and a building licence on 15 November 2005, neither being obtained within the time periods stipulated in the relevant conditions. The appellant did not, however, treat the agreement as at an end. The minimum pre-sales figure was achieved no later than 8 March 2006, within the stipulated time period. The process for the amalgamation of the land was not achieved until 9 April 2008, outside the stipulated time period, but the appellant did not exercise its right to terminate the agreement.

10 On 1 June 2007 the appellant, by its solicitors, gave notice to the respondents that the appellant considered Condor Tower was not viable and subsequently, by notice dated 28 June 2007, the appellant terminated the agreement on that ground.

11 The respondents, however, did not accept that the notice was effective to terminate the agreement. They contended that any such notice of termination had to be given within 10 days of the satisfaction of the last of the conditions, and that a condition was satisfied only if the relevant event (the obtaining of the building licence, the planning approval or the completion of the amalgamation process, as the case may be) occurred within the time period stipulated in the condition. Only the Pre-Sales Condition had been satisfied within the stipulated time period and that had been satisfied no later than 8 March 2006. The appellant's notice of termination in June 2007 was therefore out of time. Accordingly, the notice was ineffective to terminate the agreement.

12 The appellant, on the other hand, argued that each of the conditions was satisfied when the relevant event in fact occurred and it was immaterial whether or not it occurred within the stipulated time limit. As the last of the applicable events - the amalgamation of the land - did not actually occur until 9 April 2008, the appellant was entitled in June 2007 to form an opinion as to whether the development was viable and, having formed the opinion that it was not viable, to terminate the agreement as it had done.

13 The trial judge accepted, in substance, the respondents' argument and held that the appellant's notice of termination was not effective.

14 Against the background of that outline, it is necessary to turn to the relevant provisions of the agreement and the agreed facts as they apply to them.

The agreement and the relevant agreed facts

15 The applicable conditions are contained in cl 2 of the agreement, which is headed 'Conditional Acceptance'. It is convenient to set out each condition in turn, together with the relevant agreed facts in relation to that condition.

2.1 Amalgamation

2.1.1 In this clause and throughout this Agreement:

'Amalgamation' means the amalgamation of the lots comprising the Land so that they form one lot for the purposes of Section 20 of the Town Planning and Development Act 1928;

'Amalgamation Condition' means the condition specified in this clause;

'Amalgamation Date' means the latest date for satisfaction of the Amalgamation Condition being the first anniversary of the date of this Agreement; [The Amalgamation Date is therefore 8 March 2006.]

'Deposited Plan' means a deposited plan of the Land shown as one lot;

'In Order for Dealing' means the Deposited Plan has been initialled by an [authorised officer of DOAL].

2.1.2.1 an application for Amalgamation being lodged by us [the appellant] at our cost with WAPC [the Western Australian Planning Commission];

2.1.2.2 WAPC granting approval for Amalgamation within 3 months after the date of lodgement of the application;

2.1.2.3 WAPC endorsing approval on the Deposited Plan within 3 months after approval; and

2.1.2.4 the Deposited Plan being in Order for Dealing within 3 months after the date of endorsement of approval.

2.1.3 We must, if we have not already done so, lodge with the WAPC an application for Amalgamation as soon as practicable after the date of this Agreement.

2.1.4 Following the lodgement of the application for Amalgamation we must as soon as practicable endeavour to:

2.1.4.1 obtain the approval of the WAPC to the Amalgamation; and

2.1.4.2 subject to the approval of the WAPC, arrange for preparation of the Deposited Plan and for the Deposited Plan to be:

2.1.4.2.1 lodged at DOLI; and

2.1.4.2.2 endorsed as In Order for Dealing.

2.1.5 If WAPC grants approval for Amalgamation subject to a condition with which we in our sole and absolute discretion:

2.1.5.1 are unwilling to comply with; or

2.1.5.2 consider not otherwise acceptable,

we may within 20 Business Days of being notified of the condition elect, by notice to you to withdraw from and terminate this Agreement.

2.1.6 The Amalgamation Condition is for our benefit. Only we may waive the Amalgamation Condition.

2.1.7 We [the appellant] will procure that our conveyancing representative keeps you informed of progress in relation to the satisfaction of the Amalgamation Condition including when the Deposited Plan is In Order for Dealing.

2.1.8 If the Amalgamation Condition is not satisfied by the Amalgamation Date then:

2.1.8.1 this Agreement may be terminated by us [the appellant] by notice to you [the respondents];

2.1.8.2 whereupon any monies paid by you under this Agreement will be refunded to you together with interest, if any, accrued therein; and

2.1.8.3 subject to any claim which arose prior to termination neither of us will have any claim against the other.

2.1.9 If the Amalgamation Condition has not been satisfied on or prior to the Amalgamation Date we must give notice of that fact to you or your conveyancing representative not later than 10 Business Days after the Amalgamation Date and the preceding clause shall apply.

2.1.10 If the Amalgamation Condition is satisfied or waived by us then this Agreement shall proceed subject to the satisfaction of all other conditions which this Agreement is subject to.

17 The appellant applied to the Western Australian Planning Commission (WAPC) for the amalgamation of the land on 12 January 2005. On or about 27 July 2005, the WAPC granted approval for the amalgamation, subject to various conditions. There were then negotiations between the appellant and the WAPC in relation to the conditions, with the result that the appellant did not lodge the deposited plan until 19 March 2008. On 8 April 2008, the WAPC endorsed its consent to the deposited plan and, on 9 April 2008, the deposited plan was 'In Order for Dealing'.

18 It follows that the approval was not obtained within the period specified in cl 2.1.2.2 and WAPC's approval was not endorsed on the deposited plan within the period specified in cl 2.1.2.3. Nor was the deposited plan in order for dealing within the period of 12 months from the date of the agreement as specified in cl 2.1.2.4.

2.2 Planning approval

2.2.1 In this clause and throughout this Agreement:

'Local Authority' means the local authority which has jurisdiction in respect of the Land;

'Planning Application' means a formal application for approval to develop the Land by the construction of Condor Tower ...;

'Planning Approval' means the approval of the Local Authority of the Planning Application;

'Planning Condition' means the condition specified in this clause;

'Planning Condition Date' means the latest date for the satisfaction of the Planning Condition being the first anniversary of the date of the Agreement.

2.2.2.1 the Planning Application being lodged by [the appellant] at [the appellant's] cost with the Local Authority; and

2.2.2.2 the Local Authority granting Planning Approval within 3 months after the date the Planning Application is lodged by us.

2.2.3 We must, if we have not already done so, lodge the Planning Application with the Local Authority as soon as practicable after the date of this Agreement.

2.2.4 Following the lodgement of the Planning Application we must endeavour to obtain the Planning Approval from the Local Authority as soon as practicable.

2.2.5 If the Local Authority grants Planning Approval subject to a condition with which we, in our sole and absolute discretion:

2.1.5.1 are unwilling to comply with; or

2.1.5.2 consider not otherwise acceptable,

we may, within 20 Business Days of being notified of the condition, elect, by notice to you to withdraw from and terminate this Agreement.

2.2.6 The Planning Condition is for our benefit. Only we may waive the Planning Condition.

2.2.7 We will keep you or your conveyancing representative informed of progress in relation to the satisfaction of the Planning Application and Planning Approval.

2.2.8 If the Planning Condition is not satisfied by the Planning [Condition] Date then:

2.2.8.1 this Agreement will automatically terminate without notice;

2.2.8.2 any monies paid by you under this Agreement will be refunded to you together with interest accrued thereon; and

2.2.8.3 subject to any claim which arose prior to termination neither of us will have any claim against the other.

2.2.9 If the Planning Condition has not been satisfied on or prior to the Planning Condition Date we must give notice of that fact to you or your conveyancing representative not later than 10 Business Days after the Planning [Condition] Date and the preceding clause shall apply.

2.2.10 If the Planning Condition is satisfied or waived by us then this Agreement shall proceed subject to the satisfaction of all other conditions which this Agreement is subject to.

20 On 5 December 2003, the appellant lodged an application to the City of Perth for planning approval. Approval was granted, subject to certain conditions, on 21 April 2004.

21 While that was before the contract was entered into it, it was outside the period specified in cl 2.2.2.2. A varied application was approved by the City of Perth on 22 July 2004.

2.3 Building licence

2.3.1 In this clause and throughout this Agreement:

'Building Licence' means a building licence granted by the Local Authority;

'Building Licence Application' means formal applications for a building licence to build Condor Tower in accordance with the Planning Approval including full working drawings;

'Building Licence Condition' means the condition specified in this clause;

'Building Licence Date' means the date within twenty four (24) months of the satisfaction of the Planning Condition.

2.3.2.1 the Building Licence Application being lodged by us at our [the appellant's] cost with the Local Authority and WAPC within eighteen (18) months after Planning Approval.

2.3.2.2 the Local Authority and WAPC granting the Building Licence within 3 months after the date the Building Licence [Application] is lodged by us.

2.3.3 We must, if we have not already done so, lodge the Building Licence Application with the Local Authority and WAPC soon as practicable after the date of this Agreement.

2.3.4 Following the lodgement of the Building Licence Application we must endeavour to obtain the Building Approval from the Local Authority and WAPC as soon as practicable:

2.3.5 The Building Licence Condition is for our benefit. Only we may waive the Building Licence Condition.

2.3.6 We will keep you or your conveyancing representative informed of progress in relation to the satisfaction of the Building Licence Application and Building Licence Approval.

2.3.7 If the Building Licence Condition is not satisfied by the Building Licence Date then:

2.3.7.1 this Agreement will automatically terminate without notice;

2.3.7.2 any monies paid by you under this Agreement will be refunded to you together with interest accrued thereon; and

2.3.7.3 subject to any claim which arose prior to termination neither of us will [sic].

2.3.[8] If the Amalgamation Condition is satisfied or waived by us then this Agreement shall proceed subject to the satisfaction of all other conditions which this Agreement is subject to.

23 The appellant applied to the City of Perth for the grant of a building licence for Condor Tower on 22 March 2005. The licence was issued on 15 November 2005.

24 Accordingly, while the application for the building licence was made within 18 months after planning approval was obtained (21 April 2004), the licence itself was issued outside the period specified in cl 2.3.2.2.

25 Clause 2.4, headed 'Pre-sales', was in a similar format to the above conditions. Under cl 2.4, the agreement was conditional upon the appellant having pre-sold lots in the Condor Tower with a minimum aggregate sale price of $55 million by a date 12 months after the date of the agreement; that is, by 8 March 2006 (the Pre-sales Condition). It was common ground that the Pre- sales Condition was satisfied within that time.

2.5 Viability

2.5.1 In this clause and throughout this Agreement:

'Viability' means that in our sole opinion the development of Condor Tower is viable having regard to all commercial, legal and financial matters including but not limited to the conditions of approval in respect of:

2.5.1.1 the Amalgamation;

2.5.1.2 the Subdivision;

2.5.1.3 the Planning Approval; and

2.5.1.4 the Building Licence;

'Viability Condition' means the condition in this clause;

'Viability Satisfaction Date' means the latest date for satisfaction of the Viability Condition namely the date after the last to occur of the satisfaction of the Amalgamation Condition, the Subdivision Condition, the Planning Approval Condition, the Building Licence Condition and the Pre-Sale Condition.

2.5.2 This Agreement is conditional upon the satisfaction of the Viability Condition by the Viability Satisfaction Date.

2.5.3 After the satisfaction of all other conditions in this Agreement we will consider whether or not Condor Tower is Viable. If we do not consider Condor Tower to be Viable then the Viability Condition will not have been satisfied. If we do consider that Condor Tower is Viable then the Viability Condition is satisfied.

2.5.4 The Viability Condition is for our benefit. Only we may waive the Viability Condition.

2.5.5 If the Viability Condition is not satisfied by the Viability Date then:

2.5.5.1 this Agreement may be terminated by us by notice to you;

2.5.5.2 whereupon any monies paid by you under this Agreement will be refunded to you together with interest, if any, accrued therein; and

2.5.5.3 subject to any claim which arose prior to termination neither of us will have any claim against the other.

2.5.6 If the Viability Condition has not been satisfied on or prior to the Viability Date we must give notice of that fact to you or your conveyancing representative not later than 10 Business Days after the Viability Date and the preceding clause shall apply.

2.5.7 If the Viability Condition is satisfied or waived by us then this Agreement shall proceed subject to the satisfaction of all other conditions which this Agreement is subject to.

27 As I have mentioned, the appellant, by its solicitors, gave notice on 1 June 2007 that it considered that Condor Tower was not viable and, on 28 June 2007, it gave notice of termination of the agreement under cl 2.5.5.

28 The primary judge found that only the Pre-Sales Condition had been satisfied. None of the Amalgamation Condition, the Planning Approval Condition, or the Building Licence Condition had been, or ever could be, satisfied.

29 His Honour found that the Amalgamation Condition was not satisfied because:

the WAPC did not grant approval within three months after the date of lodgement of the application (12 January 2005), the approval being granted on 27 July 2005;
the WAPC did not endorse approval on the deposited plan within three months of the (conditional) amalgamation approval (27 July 2005), the endorsement not occurring until 8 April 2008; and
the Amalgamation Condition was not satisfied by the Amalgamation Date, 8 March 2006.

30 The primary judge found that the Planning Condition had not been satisfied because the application for planning approval was made on 5 December 2003 and obtained on 21 April 2004; that is, outside the three month period in cl 2.2.2.2. Therefore at the date of the agreement the Planning Condition had not been and could never be satisfied. His Honour concluded that the appellant must have been taken to have waived the Planning Condition when it entered into the agreement. Alternatively it must be taken to have waived it, at the latest, by the Planning Condition Date (8 March 2006) because it did not exercise its right of termination under cl 2.2.8 and 2.2.9.

31 His Honour found that the Building Licence Condition had not been satisfied because the application for a building licence was made on 22 March 2005, but not granted until 15 November 2005; that is, outside the period of three months specified in cl 2.3.2.2. As the building licence was not granted within the three months time limit, the Building Licence Condition was not, and could never be, satisfied. His Honour further found that there could be no Building Licence Date because that was determined by reference to the date of the satisfaction of the Planning Condition, but as set out above, his Honour found that the Planning Condition was not, and could never be, satisfied.

32 The primary judge noted, however, that the parties appear to have proceeded on the basis that because a building licence was granted (albeit out of time) the Building Licence Condition was satisfied. His Honour concluded that, despite the provision for automatic termination, the appellant must be taken to have waived the Building Licence Condition.

33 The primary judge found that, notwithstanding the references to it in cl 2.5, there was no 'Subdivision Condition' in the agreement and that the references to it were superfluous. His Honour rejected an argument by the appellant that the reference to a Subdivision Condition was a reference to cl 5 of the agreement and held, in the alternative, that the relevant provision of cl 5 (cl 5.5.2) was void.

34 The primary judge then turned to the effect of the Viability Condition, cl 2.5.

35 Under the Viability Clause, the appellant's right to form an opinion as to whether or not Condor Tower was viable, and to terminate the agreement if it was not, arose only '[a]fter the satisfaction of all other conditions in this Agreement'. His Honour held that for the purposes of the Viability Condition, each of the Amalgamation Condition, the Planning Condition, the Pre-Sales Condition and the Building Licence Condition was satisfied only if the event specified in the condition had occurred within the time stipulated in that condition. That being the case, if the time limit was not met the condition in question could never be satisfied.

36 His Honour considered that the purpose of cl 2.5 was to provide the appellant with a further opportunity to consider the viability of the Condor Tower development once the outstanding conditions had been satisfied. The primary judge described it as 'a further opportunity', because the appellant would already have had that opportunity if any of the Amalgamation Condition, the Planning Condition, the Pre-Sales Condition or the Building Licence Condition was not satisfied. His Honour considered it could be assumed that the appellant would waive the satisfaction of any of those conditions only if it was confident that the development was viable, notwithstanding the non-satisfaction of that condition.

37 The primary judge rejected the appellant's argument that the references in the Viability Condition to the 'date of satisfaction' of the various conditions referred to the date upon which the relevant event in the condition actually occurred, not to its occurrence within the stipulated time. His Honour accepted the respondents' argument that the appellant's construction would lead to the result that the appellant could wait until after the completion of the apartment - perhaps the eve of settlement - before considering whether Condor Tower was viable. His Honour considered that the parties could not have intended that result.

38 The primary judge held that as in each case the relevant time limit had not been met, none of the Amalgamation Condition, the Planning Condition or the Building Licence Condition had been satisfied or was capable of being satisfied. Only the Pre-Sales Condition had been satisfied. By the date that condition was satisfied it should have been apparent to the appellant that the Amalgamation Condition, the Planning Condition, and the Building Licence Condition had not been, and could never be, satisfied.

39 As the Pre-Sales Condition was the only condition which was satisfied, if the appellant sought to terminate the agreement pursuant to the Viability Condition it was required to do so by serving a notice under cl 2.5.6 within 10 business days of the date upon which the Pre-Sales Condition was satisfied. The date of the satisfaction of that condition was not contained in the agreed facts, but his Honour found [72] that the date must have been not later than 8 March 2006. His Honour concluded that the notice of 28 June 2007 was therefore ineffective and the agreement continued in existence.

40 The appellant relied on the following grounds of appeal:

The Learned Trial Judge erred in law in finding at (31) of the Reasons for Judgment (the Reasons) that the [Appellant] had waived Clause 2.1 of the Agreement (the Amalgamation Condition).
The Learned Trial Judge erred in law and in fact in finding at (52) of the Reasons, that the Amalgamation Condition, Clause 2.2 (the Planning Approval Condition), Clause 2.3 (the Building Licence Condition) and Clause 2.4 (the Presales Condition) were not capable of being satisfied upon their terms.
The Learned Trial Judge erred in law and in fact in finding at (53) - (54) of the Reasons that the Viability Satisfaction Date defined in Clause 2.5.1 of the Agreement was referrable to the satisfaction of the Amalgamation, Planning Approval, Building Licence and Presale Conditions which were capable of being satisfied upon their terms.
The Learned Trial Judge erred in law and in fact in finding at (67) of the Reasons that the Appellant and the Respondent could not be taken to have intended that until actual amalgamation of the Appellant's Lands occurred, the Appellant had a right under Clause 2.5 (the Viability Condition) to consider the viability of Condor Tower.
The Learned Trial Judge erred in law and in fact in finding at (80) of the Reasons that it was unlikely when the Appellant and the Respondent entered into the Agreement, they contemplated that the Appellant could consider the Viability of Condor Tower upon completion of construction.
The Learned Trial Judge erred in law in finding at (81) of the Reasons in finding that reference to Subdivision Condition in the definition of Viability Satisfaction Date was not a reference to Clause 5 of the Agreement.

41 In the course of argument on the appeal, the appellant added the following further ground:

His Honour erred in law in construing the Viability Satisfaction Date to mean the date after the last to occur of the other clause 2 conditions which are capable of being satisfied. His Honour should have found that:

(a) the other conditions referred to in cl 2.5.3 were to the exclusion of the conditions referred to in cl 2.5.1, and

(b) cl 2.5.2 refers to the satisfaction on or before the Viability Satisfaction Date of the conditions referred to in the definition of Viability Satisfaction Date.

42 The principles to be applied in the construction of a contract are well-known. The court is required to ascertain the common intention of the parties, by reference to what a reasonable person would understand the contract to mean having regard not only to the text, but also the surrounding circumstances known to the parties and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40].

43 The approach to be taken in construing the language of a written contract was discussed by Gibbs J in the following, oft-cited passage, in Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 - 110:

It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop (1888) 39 Ch D 387 at 393, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case (1880) 16 Ch D 681 at 686. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; (1932) 147 LT 503 at 514, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437).

44 It must be said at once that the agreement is very poorly drafted. Apart from a number of places where words have obviously been inadvertently omitted, and what appears to be an inadvertent omission of a cl 2.3.8, the agreement is replete with obscure and, in some cases apparently inconsistent, provisions. In the parts with which this appeal is concerned it is difficult to give the agreement any coherent meaning. The agreed facts provide no real assistance in ascertaining the parties' intentions. Nevertheless, it is into this Serbonian Bog that the court must wade to do its best to make some sense of the agreement.

45 It is convenient to deal first with ground 5 of the grounds of appeal, which challenges the finding of the primary judge that cl 5 of the agreement is not the 'Subdivision Condition' referred to in cl 2.5. The issue arises because although there are references in cl 2.5 of the agreement to a 'Subdivision Condition', there is no provision of the agreement which is so described. The primary judge found there was no 'Subdivision Condition' in the agreement.

Upon the completion of Condor Tower we will prepare the Strata Plan so that it complies with the Strata Titles Act 1985 and is otherwise in accordance with this Agreement.

5.2.1 subdivide Condor Tower into strata title lots and common property and the Apartment will be one of the strata lots;

5.2.2 allocate the unit entitlement for the Apartment and all other strata title lots in the Strata Plan certified by the valuer appointed by us in accordance with the Strata Titles Act 1985 (which unit entitlement may be greater or lesser than that described in the proposed Strata Plan disclosed to you prior to your offer to purchase the Apartment);

5.2.3 allocate a lot number for the Apartment and all other strata title lots in the Strata Plan which lot number may be different from that described in the proposed Strata Plan.

We may register the Strata Plan as soon as the construction of Condor Tower has reached such a stage as to allow:

5.3.1 the Local Authority to issue a certificate under section 23 of the Strata Titles Act 1985 as amended in respect of the Strata Plan;

5.3.2 the Western Australian Planning Commission to issue a certificate of approval in respect of the Strata Plan; and

5.3.3 registration of the Strata Plan by the Register of Titles.

5.4 Uncompleted Works after Strata Plan Registration

If at the time of registration of the Strata Plan not all of the works required to complete Condor Tower or the Apartment have in fact been completed then:

5.4.1 we will ensure that so much as remains incomplete will be completed by our builders as soon as possible; and

5.4.2 you will complete this Agreement in accordance with the clause entitled 'Settlement' in any event and not make any claim for reduction of the purchase price or compensation or delay completion by reason of the incomplete works whether in respect of the Apartment or any part of the common property in or about Condor Tower so long as the Apartment is substantially complete and fit for use or occupation.

5.5 Latest Date for Registration of Strata Plan

5.5.1 Each of us agree in accordance with Section 70(4) of the Strata Titles Act 1985 that the Strata Plan may be registered at any forty eight (48) months [sic] after the date we accept your offer.

5.5.2 If the Strata Plan is not registered within that period either of us may before the Strata Plan is registered terminate this Agreement by giving notice in writing advising that this Agreement is terminated whereupon we will authorise the deposit holder to repay you the deposit and all other moneys (if any) paid by you and there shall be no further claim under this Agreement by either party against the other at law or in equity or pursuant to statute whether state, federal or otherwise.

It is your obligation to monitor progress of the construction of Condor Tower and the registration of the Strata Plan by communicating regularly with our selling agent or our settlement agent. By way of assistance we will procure our settlement agent to advise you or your conveyancing representative (if you have nominated one) in a timely fashion when:

5.6.1 the Strata Plan has been registered; and

5.6.2 the number allocated to it by the Registrar of Titles;

5.6.3 the date when the duplicate Certificate of Title for the Apartment is expected to be issued by the DOPLI; and

5.6.4 the actual date of settlement.

Any failure or delay by our settlement agent in advising you or your conveyancing representative of any of these matters will not constitute a default by us or entitle you to any compensation or delay settlement.

47 The primary judge concluded that cl 5 was not a condition of the kind set out in cl 2 but dealt purely with administrative matters. His Honour also considered that the parties would not have intended that the appellant should be entitled to consider the viability of the development once construction of Condor Tower had been completed.

48 The primary judge further found that, in any event, insofar as it conferred a right of termination on the appellant cl 5.2.2 was 'an impermissible attempt by the [appellant] to obtain an advantage which s 70(4) [of the Strata Titles Act] does not permit'. As I understand his Honour's reasons, he found that cl 5.2.2 was therefore void. That finding was not challenged on the appeal. I note in passing, however, that that part of his Honour's reasoning appears to be difficult to reconcile with the subsequent decision of this court in Sunworld Enterprises Pty Ltd v Lacco [2009] WASCA 175.

49 I am not persuaded that the primary judge erred in finding that cl 5 was not the 'Subdivision Condition'. There is nothing which points to it as being the 'Subdivision Condition'. It is, as his Honour observed, in quite different terms to the other conditions in cl 2. It does not make the agreement conditional upon subdivision approval being obtained or conditional in any other respect. Rather, it is concerned with the preparation and registration of the strata plan following the completion of the construction of Condor Tower.

50 In my view, the primary judge correctly found that, notwithstanding references in cl 2.5 to a 'Subdivision Condition', the agreement contains no such condition. Given the standard of drafting of the agreement, that is a finding that is less surprising than it might ordinary be.

51 I should say that it was not contended before the primary judge or on this appeal that cl 10 of the agreement, headed 'Approval of Strata Plan', which bears some similarities in form to the conditions in cl 2, was the 'Subdivision Condition' referred to in cl 2.5. Counsel for the appellant maintained that cl 5 was the Subdivision Condition and described cl 10 as simply regulating how the strata plan was to be registered.

52 I turn then to the question of whether the primary judge erred in finding that the notice given by the appellant on 28 June 2007 was not effective to terminate the agreement.

53 On the appeal, no issue was taken with the findings of the trial judge that the stipulated time periods in each of the Amalgamation Condition, the Planning Condition and the Building Licence Condition were not met. The appeal turns in substance on whether (as the respondents argue), for the purposes of the definition of 'Viability Satisfaction Date' in cl 2.5.1, each of the Amalgamation Condition, the Planning Condition and the Building Licence Condition was satisfied only if the relevant event or events occurred within the stipulated times, or whether (as the appellant argues) they were satisfied when the relevant event or events actually occurred, regardless of whether or not they occurred within the stipulated time.

54 In my view, the primary judge correctly found that on the proper construction of the agreement it was the former. In explaining the reasons for that conclusion, it is convenient to take first the Amalgamation Condition. Amalgamation Condition is defined in cl 2.1.1 to mean 'the condition specified in this clause'. That, it seems to me, can only be a reference to cl 2.1.2, which makes the agreement conditional upon certain events occurring within stipulated time periods. Having regard to the terms of cl 2.1.2, the satisfaction of the Amalgamation Condition required that each of those events occurred within the stipulated time limit.

55 Clause 1.2 of the agreement provides that where words or phrases are defined in clauses of the agreement, they will have the same meanings 'for the purpose of the clause in which they appear and throughout this Agreement' (emphasis added). It follows that a reference in cl 2.5 to the Amalgamation Condition is a reference to the Amalgamation Condition as defined in cl 2.1.1. Accordingly, a reference in cl 2.5 to the satisfaction of the Amalgamation Condition means the occurrence of the events referred to in cl 2.1.2 within the time limits set out in that clause.

56 As mentioned above, in addition to the specific time limits in the Amalgamation Condition, the agreement also conferred upon the appellant, by cl 2.1.8, a right to terminate the agreement if the Amalgamation Condition was not satisfied by the first anniversary of the agreement; that is, if all of the events specified in cl 2.1.2 had not occurred by that date.

57 Each of the Planning Condition and the Building Licence Condition is to the same effect, except that neither contains a provision to the same effect as cl 2.1.8. Instead, they contain a provision that in comparable circumstances the agreement would automatically come to an end. It is unnecessary to consider whether those provisions are self-executing or require notice in order to bring the agreement to an end: see Cheshire & Fifoot, Law of Contract (9th Aust ed) [20.8]. While the terms of cl 2.2.8 and cl 2.3.7 respectively might indicate that they are self-executing, the requirement of notice in cl 2.2.9, and the apparently inadvertent omission of a comparable cl 2.3.8, tends to suggest to the contrary. In any event, nothing turns on that. Neither party sought to make anything of those termination provisions, and it is clear that neither treated them as having brought the agreement to an end.

58 The Viability Condition, cl 2.5, falls to be considered against that background. Clause 2.5 provides, in effect, that 'after the satisfaction of all other conditions in this agreement', and not later than 10 days after the last of those conditions has been satisfied, the appellant will consider whether or not Condor Tower is viable and, if it considers it is not, the appellant will be entitled to terminate the agreement by notice to the respondents.

59 The appellant mounted an argument that the words 'after the satisfaction of all other conditions in this Agreement' in cl 2.5.3 meant, not after satisfaction of the conditions set out in the Viability Satisfaction Date, but rather after satisfaction of all conditions contained in the agreement other than those set out in the Viability Satisfaction Date. Counsel for the appellant did not, however, identify what other provisions of the agreement would constitute a 'condition' for that purpose.

60 I do not consider that the argument has any substance. In the context, it seems to me plain that 'all other conditions' in cl 2.5.3 is a reference to the conditions set out in the Viability Satisfaction Date, other than the Viability Condition itself. I do not think there is any basis upon which it could reasonably be read in the sense contended for by the appellant.

61 It follows that on the proper construction of cl 2.5, the appellant's entitlement to consider the viability of Condor Towers arose after all of the other cl 2 conditions had been satisfied; that is, when all of the relevant events had occurred within the stipulated time limits. If, therefore, any of the conditions was not, and could never be, satisfied, the right to consider viability under cl 2.5.3 simply did not arise. On the facts of the present case, as none of the Amalgamation Condition, the Planning Condition or the Building Licence Condition was, or was capable of being, satisfied, no entitlement to consider viability under cl 2.5 arose.

62 It was submitted on behalf of the appellant that the parties could not have intended the agreement to bear such a meaning. It could never have been intended that the appellant's right to consider viability would be lost if it waived any of the relevant time limits. I do not agree. The time limits in the conditions in cl 2 were solely for the appellant's benefit. Where a relevant time limit was not met the appellant could either elect to avoid the agreement (putting aside any issue as to whether it could do so where that came about by reason of the appellant's default) or it could 'waive' reliance on the time limit, in the sense of expressly or impliedly intimating that it did not intend to enforce its right to terminate on the ground that the time limit has not been met: see The Commonwealth of Australia v Verwayen (1990) 170 CLR 394, 406. As the primary judge observed [51], it could be assumed that the appellant would waive reliance on a time limit only if confident that the development was viable, notwithstanding that the time limit had not been met.

63 The Viability Condition, on the other hand, was enlivened where all of the conditions had been satisfied; that is, in circumstances where no such opportunity to terminate had previously arisen. In those circumstances, the Viability Condition afforded the appellant the opportunity to consider the question of viability at that point and to terminate the agreement if it considered the development was not viable.

64 I should say that an alternative construction also appears to have been considered by the primary judge [72]; namely, that the right to consider viability under cl 2.5 arises upon the satisfaction of the last to occur of such conditions as are satisfied. On that construction, the appellant had the opportunity to terminate the agreement if any of the time limits were not met and a further opportunity to do so after the satisfaction of the last of such conditions as were met, if it considered the development was not viable. Such a construction does not, however, assist the appellant. In this case, the last condition to be satisfied, being the only condition to be satisfied, was the Pre-sales Condition and that was satisfied no later than 8 March 2006. On any view of the time within which notice of termination must be given under cl 2.5 (and once again, in that respect the provisions of cl 2.5 are far from clear), the appellant's notice of 28 June 2007 was well out of time.

65 In my view, the primary judge correctly found that the appellant's notice of termination of 28 June 2008 was ineffective to terminate the agreement.

Planning and Development Act 1928

Australian Broadcasting Commission v Australasian Performing Right Association Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (135 paragraphs)

CONDOR DEVELOPMENTS PTY LTD -v- HELSBY [2010] WASCA 16 (8 February 2010)

CONDOR DEVELOPMENTS PTY LTD -v- HELSBY [2010] WASCA 16 (8 February 2010)

Parties

Legislation Cited (2)

Cases Cited (5)