Supreme Court of WA|2008-06-16|Before: Beech J

BBC NOMINEES (WA) PTY LTD -v- YANGEBUP DEVELOPMENTS PTY LTD [No 2] [2008] WASC 117 (16 June 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : BBC NOMINEES (WA) PTY LTD -v- YANGEBUP DEVELOPMENTS PTY LTD [No 2] [2008] WASC 117

BETWEEN : BBC NOMINEES (WA) PTY LTD as Trustee for the MARKOVICH FAMILY TRUST

Practice and procedure - Application for summary judgment - Whether construction of special conditions sufficiently clear to support summary judgment - Turns on own facts

1 The defendant applied by chamber summons dated 3 June 2008 for summary judgment. At the hearing of the application on 11 June 2008, I ordered that the application be dismissed and said that I would give my reasons later. These are my reasons.

2 The facts relevant to this application are not in dispute.

3 On 19 April 2007 the plaintiff and the defendant entered into a contract (the Contract) for the sale by the defendant to the plaintiff of land described as proposed lot 513 (the Land).

4 The Land was not a lot as defined in the Planning & Development Act 2005 (WA). The Contract included special conditions set out in annexure A. Clause 4.3 of annexure A was in the following terms:

4.3. Condition 13 of the 2002 Revision of the Law Society and Real Estate Institute of Western Australia Joint Form of General Conditions for the Sale of Land ('the General Conditions') incorporated into this Contract shall be deleted and the following shall be inserted in lieu thereof:

4.3.1 This Contract is conditional upon and subject to the Seller being able to, at the expense of the Seller:

4.3.1.1 comply with any conditions imposed by the Planning Commission upon the creation of the Land; and,

4.3.1.2 cause the Planning Commission to affix its unconditional endorsement to a Deposited Plan of Survey describing the Land as a separate lot,

on or before the expiration of 270 days from the Contract Date.

4.3.2 If in the event that, for any reason howsoever arising, the Seller is unable to cause the Planning Commission to affix [its] unconditional endorsement to a Deposited Plan of Survey describing the Land as a separate lot on or before the expiration of 270 days from Contract Date then this Contract shall be at an immediate end without the need for either party to serve notice on the other and all deposit monies shall be repaid to the Buyer and neither party shall have any claim against the other either at law or in equity.

4.3.3 The Seller shall, as soon as is practical after the Planning Commission has affixed [its] unconditional endorsement to a Deposited Plan of Survey describing the Land as a separate lot, lodge the Deposited Plan so endorsed by the Planning Commission at the Office of Titles.

4.3.4 As soon [as] reasonably practicable after the Deposited Plan of Survey describing the Land as a separate lot is endorsed in order for dealings at DLI the Seller shall:

4.3.4.1 apply for a certificate of title to the Land as a separate lot,

4.3.4.2 upon making the application in satisfaction of Condition 4.3.4.1 above, notify the Buyer:

4.3.4.2.1 that the Deposited Plan describing the Land as a separate lot is endorsed in order for dealings at DLI

4.3.4.2.2 of the date at which the Seller made [the] application to DLI for issue of a certificate of title to the Land as a separate lot.

4.3.5.1 14 days from the date at which the Seller notifies the Buyer that a certificate of title to the Land as a separate lot has issued; or,

4.3.5.2 The date stipulated in the Contract, whichever is the later.

5 The 270th day after the Contract Date (19 April 2007) was 14 January 2008. By that date, the Western Australian Planning Commission (WAPC) had not affixed its unconditional endorsement to a deposited plan of survey describing the Land as a separate lot.

6 On or about 15 January 2008, the defendant gave written notice (the Termination Notice) to the plaintiff to the effect that the Contract was terminated under cl 4.3.

7 In the action, the plaintiff claims that the Termination Notice constituted a repudiation by the defendant of its obligations under the Contract and seeks specific performance of the Contract.

8 As explained in my earlier reasons, BBC Nominees (WA) Pty Ltd v Yangebup Developments Pty Ltd [2008] WASC 81 [24], the Termination Notice relied upon two grounds for termination; first, cl 4.3, and second, the subject to finance clause. In order to succeed at trial the plaintiff must prove that neither ground for the termination was lawful. In support of its application for summary judgment, the defendant relied upon cl 4.3 only. It is, therefore, unnecessary to say anything as to the other ground for the termination stated in the Termination Notice.

9 The defendant submitted that on a proper construction of cl 4.3 of the special conditions:

(a) the defendant had no obligation to take any steps to attempt to cause the WAPC to affix its unconditional endorsement to a deposited plan of survey describing the Land as a separate lot;

(b) if the WAPC did not affix its unconditional endorsement by the end of 270 days from the Contract Date then, without more, it could be said that the seller was 'unable to cause the [WAPC] to affix its unconditional endorsement ...' within the meaning of cl 4.3.2;

(c) in particular, if the seller chose to do nothing, with the inevitable consequence that the WAPC did not affix its unconditional endorsement, then the seller was 'unable to cause the [WAPC] to affix its unconditional endorsement ...'; and

(d) in effect, cl 4.3 gave the seller an option to choose whether or not to continue with the Contract or, if it so chose, to allow the condition in cl 4.3 to be unfulfilled so that the Contract was terminated after the expiration of 270 days.

10 The defendant submitted that the court should grant summary judgment on the basis of that construction of cl 4.3. In other words, the defendant invited the conclusion that the construction of cl 4.3 was sufficiently free of doubt as to support the grant of summary judgment in favour of the defendant.

11 In support of its construction of cl 4.3, the defendant emphasised two matters.

12 First, the defendant pointed out that by cl 4.3, the parties expressly agreed to the deletion of general condition 13 of the 2002 Joint Form of General Conditions for the Sale of Land (Law Society of Western Australia and REIWA). Condition 13 included, in condition 13.4, obligations upon the seller including an obligation of best endeavours in certain respects: condition 13.4(b)(i) and 13.4(b)(ii). The defendant submitted that the deletion by the parties of general condition 13, which included an obligation of best endeavours on the part of the seller, supported a construction of cl 4.3 that did not involve any obligation of best endeavours, or obligations of like character, being imposed upon the defendant.

13 Secondly, the defendant's submissions fixed upon the words 'for any reason howsoever arising' in cl 4.3.2. The defendant emphasised the width of those words.

14 The defendant accepted that summary judgment in its favour should be granted only if its construction of cl 4.3 (summarised above) were accepted, and if it were concluded that that construction was sufficiently free of doubt as to support the grant of summary judgment.

Principles relevant to grant of summary judgment

15 The caution with which the power to grant summary judgment is to be exercised is well known and was not in dispute on this application. In an application by a defendant, the defendant bears the onus of showing that there is no serious question to be tried on any cause of action raised by the plaintiff: Anderson v Effexseven (1998) 10 ANZ Ins Cas 61-424, 74-756 - 74-757. It is only when there is no real question to be tried that summary judgment will be granted. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceeding if it went to trial, that summary judgment ought properly be given: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads & Traffic Authority of NSW [2006] HCA 27; (2006) 226 CLR 256.

16 For the reasons which follow, there is, in my opinion, a real question at the least as to whether the defendant's construction of cl 4.3 should be accepted. That being so, it is inappropriate to grant summary judgment in favour of the defendant.

17 In the context of this application it is neither necessary nor appropriate for me to express any concluded views on the questions of construction of cl 4.3. For the purpose of dismissing this application it is sufficient to conclude, as I do, that the defendant's construction is not sufficiently clearly correct as to support the grant of summary judgment.

18 I accept the defendant's submission that in construing the special conditions, including cl 4.3, regard may be had to the deletion by the parties of general condition 13. See, in this regard, A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2] [2008] WASCA 112 [37] - [40].

19 Even though the deletion of general condition 13 is a matter to which regard is to be had, it is not the sole factor in determining the proper construction of cl 4.3. The fact that the parties agreed to delete general condition 13 and replace it with special condition cl 4 does not, to my mind, necessarily compel the conclusion that the parties intended cl 4.3 to operate in the way contended by the defendant (see [9] above). General condition 13 and special condition cl 4.3 are different in numerous respects. For example, they differ in the identification of the matters upon which the Contract was made conditional, the time for fulfilment of conditions, and the precise consequences of non-satisfaction of the various conditions. The construction of cl 4.3 is not necessarily to be approached by identifying a subject matter of a clause in general condition 13 on which subject matter cl 4.3 is silent, and then concluding that cl 4.3 must be construed as imposing no obligations in respect of such subject matter. The fact that general condition 13 included an express obligation of best endeavours in various respects and cl 4.3 does not contain an express obligation of best endeavours does not, of itself, compel a conclusion that the parties intended there be no obligations on the seller under cl 4.3. At the risk of stating the obvious, in construing cl 4.3, significance must be placed upon the language and evident purpose or object of that clause and of the Contract as a whole. I turn to the language of cl 4.3.

20 The defendant submits that the phrase 'for any reason howsoever arising' in cl 4.3.2 supports a construction of that clause as meaning that even if the non-satisfaction of the condition is brought about by the deliberate failure of the defendant to make any attempt to obtain the endorsement of the WAPC, the condition has thereby failed and the Contract is able to be brought to an end by the seller, or is at an immediate end by operation of cl 4.3.2. For the purposes of this application, I do not accept that submission.

21 The words 'for any reason howsoever arising' must be read in the context of cl 4.3.2 as a whole. The operation of that clause is engaged if, 'for any reason howsoever arising, the Seller is unable to cause the [WAPC] ... '. Thus the 'reason' must be a reason that the seller was unable to cause the WAPC to affix the relevant endorsement, not a reason that the WAPC does not affix the endorsement.

22 The defendant's construction argument seems to me to require attention to the meaning of the word 'unable' in cl 4.3.2, as well as the word 'able' in cl 4.3.1.

23 I do not accept the defendant's submission that cl 4.3.2 is, on a summary judgment application, to be construed as if it read 'if for any reason howsoever arising the WAPC does not affix its unconditional endorsement ...'. It is not clear to me what meaning is given to the words 'is unable to cause' in cl 4.3.2 by the defendant's construction. The clause does not say 'if the seller does not cause ... ', it says 'if the seller is unable to cause ... '.

24 In the Australian Concise Oxford Dictionary (4th ed) the first definition of 'able' is in the following terms:

(often followed by to + infinitive; used especially in is able, will be able, was able, etc, replacing tenses of can) having the capacity or power (was not able to come).

That meaning of the word 'able' is, arguably at least, apposite to the words 'able' and 'unable' in cl 4.3.1 and cl 4.3.2.

25 Therefore, cl 4.3.2 is capable of being read as meaning that if it is not within the capacity or power of the defendant to cause the WAPC to affix the relevant endorsement within the stipulated period, in that notwithstanding the defendant's best efforts the WAPC has not affixed the endorsement, then cl 4.3.2 is engaged.

26 The availability of that construction of cl 4.3 seems to me to be an answer to the defendant's application for summary judgment.

27 That construction of cl 4.3 is capable of supporting the plaintiff's claim in two ways. First, it may support a reading of cl 4.3 as giving rise, on a proper construction, to an obligation on the part of the defendant to use its best endeavours to obtain the WAPC endorsement. The argument would be that, in order to ascertain whether the defendant has been 'able to cause' WAPC endorsement, the defendant must use its best endeavours to obtain the endorsement. Secondly and alternatively, regardless of whether the clause imposes positive obligations on the defendant, cl 4.3 may be construed as, in effect, conditioning non-satisfaction of the clause by the unsuccessful exercise, by the defendant, of its best endeavours to obtain the WAPC endorsement. On that construction, it would only be concluded that the defendant was 'unable to cause' the WAPC to affix the endorsement if, notwithstanding the defendant's best efforts, the WAPC endorsement had not occurred by the end of the 270 day period.

28 The construction that I have just articulated is, arguably at least, reinforced by a consideration of the structure and evident object of cl 4, read in the context of the Contract as a whole.

29 On the face of it, the objectively ascertained intention of the parties as revealed by the Contract is that it be binding upon both of them, subject to satisfaction of various conditions including the finance condition and the conditions in cl 4.3.1. The language and structure of cl 4.3 suggests that its primary character is the creation of a condition subsequent, failure of which would cause the Contract to be at an end. Arguably at least, cl 4.3 sets a time limit for the completion of necessary procedural steps towards obtaining a separate certificate of title for the Land the subject of the Contract, and also covers the contingency that the necessary steps are not able to be taken in the stipulated time. In that event, the Contract is brought to an immediate end as determined by cl 4.3.2 or may be brought to an end by either party.

30 While the construction of every contract depends upon its own language, the courts are disposed against a construction which would enable a party to bring a contract to an end by its own deliberate action in causing the non-fulfilment of a condition. Gange v Sullivan [1966] HCA 55; (1966) 116 CLR 418, 441 - 442; Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 440 - 442. That disposition seems to me to tend against the defendant's construction of cl 4.3 as involving, in effect, an option to the defendant not to pursue the application to the WAPC and then to invoke cl 4.3, to bring the Contract to an end by giving notice, or as bringing the Contract to an end by its own operation. It is, of course, open to parties to a contract to provide one of the parties with an unfettered discretion to withdraw from the contract within a stipulated period. However, the language of cl 4.3 does not, to my mind, clearly reveal any such intention.

31 Further, it is, at the least, arguable that the rule of construction or implied term that a party agrees, by implication, to do all that is necessary on its part to enable the other party to have the benefit of the contract supports a term of the Contract that the defendant must cooperate in bringing about the affixing by the WAPC of the relevant endorsement. In Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160, Steytler J said as follows:

[I]t is a general rule applicable to every contract that each party agrees, by implication, to do all that is necessary on its part to enable the other party to have the benefit of the contract: Butt v M'Donald (1896) 7 QLJ 68 at 70 - 71 and Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 607. It follows that if performance of the contract is conditional on some event which is to any degree within the control of a party, that party must co-operate reasonably in bringing it about. Failure to co-operate in that way will generally disqualify the defaulting party from relying upon the non-fulfilment of the condition, or, to put it differently (as is sometimes done), courts will, in such cases, treat the condition as having been satisfied: see [Newmont Pty Ltd v Laverton Nickel NL [1983] 1 NSWLR 181 at 188]; GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 637; Mackay v Dick (1881) 6 App Cas 251 at 270; Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 at 433 and Paltara Pty Ltd v Dempster (1991) 6 WAR 85 [89].

See also Hanneybel v Uniflex (Australia) Pty Ltd [2002] WASCA 349 [60] - [61].

32 The defendant submitted that the implied term arising under Butt v M'Donald (1896) 7 QLJ 68 arises by implication in fact, or alternatively is a matter of construction and is not an implied term in law. I accept that submission: Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410. Thus the content of the implied term is confined by and may be excluded by the terms of the Contract.

(a) the implied term under Butt v M'Donald invites attention to the identification of the 'benefit of the contract'; and

(b) in this case, the benefit of the Contract from the plaintiff's point of view was affected by the fact that, on its proper construction, the Contract gave the defendant an option so that the implied term was, in effect, excluded.

34 I accept the first of those submissions but not the second. I have already set out my conclusion (and the reasons) that, for the purposes of this application, I am not satisfied that cl 4.3 of the Contract is to be construed as creating an option in favour of the defendant to elect whether to proceed with the Contract or not.

35 For the reasons given, it is, in my opinion, at least arguable that the terms of the Contract do not exclude the implied term or rule of construction referred to.

36 For these reasons, I refused the defendant's application for summary judgment at the hearing on 11 June 2008.

Development Act 2005

BBC NOMINEES (WA) PTY LTD -v- YANGEBUP DEVELOPMENTS PTY LTD [No 2] [2008] WASC 117 (16 June 2008)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (65 paragraphs)

BBC NOMINEES (WA) PTY LTD -v- YANGEBUP DEVELOPMENTS PTY LTD [No 2] [2008] WASC 117 (16 June 2008)

Legislation Cited (1)

Cases Cited (9)