Brunton v Hennessy [2020] NSWSC 972 | Case summary

The plaintiffs' claims for breach of contract

The first claim concerns the standard of the William Lawson Drive access.
The plaintiffs pleaded in paragraph 30 of the Statement of Claim that it was an express or alternatively implied term of the Lot 4 contract that the first defendant would construct the William Lawson Drive access by constructing: 1. a gravelled right of carriageway having a minimum reserve width of 20 metres, minimum reserve pavement width of 8 metres and a compacted gravel depth of 200mm and ensure that the specifications referred to above would apply to the access to Lot 4; and 2. a public roadway to provide for unimpeded access to all allotments of the subdivision including Lot 4 such as to withstand a one in one hundred year flooding event.
It was stated in the particulars that insofar as the term was expressed it is contained in Additional Conditions 11, 12 and 13 of the contract (set out above at [22]). The particulars then cite the terms of Additional Condition 12, which refer to "conditions similar or the same as the conditions applying to the development consent issued for the first stage of the subdivision that will result in registration of proposed lot 3". Reference is then made to conditions 15 and 14(c) of the 2016 consent (set out above at [27]). The above particulars are relied upon in support of the implication of the term.
The plaintiffs plead in paragraph 31 of the Statement of Claim that the defendant has breached the term by refusing to construct the William Lawson Drive access in compliance with the requirements of the term.
The first defendant denies that the Lot 4 contract contains the term pleaded in paragraph 30 of the Statement of Claim. The first defendant says that on the proper interpretation of the contract he was only bound to ensure that the development consent for the proposed subdivision contained conditions similar to or the same as a previous development consent he obtained. The first defendant denies that he has breached the contract as alleged.
I should add that the first defendant does not dispute (and the evidence is clear) that the William Lawson Drive access has not been constructed in accordance with the specifications contained in condition 15 of the 2016 consent. He maintains, based on the evidence of Mr Parker, that the roadway has been constructed to a standard at least as high as the specifications contained in condition 14 of the 2014 consent. It is not necessary to make any finding as to that matter. The evidence of Mr Gibbons establishes that the roadway was constructed in late-2014, prior to entry into the Lot 4 contract.
There was no dispute between the parties as to the principles applicable to the construction of written contracts, or the principles to be applied in implying terms as a matter of fact to give business efficacy to a written contract. As to the former, the plaintiffs referred to the recent summary of the principles contained in the judgment of Bathurst CJ in Lawrence v Ciantar [2020] NSWCA 89 at [98]-[101]. Reference was also made to the notion that preference is to be given to a construction that supplies a congruent operation to the various components of the whole contract (see Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16]). As to the latter, the plaintiffs referred to the seminal decision in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283, and Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32 at [21].
The plaintiffs, in their written submissions, stated that the parties to the contract knew that a development consent was necessary for the subdivision to be registered and that any consent would be likely to have associated conditions. It was contended that reasonable business persons would have understood from the context of the contract generally and Additional Condition 12 in particular, and the surrounding circumstances, that the defendant "would necessarily comply with any conditions of consent". It was submitted that the plaintiffs were entitled to assume or expect that the defendant would comply with any consent conditions, and that this expectation would "give congruency to the operation of the contract itself and the terms of any approval for the subdivision". Accordingly, the plaintiffs submitted that the conditions contained in the 2016 consent, including those concerning the specifications for the William Lawson Drive access, were express conditions of the Lot 4 contract.
The plaintiffs submitted that Additional Condition 12 was oddly worded in that it referred to the lodging of a "development application consent", and any conditions of consent were "in the gift of Oberon Council". It was submitted that Additional Condition 12 should be read so as to require the defendant to ensure that the development application he lodged would contain similar or the same "proposals" as applied to the earlier subdivision application. The plaintiffs submitted that because the defendant had no ultimate control over what conditions would be imposed by the Council, Additional Condition 12 should not be read as an agreement that the specifications for access to Lot 4 would be similar to or the same as those imposed for the earlier subdivision. It was noted that access to the lots in the earlier subdivision was not from O'Connell Road, but rather from roads to the south of the subdivision. It was also noted that Lot 4 was to be part of a larger eight lot subdivision "likely to attract a greater use of traffic and hence appropriate road construction". Finally, the plaintiffs submitted that the defendant's obligations under cl 28 of the contract included an obligation to comply with whatever conditions were imposed pursuant to the development consent (see Wardy v Hardy [2002] NSWCA 215 at [57]-[58]).
The plaintiffs submitted in the alternative that the term alleged should be implied, either because it arises from the express terms of the contract, or from the nature of the contract, or otherwise because it satisfied each of the conditions for the implication of a term as laid down in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra) at 283.
The first defendant, in his written submissions, stated that the term pleaded in paragraph 30 of the Statement of Claim does not appear expressly in the Lot 4 contract and could never have arisen by implication, bearing in mind that the 2016 consent was not in existence when the contract was made. The same submission is made in relation to a suggested term to the effect that the defendant would comply with the conditions of the development consent for the creation of the lot. The first defendant submitted that none of the conditions laid down in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra) were satisfied in this case. The first defendant submitted, in short, that he did not promise that he would build a better grade of road than presently existed along the William Lawson Drive access. The first defendant further submitted that insofar as reliance was placed on condition 14(c) of the 2016 consent, this was misplaced because the condition only applies if the William Lawson Drive access services more than four lots. This latter point seems to have been accepted by the plaintiffs.
In accordance with the well-established principles concerning the construction of written commercial contracts, it is necessary to consider the language employed by the parties, the surrounding circumstances known to the parties, and the commercial purpose and objects to be secured by the contract. The contract was for the sale of a lot in an unregistered plan of subdivision. The documents annexed to the contract included a plan of subdivision which indicated that the lot was proposed to be part of a ten lot subdivision. By Additional Condition 11 completion of the contract was made conditional upon registration of the plan of subdivision, and cl 28 obliged the first defendant to take all reasonable steps to have the plan of subdivision registered, and provided for certain rights of rescission if the plan was not registered within six months of the date of the contract. The draft s 88B instruments that were annexed to the contract indicated that Lot 4 was to have the benefit of rights of access, including over an existing track that evidently consists of or at least includes the William Lawson Drive access. The terms of Additional Condition 12 suggest that the parties were aware when the contract was made that the proposed subdivision was not yet the subject of a development consent. Those terms further suggest that the parties appreciated that any development consent issued for the proposed subdivision would contain conditions. It was not shown that the parties were aware that any particular conditions were likely to be imposed in relation to the proposed subdivision.
The parties may be taken to have contemplated that the first defendant, in discharging his obligations under the contract, including to register the plan of subdivision, would need to comply with the conditions set by the consent authority. The consent authority, of course, has powers of enforcement in relation to those conditions. The language of the contract does not, however, include any explicit promise given by the first defendant to the plaintiffs (and thus enforceable by the plaintiffs) to comply with any development consent conditions. Even in Additional Condition 12, where reference is made to such conditions, the language does not contain any explicit promise of that character. It is of course one thing for contracting parties to have an expectation that certain things will occur in relation to the contract; it is another thing for a party to give a binding promise to another party that those things will occur.
The language of Additional Condition 12 is problematic. Read literally, it refers to a development application consent that is "yet to be lodged", containing conditions similar or the same as those that apply to a development consent that has issued for the first stage of the subdivision. Of course, a development consent is issued, not lodged; and whilst a development application is lodged, it does not contain conditions. The essence of Additional Condition 12 is a warranty about the nature of certain conditions compared to conditions of a development consent that has already issued. It calls for a comparison between two development consents. It therefore seems to me that the reference to "lodged" must be regarded as an error. The expression "yet to be lodged" should thus be ignored, or perhaps treated as if it read "yet to be issued". On either basis, Additional Condition 12 constitutes a warranty by the defendant that the development consent for the subdivision that will create Lot 4 will have conditions similar or the same as those that apply to the development consent issued for the first stage of the subdivision that will result in the registration of lot 3. I do not accept the plaintiffs' submission that Additional Condition 12 should be read as imposing an obligation upon the first defendant to ensure that the development application he lodged would contain similar or the same "proposals" as applied to the earlier subdivision application.
The development consent "issued for the first stage of the subdivision that will result in the registration of lot 3" is clearly a reference to the 2014 consent. Accordingly, the effect of the warranty is that if the development consent for the subdivision that will create Lot 4 has conditions that are not similar or the same as the conditions applying to the 2014 consent, the plaintiffs could sue the first defendant for breach of the warranty, and if they were in a worse position than if the warranty had not been breached, the plaintiffs could recover damages so as to put themselves in the position they would have been in had the warranty turned out to be true. The plaintiffs have not in these proceedings advanced any case for breach of the warranty.
The first defendant took steps after the contract was made to obtain approval for the proposed eight lot subdivision. An application for development consent was lodged on 10 November 2015. The 2016 consent was issued on 15 March 2016. The consent recognised that the subdivision would proceed in stages, with the release of proposed Lot 4 being Stage 1. A Subdivision Certificate in respect of the staged release of Lot 4 was issued by Oberon Council on 15 September 2016, and the subdivision was registered on 18 October 2016. There is no suggestion that either side sought to rescind the contract pursuant to cl 28, and the plaintiffs have not pleaded any breach of cl 28. The parties proceeded to completion on 28 October 2016. Any failure to satisfy the condition referred to in Additional Condition 11 was thereby waived. I should add in this context that the first defendant's obligation under cl 28.2 to do everything reasonable to have the subdivision plan registered cannot extend to an obligation to do something that is not in fact necessary in order to obtain registration of the plan. The plaintiffs' submission based on Wardy v Hardy (supra) is stated too widely.
As I have said, the parties may be taken to have contemplated that the first defendant, in discharging his obligations under the contract (notably his obligations under cl 28 in relation to the registration of the plan of subdivision), would need to comply with the conditions set by the consent authority. However, the language of the contract does not include any express promise on the part of the first defendant to comply with all, or any particular, development consent conditions. It would have been a relatively simple matter for the parties to include provisions of that nature, but they did not do so. Moreover, insofar as the subject matter of development consent conditions is touched upon in Additional Condition 12, the first defendant gave a limited warranty, not a promise to comply with any development consent conditions that may be imposed.
Having considered the language of the contract as a whole, in light of the nature of the contract and the circumstances known to the parties at the time the contract was made, it is my view that reasonable business persons in the position of the parties would not have understood that the first defendant had made any promise to construct the William Lawson Drive access in accordance with any development consent condition that may be imposed. That is to say, it is my view that the Lot 4 contract, properly construed, does not contain an express term to the effect of that alleged in paragraph 30 of the Statement of Claim.
Neither do I consider that the contract contains any implied term to that effect. I am unable to accept that the suggested term arises either from the express terms of the contract, or from the nature of the contract. The term is not found as a matter of construction of the express terms, and the term is not implied as a matter of law as an incident of a particular class of contract (see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 345, per Mason J, citing Liverpool City Council v Irwin (1977) AC 239 as an example). The suggested term is not an incident of a contract for the sale of a lot in a proposed subdivision where access to the lot is required over the vendor's property.
Further, I do not think that the term satisfies the BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra) test for the implication of a term as a matter of fact to give business efficacy to the contract. At least, the term fails the test of necessity in that the contract would be effective without it, and it fails the test of obviousness in that it is not so obvious that it goes without saying.
The contract, involving the sale of Lot 4 and the grant of rights of access to the lot, is to my mind entirely effective and workable in the absence of the suggested term. I do not accept the plaintiffs' submission that the parties can be presumed to have intended that the first defendant would be obliged, to the plaintiffs, to comply with all the conditions of the 2016 consent. It was open to the parties to so stipulate but their failure to do so does not render the contract ineffective or unworkable according to the presumed intention of the parties.
It is not obvious to me that, had the matter been expressly adverted to by the parties, the first defendant would have agreed to construct an access road to whatever standard was later incorporated into the development consent for the subdivision. This is so in circumstances where the first defendant was prepared to give a warranty only to the extent that the development consent would contain conditions "similar or the same as" those contained in the 2014 consent. The limitation inherent in the warranty suggests that the first defendant may have been reluctant to assume an obligation that could require him to do more than was required by the 2014 consent. It seems to me that there is at least some tension between the suggested term and the warranty in Additional Condition 12. It is not necessary to consider whether the suggested term would contradict Additional Condition 12 such that another of the conditions for the implication of the term would not be satisfied.
For the above reasons, the plaintiffs have not made out their claim that the Lot 4 contract contained a term to the effect that the first defendant would construct a gravelled right of carriageway along the William Lawson Drive access that complied with the specifications contained in condition 15 of the 2016 consent. The plaintiffs' first breach of contract claim thus fails.
The plaintiffs' second claim is that the first defendant has refused to install cattle grids as required by Additional Condition 16 of the Lot 4 contract (see Statement of Claim paragraphs 25 and 26). The first defendant admits the term of the contract and says that the term required the installation of cattle grids "at all fences then crossing the access way". The first defendant denies any breach of the term and says: …that cattle grids were installed at two locations on the William Lawson Drive access way prior to exchange of Contracts in or about July 2015 and further denies that there was a breach of the Contract in that the First Plaintiff agreed in or about July 2015 for and on behalf of himself and the Second Plaintiff with the First Defendant that: a. the said cattle grids were impracticable and b. could be removed by the First Defendant and in reliance on the First Plaintiff's statement the First Defendant removed the grids so that on settlement of the Contract the Plaintiffs elected not to insist on performance of the said term and cannot now complain of any breach of it. Particulars of consent Conversation between the First Defendant and the First Plaintiff at the shearers quarters on the First Defendant's property, in which the First Defendant and the First Plaintiff were present in which the First Defendant said words to the effect: - "the cattle grids serve no purpose at all. I have decided to take them out." and the First Plaintiff said words to the effect "that's okay. It makes sense."
No evidence was adduced by the first defendant of the agreement said to have been reached with Mr Brunton in about July 2015. That aspect of the Defence may thus be put aside.
However, it was accepted in the opening written submissions of the first defendant that he has "previously breached" Additional Condition 16 "but has since remedied that breach". The breach is said to have been remedied by the removal in about late-May 2020 of the gates and races at about the 1,900m and 2,375m marks along the William Lawson Drive access (see at [52]-[54] above). I should add that in closing submissions counsel for the first defendant sought to resile from the concession.
Additional Condition 16 of the Lot 4 contract required the defendant to install cattle grids on the access track "where it crosses all fences and boundaries between O'Connell Road and the boundary of the subject Land". The "subject Land" is clearly a reference to proposed Lot 4. The condition is evidently concerned with certain points along the William Lawson Drive access which, at the time the contract was entered into on 12 August 2015, were crossed by "fences and boundaries". Unfortunately, there was a lack of evidence of the physical features of the land as at that time, such as would enable firm conclusions to be reached as to the points along the William Lawson Drive access where it was crossed by "fences and boundaries" within the meaning of the condition.
It can be discerned from some evidence given by Mr Brunton in his affidavit of 30 August 2019 (see paragraphs 28 to 31), coupled with the site plan prepared by Mr Noonan, that the sets of gates at about the 1,900m and 2,375m marks were in existence in August 2015. It further appears that this prompted the plaintiffs to instruct their solicitor to raise the matter in their negotiations with the first defendant's solicitors concerning the terms of the contract. The evidence of those negotiations, which is admissible to prove the existence of circumstances known to the parties at the time of the contract, does not shed any significant light on the matter, although I note that the 7 August 2015 letter from the first defendant's then solicitors makes reference to the existence of "stock corridors" in some, unspecified, locations along the road. Mention should also be made of the evidence of Mr Gibbons to the effect that he had installed some cattle grids (perhaps four of them) when he constructed the road in November-December 2014, but removed them, or some of them, in about late-August 2015 after the contract had been entered into (see above at [15] and [17]). It appears from Mr Noonan's site plan that there are now only two cattle grids, at about the 875m and 1,400m marks.
In these circumstances, it is difficult to conclude that the failure of the first defendant to install (or retain) cattle grids at other locations along the William Lawson Drive access constitutes a breach of Additional Condition 16. However, having regard to the manner in which the parties conducted the case in relation to this issue, including as reflected in the evidence adduced from the civil engineers, and the apparent concession made by the first defendant in opening submissions, I am prepared to find that the failures of the first defendant to install cattle grids at about the 1,900m and 2,375m marks, where sets of gates and races had been present until late-May 2020, amount to breaches of Additional Condition 16. Those sets of gates were able to be opened in such a way as to form a barrier across the road, and provide a passageway to facilitate the movement of stock from one side of the road to the other. Those points along the road might thus be regarded as places where the William Lawson Drive access was crossed by "fences and boundaries".
As mentioned earlier, the plaintiffs primarily seek the remedy of specific performance. Damages are claimed in the alternative, but no evidence was adduced in an attempt to establish that the plaintiffs suffered any particular loss, damage or injury as a result of the absence of cattle grids at those places.
The plaintiffs accepted that in order to obtain relief in the nature of specific performance, they had to demonstrate that damages were not an adequate remedy. They pointed to the fact that the contract was a contract for the sale of land, and that the William Lawson Drive access is land owned by the first defendant. It was submitted that the obligation imposed upon the first defendant by Additional Condition 16 was material to the quality of the road they were to use for access to their own land. It was further submitted that it would be difficult to measure damages by reference to any diminution in the value of their land as a result of the breach.
The first defendant submitted that specific performance should be refused because the Court would not be satisfied that damages were not an adequate remedy. It was submitted that the plaintiffs could have adduced evidence of loss or damage, but chose not to do so. It was submitted that specific performance should be declined on discretionary grounds, including that to now order the first defendant to install four new cattle grids at considerable expense would serve no useful purpose. It was put that any breach has been remedied by the recent removal of the gates and races.
In reply, the plaintiffs submitted that the removal of the gates and races in fact creates an impediment to access "by allowing the uncontrolled movement of sheep from one paddock across the access to another paddock".
Assuming that the defendant has breached Additional Condition 16 in the manner described above, I do not consider that the plaintiffs have shown that it would be appropriate to grant relief in the nature of specific performance. The obligation under Additional Condition 16 is of a type that is amenable to the grant of relief in specie, it being a promise to undertake works upon a right of way for the benefit of persons having the right to use it. Nevertheless, the breach in this case has not been shown to cause the promisee any substantial damage or injury. There was no evidence that the installation of cattle grids at those locations would provide any practical benefit to the plaintiffs in their use of the road. Indeed, it could be argued that the presence of grids would be a detriment to the extent that they restrict the speed of vehicles passing along the road.
It is suggested by the plaintiffs that the absence of cattle grids would allow uncontrolled movement of stock across the access road, and I note that Mr Parker stated that the removal of the gates and races would make the movement of stock more difficult. I accept that cattle grids at those locations would facilitate the movement of stock by the first defendant in a more or less orderly fashion, but it has not been shown that the absence of grids renders such movement impossible or even difficult to achieve using other means. I am thus not satisfied that the absence of cattle grids gives rise to a substantial risk that the first defendant's use of his land, which involves the occasional movement of stock, will detract from the plaintiffs' enjoyment of the William Lawson Drive access. Of course, quite apart from any contractual obligations, the defendant as the owner of land burdened by the right of way must not use his land in any way that amounts to an unreasonable interference with the rights conferred by the easement.
That the plaintiffs have not proven that they have suffered damage does not necessarily lead to the conclusion that damages are an adequate remedy (see Beswick v Beswick [1968] AC 58 at 102). The question is essentially whether the remedy at law is inadequate to meet the justice of the case (see Wilson v North Hampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279 at 284 per Lord Selborne). In the present case, I am not satisfied that an award of nominal damages would not be an adequate remedy for the breach. It is not a case where the only damages that would ever be available for such a breach would be nominal, as occurs, for example, with promises to confer a benefit upon a third party (see Beswick v Beswick (supra) at 90 and 102; Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 at 503). In cases of that kind, the very circumstance that the damages would only be nominal supports a conclusion that damages are an inadequate remedy. Here, a breach of Additional Condition 16 might have caused loss to the plaintiffs that would sound in an award of substantial damages.
In the absence of proof of such loss, I am not convinced that an award of nominal damages would not be an adequate remedy for the breach. In reaching that conclusion I have taken into account the nature of the contract, and the promise that has been breached. In addition, it is my view that it would not be appropriate to require the first defendant to install four cattle grids at significant cost when it has not been demonstrated that the grids would serve any useful purpose for the plaintiffs. Mr Noonan estimated that it would cost $48,000 to install four cattle grids of 8m in width. Presumably, four cattle grids of about 4m in width would cost less, perhaps an amount in the order of about $30,000. I would not be prepared to make an order that would require the first defendant to incur expense of that magnitude when no real or tangible benefit to the plaintiffs would follow.
Accordingly, the plaintiffs will be awarded nominal damages only, in the sum of $100.00, in respect of the first defendant's breach of Additional Condition 16 (see State of New South Wales v Stevens (2012) 82 NSWLR 106; [2012] NSWCA 415 at [37] and [79]; In the matter of ACT Land Pty Ltd (in liquidation) [2019] NSWSC 1860 at [62]).

Brunton v Hennessy

At a glance

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Judgment (5 paragraphs)

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Cases Cited (12)

Cited By (1)