CIVIL AND EARTHMOVING CONTRACTORS OF KWINANA PTY LTD (ACN 009 328 376)

Removal of caveat - Contract for sale of land - Offer subject to purchaser obtaining planning approval - Application for planning approval refused - Plaintiff sought reconsideration - Discharge of injunction restraining transfer of land between defendants - Injustice as a result of delay - Defendants unable to obtain purchase price - Matter must progress to trial

Second Defendant (Second Applicant) : Minter Ellison

Third Defendant (Third Applicant) : Minter Ellision

Fourth Defendant (Fourth Applicant) : Minter Ellison

Caravan and General Finance Pty Ltd v Clearview Developments Pty Ltd (1976) 15 SASR 404

Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42

Re Henderson's Caveat (1993) Q ConvR 54-450

1 SCOTT J: On 11 April 2000 the second, third and fourth defendants applied to the court for the following orders:

3 The fifth defendant remove Caveat No G921731 registered on land described as Portion of Cockburn Sound Location 651 and being the whole of the land comprised in Certificate of Title Volume 2121 Folio 12 from the title of that land.

4 The injunction granted by this honourable Court on 3 September 1999 and extended on 23 September 1999 restraining the fifth defendant from registering transfer H189043 or any transfer between the first defendant and second defendant be discharged.

5 The plaintiff pay the costs of the second, third and fourth defendants in respect of this application."

2 This matter has a long and complex history. By contract of sale dated 17 October 1997, the plaintiff offered to purchase land known as Lot 651 Rockingham Road, Naval Base, being some 10.3928 hectares ("the land"). It is common ground that the land is properly described in the third order claimed in the chamber summons as set out above.

3 The terms of the offer and acceptance are significant in this application. The purchase price was $2,350,000 with a deposit of $100,000 to be paid on or before settlement. Special conditions were contained in annexure A to the offer and acceptance, importantly:

"Clause (4) This offer is subject to the purchaser obtaining planning approval to the purchaser's satisfaction.

Clause (5) If the purchaser is unable to obtain planning approval on the whole of the site due to the MRS land reservation then the vendor is to sell the remaining portion of the land as shown on annexure B to the purchaser if the purchaser wishes to exercise this option within 60 days of clause (4) at a price of $1,300,000.

The subdivision of this land will be the responsibility of the purchaser, with obvious access to be provided to the rear lot for the vendor."

4 After the offer and acceptance was entered into, the plaintiff produced preliminary subdivisional plans which were lodged with the WA Planning Commission on 22 December 1997. Importantly, from the plaintiff's point of view, it sought to have direct access from the subdivided land onto Rockingham Road. The subdivisional plan specified such access.

5 The evidence before this Court indicates that at all times the Main Roads Department has refused to agree to the plaintiff's proposal for vehicular traffic access to Rockingham Road. That decision was notified to the WA Planning Commission by letter of 30 March 1998 sent from the Main Roads Department. A copy of that letter was faxed to the plaintiff's agent on or about 2 April 1998.

6 The plaintiff has pursued the application for subdivision on the basis of access to Rockingham Road ever since that rejection. The second, third and fourth defendants have at all times been anxious for the settlement to take place and by notice in writing dated 30 June 1999, issued a default notice to the plaintiff. That notice, exhibit PT4 to an affidavit of Peter Tilly, sworn 1 September 1999, required the plaintiff to advise the second, third and fourth defendants of planning approval, and gave the purchaser notice that if it failed to do so within 14 days, the vendor would terminate the contract.

7 It is common ground that to the date of hearing this application, no approval has been given, although the purchaser has sought a reconsideration of the decision made by the WA Planning Commission.

8 Following the default notice, the defendants issued a written notice to terminate the contract on 15 July 1999.

9 On 27 July 1999 the plaintiff issued the present writ of summons seeking specific performance against the second, third and fourth defendants. That action is still progressing and a defence and counterclaim has been filed.

10 Since the rejection of the subdivisional proposal, the plaintiff has pursued the various government authorities for reconsideration of the decision. By letter of 20 October 1999 the WA Planning Commission wrote to the plaintiff confirming the rejection of the application and advising that an appeal could be lodged within 60 days of the decision. In that letter of rejection, the plaintiff was advised that the reason for the rejection arose from the proposed access to Rockingham Road and the letter provides:

"The applicant is encouraged to liaise with the Transport Branch of the Ministry for Planning Main Roads WA and the Town of Kwinana in order to develop a more acceptable plan of subdivision that eliminates the need for long term access from Rockingham Road, provides for future connection points to Hallett Court and Hope Valley Road and accurately reflects the existing and proposed amendments to the Primary Regional Road Reservation."

11 Following that rejection, the plaintiff sought reconsideration of the decision by way of an appeal and the plaintiff maintains that as at the date of hearing of this application, the appeal has not been resolved.

12 Other steps in relation to the application for approval of the plan of subdivision have been taken by the plaintiff but it is not necessary to set those out in these reasons, as the major steps taken by the plaintiff have been referred to.

13 In the end result, the first to fourth defendants have had this land tied up because of the offer and acceptance since 1 October 1997, a period of some 2-1/2 years. Those defendants have been unable to force the plaintiff to settlement and unable to deal with the land because the plaintiff's caveat prevents them from doing so. For those reasons, the second, third and fourth defendants have brought this application to have the caveat discharged.

14 In addition, as can be seen from the orders sought as set out earlier in these reasons, the defendants also seek the discharge of an injunction granted on 3 September 1999 and extended on 23 September 1999, which restrains the fifth defendant from registering the transfer therein specified between the first and second defendants.

15 The injustice to the second to the fourth defendants arising out of this intolerable situation is apparent from reciting the history of the matter. It is common ground that the plaintiff has paid no money under the offer and acceptance so that the land has been unavailable to the first, second, third and fourth defendants since 17 October 1997 (the date of the contract). The purchase has been fixed at $2,350,000 to be paid at settlement and there is no provision in the contract to allow for any variation in the price arising from the protracted and unsatisfactory delay.

16 Affidavits filed on behalf of the plaintiff indicate that the plaintiff has been pressing for a decision on the appeal but without success. In an affidavit of Anthony Alfred Wilkie ("Wilkie"), sworn 6 April 1999, Wilkie, a consultant engineer retained by the plaintiff says that he has been attempting to contact the Main Road Department at least four times per week since 19 January 2000 to ascertain the result of the plaintiff's application for a reconsideration of the planning refusal.

17 In the same affidavit, Wilkie deposes to the fact that on 10 February 2000, he was advised by a Mr Bailey of the Main Roads Department that an answer to the plaintiff's request for reconsideration was expected within a week. No decision has, however, been given on the plaintiff's application.

18 The second, third and fourth defendants maintain that the plaintiff has not done all that is possible to bring this matter to finality. They maintain that the plaintiff has been less than assiduous in pursuing the application. Affidavits filed on behalf of those defendants indicate that the original decision not to allow the plaintiff access to Rockingham Road is likely to stand.

19 In addition, the defendants maintain that the plaintiff was aware prior to entering into the offer and acceptance that approval of a plan of subdivision in the manner sought by the plaintiff would be refused. There is evidence to support that contention. The significance of that knowledge will become apparent when the legal position is discussed later in these reasons.

20 The affidavits filed by the second, third and fourth defendants in support of this application indicate that the plaintiff has been extraordinarily dilatory in progressing the action. The evidence, if accepted, indicates that the plaintiff is being obstructive and difficult and showing a marked reluctance to progress the action. Looked at objectively, the plaintiff suffers no disadvantage by delaying the action and not progressing the matter. The contract for purchase of the land is for a fixed price and the plaintiff has paid no consideration whatsoever. The land has been tied up under the offer and acceptance for 2-1/2 years and on the material filed in support of this application, the transaction appears to be no closer to settlement.

21 In support of this application, counsel for the second, third and fourth defendants relied upon Terra Nova Pty Ltd v Nalanda Pty Ltd [1977] Qd R 296, which involved the sale and purchase of land, a condition of settlement being that settlement of the contract was to be 30 days after the receipt by the purchaser or its solicitor of a notice in writing from the vendor or its solicitors that the relevant plan of subdivision had been registered.

22 In that case, the plaintiff had made known to the defendant that it required the land for resale and that it needed the moneys from such resale by October 1973. Registration of the plan of subdivision was liable to be delayed because of the necessity for providing in the plan of subdivision, a description for title purposes, of electricity substations and because of the necessity of resuming certain land so that an access road to the subject land could be widened. Those factors were not made known to the plaintiff purchaser by the defendant. The plaintiff gave the defendant notice that should the plan of subdivision not be registered by a specified date, it intended to rescind the contract. The plan was not registered by that date and notice of rescission was given.

23 Hoare J held that the plaintiff had in the circumstances allowed a reasonable time to elapse when it fixed the time requiring registration to be effected and that the day so fixed did allow a reasonable time to elapse within which the defendant was required to register the plan. Accordingly, his Honour held that the purported recission was effective. In his judgment, Hoare J held at 302:

"Having regard to all the circumstances and in particular paying proper regard to the importance of early completion if the whole purpose of the purchase was not to be frustrated, I am satisfied that the plaintiff purchaser did allow a reasonable time to elapse when he fixed the time for requiring registration to be effected and the day so fixed did allow a reasonable time to elapse within which the vendor was required to register the plan. Accordingly I hold that the purported recission of the contract was legally effective."

24 That case is the reverse of this. In that case it was the purchaser seeking recission. In this case, it is the vendor who is seeking to terminate the contract. The other, and important distinction between Terra Nova's case and this case is that the decision in Terra Nova followed a trial of the action, whereas this application is made at an interlocutory stage of the proceedings.

25 The difficulty with determining this application at the interlocutory stage is that questions of fact cannot be resolved until the evidence is tested. The second, third and fourth defendants maintain that the plaintiff has deliberately delayed finalising the settlement, thus preventing the defendants from either obtaining the purchase price or reselling the land. The plaintiff, on the other hand, maintains that it has done all that it reasonably could be expected to do to have the proposed plan of subdivision approved.

26 It is not possible to resolve that conflict of evidence at the interlocutory stage of proceedings. That having been said, however, it is clear that in this case the defendants have suffered and continue to suffer a considerable injustice in that the land has been tied up since 17 October 1997 so that the second, third and fourth defendants have been unable to obtain either their money or any advantage from appreciation in the value of the land since that date.

27 On the defendants' argument, and supported by affidavit evidence, a resolution of the problem, even now, is not imminent. Accordingly, the defendants will continue to suffer damage until some resolution of the problem is reached.

28 In some respects it is regrettable but, in my view, this application cannot be determined at this stage. There is no dispute that the offer and acceptance was a binding contract at the time that it was entered into and the question of the lawful termination of the contract will need to be resolved at trial. The second, third and fourth defendants are in the position in which they now find themselves because of the unsatisfactory terms and conditions of the offer and acceptance, which they executed. Their remedy, however, is to progress the matter to trial as expediently as possible.

29 In the circumstances, therefore, in my opinion, the application must be dismissed, but bearing in mind all the circumstances, the costs of the application should be reserved ultimately to the discretion of the trial Judge.