BETWEEN : GRAHAM GEOFFREY WALKER and THELMA JEAN WALKER as trustees for the WALKER SUPERANNUATION FUND

CLOUGH PROPERTY CLAREMONT PTY LTD (ACN 112 098 361)

Statutory construction - Principles - Mischief ascertained - Implications for contracts infringing

Strata title - Lots - Contracts of sale - Illegality - Consequences of infringement - Effect on contractual enforceability

Banking Act 1959 (Cth)

Interpretation Act 1984 (WA), s 18, s 19

Planning and Development (Consequential and Transitional Provisional Provisions) Act 2005 (WA)

Planning and Development Act 2005 (WA)

Sale of Land Act 1962 (Vic), s 6

Sale of Land Act 1970 (WA), s 13, s 14

Strata Titles Act 1985 (WA)

Trade Practices Act 1974 (Cth)

ACQ Pty Ltd v Cook [2009] HCA 28; (2009) 237 CLR 656

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 83 ALJR 1152

Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2007] HCA 38; (2007) 232 CLR 1

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297

Fitzgerald v F J Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215

Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [No 2] (2008) ATPR 42-240

K-Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4; (2009) 252 ALR 471; (2009) 237 CLR 501

Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33

Master Education Services Pty Ltd v Ketchell [2008] HCA 38; (2008) 236 CLR 101

Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538

Northern Territory v Collins [2008] HCA 49; (2008) 235 CLR 619

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514

Stingel v Clark [2006] HCA 37; (2006) 226 CLR 442

Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410

1 The plaintiff purchasers seek to avoid a contract of sale entered into during 2007. The purchasers committed to acquire an 'off-the-plans' strata unit in a multi-storey apartment development proposed for construction at Claremont - in the western suburbs of Perth.

2 Four actions were heard together. Three have since settled following the reservation of my decision after the hearing. In the three terminated actions there was a common vendor. Each plaintiff purchaser commonly sought a declaration that their respective contract of sale was void (as the strata apartment buildings under construction either reached or approached completion). The asserted basis for each contract of sale being declared void, was in each case, illegality - on the basis of alleged non-compliance by the vendors with s 13 of the Sale of Land Act 1970 (WA) (SLA). The illegality was said to have arisen in 2007, since each contract of sale when entered was said to have violated a statutory prohibition upon each vendor in terms that they 'shall not sell', under s 13(1) of the SLA.

3 In the remaining action, CIV 2180 of 2009 (Clough action), the location of the apartment development (St Quentins Avenue, Claremont) and the vendor (Clough), are distinct, but the s 13 point of law commonly presents. The Clough action however, raises a further legal issue - also concerning alleged illegality and consequent contractual invalidity, this time grounded upon arguments of alleged non-compliance with s 14(1) of the SLA. Both s 13 and s 14 of the SLA are found in Pt III of that Act.

4 The essential issues for determination in the Clough action can be broadly summarised as follows:

(a) whether s 13 or s 14 have any applicability at all;

(b) if those sections are applicable, whether their provisions were transgressed in 2007 by Clough as vendor; and

(c) if a transgression is established by Clough against s 13 or s 14, does that necessarily generate a result whereby in law the contract of sale must be declared illegal and void - with the further consequence that the plaintiff purchasers in 2009 cannot now be compelled to settle and complete the acquisition of their strata lot, which is now completed or is nearing its completion.

5 Examination of these issues raises questions as to the proper interpretation of a number of provisions within the SLA, especially in Pt III. In the process, it is also necessary to consider the statutory history of the SLA, which contains some provisions uniquely West Australian in derivation and upon which there is a dearth of elucidation in prior case authority. Naturally, the two sections (ss 13 and 14) which are said to generate an outcome of the Clough contract of sale being illegal and void, need to be construed in their surrounding statutory context, not only within Pt III, but also within the scheme of the SLA as a whole. It will also be necessary for me to mention briefly some of the more important principles of statutory construction which govern.

6 Although the SLA commenced operation in Western Australia as Act No 119 of 1970 on 1 February 1971, it has been amended a number of times since. In particular during 1985, the critical sections s 13 and s 14, were amended to afford them an expanded ambit of application - to an area they had previously not operated. From inception in 1971, s 12 of the SLA rendered Pt III inapplicable to sales of 'lots' that fell within the regime of the former Strata Titles Act 1966 (STA 1966). Part III of the SLA otherwise applied to sales of 'lots' within a subdivision or proposed subdivision - sometimes referred to as 'broadacre subdivisions'. However, in 1985, s 12 was repealed and s 13 and s 14 were relevantly amended to achieve the expanded ambit of application towards sales of 'lots' in the arena of subdivisions or proposed subdivisions, created under the contemporaneously introduced new Strata Titles Act 1985 (WA) (STA 1985) (most of which commenced operation effectively on 30 June 1985).

7 The exercise in statutory interpretation for s 13 and s 14 of the SLA therefore involves an understanding of an interplay (as from 30 June 1985) between the amendments to Pt III of the SLA, in relation to its newly acquired applicability to strata lot subdivisions in the new STA 1985. The Acts Amendment (Strata Titles Act) 1985 (WA) (Acts Amendment ST Act), effected the repeal of s 12 and the amendments to s 13 and s 14 within Pt III of the SLA. It also commenced from 30 June 1985 - in conjunction with most of the new STA 1985.

8 There is also a potential intersection between a third tier of West Australian legislation and the SLA. The intersection arises out of s 11 of the SLA, which defined from its outset in 1971 the term 'lot' by reference to the definition of 'lot' contained in the Town Planning and Development Act 1928 (TPDA). Section 11 then elaborates upon the TPDA 'lot' definition. By 1 February 1971, as the SLA commenced its operation, the term 'lot' in the TPDA, particularly when used in the context of subdivisions under s 20 of the TPDA, had generated some significant local litigation. The history is summarised in the reasons for decision of Wickham J in Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33, at between pages 34 and 37.

9 Arguments of statutory construction as to the true meaning of s 13 of the SLA, call attention to a surrounding and somewhat high profile litigious history of s 20 of the TPDA - (which of course dealt with non-strata title subdivisions). This history sustains what is, in effect, a reading down argument by Clough to the effect that s 13 of the SLA, correctly understood, never had any application whatsoever to the 2007 contract of sale with the plaintiff.

10 The four original actions were heard together, proceeded to a trial over two days before me in October 2009, on a largely uncontroversial factual basis. By agreement, there were no pleadings. In each action the parties filed a short statement of facts, issue and contentions. Affidavits sworn on behalf of the respective plaintiff purchasers were tendered. The affidavits were received as exhibits in each action. It was agreed they contain all relevant contractual information. There was no cross-examination of the deponents.

11 The evidence in the Clough action which had commenced by writ on 29 June 2009, comprised one affidavit from Graham Geoffrey Walker, sworn 23 June 2009. Clough Property Claremont Pty Ltd (Clough) is the defendant vendor. Mr Walker's affidavit (exhibit 4) attaches a copy of the contract of sale document, which was accepted on 11 May 2007 by Clough, in respect of proposed apartment L404. L404 was to be constructed as a strata lot on proposed strata survey plan 52198, over Lot Pt 70 at the St Quentins Avenue location at Claremont (Walker contract).

12 The Walker contract is an elaborate written instrument containing many pages of incorporated terms and conditions. It seeks to incorporate by reference to a greater or lesser extent, the Joint Form of General Conditions for the Sale of Land, as published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (2002 General Conditions).

13 Perusal of the contents of the Walker contract displays constant reference to the 'off-the-plans' purchase character of the 2007 transaction. The content is such that the purchasers could not have been in any doubt in 2007 that they were entering a commitment to acquire a strata property (lot) which was yet to be created, but would in the future be built and finished by Clough. Such an 'off-the-plans' property acquisition is sometimes referred to as a 'pre-sale'. Vendor developers commonly finance their construction projects by utilising pre-sale arrangements. The strata lot that is the subject of the contract of sale, was to be constructed in the near future. Multi-level subdivisional strata level projects are sometimes referred to as 'horizontal subdivisions' - albeit that such terminology can be confusing in the context of a multi-storey proposed building which is planned to be built vertically rising upwards from ground level, as its component horizontal levels are completed in rising layers.

The Strata Titles Act 1985

14 It needs to be recorded at an early point, that no argument was put by the plaintiff purchasers during trial, that the provisions of the STA 1985 had been infringed by Clough. Part V of the STA 1985 contains provisions which are applicable to proposed strata lots, such as the Walker contract of sale under consideration. Elaborate measures of legislative protection for purchasers of proposed strata lots are found within s 69, s 69A, s 69B and s 69C of the STA 1985. By s 69D, a purchaser is given a right to elect to avoid a contract of sale for the acquisition of a strata unit, in circumstances where the required information as specified under the provisions of Pt V has not been provided to the purchaser (or at least has not been substantially provided) in the context of an acquisition of an 'off-the-plans' strata lot.

15 Section 70 of the STA 1985 is a Pt V provision of particular protective importance for purchasers of 'off-the-plans' strata units. That section imposes a requirement for the deposit and any other moneys paid by a purchaser prior to registration of a strata plan - to be paid into a trust account and held there, either by a solicitor, a real estate agent, or settlement agent, until the time that the strata plan is registered. The consequence of a contravention of the obligation to hold a purchaser's 'moneys in trust', is (once again) potential avoidance of the contract of sale - at an innocent purchaser's election made prior to registration of the strata plan; see s 70(3) of the STA 1985.

16 As I have observed, none of the Pt V provisions are contended to have been infringed by Clough in this litigation. But, the plaintiffs say that satisfaction of the requirements of Pt V of the STA 1985 by the vendor, is insufficient. They contend that further protective provisions found under s 13 and s 14 of the SLA are also applicable to their situation, and have been infringed by the vendor - resulting in an illegality which renders the Walker contract completely void.

17 Examination of the protective provisions found within the STA 1985, particularly in Pt V, renders it crystal clear that from 1985, the Western Australian Parliament clearly recognised the existence of the phenomenon of 'off-the-plans', or 'pre-sales' of proposed strata lots. Part V of the STA 1985 demonstrates by its content that whilst seeking to inject measures of protection for purchasers of 'off the plans' strata lots to be created, that the Parliament plainly did not seek to prohibit that practice. Part of Parliament's prescribed protection under Pt V involved a sensible measure of securing in trust any purchaser's moneys paid to acquire a future strata lot in a proposed subdivision - in the period prior to a strata plan being registered for the strata subdivisional development.

18 Parliament's permissive, albeit protective, attitude in the STA 1985 towards pre-sales or 'off-the-plans' sales of proposed strata units, as is manifested in the provisions of the STA 1985, is relevant to assessing the same Parliament's legislative intent in relation to its 1985 amendments made to Pt III of the SLA, by amending Act 40 of 1985, (which took effect on 30 June 1985 - the same day most of the new STA 1985 took effect). This broad perspective is called for in an evaluation of the plaintiffs' core arguments that s 13 and s 14 (as amended in 1985), in operation effectively prohibit certain classes of pre-sales of strata lots in a proposed strata subdivision. I evaluate those arguments below.

19 Finally, it is necessary for me to mention that the STA 1985's definition of 'lot' is different to the definition of 'lot' in s 11 of the SLA. The SLA from February 1991, imported the definition of 'lot' from s 2 of the TPDA. The SLA expressly elaborates the definition of 'lot' to capture as well, areas of land that will constitute a lot in a 'proposed subdivision', ie, future lots yet to be created.

20 It will be necessary for me to consider in more detail the precise content of Pt III of the SLA as that legislation applied in 2007, when the Walker contract was entered. Before doing so however, it is necessary for me to briefly mention some principles of statutory interpretation relevant to the task.

21 There appeared little if any difference as between the parties, over these general principles, at trial. Accordingly, I only propose to summarise in brief terms, some more pertinent principles applicable to the statutory construction exercise required to be undertaken here:

1. The proper approach to statutory construction begins with a consideration of the text itself; see Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 83 ALJR 1152 [6] and [47].
2. '[T]he fundamental duty of the Court is to give meaning to the legislative command according to the terms in which it has been expressed; legislative history and references to the pre-existing law should not deflect the Court from its duty in resolving an issue of statutory construction which ultimately is always a text-based activity; see Northern Territory v Collins [2008] HCA 49; (2008) 235 CLR 619 at 623 [16] per Gummow ACJ and Kirby J.
3. The language of a statute is to be applied according to its terms, not by reference to an assumption as to the kind of case in which it would be most likely to be invoked; see Stingel v Clark [2006] HCA 37; (2006) 226 CLR 442 at 449 [29] per Gleeson CJ, Callinan, Heydon and Crennan JJ.
4. By s 18 of the Interpretation Act 1984 (WA) (Interpretation Act) the court should consider 'a construction that would promote the purpose or object underlying the written law (whether that purpose or object is expressly stated in the written law or not') 'shall be preferred to a construction that would not promote the purpose or object'.
5. Section 19 of the Interpretation Act identifies the extrinsic materials which a court may consider in order to confirm the meaning of a provision in a written law, or to determine the meaning of a provision where there is ambiguity or obscurity in the ordinary meaning.
6. Secondary materials cannot be substituted for the text of legislation; see K-Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4; (2009) 252 ALR 471; (2009) 237 CLR 501 at 482 [53] per French CJ and Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518 per Mason CJ, Wilson and Dawson JJ.
7. A statutory provision is to be construed consistently with the language and purpose of all of provisions of the statute; see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 381 [69] per McHugh, Gummow, Kirby and Hayne JJ.
8. A court will prefer a construction of legislation that avoids an absurd, extraordinary, capricious, irrational or obscure result; see Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 321 per Mason and Wilson JJ.
9. A court will not construe a statute in a particular manner simply because of hypothetical consequences which may be categorised as absurd, extraordinary, capricious, irrational or obscure, when they arise in situations other than those being considered by the court; see ACQ Pty Ltd v Cook [2009] HCA 28; (2009) 237 CLR 656 at [28] per French CJ, Gummow, Heydon, Crennan and Bell JJ.

2007 - Part III Sale of Land Act 1970 (as amended)

22 It is of course necessary to construe the provisions of the SLA legislation within their overall statutory context and setting within the Act, as a whole. It will suffice however, for general orientation purposes for me only to set out the provisions of Pt III of the SLA, as it applied in 2007.

23 Before setting out those SLA Pt III provisions, however, it is necessary to refer to the definition of 'terms contract' in s 5, in Pt I and which has particular significance to purchaser protections found within Pt II of the SLA:

1. In this Act unless the contrary intention appears -

...

'terms contract' means an executory contract for the sale and purchase of land under which the purchaser is -

(a) obliged to make 2 or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land; or

(b) entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land,

and for the purpose of this interpretation deposit includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract.

24 Part III of the SLA contains s 11 to s 15 inclusive. Section 12 was repealed in 1985. The provisions of Pt III in 2007 were in these terms:

Part III ** - Restrictions on sale of subdivisional land**

In this Part, unless the contrary intention appears -

lot has the same meaning as it has in the Planning and Development Act 2005 and includes an area of land in respect of which it is represented, by or on behalf of any person attempting to promote the sale of that area of land, that it will constitute a lot in a proposed subdivision;

proprietor has the same meaning as it has in section 4 of the Transfer of Land Act 1893; and

sell includes -

(i) assign an interest in;

(ii) assign the benefit of a contract relating to;

(iii) confer a right to purchase, to acquire an interest in, or to acquire the benefit of a contract relating to;

and

(b) offer, hold oneself out or advertise as being willing, or agree to sell or, for valuable consideration, to do as mentioned in paragraph (a)(i), (ii) or (iii),

and selling and sold include corresponding meanings.

[Section 11 amended by No. 38 of 2005 s. 15.]

[12. Deleted by No. 40 of 1985 s. 4.]

(1) A person who would, but for this Act, have the right to sell 5 or more lots in a subdivision or proposed subdivision, or 2 or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985, shall not sell any of such lots unless -

(a) he is the proprietor thereof;

(b) he is selling as agent of the proprietor;

(c) he sells the lot as one of 5 or more lots sold to one person in the one transaction or as one of 2 or more lots so sold in the case of lots in a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985;

(d) he is empowered by or under an Act to execute a transfer thereof that is registrable under the Transfer of Land Act 1893; or

(e) he is presently entitled to become the proprietor of the lot.

Penalty: $750.

(2) A person shall be deemed not to be presently entitled to become the proprietor of a lot unless he is, at the date he sells the lot, entitled to be registered as proprietor of it under one or more registrable instruments or under one or more applications made under the Transfer of Land Act 1893 which have been lodged with the Western Australian Land Information Authority established by the Land Information Authority Act 2006 section 5.

(3) For the purpose of this section an instrument or an application which was at the relevant time lodged as described in subsection (2) but was defective is to be taken to give as good an entitlement to be registered as proprietor as it would give if there were no defect in the instrument or application -

(a) if the instrument has subsequently been registered or the application granted without having been returned by the Registrar of Titles or having been withdrawn from the registration process; or

(b) if the Registrar of Titles certifies in writing that he is satisfied that the defect was not of a substantial nature and that it has been remedied.

[Section 13 amended by No. 40 of 1985 s. 5; No. 81 of 1996 s. 153(1) and (2); No. 60 of 2006 s. 157.]

1. Restriction on sale of mortgaged subdivisional land

(1) A person who has the right to sell 5 or more lots in a subdivision or proposed subdivision, or 2 or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985, shall not sell any of such lots that is subject to a mortgage unless the mortgage relates only to that lot and he sells the lot under a contract which provides that the consideration for the sale of the lot shall be satisfied, to the extent of any money owing under the mortgage at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the lot sold, by the purchaser assuming on and from that date the obligations of the mortgagor under the mortgage.

Penalty: $750.

(2) Subsection (1) does not apply to a person who sells the lot -

(a) as one of 5 or more lots sold to one person in the one transaction or as one of 2 or more lots so sold in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985; or

(b) under a contract which provides that -

(i) any mortgage affecting the lot sold is to be discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract; and

(ii) the deposit and all other moneys payable under the contract, other than any money payable in excess of the amount required to so discharge the mortgage, are to be paid to a certificated practitioner (within the meaning of the Legal Practice Act 2003) or to a licensee, as defined in section 2 of the Land Agents Act 1921 2, to be applied by him in or towards so discharging the mortgage,

but where the mortgage is not discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract and the purchaser of the lot under the contract is not in default under it, he may, by notice in writing served on the vendor of the lot under the contract at any time prior to the mortgage being discharged as to that lot, rescind the contract and thereupon may, in a court of competent jurisdiction, recover from that vendor all moneys paid by that purchaser under the contract.

(3) In subsections (1) and (2) 'mortgage' does not include any floating charge on the whole or any part of the undertaking or property of a corporation.

[Section 14 amended by No. 40 of 1985 s. 6; No. 65 of 2003 s. 64(2).]

(1) Where the Minister considers that a person had, immediately prior to the coming into operation of this Act, legal obligations or other commitments in respect of any land, by reason of which it would be unreasonable for the restrictions of sections 13 and 14, or any one of them, to apply to the sale of that land, or any part of it, by that person, the Minister may, by a notice published in the Government Gazette within 12 months after the coming into operation of this Act, exempt that person from those restrictions in respect of the sale of that land or any part of it, on such terms and conditions as the Minister thinks fit and are specified in the notice.

(2) Where the Minister has granted an exemption under subsection (1), he may by a notice published in the Government Gazette at any time, revoke the exemption or vary it, as specified in the notice, as to the land or any part of it in respect of which, or the terms and conditions on which, it was granted.

(3) Where the Minister considers that a person had, immediately prior to the coming into operation of the Acts Amendment (Strata Titles) Act 1985 [Section 15 amended by No 40 of 1985 s 7], legal obligations or other commitments in respect of any land, by reason of which it would be unreasonable for the restrictions of sections 13 and 14, or any one of them, to apply to the sale of that land, or any part of it, by that person, the Minister may, by a notice published in the Government Gazette within 12 months after the coming into operation of the Acts Amendment (Strata Titles) Act 1985, exempt that person from those restrictions in respect of the sale of that land or any part of it, on such terms and conditions as the Minister thinks fit and are specified in the notice.

(4) Where the Minister has granted an exemption under subsection (1), he may by notice published in the Government Gazette at any time, revoke the exemption or vary it, as specified in the notice, as to the land or any part of it in respect of which, or the terms and conditions on which, it was granted.

25 Because of the starkly differing positions of the parties in relation to the proper construction of s 13 and s 14, it is necessary to highlight as foundation material some aspects of the more important defined terms within Pt III of the SLA.

26 First, I mention within s 11, the key definition of the term 'proprietor' which is implemented by specific reference to the definition of s 4 of the Transfer of Land Act 1983 (TLA). Given that use of the TLA definition by the SLA, the term 'proprietor' as used in the SLA, means (unless a contrary intention appears) the entity whose name appears in the Register of Titles, as proprietor. In other words, only the registered (ie, legal) owner meets the SLA's definition of 'proprietor', under s 11 of the SLA. The SLA's terminology as deployed is not wide enough to extend to cover an equitable owner. The term 'proprietor' is then used very significantly within s 13(1)(a), (b) and (e), as well as in s 13(2) and (3) of the SLA.

27 Next, I observe that the definition of 'sell' in s 11 is in broad terms, in that it covers offers to sell, or to where someone agree(s) to sell (s 11(b)). The term 'sell' is therefore used in a wide fashion in the SLA which extends beyond a bare legal conveyance scenario. Plainly, it also covers an executory contract of sale scenario.

28 Third, the definition of 'lot' in s 11 utilises a meaning of that term from the Planning and Development Act 2005 (WA) (PDA). There now appears to be a recently arising overall incongruity in this approach, which I will mention below. However, first I highlight the extended definition of 'lot' that is carried by the phrase 'and includes an area of land ...' This augmentation embraces as scenarios of 'sell', representation and the promotion of sales of areas of land that presently do not, but in future 'will constitute a lot in a proposed subdivision'. Hence future lots, not yet in existence, albeit sold to a purchaser as contemplated to exist in future, are captured within the s 11 definition of 'lot'.

29 A recent incongruity in the SLA's use of the definition of 'lot' in the PDA - arises out of an amendment under No 38 of 2005, which took effect on 9 April 2006, by s 15 of the Planning and Development (Consequential and Transitional Provisions) Act 2005 (WA) (PD Consequential Provisions Act). No doubt the broad legislative objective of the PD Consequential Provisions Act was to update the multiple affected tranches of existing WA legislation by reference to the new PDA (which largely replaced the former provisions of the TPDA). But there seems to have been an unintended consequence carried under the PD Consequential Provisions Act omnibus alterations, insofar as they applied to the SLA. The PDA contains a new definition of the term 'lot'. It has a concluding proviso that excludes lots in relation to strata schemes, etc.

30 However, s 13 and s 14 of the SLA, since 30 June 1985, expressly do apply to strata subdivisions or proposed strata subdivisions effected or continued under the STA 1985 as regards a subdivision or proposed subdivision of two or more lots or five or more lots. It does not seem therefore, that it could possibly have been the intention of Parliament under the PD Consequential Provisions Act, to render s 13 and s 14 once again inapplicable to strata subdivisions or proposed subdivisions concerning strata lots - as from 9 April 2006. Had that result been intended, surely express references to subdivisional (strata) lots under the STA 1985 in s 13(1) and s 14(1) of the SLA, would have been removed.

31 At trial, both counsel for the plaintiffs and the defendants identified this definitional incongruity in the term 'lot'. The plaintiffs submitted that the incongruity is to be resolved by the preface to s 11 of the SLA and that a contrary intention, on analysis, does appear. That contrary intention had been demonstrated, notwithstanding the amended definition of 'lot'. The result was that s 13 and s 14 of the SLA must remain applicable to subdivisions or proposed subdivisions to create strata lots for the purposes of the STA 1985. Counsel for Clough did not challenge that proposition. I accept the submission. The outcome is, in my view, the only rational explanation. Accordingly, the term 'lot' as used in s 11 of the SLA, post-9 April 2006, is to be interpreted within s 13 and s 14, on the basis that 'lot' will continue to have application to strata subdivisions or proposed strata subdivisions. Nevertheless, the unacceptably confused drafting on this point should be corrected.

32 That concludes my reference to some key definitional components from s 11 which are required to be borne in mind in a following exercise of statutory construction concerning s 13 and s 14 of the SLA. I turn to the parties' respective construction arguments.

33 The underlying factual position for the Clough action is uncomplicated. It is uncontroversially accepted for the purposes of s 13(1) illegality argument, that Clough at all relevant times during 2007, was registered proprietor of the underlying land upon which its proposed multi-level strata apartment development at Claremont was to proceed to erection and completion. Accordingly, Clough is in a factual position to advance the defence that it meets the exemption criteria available to it under s 13(1)(a) of the SLA - by reason of its registered proprietorship at the time of the contract of sale of the underlying land.

34 The Clough action carries a further legal dimension - regarding additional alleged non-compliance by Clough with the requirements of s 14 of the SLA. At the time the Walker contract was entered into in 2007, the underlying land at Claremont was encumbered by a registered mortgage, granted by Clough as mortgagor to its mortgagee. In those circumstances, the purchaser plaintiffs contend that the written terms of the Walker contract do not, as they should, provide in the fashion which s 14(1) of the SLA stipulates for their vendors mortgage. Accordingly, the plaintiffs contend, irrespective of their first case based upon an argued illegality arising under s 13(1), that their contract of sale with Clough also infringes s 14 and consequently is illegal and void on that stand alone basis, as well.

35 Clough resists all illegality challenges. As to the (non) wording of the contract of sale concerning the mortgage, Clough responds to the effect that essentially s 14(1) does not apply where its sale arrangement with the purchasers was that Clough's existing registered mortgage, subsisting in 2007 over the underlying land, needed to be discharged, prior to any proposed settlement with the purchasers. In other words, Clough says that the Walker contract clearly says that the purchasers will receive clear, unencumbered title to their strata lot, at settlement. Clough's position, formulated at pars 47 and 48 of its written submissions, is in these terms:

1. On this basis, it is submitted that when s 14(1) prohibits the sale of a lot that is 'subject to a mortgage' it should be construed as meaning the sale of a lot where the purchaser goes into possession or becomes entitled to occupation whilst a mortgage continues to exist over that lot.
2. In other words, s 14(1) is not intended to prohibit a sale of a proposed lot where the land which is to form the lot is subject to a mortgage at the time of contracting, but where the mortgage is to be discharged prior to that lot being transferred or the purchaser going into possession or occupation.

36 Resolution of the s 14 issue also requires a close examination of the provisions of the SLA as a whole, including in Pt II, and the statutory history surrounding the introduction in 1971 of the SLA.

Sale of Land Act 1970 : as introduced in February 1971

37 The SLA commenced operation as part of the law of Western Australia on 1 February 1971. It is manifestly in the character of remedial or beneficial legislation for purchasers of properties.

38 Part II of the SLA deals with scenarios surrounding sales under 'terms contracts', as defined by s 5 in subpars 5(a) and 5(b), set out above. Part II makes provision for notice to be given (under s 6 and under s 7) to purchasers or proposed purchasers, in a scenario of default under a 'terms contract'. Section 8 provides for limitations against encumbrances, and s 10 provides a statutory right of purchaser elected rescission for a contravention of s 7 or s 8 against a terms contract vendor (by reference to the statutory hypothesis to inducement under 'fraudulent misrepresentation').

39 As at February 1971, it was apparent from s 12, that there was an expressed, definite and clear legislative intent that Pt III of the SLA not apply to sales of strata lots in subdivisions.

40 Part III of the SLA, as introduced, dealt with restrictions upon sales of subdivisional land, including sales in future proposed subdivisions. For convenience, I will set out the original definition of 'lot' in s 11, when Pt III was first introduced. It is not necessary for me to repeat the definitions of 'proprietor' or 'sell', as there has been little change in those provisions. I will also set out s 13 and s 14 in their original terms upon introduction in 1971. This may be contrasted to how those sections evolved since 1971 under amendment to read in 2007, as I have set them out earlier.

41 The balance of Pt III is completed by s 15. For present purposes it is unnecessary to repeat the content of s 15. The provisions of s 15(1) and s 15(2) were part of the original 1971 enactment. Sections 15(3) and 15(4) were introduced as part of the 1985 amendments to the SLA.

PART III.-RESTRICTIONS ON SALE OF SUBDIVISIONAL

LAND.

1. In this Part, unless the contrary intention appears -

'lot' has the same meaning as it has in section 2 of the Town Planning and Development Act, 1928 and includes an area of land in respect of which it is represented, by or on behalf of any person attempting to promote the sale of that area of land, that it will constitute a lot in a proposed subdivision;

...

13. (1) A person who would, but for this Act, have the right to sell five or more lots in a subdivision or proposed subdivision shall not sell any of such lots unless -

(a) he is the proprietor thereof;

(b) he is selling as agent of the proprietor;

(c) he sells the lot as one of five or more lots sold to one person in the one transaction;

(d) he is empowered by or under an Act to execute a transfer thereof that is registrable under the Transfer of Land Act, 1893; or

(e) he is presently entitled to become the proprietor of the lot.

Penalty: Seven hundred and fifty dollars.

(2) A person shall be deemed not to be presently entitled to become the proprietor of a lot unless he is, at the date he sells the lot, entitled to be registered as proprietor of it under one or more registrable instruments or under one or more applications made under the Transfer of Land Act, 1893 which have been lodged in the Office of Titles.

(3) For the purpose of this section an instrument or an application which was at the relevant time lodged at the Office of Titles shall be deemed to be and to always have been registrable notwithstanding any defect in the instrument or application -

(a) if the instrument has subsequently been registered or the application granted without having been returned by the Registrar of Titles or withdrawn from the Office of Titles; or

(b) if the Registrar of Titles certifies in writing that he is satisfied that the defect was not of a substantial nature and that it has been remedied.

14. (1) A person who has the right to sell five or more lots in a subdivision or proposed subdivision shall not sell any of such lots that is subject to a mortgage unless the mortgage relates only to that lot and he sells the lot under a contract which provides that the consideration for the sale of the lot shall be satisfied, to the extent of any money owing under the mortgage at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the lot sold, by the purchaser assuming on and from that date the obligations of the mortgagor under the mortgage.

Penalty: Seven hundred and fifty dollars.

(2) Subsection (1) of this section does not apply to a person who sells the lot -

(a) as one of five or more lots sold to one person in the one transaction; or

(b) under a contract which provides that -

(i) any mortgage affecting the lot sold is to be discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract; and

(ii) the deposit and all other moneys payable under the contract, other than any money payable in excess of the amount required to so discharge the mortgage, are to be paid to a certificated practitioner, as defined in section 3 of the Legal Practitioners Act, 1893, or to a licensee, as defined in section 2 of the Land Agents Act, 1921, to be applied by him in or towards so discharging the mortgage,

but where the mortgage is not discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract and the purchaser of the lot under the contract is not in default under it, he may, by notice in writing served on the vendor of the lot under the contract at any time prior to the mortgage being discharged as to that lot, rescind the contract and thereupon may, in a court of competent jurisdiction, recover from that vendor all moneys paid by that purchaser under the contract.

(3) In subsections (1) and (2) of this section 'mortgage' does not include any floating charge on the whole or any part of the undertaking or property of a corporation.

Part III Sale of Land Act 1970 : Mischief

42 As to the objective s 13 was introduced to address, it is apparent from s 13's original content upon introduction in 1971, that the legislation was of a remedial character - designed to assist purchasers by imposing constraints against sales of subdivisional lots or future lots by vendors in proposed subdivisions. That protective legislative objective is also discernible in the provisions of the original s 14.

43 The objective underlying s 13 is plainly facilitating the intended conferral upon the purchaser of a lot in a subdivision, of secure title from the vendor of the lot. The objective of s 14 can be is seen to be directed towards facilitating the provision of a clear title for the purchaser of a lot in a subdivision - a title free from any derogation by an earlier encumbrance effected by the vendor (mortgagor) to a mortgagee.

44 It is to be observed that Pt III of the SLA was legislatively conceived in 1970 and 1971 in the surrounding Part II context of other intended remedial work, again directed towards the assistance of purchasers - as regards sales of land under 'terms contracts'. I have already set out the definition of a 'terms contract' under the SLA. That definition, used in reference to situations of payments of purchase price by instalments, as well as for scenarios of lot purchasers taking up an early possession or occupation of land prior to settlement and conveyance, is significant for the proper understanding of s 14 SLA, particularly the early possession scenario, as will appear below.

45 It is also to be observed that s 4 of the SLA on its introduction, repealed a number of scheduled Acts. These were earlier protective laws, applicable in vendor and purchaser sale of land contexts, including The Vendor and Purchaser Act 1878 , Purchasers' Protection Act 1933 and the Sale of Land (Vendor Obligations) Act 1940.

46 A statutory interpretation exercise always begins with a close consideration of the words actually used by Parliament. But it is also necessary (in accordance with the principles of statutory construction, to which I have earlier referred), to bear in mind the context of the particular Pt III provisions within the scheme of the SLA as a whole. Furthermore, whilst a prime importance in the text used is acknowledged, it remains permissible under s 19 of the Interpretation Act to have regard to some extrinsic materials which bear upon the legislation for the purposes of confirming meaning or clarification of an arising ambiguity. In the present case, there is a significant amount of extrinsic material to which I was referred to by counsel. I will mention some of it, albeit in a context of my recognition of its limitations and the paramouncy of the language used by Parliament, as the abiding focal point in an overall construction exercise.

47 The SLA, as I have observed earlier, became part of the law of Western Australia on 1 February 1971. Its introduction was preceded by earlier reports of the Law Reform Commission of Western Australia (LRCWA).

48 The LRCWA's first report relevant to what became the SLA, was delivered in September 1969; see Law Reform Commission of Western Australia, Project 1, Pt 1 Protection to Defaulting Purchasers Report (1969). A committee of the LRCWA had considered the issue of potential hardship to defaulting purchasers under terms contracts, where a purchaser had missed a payment or instalment of purchase price to a vendor, by oversight.

49 Hardship concerns were obviously a catalyst for what emerged as Pt II of the SLA.

50 At par 23 of the September 1969 report's recommendations, a Committee of the LRCWA repeated some prior observations from a working paper of October 1968, concerning problems it had observed arising in other States (Victoria and New South Wales), and which issues were the subject of reference by the Sale of Land Act 1962 of Victoria and the Land Vendors Act 1964 of New South Wales.

51 The LRCWA Committee's September 1969 Report observed:

1. There is still no indication at this stage that there are any similar problems in Western Australia to those outlined above. Nevertheless, we have knowledge of one large subdivisional project, where land is being developed and sold in lots, but where the vendor to the purchasers of the subdivided lots is not the registered proprietor of the land, and is in fact the last but one purchaser in a chain of dependent terms contracts from the registered proprietor. There may well be other subdivisional projects of this type, but we have not made a survey. In these circumstances, the final purchaser gets little protection in the event of default by any of the intermediates, on whom he must rely for his ultimate title.
2. The Committee has not been referred to any cases where default of the type mentioned in the paragraph above has occurred, but simply wishes to draw your attention to the fact that in this type of transaction it only needs one of the persons in the chain leading to title to default, and all the purchasers further down the line are likely to suffer ... The Victorian legislation appears to give the purchaser the most protection.
3. There is another aspect of the Victorian Sale of Land Act 1962 which we consider should be mentioned. There are cases where the vendor is selling land on a terms contract subject to an already existing mortgage. Section 46 of our Sale of Land (Vendors' Obligations) Act 1940 requires the vendor to notify the intending purchaser of the existence of any such encumbrance. The purchaser will suffer hardship if the vendor fails to repay the mortgage and the mortgagee enforces his rights against the land. The Victorian legislation protects the purchaser by providing firstly that any mortgage over the purchaser's land must relate only to that land, and secondly, for the purchaser to assume direct responsibility for repayment of the mortgage, and the amount so repayable to be deducted from the purchase price.
4. The matters mentioned in paragraphs 23 to 27 hereof do not strictly fall within the Committee's terms of reference, and our final recommendations do not attempt to solve any problems that could arise in this field. (my emphasis in bold)

52 Subsequently, and bearing in mind the comment as to a limited scope of reference for the first report, the LRCWA was asked to provide a Supplementary Report. It did so in February 1970; see Law Reform Commission of Western Australia, Project No 1 Relief for Purchasers under Land Sales Supplementary Report (1970) (Supplementary Report), sent to the then Minister for Justice, the Honourable A F Griffith, MLC. The Supplementary Report commenced:

1. In your letter dated 9th November, 1969 you requested the Committee to consider what legislation is necessary to afford protection to purchasers acquiring land under the conditions referred to in paragraphs 23 to 25 of the Committee's report dated 5th September 1969.

1. The Committee is of the opinion that in general freedom to contract should not be restricted otherwise than as recommended in its report, but that a special problem could arise in relation to subdivisional land which should be separately dealt with.
2. For example, suppose A, a registered proprietor, sells land under a terms contract to B, who in turn sells under a terms contract to C, who subdivides and sells subdivided lots to numerous purchasers. If then C breaks a condition of his contract with B, B can rescind the contract and defeat any claims by the ultimate purchasers to the land, leaving them with only personal claims against C, which may be worthless. Likewise, if B breaks a condition of his contract with A, A can claim back the land and so defeat C and his many ultimate purchasers. The ultimate purchasers may have claims against C, but if C is caught up in B's default and becomes insolvent, these may be worthless.
3. As a result of these and other inquiries, the Committee is of the opinion that protective legislation could inhibit subdivisional land development in this State. Nevertheless, the Committee considers that the ultimate purchaser of subdivisional land should be given some protection.
4. The Committee therefore recommends that legislation be enacted requiring the vendor of subdivisional land comprising five or more portions (whether Lots or parts proposed to be made into Lots) to be the registered proprietor of that land before he sells or offers for sale any portion or enters into any contract to sell any portion. This recommendation is prompted by certain provisions in the New South Wales and Victorian legislation. If adopted the problems created by the practice of selling land subject to a chain of dependant terms contracts would not arise.
5. The Committee considers that its recommendations will help protect the ultimate purchaser by removing from the field the more irresponsible speculators who cannot normally finance the purchase and transfer of land into their own names. Draft provisions to give effect to the recommendations are attached and could be included as a further Part in the draft Bill forwarded with the main report. It is stressed that the draft, as with other draft Bills emanating from this Committee, should be regarded as no more than a statement which may be adopted as instructions to the Parliamentary Draftsman.
6. Because the Committee does not think that subdivisional development should be inhibited more than is absolutely necessary, the Committee is not prepared to recommend any further restriction. However, a requirement that the vendor of subdivisional land must be the registered proprietor of the land may not be sufficient to protect the ultimate purchaser in all situations. The vendor may have heavily mortgaged the land before sale, and the purchaser could be placed in an unfortunate position if the vendor failed to live up to his mortgage commitments.
7. If the Government wishes to take the further step of protecting the ultimate purchaser from the claims of a registered vendor's mortgagee, the Committee suggests the enactment of a provision along the lines of section 6(1)(3) and (4) of the Victorian Sale of Land Act 1962. This section provides that if land is sold subject to mortgage, either the mortgage must relate only to that land and the purchaser should be able, at a certain stage, to bypass the vendor and pay off the mortgage himself, or the purchase money must be paid to a third person to be held in trust by him to be applied towards the discharge of the mortgage. The Committee suggests that in line with its recommendation above, any such restriction should apply only to land subdivided into five or more lots. (my emphasis in bold)

54 Draft provisions proposed by the LRCWA at the end of the Supplementary Report, contained a proposed draft s 9B(4), expressed in these terms:

(4) This section shall not apply to the sale of a lot within the meaning of the Strata Titles Act 1966-1969 [This subsection may not be necessary in view of the definition of 'lot' in the Strata Titles Act].

55 Before leaving these 1969 and 1970 LRCWA extrinsic materials, it is important to appreciate the strongly expressed policy concerns seen in them over the issue of a vendor's broken dependent chain of acquired title for subdivisional land - being a potential mischief upon purchasers - which appears to have driven the recommended introduction of what became s 13. Further expressed policy concerns about a vendor selling land on a 'terms contract', whilst the land remained subject to a pre-existing vendor's mortgage, are evident.

56 Subsequently, a Sale of Land Bill 1970 (WA) was drawn and proceeded through both Houses of the WA Parliament during 1970.

57 I was referred to a considerable volume of extrinsic material concerning that Sale of Land Bill in the Parliamentary debates, both in the Legislative Assembly and in the Legislative Council, during the course of November 1970. Proposed cls 13 and 14 in the Bill appear to have given rise to close consideration, particularly during Committee stages in the Legislative Council: see Western Australia, Parliamentary Debates, Legislative Assembly, 12 November 1970 1205 - 1207 (the Hon I G Medcalf, the Hon W F Willesee, the Hon A F Griffith, Minister for Justice).

58 It is also very clear that, as introduced, the purchaser protections as found in Pt III of the SLA, were not directed to apply to sales or proposed sales of strata lots (under the STA 1966). That negative intent for the Pt III provision applications regarding strata subdivisions found its direct expression in s 12 of the SLA, as introduced.

59 However, the 1971 negative legislative stance regarding Part III and strata subdivisions changed - 14 years later. Again the work of the LRCWA was influential over time to the 1985 intersection between Pt III of the SLA, and sales of strata lots in subdivision or proposed subdivision under the incoming new STA 1985_._

60 Section 19(2)(c) of the Interpretation Act permits a court to have regard to extrinsic materials such as the reports of the LRCWA and Parliamentary debates, in the circumstances identified under s 19(1)(a) or (b) of the Interpretation Act. I will mention some further Parliamentary materials from 1970 at later points in these reasons - referable to my evaluation of specific arguments in the construction of s 13 and s 14 of the SLA.

61 I now turn to the 1985 amendments to the SLA which occurred under the Acts Amendment (ST) Act.

1985 : Application of Part III of Sale of Land Act 1970 extended to sales of strata lots or proposed strata lots

62 The Acts Amendment (ST) Act took effect on the same day as most provisions of the STA 1985 (30 June 1985). The West Australian Parliament plainly intended the STA 1985 to operate harmoniously with its contemporaneous amendments to Pt III of the SLA, in relation to the extended application of Pt III to subdivisional strata lots (existing or proposed).

63 The changes to Pt III of the SLA effected under the Acts Amendment (ST) Act, were in terms:

1. Section 12 of the principal Act is repealed.
2. Section 13 of the principal Act is amended in subsection (1) -

(a) by inserting after 'proposed subdivision' the following, 'or two or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985', and

(b) in paragraph (c), by inserting after 'transaction', the following - 'or as one of two or more lots so sold in the case of lots in a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985'.

1. Section 14 of the principal Act is amended -

(a) in subsection 1 by inserting after 'proposed subdivision' the following - 'or two or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985', and

(b) in subsection 2, by inserting after 'transaction' in paragraph (a), the following - 'or as one of two or more lots so sold in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985'.

64 Section 15 of the SLA was also supplemented by the addition of s 15(3) and (4), essentially in the terms of s 15 as set out earlier at [24].

65 The changes to Pt III of the SLA effected under Acts Amendment (ST) Act, were essentially straightforward. The protective provisions of s 13 and s 14 which for 14 years (from 1971) were only applicable to lots in broadacre subdivisions, now became applicable to actual and proposed strata subdivisions, under the new 1985 strata legislation.

66 Nevertheless, it is helpful to examine some extrinsic materials associated with these 1985 alterations to Pt III of the SLA. The ongoing work of the LRCWA appears once again to have been influential in generating the 1985 amendments.

67 In a working paper published in June 1972: see Law Reform Commission of Western Australia, Protection for Purchasers of Home Units and Sales of Land through Land Agents Project No 1 - Parts II and III, Working Paper (1972) (Working Paper), the LRCWA observed at par 12, that there was a 'strong case' for applying Pt III of the SLA to the sale of lots under the STA (then, of course, the STA 1966). (See also pars 13, 14 and 19 of the 1972 Working Paper).

68 Less than a year later, in March 1973, in a report of the LRCWA: see Law Reform Commission of Western Australia Protection of Purchasers of Home Units, Report Project No 1 - Part III (1973), the Committee observed:

Lots under the Strata Titles Act

1. The Committee in its working paper pointed out that the purchaser of a lot or proposed lot under the Strata Titles Act is as vulnerable to the risks inherent in contracting to buy property itself subject to a mortgage and in contracting with a vendor who is not the registered proprietor of the lot or proposed lot, as is a purchaser of any other sort of subdivisional land. The Committee suggested that there seemed to be a strong case for applying Pt III of the Sale of Land Act to the sale of lots under the Strata Titles Act and that there would be no special difficulties involved.

1. There would seem to be no special legal or practical difficulty in applying Pt III of the Sale of Land Act to the sale of strata title lots in a building already erected, where separate strata titles have been or can immediately be issued.
2. But it is not unusual for a promoter to enter into contracts for the sale of units before the building is completed. In such cases, if the property is mortgaged, although the promoter could hardly comply with the first subsection of s 14 of the Sale of Land Act as the strata lots would not be in existence, he could fairly be expected to comply with the second (see par 8(b) above) [a reference to the payment of a deposit or other money paid by the purchaser as is required to discharge the mortgage to be paid to legal practitioner or land agent to be applied for that purpose]. (my emphasis in bold)

70 Those 1973 observations of the LRCWA do not appear to have been immediately actioned.

71 But, almost 10 years later in December 1982, the LRCWA returned to the issue of a potential widening of the scope of Pt III of the SLA to existing or proposed subdivisional strata lots, in its comprehensive report No 56, concerning proposed new strata titles legislation for Western Australia. See Law Reform Commission of Western Australia, Project No 56 The Strata Titles Act Report 1966 - 1978 (1982) (1982 Report). That report generally addressed proposed reform of the existing STA 1966-1978. But Ch 17 was directed towards the SLA.

72 In ch 17 at page 226 of the 1982 Report, the LRCWA examined the existing provisions of the SLA and at page 227, observed upon restrictions against sales of subdivisional land as was imposed under Pt III of the SLA. At page 229, at par 17.20 of the 1982 Report, the LRCWA referred back to its March 1973 Report and said:

The question of the application of Part III of the Sale of Land Act 1970-1982 to strata title lots was raised again in the working paper on this project. All but one of the persons who commented on the issue agreed that the sale of strata lots should be covered by the provisions of Part III.

73 Essentially, the LRCWA (in a 1982 context of its wider consideration of new strata title legislation for Western Australia, generally) maintained a view it had expressed from June 1972, namely that purchasers of strata lots were subject to the same risks as purchasers of other types of subdivisional land, and so therefore, should be entitled to the same protections (see also par 17.19 of the 1982 Report).

74 At page 230 of the 1982 Report, the LRCWA formulated recommendations in these terms:

17.21 The Commission remains of the view that the provisions of Pt III of the Sale of Land Act 1970-1982 should extend to strata title developments. Applying these provisions to strata lots will afford substantial protection to purchasers, particularly to those who are dealing with financially weak developers. The provisions of Pt III would also help to protect the purchaser of encumbered strata property by requiring that either the purchase moneys be deposited in a trust account of a legal practitioner or licensed real estate agent to be applied towards the discharge of the mortgage as to that lot or that the sales contract provide for the purchaser to assume the mortgage and the price to be reduced by an amount equal to the amount owing under the mortgage. The Commission recommends that Pt III of the Sale of Land Act 1970-1982 should extend to strata title developments.

17.22 It should be noted that the provisions of Pt III presently are limited in their application to subdivisions of five or more lots, on the ground that abuses are more likely to occur in larger developments. The Commission considers, however, that the special nature and problems of strata title developments require extending the protection of Pt III to the situation where a person has the right to sell two or more lots in a strata title subdivision. Since a strata subdivision must consist of at least two lots, the developer of every strata subdivision would be required to comply with Pt III.

17.23 The provisions of Pt III presently apply to the sale of lots in both existing and proposed subdivisions. The term 'lot' is given an extended definition to include '... an area of land in respect of which it is represented, by or on behalf of any person attempting to promote the sale of that area of land, that it will constitute a lot in a proposed subdivision'.

17.24 In extending Pt III to include the sale of strata title lots, the Commission recommends that it should be made clear that it also applies to proposed strata lots. The application of the provisions of Pt III to sales of proposed strata lots and the question of the need for additional protection is discussed in the following paragraphs.

Whether further protection is required in respect of sales of lots before registration of the strata plan?

17.29. As applied to proposed strata lots, s 13 of the Act will mean that, subject to the qualifications set out in par 17.22 above, a person cannot contract to sell an area of land in respect of which it is represented that it will constitute a lot in a proposed strata development unless he is or is presently entitled to become the proprietor of that land. Since the lot is not yet in existence, the developer could not be the registered proprietor of the lot itself at the time the contract is made; however, the developer will be in compliance with s 13 if he is or is presently entitled to become the registered proprietor of the parcel which is being developed. When the strata plan is registered, the developer will then become the registered proprietor of the lot and will be in a position to transfer title to the lot to the purchaser.

76 At par 17.30 of the 1982 Report, the LRCWA addressed s 14 of the SLA_._ It observed:

17.30 Section 14 is also important because any mortgage over the whole parcel will be transferred automatically to the individual strata lots when the plan is registered and separate certificates of title are issued. By providing that moneys are to be applied towards the discharge of the mortgage as to that lot, s 14 will thus help to ensure that the purchaser of a proposed strata lot gets the unencumbered property which he bargained for. Although the Commission acknowledges there may be circumstances when lots are sold before registration of the plan, where the Sale of Land Act 1970-1982 requirements will not apply because the property is not encumbered, the Commission does not consider that special restrictions should be placed on the use of purchase moneys in these cases, particularly since the Law Society's and REIWA General Conditions for the Sale of Land provide that the deposit is to be held by the vendor's agent as stakeholder. (my emphasis in bold)

77 In broad summary then, the 1982 Report recommendations show that the LRCWA:

(a) wished to see further protection for purchasers of lots in strata subdivisions;

(b) was concerned about financially weak developers as vendors;

(c) took an expansive view as to the potential application of Pt III of the existing SLA to developers of every strata subdivision (par 17.22);

(d) recommended that the provisions of Pt III apply to future proposed strata lots, as well as to existing strata lots;

(e) recognised (at par 17.29) that the present entitlement of a developer to become registered proprietor of a parcel of land 'being developed', met the objectives s 13 of the SLA as to the provision of secure title, prior to registration of the strata plan;

(f) identified the desirability of the purchaser of a proposed strata lot ultimately receiving the unencumbered property as bargained for, once separate certificates of title were issued.

78 The Acts Amendment (ST) Act was the subject of a second reading in the Legislative Council: see Western Australia, Parliamentary Debates, 2 April 1985 Legislative Council 1628 - 1629 (the Hon I G Medcalf). The Hon I G Medcalf, now in Opposition, spoke with support. He said at page 1629:

There is a further provision in the Strata Titles Bill itself, a provision to which I referred when discussing that Bill, which provides additional protection if the units are pre-sold in a strata title subdivision. In those cases the deposit and purchase money must be paid to a solicitor or real estate agent. This is an advantageous change which is long overdue.

79 Those observations were made after Mr Medcalf's discussion of proposed amendments in the Bill to s 14, as regards the direction of moneys paid by a purchaser to the vendor's mortgagee.

80 The scenario of pre-sales in a strata title subdivision context addressed above by Mr Medcalf, was viewed as an additional protection in a pre-sale scenario. He concluded:

The alternative of not having this provision, which has unfortunately affected many people in the past, is that people purchase a title to a strata unit from someone who is not authorised to sell it. They discover that the unit is already encumbered by mortgages, and after paying the purchase price to the person from whom they bought the unit, they discover they can only have it if they pay off the mortgage as well.

So they pay twice. Many people have found themselves in this situation and practically nothing could be done about it, particularly where the vendor was a man of straw, a person of no means, or was in receivership or liquidation.

81 Between 1985 - 2007, the only other relevant alteration to Pt III of the SLA was a change effected under the PD Consequential Provisions Act, (which took effect on 9 April 2006), which brought with it the difficulties over the imported definition of 'lot', to which I have earlier referred.

82 I now move to address the arguments raised invoking s 13 and s 14 of the SLA, concerning alleged illegality in circumstances in which the Walker contract was entered with Clough as vendor, in 2007.

Walker contract 2007: evaluation of s 13 and s 14 SLA arguments

83 The plaintiffs' s 13 submissions begin from an uncontroversial premise that where words used in a statute are clear, they must be respected by a court. The court should not in that situation venture further, in search of alternate, deeper or hidden meanings, so it is submitted.

84 From that premise, the plaintiffs contend that in 2007, Clough, within the terminology of s 13(1) of the SLA, clearly had a right to sell two or more lots in its proposed Claremont strata subdivision under the STA 1985. Clough in 2007 sold the future apartment as a lot in its proposed subdivision to the plaintiffs. The plaintiffs submit that, as a result, s 13(1) of the SLA is engaged, and that none of the following exemptions as found in s 13(1)(a) - (e) of the SLA, are applicable to Clough.

85 In particular, the plaintiffs say that an exemption under s 13(1)(a) is only applicable for a vendor's demonstrated proprietorship of the actual (strata) 'lot' being sold by a vendor. Thus, it is put by the plaintiff that in the case of Clough, it is insufficient that Clough can establish that it was, in 2007, the legal owner (registered proprietor) of all underlying land upon which its mooted Claremont strata development was to proceed. Clough, they argue, was not then the registered proprietor of the actual strata 'lot' which it sold to the plaintiffs. Therefore s 13(1) was infringed. That is so, the plaintiffs argue, even though in 2007 a proposed (strata) 'lot' did not yet exist for Clough at that time to be the legal owner of. As a result, the 2007 Walker contract is said to be illegal and void. Axiomatically then, the plaintiffs say they cannot be required to settle in 2009 upon their contract of sale because it is illegal and void - even if the proposed strata lot, in 2009, is now in existence.

86 Adopting arguments advanced by the other vendors in the resolved actions, Clough first contends that s 13(1) of the SLA is of no application to it - in the overall context of the Walker contract. The argument turns upon the asserted true meaning of the phrase in s 13(1), 'have the right to sell'. The argument effectively seeks to read down s 13(1) of the SLA to having a limited applicability - ie, only to scenarios where a statutory permission has already been obtained by a vendor to sell an existing or proposed strata lot - as would be the case subsequent to registration of the strata plan for the Clough Claremont development. In 2007, there was then no WAPC approval yet obtained for Clough's proposed development. Therefore Clough argues at the outset that the phrase 'right to sell' in s 13(1), is not engaged, and thus s 13(1) is of no application to the Walker contract.

87 But Clough alternatively contends that if s 13(1) of the SLA does apply to it, as vendor under the 2007 contract of sale (as I conclude it does), then Clough also meets the parameters of the s 13(1)(a) exemption - on a basis that it was a registered proprietor in 2007 of all the underlying land upon which its Claremont strata development was to proceed.

88 The plaintiffs contend that Clough in 2007 transgressed s 13(1), because the word 'thereof', as used in s 13(1)(a) of the SLA must be read as a reference to the noun 'lots', in the introductory words of s 13(1). The plaintiffs point to following occurrences of the noun 'lot' in subpars (c) and (e) - as part of an argued common meaning for 'lot' in all the s 13(1) exemption subparagraphs. They argue that there is nothing in s 13(2) - a deeming provision concerning the phrase 'presently entitled' used in s 13(1)(e) - to support a view that subpar 13(1)(a) refers to anything other than a requirement for registered proprietorship of the actual strata 'lot' which is the subject of the contract of sale. They say, in effect, that it would have been the easiest thing for Parliament to specify in s 13(1)(a) some looser criteria than lot proprietorship, such as the proprietorship of the 'underlying land', were that the true legislative intent of the exemption, but that Parliament did not do so.

89 However, in my overall assessment, use of the word 'thereof' within s 13(1)(a), is in its context, ambiguous. Part of the ambiguity arises because the introductory words in s 13(1) are broad and diverse in their intended reach of subject matters. They attempt to extend to existing as well as to proposed future subdivisions. Accurately addressing all the potential ramifications of such diverse subject matters, part of which does not yet even exist (ie, upon a sale of a future lot), is no easy drafting exercise.

90 The sale constrained under s 13(1) of the SLA by the phrase 'shall not sell', also needs to be read with the wide definition of 'sell' (in s 11 to which I have referred). The verb 'sell', particularly as used in subpar (b) of s 11, extends to cover, amongst other things, the agreement to sell. In addition, the term 'lot' (defined in s 11) extends widely to cover subject matter represented by a vendor in terms of promotion of the sale of areas of land that in future will constitute lots in a 'proposed subdivision'. The range of potential situations that s 13(1) of the SLA seeks to deal with is extensive, covering both existing and future 'lots' sales and I therefore proceed to assess the meaning of the word 'thereof', used in s 13(1)(a), as also wide, extending in reach to cover sales scenarios - including sales by the proprietor of existing lots, and sales of future lots.

91 The provisions of s 13(1) of the SLA from inception in 1971 and as extended in 1985, lead me in the end to a view that the remedial scope of s 13 is fundamentally concerned with redressing potential insecure title prejudice for purchasers in subdivisions, in situations where a chain of vendor title may be vulnerable to breakdown or deficiency, impacting later against the purchaser.

92 The legislative policy concern appears to be directed to situations where the vendor of a lot in an existing or future subdivision, lacks secure title to what is being sold, at the time of entering into the contract of sale. That policy concern, of course, presents no difficulties here - with regard to Clough's position as vendor in 2007. Clough was registered proprietor of all the underlying land. Given the fact that a strata plan was not registered in 2007, it was impossible for Clough then to be registered proprietor of the future strata lot that was the subject of the 2007 contract of sale. That strata lot did not then exist, as both parties, assessed objectively, clearly understood in the terms of the Walker contract. Section 13(1) of the SLA, as I have observed, was intended by Parliament to apply broadly to scenarios of sales in existing subdivisions as well as to sales of future subdivisions and which, at the time of an executory contract of sale, are yet to be created). The language of s 13(1) and its exemptions needs to be read accordingly.

93 I discern no potential chain of title insecurity snare for an 'off-the-plans' strata lot purchaser in a contract of sale, in circumstances where a vendor such as Clough is already the registered proprietor of all the underlying land upon which the proposed future strata subdivision is proceeding.

94 That interpretation of 'thereof' in s 13(1)(a) of the SLA is confirmed by the 1969 and 1970 LRCWA Reports to which I have referred, which set the scene for the eventual introduction of s 13 of the SLA. Of course, at that time, the LRCWA only had broadacre subdivisions in contemplation. But a concern over a vendor's insecure chain of title breakdown - potentially impacting against innocent purchasers, is a policy objective that is manifest. In the later 1973 and 1982 Reports of the LRCWA, the same vendor's chain of title breakdown deficiency issue is manifest again, but then in a wider policy context of that concern being redressed in the wider arena of strata subdivisions concerning existing or future strata lots. I reiterate that the LRCWA in its 1982 Report at par 17.29 said:

Since the lot is not yet in existence, the developer could not be the registered proprietor of the lot itself at the time the contract is made; however, the developer will be in compliance with s 13 if he or is presently entitled to become the registered proprietor of the parcel which is being developed. (my emphasis in bold)

95 The 1982 Report reference to 'the parcel being 'developed', occurs in a context of obvious and necessary recognition that the 'strata lot' is not in existence in an 'off the plans' sale situation. It confirms for me that what became s 13(1)(a) of the SLA, in dealing with one area of its wide application (ie, to expectancies) addresses what is essentially the obvious issue for an expectancy. The concerns over a vendors chain of title breakdown with regard to a purchasers' ultimate secure title to a future lot sold to a purchaser 'off the plans', is comfortably met in the circumstance where the vendor is and remains, the registered proprietor of all the underlying land. Hence, where the subject matter of the sale is an expectancy, the terminology 'thereof' in s 13(1)(a) of the SLA is, in my view, wide enough and appropriate to address what will only exist at the time of the 'off the plans' sale - namely the underlying land upon which the future strata lots are to be created.

96 In present circumstances, Clough was registered proprietor in 2007 of the parcel of underlying land being developed. Clough, in due course, would become registered proprietor of the strata lots that issued within its subdivision, upon registration of a strata plan - from which the particular strata lot the subject of the Walker contract of sale issued.

97 On those facts, there is no looming or potential vendor's chain of title policy concern for s 13(1) of the SLA to protect a purchaser against.

98 The plaintiffs' wider contended meaning, in effect, requires Clough to be the registered proprietor of the actual strata lot sold at the time the contract of sale is entered. This would result, in effect, in a substantive prohibition on sales until the very strata lot sold, is created. It would, in operative effect, significantly cut back scope for 'off-the-plans' sales of strata units, until a strata plan is registered. The SLA, as a whole, assessed in harmony with the contemporaneously introduced STA 1985, in my view, provides no support for such a constrained landscape to govern the sales of future strata lots. Ambiguity in that regard, from the use of the word 'thereof' in s 13(1)(a), is resolved in the LRCWA extrinsic materials, to which I have referred.

99 Implicit in this approach, however, is my allied view that Clough in pre-selling the proposed future strata lots at Claremont, did fall within the regime of s 13(1) of the SLA. Clough, in my view, then enjoys exemption from the opening constraints of s 13(1) of the SLA, because it satisfies the requirements under s 13(1)(a) of the SLA.

100 I now proceed to consider independent arguments concerning illegality by reason of alleged infringement of s 14 of the SLA.

Section 14 Sale of Land Act : Clough's position as vendor

101 I have already mentioned that there was a registered mortgage over the underlying land which constituted Clough's proposed developmental strata subdivision, at the time of the contract of sale in 2007. In those circumstances, the plaintiff purchasers say that the written terms of the Walker contract of sale (exhibit 4 - GGW1) do not conform to the requirements of s 14(1) of the SLA, or provide any basis for exculpation from s 14(1), within s 14(2)(b) of the SLA.

102 The plaintiffs' s 14 argument as to illegality, is advanced in circumstances where there is, I repeat, no issue raised that the protective provisions for purchasers found in Pt V of the STA 1985, have not been fully complied with by Clough. Part V contains s 70, which requires that a purchaser's moneys be held in trust, pending registration of the strata plan. Notwithstanding Pt V STA 1985 vendor compliance, the plaintiffs contend that the Walker contract must nevertheless expressly provide (in the words of s14(1)) that the plaintiffs' payments made to Clough, be applied, in effect, towards paying out any residual secured indebtedness to Clough's mortgagee.

103 It is not in dispute that the written terms of the Clough contract of sale do not provide that the purchasers' moneys must be applied towards meeting any unsatisfied vendor debt to Clough's mortgagee. There is no need for me to set out provisions from the Walker contract in order to display that accepted negative position (per s 14(1) of the SLA).

104 However, the Walker contract of sale does provide, in effect, that the purchaser will not be entitled to take possession of the strata lot prior to a settlement taking place. Presumably the plaintiffs, competently advised, would never settle on their strata acquisition until Clough, as vendor, was in a position to transfer to them clear, unencumbered title to their purchased strata lot.

105 There appears to be some tension between the protective provisions in relation to payments made by purchasers of proposed strata lots being put in trust prior to registration of a strata plan as established under the STA 1985 (with s 70 thereof envisaging that such moneys be held in trust for a purchaser) and s 14 of the SLA - which envisages a somewhat different trust monies application arrangement (pursuant to which the purchasers' moneys in trust are applied towards satisfying any residual debt to the vendor's mortgagee). How are the protective provisions in the two Acts to be reconciled? The answer, in my view, lies in the overall context of s 14, read as part of the SLA, as a whole.

106 The Walker contract of sale does not meet the definition of being a 'terms contract', under s 5 of the SLA. It particularly does not meet criteria under subpar (b) of that two-limbed definition of 'terms contract' - as there is no person 'entitled to possession or occupation of the land before (he) becomes entitled to a conveyance or transfer of the land'.

107 The apparent tension between the respective protective trust moneys provisions in the two different Acts, is resolved through a recognition (confirmed by the legislative history and the extrinsic material) that s 14 of the SLA must be read in a somewhat narrower context - ie, in the existence of a 'terms contract' scenario.

108 When the protective regime which ultimately became s 14 in Pt III of SLA was canvassed by the LRCWA in 1969 and 1970, it was with an eye to importing a protective provision from the Victorian Sale of Land Act 1962. The LRCWA said, in the passage to which I earlier referred from its September 1969 Report, at par 27:

There are cases where the vendor is selling land on a terms contract subject to an already existing mortgage. (my emphasis in bold)

109 At par 8 the Supplementary Report the Committee suggested a provision along the lines of s 6(1)(3) and (4) of the Victorian SLA. It is unnecessary to set out the Victorian provisions. It is enough to observe that each subsection made explicit reference to a sale of land under a 'terms contract'. Moreover, the definition of 'terms contract', used in s 2 of the Victorian SLA, is structurally similar to the definition used in the SLA from its inception in 1971.

110 The policy problem of an undischarged vendor's mortgage potentially continuing undischarged, post the settlement on a strata 'lot' acquisition by a purchaser, would take on more direct relevance, in circumstances where the purchaser is in or is entitled to pre-settlement possession, where the vendor lacks requisite funds to discharge its mortgage. In that situation, the vendor would be unable to provide unencumbered title to the purchaser, already in possession. Terms contracts, of course, are the subject of the protective provisions in Pt II in the SLA. But in my view, those neighbouring Pt II provisions provide proper context and illumination for further purchaser protections enacted under s 14 of Pt III of the SLA.

111 Here, there is no suggestion under the Walker contract that the plaintiffs are in possession, or have any entitlement to pre-settlement possession. Accordingly, protections afforded by s 14 of the SLA against potential difficulties associated with an undischarged vendor's mortgage and a prejudicial subsequent exposure to the vendor's unpaid mortgagee, are of no contextual relevance or utility, in circumstances where a more orthodox scenario of a proposed 'clean title' settlement exists.

112 In the present case, the purchasers have a contractual right to receive clear, unencumbered title from Clough at settlement, in respect of their strata lot. They will be entitled to take possession after that event. In that more orthodox settlement scenario, the trust account protections as met by Clough in respect of the purchasers' payments into trust prior to the registration of a strata plan (in accordance with s 70 of Pt V of the STA 1985), adequately protect the plaintiffs' funds which are advanced to the vendor prior to settlement. Nothing more, under s 14 of the SLA, is called for, absent a 'terms contract' situation, in my view.

113 Scrutiny of the Walker contract (see attachment GG1; annexure 2 (Special Conditions), cl 4) reveals it to incorporate most provisions of the Joint Form of General Conditions for the Sale of Land, save for clauses which are specifically excluded (see cl 4.2). Clause 6 of the General Conditions addresses the purchasers' entitlement to possession, when no date for possession has been specified under cl 6.1(a)(1) and (2). There is no suggestion within the provisions of the Walker contract that the purchaser plaintiffs hold any pre-settlement entitlement to possession of their strata lot. Nor is there any suggestion that the strata lot is being sold on a basis other than as the sale of a strata lot, pursuant to which the purchasers will receive a clear, unencumbered title at settlement. Consequently, there is no terms contract. There is no looming vendor's undischarged mortgage debt mischief - towards s 14(1) of the SLA was obviously created to protect against from 1971 (then extended in 1985, to cover existing and future strata lots in proposed subdivisions). That view is confirmed in the December 1982 Report of the LRCWA and in Hon I G Medcalf's observations in the Legislative Council, to which I have referred.

114 Accordingly, s 14(1) is not infringed and no ensuing issue of illegality linked to it arises in my assessment.

115 The result is that both challenges advanced by the plaintiff purchasers to the validity and enforceability of their 2007 contract of sale should be dismissed.

Consequence of a transgression against s 13(1) SLA in 2007

116 Given the conclusions above as to non transgression of s 13 and s 14 of the SLA, it is not strictly necessary for me to address further the question as to what consequences would follow upon a transgression of the SLA being established. However, the issue was fully argued and out of deference to the submissions of counsel, I propose to briefly record my views as to an hypothesised transgression against s 13(1).

117 The plaintiffs contend that the terms of s 13(1) prohibited entry into of the Walker contract of sale - in particular the words of s 13(1) 'shall not sell' (any of such lots). As I have observed, the term 'sell' as defined, will embrace an executory contract of sale. Since the sale is prohibited, by s 13(1), the plaintiffs simply contend that the contract of sale is illegal and therefore void. Axiomatically, a contract declared void cannot be enforced.

118 Clough, on the other hand, contends that the state of Australian law is now such that not every prohibited act or contract entered in breach of a statutory provision must necessarily be assessed as void by a court.

119 It is convenient to set out Clough's (incorporated by reference) written submissions on this last issue (contained in supplementary written submissions):

1. The consequence, if any, of a breach of s 13 will depend on the intention of the provision, as determined with due regard to its purpose, text, context and subject matter. Section 13 of the Sale of Land Act prohibits certain vendors entering (and seeking to enter) certain contracts for sale and similar transactions.
2. Although the provision is literally capable of bearing a meaning by which it prohibits a vendor selling in the sense of conveying, such a construction cannot be attributed, because no conveyance could occur unless the vendor was registered, or entitled to be registered, as proprietor of the relevant lot. In other words, a construction to such an effect would be pointless. The real target of the provision is contracts for sale and similar contracts and attempts to make such contracts.
3. The evident purpose of s 13 of the Sale of Land Act is to protect purchasers, not vendors.
4. As it is no part of the purpose of the provision to protect vendors, there is no intention to allow vendors to invoke their own contraventions of the provision in order to escape obligations under sale contracts made in breach of the prohibition. A construction which had that effect would overreach the particular protective purpose of the provision.
5. Thus, there is no intention that contracts or other transactions entered in breach of s 13 should necessarily be void or unenforceable.
6. Nor is there an intention that contracts or other transactions entered in breach of the provision should be immediately void or unenforceable. The section itself recognises that prohibited contracts, etc will not necessarily and immediately be void or unenforceable, because s 13(3) contemplates a period of time during which it may be unclear whether the section has been breached. During such a period, the status of a contract would be uncertain. It is more likely that the intention was that the contract would be unenforceable, not void, during the period of uncertainty and that it would become enforceable if the outcome was that the subsection was complied with. (Moreover, during such a period, any risk to the purchaser may be removed by a vendor getting in title, regardless of whether the conditions specified in s 13(3) are ultimately satisfied.)
7. Sale contracts or similar transactions may be of various kinds, with varying degrees of risk for purchasers. For example, contracts may provide for only nominal deposits to be paid with no other payments required until settlement or until the vendor gets in title. On the other hand, contracts may provide for substantial deposits and instalments to be paid.
8. Some of the conduct that is prohibited, by its very nature, is not able to be rendered void or unenforceable. This applies to holding out and advertising.
9. The fundamental purpose of s 13 is to protect purchasers from the risk of making payments of deposits or instalments under contracts, etc where vendors (who are within the class described in the opening words of subsection (1)) may not be able to deliver title. (As regards strata lots, the risk is further mitigated by s 70 of the Strata Titles Act 1985.)
10. The section manifests no intention to give purchasers greater protection than is necessary to avoid the relevant mischief, namely being exposed to risk of loss of interim payments from the inability of vendors to get in title.
11. ...
12. Accordingly, the specific scope of the protective purpose necessarily implies an intention to limit the impact on contractual rights, commensurate with the risks (including the period of risks) against which protection was deemed appropriate by the Parliament.
13. Thus, the intention which emerges from this analysis of the provision is one which renders a prohibited contract or transaction unenforceable by the vendor while the vendor is unable to satisfy the requirements of the provision.

Section 13 transgression evaluation : the law

120 In Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2007] HCA 38; (2007) 232 CLR 1 (Baxter), the plurality (Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ), referred with apparent approval at [45], to a frequently cited passage from reasons of Sir Anthony Mason in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410 at 423, in terms:

The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question.

121 Before further considering Baxter, I observe that in the present case the SLA is silent upon the issue of a civil outcome, in relation to a transgression of s 13(1).

122 On the facts considered in Yango, lending contracts were not ultimately found to be prohibited by the Commonwealth statute. In Yango, the relevant transgression of the Banking Act 1959 (Cth) was by the foreign bank, not holding a requisite banking licence. The lending contracts themselves that were entered into by the unlicensed foreign bank, were not assessed by Mason J as prohibited:

I therefore conclude that the purpose of the Act is adequately served by the imposition of the very heavy penalty which is prescribed for a contravention of s 8 and that it does not prohibit and thereby invalidate contracts and transactions entered into in the course of carrying on banking business in breach of the section (427).

123 The transgression in Yango was of a prohibition against the carrying on of banking business in Australia without authority - not the entry into the impugned security contracts.

124 Returning to Baxter, the plurality, having referred to the above passage from the reasons of Mason J in Yango, observed at [46]:

That passage was cited by Kerr LJ in Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd [1988] QB 216 at 270, where his Lordship said that when a statute contains a unilateral prohibition on entry into a contract, it does not follow that the contract is void.

Whether or not the statute has this effect depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. Ultimately, the question is one of statutory construction. As was pointed out in SST Consulting Services Pty Ltd v Rieson [2006] HCA 31; (2006) 225 CLR 516 at 527, the Act is far from being silent upon the question of the consequences of illegality, but, rather, contains elaborate provisions. That is not to say that the express provisions of the Act answer all questions that may arise, but they answer many of them, and set the context in which others are to be resolved.

125 Baxter involved a transgression against Pt IV of the Trade Practices Act 1974 (Cth) - but the principles concerning illegality, cited above, are of broader application.

126 I also mention the High Court's further observations in Master Education Services Pty Ltd v Ketchell [2008] HCA 38; (2008) 236 CLR 101 at [39], again a case of infringement against (s 51AD) the Trade Practices Act - under which federal statute there is, of course, the flexible armoury of differential remedies potentially made available to be fashioned appropriately to existing circumstances of each case, especially pursuant to s 87 of that Act.

127 Nevertheless, in Master Education, Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ appear to have indorsed observations of Rares J in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [No 2] [2008] FCA 810; (2008) ATPR 42-240 at 49,299 [103] - [104] to the effect that it would be:

[A]n unusual result if, in that circumstance, a franchisee's bargain was struck down in every case, regardless of the position in which it places the franchisee. It is not to be assumed in every case that a franchisee wishes to be relieved of their bargain. To render void every franchise agreement entered into where a franchisor had not complied with the Code would be to give the franchisor, the wrong-doer, an opportunity to avoid its obligations, and at the same time to place the franchisee in breach of obligations to third parties. A preferable result, and one for which the Act provides, is to permit a franchisee to seek such relief as is appropriate to the circumstances of the case [39].

128 I also mention as reflecting similar sentiments, earlier observations of McHugh and Gummow JJ in Fitzgerald v F J Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215, 229 - 230, endorsing, in the context of considering when a court should not refuse to enforce contractual rights, principles earlier set out by McHugh J in Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538, at 613.

129 Essentially then, the s 13(1) vendor transgression outcome here, is to be resolved as a matter of statutory construction. Therefore, it is necessary to address various factors.

130 In the first place, the mischief addressed by s 13(1) is, as I have already observed, directed towards a vendor's potential subdivisional chain of title deficiency impacting against a purchaser. No vendor's chain of title mischief impacting or potentially impacting against the purchasers is presently discernible. There is nothing before me to suggest that the purchasers in this case will not receive by way of conveyance from the vendors, secure registered title to the strata unit at settlement, in accordance with the terms of the 2007 contract of sale envisaged.

131 Secondly, it is correct that at various places within the SLA, it is to be observed that the legislation provides a specific remedy by way of providing an outcome of selected avoidance at the will of the purchaser (see s 10, s 14(2) (concluding proviso) and s 19 within Pt IV) of the SLA. But I do not think in overall context of the SLA that it is to be inferred from the silence in s 13 as to its transgression outcome, that this tends towards an assessment of necessarily void in the case of all transgressions of s 13. Nor is it persuasive in my view to point to other legislation such as the TPDA regarding s 20, and argue that as at 1971, an infringement against s 20 of that Act would have been assessed by a Western Australian court as necessarily generating the outcome of voidness. The two Acts are distinct. The appropriate sanction for transgression of individual sections of each Act requires their stand alone assessment in the context of the prevailing facts surrounding each transgression.

132 Next, I accept the force of all the matters articulated in the defendant's written submissions on this issue, as I have set them out above. The proper construction of s 13 of the SLA drives the conclusion that entry into a prohibited contract would not necessarily always generate an outcome that the contract is to be assessed as void. As the defendant correctly submits, s 13(3) of the SLA contemplates a period of time during which it may be unclear whether the section has been breached or not, in which case the status of the contract must then be uncertain. Therefore, the legislative intention is much more likely, in my view, to have been that the contract of sale may be viewed as unenforceable, rather than absolutely void in that period of uncertainty. As the defendant submits, some conduct prohibited by s 13(1) of the SLA, such as a vendor holding out or advertising (as per defined aspects of 'sell') by its very nature is not capable of rendering a contract void.

133 The fundamental beneficial intent of the legislature towards securing title to an acquired lot for a purchaser, in circumstances where the vendor's chain of acquired title may be insecure, is amply met, where the outcome of a s 13(1) of the SLA transgression by a vendor is at the level of unenforceability; where there subsists any issue as to the ultimate security of the title for the lot which a vendor must convey to the purchaser at the eventual settlement.

134 Fourthly, the equitable remedy of specific performance to enforce a conveyance could hardly be expected to be obtained by a vendor in circumstances where it was not ready, willing and able to perform the passing of secure title in the strata lot to the purchaser at a proposed settlement. There is always flexibility in Equity's potential responses to the consequences of an illegality: Nelson at 559 per Deane, Gummow JJ, which should also illuminate the approach of the common law.

135 Fifthly, a degree of flexibility in s 13(1) of the SLA transgression outcomes is required in circumstances where the range of potential application for s 13's remedial work is broad and is directed towards diverse situations, including where subdivisions creating lots sold 'off the plans' are proposed and the sales subject matter is only an expectancy. Flexibility is demanded in those broad circumstances, to redress potential title prejudice to a purchaser, essentially on a case by case basis. A purchasers' title security is amply protected by the outcome of transient unenforceability pending an ascertainment of the vendors' security of title - as regards a proposed future lot.

136 Finally, the unwavering outcome whereby all transgressing contracts of sale must necessarily be held void, is, in my view, too blunt an instrument to serve the ends of justice on a case by case basis. Sometimes the outcome of total voidness may be an outcome which is consequently advantageous to plaintiff purchasers, in a context of the falling property market between 2007 and 2009. But, in my view, that may be an outcome which is disproportionate to the vendor's transgression of s 13(1). Hypothesising a rising property market, the universal voidness outcome for contracts of sale could confer upon an unscrupulous vendor the opportunity to escape its performance obligations to purchasers, so as to capitalise upon the rising property market. The observations of Rares J directed towards a franchisee's position, referred to with evident approval by the plurality in Master Education, with respect, seem apposite to s 13(1) of the SLA.

137 In the present circumstances therefore, the purchaser's title security would have been amply protected, as regards the issue of receiving a clear title to their strata lots.

138 The same considerations would be broadly applicable, had I assessed a transgression against s 14, save the position would have favoured the vendor to an even greater extent, since the words of prohibition found in s 13(1) do not manifest in s 14.

139 I will hear the parties as to the final orders in light of these reasons.