Supreme Court of WA|2008-12-03|Before: Beech J

HENDERSON -v- CURTIS [2008] WASC 283 (3 December 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : HENDERSON -v- CURTIS [2008] WASC 283

Practice and procedure - Application for summary judgment - Contract for sale of land - Condition that subdivision be approved within six months - Written variation extending the time - Whether variation to contract for sale of land contractually binding - Whether variation to contract supported by consideration - Whether contract terminates automatically upon non-satisfaction of condition or whether notice is needed - Turns on own facts

(These reasons are an edited version of reasons given extemporaneously on 24 November 2008.)

1 The plaintiffs apply for summary judgment in their action to enforce a contract with the defendant for the sale and purchase of land. For the reasons which follow, I would grant summary judgment.

2 The principles relevant to the grant of summary judgment are not in doubt. Summary judgment will be granted only when there is no real question to be tried. Conflicts of evidence on affidavit are not to be determined in the context of an application for summary judgment. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].

3 The defendant owns property at 65 Watkins Street, White Gum Valley. By contract dated 25 July 2006 the plaintiffs agreed to purchase from the defendant part of 65 Watkins Street, being an area of 230 sqm at the rear of that property. Special conditions 6, 7, 8 and 9 of the contract provide as follows:

This offer is subject to all necessary approvals by authorities to the purchasers' proposed plan of subdivision within six months of acceptance.
The [purchasers] shall pay all costs associated with the survey and refencing the southern boundary.
The vendor acknowledges that a sewerage extension junction shall be located at the south-east corner as shown on [the] sketch. [Purchasers] to pay all costs associated with installation of main ...
The vendor shall sign all required applications to expedite the subdivision application.

4 It is common ground that the necessary subdivision approvals were not obtained by the date specified in the contract; that is, by 25 January 2007.

5 In his affidavit Mr Andrew Henderson, one of the purchasers, says that on more than one occasion the defendant, Ms Fiona Curtis, orally agreed to extend the January date stipulated by special condition 6. In her affidavit Ms Curtis denies that that occurred. An application for summary judgment is not an occasion to determine disputed factual contentions. It is not necessary, in any event, for the plaintiffs to make good the oral extensions in order to succeed in their claim.

6 It is not in dispute that in or about October 2007 the parties signed a document entitled Variation to Contract. That document stated that the parties thereby agree to vary the contract dated 25 July 2006 as follows:

The time stated in Clause 6 of the contract is extended to now read: This offer is subject to all necessary approvals by authorities to the purchasers proposed plan of subdivision by March 30, 2008.

7 There was some dispute as to the circumstances in which that document was signed. However, nothing turns on that dispute. I will return to that later in these reasons.

8 By letter of 9 November 2007 the defendant wrote to Mr Henderson stating that she would no longer agree to sell part of her property unless the necessary approvals were obtained within a further four weeks; that is, by 7 December 2007.

9 Counsel for the defendant submits that the plaintiffs acted unreasonably in failing to respond to that letter until 7 December 2007. Whether that is so is not, in my opinion, relevant to the application that is before me. The application that is before me is to be determined on the basis of the parties' rights and obligations arising from their contract, taking into account any legally effective variations. It does not invite attention to an open-ended assessment of the reasonableness of the parties' conduct.

10 On 7 December 2007 a solicitor wrote on behalf of the plaintiffs to the defendant, referring to the signed variation of contract and stating that any withdrawal from the contract by the defendant would be a breach of contract.

11 On 11 December 2007 the defendant's solicitors wrote in response. Reference was made in that letter to what was said to be an absence of consideration for the variation. I will return to that topic.

12 On 19 December 2007 the defendant's solicitors wrote to the settlement agent for the plaintiffs stating:

The [purchasers] being in default in performing their contract in due time the contract of sale has been terminated.

13 By 11 February 2008 all necessary approvals to the subdivision had been granted.

14 The plaintiffs seek summary judgment for specific performance of the contract as varied by the Variation to Contract signed in October 2007.

15 The defendant has filed a defence in the action. In substance the defence raises two matters in answer to the plaintiffs' claim. Only one of those appears to have been pursued in submissions today but, nonetheless, I will deal with both of them. First, in the defence it is said that the signed variation is legally ineffectual for want of consideration. Secondly, it is said that the contract had come to an end when the date required for satisfaction of condition 6 passed without the condition being satisfied. In my opinion, each of those alleged defences is legally unsustainable.

16 I accept that an agreement by parties to a contract to vary the contract is to be treated as a contract itself. In particular, a promise by one party to vary a contract will only be enforceable if the promise is supported by consideration. The defendant's submissions assert that the defendant did not get any benefit from the extension of the time in special condition 6. However, I do not accept that whether a promise is supported by consideration is to be determined solely by reference to whether a commercial benefit is derived or is likely to be derived from that promise. Rather, mutual promises are capable of being consideration each for the other.

17 When parties to a contract agree to vary the time or the quantum of an unconditional obligation owed by only one of the parties, then there will be no consideration for the promise by the other party to agree to that variation. A case such as D & C Builders Ltd v Rees [1965] EWCA Civ 3; [1966] 2 QB 617; [1965] 3 All ER 837, relied upon in the defendant's outline of submissions, falls into this category.

18 However, where parties agree to vary some other aspect of their contract, other than an unconditional obligation owed only by one party, the agreement by each party for the variation of the mutual rights and obligations of the parties will be consideration for the other party's promise. That is the position stated by the Queensland Court of Appeal in the other case relied upon by the defendant, Inness v Waterson [2006] QCA 155 [49].

19 In this case, the primary character of special condition 6 is as a non-promissory condition subsequent to the continued enforceability of the contract. It provides a date by which a condition must be fulfilled, failing which each party will be entitled to treat the contract as being at an end. Consequently, in my opinion, the agreement of both parties to vary the date stipulated in special condition 6 is supported by consideration in the form of the mutual promise of each party to the other to vary each party's rights and obligations.

20 I turn to the second legal defence pleaded by the defendant. This defence appears to assert that the contract automatically came to an end without the need for either party to give notice of its intention to bring the contract to an end on the ground of failure of satisfaction of special condition 6. This matter was not pursued in the defendant's written submissions.

21 In my opinion, it is clear that special condition 6 is not self-executing. In other words, properly construed, the non-satisfaction of special condition 6 would not bring the contract automatically to an end. Rather, it would give each party, so long as the party were not in default in causing the non-fulfilment of the condition, a right to treat the contract as being at an end if it so elected. There is a substantial body of authority that supports such a construction of special condition 6. See, by way of example, Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 440 - 442; Gange v Sullivan [1966] HCA 55; (1966) 116 CLR 418, 441 - 442; Kheng v Secola [2001] WASCA 3 and Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160 [85] - [90].

22 In the defendant's outline of submissions in opposition to the plaintiffs' application for summary judgment it is asserted that Mr Henderson 'pressured' the defendant to sign the Variation to Contract. In oral submissions counsel for the defendant conceded that no ground of duress and, I would add, unconscionable conduct, arises from the circumstances in which the variation was signed. In my opinion, that concession was properly made. The evidence of the defendant as to the circumstances in which the variation was signed is set out in pars 7 and 8 of her affidavit. In my opinion, that evidence falls well short of establishing any arguable defence of duress or unconscionable conduct on the part of Mr Henderson.

23 In oral submissions, counsel for the defendant emphasised that the value of the property had increased significantly. It is at least open to doubt as to whether there is admissible evidence to establish that proposition; however, nothing turns on that. That is because, in my opinion, it can be assumed in favour of the defendant that the value of the property has increased, and has increased perhaps very significantly.

24 On that assumption, those circumstances would not, in my opinion, give rise to any arguable defence on the part of the defendant to the plaintiffs' claim to enforce the contract as varied. The rights and correlative obligations of the parties are to be ascertained by reference to the binding agreements that they have made. The variation agreed in October 2007 is, as I have said, a binding contract. There is nothing in the circumstances of its entering into by the parties that gives rise to any defence of duress or unconscionable conduct.

25 In those circumstances, the fact that the contract price may be significantly less than the market price at the time the contract is performed is not a matter which gives rise to any defence. It does not make enforcement of the contract 'inequitable', as was submitted by the defendant. Equity does not set itself against the enforcement of promises simply because the contract price is substantially less than the market price.

26 It was also asserted in written submissions for the defendant that the plaintiffs have not acted in good faith. I see nothing in the evidence to support that contention. In any event, I am unable to see a role for a notion of good faith in the context of this application. The parties made an agreement. The parties agreed to vary that agreement. In my opinion, it is not inconsistent with any possible obligation of good faith for the plaintiffs to enforce the agreement as varied according to its terms.

27 In summary, therefore, the following seems to me to be clear beyond any reasonable argument:

(1) the contract did not come to an end in late January 2007 when the six-month period stipulated in the original contract expired without the condition being satisfied;

(2) at that stage, subject to not being in default, both parties had a right to give notice terminating the contract but neither party chose to do so;

(3) in October 2007 the parties signed a written variation extending the time for special condition 6 to be satisfied to 30 March 2008;

(4) on the evidence, there is nothing in the circumstances surrounding the signing of the variation that gives rise to any reasonably arguable claim that the variation is not legally enforceable;

(5) the variation agreement is supported by consideration; and

(6) accordingly, the contract as varied is legally enforceable.

28 For these reasons I would grant summary judgment for the plaintiffs.

HENDERSON -v- CURTIS [2008] WASC 283 (3 December 2008)

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HENDERSON -v- CURTIS [2008] WASC 283 (3 December 2008)

Cases Cited (4)