JOHN NITSCHKE NOMINEES PTY LTD v HAHNDORF GOLF CLUB INC & ANOR No. SCCIV-03-737 [2004] SASC 128

JOHN NITSCHKE NOMINEES PTY LTD v HAHNDORF GOLF CLUB INC & ANOR No. SCCIV-03-737 [2004] SASC 128 - SASC 2004 case summary — Zoe

[17]

"8. RIGHT OF FIRST REFUSAL

In consideration of the Vendor agreeing to sell the said Land to the Purchaser the Purchaser agrees with the Vendor that if at any time the Purchaser is desirous of disposing of its estate in fee simple in the said Land or any portion of it the Vendor will have the right of first refusal to purchase the said Land subject to the following covenants terms and conditions:

8.1 The Purchaser will give notice in writing to the Vendor of the Purchaser's intention to dispose of the said Land or any part of it ("first sale notice") and the first sale notice will constitute an offer by the Purchaser to sell the whole of the said Land to the Vendor. The first sale notice will specify the consideration required by the Purchaser from the Vendor from the purchase by the Vendor of the Purchaser's interest in the said Land and the terms and conditions upon which the said Land will be sold to the Vendor. The consideration and terms and conditions will not in any respect whatsoever constitute the imposition of any more onerous obligations and duties upon the Vendor or require the Vendor to pay any greater sum for the said Land than the Purchaser would impose or require from a purchaser other than the Vendor.

8.2 The Vendor may within 30 days after the service of the first sale notice give notice in writing to the Purchaser of the Vendor's acceptance or rejection of the Purchaser's offer to sell. If the Vendor serves a notice of acceptance on the Purchaser ("first purchase notice") there will be deemed to be a binding contract ("first Contract") for the sale by the Purchaser and the purchase by the Vendor of the Purchaser's interest in the said Land for the consideration stated in the first sale notice incorporating the provisions of the Law Society of South Australia Contract for Sale and Purchase of Land and the further terms and conditions set out in Special Condition 8.5.

8.3 If the Vendor does not within 30 days after service of the first sale notice give to the Purchaser the first purchase notice as required by Special Condition 8.2 the Purchaser may negotiate the sale of the said Land to a third party unrelated to the Purchaser ("unrelated third party"). If an offer to purchase the said Land has been submitted to the Purchaser by an unrelated third party the Purchaser will give notice in writing to the Vendor of the Purchaser's intention to dispose of the said Land ("second sale notice") and the second sale notice will:

8.3.1 constitute an offer by the Purchaser to sell the whole of the said Land to the Vendor,

8.3.2 have attached to it a copy of any terms of sale or sale contract offered to or by and/or accepted by the unrelated third party ("third party offer"),

8.3.3 specify the consideration required by the Purchaser from the Vendor and the terms and conditions upon which the said Land will be sold to the Vendor which consideration and terms and conditions will not in any respect whatsoever constitute the imposition of any more onerous obligations and duties upon the Vendor or require the Vendor to pay any greater sum for the said Land than set out in the third party offer.

8.4 The Vendor may within 30 days after service of the second sale notice give notice in writing to the Purchaser of the Vendor's acceptance or rejection of the Purchaser's offer to sell. If the Vendor serves a notice of acceptance on the Purchaser ("second purchase notice") there will be deemed to be a binding contract ("second Contract") for the sale by the Purchaser and the purchase by the Vendor of the Purchaser's interest in the said Land for the consideration stated in the second sale notice incorporating the provisions of the Law Society of South Australia Contract for Sale and Purchase of Land and the further terms and conditions set out in Special Condition 8.5.

8.5 The further terms and conditions to be incorporated in the first Contract or the second Contract (as the case may be) are:

8.5.1 settlement will be effected on or before the expiration of 60 days following receipt by the Purchaser of the first purchase notice or the second purchase notice (as the case may be);

8.5.2 a deposit equal to 5% of the purchase price will be paid by the Vendor to the Purchaser within 48 hours of the service of the first purchase notice or the second purchase notice (as the case may be) upon the Purchaser;

8.5.3 the balance of the purchase price will be paid at settlement;

8.5.4 all rents rates taxes insurance and other outgoings and incomings will be adjusted to the date of settlement;

8.5.5 the Vendor will deliver to the Purchaser a Memorandum of Transfer in registrable form and the Purchaser will execute the Memorandum of Transfer and deliver it to the Vendor at settlement upon payment of the balance of the purchase price in full;

8.5.6 the said Land will in all respects be at the risk of the Vendor as and from the date of execution of the first Contract or the second Contract (as the case may be);

8.5.7 settlement will take place at the Lands Titles Office at Adelaide or at such other place as may be mutually agreed between the Purchaser and the Vendor;

8.5.8 if the Vendor defaults in payment of the balance of the purchase price or any part thereof or in the due compliance with the terms and conditions of the first Contract or the second Contract (as the case may be) the Vendor will pay to the Purchaser interest on so much of the balance of the purchase price as remains unpaid at the rate of interest 2% per annum greater than the annual rate of interest charged from time to time by the Commonwealth Bank of Australia on overdraft accounts of less than $100,000 computed from the date upon which the payment or payments fell due until payment is made in full.

8.6 The Vendor may charge the said Land with the rights and interests granted to the Vendor under and by virtue of the terms of this Special Condition 8 by registering in its favour as the next document immediately after the Memorandum of Encumbrance referred to in Special condition 7.2 a memorandum of encumbrance in such form as may be required by the Vendor and the Registrar General ("encumbrance").

8.7 If the Vendor refuses neglects or otherwise fails to give notice in writing to the Purchaser within the relevant period specified in Special Condition 8.4 or the Vendor notifies the Purchaser of its rejection of the offer to sell contained in the second sale notice the Purchaser may thereafter sell the said Land to a party other than the Vendor for a consideration and upon terms and conditions that are no more favourable to a party other than the Vendor than those set out in the second sale notice.

8.8 In this Special Condition 8 "Vendor" means the person and each of the companies set out in Item S1 of the Schedule and

8.8.1 the spouse children and remoter issue of that person;

8.8.2 any shareholder in or director of the companies as at the date of this agreement; and

8.8.3 any company, trust or other legal entity in which at least one share or other interest (whether present or contingent) is owned or held by any of the persons or companies previously referred to in this Special Condition 8.8.

PROVIDED THAT the Vendor will cause the Purchaser to be advised in writing each time there is a change to the group of persons and companies constituting "Vendor".

8.9 If the whole of Lot 21 and Lot 22 is sold to a person who does not fall within the definition of "Vendor" provided by Special Condition 8.8 on settlement of the sale by the Vendor of the last portion of Lot 21 or Lot 22 (as the case may be) this right of first refusal will lapse and the Vendor will produce for registration a discharge of the encumbrance."

[19]

"The Encumbrancer desiring to render the land above described for the purposes of securing to and for the benefit of the Encumbrancee the payment of the sum of money and the performance and observance of the covenants on the part of the Encumbrancer hereinafter contained DOES HEREBY ENCUMBER THE ESTATE AND INTEREST IN THE LAND ABOVE DESCRIBED FOR THE BENEFIT OF THE ENCUMBRANCEE SUBJECT TO THE ENCUMBRANCES AND OTHER INTERESTS AS SHOWN HEREON ("Land") with the payment (if demanded) of the yearly rent charge of 10 cents payable on the 30th day of June each year commencing on the 30th day of June next ensuing after the execution hereof PROVIDED HOWEVER that if throughout the year immediately preceding the due date for payment of such yearly rent charge the Encumbrancer shall not have committed suffered allowed or permitted any breach of and shall have otherwise duly performed an observed all of the covenants contained in clause 3 hereof then in lieu of the sum of 10 cents which would otherwise have been payable (if demanded) there shall be payable (if demanded) the sum of 5 cents to the intent that the Encumbrancee shall hold the said yearly rent charge in fee simple and with the performance and observance of the covenants by the Encumbrancer contained or implied herein AND the Encumbrancer for itself and its successors in title hereby covenants with the Encumbrancee and each and every registered proprietor for the time being of each and every one and each and every part of the allotments into which the land comprised in Allotments 1 and 2 Filed Plan 17160 Hundred of Onkaparinga comprised in Certificates of Title Register Book Volume 5071 Folios 707 and 708, Allotment 22 in DP 39485 being portion of the land comprised in Certificates of Title Register Book Volume 5134 Folio 947 and Allotment 21 in DP 39485 being portion of the land comprised in Certificates of Title Register Book Volume 4375 Folios 70 and 71 (together "Adjacent Land") is now or hereafter divided and all successive owners, assignees, executors, administrators and transferees thereof as follows:

1. The Encumbrancer will pay to the Encumbrancee the said sum of TEN CENTS (10¢) (if demanded) or the said sum of FIVE CENTS (5¢) (if demanded) (as the case may be) on the 30th day of June next and on each and every 30th day of June thereafter.

2. Nothing herein contained for or in respect of payment of the said yearly rent charge shall in any way affect or prejudice the rights of the Encumbrancee to an injunction to prevent or restrain any breach of any of the covenants hereinafter contained or to damages for such breach.

3. 3.1 In this Encumbrance, unless the contrary intention appears the expression "Land" means Lot 20 in Deposited Plan No 39485 being portion of the land comprised in Certificates of Title Register Book Volume 5134 Folios 124 and 947.

3.2 During the continuance of this Encumbrance the Encumbrancer its agents or assigns and other persons claiming through the Encumbrancer shall not sell the Land or any portion of it unless the following conditions are satisfied:

3.2.1 The Encumbrancer will give notice in writing to the Encumbrancee of the Encumbrancer's intention to dispose of the Land or any part of it ("first sale notice") and the first sale notice will constitute an offer by the Encumbrancer to sell the whole of the Land to the Encumbrancee. The first sale notice will specify the consideration required by the Encumbrancer from the Encumbrancee from the purchase by the Encumbrancee of the Encumbrancer's interest in the Land and the terms and conditions upon which the Land will be sold to the Encumbrancee. The consideration and terms and conditions will not in any respect whatsoever constitute the imposition of any more onerous obligations and duties upon the Encumbrancee or require the Encumbrancee to pay any greater sum for the Land than the Encumbrancer would impose or require from an Encumbrancer other then (sic) the Encumbrancee.

3.2.2 The Encumbrancee may within 30 days after service of the first sale notice give notice in writing to the Encumbrancer of the Encumbrancee's acceptance or rejection of the Encumbrancer's offer to sell. If the Encumbrancee serves a notice of acceptance on the Encumbrancer ("first purchase notice") there will be deemed to be a binding contract ("first Contract") for the sale by the Encumbrancer and the purchase by the Encumbrancee of the Encumbrancer's interest in the Land for the consideration stated in the first sale notice incorporating the provisions of the Law Society of South Australia contract for Sale and Purchaser of Land and the further terms and conditions set out in subclause 3.2.5.

3.2.3 If the Encumbrancee does not within 30 days after service of the first sale notice give to the Encumbrancer the first purchase notice as required by subclause 3.2.2 the Encumbrancer may negotiate the sale of the Land to a third party unrelated to the Encumbrancer ("unrelated third party"). If an offer to purchase the Land has been submitted to the Encumbrancer by an unrelated third party the Encumbrancer will give notice in writing to the Encumbrancee of the Encumbrancer's intention to dispose of the Land ("second sale notice") and the second sale notice will:

3.2.3.1 constitute an offer by the Encumbrancer to sell the whole of the Land to the Encumbrancee,

3.2.3.2 have attached to it a copy of any terms of sale or sale contract offered to or by and/or accepted by the unrelated third party ("third party offer"),

3.2.3.3 specify the consideration required by the Encumbrancer from the Encumbrancee and the terms and conditions upon which the Land will be sold to the Encumbrancee which consideration and terms and conditions will not in any respect whatsoever constitute the imposition of any more onerous obligations and duties upon the Encumbrancee or require the Encumbrancee to pay any greater sum for the Land than set out in the third party offer.

3.2.4 The Encumbrancee may within 30 days after service of the second sale notice give notice in writing to the Encumbrancer of the Encumbrancee's acceptance or rejection of the Encumbrancer's offer to sell. If the Encumbrancee serves a notice of acceptance on the Encumbrancer ("second purchase notice") there will be deemed to be a binding contract ("second Contract") for the sale by the Encumbrancer and the purchase by the Encumbrancee of the Encumbrancer's interest in the Land for the consideration stated in the second sale notice incorporating the provisions of the Law Society of South Australia Contract for Sale and Purchaser of Land and the further terms and conditions set out in subclause 3.2.5.

3.2.5 The further terms and conditions to be incorporated in the first Contract or the second Contract (as the case may be) are:

3.2.5.1 settlement will be effected on or before the expiration of 60 days following receipt by the Encumbrancer of the first purchase notice or the second purchase notice (as the case may be);

3.2.5.2 a deposit equal to 5% of the purchase price will be paid by the Encumbrancee to the Encumbrancer within 48 hours of the service of the first purchase notice or the second purchase notice (as the case may be) upon the Encumbrancer;

3.2.5.3 the balance of the purchase price will be paid at settlement;

3.2.5.4 all rents rates taxes insurance and other outgoings and incomings will be adjusted to the date of settlement;

3.2.5.5 the Encumbrancee will deliver to the Encumbrancer a Memorandum of Transfer in registerable form and the Encumbrancer will execute the Memorandum of Transfer and deliver it to the Encumbrancee at settlement upon payment of the balance of the purchase price in full;

3.2.5.6 the Land will in all respects be at the risk of the Encumbrancee as and from the date of execution of the first contract or the second Contract (as the case may be);

3.2.5.7 settlement will take place at the Lands Titles Office at Adelaide or at such other place as may be mutually agreed between the Encumbrancer and the Encumbrancee;

3.2.5.8 If the Encumbrancer defaults in payment of the balance of the purchase price or any part thereof or in the due compliance with the terms and conditions of the first Contract or the second Contract (as the case may be) the Encumbrancee will pay to the Encumbrancer interest on so much of the balance of the purchase price as remains unpaid at the rate of interest 2% per annum greater than the annual rate of interest charged from time to time by the Commonwealth Bank of Australia on overdraft accounts of less than $100,000 computed from the date upon which the payment or payments fell due until payment is made in full.

3.2.6 If the Encumbrancee refuses neglects or otherwise fails to give notice in writing to the Encumbrancer within the relevant period specified in subclause 3.2.4 or the Encumbrancee notifies the Encumbrancer of its rejection of the offer to sell contained in the second sale notice the Encumbrancer may thereafter sell the Land to a party other than the Encumbrancee for a consideration and upon terms and conditions that are no more favourable to a party other than the Encumbrancer than those set out in the second sale notice.

3.2.7 In this clause 3.2 "Encumbrancee" means the person and each of the companies set out in the panel titled "ENCUMBRANCEE" on the first page of this Encumbrance and:

3.2.7.1 the spouse children and remoter issue of that person;

3.2.7.2 any shareholder in or director of the companies as at the date of this Encumbrance; and

3.2.7.3 any company, trust or other legal entity in which at least one share or other interest (whether present or contingent) is owned or held by any of the persons or companies previously referred to in this subclause 3.2.7

PROVIDED THAT the Encumbrancee will cause the Encumbrancer to be advised in writing each time there is a change in the group of persons and companies constituting "Encumbrancee".

3.2.8 If the whole of the Land is sold to a person who does not fall within the definition of "Encumbrancee" provided by subclause 3.2.7 on settlement of the sale by the Encumbrancee of the last portion of the Land this right of first refusal will lapse and the Encumbrancee will produce for registration a discharge of this Encumbrance.

4. The Encumbrancer shall not sell or agree to sell or transfer the estate or interest of the Encumbrancer in the Land or any portion thereof without obtaining from the purchaser or transferee of the Land or portion thereof the subject of the sale or transfer a binding agreement to execute and lodge for registration under the provisions of the Real Property Act 1886 (as amended) as the first document immediately after the registration of the Memorandum of Transfer in respect of the Land or portion thereof the subject of the sale or transfer a Memorandum of Encumbrance in favour of the Encumbrancee or its nominee containing the same or substantially similar covenants and other stipulations as are herein contained with the substitution of:

4.1 the name address and description of the purchaser or transferee of the Land or such portion thereof subject to the sale or transfer as Encumbrancer;

4.2 a description of the Land or such portion thereof subject to the sale or transfer in a form required for registration;

4.3 such further or other consequential amendments as may be required for registration;

and the Encumbrancer shall ensure that such Memorandum of Encumbrance is lodged for registration and is registered as soon as practicable.

5. Upon the Encumbrancer both ceasing to be registered as the proprietor of the whole of the Land and causing clause 6 hereof to be complied with in respect of the Land, or, upon the Encumbrancer ceasing to be registered as the proprietor of any portion of the Land and causing clause 6 hereof to be complied with in respect of that portion, the Encumbrancer shall be released and discharged from the obligation to observe and perform the provisions contained in clauses 1 and 3 hereof in so far as the provisions of such clauses relate to or affect the whole of the Land or any portion thereof (as the case may be) provided however that the Encumbrancer shall remain liable to use its best endeavours from time to time at the request and cost in all things of the Encumbrancee to secure compliance with the provisions contained in clauses 1 and 3 hereof by all the Encumbrancer's assigns and successors in title hereafter acquiring an estate or interest in the whole of the Land or any portion thereof.

6. Any waiver by the Encumbrance of any breach of any one or more of the covenants conditions restrictions or stipulations herein contained shall not be nor be construed to be a waiver of any subsequent or other breach of the same or any other covenant condition restriction or stipulation herein contained, nor shall any failure on the part of the Encumbrancee to require to exact full and complete compliance with any of the covenants conditions restrictions or stipulations herein contained be construed as in any manner changing the terms hereof or as preventing the Encumbrancee from enforcing the full provisions hereof.

...

9. If any term covenant condition or provision of this Encumbrance is or is held by a court of competent jurisdiction to be invalid void or unenforceable same shall be severed herefrom and the remainder of such terms covenants conditions and provisions shall remain in full force and effect and shall in no way be affected impaired or invalidated thereby."

[64]

"THE COURT DECLARES that:

1. Clause 3 of the Encumbrance No 7779125 dated 17 August 1994 ("the Encumbrance") is void and unenforceable.

2. Clause 4 of the Encumbrance is void and unenforceable.

3. The plaintiff is under no obligation to comply or further comply with the covenants contained in the Encumbrance before proceeding to completion of the contract for sale and purchase to Kinsmen Developments Pty Ltd dated 25 February 2003.

4. The plaintiff is entitled to sell Allotment 20, being the whole of the land comprised in Certificate of Title Register Book Volume 5274 Folio 541, to Kinsmen Developments Pty Ltd, free of the covenants contained in Clauses 3 and 4 of the Encumbrance.

5. Upon payment into Court by the plaintiff of the moneys hereinafter specified the land comprised in Certificate of Title Register Book Volume 5274 Folio 541 is freed and discharged from Encumbrance No 7779125 and from the principal interest and other charges secured by the said Encumbrance [section 27(2) Law of Property Act 1936 (SA)].

THE COURT ORDERS that:

6. The Inter Partes Summons dated 13 June 2003 is amended to include an application under section 27 of the Law of Property Act 1936 (SA).

7. The plaintiff pay into Court the principal sum of $100.00 (together with the amount of $10.00 to meet the contingencies of further costs expenses and interest and any other contingency in respect of the Encumbrance between the plaintiff as Encumbrancer and the defendants as Encumbrancees).

8. Upon payment into court by the plaintiff of the moneys hereinbefore specified in discharge of the plaintiff's liability for rent charges pursuant to clause 1 of the Encumbrance (for which the receipt of the Registrar of the Supreme Court shall be sufficient evidence), the Registrar General of the Lands Titles Registry Office make an entry on Certificate of Title Register Book Volume 5274 Folio 541 effecting the removal or cancellation of the Encumbrance registered thereon.

9. The first defendant pay to the plaintiff its costs of action to be taxed in default of agreement.

10. This declaration and order be stayed in its operation as to paragraphs 5, 6, 7 and 8 herein until 5.00 pm on 12 September 2003 for the purpose of enabling the defendant, if so advised, to institute an appeal in relation to the declarations and orders made, or any of them.

11. Further consideration of the question of a continuing stay be adjourned for consideration by the Chamber Judge on 12 September 2003.

12. The parties have liberty to apply as to moneys paid into Court and generally."

[131]

"The question whether a bond or covenant or contract purporting to impose a total contractual restraint upon alienation is void does not seem to be settled. A condition doing so attached as a condition subsequent to the estate is of course void. The invalidity may be put on the ground of repugnancy to the grant or upon public policy or for that matter it may conceivably be attributed to an indirect effect of Quia Emptores. That is immaterial, for it is a known rule that the condition is void. But with contractual restraints there is no fetter upon alienation which does more than sound in damages, that is, unless a doctrine of equity intervenes to make it bind the land.

...

The ground for denying the validity of a contractual restriction upon alienation is that it is a principle of the law that private property should be fully alienable. See per Jessel M.R. in In re Ridley; Buckton v. Hay and Sweet (1917) 33 L.Q.R. 236, Cruise, 2 Dig. P. 6, in effect expresses a view that a contractual restriction upon the alienation of an absolute estate if unqualified should be considered void and this seems to accord with modern views of policy. Cruise, after referring to the supposed distinction between a condition and a covenant or contract, says this: 'This doctrine appears extremely questionable, as it offers an obvious mode of restraining a person from those rights over an estate which the common law gives him; consequently of frustrating the common law, as fully as if a condition of this kind were allowed to be inserted in a conveyance of land; and in some cases it appears not to have been allowed.' Indeed it is impossible to doubt that a fetter on alienation may be imposed by covenant which is as effective over a very long period of time to prevent alienation of land as a condition subsequent would have been had it been valid. I think therefore that cl. 3 should be considered void as an independent restraint on alienation. So far as cl. 4 relates to consent it clearly falls with cl. 3."

[180]

143 Secondly, Nitschke submitted that the first sale notice did not comply with the requirements of the encumbrance because the terms and conditions of the offer constituted the imposition of more onerous obligations and duties than Hahndorf would impose on another purchaser. The terms and conditions offered to Nitschke are those contained in the first sale notice and those contained in clause 3.2.5 of the encumbrance and those contained in The Law Society of South Australia Contract for the Sale and Purchase of Land. It must be remembered that at the point at which the first sale notice is given no contract will have been concluded with a third party because to have concluded a contract with a third party would be a breach of the covenants in the encumbrance. By the time the first sale notice was served, Hahndorf had been negotiating with Kinsmen for some time. Three letters were put in evidence which contained details of a proposed sale of the subject land to Kinsmen. There were two letters from Kinsmen to Hahndorf dated 17 May 2002 and 20 June 2002 respectively, and one from Hahndorf to Kinsmen dated 13 June 2002. The Judge seems to have taken the view that because there was no concluded contract with Kinsmen, the details of the negotiations with Kinsmen should be ignored. He said that either party could still change its mind. It is true that either party could still change its mind. However, depending on how far the negotiations had progressed, I do not think it is right to ignore the contents of negotiations with a third party in determining the obligations and duties Hahndorf would impose or require from another purchaser. The negotiations might be strong evidence relevant to that issue. In fact, I note that the terms and conditions in clauses 1.1 - 1.3 of the first sale notice largely reflect the terms and conditions referred to in the course of Hahndorf's negotiations with Kinsmen. Furthermore, the letter from Kinsmen dated 17 May 2002 states that it was agreed in principle subject to a number of conditions that a contract involving certain terms and conditions would be entered into. The first limb of Nitschke's argument under this head was that it is clear from the negotiations between Hahndorf and Kinsmen that Kinsmen would not be obliged to proceed with settlement under a contract if all relevant approvals, including approvals under the Development Act 1993 and the RPA, were not obtained. I agree that that is a proper inference to draw from the correspondence which sets out the negotiations. Nitschke submitted that by contrast, it would be required to settle and carry out those works referred to in the first sale notice which did not constitute development irrespective of whether or not development approval had been obtained. It would also be required to maintain the course to the requisite standard (clause 1.5 of the first sale notice) and purchase plant and equipment (clause 1.3). Hahndorf sought to meet this argument by submitting that the provisions of the Law Society of South Australia Contract for the Sale and Purchase of Land would be part of any contract between Nitschke and Hahndorf. Nitschke did not dispute that proposition. Hahndorf submitted that by reason of clause 18 of the Law Society Contract, the contract would be subject to the obtaining of all consents necessary to avoid a situation whereby performance of the contract contravened any Act including the Development Act 1993. Clause 18 in the Law Society Contract which was in fact annexed to the second sale notice provides:

[181]

"CONSENTS

18. (1) If this agreement or the performance of this agreement would otherwise contravene the provisions of the Real Property Act, 1886 or any other Act, this agreement is subject to the obtaining of all consents and to the deposit of all plans required by law to be obtained or deposited by either party, whether or not such consents are mentioned in Item 19.

(2) Without limiting the generality of the sub-clause (1), this agreement is subject to -

(a) the approval in writing of the relevant planning authority pursuant to the Strata Titles Act, 1988, or

(b) the Development Assessment Commission issuing a certificate under section 51 of the Development Act, 1993 or any other consent necessary under the provisions of that Act being given, and

(c) the deposit of a plan of division or a strata plan or plan of Community Division pursuant to the Community Titles Act, 1996

where it is necessary by virtue of the provisions of any of the Acts referred to in this clause to obtain the approval, certificate or consent or to deposit the plan.

(3) The grant, transfer, conveyance, mortgage or encumbrance of any estate or interest in the Land pursuant to this agreement shall not have effect until the plan of division or the strata plan contemplated by the parties has been deposited if the grant, sale, transfer, conveyance, mortgage or encumbrance thereof would otherwise contravene the provisions of the Real Property Act, 1886.

(4) The parties shall use their best endeavours to obtain all such consents and to procure the deposit of all such plans as are required by Item 19 to be obtained or procured and all such other consents as they may be required to obtain under this clause and to have any such plan of division or strata plan deposited.

(5) If default is made by either party in carrying out any of his or her obligations under this clause, the provisions of clause 20 shall apply.

(6) (a) Subject to sub-clause (8), if all the consents referred to in this clause are not obtained or if any such plan is not deposited within the period or respective periods specified in Item 19, or if no period is specified in Item 19, within one calendar month from the date of this agreement, either party, upon giving 14 days' notice in writing to the other, may determine this agreement.

(b) This agreement shall determine immediately upon the expiration of such notice, unless the consents are obtained or the plan is deposited in the meantime.

(7) (a) Except where otherwise provided in this agreement, upon the determination of this agreement under sub-clause (6), all moneys paid by the Purchaser under this agreement shall be refunded,

(b) the Vendor shall be liable to pay to the Purchaser the amount of any moneys paid by the Purchaser to the Deposit Holder if -

(i) the Deposit Holder to whom the moneys were paid is the agent of the Vendor, and

(ii) the Deposit Holder does not refund the money within 14 days of the receipt by the Deposit Holder of notice that this agreement has been determined, and

(c) except as provided in paragraph (b), neither party shall have any recourse against the other consequent upon the determination of this agreement under this clause.

(8) If any consent mentioned in this clause is not obtained or any plan mentioned in this clause is not deposited due to the failure of the party required by Item 19 to obtain the consent or to procure the deposit of the plan, then the party who is in default shall not be entitled to determine this agreement under sub-clause (6); any such determination, by the party who is not in default shall not prejudice any other rights or remedies which that party may have against the other party.

(9) In this clause, 'consent' includes approval, certificate or other permission or authorisation and 'deposited' means deposited in the Lands Titles Registration Office by the Registrar-General."

[192]

152 First, under the Kinsmen contract there was no obligation on Kinsmen to pay a deposit, whereas by reason of clause 3.2.5.2, and the terms of the offer, Nitschke was obliged (had it accepted the offer) to pay a deposit equal to 5% of the purchase price. That was a more onerous term or condition. There are a number of possible interpretations of the clauses relevant to this issue. The first is that the terms and conditions in clause 3.2.5 will always form part of any contract between encumbrancer and encumbrancee. They are not to be taken into account in assessing whether the offer to Nitschke involves more onerous obligation and duties because they are specified by the encumbrance itself and need not be included in the second sale notice. That was the approach adopted by the Judge. A second approach is to say that they are taken into account in making the relevant assessment. They deal with important matters such as the fact that settlement must be effected within 60 days, and if they are left out of account this would represent a significant exception to the protection provided to the encumbrancee by the requirement in clause 3.2.3.3. If this interpretation is adopted, then the third party offer must contain terms and conditions similar to those in clause 3.2.5. A third approach is to say that the terms and conditions set out in clause 3.2.5 are included in the relevant assessment, but that Hahndorf may offer different terms on the relevant subjects by including such different terms in the second sale notice. In other words, the time of settlement, for example, can be altered by including a different term on that subject in the second sale notice. In my opinion, this is the interpretation which should be adopted. It provides the protection to the encumbrancee envisaged by the encumbrance. The matters in clause 3.2.5 are important matters and it would represent a significant exception to the requirement in clause 3.2.3.3 to hold that they stand outside that requirement. Equally, it is important that there be flexibility in terms of Hahndorf's negotiations with a third party.

At a glance

Court

Decision date

Before

Source

Judgment (206 paragraphs)

JOHN NITSCHKE NOMINEES PTY LTD v HAHNDORF GOLF CLUB INC & ANOR No. SCCIV-03-737 [2004] SASC 128 (6 May 2004)

Parties

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