Plaintiffs v Defendant [2016] VSC 75 | Case summary

Plaintiffs v Defendant [2016] VSC 75 | Case summary | Zoe

[60]

MR CLARKE: This drawing shows a supermarket partly on the sold land and partly on your land? That's correct isn't it?---I can't answer that because it's not to scale. I'm not a draftsman. I just got told, "Draw a picture". It's the same - the council told to - for the UDF to have no measurements. They want mud maps. They want colour pictures of - ah, supermarket's going there. Shops are going there. SOHO's going there because they've all said it comes to the planning and permit stage. They said it's totally irrelevant so how can I interfere? I'm not a town planner. I was asked for my ideas, drawings. Not one of them is a master plan.

That is a plan that relates to both lots doesn't it?---I can't honestly answer you because I don't know what the council's going to accept. I was told to draw a picture. I drew a picture. Now, then it is up to the developer or whoever's in charge to work out the sizes.

Well, one - - -?---If I asked you to draw a picture and it doesn't fit on the page is that my fault?

You knew I suggest at the time that this was drawn by you that the supermarket - that the land that you sold had to fit the (indistinct) a supermarket?---That's correct. That's the whole concept of the sale.

Exactly and this - - -?---And that's why rooftop parking was suggested for Hera's benefit so it could fit all its elements into the parcel of land.

Yes, and do you say this drawing has all of the elements of the supermarket on the land that you sold?---It has all of the elements that the PSP [Precinct Structure Plan] has required. The supermarket elements again is back to the developer because I have not signed a lease or an agreement or a contract with the supermarket. My agreement is to have a full-line supermarket on Lot 1. That's the lot, what it's called.

The southern lot?---All right, the southern lot and that's what I was working towards.

Yes, and your evidence to Her Honour is that this is a stepping along the way to having a full-line supermarket located on the land that you sold to Hera?---That's correct. It is an idea because that's what I was asked for and that's what I produced.[16]

[148]

Mr Limoli owns the site at No. 2 Adrian Street (eastern purple parcel above). Mr Limoli has engaged Taylors Development Strategists to prepare an Urban Design Framework for the Activity Centre. Mr Limoli is contracted to sell the land to a third party, a contract which does not come into effect until an Urban Design Framework has been approved on the site.
Mr & Mrs Bisognin own the site at No. 1 Adrian Street (western purple parcel above). In 2012 they sold 'options' on their site to a third party developer, who has subsequently entered into a contract with Woolworths to purchase the southernmost portion of their site. They have subsequently taken legal action against the original third party developer for entering into a contract with Woolworths.
As part of a mediation hearing of the Supreme Court, Mr & Mrs Bisognin agreed to a set timeframe within which the developer had left to act on their purchased 'options' being 25 August 2015, after which time the contract will expire and Mr & Mrs Bisognin would be free to make their own deal with Woolworths for the purchase of their site.
Prior to and during the mediation hearing, Mr & Mrs Bisognin were in contact with Council's Strategic Development Department in regards to the size of the supermarket allowed to be built on their property. Despite the PSP stating that only a small format supermarket could be built on the site, Council's Strategic Development Department advised the Bisognin's that a larger format supermarket could be supported on the site due to the work conducted on Council's Activity Centre Strategy supporting this outcome.
Mr & Mrs Bisognin have advised Planning Officers during this process that they only agreed to the mediation outcomes on the site as it was their understanding that Woolworths could not fit their large format supermarket on the land that they were contracted to purchase and that their contract with the original third party developer would fall through.
Woolworths however are confident that they can fit their large format supermarket on the parcel of land that they are contracted to purchase from the third party developer. A representative from Woolworths has been present at earlier workshops held by Council Officers to work through issues with the Urban Design Framework. Woolworths are now being represented by Frank Perry and Associates.

[188]

You will note from the attached correspondence from the relevant authorities that in order for consent to be granted for the purposes of the statement of compliance fees/bond monies in the sum of approximately $920,000 will need to be paid/provided. This is a vendor obligation as it is usual practice that the vendor assumes the responsibility for payment of these fees in their entirety. Accordingly we request as a matter of urgency that you confirm with us once payment of the fees and bond monies have been made so that the requisite consent from the referral authorities may be obtained for the statement of compliance to be issued.

Please note that our client has used its best endeavours at its own cost and expense to prepare the Plan of Subdivision in readiness for it to be lodged at the Land Titles Office. Your clients cooperation is therefore required for the requisite consents to be granted for the Plan of Subdivision to be lodged and registered.

We also seek your advices regarding the status of the GAIC payment that will become due and payable for the purpose of registration of the Plan of Subdivision. Has your client contacted the relevant authorities and made the relevant application?

In the circumstances our client considers it appropriate that the sunset date referred to in special condition 8 of the Contract to either be extended or to no longer apply in order for our respective clients to properly fulfil their obligations under the Contract of Sale taking into account your clients conduct in delaying and frustrating the process for the Plan of Subdivision to be registered.

Furthermore we are instructed that our client is ready, willing and able to settle this Contract as it has secured funds to immediately effect settlement once the Plan of Subdivision is registered in accordance with the Contract.

We are instructed that if we do not receive your confirmation that the fees/bond monies will be paid by the vendor immediately or if the default notice is not withdrawn or extension in time as set out above is not granted by 5.00 pm Wednesday, 12 August 2015 our client will be referring this matter to Court where our client will seek appropriate orders and relief. This letter and our other letters shall be produced in Court on the issue of costs.

(emphasis added)

[241]

[46] The rights and liabilities of parties under a provision of a contract are determined objectively[77], by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose[78].

[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean[79]. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract[80].

[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning[81].

[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating"[82]. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.[83]

[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result".[84] Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".[85]

[420]

The nature of a section 173 agreement

[43] A section 173 agreement can be described as a hybrid instrument. In part such an instrument has the character of a private agreement. However it is also an instrument that forms part of the planning controls which apply to land. I will return to this issue later.

[44] A planning scheme may provide that any use or development of land is conditional on an agreement being entered into with the responsible authority or a referral authority. A planning permit for any use or development of land may include a condition that the owner of the land, or an applicant for a permit in anticipation of the applicant becoming the owner of the land, enter into an agreement with the responsible authority under section 173 of the Act. Further, a section 173 agreement may be entered into voluntarily by a responsible authority and an owner of land.

[45] An agreement may provide for various matters concerning the use or development of land or, indeed, any matter intended to achieve or advance the objectives of planning in Victoria.

[46] An agreement made pursuant to section 173 of the Act binds the owner to the covenants specified in the agreement. Further, and importantly, a responsible authority may apply to the Registrar of Titles to register an agreement relating to land (other than Crown land). The Registrar of Titles must make a recording of the agreement in the register, the effect of which is that any burden of a covenant in the agreement runs with the land affected and the responsible authority may enforce the covenant against any person deriving title from the person who entered into the covenant.

...

[52] It is common for a section 173 agreement to be entered into in respect of land, and then registered on the title to that land, and then for the land to be subdivided. In this case the agreement then attaches to each allotment created from the land. However in this situation a covenant imposed upon an owner imposes a separate obligation on the owner of each lot, enforceable by the responsible authority; and the owner of a lot subject to the agreement is not necessarily a party to an obligation of another owner in respect of another lot.[201]

[481]

[42] In IBM United Kingdom Ltd v Rockware Glass Ltd,[234] in the context of a covenant to use best endeavours to obtain planning permission, Buckley LJ described the obligation as requiring a vendor to do what an owner who is anxious to obtain permission would do to achieve it:

What would an owner of the property with which we are concerned in this case, who was anxious to obtain planning permission, do to achieve that end. The formula which has been suggested and which would commend itself to me is that the plaintiffs as covenantors are bound to take all those steps in their power which are capable of producing the desired results, namely, the obtaining of planning permission, being steps which a prudent, determined and reasonable owner, acting in his own interests and desiring to achieve that result, would take.[235]

On that basis, his Lordship held that the obligation would include an obligation to appeal from an initial refusal of permission so long as the circumstances were such as to indicate that there was a reasonable chance of success.

[43] Similarly, in Western Australia, in Paltara Pty Ltd v Dempster,[236] Malcolm CJ and Pigeon J held that an obligation to use best endeavours to obtain subdivisional approval in a contract for the sale of land required the obligor company to do what reasonably could be done in the circumstances, and that what could reasonably be done was whatever a reasonable and prudent board of directors acting properly in the interests of their company would do in the circumstances of the case.

[44] To the same effect, in Hawkins v Pender Bros Pty Ltd,[237] the Full Court of the Supreme Court of Queensland approved the formulation that a covenant to use best endeavours to obtain building and town planning approvals required the obligor conscientiously to apply itself to the task of securing approval with the vigour to be expected of it if it were prudently attempting to secure its own interests, and to continue so to do until it should reasonably judge in the circumstances that further efforts would have such remote prospects of success as to be likely to be wasted.

[45] In a similar context, both IBM and Hawkins were recently referred to with approval by the New South Wales Court of Appeal in Foster v Hall.[238]

[46] In Western Australia in O'Rourke v P & B Corp Ltd,[239] Martin CJ sitting at first instance concluded after a thorough and careful consideration of relevant authority that the scope of the obligation to use best endeavours to achieve a planning approval is to be assessed in accordance with what had been said in Paltara, with the result that:

if a prudent and reasonable person, acting in his or her own interests and determined to obtain approval, would have pursued an appeal, the obligation to use best endeavours would extend to an obligation to appeal. Construed in this way, there does not appear to me to be any tension between the decision in IBM United Kingdom Ltd and the decisions in Paltara and Ross in this court.[240]

Plaintiffs v Defendant

At a glance

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Judgment (514 paragraphs)

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Legislation Cited (7)

Cases Cited (4)