Court of Appeal (Qld)|2006-09-22|Before: McPherson and Keane JJA and Wilson J Separate reasons for judgment of, each member of the Court, each concurring as to the orders made
McPherson and Keane JJA and Wilson J Separate reasons for judgment of, each member of the Court, each concurring as to the orders made
Catchwords
INTERPRETATION - GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS - GIVING
EFFECT TO MANIFEST INTENTION - appellant agreed to sell rural
land to
respondent for redevelopment by respondent as commercial land - appellant
Source
Original judgment source is linked above.
Catchwords
INTERPRETATION - GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS - GIVINGEFFECT TO MANIFEST INTENTION - appellant agreed to sell ruralland torespondent for redevelopment by respondent as commercial land - appellantpurported to terminate contract because respondentfailed to comply with specialcondition of contract relating to development approval - respondent commencedaction for specific performance- trial judge made order for specificperformance in favour of respondent - interpretation of special condition addedto standardREIQ form - use of extrinsic materials - expressio unius estexclusio alterius - whether the respondent's failure to lodge an applicationfor operational works approval afforded the appellant the right to terminatecontract under special conditionCONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - IN GENERAL - specialcondition required respondent to "keep" appellant "fullyinformed of theprogress" of applications made to local authority - appellant's real estate
agent was given authority to communicate
with officers of respondent for some
purposes - duty of agent to pass to the appellant information relating to
respondent's ability
to complete contract - meaning of "sale" of land - whether
real estate agent was appellant's agent for purpose of special condition
and
whether appellant waived entitlement to be kept informed
Integrated Planning Act 1997 (Qld), s 1.3.2, s 1.3.5, s 3.2.1, s
3.2.3
Anderson v Densely [1953] HCA 47
(1953) 90 CLR 460, consideredAustin v
Bonney [1999] 1 Qd R 114, citedBlackley v National Mutual Life
Association of Australasia Ltd [1972] NZLR 1038, consideredCodelfa
Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149
CLR 337, citedCommonwealth v Verwayen (1990) 170 CLR 394,
citedEl Ajou v Dollar Holdings plc [1993] EWCA Civ 4
[1994] 2 All ER 685,
citedFairmease Pty Ltd v Von Pein [2004] QSC 220, citedFinance
Corporation of Australia Ltd v Commissioner of Stamp Duties [1981] Qd R 493,
cited Fitzgerald v Metcalf [1917] NZGazLawRp 49
[1917] NZLR 486,
consideredFreshmark Limited v Mercantile Mutual Insurance (Australia)
Limited [1993] QCA 222
[1994] 2 Qd R 390, citedGange v Sullivan [1966] HCA 55
(1966) 116 CLR
418, citedHavenbar Pty Ltd v Butterfield (1974) 133 CLR 449,
citedJames v Smith [1931] 2 KB 317n, citedKoikas v Green Park
Construction Pty Ltd [1970] VicRp 18
[1970] VR 142, citedLittlewoods Mail Order
Stores Ltd v Inland Revenue Commissioners [1963] AC 135,
citedMcCarrick v Liverpool Corporation [1947] AC 219,
citedMehmet v Benson [1965] HCA 18
(1965) 113 CLR 295, citedMorgan v
Liverpool Corporation [1927] 2 KB 131, citedNorth Stafford Steel Co v
Ward (1868) LR 3 Ex 172, cited O'Brien v Robinson [1973] UKHL 1
[1973]
AC 912, citedPetersen v Moloney [1951] HCA 57
(1951) 84 CLR 91, appliedRoyal
Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5
153 CLR 153, consideredStrover v Harrington [1988] 2 WLR 572,
citedSun World Inc v Registrar, Plant Variety Rights (1997) 75 FCR
528, citedSuttor v Gundowda Pty Ltd [1950] HCA 35
(1950) 81 CLR 418, cited
Judgment (260 paragraphs)
[1]
INTERPRETATION - GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS - GIVING EFFECT TO MANIFEST INTENTION - appellant agreed to sell rural land to respondent for redevelopment by respondent as commercial land - appellant purported to terminate contract because respondent failed to comply with special condition of contract relating to development approval - respondent commenced action for specific performance - trial judge made order for specific performance in favour of respondent - interpretation of special condition added to standard REIQ form - use of extrinsic materials - expressio unius est exclusio alterius - whether the respondent's failure to lodge an application for operational works approval afforded the appellant the right to terminate contract under special condition
[2]
CONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - IN GENERAL - special condition required respondent to "keep" appellant "fully informed of the progress" of applications made to local authority - appellant's real estate agent was given authority to communicate with officers of respondent for some purposes - duty of agent to pass to the appellant information relating to respondent's ability to complete contract - meaning of "sale" of land - whether real estate agent was appellant's agent for purpose of special condition and whether appellant waived entitlement to be kept informed
[3]
Integrated Planning Act 1997 (Qld), s 1.3.2, s 1.3.5, s 3.2.1,
[1] McPHERSON JA: The defendant vendor Mr Graham Smith, who is the appellant in this Court, agreed to sell to the plaintiff respondent SCN Pty Ltd some 7.6 ha of land situated in the local government area administered by the Logan City Council. The contract dated 29 July 2004 is in a standard printed form (which includes a provision that time is of the essence of the contract), but with the addition of a further fifteen special conditions. They are set out in the reasons for judgment of Keane JA in this case. The agreed price for the land is $2,000,000, with the balance after deposit being payable on completion, identified in special condition 12 as 30 days after notice advising that "the application referred to in special condition 1 has been approved or waived".
[31]
[2] Under the Local Area Plan the land was at the time of the contract capable of being used only for purposes that are sufficiently described as rural residential; but the Purchaser, of which Mr Colin Street is the principal, was planning to develop it for use for mixed industrial and business purposes. For this to be achieved it was necessary (to use the language of earlier legislation) for the land to be rezoned; or, as it is now expressed under the Integrated Planning Act 1997, to obtain Council approval for a "material change of use". The evidence shows that for a development like this, such approval will in practice only be given on conditions that include the provision by or at the developer's expense of "infrastructure" for the land in the form of roads, water, drainage, electricity and sewerage services. This is done by carrying out or constructing "operational works" in conformity with the conditions imposed in the Council approval. In the present case, this procedure of imposing conditions was followed when on 15 March 2005 the Council gave its approval to the material change of use on terms including a condition that no application for operational works on some parts of the land was to be lodged until written notice was received from the Council. The process of obtaining approval for the operational works had not been completed when the contract was repudiated in circumstances that will be described.
[32]
[3] The special conditions of contract show that the parties had matters of this kind in contemplation when they made the contract. Clause 1 of those conditions embodies two sentences and it is convenient to set them out separately. The first is as follows:
[33]
"This contract is subject to and conditional upon the Purchaser lodging an application for material change of use application, development application and operational works (herein after called the 'application') in respect of the property with the Local Authority on or before 60 days from the date hereof and approval of such application being received by the Purchaser on or before 15 months from the date hereof."
[34]
The second sentence (which in the contract version simply runs on from the first) is
[35]
"If the Purchaser fails to lodge the material change of use application with the local authority within 60 days of the date hereof then the Vendor may by notice in writing terminate the contract."
[36]
[4] The Vendor now no longer wishes to perform the contract. Indeed, he has entered into an agreement to sell the land to someone else. His primary defence, or the principal one that has survived through to this appeal, is that the Purchaser failed to comply with the first sentence of special condition 1, in that it did not on or before 60 days from the contract date of 29 July 2004 (or within the extended time allowed by the Vendor for that purpose) lodge an application for "operational works" within the terms of that clause. This is admitted by the Purchaser. The consequence, so the Vendor contends, is that under special condition 1 he became entitled to put an end to the contract and did so by notice dated 7 November 2005. The learned judge at first instance rejected this submission, and ordered specific performance of the contract, against which the Vendor now appeals.
[37]
[5] It is pertinent at this point to add that special condition 3 provides that, should the Purchaser not be granted approval on terms satisfactory to it of the application in special condition 1, "then this contract shall be at an end". The effect of provisions in the general form of special conditions 1 and 3 has been the subject of extensive judicial exegesis in Australia beginning with Suttor v Gundowda Pty Ltd[1950] HCA 35; (1950) 81 CLR 418. Subject always to particular stipulations of the contract in question, the established interpretation is that, even where such a clause expressly provides that the contract is to be "void" (or in this instance "at an end") if the condition is not fulfilled, its legal effect is not to work an automatic avoidance or determination of the contract, but only to invest the parties or the particular party having the benefit of the condition with the right or option of putting an end to the contract. At one point in the pleaded Defence it was alleged that the contract "lapsed automatically" upon non-fulfilment of the condition about approval; but it is settled by the line of authority to which I have referred that a communicated election would be required for that purpose. Here, special condition 1 expressly requires the contract to be terminated by a "notice in writing" from the Vendor, so that it is simply not possible to contend that the process of termination was to take place automatically on non-fulfilment of the condition without reference to the parties or one of them. The expression "terminate" in special condition 1 is itself materially indistinguishable from that used in Gange v Sullivan[1966] HCA 55; (1966) 116 CLR 418, where the contract was to be "at an end", and the reasoning in that decision therefore applies to this.
[38]
[6] So far, none of this is controversial. The critical question is, however, who may exercise the power conferred by special conditions 1 and 3 to terminate the contract and in what circumstances. As to this, special condition 1 is, I think, clear in its terms. The Vendor may terminate the contract, but he may do so only "if the Purchaser fails to lodge the material change of use application within 60 days" of the contract date of 29 July 2004. It is true that the first sentence of the clause is not elegantly drafted. There is, in the use of the words "material change of use application" and "development application", an element of unnecessary repetition or perhaps tautology; but neither that, nor the specific reference in the first sentence to "operational works", justifies the conclusion that it or the second sentence is designed to arm the Vendor with power to terminate the contract if the Purchaser fails to lodge an "operational works" application within 60 days of the contract date. The second sentence is quite specific about the event on the happening of which the Vendor may give notice of termination. It operates on the Purchaser's failure to lodge "the material change of use application", and nothing else.
[39]
[7] I agree with what Keane JA has written on this point in his reasons on this appeal. Expressio unius est exclusio alterius: see North Stafford Steel Co v Ward(1868) LR 3 Ex 172, 177, per Willes J. But it is hardly necessary to clothe the thought in authority or in Latin garb. If one alternative is expressly and specifically mentioned, it rationally tends to exclude the implication of another or of any other. A clear illustration in a comparable context is Sandra Investments Pty Ltd v Booth[1983] HCA 46; (1983) 153 CLR 153, in which a contract was expressed to be subject to and conditional upon approval by the local authority of a plan of subdivision within six months, failing which the purchaser was by cl 24 to have the option of cancelling the contract. Gibbs CJ, with whose reasons for judgment Mason, Murphy and Brennan JJ agreed, said [1983] HCA 46; (153 CLR 153, 157-158):
[40]
"Clause 24 does expressly deal with the situation that arises when the approval of the Council is not obtained within the stipulated time. It provides that in such event the purchaser at its option may cancel the contract ... The plain implication is that if the purchaser does not choose to cancel the contract the vendor has no right to treat it as being at an end."
[41]
The same conclusion applies to the second sentence of special condition 1 in this case. See also Koikas v Green Park Construction Pty Ltd[1970] VicRp 18; [1970] VR 142, at 149.
[42]
[8] Such a conclusion accords generally with the provisions of the special conditions in this case. They are evidently inserted for the benefit primarily if not exclusively of the Purchaser. The Vendor is interested in their operation only to the extent that they ensure that the Purchaser is bound to complete within 15 months of contract date or such extended period as is allowed. Only in two instances is the Vendor expressly invested with a power to terminate the contract. One is in the circumstance or event specified in the second sentence of cl 1 already considered, which is if the Purchaser fails to lodge the material change of use application within 60 days. The other instance is contained in the second sentence of special condition 10, which is as follows:
[43]
"10. Should any of the conditions not be satisfied within the period stipulated in the clauses hereunder then the Purchaser may at its option by notice in writing to the Vendor terminate this contract and the contract shall be at an end. If notice of satisfaction or non-satisfaction of a condition is not given within the period stipulated then the Vendor may by notice in writing to the Purchaser terminate the contract."
[44]
[9] Clause 10 confers on the Vendor, as distinct from the Purchaser, no general power to terminate the contract if a condition is not satisfied. It does so only if notice of satisfaction or non-satisfaction of a condition is not given [by the Purchaser] within the period stipulated. What happened here initially was that the Purchaser on 27 October 2005 sought to invoke a power conferred on it by special condition 5 to extend by 90 days the date for obtaining approval for the change of use. Such an extension would have taken to 27 January 2006 the date for complying with special condition 1. The Vendor refused to acknowledge the Purchaser's right so to extend. He did so on 2 November 2005 essentially on the ground that the Purchaser had, in failing to lodge an application for operational works, under special condition 5 not done all things reasonably required of it to obtain the approval. On 7 November the Vendor through his solicitors advised the Purchaser that he terminated the contract because of that failure on the part of the Purchaser. On 9 November 2005 the Purchaser in turn advised that it treated this purported termination as a repudiation of the contract. On 25 January 2006, which on the Purchaser's view of it was close to the last day available for doing so, the Purchaser notified that it exercised the power conferred on it by special condition 9 of waiving in writing both special condition 9 (and so satisfying it) relating to Council approval and special condition 3. This would, if accepted by the Vendor, have had the effect of making the contract binding on the Purchaser as an unconditional contract to purchase. Instead of being carried to completion, however, these proceedings ensued.
[45]
[10] At the trial evidence was directed mainly to the issue whether the Purchaser had, as required by special condition 4, "diligently pursued" the application to the Council; and also, in terms of special condition 5, whether it had done "all things reasonably required of it to obtain such approval". On this issue the plaintiff succeeded. The learned judge was persuaded by the evidence of Mr Venn, who is evidently the doyen of planning consultants in Brisbane, that the plaintiff's achievement in obtaining Council approval by 15 March 2005 was "most commendable". His Honour was satisfied by the evidence of Mr Venn and of other experts in this field that the plaintiff had in fact shown it was "anxious to advance the process of obtaining approvals and took appropriate steps to achieve that end". Because the Vendor has not appealed against these conclusions, there is no occasion to revisit the evidence or the findings supporting them.
[46]
[11] What remains to be considered as the second point on appeal is the Vendor's contention that the Purchaser had failed to comply with, and so was in breach of, the provisions of special condition 4, which is in the following form:
[47]
"4. The Purchaser undertakes to diligently pursue the application referred to in special condition 1 and to answer all reasonable requests for information made by the local authority or other relevant government departments and to keep the Vendor fully informed of the progress of the application referred to in special condition 1 on a monthly basis."
[48]
It is followed in special condition 5 by the further provision that the contract will "still be in force" if the Purchaser demonstrates that, through no fault of its own, delays experienced in obtaining the approval were caused by the local authority, and that, if the Purchaser demonstrates that it has done all things required of it to obtain such approval, then it may at its sole option extend for a period of 90 days the date for satisfaction of this condition.
[49]
[12] From the evidence of the town planning and engineering experts which was accepted, it is evident that his Honour found that the Purchaser satisfied the requirements of special condition 5 and so was entitled to the 90 day extension it claimed. This, however, is subject to the Vendor's submission concerning non-satisfaction of special condition 4 and his claim, in particular, that the Purchaser did not comply with its terms in failing "to keep the Vendor fully informed of the progress of the application ... on a monthly basis." The submission raises a question of interpretations of special conditions 4 and 5 and their relationship to cl 13.1 of the standard conditions, on which the Vendor also relies to support its refusal to complete the contract.
[50]
[13] Clause 13.1 of the standard conditions confers on the Vendor a general right to terminate the contract if the Purchaser:
[51]
"(b) fails to comply with any of the terms or conditions of this Contract;"
[52]
In substance, what the Vendor says is that cl 13.1(b) of the standard conditions gives him a power, additional to any vested in him by the special conditions, of terminating the contract for non-fulfilment of any of those special conditions. There is, I think, a compelling argument that the fifteen special conditions of contract constitute a complete and exhaustive code of the rights of the parties to terminate arising out of those special conditions or their non-fulfilment, and that it was not intended that the standard conditions should provide the Vendor with a further source of power to terminate in the event of non-fulfilment of a special condition. Special condition 5 appears to confirm this impression in providing as it does that "This contract will still be in force if the Purchaser demonstrates ..." that it had done all things required of it to obtain the approval. In doing so, it seems clearly enough to remove the preceding special conditions from the operation of the general power of termination conferred in cl 13(1)(b).
[53]
[14] In view of the course taken by the submissions before us, however, it seems preferable to determine the question raised by non-compliance with special condition 4 on the particular ground selected by the parties themselves. The complaint in this instance is that the Purchaser did not, within the meaning of special condition 4, "keep the Vendor fully informed of the progress of the application ... on a monthly basis." His Honour found that the Purchaser did not itself directly keep the Vendor informed monthly of the progress of the application. It purported to do so by informing the Vendor's real estate agent Mr Jolly. His Honour found that Mr Jolly (who was not called to testify at the trial) had not passed on to the Vendor all the information communicated to him by the Purchaser. Hence, it was said by the Vendor to follow that the Purchaser was in breach of special condition 4. Viewing it as a promissory condition that was breached by the Purchaser, the Vendor was therefore entitled, or so he claimed, to exercise the power of terminating the contract under cl 13.1(b) of the standard conditions.
[54]
[15] The contested issue is the status of Mr Jolly in the process of receiving and relaying communications from the Purchaser to Vendor. His Honour held that he was the Vendor's agent for this purpose. Characterising him as an "agent" may perhaps unnecessarily invest the issue with the aspect of a question of law, whereas it is in my opinion simply a matter of fact, as to which there is ample evidence to support his Honour's finding. It is necessary to trace the sequence of events, beginning with the fact the contract dated 29 July 2004 was not the first of its kind entered into by these two parties for sale of the same land. There had been an earlier contract between them dated 5 April 2004. It too was subject to a defeasance condition operating in favour of the Purchaser, which was relied on by it to terminate that contract on 7 June 2004. The reason on that occasion was difficulties and expense associated with Council infrastructure requirements imposed or expected as a condition of approving a material charge of use. In relation to that contract, Mr John Jolly also acted as the real estate agent for the Vendor. It was he who on that occasion advised the Vendor of the difficulties facing the Purchaser and arranged an extension of time, which was then reduced to writing by the parties' solicitors. Then, on or about 27 May 2004, Mr Jolly informed Mr Smith that the Purchaser was electing to withdraw from the contract, an action that was confirmed by its solicitors by letter on 7 June 2004.
[55]
[16] In consequence of this setback, Mr Jolly suggested to Mr Smith that they discuss with the Council the matter of obtaining development approval. Mr Jolly arranged a meeting, which was held on 9 June 2004 attended by Jolly, Smith, Mrs Smith, their solicitor, Andrew Wheldon and Council representatives. The Council recommended that Mr Smith lodge a development application, which would propel the Council into determining the infrastructure needed for the development. After the meeting on 9 June, Mr Smith authorised Mr Jolly to return to the Purchaser and propose a new contract under which the Purchaser would make the application for the development approval. Subsequently Mr Jolly informed Mr Smith that the Purchaser was interested in doing so, and the subject contract was in due course entered into on 29 July 2004.
[56]
[17] It was said not to be legitimate to refer to the earlier contract and Mr Jolly's part in the communications with respect to it. That was because they happened before the new contract was entered into. No one doubts that from the time of its execution it is the contract of 29 July 2004 that governs the rights of the parties; but we are at this point concerned not with the provisions of the contract but with the character or function with which the parties by their conduct invested Mr Jolly. Plainly he acted as and was constituted the channel of communication between the Vendor and the Purchaser. The parties throughout treated him as such and there is nothing in the contract that is inconsistent with their having done so.
[57]
[18] This pattern of conduct was not disturbed when the new contract was entered into on 29 July 2004. In cross-examination at the trial, Mr Smith said that "whenever I wanted information for the estate I contacted John Jolly", adding that if he couldn't get information from John Jolly (because for example he said he would be speaking to Colin [Street] "next week") he would instruct his solicitor to request the information "officially". The reference in this answer to "information for the estate" is explained by the fact that in contracting to sell the land Mr Smith was acting as executor of the will of his late father who had owned the land, and there were numerous beneficiaries who had to be consulted and informed. But he agreed that he obtained information "by one of those two routes"; that is either through Mr Jolly or through his own solicitor Andrew Wheldon. Later, in his answers under cross-examination Mr Smith was asked if normally he would get information or pass it through Mr Jolly. His response was:
[58]
"as a normal - up to a certain point - well Mr Jolly seemed to run everything as far as I can say ..."
[59]
The appropriate conclusion as a matter of fact is that the parties maintained this relationship with Mr Jolly which had been established before 29 July 2004.
[60]
[19] It is to be borne in mind that Mr Jolly had an obvious interest in seeing the contract through to completion. It was only then that he earned a right to be paid commission. It was therefore natural that he should be treated, and present himself, as the go-between. Mr Colin Street and Mr Smith had never met personally or communicated directly, and they did not do so until 29 August 2005. That was when a meeting, arranged by Mr Jolly at Mr Smith's request, was held at the latter's home, at which Mr Street provided him with detailed information about the progress of the application to the Council. A further meeting for a similar purpose, again arranged by Mr Jolly at Mr Smith's request, was held at the Coffee Club on 14 October 2004. There was also correspondence to Mr Smith from Mr Jolly in December 2004, March 2005, September 2005 and October 2005, in which the latter conveyed information from Mr Street. Although it does not show that Mr Jolly had the authority of the Vendor to receive information from the Purchaser, it serves to emphasise the continuing practice of the parties, without dissent, of treating Mr Jolly as their medium of communication with respect to matters affecting the contract and the development application to the Council. Only when he communicated "officially" did the Vendor use the services of his solicitor to inform the Purchaser of action he was proposing to take under the contract.
[61]
[20] I therefore conclude that his Honour was justified in concluding that Mr Jolly was the Vendor's "agent" for the purpose of passing on information from the Purchaser, and that in consequence the Purchaser was not in breach or in default under special condition 4 in keeping the Vendor fully informed of the progress of the application to the Council.
[62]
[21] In addition, it seems to me that the Vendor by his conduct lost the right to terminate the contract on the ground of default under special condition 4. The relevant default, if any, took place in the period between December 2004 and August 2005. Under special condition 4 the obligation on the Purchaser was to keep the Vendor fully informed of progress and to do so "on a monthly basis". According to the standard conditions, time was of the essence of this obligation. It followed that the Vendor was, at or by the end of each month during that period, inevitably aware that, according to his contention, the Purchaser was in breach or default of special condition 4. Yet instead of taking steps at once to determine the contract in the exercise of the power, if any, to terminate under cl 13.1(b) of the standard contract, he continued into October 2005 to act as if the contract remained on foot. By doing so, he lost the power to terminate for that default: Havenbar Pty Ltd v Butterfield(1974) 133 CLR 449, at 458; and cf also Mehmet v Benson[1965] HCA 18; (1965) 113 CLR 295, at 303, 310.
[63]
[22] For this purpose, it does not appear to me to matter whether it is more accurate to describe that consequence as resulting from the doctrines of waiver, estoppel or of election as claimed in the plaintiff's Reply. It requires very little to displace the essentiality of time with respect to a contractual obligation like that in special condition 4. Continuing between December 2004 and thereafter in 2005 to recognise that the contract was still in force and binding on the parties had the consequence that the Vendor lost his power to terminate the contract by reason of the Purchaser's continuing monthly breaches of that obligation. On each occasion when, as in August or October 2005, he arranged to meet Mr Street he thus maintained the continuing existence of the contract by choosing not to repudiate it for breach of special condition 4. The result would be the same even if time had not been of the essence of the obligation to keep the Vendor informed on a monthly basis. The Vendor's right to be informed derived from the contract, and by requesting after default that he be informed, he placed it beyond his power to terminate the contract in reliance on cl 13(1)(b) on the ground of that default. Thereafter his remedy for breach, if any, of special condition 4 was confined to damages or recompense for the loss resulting to him by that breach. His Honour's findings implicitly make it clear that he suffered no such loss by reason of the failure to keep him informed on a monthly basis. The Purchaser did all that was required to obtain the necessary approval from the Council.
[64]
[23] The same conclusion can, I consider, be reached by interpreting special condition 4 as subject to special condition 5. This seems to me to be the intention and significance of the introductory words in the special condition 5 that:
[65]
"This contract will still be in force if the Purchaser demonstrates that through no fault of his own time delays experienced in obtaining the approval ... were caused by the local council authority ..."
[66]
In short, special condition 5 operates as a qualification on special condition 4 if the terms of special condition 5 are demonstrably satisfied, which his Honour held they were.
[67]
[24] In my opinion the learned judge was correct in ordering specific performance of the contract. The appeal should be dismissed with costs.
[68]
[25] KEANE JA: By a contract dated 29 July 2004, the appellant agreed to sell 7.6 hectares of rural land at Berrinba to the respondent for redevelopment by the respondent as commercial land. By letter dated 7 November 2005, the appellant purported to terminate the contract by reason of the respondent's failure to comply with a special condition of the contract relating to the seeking of development approval from the local authority. The respondent did not accept this purported termination of the contract, and commenced an action for specific performance. On 29 June 2006, the learned trial judge made an order for specific performance of the contract in favour of the respondent.
[69]
[26] The appellant contends that the learned trial judge erred in failing to conclude that the appellant had lawfully terminated the contract by reason of the respondent's failure to comply with the special condition in question. I will discuss the appellant's arguments after first summarising the terms of the contract, the appellant's case at trial, the facts of the case as found by the learned trial judge and the judge's reasons for decision.
[70]
[27] The contact was in the standard REIQ form for the sale of commercial land and buildings. Some of the standard conditions were deleted, but that is presently immaterial. Importantly, the contract contained the following special conditions:
[71]
"1. This contract is subject to and conditional upon the Purchaser lodging an application for material change of use application, development application and operational works (herein after called the 'application') in respect of the property with the Local Authority on or before 60 days from the date hereof and approval of such application being received by the Purchaser on or before 15 months from the date hereof. If the Purchaser fails to lodge the material change of use application with the local authority within 60 days of the date hereof then the Vendor may by notice in writing terminate the contract.
...
3. Should the Purchaser not be granted approval in relation to the application referred to in special condition 1 on terms satisfactory to the Purchaser then this contract shall be at an end.
4. The Purchaser undertakes to diligently pursue the application referred to in special condition 1 and to answer all reasonable requests for information made by the local authority or other relevant government departments and to keep the Vendor fully informed of the progress of the application referred to in special condition 1 on a monthly basis.
5. This contract will still be in force if the Purchaser demonstrates that through no fault of his own time delays experienced in obtaining the approval for the application referred to in special condition 1 were caused by the local council authority or government body. If the Purchaser has done all things reasonably required of it to obtain such approval and such approvals are not in place within the time limited in these conditions then the Purchaser in its sole option may extend the date for satisfaction for this condition for a period not exceeding 90 days. To give effect to this extension the Purchaser must within 15 months of the date hereof:
[72]
i. Give notice in writing to the Vendor that it wishes to extend pursuant to this clause.
[73]
...
9. The parties agree that the Purchaser may waive reliance on any part of these conditions by notice in writing to the Vendor whereupon this conditional (sic) shall be deemed satisfied on the date of giving notice of such waiver.
10. Should any of the conditions not be satisfied within the period stipulated in the clauses hereunder then the Purchaser may at its option by notice in writing to the Vendor terminate this contract and the contract shall be at an end. If notice of satisfaction or non-satisfaction of a condition is not given within the period stipulated then the Vendor may by notice in writing to the Purchaser terminate this contract.
...
12. Completion of this contract shall be effected on the day being 30 days after notice advising that the application referred to in special condition 1 has been approved or waived."
[74]
[28] Clause 13.1(b) of the standard commercial conditions of the contract conferred on the appellant a right of termination if the respondent failed to comply with any of the terms or conditions of the contract.[1]
[75]
[29] At trial, the appellant contended that the respondent, in breach of special condition 1 of the contract, failed to make an application to the local authority for approval for material change of use of the land (but made an application for preliminary approval for such a change) within 60 days from the date of the contract, and failed to make an application for operational works at all. Accordingly, so it was said, the appellant was entitled to terminate the contract under special condition 1.
[76]
[30] The appellant also contended that the respondent did not diligently pursue the application which it made, and made no application for operational works. Accordingly, the appellant said that the respondent was not entitled to an extension pursuant to special condition 5 of the contract, and the appellant was, therefore, entitled to terminate the contract under special condition 10 of the contract.
[77]
[31] Finally, the appellant contended that the respondent failed to keep the appellant fully informed of the progress of the applications in accordance with special condition 4 so that the appellant was entitled to terminate the contract pursuant to
[78]
cl 13.1 of the standard commercial conditions of the contract.
[79]
[32] The appellant and respondent had entered into a contract for the sale of the land on 5 April 2004. That initial contract was terminated by the respondent when it was unable to obtain satisfactory assurances from the local authority, the Logan City Council, in relation to its plans for the development of the land.[2]
[80]
[33] On 9 June 2004, the appellant, his wife, their solicitor, Mr Wheldon, and their real estate agent, Mr Jolly, met with officers of the Council to discuss how the obstacles to obtaining development approval might be overcome. The Council's officers recommended that the appellant, or a developer, should lodge a preliminary development application which would compel the Council to determine what infrastructure would be required for the proposed development. The Council officers said that such an application would have prospects of success of "at least seven out of ten".[3]
[81]
[34] In late July, before the contract presently in issue was signed, Mr Jolly spoke to Mr Street, the sole director and shareholder of the respondent, and told him of the meeting with the Council. Mr Jolly said that "an application for preliminary approval covering a range of potential uses would be the best way forward as the Council would look more favourably on such an application".[4] Mr Jolly made this contact with Mr Street on the instructions of the appellant who instructed him that he would be prepared to execute another contract with the respondent if it agreed to make all necessary applications for development approval.[5] As I noted above, the contract presently in issue was signed on 29 July 2004.
[82]
[35] On 24 September 2004, the respondent's solicitors wrote to the appellant's solicitors seeking an extension of time in which to satisfy special condition 1 by giving the respondent:
[83]
"[and the Logan City Council] further time to address all the issues involved such as the provision of Water, Sewerage, Electricity and so on prior to the lodgement of the Material Change of Use and Development Application."[6]
[84]
[36] On 28 September 2004, the appellant's solicitors agreed "to extend the date for satisfaction of Special Condition 1 of the Contract to 26 November 2004 with time to remain of the essence".[7]
[85]
[37] An application for material change of use (rural to commercial) and a plan of development (preliminary approval) for land which included the land the subject of the contract was lodged on 25 November 2004.[8] The learned trial judge found that the respondent did not lodge an application for operational works at any time.[9]
[86]
[38] On 9 December 2004, the respondent's solicitors advised the appellant's solicitors that the respondent had satisfied special condition 1 of the contract.[10]
[87]
[39] On 15 March 2005, the local authority approved the respondent's application for a material change of use of the land.[11]
[88]
[40] On 5 August 2005, after the appellant made inquiries of the Council, the appellant's solicitors wrote to the respondent's solicitors asserting that "the Development Application and Operational Works Applications have not been lodged". The appellant reserved his rights under the contract.[12]
[89]
[41] In response, the respondent adopted the position that the "operational works approval application cannot be made until the Development Approval has been issued stating the conditions imposed by Council".[13] The respondent also sought the appellant's agreement to vary the contract by increasing from 90 to 180 days the time by which the plaintiff could extend the period for obtaining approvals contained in special condition 5. This request, which was pursued in further correspondence, was ultimately refused by the appellant.[14]
[90]
[42] On 27 October 2005, the respondent's solicitors wrote informing the appellant's solicitors of the respondent's election under special condition 5 of the contract to extend the date for satisfaction of special condition 1 until 27 February 2006. The learned trial judge found that the respondent diligently pursued its application to the council and did all things reasonably required of it to obtain the approvals upon which the completion of the contract depended.[15] On that basis, the respondent contended at trial that it was entitled to extend the time for completion in this way.
[91]
[43] There was some further skirmishing in correspondence between the parties before the appellant purported to terminate the contract on 7 November 2005.[16]
[92]
[44] On 25 January 2006, the respondent's solicitors wrote to give notice under special condition 9 waiving the requirements of special condition 1 of the contract.[17] Thereafter, the respondent commenced proceedings to enforce the contract.
[93]
[45] The learned trial judge held that the appellant's solicitors' letter of 7 November 2005 was not effective to terminate the contract.
[94]
[46] The judge held that "special condition 1 did not make the contract conditional upon the [respondent] making an application for approval for operational works within 60 days".[18] His Honour reached that view on the basis of his Honour's construction of special condition 1. The words "application, development application" after "material change of use" in the first sentence of the special condition were treated as surplusage.[19] His Honour also notionally deleted the words "and operational works" where they appear in the first sentence of special condition 1.[20]
[95]
[47] His Honour regarded this interpretation of special condition 1 as necessary to resolve what he saw as an ambiguity in special condition 1 and to render the right of termination conferred by the second sentence of the special condition (which referred to the failure to lodge the material change of use application) congruent with the obligation cast on the respondent by the first sentence of the special condition.[21]
[96]
[48] Furthermore, his Honour held that, while an application for approval of operational conditions could theoretically have been made before the material change of use application had been approved, it would have been meaningless.[22]
[97]
[49] Alternatively, his Honour considered that the appellant, by his solicitors' letter of 28 September 2004 granting the respondent's request for an extension of time within which to lodge the material change of use application and thereafter keeping the contract on foot, waived the contractual requirement (now asserted by the appellant) that the respondent should also lodge at the same time an application for approval for operational works. [23]
[98]
[50] The learned primary judge held that the respondent had complied with special condition 4 of the contract, both in terms of the diligent pursuit of the application, and reporting to the appellant to keep him fully informed of the progress of the application.[24] As to this latter point, his Honour held that communications by Mr Street of the respondent to Mr Jolly, the appellant's real estate agent, as to the progress of the application to the Council were communications to the appellant on the footing that the "scope of [Mr Jolly's] agency extended to [the] role" of passing on to the respondent information about the appellant's endeavours to obtain the approvals from the Council. His Honour concluded:
[99]
"The evidence supports the conclusion that Mr Jolly was the [appellant's] agent for the purpose of receiving and relaying communications from the [respondent] ... Before the contract was made the [appellant] authorised and instructed Mr Jolly to tell Mr Street of the outcome of their meeting with the Council's officers, thereby indicating that he was to be a mode of communication between them. [The appellant] said in cross-examination that 'whenever [he] wanted information ... [he] contacted John Jolly ... Mr Jolly was the only method of communicating with or receiving communications from Mr Street'."[25]
[100]
[51] His Honour proceeded to the conclusion that the respondent was entitled to an extension of time until 26 January 2006 under special condition 5 within which to obtain the approvals referred to in special condition 1.[26] As has been seen, before 26 January 2006, the respondent waived those conditions of the contract, as it was entitled to do under special condition 9 of the contract.
[101]
[52] In the upshot, his Honour held that the contract remained on foot and that the respondent was entitled to specific performance of the contract.
[102]
[53] The appellant's first submission to this Court was that the learned trial judge erred in his interpretation of special condition 1. The appellant accepted that special condition 1 should be interpreted as if the first sentence read:
[103]
"This contract is subject to and conditional upon the Purchaser lodging an application for material change of use and operational works [hereinafter called the 'application'] in respect of the property with the Local Authority on or before 60 days from the date hereof and approval of such application being received by the Purchaser on or before 15 months from the date hereof."
[104]
The crux of the appellant's argument in relation to special condition 1 was that the "mistake" in the wording of special condition 1 had occurred in the second sentence. The appellant argued that the reference to "the material change of use application" in the second sentence of special condition 1 was to be understood as a reference to "the application" expressly designated in the first sentence. The appellant said that to not read the second sentence in this way would be to accept the absurdity that a contract expressed to be subject to a condition that the purchaser lodge an application for operational conditions within 60 days could not be terminated by the vendor if that condition was not complied with.
[105]
[54] The appellant also argued that this appreciation of the commercial realities of an effective application for approval for operational works was not part of the shared understanding of the parties which might have been said to form the matrix of fact in which the contract was set.[27] As appears from his Honour's reasons,[28] the consideration that the operational works application could not be lodged to any good purpose before the approval of the material change of use application had been obtained was a consideration which was influential in leading the trial judge to interpret special condition 1 adversely to the appellant. The appellant argued that to read special condition 1 in the light of the constraints which the respondent alone appreciated might affect its prospects of a successful application for operational works would be to readjust the commercial balance struck by the language of the contract in a way which would allow the respondent greater flexibility in its formulation of its proposals for operational works at the expense of the appellant whose land might thereby be tied up under contract for a longer period than he had bargained for.
[106]
[55] Moreover, the appellant pointed out that, under the Integrated Planning Act 1997 (Qld) ("the Act") which is the legislation which creates applications of the kind referred to in special condition 1, an application for a material change of use and an application for operational works may be made by one development application.[29] The contractual context, in which special condition 1 appears, makes it clear, so it was said, that only one application is contemplated by the first sentence of special condition 1, and that is the "composite" application deliberately designated as "the application". Accordingly, it was submitted that the view taken by the trial judge is not only unreasonable, but unworkable.
[107]
[56] The appellant also argued that the letter from the appellant's solicitor of 28 September 2004 was not apt to effect a waiver of the respondent's obligation to lodge an application for operational conditions in accordance with the text of the first sentence of special condition 1. It will become apparent that, because of the view which I take of the proper construction of special condition 1, it is unnecessary to determine whether the view of the learned trial judge on this waiver point should be upheld.
[108]
[57] On the appeal, the appellant did not seek to challenge the trial judge's finding that the respondent had diligently pursued the approval of the application which had been lodged. Nor did the appellant seek to argue that the application which the respondent had lodged was not an "application for a material change of use". The appellant did, however, argue that the trial judge erred in concluding that the respondent had complied with the requirement of special condition 4 to keep the appellant fully informed as to the progress of the application. In particular, the appellant argued that his Honour erred in treating communications by the respondent to Mr Jolly as to the progress of the application to the Council as communications to the appellant for the purpose of special condition 4.
[109]
[58] In my respectful opinion, it is unnecessary to speculate as to the more reasonable solution to the uncertainties of interpretation generated by the language of special condition 1, or to have recourse to extrinsic evidence to aid that speculation. While there is some garbling of the language of the first sentence of special condition 1, there is, in my respectful opinion, no need to rephrase the second sentence to make the right of termination "fit" the conditions expressed in the first sentence. The contractual intention of the parties can be seen with tolerable clarity from the language which the parties have used without the need for recourse to assistance from matters extraneous to the contract.
[110]
[59] The second sentence of special condition 1 conferred a right of termination on the purchaser in the event that the respondent failed to lodge the application for a material change of use within 60 days. The difference in language between "the application" as defined and the "material change of use application" is clear. The use of different language and different concepts in such close collocation is hardly likely to have been inadvertent.
[111]
[60] There is no compelling commercial reason why the right of termination conferred by the second sentence of special condition 1 should be extended to cover failure to make any of the applications referred to in the first sentence other than the application for a material change of use expressly referred to in the second sentence where the right of termination is conferred on the vendor. Nor is there any logical absurdity involved in accepting that the contract was subject to a condition that the respondent make an application for material change of use and approval for operational works, but that the vendor should be entitled to terminate the contract only by reason of a failure to make the application for material change of use within the 60 day time frame. It is clear that, under the Act, an application for a material change of use is the necessary first step in the process towards obtaining the approvals to which the contract is subject. A contractual provision of the kind in special condition 1 is apt to ensure that the vendor may bring the contract to an end if the application which is essential to commence the process towards obtaining the approvals upon which the contract is subject is not made within a stipulated time. The approval process once commenced must be pursued with diligence under special condition 4. If the approval process is not completed within 15 months, the vendor will be entitled to terminate by special condition 10 unless the purchaser has, before that time, chosen to waive the need for some or all of the approvals. The vendor's commercial interest in the diligent pursuit of the approvals mentioned in the first sentence of special condition 1 after the material change of use application has been lodged is protected by special condition 4. The accommodation of the interests of vendor and purchaser thus achieved seems distinctly reasonable. Further, to accept that the parties have made a specific provision of the kind found in special condition 1 considered in the context of the contract as a whole is not to accept that they have engaged in an exercise in absurdity: it is simply to recognise that the parties have chosen to stipulate for consequences different from those which might otherwise have been regarded as implicit in the terms of their bargain had this specific provision not been made.
[112]
[61] In Sandra Investments Pty Ltd v Booth,[30] Gibbs J emphasised the importance of the negative implications which necessarily arise from the express conferral of a right of termination upon one party in a particular event. The decision of the High Court in that case affords a warning against a process of construction which weakens the negative effect of the express provision in such a case. In the present case, the right of termination on the ground of the respondent's failure to lodge the application for a material change of use within 60 days was conferred exclusively upon the appellant. This right of termination for failure to lodge the application for material change of use was both a statement of a right exclusive to the appellant and an exhaustive statement of the rights of the appellant to terminate the contract for a failure by the respondent to lodge any of the applications referred to in special condition 1 with the local authority within 60 days of the contract.
[113]
[62] In my view, the specific provisions of special condition 1, and particularly the second sentence, must be taken to displace, so far as the subject matter of special condition 1 was concerned, the general right of termination conferred on the appellant by standard condition 13.1(b) of the contract. The right of termination conferred on the vendor by the second sentence of special condition 10 is clearly not concerned with the same subject matter as the second sentence of special condition 1. To read these other provisions as subject to the specific provisions of special condition 1 more faithfully accords with the language the parties have used than to read the reference to "the material change of use application" in the second sentence of special condition 1 as if an application of a distinctly different description had been referred to. This is especially so bearing in mind that the "application" which involved approval of operational works was expressly designated as such in the first sentence of special condition 1. No attempt was made by the appellant to rectify the second sentence of special condition 1 on the basis that the parties there referred to the material change of use application by mistake.
[114]
[63] The parties made quite elaborate provision for this aspect of their bargain. The court should be slow to conclude that the effort of the parties to produce a charter of their rights and duties has produced an unworkable or unreasonable result. My own view is that the parties have not produced such a result in this case. On the interpretation of the contract which I prefer, the legitimate interests of the appellant as vendor are given proper protection. The effect of special conditions 3 and 10 of the contract was that the appellant's land could not be frozen by the uncompleted contract with the respondent for more than 15 months from the date of the contract, subject, of course, to the respondent's rights under special condition 5. Those rights of the respondent were themselves dependent upon the respondent doing all things reasonably required of it to obtain approval for the application designated in special condition 1. The appellant's interest in being able to terminate for a failure of the conditions in the first sentence of special condition 1 (other than that relating to the lodging of the material change of use application within 60 days, which was protected by the second sentence of special condition 1) was protected by special condition 10. The appellant's protection in this respect was subject to special condition 5 which provided a means whereby the respondent could extend the 15 month timeline for approvals, but only if the respondent pursued its applications with reasonable diligence. The appellant's interest in being able to terminate the contract in the event of a failure by the respondent diligently to pursue the satisfaction of the conditions in the first sentence of special condition 1 was protected by special condition 4 and cl 13.1(b) of the standard conditions.
[115]
[64] The analysis of special condition 1 which I prefer supports the conclusion reached by his Honour on this point, but it does so without the need for recourse to extrinsic evidence. This analysis has the merit of giving effect to all of the contractual provisions which bore upon the parties' rights of termination. It also respects the designation of the composite application as "the application", and the obvious difference between "the application" as a term which the parties deliberately defined, and the "application for material change of use" to which the parties chose to refer in the second sentence of special condition 1.
[116]
[65] Accordingly, I am of the opinion that the respondent's failure to lodge the application for operational works' approval did not, on this analysis of the special conditions, afford the appellant any right to terminate the contract under the second sentence of special condition 1. Subject to the appellant's argument in relation to special condition 4, the question then is whether the appellant was entitled to terminate the contract in reliance on special condition 10 by reason of the failure of the respondent to achieve approval of its application for material change of use in accordance with special condition 1. The answer to this question depends, in turn, on whether the respondent's extension of time under special condition 5 was effective. This, in turn, depends on whether the respondent "has done all things reasonably required of it to obtain" the approval of the Council to the applications referred to in the first sentence of special condition 1. On the findings made by the trial judge, this question must be answered in the affirmative. [31] These findings of the trial judge in this regard were unchallenged on the appeal.
[117]
[66] The next issue is whether the respondent breached the information requirement of special condition 4, so as to enliven an entitlement in the appellant to terminate the contract under cl 13.1(b) of the standard commercial conditions. In this regard, the appellant's argument was that Mr Jolly was not his agent for the provision of information concerning the progress of the application to the Council.
[118]
[67] On the hearing of the appeal, the respondent conceded that, subject to the respondent's arguments about Mr Jolly's agency, the respondent had failed to keep the appellant fully informed about the progress of the application to the Council between 9 December 2004 and 11 August 2005.
[119]
[68] One may digress here to note that the appellant never suggested that he had actually called for the provision of information to himself under special condition 4; much less that such a request was refused. The respondent's obligation was to keep the appellant fully informed. The respondent's obligation was not to "provide all information in its possession" to the appellant. The appellant was in a position to decide what information he required so as to be "fully informed". He was able to call for any information which might be available to the respondent. It might, therefore, have been arguable that the content of the respondent's obligation necessarily depended on the extent to which the appellant was, from month to month, relevantly uninformed and required information so as to be kept fully informed. On this view, it was arguable that there could not have been any breach of this obligation if the appellant, who might have fully informed himself by other means, chose not to call on the respondent to provide him with any information. In such a case, it could not be said that any information from the respondent was necessary to keep the appellant fully informed. Similarly, if the appellant actually required no information at all in any particular month beyond that which he already had, it could hardly be said that he was not kept fully informed. He was as fully informed as he wished to be bearing in mind that the appellant knew Mr Jolly to be a source of relevant information. The point is that, unless in each month the appellant told the respondent that he required some information from the respondent so as to be fully informed, it could be argued, by analogy with cases concerning the landlord's covenant to keep leased premises in repair,[32] that no occasion arose for the provision of such information by the respondent in order to "keep" the appellant fully informed. The respondent's concession makes it unnecessary, however, to consider the merits of this argument.
[120]
[69] The appellant points out, with some force, that the appellant's authority to Mr Jolly to communicate to Mr Street the outcome of the meeting of 9 June 2004 with the Council's officers was an isolated pre-contractual incident. For present purposes, it may be accepted that this instruction was hardly apt to constitute Mr Jolly the appellant's alter ego for all dealings with the respondent. The appellant's further argument in relation to Mr Jolly's authority is less compelling.
[121]
[70] The appellant argued that the learned trial judge also erred in concluding that communications to Mr Jolly of information concerning the progress of the application were taken to be made to the appellant because Mr Jolly was duty bound to pass this information on to the appellant. The judge relied upon the following passage from Commission Agency by Joske:[33]
[122]
"It is undoubtedly the duty of the agent, without any enquiry from his principal, to communicate to him everything that is necessary to enable him to form his own judgment as to the capacity of the purchaser to complete the purchase, and failure to do so is a breach of duty disentitling the agent to commission."
[123]
The learned author cited Fitzgerald v Metcalf[34] as authority for this statement of principle. The appellant accepted that information given to an agent who is duty bound to pass the information on to the agent's principal can be taken to be a statement to the principal, but pointed out that this statement of principle was made in relation to the duties of an agent who receives information in the course of his agency before the contract of sale is made.
[124]
[71] The appellant's argument was that Mr Jolly's agency was completely performed, and his duties to the appellant discharged, when the contract of 29 July 2004 was signed by the parties. It was said that, on that date, the sale, which the appellant had engaged Mr Jolly to effect, was effected. Thereafter, it was argued, Mr Jolly was not duty bound to pass on to the appellant communications from the respondent. In support of this argument, the appellant points to the terms of the contract between the appellant and the respondent whereby, in cl 27 of the standard conditions, notices under the contract may be given to the parties' solicitors and, in cl 27.1, notice pursuant to the standard form finance clause in cl 31 may, exceptionally, be given to "the Vendor's Agent as if the Vendor's Agent was a party". The appellant also points to the terms of Mr Jolly's engagement by the appellant whereby Mr Jolly was appointed as agent "for the sale" of the land, and expressly limited (by cl 4 of the standard terms and conditions of the appointment) the expressions of interest which the agent was obliged to pass on to the principal.
[125]
[72] Having regard to the appellant's statement in cross-examination that "whenever [he] wanted information [he] contacted Mr Jolly", the appellant's submission that Mr Jolly was not duty bound to pass on to him the information relating to the approval which was in his possession seems somewhat remote from commercial reality. There is no suggestion, for example, that Mr Jolly ever responded to the appellant's enquiries about the respondent's progress with its applications to the Council by telling the appellant "to mind his own business". As a matter of commercial reality, the conduct of Mr Jolly and the appellant may be explained on the basis that the information the subject of the appellant's enquiries was his business, and this was well recognised by the appellant and Mr Jolly. Be this as it may, the appellant's argument fails, it seems to me, in the particular circumstances of this case because, as a matter of law, Mr Jolly continued to be duty bound to pass onto the appellant information relating to the respondent's ability to complete the contract after it had been signed by the parties.
[126]
[73] Completion of the contract between the appellant and the respondent was conditional upon the respondent obtaining the approvals. The appellant had an interest in being informed of the progress of the application for those approvals. Special condition 4 of the contract expressly entitled the appellant to be kept informed of the progress of that application on a monthly basis. The information to which the appellant was entitled by special condition 4 bore directly on the willingness and ability of the respondent to complete the contract and upon the appellant's right to free himself from the burden of the contract if the respondent failed to pursue the application with reasonable diligence. Mr Jolly's entitlement to commission did not arise until completion of a sale was achieved. To say this is not merely to say that Mr Jolly had an interest as agent in the completion of the contract between vendor and purchaser. It is to recognise that Mr Jolly's duties and responsibilities to the appellant were truly "unfinished business" on his part at least until he found a purchaser who was truly ready and willing to complete the purchase.
[127]
[74] In Anderson v Densley,[35] Williams ACJ, Webb and Taylor JJ said:
[128]
"Where an agent is employed on commission to sell a property (and non-completion is not due to the default of the vendor) the commission only becomes payable if the sale is completed."
[129]
Their Honours cited in support of that statement of principle the decision of the Court of Appeal of England and Wales in James v Smith.[36] Reference to the judgments of the distinguished members of the Court of Appeal in James v Smith shows that the basis for this statement of principle lies in an appreciation of the fundamental obligation assumed by a real estate agent in favour of a principal, namely to find a "purchaser ready and willing to purchase in the sense of a purchaser able to purchase and complete as well ...".[37] Unless the agent has found a buyer who is ready and willing to carry out his contract at the proper time, the agent has not performed the service for which he or she has been engaged.
[130]
[75] This view of the matter draws support from the proposition that, generally speaking, a "sale" of land is the actual transfer of land in return for the money consideration rather than an agreement to sell.[38] It is to be emphasised that the issue for present consideration is not concerned with the exploration of the limits of a real estate agent's duty to his or her principal to assist in achieving an actual sale in any case where the sale is subject to conditions precedent to performance. The question here is whether, in the circumstances of this case, Mr Jolly was duty bound to the appellant to pass on to him the information from Mr Street concerning the progress of the respondent's application, being information to which the appellant was expressly entitled under the contract and which bore directly upon the prospects that the respondent would be able and willing to complete the sale and the appellant's ongoing rights in that regard. Should the appellant have been entitled to terminate the contract with the respondent by reason, for example, of a breach of special condition 4, then Mr Jolly's continuing obligation to find a purchaser who would complete would have been more readily apparent, but the nature and content of his obligations to the appellant would have remained the same.
[131]
[76] In my view, the distinction which the appellant seeks to draw between the duty of a real estate agent to the vendor before a contract is signed and that duty after a conditional contract of the kind here in question is signed, but before completion, is illusory. Mr Jolly remained duty bound to communicate the information relating to the progress of the application which was given to him by Mr Street to the appellant as an incident of his obligation to find a purchaser for the appellant's land.
[132]
[77] The express provisions of the contract between the parties and the appointment by the appellant of Mr Jolly do not give rise to a contractual implication inconsistent with the existence of such a duty on Mr Jolly's part. The provisions of cl 27 of the standard conditions of the contract are concerned with a different subject matter, namely the giving of notices required by the contract. The specific provisions of cl 27.1 and cl 31 enabling the giving of notices relating to the satisfaction of the standard form conditions relating to finance do not imply the absence of a duty in the agent to provide information about conditions other than finance. If anything, it may be said that the existence of these standard form provisions is an acknowledgment of the ongoing role of a vendor's agent where a contract of sale is subject to conditions precedent to completion.
[133]
[78] So far as the terms of Mr Jolly's appointment are concerned, the provisions relating to the obligations of the agent in relation to the provision by the agent of offers or expressions of interest deal with that particular subject matter. Accordingly, they do not imply the absence of an obligation in the agent to provide his or her principal with information bearing upon the willingness or ability of a purchaser to complete a purchase.
[134]
[79] In my opinion, the respondent discharged its obligations under special condition 4 by the provision of this information to Mr Jolly. Accordingly, the appellant's challenge to this aspect of the learned trial judge's decision must fail.
[135]
[80] The appellant's challenge to the judgment cannot be sustained for the reasons I have given. It is not necessary to enter upon a discussion of the other bases on which the respondent contends that the judgment should be upheld.
[136]
[82] The appellant must pay the respondent's costs of the appeal.
[137]
[83] WILSON J: I have had the advantage of reading the reasons for judgment of Keane JA, where His Honour has fully set out the facts. I agree with the orders proposed by His Honour.
[138]
(a) whether the respondent (the purchaser) had breached special condition 1 of the contract, so entitling the appellant (the vendor) to terminate under that condition; and
[139]
(b) whether the respondent had breached special condition 4 of the contract, so entitling the appellant to terminate under standard condition 13.1.
[140]
"1. This contract is subject to and conditional upon the Purchaser lodging an application for material change of use application, development application and operational works (herein after called the "application") in respect of the property with the Local Authority on or before 60 days from the date hereof and approval of such application being received by the Purchaser on or before 15 months from the date hereof. If the Purchaser fails to lodge the material change of use application with the local authority within 60 days of the date hereof then the Vendor may by notice in writing terminate the contract."
[141]
[86] I respectfully concur in what Keane JA has written about special condition 1. I wish to add the following observations.
[142]
[87] The subject matter of the contract was vacant land, which could be developed only with certain local authority approvals under the Integrated Planning Act 199_7_ (Qld). Section 1.3.2 of that Act provided this definition -
[143]
"1.3.2 Meaning of 'development'
'Development' is any of the following -
(a) carrying out building work;
(b) carrying out plumbing or drainage work;
(c) carrying out operational work;
(d) reconfiguring a lot;
(e) making a material change of use of premises."
(emphasis added)
[144]
"1.3.5 Definitions for terms used in 'development'
In this Act -
...
'material change of use', of premises, means -
(a) generally -
(i) the start of a new use of the premises; or
(ii) the re-establishment on the premises of a use that has been abandoned; or
(iii) a material change in the intensity or scale of the use of the premises;
'operational work' -
1. 'Operational work' means -
(a) extracting gravel, rock, sand or soil from the place where it occurs naturally; or
(b) conducting a forest practice; or
(c) excavating or filling that materially affects premises or their use; or
(d) placing an advertising device on premises; or
(e) undertaking work in, on, over or under premises that materially affects premises or their use; or
(f) clearing vegetation to which VMA applies; or
(g) undertaking operations of any kind and all things constructed or installed that allow taking, or interfering with, water (other than using a water truck to pump water) under the Water Act 2000; or
(h) undertaking -
(i) tidal works; or
(ii) work in a coastal management district.
2. 'Operational work' does not include -
(a) for items 1(a) to (f) - any element of the work that is building, drainage or plumbing work; or
(b) destroying, disturbing or removing vegetation to which VMA does not apply."
[145]
By s 3.2.1 ("Applying for development approval") an application for approval of a material change of use and an application for approval of operational work might be made by one development application or separately. The trial judge found[39] as a matter of fact that an application for approval of operational work could not practically be made without first having obtained the local authority's approval, preliminary or final, for the material change of use.
[146]
[88] Both before the trial judge and on appeal the parties agreed that the first sentence of special condition 1 referred to two, not three, concepts - material change of use and operational work. The respondent made an application for preliminary approval of material change of use within a period of 60 days extended by agreement between the parties. The appellant conceded that an application for such preliminary approval was sufficient.[40] But the respondent did not make an application for approval of operational work at all.
[147]
[89] The appellant's contention was that the respondent was obliged to apply for approval of both a material change of use and operational work within the 60 days (as extended), while the respondent's contention was that it was obliged to apply for approval only of a material change of use within the 60 days (as extended), and that the contract was then conditional upon its receiving approval of both a material change of use and operational work within 15 months.
[148]
[90] The quest for the true meaning of special condition 1 must begin with an examination of its terms in the context of the contract as a whole.[41] The contract was in the standard REIQ/QLS Contract Commercial Land and Buildings (2nd ed GST reprint) form supplemented by a number of special conditions. By special condition 12 completion was due "on the day being 30 days after notice advising that the application referred to in special condition 1 has been approved or waived". Various other special conditions referred to "the application referred to in special condition 1":
[149]
(a) by special condition 3, the contract was to be at an end if the respondent was not granted approval in relation to the application referred to in special condition 1 on terms satisfactory to it;
[150]
(b) by special condition 4, the respondent undertook -
[151]
(i) diligently to pursue the application referred to in special condition 1; and
[152]
(ii) to keep the appellant fully informed of the progress of the application referred to in special condition 1 on a monthly basis;
[153]
(c) special condition 5 dealt with delays in obtaining approval of the application referred to in special condition 1. It provided for extension (not exceeding 90 days) of the time for satisfaction. To give effect to this the respondent had to give notice to the appellant within 15 months of the date of the contract.
[154]
[91] In special condition 1 itself the words in parenthesis "(herein after called the 'application')" immediately followed "an application for material change of use application, development application and operational works". In other words, the "application" meant the application for material change of use and operational work. The contract was conditional on approval of "such application", ie approval of both material change of use and operational work, within 15 months (or within 15 months + no more than 90 days if the respondent qualified for and sought an extension within the 15 months pursuant to special condition 5).
[155]
[92] There is clearly a tension between the express wording of the first sentence and the second sentence:
[156]
first sentence "This contract is subject to and conditional upon the [respondent] lodging ... the 'application' ... on or before 60 days from the date hereof"
and
second sentence "If the [respondent] fails to lodge the material change of use application ... within 60 days of the date hereof then the [appellant] may by notice in writing terminate the contract."
[157]
[93] Once it is appreciated that while it might have been possible to lodge one composite application, it would have been impractical to do so, and that 15 months were allowed for obtaining both approvals, then it becomes apparent why the right of termination given to the appellant in the second sentence was limited to circumstances in which the respondent failed to lodge "the material change of use application" rather than "the application" within 60 days of the contract. The parties intended that the respondent be obliged to start the process by lodging an application for material change of use within 60 days. Thus, the first sentence should be read as if the words "on or before 60 days from the date hereof" were deleted.
[158]
[94] Such an interpretation would give internal consistency to the two sentences of special condition 1 and to the special conditions as a whole. Moreover, it would accord with business common sense and avoid the capricious result of the respondent's being obliged to make a worthless application for approval of operational work before obtaining approval (or preliminary approval) for a material change of use.
[159]
"4. The Purchaser undertakes to diligently pursue the application referred to in special condition 1 and to answer all reasonable requests for information made by the local authority or other relevant government departments and to keep the Vendor fully informed of the progress of the application referred to in special condition 1 on a monthly basis."
[160]
[96] The trial judge found that the respondent was not in breach of its due diligence obligation.[42] His Honour found that the respondent had kept Mr Jolly, the principal of Remax Property Gallery ("Remax"), one of the agents in conjunction named in the contract, fully informed, but that Mr Jolly had not passed the information on to the appellant.[43] He then went on to consider whether Mr Jolly was the appellant's agent for the purpose of receiving the communications, and concluded that he was.[44] It followed that the respondent had not breached special condition 4.
[161]
[97] On appeal the respondent conceded that it had not kept the vendor personally informed from at least 9 December 2004 to 11 August 2005. But sufficient, relevant information had been supplied to Mr Jolly, and the only live issues in relation to special condition 4 were whether Mr Jolly was the appellant's agent for this purpose, and if he was not, whether the appellant had waived his entitlement to be kept fully informed.
[162]
[98] Notice to an agent will be imputed to his or her principal, whether or not the agent has passed the information on to the principal, if the agent had actual or ostensible authority to receive it.[45] For example, in Blackley v National Mutual Life Association of Australasia Ltd[46] the insured, who was accurate and truthful in his proposal for insurance, was under an ongoing obligation to inform the insurer of any material change of circumstance between the proposal and the issue of the policy. During that intervening period, he was diagnosed with a brain tumour and his wife duly informed the insurer's agent, but the agent did not pass the information on to the insurer. Disclosure to the agent was held to be sufficient because the agent had ostensible authority to receive it on behalf of the insurer.
[163]
[99] The critical question is whether it was within the scope of the agent's authority to receive the information, and not whether the agent was under a duty to the principal to pass on the information.[47]
[164]
[100] What then was Mr Jolly's authority? The respondent relied only on actual authority, both express and implied. It relied on these passages in the trial judge's reasons -
[165]
"[114] These cases[48] say nothing about whether an estate agent appointed by a vendor is his agent for receiving communications from the purchaser. I would have thought the agency unworkable if the agent did not have that authority. It is notorious that communications between vendors and purchasers of real property commonly occur via the vendor's real estate agent as well, of course, as through solicitors on matters of legal importance. According to Commission Agency by Joske:
[166]
'It is undoubtedly the duty of the agent, without any enquiry from his principal, to communicate to him everything that is necessary to enable him to form his own judgment as to the capacity of the purchaser to complete the purchase, and failure to do so is a breach of duty disentitling the agent to commission',
The progress of the applications for local Government approval on which the contract was conditional, and information about the defendant's endeavours to obtain those approvals was clearly 'necessary to enable (the defendant) to form his own judgment as to the capacity of the (plaintiff) to complete the purchase'. Accordingly it was Mr Jolly's duty to pass the information on to Mr Smith. The scope of his agency extended to that role.
[169]
[115] The evidence supports the conclusion that Mr Jolly was the defendant's agent for the purpose of receiving and relaying communications from the plaintiff. Mr Jolly was appointed by the defendant as agent to find a purchaser for the property with the concomitant duties of informing the defendant of offers made for the property, or enquiries about it. Before the contract was made the defendant authorised and instructed Mr Jolly to tell Mr Street of the outcome of their meeting with the Council's officers, thereby indicating that he was to be a mode of communication between them. Mr Smith said in cross-examination that 'whenever [he] wanted information ... [he] contacted John Jolly'. When asked whether Mr Jolly was the usual means by which he communicated with Mr Street and received communications from Mr Street his answer was that he had never communicated with Mr Street until the meeting in August 2005. The question was evasive to an extent. Mr Smith was well aware when answering that Mr Jolly's status was critical. Nevertheless it appears from his answer that Mr Jolly was the only method of communicating with or receiving communications from Mr Street.
[170]
There is some documentary evidence that Mr Jolly did convey to Mr Smith that which he had learned that Mr Street. See items 19, 28, 49 and 54 in exhibit 1. It is also instructive that when he wished to convene a meeting with Mr Street the defendant instructed Mr Jolly to convey the invitation."[49]
[171]
[101] Remax in conjunction with Focused Marketing Pty Ltd was appointed the appellant's agent by a document in Form 22a under the Property Agents and Motor Dealers Act 2000 (Qld).[50] By clause 4 of that document it was appointed -
[172]
"...to perform the following service/s:
Sale of vacant land."
[173]
It was an "open listing" - in other words, while the appellant appointed Remax as its agent to sell the land it retained the right to appoint others: clause 5. Commission was payable on settlement: clause 6. Certain additional terms (in a form approved by the REIQ) were attached. Standard condition 2 was as follows:
[174]
"Entitlement to Commission
The Client agrees to pay the Agent commission as specified in the Appointment if a Contract of Sale of the Property is entered into with a buyer, whether within the Term or after the Term, where the Relevant Person is the effective cause of the sale within the Term, provided that:
(1) the Contract of Sale of the Property is completed;
(2) the Client defaults under the Contract of Sale and that Contract is terminated by reason of or following that default; or
(3) the Contract of Sale is not completed and the whole or part of the deposit paid is liable to be forfeited; or
(4) the Contract of Sale is terminated by mutual agreement of the Client and the buyer.
For the purposes of clause 2.1 a Relevant Person is, where the Appointment is for:
(1) an Exclusive Agency, any person (including the Client); or
(2) a Sole Agency, any person other than the Client; or
(3) an Open Listing, the Agent only."
[175]
(There was a handwritten notation on the form that standard conditions 2(2), (3) and (4) were not to apply.)
[176]
[102] For Remax to be entitled to commission, it had to find a purchaser ready, willing and able to purchase and to complete at the appointed time[51] and the sale had to be completed.[52]
[177]
[103] The scope of the agency was recorded in standard condition 30 of the contract of sale between the appellant and the respondent.
[178]
"30 APPOINTMENT OF AGENT
In the absence of any specific appointment the Vendor by executing this Contract confirms the appointment of the Vendor's Agent (jointly with any other agent in conjunction with whom the Vendor's Agent has sold) as the agent of the Vendor to introduce a buyer."
[179]
There was nothing in that contract evidencing any authority in the agent to receive notices or information on behalf of the appellant (other than notice that finance had been approved in the case of a contract subject to finance,[53] which this was not).
[180]
[104] Senior counsel for the appellant drew a distinction between the completion of the role assigned to the agent and its entitlement to commission. He submitted that the agent's role was complete on the execution of the contract, but that there was a contingency affecting its entitlement to commission (namely, that the contract be completed). He submitted that information given to Mr Jolly after the execution of the contract and before completion was not given to him in the course of his employment - in other words, that he was not authorised to received it on behalf of the appellant, and accordingly knowledge of it was not imputed to the appellant.
[181]
[105] There is force in this submission. The agent's express engagement to sell the property was an engagement to find a purchaser who was ready, willing and able to purchase and with whom the appellant entered a contract of sale. In some cases there may be room for argument about such an agent's entitlement to commission where the sale is not completed through the fault of the vendor or for other reasons not attributable to the purchaser. However, in the present case it was unequivocally provided that commission should be payable only if the sale were completed.
[182]
[106] Senior counsel for the respondent submitted that the agent was under an obligation "to discharge any function relevant to the contract completing that[ was] reasonable for a person in his position to do" - for example, to pass on information relevant to the transaction that came to its notice.[54] The existence of such an obligation (breach of which might sound in damages) is not determinative of the question whether it was within the scope of its authority to receive information which the respondent was contractually obliged to provide to the appellant with the consequence that giving the information to the agent amounted to giving it to the appellant.[55]
[183]
[107] It was not within the agent's express actual authority to do so; nor, in my view, was it within its implied actual authority. As Dixon, Fullagar and Kitto JJ said in Petersen v Moloney[56] "the law does not imply from the mere fact of employment to find a purchaser a general authority to do on behalf of the employer anything which may be incidental to effecting a sale." There the Court held that the agent did not have implied authority to receive the purchase moneys on behalf of the vendor. In the present case I am unpersuaded that it was necessarily incidental to the agent's express authority to find a purchaser ready, willing and able to purchase that the agent have authority to receive the information in question. The agent had found the respondent who was a purchaser ready, willing and able to purchase so long as its obligation to complete was conditional upon its receiving, on terms satisfactory to it, local authority approval for a material change of use and operational work. The appellant had agreed to sell to the respondent pursuant to a contract completion of which was conditional on the application being approved within a specified time, and by which the respondent was obliged to make the necessary applications within specified times, and to kept the appellant informed as to their progress. These were conditions of the contract to which both parties agreed and which required performance inter partes. While the agent clearly had an interest in their fulfilment, it had performed its function and had no necessary part to play in their fulfilment. Moreover, there was no evidence that it was within the usual authority of a real estate agent to have such authority between the signing of the contract and completion or of its being a custom of the market in which the agent operated that the agent have such authority.[57]
[184]
[108] Senior counsel for the respondent advanced an argument that, as a matter of fact, the parties had so conducted themselves to treat Mr Jolly as the appellant's agent for this purpose. His case was one of actual authority only.[58] The evidence did not establish this; it established no more than that in the pre-contract stage the appellant had authorised Mr Jolly to inform Mr Street on behalf of the respondent of the results of a particular meeting with the Council, that there were no direct communications between the appellant and Mr Street until August 2005, and that in the meantime whenever the appellant wanted to know something he asked Mr Jolly. The trial judge referred to four pieces of correspondence as some documentary evidence that Mr Jolly passed on to the appellant what he had learned from Mr Street. The letters do no more than that. They do not throw light on the question of Mr Jolly's authority to receive information on behalf of the appellant. The first two were dated 15 December 2004[59] and 2 March 2005[60] respectively. After that the Council approved the material change of use application on 15 March 2005, but that fact does not seem to have been conveyed to the appellant. The third, dated 19 September 2005,[61] was written at the request of the respondent[62] and the fourth, dated 20 October 2005,[63] after the appellant's complaint, was aptly described by senior counsel for the appellant as advocacy on behalf of the respondent.[64]
[185]
[109] In my respectful opinion the trial judge erred in his conclusion that Mr Jolly was the appellant's agent for the purpose of communicating with the respondent.[65]
[186]
[110] In their written submissions counsel for the respondent argued that even if Mr Jolly did not have the relevant authority -
[187]
(a) the appellant is estopped from relying upon a failure by the respondent to communicate directly with him as a ground for complaint to terminate the contract;
[188]
(b) alternatively, the appellant "waived compliance with a breach of special condition 4" and affirmed the contract.[66]
[189]
As counsel for the appellant submitted[67] the only pleaded basis for the three contentions of estoppel, waiver or affirmation, is that "at no stage prior to serving the defence in this action did the [appellant] complain that the [respondent] had failed to keep it informed as to the progress of the application".[68]
[190]
[111] The respondent's argument rests on waiver in the sense of estoppel.[69] The argument is that by not raising the respondent's failure to keep him fully informed on a monthly basis, the appellant represented that the right of termination for breach of that obligation would not be exercised.
[191]
[112] From the time before the contract was signed when the appellant authorised Mr Jolly to convey to Mr Street the results of the meeting with the Council on 9 June 2004, the appellant contacted Mr Jolly if he wanted information about matters arising under the contract, and, whether or not it was at Mr Jolly's instigation, Mr Street gave Mr Jolly information about the progress of the application. As counsel for the respondent submitted -
[192]
"59. In these circumstances, and without protest from Mr Smith, Mr Street continued to communicate via Mr Jolly throughout the course of the development rather than contacting Mr Smith directly. It was assumed, without a word otherwise, that this practice was acceptable to Smith. Given that the parties did not have any direct contact until about 13 months after the contract was signed, it must be concluded that Smith was acquiescent with the information he was receiving and the manner in which it was being conveyed."[70]
[193]
[113] In the circumstances it would be unconscionable for the appellant to rely on the failure to keep him fully informed as a ground for termination.[71]
[194]
[114] In the premises I have concluded that while the respondent failed to keep the appellant fully informed of the progress of the application on a monthly basis, the appellant may not rely on that failure as a ground for terminating the contract under standard condition 13.1.
[37][1931] 2 KB 317n at 318. See also at 320 - 321, 322. The court was constituted by Bankes, Scrutton and Atkin LJJ.
[232]
[38]Littlewoods Mail Order Stores Ltd v Inland Revenue Commissioners[1963] AC 135 at 152; Finance Corporation of Australia Ltd v Commissioner of Stamp Duties[1981] Qd R 493 at 499, 511 - 512; Sun World Inc v Registrar, Plant Variety Rights(1997) 75 FCR 528.
[57] See Dal Pont GE, The Law of Agency, Butterworths, 2001 at 182.
[251]
[58] Transcript of the appeal proceeding, p 56, in the submissions of senior counsel for the appellant, to which senior counsel for the respondent did not demur.
[252]
[62] Evidence of Mr C Street, transcript of the trial, p 83.
[68] Further amended reply and answer at [5(a)] (note that this is the second [5], at p 947 of the appeal record).
[258]
[69] See Carter JW, Carter on Contract, vol. 1, 'Waiver meaning estoppel', looseleaf, LexisNexis Butterworths, [07-200].
[259]
[70] Outline of argument on behalf of the respondent at [59] (citations removed).
[260]
[71] Further amended reply and answer [5(c)(ii)] (note that this is the second [5], at p 947 of the appeal record); Commonwealth v Verwayen (1990) 170 CLR 394; Freshmark Limited v Mercantile Mutual Insurance (Australia) Limited[1993] QCA 222; [1994] 2 Qd R 390.