CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – discharge, breach
and defences to actions of breach – repudiation and
non-performance
– election and rescission – where plaintiff was the developer of a
Source
Original judgment source is linked above.
Catchwords
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – discharge, breachand defences to actions of breach – repudiation andnon-performance– election and rescission – where plaintiff was the developer of aluxury apartment complex – wherelot was reconfigured as a communitytitles scheme pursuant to the Body Corporate and Community Management Act1997 (Qld) in July 2009 – where site was placed on the EnvironmentalManagement Register in September 2007 pursuant to the EnvironmentalProtection Act 1994 (Qld) s 374 and was removed from the Register inFebruary 2008 – where defendant entered into a contract of sale in January2008 –whether defendant entitled to rescind under s 421(3) of theEnvironmental Protection Act 1994 (Qld) – where defendant provideda bank guarantee to plaintiff as vendor – where plaintiff failed to returndefendant’sbank guarantee – whether defendant entitled for damagesfor plaintiff’s refusal to return the bank guaranteeCONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – discharge, breach
and defences to actions of breach – repudiation and
non-performance
– election and rescission – where defendants entered into put and
call deeds in December 2007 and January
2008 respectively – whether
defendants entitled to rescind pursuant to Environmental Protection Act
1994 (Qld) s 421(3) – whether Environmental Protection Act 1994
(Qld) s 421 is applicable to put and call deeds with nominee provisions
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – discharge, breach
and defences to actions of breach – repudiation and
non-performance
– election and rescission – loss or waiver of right to rescind
– whether right of rescission afforded
by s 421(3) can be waived –
whether right confers a public benefit or only a private benefit
TRADE AND COMMERCE – Trade Practices Act 1974 (Cth) and
related legislation – consumer protection – misleading or deceptive
conduct or false representations –
misleading or deceptive conduct
generally – where plaintiff did not tell defendants that the land was on
the Environmental
Management Register – whether there was misleading or
deceptive conduct by the plaintiff or its agent
Acts Interpretation Act 1954 (Qld,) s 14A(1)
Body Corporate and Community Management Act 1997 (Qld), s
212
Environmental Protection Act 1994 (Qld), ss 3, 4(1), 373,
374, 421, 458
Property Agents and Motor Dealers Act 2000 (Qld),
s 364 and ch 11
Trade Practices Act 1974 (Cth) ss 52, 53A,
87
APM Property 3 Pty Ltd v Blondeau [2009] QSC 326,
applied
Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty
Ltd [1994] VicRp 70
[1994] 2 VR 463, cited
Brooks v Burns Philp Trustee Co
Ltd [1969] HCA 4
(1969) 121 CLR 432, cited
David Deane & Associates Pty
Ltd v Bonnyview Pty Ltd [2005] QCA 270, applied
Ellison v Lutre
Pty Ltd [1999] FCA 388, cited
Re Permanent Trustee Nominees
(Canberra) Limited [1989] 1 Qd R 314, cited
Sargent v ASL
Developments Ltd (1974) 131 CLR 634, cited
Vale 1 Pty Ltd v
Delorain Pty Ltd [2009] QSC 425, considered
Judgment (396 paragraphs)
[1]
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - discharge, breach and defences to actions of breach - repudiation and non-performance - election and rescission - where plaintiff was the developer of a luxury apartment complex - where lot was reconfigured as a community titles scheme pursuant to the Body Corporate and Community Management Act1997 (Qld) in July 2009 - where site was placed on the Environmental Management Register in September 2007 pursuant to the Environmental Protection Act1994 (Qld) s 374 and was removed from the Register in February 2008 - where defendant entered into a contract of sale in January 2008 - whether defendant entitled to rescind under s 421(3) of the Environmental Protection Act1994 (Qld) - where defendant provided a bank guarantee to plaintiff as vendor - where plaintiff failed to return defendant's bank guarantee - whether defendant entitled for damages for plaintiff's refusal to return the bank guarantee
[2]
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - discharge, breach and defences to actions of breach - repudiation and non-performance - election and rescission - where defendants entered into put and call deeds in December 2007 and January 2008 respectively - whether defendants entitled to rescind pursuant to Environmental Protection Act1994 (Qld) s 421(3) - whether Environmental Protection Act 1994 (Qld) s 421 is applicable to put and call deeds with nominee provisions
[3]
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - discharge, breach and defences to actions of breach - repudiation and non-performance - election and rescission - loss or waiver of right to rescind - whether right of rescission afforded by s 421(3) can be waived - whether right confers a public benefit or only a private benefit
[4]
TRADE AND COMMERCE - Trade Practices Act1974 (Cth) and related legislation - consumer protection - misleading or deceptive conduct or false representations - misleading or deceptive conduct generally - where plaintiff did not tell defendants that the land was on the Environmental Management Register - whether there was misleading or deceptive conduct by the plaintiff or its agent
Re Permanent Trustee Nominees (Canberra) Limited[1989] 1 Qd R 314, cited
[16]
Sargent v ASL Developments Ltd (1974) 131 CLR 634, cited
[17]
Vale 1 Pty Ltd v Delorain Pty Ltd[2009] QSC 425, considered
[18]
Michael Drummond for the second and third defendants
[19]
[1] MARGARET WILSON J: The plaintiff was the developer of a site at 141 Sydney Street, New Farm on which it constructed an apartment complex called "The Ivy".
[20]
[2] Each of the defendants entered into a contract to acquire an apartment "off the plan" - LJ & BJ Investments Pty Ltd (lot 7), McVicar (lot 6) and Mulcahy (lot 5). Each of them subsequently purported to rescind the contract. In these three proceedings the plaintiff claims specific performance and damages in lieu of or in addition to specific performance.
[21]
[3] The three proceedings were heard together, as they contain some common factual and legal issues.
[22]
[4] The plaintiff developed The Ivy as a complex of seven luxury townhouses, each of three levels above ground plus basement carparking. The site was reconfigured as a community titles scheme pursuant to the Body Corporate and Community Management Act 1997 (Qld), the scheme being established on 7 July 2009.
[23]
[5] The plaintiff owned the site. It was described as lot 140 on RP 811237, and was in an area predominantly used for commercial and residential purposes. It had previously been occupied by a warehouse, with associated hard standing and carparking areas.
[24]
[6] In 2005 the plaintiff engaged GHD Pty Ltd, consulting engineers ("GHD"), to conduct a preliminary investigation of the site to assess the potential for contamination from past uses. That investigation identified acid sulphate soils and contaminated land as possible concerns. In December 2006 Soil Surveys Pty Ltd conducted an acid sulphate investigation and developed a management plan for the proposed development. Fill material containing ash was identified.
[25]
[7] In June 2007 the plaintiff engaged GHD to carry out further investigations. In August 2007 it reported to the plaintiff that it had identified layers of ash and fragments of fibre cement sheeting in the fill material, elevated concentrations of heavy metals and polynuclear aromatic hydrocarbons in the fill material, and asbestos in the fragments of fibre cement sheeting. Contamination was confined to the overlying fill material which averaged 1.3 m deep across the site. GHD advised that the contamination presented potential risks to human health and the environment if the site were not remediated or managed appropriately. It recommended removing the contaminated fill and scraping the surface of the clay lying beneath the fill to a depth of 0.2 to 0.3 metres.
[26]
[8] In September 2007 the plaintiff notified the Environmental Protection Agency ("EPA") that the site was contaminated and sought a permit to remove and dispose of contaminated soil. It was placed on the Environmental Management Register ("EMR") pursuant to s 374 of the Environmental Protection Act 1994 (Qld) ("EP Act") on 7 September 2007. In a notice to the plaintiff that the land had been placed on the EMR, the EPA wrote the following:
[27]
In accordance with the land being recorded on the EMR the following requirements apply under section 421 of the EP Act.
[28]
If the owner proposes to dispose of the land to someone else, the owner must, before agreeing to dispose of the land, give written notice to the buyer that the particulars of the land have been recorded in the register."
[29]
[9] Also in September 2007, the plaintiff obtained a permit to remove and dispose of the contaminated soil, and caused remediation work to be undertaken in accordance with a plan prepared by GHD and reviewed by Mr Trevor Lloyd of Lloyd Consulting as Third Party Reviewer ("TPR") in accordance with the third party review process prescribed by the EP Act. GHD supervised remediation works and sampled and analysed materials at the site.
[30]
[10] On 21 December 2007 GHD issued a Remediation and Validation Report recommending that the site was suitable for removal from the EMR. The TPR report essentially accepted the submissions in the GHD report. These reports were submitted to the EPA by GHD in mid January 2008. On 23 January 2008 the EPA informed the plaintiff that certain further information was required.
[31]
[11] The EPA issued two documents dated 4 February 2008. Curiously, two copies of each document appear to have been issued[1] - in each case, one of them simply bearing the date "04 February 2008" and the other "DATE PRINTED: 04/02/2008".
[32]
(a) Notice of Removal of Land from the Environmental Register in these terms -
[33]
"In accordance with Part 8 of the Environmental Protection Act1994, notice is given that the parcel of land described below has been removed from the Environmental Management Register (EMR).
[34]
HAZARDOUS CONTAMINANT - This site has been subject to a hazardous contaminant. Refer to the summary given below.
The parcel of land has been investigated and relevant reports have been assessed by the administering authority and it has been determined that this land is not contaminated land and the land has therefore been removed from the EMR.
[37]
Following removal from the EMR any information relating to this site will NOT be available to the public via a search of the EMR or the Contaminated Land Registrar (CLR)."
[38]
"STUDIES UNDERTAKEN BY APPLICANT OR REQUESTED BY DIRECTOR
[39]
Turissi [sic] Properties Report for 141 Sydney Street New Farm Remediation and Validation Report, Prepared by GHD Pty Ltd dated December 2007, (Doc No. 41/18362/00/368011).
[40]
Third Party Review Summary Report, prepared by Lloyd Consulting Pty Ltd, dated November 2007 (Doc No. 2-07-036).
[41]
On the basis of the information supplied to this Department, the subject site is suitable for any use.
[42]
There is no requirement to record this site on the Environmental Management Register or the Contaminated Land Register."
[43]
On one of the versions of the Suitability Statement, the plaintiff was described as the "Applicant" and on the other it was described as the "Owner".
[44]
[12] Mr Clinton Amble was the plaintiff's business and development director. He was the most senior person in the plaintiff's employ with day to day contact with the project. He issued instructions to GHD, as well as to the marketing agents Catalina Realty and the plaintiff's solicitors ClarkeKann.[2]
[45]
[13] At least by August 2007, and probably before then, Mr Amble learnt from GHD that the site was contaminated for the purposes of the EP Act. He signed the notification to the EPA on 6 September 2007, and he knew about the notice of listing on the EMR which the EPA issued the next day.[3] On 23 January 2008 he made a statutory declaration in support of the application to remove the site from the EMR.[4]
[46]
[14] Mr Amble instructed ClarkeKann to draft a standard form contract to be used in selling the apartments. This was supplied to Catalina Realty at least by December 2007.[5]
[47]
[15] Ms Margaret Slaughter and Ms Lyndis Zirbel were the salespersons employed by Catalina Realty who marketed The Ivy. Ms Slaughter negotiated the transaction with LJ & BJ Investments Pty Ltd in relation to lot 7, and that with Mr Mulcahy in relation to lot 5, and Ms Zirbel negotiated the transaction with Mr McVicar in relation to lot 6.
[48]
[16] At no material time did Ms Slaughter know that the site was on the EMR.[6] In a conversation in mid-2007 Mr Amble had told her and Ms Zirbel of a "miniscule" amount of contamination, insufficient to require the site to be placed on the EMR. Subsequently, she did not receive any other contrary information.[7]
[49]
[17] There is no suggestion that Ms Zirbel knew the site was on the EMR at any material time.
[50]
[18] Clause 11.3 of the contract was in these terms -
[51]
"11.3 The Seller discloses to the Buyer that the results of the geo-technical investigations into the Base Parcel have identified a layer of ash/coal with trace levels of contaminants in the soil which may require notification to the Environmental Protection Agency ('EPA') as a 'notifiable activity' under the Environmental Protection Act (Qld) 1994. The Seller hereby gives the Buyer notice that, at some time in the future, but prior to settlement:
[52]
(a) particulars of the Base Parcel may be recorded on the environmental management register or contaminated land registrar; or
[53]
(b) the Seller may receive a notice or notices under the Environmental Protection Act (Qld) 1994 that the Base Parcel has been used for a notifiable activity or is contaminated land or requiring a site investigation, remediation or a site management plan; or
AND the Buyer shall not take objection, raise requisition, delay settlement or otherwise seek to claim compensation in respect of any such matters except where the Seller takes no action to mitigate the affects/impacts of the contamination and no attempts to validate the site of any such contaminated soils. Based on the geo-technical investigations carried out, the Seller is confident that any soil containing any levels of contaminants can be fully removed from the Base Parcel during excavation" (emphasis added).
[56]
[19] Mr Bill Clarkson was a director of LJ & BJ Investments Pty Ltd. He and his wife were looking for a property to live in. His first conversation with Ms Slaughter about The Ivy was in about July 2007. She telephoned him about three months later with some information about the complex and sent him photocopies of basic plans and marketing materials.
[57]
[20] Sometime in November or December 2007 Mr Clarkson had another telephone conversation with Ms Slaughter about The Ivy. The next day she sent him a handwritten message and basic plans by facsimile. She described the joinery, fixtures, fittings and finishes in glowing terms.[8]
[58]
[21] By letter dated 3 December 2007 Mr Amble advised Mr Clarkson that the plaintiff was holding unit 7 for them exclusively until Wednesday 12 December 2007. He sought signed confirmation of acceptance and a $5,000 expression of interest payment.[9] Mr and Mrs Clarkson signed the form and paid the $5,000.
[59]
[22] On 9 December 2007 Mr and Mrs Clarkson met Ms Slaughter at her office, when they discussed the development further. The Clarksons raised the absence of a powder room on the plans for level 2, and Ms Slaughter undertook to look into the possibility of one being constructed. About a week later Ms Slaughter called Mr Clarkson and told him a powder room could be constructed, and that it would cost about $13,500. Ultimately the plaintiff agreed to provide the powder room without any extra added cost, because Mr Clarkson had introduced Mr Mulcahy and Mr McVicar to the plaintiff.
[60]
[23] Before going on Christmas holidays, Mr Clarkson telephoned his accountant and asked which entity should become the purchaser of the apartment. The accountant told him it should be LJ & BJ Investments Pty Ltd.
[61]
[24] On 15 January 2008 Ms Slaughter attended Mr Clarkson's office. She furnished him with the following documents -
[62]
(e) PAMD Form 27c - Selling Agent's Disclosure to Buyer; and
[63]
(f) A Seller's Statement/Buyer's Acknowledgment in relation to the apartment.
[64]
Mr Clarkson executed documents (a), (b), (d) and (f) on behalf of LJ & BJ Investments Pty Ltd.
[65]
[25] The contract was in the standard form. In the Reference Schedule, the purchase price was $2,250,000, and a total deposit of $225,000 was required to be paid to the Stakeholder by 25 January 2008. Clarke Kann Lawyers (the plaintiff's solicitors) were named as the Stakeholder. The purchaser had the option of providing a bank guarantee to the vendor instead of the deposit.[10] The settlement date was to be 14 days after the plaintiff notified the purchaser that the scheme had been established, that a certificate of classification had issued for the building containing the lot, and that the lot was ready for occupation.[11]
[66]
[26] The Disclosure Statement contained a Schedule of Finishes.[12] Ms Slaughter handwrote -
[67]
on the bottom of the second page of the schedule. Both he and Ms Slaughter initialled the page[13] when the documents were executed.
[68]
[27] Although Redchip Lawyers were named in the Reference Schedule as the purchaser's solicitors, Mr Clarkson did not consult them before executing the documents. He did not read the clauses behind the Reference Schedule.[14]
[69]
[28] The plaintiff executed the contract on 18 January 2008.
[70]
[29] At the end of January 2008 LJ & BJ Investments Pty Ltd provided a bank guarantee for the full amount of the deposit.[15]
[71]
[30] On 11 February 2008 the plaintiff's solicitors ClarkeKann wrote to Redchip Lawyers in these terms -
[72]
"We refer to Clause 11.3 of the Contract of Sale in this matter.
[73]
The Environmental Protection Agency has advised that the base parcel of land is suitable for any use and that there is no need for the site to be recorded on the Environmental Management Register or Contaminated Land Register. A copy of the Suitability Statement and Notice of Removal are enclosed for your records.
[74]
Please contact Matthew Bolster of this office on 07 3001 9292 should you have any queries.[16]"
[75]
They enclosed copies of the Notice of Removal of Land from the Environmental Management Register and the Suitability Statement.[17]
[76]
[31] On 12 February 2008 Mr Clarkson spoke with Ms Slaughter by telephone, requesting the refund of the $5,000 expression of interest fee now that a bank guarantee for the full amount of the deposit had been provided. [18]
[77]
[32] Redchip Lawyers forwarded the latter to Mr Clarkson at 99 Bridge Street, Fortitude Valley on 13 February 2008, under cover of a letter in these terms -
[78]
Please find enclosed copy of letter we received from the Seller's Solicitors for your information and records.[19]"
[79]
At the time the premises at 99 Bridge Street were used both as Mr and Mrs Clarkson's place of residence and as LJ & BJ Investments Pty Ltd's business address. The company had employees who worked there, including an assistant to Mr Clarkson. The date "15 Feb 2008" had been stamped on the letter. At trial, Mr Clarkson had no recollection of seeing the letter until the different firm of solicitors he instructed in June and July 2009, Merthyr Law, went through the file with him.[20] He could not say whether it had been opened and date stamped by someone in his office. In the circumstances, I infer that it was received in Mr Clarkson's office on or about 15 February 2008, but that it did not come to his attention.
[80]
[33] Under cover of letter dated 20 February 2008, the plaintiff's solicitors sent Mr Clarkson a cheque for $5,000 in refund of the expression of interest fee.[21]
[81]
[34] On 22 February 2008 Mr Clarkson met Ms Slaughter in her office to select finishes. He signed a Finishes Options Selection Schedule.[22]
[82]
[35] There were some further conversations between Mr Clarkson and Ms Slaughter, including one on about 6 March 2008 when he inquired about other purchasers having entered into put and call option agreements rather than contracts of sale.[23]
[83]
[36] Ms Slaughter recalled a conversation about an extra power point in the multi-purpose room and whether a gas point would be weatherproofed.[24] She wrote Mr Clarkson's name on the page of her diary for 11 March 2008, and later on that page she recorded -
[84]
I accept that they spoke about these matters on or about that date.
[85]
[37] On 27 March 2008 a plan was faxed from the facsimile number used by Mr Clarkson to Ms Slaughter.[26] It was in fact a plan of the ground floor of lot 7 even though "Apartment No 1" was handwritten on it. The positions for a gas point and a power point were marked in handwriting. At trial, Mr Clarkson had no knowledge of this document, and its provenance is unexplained.[27] Nothing turns on this.
[86]
[38] On about 7 April 2008 there was a telephone conversation in which Mr Clarkson raised with Ms Slaughter the possibility of changing the name of the purchaser.[28]
[87]
[39] On 21 May 2008 Mr Clarkson signed a Purchase Variation Form relating to the kitchen and the powder room. There was no extra cost to be added to the purchase price.[29]
[88]
[40] On about 28 January 2009 Ms Slaughter telephoned Mr Clarkson to update him about when the complex might be finished and the likely date for settlement. She indicated May or June 2009.[30] He said he wanted to inspect the apartment before settlement.
[89]
[41] In June or July 2009 Mr Clarkson retained new solicitors, Merthyr Law. They went through the contract with him; they informed him that the land was contaminated and on the EMR. He had not known this, and I accept he would not have contracted to purchase the apartment had he known.[31]
[90]
[42] By letter dated 13 July 2009 addressed to Redchip Lawyers the plaintiff's solicitors advised that The Ivy New Farm Community Titles Scheme had been established and that the Settlement Date was 27 July 2009.[32] That was one day short of the 14 day period allowed by the contract.
[91]
[43] The next day 14 July 2009, Merthyr Law gave the plaintiff notice of LJ & BJ Investments Pty Ltd's rescission of the contract pursuant to s 421(3) of the EP Act, and demanded return of the deposit.
[92]
[44] The plaintiff denied that LJ & BJ Investments Pty Ltd was entitled to rescind the contract, and refused to return the bank guarantee.[33] On 6 August 2009 it sued for specific performance.[34]
[93]
[45] The defendant was concerned that the plaintiff might call on the guarantee. It incurred legal expenses of $5,478 (including GST) in correspondence with the plaintiff's solicitors and briefing counsel in relation to seeking urgent interlocutory relief. Eventually it was agreed that the guarantee be held by an independent solicitor pending the resolution of this proceeding.[35]
[94]
[46] The defendant has incurred continuing bank fees in relation to the guarantee. These have been debited to an account with the Commonwealth Bank every six months since the guarantee was provided. The total amount debited to 27 January 2010 was $11,400.[36]
[95]
[47] In its defence and counterclaim LJ & BJ Investments Pty Ltd alleged (inter alia) that it was entitled to rescind the contract under s 421(3) of the EP Act, that the plaintiff had engaged in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) ("TPA") in impliedly representing that the land was and had always been free from contamination, and that it had suffered loss and damage by reason of the plaintiff's refusal to return the bank guarantee. It counterclaimed against the plaintiff for the following relief -
[96]
(a) a declaration, whether under s.82 [sic] of the TPA or otherwise, that on 14 July 2009 the Defendant validly terminated the contract for the purchase by the Plaintiff of proposed lot 7 in respect of 'The Ivy';
[97]
(b) damages, whether under s.82 of the TPA or otherwise;
[98]
(c) such further and other relief as the Court may deem necessary or appropriate, including orders under s.87 of the TPA;
[99]
Issues in the proceeding against LJ & BJ Investments Pty Ltd
[100]
[48] The following issues arise for determination in the proceeding against LJ & BJ Investments Pty Ltd:
[101]
(a) whether the plaintiff was required to provide any notice to the defendant in accordance with s 421(2) of the EP Act;
[102]
(b) whether the defendant was entitled to rescind in accordance with s 421(3) of that Act;
[103]
(c) whether the defendant could waive any right to rescind under s 421(3);
[104]
(d) whether the defendant waived its right to rescind ;
[105]
(e) the consequences (if any) of the plaintiff's having called for settlement one day early;
[106]
(f) whether there was misleading or deceptive conduct by the plaintiff or its agent;
[107]
(g) whether the defendant is entitled to damages for the plaintiff's refusal to return the bank guarantee.
[108]
[49] Mr McVicar first heard about The Ivy from Mr Clarkson. He made an email inquiry about it and then attended a meeting with Ms Zirbel on 12 December 2007.
[109]
[50] Ms Zirbel showed him plans for the whole development, and they discussed the pros and cons of the different apartments. He was adamant that there be a powder room on the second floor, and he was interested in having an extra carpark and cupboards in the multi-purpose room. He left the meeting with a sales brochure and a fairly detailed set of plans for the whole complex.[38]
[110]
[51] On 17 December 2007 Ms Zirbel sent an email to Mr McVicar advising that the plaintiff was willing to provide a powder room as an optional upgrade for $13,500. There would have to be some redesign work by the architects and plans would have to be resubmitted to the Brisbane City Council.[39]
[111]
[52] On or about 21 December 2007 Mr McVicar collected documents in relation to lot 6 from Ms Zirbel and took them to his solicitor Mr Drummond.[40] That day he executed the following -
[112]
(e) Seller's Statement/Buyer's Acknowledgement in relation to the apartment; and
[113]
(f) PAMD Form 32a - Lawyer's Certification for Waiver of Cooling-Off Period.
[114]
He was unaware that the site was on the EMR, although he knew there were contaminants in the soil. He alleges that he was misled by clause 11.3 of the contract.[43] His attitude to this is clear from this exchange in cross-examination -
[115]
"... you were aware when you signed the contract that there were some contaminants in the soil? -- Yes, that's correct.
[116]
All right, but that didn't concern you? -- My understanding was that I was protected by an Act so if that was required I would have been notified.
[117]
No, no, no. You weren't concerned, were you, when you signed the contract that there were contaminants in the soil? -- No, I wasn't."[44]
[118]
In consideration of the Buyer paying to the Seller the Call Option Fee, the Seller irrevocably offers to sell the Property to the Buyer during the Call Option Period on the terms set out in the Contract for the Purchase Price. The Seller's offer will lapse if it is not accepted by the Buyer during the Call Option Period."
[119]
The "Call Option Fee" and the "Call Option Period" were defined -
[120]
means 10% of the purchase price under the Contract payable as to $50,000 on or before 16 January 2008 and the balance of $149,500 $154,500 on or before 30 June 2008, with time of the essence in respect of such payments.
[121]
means the period beginning on the date of this Deed and ending 23 December 30 June 2008 (or such later date as is agreed in writing between the Seller and the Buyer). "
[122]
The contract was in the standard form. The purchase price was $2,045,000 ($1,995,000 plus $50,000 for carpark "A"). The deposit of $204,500 was payable in two tranches - an initial deposit of $50,000 on or before 16 January 2008, and the balance on or before 30 June 2008. The settlement date was to be 14 days after the plaintiff notified the purchaser that the scheme had been established, and that a certificate of classification had issued for the building containing the lot, and that the lot was ready for occupation.
[123]
Subject to clause 3.3, the Buyer may appoint a nominee to exercise the Call Option instead of the Buyer by notice in writing to the Seller in the form set out Schedule 4 [sic]. If the right to appoint a nominee is exercised:
[124]
(a) the Buyer guarantees to the Seller the performance of all of the obligations of the nominee under this Deed and the Contract as Buyer;
[125]
(b) the Buyer indemnifies and shall keep indemnified the Seller against all loss, cost, damage, expense and liability incurred or suffered by the Seller as a result of the nominee defaulting in respect of the obligations referred to in clause 3.2(a);
[126]
(c) references in this Deed to the Buyer shall, where the context requires, be construed as references to the nominee.
[127]
3.3 Condition Precedent Before Buyer may appoint nominee
[128]
The Buyer may not appoint a nominee to exercise the Call Option under clause 3.2 until after the Buyer has notified the Seller of the name and address of the proposed nominee and the Seller has given to the proposed nominee a signed Disclosure Statement pursuant to section 213 of Body Corporate and Community Management Act (Qld) 1997 and section 21 of the Land Sales Act (Qld) 1984. The Seller will provide a Disclosure Statement and Contract (completed with details of the proposed nominee as buyer) to the Buyer within 14 days of written request by the Buyer (including the name and address of the proposed nominee and any guarantors, if applicable).
[129]
If the Buyer wishes to exercise the Call Option it shall serve upon the Seller any time during the Call Option Period the following:
[130]
(a) written notice of acceptance of the offer in the form set out in Schedule 2; and
[131]
(b) a bank cheque made payable to the Stakeholder for the balance of the deposit moneys (if applicable) payable under the Contract (after taking account of the Call Option Fee).
[132]
3.7 Contract entered on exercise of Call Option
[133]
On the exercise of the Call Option pursuant to clause 3.4 and, if applicable, clause 3.6, the Seller and the Buyer become immediately bound as Seller and Buyer respectively under a contract for the sale of the Property in accordance with the terms contained in the Contract notwithstanding that the Seller has not signed the Contract in accordance with clause 3.8.
[134]
Upon the Call Option being exercised and upon receipt of the 2 executed copies of the Contract the Seller shall sign both copies of the Contract and return one copy to the Buyer."
[135]
[55] The plaintiff was granted a put option by clause 4 -
[136]
The Buyer grants to the Seller during the Put Option Period an option to require the Buyer to purchase the Property on the terms set out in the Contract for the Purchase Price.
[137]
If the Seller wishes to exercise the Put Option it shall serve upon the Buyer any time during the Put Option Period a written notice of exercise of the Put Option in the form set out in Schedule 3.
[138]
On the exercise of the Put Option pursuant to clause 4.2 the Buyer and the Seller become immediately bound as Buyer and Seller respectively in accordance with the terms contained in the Contract.
[139]
On the exercise of the Put Option, the Buyer will provide a bank cheque made payable to the Stakeholder for the balance of the deposit moneys (if applicable) payable under the Contract (after taking account of the Call Option Fee)."
[140]
[56] The application of the Call Option Fee was dealt with as follows -
[141]
If the Call Option is exercised, the Call Option Fee will be credited towards the Deposit payable under the Contract.
[142]
If the Put Option is exercised, the Call Option Fee will be credited towards the Deposit payable under the Contract.
[143]
If the Call Option is not exercised, the Call Option Fee will be absolutely forfeited to the Seller."
[144]
[57] Mr McVicar wrote on the bottom of the Schedule of Finishes which was part of the Disclosure Statement -
[145]
"Finishes to be selected by January 2.. 2008." [45]
[146]
It did not concern him that there was no reference to the powder room: he had been assured by the agent that there would be one, but final drawings were not yet available. He knew what the additional cost would be, but he was not obliged by the document he signed to pay for it.[46]
[147]
[58] The plaintiff executed the put and call option deed on or about 7 January 2008. Mr McVicar's solicitor executed the Call Option Notice on his behalf on 19 December 2008.[47]
[148]
[59] There was a deal of activity in the meantime.
[149]
[60] By letter to Mr Drummond dated 9 January 2008, the plaintiff's solicitors said they would hold the sale contract executed by Mr McVicar in escrow. They continued -
[150]
"If the buyer exercises its Call Option, we will arrange for this Sale contract to be executed by the Seller in accordance with the provisions of the Put and Call Option Deed. If the Buyer nominates a nominee to exercise the Call Option, we will submit fresh contract documentation for execution by the nominee in accordance with the provisions of the Put and Call Option Deed."[48]
[151]
[61] On 17 January 2008 the plaintiff's solicitors wrote to Mr Drummond enclosing a copy of a handwritten special condition of the contract about a wardrobe in the multi-purpose room. It was part of the contract they were holding in escrow, but had been omitted from the copy of the contract attached to the put and call option deed.
[152]
[62] On 18 January 2008 Mr McVicar made the first payment of the Call Option Fee in the amount of $50,000.[49]
[153]
[63] On 11 February 2008 ClarkeKann wrote to Mr Drummond in the same terms they had written to LJ & BJ Investments Pty Ltd's solicitors, enclosing copies of the Notice of Removal of Land from the EMR and Suitability Statement.[50] Mr Drummond received the correspondence by facsimile, and interpreted it as meaning that the property was "clean", ie not contaminated and not on any register. He forwarded the correspondence to Mr McVicar.[51] Mr Mulcahy telephoned Mr Drummond in response to similar correspondence. Mr Drummond conveyed his opinion, and asked Mr Mulcahy to pass it on to Mr McVicar if he were speaking to him.[52]
[154]
[64] On 13 February 2008 Mr Drummond wrote to ClarkeKann advising that Mr McVicar had elected to pay unpaid tax interest on the duty payable on the put and call option deed until he exercised the option.
[155]
[65] On 18 February 2008 Ms Zirbel sent Mr McVicar an email advising that the plans and specifications for the powder room were available, offering to arrange an inspection, and advising that the finishes had to be selected by the next week.[53] On 22 February 2008 Mr McVicar attended Ms Zirbel's office and executed a Finishes Options Selection Schedule for lot 6.[54] He told her he wanted to proceed with the powder room.[55]
[156]
[66] On 25 March 2008 ClarkeKann advised Mr Drummond that the contract which they were holding in escrow would have to be re-executed because of a change to one of the forms under the Property Agents and Motor Dealers Act 2000 (Qld). Mr McVicar did as requested, and Mr Drummond returned the PAMD Form 32A, the contract of sale and the buyer's acknowledgement to ClarkeKann under cover of a letter dated 2 April 2008.[56]
[157]
[67] On 7 April 2008 Mr McVicar executed a Purchase Variation Form relating to the inclusion of a powder room for an extra $13,500.[57]
[158]
[68] By emails dated between 6 May 2008 and 2 June 2008 Mr McVicar raised the possibility of resale of lot 6 with Ms Zirbel.[58] They discussed this at a meeting on 4 June 2008.[59]
[159]
[69] On 23 June 2008 Mr McVicar provided a bank guarantee in the amount of $154,000 [sic] as the second tranche of the deposit. This was accepted by the plaintiff.[60]
[160]
[70] Between 29 September 2008 and 2 October 2008 Mr McVicar and Ms Zirbel exchanged emails about the design of the walk in wardrobe in the master bedroom, Mr McVicar deciding on the original design.[61]
[161]
[71] On 10 November 2008 Mr Drummond wrote to ClarkeKann, noting that the option was due to be exercised by 23 December 2008, advising his client intended to list the property for sale, and offering have the put and call option agreement rescinded in exchange for payment to him of $200,000. That offer was rejected by the plaintiff.[62]
[162]
[72] Mr Drummond executed the call option on behalf of Mr McVicar on 19 December 2008.[63] ClarkeKann returned a copy of the contract of sale executed by the plaintiff to Mr Drummond that day.[64]
[163]
[73] By email to Ms Zirbel dated 19 March 2009 Mr McVicar expressed his satisfaction with the dark colour scheme he had selected.[65]
[164]
[74] Mr McVicar sought to be released from the contract in June and July 2009.[66]
[165]
[75] On 13 July 2009 the plaintiff's solicitors advised that the community titles scheme had been established, and that the Settlement Date was 27 July 2009.[67] On 21 July 2009 the plaintiff's solicitors agreed to a two week extension for settlement.[68]
[166]
[76] Mr McVicar received a phone call from another real estate agent in the New Farm area advising him that the land was on the Contaminated Land Register ("CLR") when he signed the contract. He contacted Mr Drummond.[69] On 23 July 2009 Mr Drummond wrote to ClarkeKann purporting to rescind the contract.[70]
[167]
[77] The plaintiff denied Mr McVicar was entitled to rescind the contract. It claimed the deposit, but gave an undertaking not to cash the guarantee without first providing three business days' notice.[71] On 11 August 2009 it sued for specific performance of the contract of sale dated 19 December 2008.[72]
[168]
[78] In his defence Mr McVicar alleged that he was entitled to rescind the contract under s 421(3) of the EP Act, and further that clause 11.3 of the contract was a false and misleading representation concerning the characteristics of the land within the meaning of s 53A of the TPA, entitling him to the terminate the contract.[73]
[169]
[79] Mr Mulcahy first became aware of The Ivy development through Mr Clarkson and Mr McVicar. He contacted Ms Slaughter and met her at her office on 11 or 12 December 2007.
[170]
[80] Ms Slaughter showed Mr Mulcahy the floor plans. There was only one apartment available - lot 5. He left the meeting with photocopies of the plans and a brochure. There was further contact between Mr Mulcahy and Ms Slaughter.[74] Then on 17 December 2007 she sent him an email advising -
[171]
(a) that there was an extra carpark available for $50,000;
[172]
(b) that contracts were being drawn up with a put and call option and should be ready the next day; and
[173]
(c) of the availability of a powder room as an optional extra for $13,500.[75]
[174]
[81] On or about 21 December 2007 the following documents in relation to lot 5 were delivered to Mr Mulcahy's solicitor Mr Drummond -
[175]
(e) Seller's Statement/Buyer's Acknowledgement in relation to the apartment; and
[176]
(f) PAMD Form 32a - Lawyer's Certification for Waiver of Cooling-Off Period.
[177]
[82] The put and call option deed was in the same terms as that executed by Mr McVicar. The Call Option Fee (10% of the purchase price under the contract) was payable by 15 January 2008, and the Call Option Period ended on 23 December 2008.
[178]
[83] The contract was in the standard form. The purchase price was $1,985,000. The deposit of $198,500 was to be paid by 15 January 2008. The settlement date was defined in the standard form (as it was in the LJ & BJ Investments Pty Ltd and McVicar contracts).
[179]
[84] Ms Slaughter wrote on the bottom of the Schedule of Finishes which was part of the Disclosure Statement -
[180]
[85] Mr Mulcahy executed the put and call option deed at his solicitor's office on or about 21 December 2007,[78] unaware that the site was on the EMR. His solicitor executed the Call Option Notice on his behalf on 19 December 2008.[79]
[181]
[86] Mr Mulcahy provided a bank guarantee in the amount of $198,500 as the Call Option Fee.[80]
[182]
[87] The plaintiff's solicitors wrote to Mr Drummond on 9 January 2008 and 17 January 2008 in similar terms to their letters to him in relation to the McVicar contract.[81]
[183]
[88] On 11 February 2008 ClarkeKann wrote to Mr Drummond (in the same terms they wrote to him about the McVicar contract) enclosing copies of the Notice of Removal of Land from the EMR and Suitability Statement.[82] He forwarded it to Mr Mulcahy. Mr Mulcahy had the telephone conversation with Mr Drummond referred to in paragraph 63 of these reasons.[83]
[184]
[89] On 13 February 2008 Mr Drummond wrote to ClarkeKann advising that Mr Mulcahy had elected to pay unpaid tax interest on the duty payable on the put and call option deed until he exercised the option.[84]
[185]
[90] On 3 March 2008 Mr Mulcahy attended Ms Slaughter's office and executed a Finishes Option Schedule for lot 5. His intention to take up the option for a powder room was made clear by the addition of the words "Powder room" on the form he signed.[85]
[186]
[91] There was a telephone conversation between Mr Mulcahy and Ms Slaughter about stamp duty payable on the put and call option deed on 11 March 2008.[86]
[187]
[92] On 25 March 2008 ClarkeKann wrote to Mr Drummond in similar terms to their letter to him about the McVicar contract, requesting re-execution of the contract. Mr Mulcahy did as requested.[87]
[188]
[93] On 7 April 2008 Mr Mulcahy executed a Purchase Variation Form relating to the inclusion of a powder room for an extra $13,500.[88]
[189]
[94] In June and October 2008 Mr Mulcahy had conversations with Ms Slaughter about aspects of the fit-out of the apartment, and by email of 7 October 2008 he confirmed his design option selection for the wardrobe in the master bedroom. Between October and December 2008 they had a couple of discussions about on-sale.[89]
[190]
[95] On 26 November 2008 Mr Drummond wrote to ClarkeKann (in similar terms to his letter of 10 November 2008 about the McVicar transaction), noting that the option was due to be exercised by 23 December 2008, advising his client intended to list the property for sale, and offering to have the put and call option agreement rescinded in exchange for payment to him of $200,000. The plaintiff rejected the offer.[90]
[191]
[96] Mr Drummond executed the call option on behalf of Mr Mulcahy on 19 December 2008.[91] ClarkeKann returned a copy of the contract of sale executed by the plaintiff to Mr Drummond that day.[92]
[192]
[97] In the first half of 2009 Mr Mulcahy had several conversations with Ms Slaughter about settlement. A pre-settlement inspection was arranged for 23 July 2009.[93]
[193]
[98] On 13 July 2009 the plaintiff's solicitors advised that the community titles scheme had been established, and that the Settlement Date was 27 July 2009.[94]
[194]
[99] In July 2009 Mr Mulcahy received a telephone call from another real estate agent Andrew Clark, inquiring whether he was aware the land was on the CLR.[95] He contacted Mr Drummond. On 23 July 2009 Mr Drummond wrote to ClarkeKann purporting to rescind the contract.[96]
[195]
[100] The plaintiff denied Mr Mulcahy was entitled to rescind the contract. It claimed the deposit, but gave an undertaking not to cash the guarantee without first providing three clear days' notice.[97] On 20 August 2009 it sued for specific performance of the contract of sale dated 19 December 2008.[98]
[196]
[101] Mr Mulcahy's defence raised the same issues as Mr McVicar's.[99]
"421 Notice to be given to proposed purchaser of land
[200]
(a) particulars of the land are recorded in the environmental management register or contaminated land register; or
[201]
(i) a notice under section 373 informing the owner that the administering authority believes the land has been, or is being, used for a notifiable activity or is contaminated land; or
[202]
(ii) a notice to conduct or commission a site investigation; or
[203]
(iv) a notice that the administering authority is preparing, or requiring someone else to prepare, a site management plan for the land; or
[204]
(c) the land is the subject of an order under section 458.
[205]
(2) If the owner proposes to dispose of the land to someone else (the buyer), the owner must, before agreeing to dispose of the land, give written notice to the buyer--
[206]
(a) if particulars of the land are recorded in the environmental management register or contaminated land register--that the particulars have been recorded in the register and, if the land is subject to a site management plan, details of the plan; or
[207]
(b) if the owner has been given a notice under this part--that the owner has been given a notice under this part and particulars about the notice; or
[208]
(c) if the land is the subject of an order under section 458--that the land is the subject of the order and particulars about the order.
[209]
(3) If the owner does not comply with subsection (2), the buyer may rescind the agreement by written notice given to the owner before the completion of the agreement or possession under the agreement, whichever is the earlier.
[210]
(4) On rescission of the agreement under subsection (3)--
[211]
(a) a person who was paid amounts by the buyer under the agreement must refund the amounts to the buyer; and
[212]
(b) the buyer must return to the owner any documents about the disposal (other than the buyer's copy of the agreement).
[213]
(5) Subsections (3) and (4) apply despite anything to the contrary in the agreement."
[214]
[103] The base parcel of land was on the EMR when LJ & BJ Investments Pty Ltd entered into the contract to purchase lot 7 in the proposed community titles scheme, and when Mr McVicar and Mr Mulcahy entered into put and call option deeds with respect to lots 6 and 5 respectively, but it was removed from the register a considerable time before the community titles scheme was established.
[215]
[104] In APM Property 3 Pty Ltd v Blondeau[100] Mullins J held that the obligation of disclosure cast on an owner of land that is on the EMR by s 421(2) of the EP Act applies to a proposed sale of any part of the parcel of land on the register. There the owner of a parcel of land on the EMR proposed reconfiguring it into a community titles scheme. While the base parcel of land ("Lot 2") was on the register, it entered into put and call option agreements in relation to "off the plan" sales of lots in the community titles scheme. Her Honour said -
[216]
"[38] The interpretation issue that arises on whether land covers a proposed lot to be subdivided out of that land under a CTS is not limited to the operation of s 421(2), but affects the interpretation of the description 'particulars of the land' for the purpose of part 8 of chapter 7 of the EPA. The recording of the particulars of the land in the environmental management register is based on the real property description of land. When the description changes, as a result of a plan of subdivision (including a CTS) it follows that, at least in the first instance, that the same land (but with its new real property description or descriptions) remains recorded in the environmental management register.
[217]
[39] One of the purposes of s 421(2) must be to alert a prospective purchaser of the land of the inclusion of the land in the environmental management register, because the EPA has the potential to impose serious obligations on the purchaser of land that was included in the environmental management register at the time of the purchase.
[218]
[40] It gives effect to the protective purpose of s 421(2) (and operation to the other provisions of part 8 of chapter 7 of the EPA that apply to the purchaser of land that is included in the environmental management register) if the reference to land in s 421(2) is construed as including part of the land. It has a sensible operation in relation to the subdivision of land by a CTS, as relevant parts of the physical land are likely to be included in the common property of the CTS which is owned by all lot owners. The fact that environmental issues affecting land may be addressed in the development approval stage is not a justification for giving an interpretation to s 421(2) that is inconsistent with its clear purpose.
[219]
[41] Although the proposed lot that was the subject of each of the option agreements was part only of Lot 2, the obligation imposed on the owner of Lot 2 in relation to a proposed sale of Lot 2 must also apply to the sale of any part of Lot 2, while the particulars of Lot 2 that are recorded in the environmental management register apply to the whole of Lot 2."[101]
[220]
None of the parties in the present litigation challenged Her Honour's analysis and conclusion, with which I respectfully agree.
[221]
Application of s 421 to the contract with LJ & BJ Investments Pty Ltd
[222]
[105] The base parcel of land was on the EMR on 18 January 2008 when the plaintiff executed the contract to sell LJ & BJ Investments Pty Ltd lot 7 - that is, a lot within the community titles scheme into which the base parcel was to be reconfigured. The contract was an agreement to dispose of the land within the meaning of s 421. Therefore, the plaintiff was obliged to give LJ & BJ Investments Pty Ltd notice in accordance with s 421(2). It failed to do so.
[223]
Application of s 421 to the put & call option agreements with McVicar & Mulcahy
[224]
[106] In Blondeau[102] Mullins J analysed the terms of a put and call option agreement between the applicant (the developer of a community titles scheme) and the first respondent (the purchaser of one of the proposed lots), concluding that by entering into the agreement the applicant had put itself in the position where, without any further act on its part, it was bound to sell the proposed lot to the first respondent if the call option were exercised, and the first respondent had put himself in the position where, without any further act on his part, he was bound to purchase the proposed lot if the applicant exercised the put option. Her Honour held that the option agreement constituted an agreement to dispose of land recorded on the EMR, and that the applicant was required to comply with s 421(2) before entering into the option agreement.[103]
[225]
[107] In the present litigation counsel for the plaintiff sought to distinguish Blondeau on the basis that Mr McVicar and Mr Mulcahy could have appointed nominees to exercise the call option, and so there was not absolute certainty as to the identity of the purchaser. (If there was a nominee clause in the put and call option in Blondeau, it was not mentioned in the judgment.)
[226]
[108] Counsel for the plaintiff relied on the decision of Douglas J in Vale 1 Pty Ltd v Delorain Pty Ltd.[104] The issue in that case was whether three put and call option deeds between the applicant Vale 1 Pty Ltd as grantee and the respondent developer Delorain Pty Ltd as grantor constituted "relevant contracts" for the purposes of s 364 and chapter 11 of the Property Agents and Motor Dealers Act 2000. "Relevant contract" was defined as a "contract for the sale of residential property in Queensland." The applicant was the marketer of the proposed residential allotments. The applicant had a call option to purchase the property; alternatively it could refer a buyer to the respondent. The respondent had a put option to sell to the applicant. His Honour held that the deed did not result in a contract for the sale of relevant property to a clearly identified buyer. He said[105] -
[227]
"In the performance of the deeds the identity of the eventual buyer depended on the potential exercise of rights under the call option in favour of Vale granted under cl 5, or by Vale's referral of a buyer under cl. 6 or by Delorain's exercise of its option under cl. 8 after the exercise date. Until the purchaser is identified through that process it is impossible to conclude that a contract for the sale of the property has come into existence."
[228]
[109] In my view the nominee provisions in the present put and call option deeds are of a different character from clause 6 in Vale 1 Pty Ltd v Delorain Pty Ltd.
[229]
[110] In David Deane & Associates Pty Ltd v Bonnyview Pty Ltd[106] the appellants owned land they intended subdividing. They agreed to pay the respondent real estate agent commission if it introduced a purchaser who entered into a valid and enforceable contract of sale confirmed by the appellants and who completed the contract, or if the appellants did not complete such a contract, or if the appellants released the respondent from further contractual obligations. The respondent introduced the appellants to Traspunt No 2 Pty Ltd, which entered into three put and call option agreements with them. Each of the option agreements conferred on Traspunt the right to compel the appellants to transfer all the lots to it for stipulated prices. Each of the option agreements conferred on the appellants the right to compel Traspunt to acquire, either for itself or its nominee, a certain number of the lots at a stipulated price in the event Traspunt did not elect to acquire them itself within certain periods from the date of registration of the plan of subdivision. The cumulative effect of the three agreements was that all the lots could have been put by the appellant to Traspunt. Subsequently the appellant entered into a deed with another company (related to Traspunt) reciting the existing option agreements and agreeing to contract directly to sell the lots to buyers introduced by yet another related company.
[230]
[111] The respondent succeeded on its claim for commission on the total price payable to the appellants under the option agreements. Keane JA (with whom the other members of the Court of Appeal agreed) found that the option agreements were valid and enforceable contracts of sale and that the appellants transferred the lots in question to other parties on the basis those other parties were nominees of Traspunt. The transfers were to be taken to have occurred in fulfilment of the contract between Traspunt and the appellants. His Honour held that the respondent was entitled to the commission because it had introduced a purchaser who entered into a contract of sale which the appellants then failed to complete.[107]
[231]
"...the principle that, where a contract provides for a transfer to a named purchaser or its nominee, then a transfer to the purchaser's nominee will usually be regarded as an event occurring pursuant to the contract between the vendor and the purchaser rather than as part of a separate arrangement between the vendor and the purchaser's nominee. As Phillips JA, with whom Winneke P and Batt JA agreed, explained recently in Salter v Gilbertson:[109]
[232]
'Ordinarily, where there is an agreement of purchase and sale expressed to be between A (the seller) and B "or the nominee of" B, B is regarded as having the power simply to nominate who shall be transferee (that is, B or another at the direction of B) and a transfer to B and a transfer to B's nominee are alike regarded as in fulfilment of the contract between A and B.'"
[233]
[113] The call options given to Mr McVicar and Mr Mulcahy were in terms that they might appoint nominees to exercise those call options. But if either of them did so, he would remain responsible for the completion of the contract of sale by having to guarantee the performance of the nominee's obligations under the deed and contract and to indemnify the plaintiff against any loss as a result of default by the nominee. In my view the nominee provisions do not affect what is otherwise the true nature of the put and call option deeds, namely agreements to dispose of land within the meaning of s 421 of the EP Act.
[234]
[114] Therefore, the plaintiff was obliged to give Mr McVicar and Mr Mulcahy notice in accordance with s 421(2). It failed to do so.
[235]
[115] In each case the disposition of land pursuant to the put and call option agreement could be completed only by settlement of the contract of sale. Non-compliance with s 421(2) entitled the purchasers to rescind not just the option agreements but also the contracts of sale.
[236]
Can the right of rescission afforded by s 421(3) be waived?
[237]
[116] Whether the right of rescission can be waived depends on the proper construction of s 421(3).
[238]
[117] That provision must be considered in the context of the whole of s 421 and in the wider context of the whole EP Act. The interpretation that will best achieve the purpose of the Act is to be preferred to any other.[110]
"...to protect Queensland's environment while allowing for development that improves the total quality of life, both now and in the future, in a way that maintains the ecological processes on which life depends (ecologically sustainable development)."[111]
"The protection of Queensland's environment is to be achieved by an integrated management program that is consistent with ecologically sustainable development."
[243]
[119] Section 421 is in chapter 7 part 8 of the Act, which is concerned with the environmental management of contaminated land. In APM Property 3 Pty Ltd v Blondeau[112] Mullins J analysed relevant provisions of the Act in construing s 421(2). Her Honour summarised them in this way -
[244]
"[31] Division 3 of part 8 of chapter 7 of the EPA provides for a site investigation of the land that is included in the environmental management register. Relevantly the administering authority may require the owner of the land to conduct or commission the site investigation in certain circumstances where, at the time the land was acquired by the owner, particulars of the land were recorded in the environmental management register: s 376(4)(b)(ii). After the site investigation report is done, the administering authority is then required to decide whether or not the land is contaminated land and, and if it is satisfied that it is not, can remove particulars of the land from the environmental management register (s 384(2)(a)), but if the administering authority is satisfied that the land is contaminated land and remediation is required, particulars of the land are recorded in the contaminated land register (s 384(2)(c)), but otherwise the land will remain on the environmental management register (s 384(2)(b) or s 384(2)(d)).
[245]
[32] Where remediation is required, in certain circumstances the administering authority may require the owner of the land to conduct or commission work to remediate the land, where particulars of the land were recorded in the environmental management register at the time the land was acquired by the owner: s 391(3)(b).
[246]
[33] The existence of a site management plan for land under the EPA affects the development of land under other State legislation. Section 417 of the EPA provides:
[247]
'417 Approval or authority must not allow contravention of site management plan
[248]
A local government must not, under an approval or other authority under the Integrated Planning Act or any other Act, allow the use or development of, or an activity to be carried out on, land in a way that contravenes a site management plan for the land.'
[249]
[34] This complements the regime under the Integrated Planning Act 1997. The reconfiguration of a lot by a CTS is assessable development for the purpose of that Act and, in the normal course, the administering authority under the EPA would be consulted by the Council as to appropriate conditions for the development approval, because of the inclusion of Lot 2 in the environmental management register."
[250]
[120] There is no prohibition on the sale of land on the EMR or the CLR. Subsection (2) of s 421 obliges the owner of land that is on the EMR or the CLR, is the subject of a notice under s 373 or other specified notices, or is the subject of an order under s 458[113] to give a prospective purchaser notice to that effect. Subsection (3) gives the purchaser a right of rescission where subsection (2) is not complied with, and subsection (4) provides for refund of all amounts paid. By subsection (5), it is not possible to contract out of subsections (3) and (4).
[251]
[121] A right created by statute may be a private right merely for the private benefit of an individual, or it may reflect a public policy for the benefit of the community. Generally, a private right can be waived, unless, on its proper construction, the statute prohibits waiver. A public right cannot be waived. As Windeyer J said in Brooks v Burns Philp Trustee Co Ltd[114] -
[252]
"When a statute creates and confers rights and imposes corresponding duties, persons for whose benefit this was done may by contract waive or renounce their rights, unless to do so would be contrary to the statute. It may be seen that it would be so, because of an express prohibition against 'contracting out', or because the provisions of the statute, read as a whole, are inconsistent with a power to forgo its benefits: or the policy and purpose of the statute may shew that the rights which it confers on individuals are given not for their benefit alone, but also in the public interest, and are therefore not capable of being renounced."
[253]
[122] Connolly J gave a number of illustrations of the distinction in Re Permanent Trustee Nominees (Canberra) Limited[115] -
[254]
"The principle to be applied in such a case is shortly stated in the maxim quilibet potest renunciare juri pro se introducto.[116] In Wilson v McIntosh[117] the Privy Council was concerned with an application to bring land under the Real Property Act. Section 23 of the Act provided that a caveat against bringing the land under the Act should be deemed to have lapsed after the expiration of three months unless within that time the caveator should have taken proceedings to establish his title. The applicant was held to have waived s 23 by stating a case and obtaining an order upon the caveator to state her case after the expiration of the three months. Their Lordships applied the maxim to which I have referred and cited with obvious approval a statement from the earlier decision in Phillips v Martin[118] to the effect that 'it is quite clear that a man may by his conduct waive a provision of an Act of Parliament intended for his benefit.'
[255]
Cases in which it has been held that a party may not renounce the benefit of a statutory provision abound. They will all be found to involve an element of public as opposed to private benefit. Thus a wife's right to maintenance cannot be bargained away: Davies v Davies,[119] nor can the right to apply under the testator's family maintenance legislation: Lieberman v Morris,[120] nor can a provision contained in life insurance legislation intended in the interests of the general public: Equitable Life Assurances of the United States v Bogie,[121] nor can the requirement of notice of intention to call up or demand payment required by mortgagors' relief legislation, the statute being for the benefit of the public generally: Cataldo v Clarke & Fauset.[122]"
[256]
[123] The focus is on the particular right given by s 421(3).[123] In granting that right of rescission, did the Legislature intend to confer a benefit only on a purchaser, or did it intend to confer a benefit on the whole community?
[257]
[124] In my view there is an element of public as opposed to private benefit in the right of rescission given by s 421(3). The object of the Act, the protection of the environment while allowing for ecologically sustainable development, can be characterised as the advancement of the interests of the community as a whole. Subsections (2), (3) and (4) of s 421 not only afford consumer protection to a prospective purchaser; they also regulate the sale of affected land consistently with the object of the Act. It would be inimical to that object to allow dealings in affected land without notice of its being on the EMR or the CLR or the subject of a notice under s 373 or of an order under s 458. It would be just as inimical to that object to allow a purchaser to waive the benefit of subsection (3) or (4) as it would be to allow it to contract out of those subsections.[124]
[258]
[125] In principle, a right otherwise capable of waiver cannot be waived until the time comes for its exercise.[125] The right to rescind under s 421(3) may be exercised at any time until settlement or possession, whichever is the earlier. This is a further indication that the Legislature did not intend that right to be capable of waiver.[126]
[259]
[126] I conclude that the right of rescission afforded by s 421(3) cannot be waived.
[260]
[127] Should I be wrong in my conclusion that the right of rescission in s 421(3) cannot be waived, it would be necessary to consider whether the elements of waiver by election have been made out in the case of any of the defendant purchasers. These elements are knowledge on the part of the party alleged to have made an election, words or conduct consistent only with the exercise of one of two sets of rights and inconsistent with the exercise of the other, and that the time for making an election had arisen.[127]
[261]
[128] I am satisfied that the defendants' solicitors read the correspondence from the plaintiff's solicitors of 11 February 2008[128] and the enclosed copies of the Notice of Removal and the Suitability Statement,[129] and forwarded copies to their respective clients. Even if they had not done so, the solicitors' knowledge of their contents would be imputed to their clients.[130]
[262]
[129] But that begs the question whether that correspondence and the enclosures were sufficient to inform the purchasers that the land was on the EMR before the agreements to dispose of the land were made. In my view they were not.
[263]
[130] The letter was obtuse. It referred to clause 11.3 of the contract, which was a confusing if not misleading provision: in stating that at some time in the future the land might be on the EMR or the CLR, it might well be interpreted as implying that it was not presently on either. The letter used the present tense in passing on the EPA's advice about the base parcel's suitability for any use and the absence of any necessity for it to be recorded on the EMR or the CLR, and continued that copies of the notices were "enclosed for your records". The Notice of Removal did not state either the date when the base parcel had been placed on the EMR or the date when it had been removed. The Suitability Statement referred to studies dated "November 2007" and "December 2007", but did not state when the determinations that the site was suitable for any use and that it did not need to be on either register had been made. Whether or not a prudent purchaser (or his solicitor) would have been put on inquiry by this correspondence, it simply did not inform the defendants that the land had been on the EMR before the agreements were made - in LJ & BJ Investments Pty Ltd's case the contract of sale, and in McVicar and Mulcahy's cases, the put and call option deeds.
[264]
[131] It has not been suggested that any of them acquired such knowledge from any other source until shortly before completion was to take place.
[265]
[132] Counsel for LJ & BJ Investments Pty Ltd submitted that the plaintiff could not establish waiver of the statutory right of rescission unless it established that the purchasers had knowledge of the right, as well as knowledge of the facts. In Sargent v ASL Developments Ltd[131] Stephen J considered whether the nature of the requisite knowledge differs according to whether the right alleged to have been waived is an expressly conferred contractual right on the one hand or on the other hand, some other right, such as one conferred by law to rescind ab initio for fraudulent misrepresentation, or a right of rescission conferred by statute. However, it was not necessary for his Honour to decide the point. So, too, in Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd[132] Hedigan J of the Supreme Court of Victoria considered a similar argument but found it unnecessary to decide the point. In Ellison v Lutre Pty Ltd[133] the Full Court of the Federal Court held that whether the requisite knowledge is knowledge of the right of rescission or merely knowledge of the facts giving rise to that right turns on the construction of the particular statutory provision.
[266]
[133] In the present cases none of the defendants had knowledge of either the facts giving rise to their right of rescission nor of the right itself until shortly before completion was due. Accordingly, it is not necessary for me to determine this question.
[267]
[134] The plaintiff has particularised various conduct by each defendant in the period between 11 February 2008 and the date for completion as conduct consistent only with an election to affirm the respective agreements.[134] However, by s 421(3) the defendants could rescind at any time before completion or possession. Accordingly, even if they had the requisite knowledge, there was no inconsistency between their acknowledging the existence of the agreements and taking steps under or in reliance on them on the one hand and the maintenance of their rights to rescind conferred by s 421(3) on the other.[135]
[268]
[135] Even if the right of rescission afforded by s 421(3) could be waived, I am satisfied that it was not waived by any of the defendants.
[269]
That the plaintiff called for settlement one day early
[270]
[136] The community titles scheme was established on 7 July 2009. By letters dated 13 July 2009 the plaintiff called for settlement on 27 July 2009.
[271]
[137] Under s 212(2) of the Body Corporate and Community Management Act 1997 (Qld) each of the contracts of sale was taken to include a term that settlement not take place earlier than 14 days after the plaintiff advised the defendant that the scheme had been established. The settlement date was defined in the Reference Table to the contracts in this way -
[272]
14 days after the Seller notifies the Buyer that the Scheme has been established, and that a Certificate of Classification has issued for the building containing the Lot, and that (in the reasonable opinion of the Seller) the Lot is ready for occupation.
[273]
That satisfied s 212(2), but the date nominated by the plaintiff's solicitors, for 27 July 2009, was one day short of the requisite period.
[274]
[138] By 27 July 2009 the defendants had all given notice of rescission. The plaintiff did not purport to terminate for the defendants' failure to settle on 27 July 2009, but rather sued for specific performance.
[275]
[139] In the circumstances, even if the defendants' rescission were ineffective, nothing would turn on the short notice.
[276]
The plaintiff's failure to return LJ & BJ Investments Pty Ltd's bank guarantee
[277]
1.3 The Buyer may provide a bank guarantee to the Seller instead of the Deposit as long as the bank guarantee -
[278]
(e) provides that the amount of the bank guarantee is payable to the Stakeholder on demand by the Stakeholder.
[279]
1.4 If the bank guarantee is called on, then the amount of the bank guarantee must be paid to the Stakeholder. The amount called on will then be treated as the Deposit" (emphasis added).
[280]
[141] LJ & BJ Investments Pty Ltd provided a bank guarantee to the plaintiff as vendor. While the contract dealt with who should have the benefit of interest on a deposit,[136] it was silent on responsibility for bank fees on a guarantee. I infer that it was intended that the purchaser should bear these.
[281]
[142] That the right of rescission afforded by s 421(3) of the EP Act is a right to rescind ab initio is clear from s 421(4), which provides that on rescission moneys paid by the purchaser must be refunded and the purchaser must return documentation to the owner.
[282]
[143] In their letter of 14 July 2009 LJ & BJ Investments Pty Ltd's solicitors gave notice of rescission and called for return of the deposit.[137] The client would have been entitled to return of money paid as a deposit. It had provided a bank guarantee in lieu of a monetary deposit, and so was entitled to the return of the guarantee. The plaintiff's refusal to return it amounted to detinue and conversion.
[283]
[144] LJ & BJ Investments Pty Ltd is entitled to an order for the return of the bank guarantee and damages for its wrongful detention.
[284]
[145] The plaintiff should pay the bank fees on the guarantee from 14 July 2009 as damages for detinue and conversion.
[285]
[146] The quantum of the legal fees was not seriously disputed and counsel for the plaintiff did not submit that those fees were conceptually different from the bank fees.[138]
[286]
[147] Accordingly I hold that the plaintiff should also pay the legal fees claimed as damages for detinue and conversion.
[287]
[148] Should I be wrong in my conclusion that LJ & BJ Investments Pty Ltd validly rescinded the contract pursuant to s 421(3) of the EP Act, it would be necessary to consider its counsel's submissions in support of a declaration pursuant to s 87 of the TPA that it validly terminated the contract - by which I assume he meant a declaration declaring the contract to be void ab initio.
[288]
[149] LJ& BJ Investments Pty Ltd alleges that the plaintiff impliedly represented that the land was, and always had been free from contamination, and that it was in response to and in reliance on that representation that Mr Clarkson executed the contract. It relies on three matters in support of the allegation of an implied representation -
[289]
(a) the statements in Ms Slaughter's handwritten facsimile that "The Ivy" development was of the highest quality;[139]
[290]
(b) silence: the plaintiff's omission to tell it that the land or any part of it was or had been or might be placed on the EMR or be contaminated; and
[291]
(c) Ms Slaughter's presenting the contract documents to Mr Clarkson for signing without bringing to its attention clause 11.3 (which did not, in any event, provide that the land was then listed on the EMR).[140]
[292]
[150] It contends that the representation was misleading or deceptive conduct contrary to s 52 of the TPA.
[293]
[151] The plaintiff was required by the EP Act to tell LJ & BJ Investments Pty Ltd that the land was on the EMR before the agreement was made. Mr Amble knew that the land was on the register, and I infer that his omission to inform Ms Slaughter or the purchaser of this was deliberate. It is not to the point that Ms Slaughter did not knowingly remain silent or otherwise knowingly mislead Mr Clarkson. He was entitled to infer from their silence that the land was not on the register.[141] I am satisfied that the plaintiff did make an implied representation as alleged, and that it was misleading or deceptive.
[294]
[152] The Court may make orders under s 87 only in cases of loss or potential loss in consequence of misleading or deceptive conduct. In Marks v GIO Australia Holdings Ltd[142] McHugh, Hayne and Callinan JJ said -
[295]
"That is, the Court can make orders under s 87 only in so far as those orders will compensate (or will prevent or reduce) the loss of damage that is identified."
[296]
[153] Loss or damage is not to be measured only by the difference between price and value, it need not be monetary, and it is to be measured when a potentiality causing harm comes to fruition.[143] The plaintiff's misleading or deceptive conduct induced the contract. I accept the submission of counsel for LJ & BJ Investments Pty Ltd that so long as his client's right to rescind under s 421(3) remained in tact there was no loss or damage, but if (contrary to my view) it lost that right by waiver, the waiver did not affect the fact or consequences of the earlier misleading or deceptive conduct. A contingency giving rise to loss or damage was then fulfilled.
[297]
[154] On those premises it would be appropriate to make an order under s 87 declaring the contract of sale void ab initio.
[298]
McVicar and Mulcahy's allegations of breach of the TPA
[299]
[155] Mr McVicar and Mr Mulcahy allege that clause 11.3 of the contract constituted a false and misleading representation concerning the characteristics of land contrary to s 53A of the TPA.[144] However, as they have not sought any relief based on breach of s 53A and their counsel made no submissions based on breach of s 53A, it is not necessary to consider these allegations.
[300]
[156] The plaintiff's claims for specific performance should be dismissed.
[301]
[157] On LJ & BJ Investments Pty Ltd's counterclaim, the plaintiff should be ordered to return the bank guarantee, and to pay the bank fees on the guarantee from 14 July 2009 and the legal fees incurred by the defendant in relation to the demand for the return of the guarantee.
[302]
[158] I will hear counsel on the form of the orders and on costs in each proceeding.
[303]
[159] On 16 September 2010, counsel informed the court that the bank guarantee was returned to LJ & BJ Investments Pty Ltd on 10 September 2010.
[304]
[1] Turrisi Properties Pty Ltd v LJ & BJ Investments Pty Ltd Agreed Bundle of Documents ("LJ & BJ Trial Bundle") pp 711 and 713, 710 and 712.
[305]
[3] Transcript 1-92-193; LJ & BJ Trial Bundle p 593.
[9] See transcript 1- 60. LJ & BJ Trial Bundle p 596. On the typewritten letter "6&/" was handwritten before "7". When and by whom this was done was not established: nothing turns on it.
[310]
[10] Contract between LJ & BJ Investments Pty Ltd and Turrisi Pty Ltd. See LJ & BJ Trial Bundle p 668, clause 1.3.
[123] See, for example, Blackman v Milne[2007] 1 QdR 198; [2006] QSC 350 where Douglas J considered whether the right granted by s 365(2)(c)(ii) of the Property Agents and Motor Dealers Act 2000 was a public or a private right.
[380]
[125]Commonwealth v Verwayen (1990) 170 CLR 394 at 427 per Brennan J.
[381]
[126] Cf. the reasoning of Muir J in MP Management (Aust) Pty Ltd v Churven[2002] QSC 320 at [46].
[382]
[127]Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 655 - 656, 646; Agricultural and Rural Finance Pty Ltd v Gardiner[2008] HCA 57; (2008) 238 CLR 570 at 588; Ace Property Holdings Pty Ltd v Australian Postal Corporation[2010] QCA 55 at [147] - [152]; Champtaloup v Thomas[1976] 2 NSWLR 264 at 269; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd[2003] FCA 50; (2003) 128 FCR 1 at 89 - 92; Commonwealth v Verwayen ( 1990) 170 CLR 394 at 427 per Brennan J.
[134] Amended reply and answer in Turrisi Properties Pty Ltd v LJ & BJ Investments Pty Ltd BS 8515/09 filed 26 February 2010 (court document 13) para 3(e); Further amended reply in Turrisi Properties Pty Ltd v Shane Travis McVicar BS 8738/09 filed 10 March 2010 (court document 8) para 1(h); Further amended reply in Turrisi Properties Pty Ltd v Terence James Mulcahy BS 9160/09 filed 10 March 2010 (court document 8) para 1(h).
[144] Defence in Turrisi Properties Pty Ltd v Shane Travis McVicar BS 8738/09 filed 17 September 2009 (court document 2) para 16.9; Defence in Turrisi Properties Pty Ltd v Terence James Mulcahy BS 9160/09 filed 22 September 2009 (court document 2) para 16.9.