and Harofam Pty Ltd v Richelle Yvonne Scherman
[2013] VSCA 104
•10 May 2013
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2012 0172 | |
| HAROFAM PTY LTD | Appellant |
| v | |
| RICHELLE YVONNE SCHERMAN | Respondent |
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| JUDGES | NETTLE AP, NEAVE JA and GARDE AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 26 April 2013 |
| DATE OF JUDGMENT | 10 May 2013 |
| MEDIUM NEUTRAL CITATION | [2013] VSCA 104 |
| JUDGMENT APPEALED FROM | [2012] VSC 402 (Warren CJ) |
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REAL PROPERTY – Sale of land – Contract – Interpretation – Time for Registration of Plan of Subdivision – Whether contract validly rescinded by purchasers – Construction – Whether Plan not registered on ‘relevant date’ – Period of time for extension – Whether date ‘fixed’ – Whether ‘other period’ specified – Solid Investments Aust Pty Ltd v Clifford (2010) 27 VR 41, Harman Nominees Pty Ltd v Leighton Shores Pty Ltd [2012] WASCA 189 followed – Sale of Land Act 1962 (Vic) s 9AE(2).
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| Appearances: | Counsel | Solicitors |
| For the Appellant | Mr G H Golvan QC with Mr G D Bloch | Fixler & Associates |
| For the Respondent | Ms C H Sparke SC | Richelle Scherman Solicitor |
NETTLE AP
NEAVE JA
GARDE AJA:
This is an appeal from a judgment of the Chief Justice given on 6 September 2012.[1] Her Honour held that Special Condition 10.3 of a Contract of Sale of Land dated 20 June 2012 (‘the Contract’) did not comply with s 9AE(2) of the Sale of Land Act 1962 (Vic) (‘the SLA’). The appellant contends that the judge erred in the interpretation of s 9AE(2) of the SLA and in the construction of Special Condition 10.3.
[1][2012] VSC 402 (‘Reasons’).
The facts
The facts sufficiently appear from the Chief Justice’s reasons for judgment:[2]
[2]Reasons, [3]–[11].
1) By contract of sale dated 20 June 2010 (‘the Contract’), Ms Scherman purchased a property on an unregistered plan of subdivision with respect to a development at Lot 17, 219–221 East Boundary Rd, East Bentleigh.
2) The Contract was expressed to be conditional upon the registration of the plan of subdivision and conferred on Ms Scherman, as purchaser, a right to avoid the contract if the plan were not registered on ‘the relevant date’.
3) The Contract was a contract for the sale of a lot from an unregistered plan of subdivision and was therefore a prescribed contract within the meaning of s 9AE(2) of the SLA. Section 9AE(2) provides that:
9AE. Rescission of prescribed contract
(2)If the plan of subdivision is not registered within 18 months after the date of the prescribed contract of sale of a lot on that plan of subdivision, or, if the contract specifies another period, before the end of that specified period, the purchaser may, at any time after the expiration of that period but before the plan is so registered, rescind the contract.[3]
[3]Emphasis added.
4) Special Condition 10.3 of the Contract provided:
10.3 Time for Registration of the Plan of Subdivision
If the Plan of Subdivision is not registered within twenty-four (24) months of the Day of Sale or such further time, but such further time to not exceed 6 months, as the Vendor may by notice in writing to the Purchaser require in the event that delays occur as a result of any act, matter or thing beyond the reasonable control of the Vendor which directly or indirectly causes the registration of the Plan to be delayed, either party may, at any time after the expiration of this period or such extended period, but before the Plan of Subdivision is registered, rescind the Contract by giving written notice to the other, in which case the deposit, any interest thereon and all other moneys paid by the Purchaser shall be refunded less any bank and government charges, GST and any legal fees for prior default.[4]
[4]Emphasis added.
5) The plan of subdivision was not registered as at 19 June 2012 (being the day 24 months after the date of sale) and, on that day, the appellant informed Mr Scherman by way of notice under Special Condition 10.3 that the appellant was purporting to exercise its right to a six month extension to finalise registration of the subdivision.
6) On 21 June 2012 Ms Scherman gave notice of rescission and by letters dated 25 June, 27 June and 5 July 2012 she informed the appellant that she considered the contract to be at an end (by virtue of s 9AE(2) of the SLA) and requested return of her deposit with interest less charges.
7) The plan was not registered as at 12 July 2012.
The judge’s reasons
The Chief Justice held that, inasmuch as Special Condition 10.3 provided for such further time to not exceed 6 months, as the vendor may by notice in writing to the Purchaser require, it did not specify another period within the meaning of s 9AE(2) of the SLA.[5]
[5]Reasons, [21].
In so holding, her Honour followed the decisions of Bongiorno J in Clifford v Solid Investments Australia Pty Ltd,[6] and of Mandie JA on appeal in Clifford.[7] In Clifford, Mandie JA said this:
In my opinion, the plain interpretation of s 9AE(2) supports the position taken by the purchasers. Section 9AE(2) provides a time limit within which a plan of subdivision is to be registered after which a purchaser may rescind the contract, namely, 18 months after the date of the contract, and then provides in effect that the contract may specify ‘another period’ in substitution for the statutory period, after which a purchaser may rescind if the plan is still unregistered.
…
In the present case, I cannot identify any reason of policy for extending the meaning of ‘specifies another period’ so as to encompass the specification of a period by reference to an ascertainable event, let alone so as to permit the creation of machinery for the identification of the period at some time in the future, such machinery to be activated by the vendor on the basis of a set of wide contractually provided circumstances. On the contrary, the section on its face and in its context must be taken to have intended to establish an identifiable period at the time the contract is entered into and I would also endorse the reasoning of the trial judge as to why that is so.[8]
[6][2009] VSC 223.
[7]Solid Investments Australia Pty Ltd v Clifford (2010) 27 VR 41.
[8](2010) 27 VR 41, 48–9 [29]–[31].
Applying that reasoning to the facts in this case, the Chief Justice concluded that:
A ‘specified date’ is defined by a specified commencement date and a specified end date. In this case, in conferring on the vendor a right to change the end date of the specified date of 24 months in special condition 10.3, that special condition has not specified any other period than 24 months for the purposes of the right to rescind under s 9AE(2). … s 9AE(2) requires the relevant contract to specify the alternative period to the one fixed by s 9AE(2) for the purposes of the purchaser’s right to rescind. Special condition 10.3 purports to give the vendor a right to fix another end date for the initial specified period of 24 months after the contract is entered into. In this case, special condition 10.3 of the contract falls squarely within the description considered by Mandie JA in the Clifford matter.[9]
[9]Reasons, [16], citations omitted.
The appellant’s contentions
The appellant contends that Clifford was distinguishable and that the Chief Justice was in error in failing to distinguish it. According to the appellant, the critical difference is that, whereas in Clifford the contract purported to confer on the vendor the right to extend the plan registration date on multiple occasions and to a different extent on each occasion, Special Condition 10.3 of the Contract provides for only one possible extension of up to a maximum period of six months, thus fixing the outer limit of the period within which the Contract can be rescinded at 30 months.
Counsel for the appellant submitted that there were also other important differences, in that:
a) In Clifford, the vendor could extend the period by any amount of time which the vendor chose (the only check being that the extension had to be reasonable), and so could hold the purchaser to the contract for an indefinite period of time without procuring registration of the plan. In contrast, under Special Condition 10.3 of the Contract, the purchaser is assured of the right to rescind if the plan is not registered within a maximum of 30 months after the date of the Contract (comprised of the initial 24 months specified in the Contract plus such further period of up to six months as the vendor might stipulate).
b) In Clifford, the words ‘in the opinion of the Vendor’ conferred on the vendor an effectively untrammeled, subjective discretionary power to determine the extension or extensions which the vendor required, subject only to the requirement that each such extension be reasonable. In contrast, under Special Condition 10.3 of the Contract, the appellant’s right of extension may only be exercised if in truth there are events beyond the appellant’s control which necessitate the extension.
The respondent’s contentions
The respondent contends to the contrary that, although Special Condition 10.3 may allow for but one extension of up to a maximum of six months, it still does not enable the parties to say, as at the date of entry into the Contract, what if any period of extension there may be. Consequently, it does not specify another period within the meaning of the section.
In the respondent’s submission, the other supposed differences as between this case and Clifford are also illusory, because:
a) The date for completion is not ‘fixed’ and calculable at the time of entry into the Contract. It will remain indeterminate until and unless the vendor either exercises the power of extension within the first period of 24 months after the date of Contract or the period of 24 months passes without the vendor choosing so to extend.
b) Just as in Clifford, Special Condition 10.3 allows the vendor to make a unilateral determination as to what if any period of extension there will be (albeit that it cannot be of anymore than six months). Indeed the vendor could extend the period more than once, provided that the overall period of extension did not exceed six months.
c) Although Special Condition 10.3 prohibits any extension exceeding six months, and thus provides the purchaser with some degree of certainty, a not dissimilar restriction operated in Clifford by reason of the requirement in that case that the vendor act reasonably.
d) Despite the maximum extension of up to six months set by Special Condition 10.3, Special Condition 10.3 is productive of a period of uncertainty of up to six months on top of the initial period of 24 months; and, in the scheme of things, given that what is in issue is the purchase of a unit off an unregistered plan of subdivision, it is such a substantial period of uncertainty as to run counter to the apparent spirit and intendment of s 9AE(2).
The judge was not in error
We do not consider that the judge was in error in following Clifford. Like her Honour, we perceive it to be relevantly indistinguishable.
As Mandie JA said in Clifford, s 9AE(2) provides for a time limit of 18 months within which a plan of subdivision is to be registered or, if the contract so specifies,
‘another period’ in substitution for the statutory period, after which a purchaser may rescind if the plan is still unregistered.
As was observed by von Doussa J in Andersen v Umbakumba Community Council,[10] the plain and ordinary meaning of the verb ‘specify’ is:
To mention, speak of, or name (something) definitely or explicitly; to set down or state categorically or particularly; to relate in detail. Usually said of persons, but sometimes of an act, document, etc.[11]
[10](1994) 126 ALR 121, 125.
[11]Oxford English Dictionary, meaning 2.
The meaning of verb ‘specify’ has also recently been discussed in Vanstone v Clark[12] where Black CJ said:
On the Minister’s construction of cl 5(1)(k), which gives particular weight to the opening words of the clause, it still falls outside power as the relevant behaviour is not ‘specified’ behaviour. ‘Specified’ behaviour imports requirements of clarity and precision and this statutory concept is not satisfied by ‘vague generalities’: see Tickner v Chapman and the authorities usefully collected by Burchett J. Thus in Jolly v Yorketown District Council, Barwick CJ and Owen J considered that a statutory requirement for a notice to ‘specify’ certain matters required that it do so ‘in explicit terms’. The significance of this statement is illuminated by reference to Kitto J’s judgment in the same case where he stated that to specify means ‘to give not by inference but by direct statement’. To underline the point (if that be necessary), in Federated Engine-Drivers and Firemen’s Assn of Australasia v Broken Hill Proprietary Co Ltd, Barton J said that ‘[t]hings specified must be specific things. Here all is general.’[13]
[12](2005) 147 FCR 299, 306 [13].
[13]Citations omitted.
In Norvill v Chapman,[14] Burchett J said:
Courts which have considered the meaning of ‘specify’ in various contexts have treated it as a strong word. In Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd, I referred to it as ‘a word which signifies precision’. I added:
Even such a word must yield to context, since no word has a meaning which remains rigidly fixed, however it is used. A word is not a locked box with static contents; it is more like a living cell, changing as it responds to the environment, which is its context. But no change wrought by the contextual currents enveloping the word ‘specify’ … can so transform it that it fails to signify a requirement of clarity and precision … Judicial attempts to expound the meaning of the word ‘specify’ have repeatedly fixed upon unambiguous clarity as being connoted by it: Re Green's Will Trusts; Re Paddle River Construction Ltd; A v B; Bond Corp Holdings Ltd v Sulan. See also Re Karounos; Ex parte Official Trustee in Bankruptcy. In Jolly v Yorketown District Council Barwick CJ and Owen J equated ‘specify’ with ‘state in explicit terms’, a sense closely corresponding with that adopted by Kitto J in the same case at 352 and by Higgins J in his dissenting judgment in Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Pty Co Ltd. In that last case, Barton J said (at 272): ‘Things specified must be specific things. Here all is general.’ Those words might have been written for the present case.[15]
[14](1995) 57 FCR 451, 480.
[15]Citations omitted.
It follows, as Mandie JA said in Clifford, that in terms and in context the plain and ordinary meaning of s 9AE(2) of the SLA is to require a specific period of time in which the plan of subdivision must be registered, at the time when the contract is made.
Moreover, like Mandie JA, we cannot discern any reason of policy or principle for extending the ordinary meaning of ‘specifies another period’ to encompass the identification of a period by reference to an ascertainable event, even when the occurrence of that event can be determined objectively. As his Honour said, the certainty which s 9AE(2) is intended to provide would be even more illusory if the contract of sale gave a vendor the right to extend the period in contractually defined circumstances, as was the case here. Because a dispute could arise between the vendor and the purchaser about whether delays had occurred as a result of matters ‘beyond the reasonable control of the vendor’, Special Condition 10.3 is calculated to deny the kind of certainty which s 9AE(2) of the SLA was evidently enacted to create.
We acknowledge that, because the maximum possible extension under Special Condition 10.3 cannot exceed six months, and because Special Condition 10.3 permits of only one extension, it may not be productive of as much a uncertainty as obtained in Clifford.
We also allow that, in the majority of circumstances, the discretion of the vendor under Special Condition 10.3 is likely to be more tightly circumscribed than the discretion in Clifford. It appears to us, however, that the
respondent’s counsel correctly characterised such differences as differences only of degree.
As counsel for the appellant ultimately conceded in argument, if the construction of s 9AE(2) for which he contended were accepted it would mean that, no matter how long a maximum specified period of extension might be – even, say, as long as 10 years – the parties should be taken to have ‘specifie[d] another period’. If that were so, it would mean that the parties should be taken to specify a period at the time of entry into the contract even though, as at the date of entry into the contract, the vendor could determine, after the contract had been entered into, to extend the period for registration by anything between a day and a decade. We are unable to accept that a meaning of the section which has that kind of result could possibly have been intended.
Harman’s case
We are fortified in that conclusion by the recent decision of the Western Australian Court of Appeal, in Harman Nominees Pty Ltd v Leighton Shores Pty Ltd,[16] concerning the proper construction of s 70(4)(a) of the Strata Titles Act 1985 (WA).
[16][2012] WASCA 189.
Like s 9AE(2) of the SLA, s 70(4) of the West Australian Act provides that:
If the strata/survey-strata plan is not registered—
(a)within such period after the date of the contract as is agreed in writing by the purchaser and the vendor; or
(b) in the absence of any such agreement, within 6 months after that date,
the purchaser may avoid the sale at any time before the plan is registered.
The question for decision in Harman was whether the following clause (cl 7) of several contracts for the sale of land complied with the section:
(a)The parties agree that the Buyer may only exercise the Buyer’s rights under section 70(4) of the Strata Titles Act if the Strata Plan has not been registered by the Registration Date.
(b) If the registration of the Strata Plan is delayed or potentially delayed as a result of one or more causes or occurrences beyond the control of the Seller which prevents the Seller registering the Strata Plan, the Registration Date may be extended to the date which the Seller reasonably determines to take into account the effect, or likely effect, of that delay or potential delay.
(c) The Seller shall advise the Buyer in writing of any extension of the Registration Date.
At first instance, the primary judge held that, upon the proper construction of s 70(4)(a), the reference to a ‘period agreed in writing by the vendor and the purchaser’ means a period with a fixed and ascertainable date, and upon the proper construction of cl 7 of the contract, it provided for a period of 48 months in conformity with s 70(4)(a).
On appeal, the Court of Appeal were unanimous in the view that the primary judge had erred in holding that cl 7 of the contract complied with the statutory requirement. In the Court’s view, ‘period’ in s 70(4) meant a period which was fixed and ascertainable when the parties entered in to the contract and thus, although cl 7 specified a mechanism for fixing a period, it did not specify a period.
Buss JA (who delivered the principal judgment, and with whom Newnes JA agreed) reasoned that the word ‘period’ in s 70(4):
…means a portion or interval of time which is fixed and ascertainable when the parties agree in writing upon the period. Section 70(4)(a) therefore contemplates a single and ascertainable date (and not two or more possible dates) on which the purchaser will be entitled to avoid the sale if the strata/survey-strata plan has not been registered.[17]
[17][2012] WASCA 189, [58].
And that:
The evident object of s 70(4) read with s 70(5) is:
(a) to enable the parties to agree in writing on a period after the date of the contract within which the strata/survey-strata plan must be registered if the parties contemplate that registration may not occur within six months after that date; and
(b) to protect the purchaser’s interests by enabling him or her to avoid the sale if the strata/survey-strata plan is not registered within an agreed time (or, absent agreement, within six months after the contract date) and, upon the purchaser avoiding the sale, to enable him or her, subject to s 70(5), to recover all moneys, including the deposit, paid under the contract.
The default period of six months stipulated by the Parliament in s 70(4)(b) is fixed and ascertainable upon the parties executing the contract.[18]
It is more consistent with the evident object of s 70(4) to construe the word ‘period’ in s 70(4)(a) to mean a portion or interval of time which is fixed and ascertainable when the parties agree in writing upon the period than to construe it in the manner contended for by Leighton Shores.[19]
…
…in my opinion, the parties did not agree, upon execution of each Contract, to a single date. In particular, they did not agree upon a fixed and ascertainable portion or interval of time. They merely agreed that the Registration Date could be any date from 48 months after the Contract date onwards, depending on whether the vendor exercised its unilateral power to extend the time. When the Contract was executed, the date on which the purchaser would be entitled to avoid the sale under s 70(4), if the strata plan was not registered by that date, was unknown.[20]
Clause 7, read with the definition of ‘Registration Date’, did not fix a date on which an agreed portion or interval of time ended. Rather, these provisions conferred on the vendor a unilateral power, subject to conditions, to nominate a date (the nominated date being more than 48 months after the Contract date), before which the purchaser could not exercise his or her right under s 70(4) to avoid the sale. Further, cl 7, read with the definition of ‘Registration Date’, provided, in essence, that if the vendor did not exercise its unilateral power to nominate a date (the nominated date being more than 48 months after the date of the Contract), the purchaser’s right under s 70(4) to avoid the sale would arise if the strata plan was not registered within 48 months after the Contract date. Clause 7 contained, in substance, an agreement to identify a date on which the purchaser’s right under s 70(4) would become exercisable.[21]
[18]Ibid [61]–[62].
[19]Ibid [63].
[20]Ibid [88].
[21]Ibid [89].
Murphy JA came to the same conclusion for similar reasons. His Honour said that:
In its ordinary meaning, the word ‘period’, when used in connection with a specified commencement date, and when applied to a timeframe ‘within which’ something is to be done, would signify some specified division or portion of time. In such a context, it ordinarily connotes a measurable and finite interval of time. There is, in the text of s 70, read in the context of the Act as a whole, no basis upon which to depart from the ordinary meaning of the word ‘period’ in this regard. Indeed, the ordinary meaning is confirmed by reference to s 70(4)(b) where the default position set by Parliament is the finite interval of six months from the commencement of the contract. The ordinary meaning also accords with, and serves the object of, the beneficial nature of the provision.[22]
The second question concerns the proper construction of the contract. Clause 7(a) is expressed in terms which suggest a contractual limitation on the circumstances in which the purchaser may terminate the contract under s 70(4) of the Act. However, neither cl 7(a) nor any other term of the contract could operate to exclude or restrict the purchaser’s rights under s 70(4), by virtue of s 70A of the Act. Accordingly, as senior counsel for the appellant put it (ts 7), cl 7(a) is, in effect, an agreement to identify the registration date for the purposes of the right of termination arising under s 70(4). Clause 7(a) refers in terms to the definition of ‘Registration Date’, which directs attention back to cl 7(b). Clause 7, read as a whole (and subject to the matters referred to below) must be taken to mean, in substance, that the parties agree, for the purposes of the operation of s 70(4)(a) of the Act, that the vendor will have four years to achieve registration of the strata plan, unless it nominates some further or other time, as reasonably considered by it to be necessary, having regard to any actual or potential delays beyond its control.[23]
So construed, cl 7 does not (subject to the matters referred to below) meet the description of ‘period’ in s 70(4)(a) of the Act as discussed above. The contractual power to extend operates upon the reference to four years in such a way that (subject to cl 3) cl 7 does not itself fix a finite and measurable interval of time. By virtue of the overriding power given to the vendor to nominate a different period, the parties had not, by the terms of their contract, agreed upon a fixed period within the meaning of s 70(4)(a).[24]
[22]Ibid [136].
[23]Ibid [137].
[24]Ibid [138].
It is true, as counsel for the appellant contended, that the contract in Harman’s case did not stipulate a maximum possible period of extension. To that extent, it was productive of greater uncertainty than Special Condition 10.3 of the Contract in this case. But, at the risk of repetition, the difference is one only of degree.
The importance of Harman, for present purposes, is that it accords with and strengthens our view that ‘period’ in s 9AE(2) of the SLA means ‘a period of time which is fixed and ascertainable when the parties agree in writing upon the period’.[25] In contrast, a period which remains to be determined after the parties enter into a contract of sale of land, even if it cannot exceed a prescribed maximum, is ‘not fixed and ascertainable when the parties agree in writing on the period’.
[25][2012] WASCA 189, [58] (Buss JA).
Stare decisis
Under the principles of stare decisis which apply in this State, a judge of the Trial Division sitting at first instance is bound to follow a decision of this Court unless it is distinguishable.[26] As we have said, in point of principle this case is indistinguishable from Clifford albeit that there are differences of detail. In our view, it follows that the judge was bound to follow Clifford just as her Honour did.
[26]Business World Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 503 (Gummow J); La Macchia v Minister for Primary Industries and Energy (1992) 110 ALR 201, 204 (Burchett J).
Under the principles of stare decisis which apply in this Court, the Court is bound to follow a previous decision of the Court unless persuaded that the earlier decision of the Court is clearly wrong.[27] For the reasons we have given, we are not persuaded that the decision in Clifford was wrong. We think it was right.
[27]Nguyen v Nguyen (1990) 169 CLR 245, 268–270 (Dawson, Toohey and McHugh JJ); R v BDX (2009) 24 VR 288, [125]–[126] (Vincent and Weinberg JJA).
Further, even if there were any doubt about the decision in Clifford, and we do not think that there is, in this Court we are bound to follow a decision of another intermediate appellate court concerning the meaning of legislation which is in pari materia even if not altogether uniform, unless persuaded that the decision is plainly wrong.[28] So far from thinking that Harman may be wrong, we think it plainly to be right.
[28]Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, 492; DPP vPatrick Stevedores Holdings Ltd [2012] 296 ALR 156, [117] (Maxwell P, Weinberg JA, Fergusson AJA).
Conclusion
In the result, the appeal will be dismissed.
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