Arnesen v Springs Beach Development Pty Ltd - [2008] QSC 283

SUPREME COURT OF QUEENSLAND

CITATION:	Mark Arnesen v Springs Beach Development Pty Ltd [2008] QSC 283
PARTIES:	MARK ARNESEN
Plaintiff
V SPRINGS BEACH DEVELOPMENT PTY LTD ACN 114 594 240
Defendant
FILE NO/S:	BS 7047/07
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING
COURT:	Supreme Court, Brisbane
DELIVERED ON:	21 November 2008
DELIVERED AT:	Brisbane
HEARING DATE:	13 October 2008 – 17 October 2008
JUDGE:	McMurdo J

ORDER:	1.	The plaintiff’s claim is dismissed.
2.	It is declared that the defendant has validly terminated the Option Agreement between the parties.
3.	The plaintiff is to remove caveat number 710961841 over the property described as Lot 5 on RP619130 in the County of Flinders, Parish of Uxbridge, Title Reference 30575152 and located at Springs Beach Road, Agnes Waters, forthwith.

CATCHWORDS:	CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – Where the parties executed an option deed over property that could be exercised only upon the registration of a particular plan for development with the Department of Natural Resources and Mines – Where the council approved the proposed development subject to conditions – Where the defendant did not find those conditions acceptable – Whether the obligations upon the defendant are affected by a subsequent contract between the parties – Whether the defendant was under an obligation to act reasonably – Where the defendant was obliged to take reasonable steps to procure approval, but was not obliged to proceed if it were genuinely unwilling to comply with the conditions of that approval
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Butts v O’Dwyer (1952) 87 CLR 267
Codelfa Constuction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1985) 3 BPR 9657
Meehan v Jones (1982) 149 CLR 571
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Strati v JAG Investments Pty Ltd (1980) 1 BPR 9600
Body Corporate and Community Management Act 1997 (Qld) Land Title Act 1994 (Qld), s 97A Mr RG Bain QC with Mr D Clothier for the plaintiff Mr DA Savage SC with Mr D O’Brien for the defendant
SOLICITORS:	Bain Gasteen for the plaintiff Wilson Ryan Grose for the defendant

The defendant is the registered owner of undeveloped freehold land on the coast just south of Agnes Water. In 2006 it proposed to subdivide this land, which has an area of approximately 10 hectares, into four lots, and it granted to the plaintiff an option to purchase one of them. It was agreed that the option could be exercised only once the plan of subdivision had been registered. No such plan has been registered and the defendant has purported to terminate the agreement by which the option was granted. The plaintiff claims that the option agreement is on foot, and he seeks to enforce it by requiring the defendant to procure the registration of the plan and thereby enable…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] QSC 283
Decision Date: 21 November 2008

CaseChat Overview and Summary

Arnesen v Springs Beach Development Pty Ltd was a case before the Supreme Court of Queensland where the plaintiff, Arnesen, sought a declaration that an implied term existed in an option deed that required Springs Beach Development Pty Ltd, the defendant, to do everything necessary to register a plan of subdivision and establish a scheme by a specified date. The defendant argued that the option deed did not contain such an implied term and relied on clauses in the contract document that provided for termination in the event of certain conditions not being met.

The legal issues before the court were whether the option deed contained an implied term that required the defendant to do everything necessary to register the plan of subdivision and establish the scheme, or whether the defendant was only required to take reasonable steps. The court considered whether such a term would be necessary to give business efficacy to the option deed and whether it would be reasonable and equitable between the parties. The court also considered the effect of clauses 6.2 and 6.4 of the contract document, which provided for termination in the event of certain conditions not being met.

The court found that it would be necessary to imply an obligation upon the defendant to do something to procure the registration of the plan and the establishment of the scheme, as without any such obligation, the option deed would lack business efficacy. However, the court found that it would not be necessary to imply a term whereby the defendant was to do everything which was necessary to procure that result. The court also found that such a term would not satisfy the requirement that it be no more than is reasonable and equitable between the parties. The court held that the defendant was only required to take reasonable steps to procure the registration of the plan of subdivision and the establishment of the scheme.

ORDERS:
1. The plaintiff’s claim for a declaration that an implied term existed in the option deed that required the defendant to do everything necessary to register the plan of subdivision and establish the scheme was dismissed.

Orders

Orders of the court

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Clause 6.2 of the contract document provides as follows: “Final Registration Date Subject to clause 6.3, if the Scheme is not established by the Final Registration Date, then either party may terminate this Contract by notice in writing to the other such notice to be effective from the date of receipt thereof, and in the event of such termination, all moneys paid by the Buyer as Deposit and Interest (if any) shall be refunded in full to the Buyer and neither party shall have any claim whatsoever against the other.” The Final Registration Date is specified by the contract document as 1 November 2007. Clause 6.4 of the contract document is as follows: “Planning or Building Restrictions If the Local Authority or any other statutory body having jurisdiction refuses to grant or revokes any development permit or approval or certificate or other permit relating to the Land the subject of this Contract or refuses to seal or approve the Plans or the [community management statement], or imposes any conditions on the sealing of such Plans with which the Seller shall be unable or unwilling to comply, or if for any other reason outside the Seller’s control the development of the scheme Land becomes unviable, the Seller may terminate this Contract by notice in writing to the Buyer or his Solicitors and upon termination all monies paid by the Buyer shall be refunded without deduction and neither party shall have any claim against the other for any costs, expenses or otherwise by virtue of this Contract or its termination pursuant to this clause.” Before going to the facts of why no plan of subdivision has been registered, there is a substantial issue as to the extent to which the defendant was obliged to pursue the registration of the plan of subdivision and the establishment of the scheme. The plaintiff’s pleaded case is that the option deed contains an implied term that: “The defendant will do everything necessary on its part, or alternatively will take reasonable steps, to cause: (a) the creation of a separate title for Lot 4 on or before 1 November 2007; (b) the creation of the Scheme on or before 1 November 2007.” It is alleged that this term must be implied to give business efficacy to the option deed. The defendant denies the existence of that implied term, on the basis that it would be inconsistent with cl 6.4 of the contract document, which the defendant says must be given effect as if it appeared in the option deed. Absent any effect being given to cls 6.2 and 6.4 of the contract document, I accept that it would be necessary to imply an obligation upon the defendant to do something to procure the registration of the plan and the establishment of the scheme. Without any such obligation, the option deed would lack business efficacy. However, it would not be necessary to imply a term whereby the defendant was to do everything which was necessary to procure that result. And such a term would not satisfy another requirement for a term which is to be implied in fact, according to BP Refinery (Westernport) Pty Ltd v Shire of Hastings,[1] which is that the term be no more than is reasonable and equitable between the parties. [1] (1977) 180 CLR 266 at 282-3, approved in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 605-6; Codelfa Constuction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347 and 404.