Avanti (WA) Pty Ltd v CLADCO Pty Ltd (as trustee for the Pascoe Family Investment Trust)
[2007] WADC 135
•9 AUGUST 2007
AVANTI (WA) PTY LTD & ORS -v- CLADCO PTY LTD (AS TRUSTEE FOR THE PASCOE FAMILY INVESTMENT TRUST) [2007] WADC 135
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 135 | |
| Case No: | CIV:1000/2007 | 5 JULY 2007 | |
| Coram: | DEPUTY REGISTRAR HARMAN | 9/08/07 | |
| PERTH | |||
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Application successful but for damages | ||
| PDF Version |
| Parties: | AVANTI (WA) PTY LTD OPDAL PTY LTD FILIPPO DORIA & ROSA MARIA DORIA (AS TRUSTEE FOR THE DORIA FAMILY TRUST) CLADCO PTY LTD (AS TRUSTEE FOR THE PASCOE FAMILY INVESTMENT TRUST) |
Catchwords: | Practice Western Australia Practice under The Rules of the Supreme Court of Western Australia Application under O 14 by which plaintiff's seek an order for specific performance Whether a particular condition was a precondition to contractual undertaking or to performance |
Legislation: | Nil |
Case References: | Dougan v Ley (1946) CLR 142 Hunt v Wilson [1978] 2 NZLR 261 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch 279 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Plaintiff
OPDAL PTY LTD
Second Plaintiff
FILIPPO DORIA & ROSA MARIA DORIA (AS TRUSTEE FOR THE DORIA FAMILY TRUST)
Third Plaintiff
AND
CLADCO PTY LTD (AS TRUSTEE FOR THE PASCOE FAMILY INVESTMENT TRUST)
Defendant
Catchwords:
Practice - Western Australia - Practice under The Rules of the Supreme Court of Western Australia - Application under O 14 by which plaintiff's seek an order
(Page 2)
for specific performance - Whether a particular condition was a precondition to contractual undertaking or to performance
Legislation:
Nil
Result:
Application successful but for damages
Representation:
Counsel:
First Plaintiff : Mr S J Davis
Second Plaintiff : Mr S J Davis
Third Plaintiff : Mr S J Davis
Defendant : Ms C H Thompson
Solicitors:
First Plaintiff : Salter Power
Second Plaintiff : Salter Power
Third Plaintiff : Salter Power
Defendant : Blatchfords Lawyers
Case(s) referred to in judgment(s):
Dougan v Ley (1946) CLR 142
Hunt v Wilson [1978] 2 NZLR 261
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch 279
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1 DEPUTY REGISTRAR HARMAN: The plaintiffs' claim is founded on an agreement under which they contend that the defendant purchased their interests in the business known as the Willetton Liquor Store. By their pleading the plaintiffs cite particular provisions of the agreement; that the defendant paid a deposit of $5,000; and assert that by its letter of 20 March 2007 the defendant gave notice of repudiation. Thereupon the plaintiffs required the defendant to proceed with the agreement but it failed to do so. They seek an order for specific performance and damages, alternatively for damages.
2 The plaintiffs have applied for summary judgment. They bear the onus of persuading the court that it is appropriate to exercise discretion to award judgment.They relied on the affidavits of Antonio Albuino and Tony Dunsire.A respondent to such an application carries the onus of supporting any submission that it would care to make.
3 The focus of attention in the application was on special condition 2 of the agreement which is as follows:
"This offer is subject to the Purchaser or his representative confirming in writing within twenty one (21) days of the contract date, that the terms and conditions of the property lease are acceptable. See General Conditions clause 8 regarding the assignment of the lease."
4 Clause 8 is as follows:
"This Agreement is conditional upon the Buyer receiving written approval from the landlord or managing agent specified in G of the Schedule to an assignment of the existing lease and the Seller shall do all things necessary to assign the lease of the Premises to the Buyer and have the Buyer accepted as a tenant of the Premises and the Buyer will procure references and do all things necessary to have the Buyer accepted as a respectable and responsible tenant of the landlord."
5 Part G of the schedule appears under the heading "Assignment of lease of premises":
"Date of Expiry: 2010 Options: 5yrs
Landlord: Bannatyne Holdings Pty Ltd
Managing Agent: Marilyn Watts
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- Annual Rent: Indecipherable Next Review: CPI Annually Nov 06"
6 The defendant's notice of repudiation is by letter dated 20 March 2007 addressed to Mr Dunsire. It is as follows:
"Dear Sir,
Re: Willetton Liquor Store
We refer to the telephone conversations between ourselves in relation to the above matter and confirm that we no longer wish to purchase the above store on the grounds of the lease being unacceptable. The landlord is offering no options into the existing lease and as such we wish to cancel the offer for the above."
7 In advancing their case the plaintiffs contended that the defendant's letter of 20 March 2007 implicitly communicates its acceptance of the terms and conditions of the lease. That conclusion is consistent with the defendant's evidence; that it had wanted to secure from the landlord a longer term than that expressed in the agreement.
8 There is nothing in either the defendant's letter or its evidence to the effect that the terms and conditions of the property lease were either subjectively or objectively unacceptable. At that point the plaintiffs relied on the obligation on all contracting parties to deal with each other bona fide. In particular, that it is not open to the defendant to draw upon any want of commitment on behalf of the lessor to extend the period of the lease from what is expressed in the agreement.
9 The defendant's first submission in response was that special condition 2 was a condition precedent to any contractual obligation. In addressing that prospect each of the parties sought to draw upon Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537.
10 The defendant referred to the text of the reasons of Mason J at p 551 where he discussed the considerations that bear upon the characterisation of a condition as precedent to the formation of the contract or precedent to performance. At p 552 he stated:
"Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a
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- condition precedent to the formation or existence of a contract. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding contract unless the event in question happens. Instead, it is appropriate in conformity with the mutual intention of the parties to say that there is a binding contract which makes the stipulated event a condition precedent to the duty of one party, or perhaps of both parties, to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties. For these reasons the condition will not be construed as a condition precedent to the formation of a contract unless the contract read as a whole plainly compels this conclusion."
11 In that case the condition under consideration was:
"This Contract is entered into subject to Purchasers completing a sale of their property No 9 Korokan Road, Lilli Pilli."
12 Mason J considered the language by which the condition was expressed but that in the context of the broader agreement it was capable of being read as a provision which would condition the performance of contractual obligations. The conclusion that he reached was that the clause conditioned the performance of the contractual obligations rather than operating as a condition precedent.
13 At the commencement of his reasons for decision Wilson J cited a passage from Hunt v Wilson [1978] 2 NZLR 261 at 267 which referred to the unhelpful categorisation of conditions as precedent and subsequent. He proposed that the relevant condition might be described as either a condition subsequent to the formation of the contract, or as a condition precedent to an obligation in either party to proceed to completion. He concluded:
"The obligation to complete is contingent on the fulfilment of the condition, but in the meantime there is a conditional contract in existence from which neither party is at liberty to withdraw at will. Interim obligations were undertaken by both parties. The vendor had to make good its title to sell, and the purchasers were obliged to pay the deposit and make all reasonable efforts to bring about a sale of the Lilli Pilli property."
14 Like the condition in Perri v Coolangatta Investments Pty Ltd, the language of special condition 2 would support the result that it creates a pre-contractual obligation. However the broader context provided by
(Page 6)
- the agreement reveals that the defendant would pay a deposit. That deposit has been paid. In my opinion that obligation and its performance would justify characterisation of special condition 2 as precedent to performance.
15 At this point of my reasons it is appropriate to record that I am satisfied as to the validity of the plaintiffs' claim.
16 The defendants also contended that special condition 2 would operate so as to allow it to withdraw from the contract unless within the prescribed period it confirmed that the terms and conditions of the lease were acceptable. In effect, that the plaintiffs' contractual entitlements would depend upon the defendant having confirmed acceptability of the terms and conditions of the property lease in writing. I have no difficulty in recognising that by its letter the defendant communicated its approval of the terms and conditions of the lease.
17 The defendant's related submission draws upon par 6 of the affidavit of Dean Christopher Pascoe sworn 27 June 2007 which is as follows:
"6. I was happy to sign the contract documents for the purchase of the Business as I thought I had the opportunity to withdraw if I had concerns about the lease. This is what Mr Dunsire told me during the discussions referred to in paragraph 4. He specifically showed me special condition 2 of the Sale Agreement (annexure AA-1) to first Albuino affidavit, page 21) which he said was to this effect. He showed me this condition on the date I signed the Sale Agreement, 21 February 2007, before I signed the agreement on behalf of Cladco. But for Mr Dunsire's advice, I would not have signed the Sale Agreement. At this time I had not had the opportunity to fully consider or understand the terms of the lease, which to me was a very large document."
18 I have no difficulty with the last sentence, it was presumably either for that reason or the likelihood that a purchaser would need to take advice that the term had been utilised. As to the balance, in my opinion it founds no case in opposition to the application as the defendant does not articulate that it had any concerns about the lease. The fact that the landlord had not been prepared to guarantee an extension beyond the balance of the term and the option as expressed at par 7 would not constitute a concern about the lease.
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19 In my opinion it is simply a matter of whether the case is sufficiently clear to grant summary judgment. The datum is the evidence and the issues raised upon it by the parties. I am satisfied that the relevant terms of the agreement express a clear case that special condition 2 is properly read as a condition performance of the contract and it is clear that the defendant conveyed its satisfaction with the terms and conditions of the lease. It follows that the plaintiff is entitled to judgment.
20 The next issue raised by the terms of the application is whether specific performance would properly be awarded. That remedy is discretionary and according to Lord Selbourne in Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch 279 at p 284:
"The Court gives specific performance instead of damages, only when it can by that means do more perfect and complete justice."
21 The subject of the contract is a liquor store business. Particular features of the contract were such that it would only be concluded with the approval of the purchaser by the licensor and the landlord. The plaintiffs' entitlement is to receipt of the purchase price on the date of settlement which appears to have been 27 April 2007.
22 At one level it is likely that in every case of contractual breach a more perfect and complete justice would emerge from the provision of specific performance. Whether damages would be an adequate remedy would be determined by whether the plaintiffs' loss would extend beyond consideration of the prospect of there being difficulty in the process of assessing damages. In The Principles of Equitable Remedies 6th Ed, at p72 ICF Spry reviews the range of cases in which the remedy has been considered appropriately granted. One such case is Dougan v Ley (1946) CLR 142 the subject of which has some resonance with the case before me in that the purchaser sought to enforce a contract for the purchase of a business which included the benefit of a statutory licence. He obtained such relief despite there being the same or similar assets in the market and that the contract was conditional upon the licensor approving the transfer and that the order made accommodated that fact. In the report the High Court found that no error had been made in the exercise of discretion.
23 Spry concludes:
"Enough has been said in order to establish the large variety of circumstances that courts with equitable jurisdiction regard as
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- sufficient to render inadequate the remedy of damages at law. In each case the proper enquiry is whether the plaintiff would in all material respects be in the same position, if he were relegated to such remedies in damages as he might have, as he would be if he obtained performance in specie of the contractual obligations in question."
24 During the course of submissions, I was not drawn to any evidence or provided with any useful analysis that would engage with the prospect that the plaintiffs' would not recover an appropriate measure of damages. No feature of any loss of the plaintiff that comes to mind would fall outside that scope. The only consideration that suggested itself to me is that there was a prospect of delay in the process of the plaintiffs being compensated in that prior to its sale to the defendant the business had been in the hands of the agent since October 2005. I was not alerted to any adverse impact of that prospect. However, I consider the case before me there is nothing that draws me to the conclusion that damages would be an insufficient remedy. It follows that there is no ground to consider the exercise of discretion to award specific performance.
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