Black and Ors v Australand Holdings Pty Ltd S300/2000

[2001] HCATrans 647

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S300 of 2000

B e t w e e n -

RICHARD BLACK

First Applicant

SCIARA HOLDINGS PTY LTD

Second Applicant

JOHNEEN DE GROOT‑BLACK

Third Applicant

and

AUSTRALAND HOLDINGS PTY LTD

Respondent

Application for special leave to appeal

GLEESON CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 DECEMBER 2001, AT 10.01 AM

Copyright in the High Court of Australia

___________________

MR D.F. JACKSON, QC:  If the Court pleases, I appear with my learned friend, MR M.J. WATTS, for the applicant.  (instructed by Forshaws Neill)

MS R.S. McCOLL, SC:  If the Court pleases, I appear with my learned friend, MR A.R. RIDLEY, for the respondent.  (instructed by Colin Biggers & Paisley)

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, as is apparent from the supplementary summary of argument for the applicant, which your Honours will see, relevantly, at page 247, paragraph 20, we submit that the case is one of significant procedural irregularity for two combined reasons.  The first is that an issue which was conceded at trial became the deciding issue on appeal and, in consequence, an issue which might have been decisive in favour of the applicants was not dealt with at all on the appeal.  Could I say, your Honours, that if the Court were, in the end, minded to grant special leave, the second of those issues is one which either the Court could deal with itself or remit the matter for decision then to the Court of Appeal.  But, your Honours, the issues involved are, really, in fact, quite short.

GLEESON CJ:   It is the judgment of 23 November?

MR JACKSON:   The second judgment, your Honour, yes.  Your Honours, may I adopt this course?  I would seek, first, to demonstrate that the Court of Appeal was in error in allowing departure from the concession; indeed, from inviting departure from the concession at trial and, secondly, to show that the issue, which was not dealt with - and I accept we have to succeed on both aspects of the case - is sufficiently arguable.  Your Honours, could I deal with the first of those things?  The basic facts were very simply.

The applicants sold their properties to the respondent, a developer proposing substantial unit development.  Each contract of sale contained a right of first refusal in the vendors to a unit in the new development.  The central clause - it was clause 24 of

the agreement, your Honours will see it at page 7 - it commences at the bottom of the page.  These are the contracts for sale to the developer, to the respondent.  At the bottom of the page your Honours will see clause 24 commencing and then at the top of the next page, your Honours will see that:

The Purchaser is to give to the Vendor a right of first refusal to purchase a unit in the proposed development ‑ ‑ ‑

HAYNE J:   At trial it was contended that there had been a variation of that obligation.

MR JACKSON:   We failed, your Honour.

HAYNE J:   But the burden of the case sought to be made at trial was that there had been performance by your side of the transaction of a different, that is to say, a varied contractual obligation.

MR JACKSON:   Your Honour, that was an aspect of the case, an important but not the only aspect of the case.  Your Honour, it was issue on which we failed, but that left the situation ‑ ‑ ‑

HAYNE J:   And failed because there had not been variation.  That was the finding below.

MR JACKSON:   Yes.  So, no variation, so clause 24 remained.  Your Honours will see that clause 24 involved simply these stages.  First, clause 24(c):  we were to be served with price lists.  Secondly, we had to nominate a unit “within seven days”, clause 24(d).  Once that was done, there then had to be, clause 24(f), a form of contract served, and then clause 24(g), we had to exchange or complete the contract “within seven days” - complete in the sense of entry into it “within seven days of service of such Contract”.

Now, your Honours, as I said to your Honour Justice Hayne, we contended, and failed, on another issue, namely, whether that provision had been varied, so that what we had was an option rather than a right of first refusal.  But in the consequence of it, was that the nomination which we sent - when I say nominations, your Honours, I am referring to clause 24(d) ‑ were in a form more appropriate to the exercise of an option rather than to the exercise of the right contained in clause 24(d).

However, your Honours, the respondent treated the nomination as if it did comply with clause 24(d) and sent the form of contract under required compliance with clause 24(g).  Your Honours will see that at page 37, commencing at the last two lines on the page, the letter from the respondent’s solicitors saying:

We have forwarded directly by way of service to your client and to the other vendors . . . a Contract for Sale of Land prepared in accordance with special condition 24 . . . in terms of which -

and then the letter to one of the applicants in form, your Honours will see immediately following, and then in line 15:

In terms of the said clause 24 we enclose by way of service a Contract -

Then the next paragraph, your Honours:

We are instructed to draw your attention to the provisions of sub‑paragraph (g) of clause 24 which provides -

et cetera.

HAYNE J:   Did that happen?

MR JACKSON:   I am sorry, your Honour?

HAYNE J:   Did the exchange of contracts happen?

MR JACKSON:   No, your Honour.  What occurred was that we contended that the contract that was served was not one which complied with the requirements for such a contract and the particular point ‑ I am taking a number of points but the particular point which arises, on which we did not succeed before the primary judge, but it was not dealt with at all by the Court of Appeal, was that one of the requirements for contracts of sale in New South Wales is that there is a statutory prohibition upon entering into such a contract, where a building has to be constructed, unless there is attached to the contract a form of builder’s contract of insurance which will ensure that if a builder defaults, the building will be completed.

That is the point that was not dealt with and, your Honours, it was not dealt with because the view taken by the Court of Appeal was that the issue which had been conceded - and I will come back to that in just a moment - because the view taken by the Court of Appeal was that because the documents we gave nominating the units were ones that were not in a proper form, then, despite the fact that no point had been taken about that and contracts had been given to us, that that meant we were not entitled to any contracts at all, therefore, complaints about the particular form of them were irrelevant.

Your Honours, I said that it was conceded at the trial that compliance with clause 24(d) and (e) had been waived.  Your Honours will see that recorded ‑ that is at page 75, about line 16, where, after referring to the letters, his Honour said:

The defendant concedes that the correct analysis of the events which happened is to be regarded as a waiver by the defendant of the proper compliance by the plaintiffs with special conditions 24(d) and (e).  The defendant conceded that by its conduct in serving contracts on 27 February, it signified that it was prepared to act upon the basis that the handwritten nominations, for all their patent defects, would be taken by the defendant as satisfying the plaintiff’s obligations to nominate pursuant to ‑

those two special conditions.  Now, your Honours, the issue which then arose is flagged by the judge immediately following, where he said:

the only remaining issue concerns the plaintiffs’ claim that the defendant’s obligation upon the proper construction of the Sale Contracts was to serve . . . a Contract for the Sale of Land:

(a)  Containing ‑

et cetera, “usual terms”, and so on.  One of the points taken in that regard, your Honours, appears at page 86, line 45, where his Honour said:

The plaintiffs’ attack on the defendant’s form of contract was made by reference to a schedule of particulars.

That takes one to the next page, your Honours, line 14.  Your Honours will see the issue then raised about the non‑compliance with the Act, and your Honours will see, in particular, at page 89, commencing at line 20, his Honour proceeds to deal with that issue which goes on for some pages.  Now, your Honours, may I say then that in the Court of Appeal there was no suggestion by the respondent of departure from its position until the matter was raised by the court.

Your Honour will see that adverted to by Justice Priestley in the Court of Appeal at page 159.  This is in the second judgment, commencing in paragraph 56 at the bottom of the page.  Then your Honours will see what took place, in the extract, commencing on the next page and going through to page 161.  May I pause to say, your Honours, that the basis for ‑ this was the second time the matter was in the Court of Appeal.  It had asked to be re‑listed for a number of reasons, including the reason that it was said this point should not have been dealt with by the Court of Appeal because the issue had been conceded below.

Your Honours will see that it had been the basis for the first decision by the Court of Appeal.  That appears from Justice Fitzgerald at page 124 about line 16 in a passage which goes to the end of that paragraph.  So the Court of Appeal dealt with the case very shortly, selected one point that went to the heart of the matter, and that was the end of the case. 

Your Honours, the Court of Appeal would not resile from the approach which it had taken on the first occasion.  May I indicate, very quickly, where that appears and the reasons for it?  Page 162, paragraph 62, Justice Priestly said, in effect, that:

the exchange -

to which he had referred -

was sufficient to alert the appellants to the possibility that the court might treat the matter as one which it could consider ‑

Your Honours, page 168, paragraph 68, his Honour summarised the submission.  Page 170, at the bottom of the page, paragraph 73:

what became common ground at the trial was that the respondent was not taking the point . . . It was content to argue the case on the footing ‑

and your Honours will see the footing.  Then page 171, paragraph 75, going to the top of page 172, and finally, your Honours, page 174, paragraphs 81 to 83. 

Your Honours, Justice Fitzgerald’s views were to the same effect.  Could I give your Honours one reference:  page 192, paragraph 116.  Your Honours, we would seek to say, very shortly, about it, that the approach taken by the Court of Appeal leaves out of account that at the time of the events related to ‑ if I could use a neutral term ‑ clause 24, the applicants were purporting to exercise contractual rights.  The respondent was, in terms ‑ I have taken your Honours to the letters ‑ purporting to perform a contractual obligation.

That obligation arose only if there had been compliance by the applicant with its contractual obligation or if the need for such compliance had been waived.  Your Honours, we would submit, in the circumstances, there was certainly material which was, at least arguably, sufficient to amount to a waiver, and the concession made at the trial was one which was properly made.  Your Honours, it may have been right, it may have been wrong, but it was a concession made at the trial and one in relation to which there was no basis, in our submission, upon which the respondent should have been permitted to depart from it in the Court of Appeal.

It was, effectively, an application to withdraw an admission and no basis was demonstrated for doing so.  Your Honours, that is the first point.  On that, we have to succeed to get anywhere.  May I go then to the second point? 

The relevant provision, your Honours, is section 96(2) of the Home Building Act 1989. Your Honours will see it in the book of materials. It is the first document. Section 96(2) is to be seen at page 60 of that Act. Section 96(2) provides that, amongst other things:

a developer who does residential building work, must not enter into a contract for the sale of land on which the residential building work has been done, or is to be done, unless a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, is attached to the contract.

Now, your Honours, could I say, in relation to that, the notion of the insurance required is provided for by the regulations.  They are behind tab 2.  If one goes, your Honours, to regulation 43, the purpose of having such a contract is provided for, relevantly, by subregulations (1) and (3), and, your Honours, there is a form, I think, number (4) of the regulations which, in effect, picks up the words of the regulations.

Now, your Honours, if I could take your Honours then to a summary of the argument which we would seek to advance on this issue, which is set out in the supplementary written submission at page 245, and if I could take your Honours to paragraph 10 at page 245.  Two sub‑issues are involved.  One is whether the contracts had to “comply with prevailing New South Wales legislation”, and your Honours, we would submit, as we do, in paragraph 11, that it would be extraordinary, with respect, if contracts which were to be contracts in relation to the sale of, in effect, land in New South Wales, did not have to comply with the terms of the legislation.

That gives rise to the second question which your Honours will see set out in paragraph 10(b), “whether s96(2)” applied. Your Honours, in that regard we set out in summary, your Honours, that the work being undertaken was “residential building work”. You will see the definition of that set out in paragraph 13, “work involved in”, amongst other things, “the construction of a dwelling”, and “dwelling” is defined to include, as your Honours will see at the conclusion of paragraph 13, a “strata or company title home unit or residential flat”.

We refer, in paragraph 14, to the evidence “that the respondent was a ‘developer’”, and if I could go shortly then to paragraph 16, your Honours will see that the requirement imposed by the respondent was that we had to sign identical contracts, that is, contracts which did not have such a document attached to them and, your Honours, the only remaining questions were two which were adverted to by the primary judge. One was whether section 96(3) of the Act ‑ and I will take your Honours to that in just a moment ‑ exempted them from doing so. The other was the provision of regulation 8(1)(f)(iii). Your Honours, I am sorry to make it - to have to take your Honours to those for just a moment, but if I could go to ‑ ‑ ‑

GLEESON CJ:   Just before you do, could I take you to page 214 of the application book?  It is grounds 1, 2 and 3 that raise what you described, I think, as your first point?

MR JACKSON:   Yes.

GLEESON CJ:   And ground 4 that raises the point you are on now.

MR JACKSON:   Yes.

GLEESON CJ:   And you need to succeed on 1, 2 and 3 before you get to 4.

MR JACKSON:   Indeed, your Honour, and I accept immediately, I have to succeed on the first issue to get to the second. Your Honour, the remaining things I wanted to say about the second one was simply these. If one goes to section 96(3) of the Home Building Act, which your Honours will see at page 60 of the books, you will see that it says it:

does not apply:

(a) to an owner‑building, or

(b) to a person who does owner‑builder work . . . that does not involve:

things of a certain kind.  Your Honours, the definition of “owner‑builder work” is at page 29, and “owner‑builder work” is defined in section 29, and it means residential work being work “that relates to a single dwelling‑house or a dual occupancy” and “owner‑builder” is described similarly. 

Your Honours, as to regulation 8(1)(f)(iii) - if I could take your Honours to the regulations for a moment.  Your Honours will see it at

page 10 of the regulations, at the bottom of page 10.  It excludes from the definition of “residential work”, supervision.  It says, “the supervision only of residential building work”, and your Honours will see a number of exceptions at the top of the next page.

But, your Honours, in our submission, the developer was not engaged in the supervision only of residential building work or any of the other classes of supervision involved.  Your Honours, maybe there are arguments one way and arguments the other way but, in our submission, that issue is sufficiently arguable.  Your Honours, those are our submissions.

GLEESON CJ:   Ms McColl, can you let us know first what you want to say about grounds 1, 2 and 3 on page 214?  I think Mr Jackson has called them the first issue or the first question.

MS McCOLL:   In essence, our submissions are that the matters to which those grounds go are matters of practice and procedure as to which the decision of the Court of Appeal is not shown to have been incorrect.  The discretion of the court was exercising on the application.

HAYNE J:   Why should the Court of Appeal go behind a concession made at trial?

MS McCOLL:    In fact, as demonstrated by the decision of the Court of Appeal on the application to reopen, the concession, so‑called, was not one which could have any material effect on the trial, in this sense, that the issue which was what Justice Fitzgerald christened “the original clause 24 case” which was, in effect, that the applicants had properly exercised a right of first refusal to exchange contract for purchase rather than the case which they advanced throughout the time leading up to the trial, namely, that they had varied the contract, the matter to which your Honour Justice Hayne referred at the outset.

It had always been open on the pleadings that, in fact, it had been incumbent upon the applicants to prove that they had properly exercised that right, which they could never do because they had only ever persisted in what might be called “their varied case”, that the pleadings squarely put in issue the proposition they had to prove the original clause 24 case.  They did not do that.  They did not assert, by way of reply, that there had been a waiver or an estoppel in any way by virtue of any conduct of the respondent by serving contracts and that the concession to which my friend refers, which he has labelled also an admission, was one which was made in an exchange between the learned trial judge, Justice Einstein and Mr Greenwood, who appeared below for the respondent, well after the evidence had closed and certainly at a time when the applicants had failed to assume the burden which the Court of Appeal said they ought to have assumed, namely, of discharging the burden of proving that they had, in fact, properly exercised a right to purchase.

HAYNE J:   Sorry, can I just go back several stages?  Do I understand you to say, first, that the concession comes in argument after evidence?

MS McCOLL:    That is correct.

HAYNE J:   Two, that the concession is not one to be found in pleadings or other ‑ ‑ ‑

MS McCOLL:    That is correct.  The pleaded case squarely put in issue, as Justice Priestley, we would submit, sets out very clearly at page 157 of the application book, a matter in which Justice Fitzgerald agreed and, of course, the President agreed both with Justice Priestley and Justice Fitzgerald, it is very apparent at page 157 of the application book, that the issue was squarely raised on the pleadings and it was paragraph 24A which is there set out, is that paragraph in which the applicants had sought to plead their original clause 24 case.  The allegation there had been denied and his Honour there refers to the fact that the pleading the applicants relied upon:

involved the prior but unstated allegation that each appellant had done what was necessary pursuant to Special Condition 24 to bring into existence the right to receive a contract ‑

and then his Honour refers to Part 15 rule 11 of our Supreme Court Rules which presumes that such a pleading is inferred where it is a necessary pre‑condition to establishing a particular fact.  His Honour then points out that the “non admission of paragraph 24A” by the respondent “left the onus on the appellants to prove they had done what was necessary to bring their alleged rights to receive contracts into existence.

The could not, of course, do that because their principal case, factually, throughout the trial before the learned trial judge, was that they had, in fact ‑ there had been the variation of that clause and no letter had ever been served which could amount to a nomination for the units themselves, which was a point his Honour Justice Priestley again makes very clear when he says that “the appellants”, at page 157, line 40 in paragraph 52:

On the view taken by this court in the appeal, the appellants could not discharge this onus.

In other words, factually, no matter when Mr Greenwood may have, in the Court of Appeal, withdrawn the original concession, there was never any evidence which could have challenged the way the court approached it because the letters, as appears at line 45:

the letters written to the respondent’s solicitors on 20 January ‑

which were the nomination letters, to which my learned friend, Mr Jackson, has referred ‑

did not “nominate a unit in the proposed development which the Vendor intends to purchase” ‑

or in the words of the trial judge ‑

when granting leave to amend . . . the procedure stipulated in paragraph (d) of Special Condition 24 had not been completed.

As his Honour then continues at the top of page 158, once the period contemplated by clause 24 for the nomination, or for the exercise of the “right of first refusal” had passed, that “right of first refusal” had lapsed.  In effect, the decision of the Court of Appeal on the reopening application proceeds on the basis that there was no right which could, in effect, as a matter of law ‑ there was no right which could be waived or estopped and, as a matter of fact, that case had never been pursued in an evidentiary fashion before the trial judge, when it ought to have been so pursued on the way the matter was pleaded.

GLEESON CJ:   Yes, thank you, Ms McColl.  Mr Jackson.

MR JACKSON:   Your Honour, may I just say this:  on appeal, your Honours will see what was said by counsel for the respondent at page 247 extracted in paragraph 19, where he recorded:

“…the position that was adopted by the respondent was that to the extent that an election had been made or nomination had been made in accordance with the right of first refusal, even though it wasn’t done properly it was accepted by the respondent that it would nevertheless treat the nomination as being in accordance with the right of first refusal and so serve the contracts pursuant to 24(f).

Now, your Honours will see, that really reflects what was done at the time.  I am not talking about at the trial, I am talking about at the time.

HAYNE J:   What was done at the time might have reflected the wish of one party to bring about a binding contract.  The tender of contracts to your client may well have been understood in that light.

MR JACKSON:   Well, your Honour, could I say that what was done was to provide to us contracts in a way which described them as being done pursuant to a contractual obligation which would not have arisen otherwise.  What we would seek to say is that if the obligation that was being exercised was one that was assumed by reason of not relying on any error on our part that had taken place.

HAYNE J:   Or, alternatively, a very sensible commercial course was being adopted by the would‑be vendor saying to the person asserting a right to an option, “No, no, here is a contract, sign up”.

MR JACKSON:   Your Honour, some eggs have two ends, and to have one have the better end, one must have the lesser, too, and this is such a case.  Your Honour, what we would submit is that by taking advantage of that, there was an underlying waiver of non‑compliance with the obligation.  It was not just a matter of a concession.  Your Honours, those are our submissions.

GLEESON CJ:   Counsel for the applicants accepts that the applicants must succeed on grounds 1, 2 and 3 of the application in order for the application, ultimately, to succeed.  The decision of the Court of Appeal of 23 November 2000, in relation to the issues, the subject of grounds 1, 2 and 3, turned on the application of well‑settled principles to the particular facts and circumstances of the case and raises no issue suitable for a grant of special leave.

Furthermore, there are insufficient prospects of success of an appeal to warrant a grant of special leave.  The application is refused with costs.

AT 10.31 AM THE MATTER WAS CONCLUDED