Bob Lynch Insurance Agencies Pty Ltd v Facer; Bob Lynch Insurance Agencies Pty Ltd v P and J Mieluk Pty Ltd
[2005] TASSC 3
•1 February 2005
[2005] TASSC 3
CITATION:Bob Lynch Insurance Agencies Pty Ltd v Facer; Bob Lynch Insurance Agencies Pty Ltd v P & J Mieluk Pty Ltd [2005] TASSC 3
PARTIES: BOB LYNCH INSURANCE AGENCIES PTY LTD
(ACN 009 560 212)
v
FACER, Lance AndrewBOB LYNCH INSURANCE AGENCIES PTY LTD
(ACN 009 560 212)
v
P & J MIELUK PTY LTD (ACN 082 619 378)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: M306/2004
M307/2004
DELIVERED ON: 1 February 2005
DELIVERED AT: Hobart
HEARING DATES: 20, 22 December 2004
JUDGMENT OF: Master S J Holt
CATCHWORDS:
Contract – General contractual principles – Discharge, breach and defences to action for breach – Repudiation and non-performance – Election and rescission – Generally – By purchaser for failure of vendor to fulfil condition.
Conveyancing and Law of Property Act1884 (Tas), s39.
Aust Dig Contract [135]
REPRESENTATION:
Counsel:
Applicant: D A Shelley
Respondent (Lance Andrew Facer): D B Smith
Respondent (P & J Mieluk Pty Ltd): A Perkins
Solicitors:
Applicant: Page Seager
Respondent (Lance Andrew Facer): Butler McIntyre & Butler
Respondent (P & J Mieluk Pty Ltd): Piggott Wood & Baker
Judgment Number: [2005] TASSC 3
Number of paragraphs: 33
Serial No 3/2005
File No M306/2004
M307/2004
BOB LYNCH INSURANCE AGENCIES PTY LTD (ACN 009 560 212)
v LANCE ANDREW FACER
BOB LYNCH INSURANCE AGENCIES PTY LTD (ACN 009 560 212)
v P & J MIELUK PTY LTD (ACN 082 619 378)
REASONS FOR JUDGMENT MASTER HOLT
1 February 2005
The applications
The applicant, Bob Lynch Insurance Agencies Pty Ltd, a subdivider of land for residential development, has brought two applications pursuant to the Conveyancing and Law of Property Act 1884 ("the Act"), s39, in respect of contracts for the sale of some blocks of land at the Lynrowan Subdivision at Acton Park. The respondent to the first application is Lance Andrew Facer ("Mr Facer"), the purchaser of lot 5, and the respondent to the second application is P & J Mieluk Pty Ltd ("Mieluk"), the purchaser of lots 2, 34 and 35.
Each of the contracts include the following clauses:
"5 Easements & Covenants
The Property is sold:
(a) …
(b) subject to all easements which are:(i) registered; or
(ii) apparent from an inspection of the Property; and
(c) subject to all easements and covenants disclosed in this Contract.
…
15:
This contract is conditional upon the Vendor obtaining approval from the Clarence City Council for the proposed subdivision ... .
…
17:
The Vendor warrants for the benefit of the Purchaser that the Schedule of Easements will not contain any covenants, easements or other matters other than those required by the conditions of approval given by the City of Clarence and that, if other matters are contained in the Schedule of Easements that have not been required by the City of Clarence, then the Purchaser may, entirely at their discretion, bring this contract to an end."
The four contracts for the four lots were each made on 27 February 2004, before subdivision approval had been obtained, before a schedule of easements had been prepared and before separate titles to the lots had issued, hence clauses 15 and 17.
The lots in the subdivision are derived from two titles, namely Certificate of Title Volume 100975 Folio 1 and Certificate of Title Volume 109575 Folio 412, but the four lots the subject of these applications are all derived solely from the land formerly comprised in Certificate of Title Volume 100975 Folio 1. The schedule of easements for this title as registered at the date of the contracts contained no covenants.
The Clarence City Council issued an amended permit for the subdivision on 19 May 2004. On 30 August 2004, a schedule of easements for all lots in the subdivision was sealed by the Council and that schedule, numbered SP142075, was registered at the Land Titles Office, with titles to all the lots issuing on 1 September 2004. The schedule contained a number of covenants copied verbatim from the schedule of easements which was registered on the title from which some subdivision lots (but not the ones the subject of these applications) had been derived, namely Certificate of Title Volume 109575 Folio 412. The result was that the lots the subject of the present applications, namely the lots derived from the other parent title being Certificate of Title Volume 100975 Folio 1, were made subject to these covenants for the first time on 1 September 2004.
The covenants transposed from parent Certificate of Title Volume 109575 Folio 412 to the subject lots relevantly included the following:
"Not to use on such lot plan (sic) unpainted galvanised roofing iron on any dwelling or other building but only roofing tiles or colourbond roofing iron.
Not to use any dwelling or other building on such lot for any purpose apart from usual residential purposes. The keeping of family pets such as horses or dogs in a separate building shall not be in breach of this stipulation.
… the Vendor (Bob Lynch Insurance Agencies Pty Ltd) shall not be required to fence."
The registration of the schedule of easements containing these covenants meant that covenants which had not applied to the respondents' lots at the time the contracts for purchase were made and which had not been disclosed in the contracts had been introduced by the time settlement was due. Accordingly, the vendor was not in a position to transfer titles in the form agreed with the purchasers, unless the covenants fell within the ambit of the contract cl 17.
The respondents have refused to settle and the applicant has responded by issuing the applications under the Act, s39, which is as follows:
"A vendor or purchaser of real or leasehold estate, or their representatives respectively, may at any time apply in a summary way to a judge in chambers in respect of any requisitions or objections, or any claim for compensation, or any other question arising out of or connected with the contract, not being a question affecting the existence or validity of the contract, and the judge shall make such order upon the application as to him shall appear just, and shall order how and by whom all or any of the costs of and incident to the application shall be borne and paid."
Mr Facer, in correspondence through his solicitors, claimed a right to terminate his contract to purchase lot 5 because of the introduction of the covenants imposing restrictions on roofing materials and use. Mieluk, in correspondence through its solicitors, claimed a right to terminate its contracts for the purchase of lots 2, 34 and 35 because of the introduction of the covenant which said that the vendor shall not be required to fence.
The applicant has responded by saying that the roofing materials and use covenants in the schedule of easements about which Mr Facer complains, and the fencing covenant about which Mieluk complains, were authorised by the contract cl 17 and in any event Mieluk has made an election to complete from which it cannot now resile.
The Council permit conditions referred to by the parties are as follows:
"15Suitable covenants must be included in the Schedule of Easements with respect to:
• preventing the use of uncoated metal surface without Council approval and the construction of dwellings having a finished floor level less than 300mm above natural ground level.
Additional covenants or other controls must not be included on the titles to the lots created by the subdivision where they are in conflict with any provisions of, or seek to prohibit any use provided for within, the relevant Planning Scheme applying to the site.
21All lots, including any public open space, must be fenced, and suitable fire breaks created, in accordance with Council's adopted fencing standard. The Final Plan and Schedule of Easements will not be sealed until this work is complete or a sufficient Bond and Guarantee to provide security for the work is lodged."
The relevant part of the application in the Facer matter is as follows:
"1 The Applicant applies for the determination as to whether Clause 17 of the Agreement permits the Respondent to cancel the Agreement on any of the following bases:
(a)That Schedule of Easements SP142075 contains a covenant: 'Not to use on such lot plan unpainted galvanized roofing iron on any dwelling or other building but only roofing tiles or colour bond roofing iron.'
(b)That Schedule of Easements SP142075 contains a covenant: 'Not to use any dwelling or other building on such lot for any purpose other than usual residential purposes. Provided that the keeping of family pets such as horses or dogs in a separate building shall not be in breach of this stipulation.'"
The relevant part of the application in the Mieluk matter is as follows:
"1The Applicant applies for the determination as to whether Clause 17 of the Agreements permits the Respondent to cancel the Agreements on the basis that the Schedule of Easements SP142075 contains a fencing provision as follows: 'FENCING PROVISION: In respect of the lots on the plan the Vendor (Bob Lynch Insurance Agencies Pty Ltd) shall not be required to fence.'
2The Applicant applies for the determination as to whether the Respondent has exercised an election not to terminate the Agreements pursuant to Clause 17 of the Agreements.
3The Applicant applies for the determination as to whether the Respondent has waived its rights to terminate the Agreements pursuant to Clause 17 of the Agreements."
There was no dispute that the Act, s39, provides an appropriate vehicle for the litigation of the matters in dispute. Although the continued existence of the contracts is in issue, there is no contention that there never were valid contracts and it is only the latter type of contention which will bring the matter within the exclusion specified in s39. See Grubb v Toomey [2003] TASSC 131 at par2.
The arguments
Counsel for the applicant submits that on a proper construction of cl 17:
(i)The words "other matters", second occurring, refer only to matters in the schedule of easements other than covenants or easements, so that the agreement between the applicant and the purchasers is that the purchasers must accept any covenants and easements burdening their lots even though they are additional to those required by the Council and may only bring the contract to an end if the schedule contains a matter, not being a covenant or easement, which is not required by Council, such as a profit à prendre.
(ii)In any event, the words "will not contain any covenants, easements or other matters other than those required by the conditions of approval given by the City of Clarence" only refer to "material", "substantial" or "consequential" covenants, easements or other matters.
(iii)That, as before a final plan of subdivision can take effect, the schedule of easements must be sealed by the Council, whatever is in the schedule, regardless of whether it is there at Council's instigation or the subdivider's instigation, amounts to a covenant, easement or other matter "required by the City of Clarence". In other words, whatever is in the schedule must be taken to have been required so that a purchaser can never have the right to terminate under cl 17.
Counsel for the applicant went on to submit that neither the roofing and use restrictions, about which Mr Facer complains, nor the fencing provision, about which Mieluk complains, are "material", "substantial" or "consequential". In support of the proposition that the roofing restriction and the fencing provision were not material, counsel said that the following two matters are matters of common knowledge and as such, notwithstanding there being no evidence, I should take judicial notice of them:
(i)The type of materials used for roofs of residential buildings are usually tiles, colourbond or painted or unpainted galvanised iron.
(ii)The fencing provision in the schedule of easements is one which the parties could objectively expect to be included in a schedule of easements for a subdivision.
Counsel for the applicant submitted that the fencing provision in the schedule was immaterial for another reason, namely, because permit condition 21 (which I have set out at par11 of these reasons) requires the vendor to fence anyway.
Finally, so far as the Mieluk matter is concerned, the following were agreed facts:
(i)the Council's conditions of approval were obtained by Mieluk's solicitors on 4 June 2004; and
(ii)the schedule of easements was obtained by Mieluk's solicitors on 6 September 2004.
Counsel for the applicant submitted that the knowledge of the company's solicitor is to be imputed to the company and Mieluk after 6 September 2004, knowing the facts and being deemed to know the terms and meaning of its own contract and the rights it confers, engaged in conduct unequivocally inconsistent with maintaining a right to bring the contract to an end. In particular, that after 6 September 2004, Mieluk wrote to the applicant's solicitors on five occasions indicating that it intended to proceed to settlement; sent transfer forms to the applicant's solicitors; sent an amended transfer form to the applicant's solicitors; and then, in the face of a notice to complete which may have enabled the applicant to bring an end to the contracts, lodged a caveat claiming an equitable estate or interest in the three lots in fee simple as purchaser.
The contract construction points
There was no dispute as to the matters of general principle advanced by counsel for the applicant. They are in brief as follows:
(i)"It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied". Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 (APRA) at 109.
(ii)"… the whole of the instrument has to be construed, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another". APRA at 109.
(iii)"If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable …". APRA at 109.
(iv)"On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate'"… . APRA at 109
(v)"… the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects'" … . APRA at 109.
(vi)" … no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements". Council of Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437.
(vii)" … evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning." Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352.
(viii)"… where there is any doubt as to the construction of any stipulation in a contract, one ought to construe it strictly against the party in whose favour it was made.” Burton v English (1883) 12 QBD 218 at 220.
(ix)" … the contra proferentem rule should be employed only when other rules of construction fail." Pebruk Nominees Pty Ltd v Woolworths (Victoria) Pty Ltd & Anor [2003] TASSC 94 at par31.
I find no ambiguity in cl 17 of the contracts. It concerns a schedule of easements, the contents of which at the time of the contracts was to consist of any existing easements and covenants, any easements apparent from an inspection of the property; the wishes of the applicant subdivider; and the requirements of the Council. Covenants which the subdivider wished itself to add are within the province of cl 5 which has been set out at par2 of these reasons. Any covenants or easements which the subdivider wished to add clearly had to be specifically notified in the contract pursuant to cl 5(c), if the purchaser was to be bound to take title subject to such covenants and easements. The only unknown factor at the time the contracts were entered into, was the contents of the schedule which the Council would require. This is the sole province of cl 17 and, in my view, on even a cursory reading of the words used in the clause, it is abundantly clear that the contract obliged the purchaser to take title subject to undisclosed covenants only where such covenants were "required by the conditions of approval". I consider the asserted alternative constructions (i) and (iii) (ref: par15) put forward on behalf of the applicant to be no more than an exercise in philology. It would be against the plain meaning of the words in the context of the transactions to construe the clause in a way which would bind the purchaser to take title subject to any covenant that may appeal to the whim of the subdivider which stops short of contradicting or contravening another clause in the contract.
As to assertion (ii) that only "material", "substantial" or "consequential" variations from Council's requirements fall within the protection provided to the purchaser by cl 17, I observe firstly that the parties have not chosen to add such words in their written agreements. Secondly, that there is no reason to employ these words of limitation instead of other words of limitation such as "significant" or "important". Thirdly, each of these words, if incorporated into the clause, would be likely to produce uncertainty as all of them can carry different shades of meaning. It is not obvious that such limiting words were intended and their application would not be free of potential difficulty.
Even if I had found that cl 17 only affords a remedy to the purchaser in the case of "material", "substantial" or "consequential" variations from the Council's permit requirements, I would consider each of the impugned covenants to be "material", "substantial" or "consequential". The roofing covenant applies to all buildings and arguably would prevent the construction of a glass or plastic roofed greenhouse or a translucent roof being placed on a carport. The main dwelling, according to the covenant, could not contain an atrium room with a glass roof or a conjoined garage with a concrete roof doubling as a sundeck. The use restriction contained in the covenant, notwithstanding that the relevant planning scheme designates uses such as "Home Occupation" as permitted and others as permissible, appears to prohibit all uses of buildings ancillary to a residential use other than the keeping of pets. Although the permit requires the subdivider to fence, the purchasers cannot compel performance and the purchaser, but for the covenant, would have a chance of obtaining a contribution towards the cost of a better fence than the standard required by the Council permit. Even if I took judicial notice of the matters put forward by counsel for the applicant (referred to at par16 of these reasons), they would not be such as to persuade me that the impugned covenants are not "material", "substantial" or "consequential".
Lastly, in dealing with this aspect, I note a submission by counsel for the applicant referring to a letter written on behalf of Mr Facer on 3 June 2004 requesting a release from the contract as Mr Facer had been transferred in his employment and was required to move interstate. It was contended that the letter is evidence that the covenants were of no consequence in Mr Facer's thinking. I reject that submission. The schedule of easements was not registered until 1 September 2004 and so the letter was written almost three months before Mr Facer had an opportunity of knowing what the covenants were and comparing them to those required by the Council. In any event, cl 17, as I have construed it, enables the purchaser to put an end to the contract where the schedule contains covenants in addition to those required by Council. The purchaser's motivation for relying on the clause is irrelevant.
The schedule of easements contains covenants going beyond what had been "required by the conditions of approval given by the City of Clarence" and so upon registration of the schedule, Mr Facer and Mieluk acquired a right to be exercised entirely at their discretion to bring the contracts to an end. Mr Facer did this in correspondence from his solicitors shortly after titles issued in September 2004. Mieluk purported to do this belatedly by a letter from its solicitors dated 29 October 2004, but the applicant says that by then Mieluk was already bound by an election it had made to proceed to completion.
The claim that Mieluk has elected to complete
As set out earlier in these reasons, the agreed facts are that at all times after 6 September 2004 Mieluk's solicitors knew of the variances between the Council permit and the schedule of easements. This knowledge is to be imputed to Mieluk. In Sargent v ASL Developments Ltd (1974) 131 CLR 634, Stephen J said at 649:
"Now where, as in this case, a vendor employs a solicitor to attend to the carrying out of the legal aspects of a sale he necessarily authorizes that solicitor to attend to all the usual aspects of conveyancing practice; that authority will here extend to the obtaining of the necessary planning certificate and the solicitor's knowledge, gained from that certificate, may properly be imputed to his clients since it was acquired both for the purpose of that transaction and in the course of it."
Counsel for Mieluk did not suggest that the acquisition by Mieluk's solicitors of the subdivision permit and the schedule of easements was other than for the purpose of and in the course of the conveyancing transaction.
Although knowledge of the facts which give rise to a right is essential for there to be an election, knowledge that the contract provides a choice of rights is not essential. As Stephen J said in Sargent v ASL Developments Ltd (supra) at 645:
"Where election is in question between contracting parties and, as in these appeals, the contract itself confers the inconsistent rights there can be no question whether a party had knowledge of his choice of rights. He is deemed to know the terms of his own contract and the rights it confers, at all events he cannot take advantage of his own ignorance …; moreover he must take his contract as bearing whatever meaning the court will assign to it when it is called upon to interpret it, he is bound 'by the interpretation which a court of law may put upon the language of the instrument'."
An election, once made, cannot be revoked. In Wendt v Bruce (1931) 45 CLR 245, Gavan Duffy CJ and Starke J said at 253:
"Now, a man who has his option whether he will affirm a particular act or contract must elect either to affirm or to disaffirm it altogether; he cannot adopt that part which is for his own benefit, and reject the rest: he cannot blow hot and cold. And the election once made is finally made."
Before going to the facts in detail, I make brief reference to the difference between the doctrines of election, estoppel and waiver. In The Commonwealth v Verwayen (1990) 170 CLR 394, Brennan J (as he then was) explained the differences. He said at 421 – 422:
"Election consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights. … An election is binding on the party who makes it once it is made overtly - or, at all events, not later than on the communication of the election to the party or parties affected thereby. … It is binding whether or not others who are affected by the election have acted in reliance on it. In this respect, election is to be distinguished from estoppel."
He went on, at 423, to explain that waiver is concerned with "a unilateral release or abandonment of a right" and said at 424:
"The sterilizing of a right might, in some circumstances, be attributable to either a waiver or an election, but the doctrines are distinct, for a right may be waived though there is no alternative right inconsistent with it."
Here, if Mieluk was entitled to bring the contract to an end (as I have found it was), it had a choice between two inconsistent rights, namely a right to bring the contract to an end or a right to insist that the contract be completed. And so although the factual basis for the contention that Mieluk can no longer rely on cl 17 is the same and might be labelled either as election or waiver, the proper legal categorisation of the claim is a claim of election.
I set out below the correspondence which issued from Mieluk's solicitors to the applicant's solicitors after 6 September 2004 when Mieluk's solicitors knew of the variances between the Council permit and the registered schedule of easements.
"9 September, 2004
Dear Madam,
Bob Lynch Insurance Agencies Sale to P & J Mieluk Pty Ltd
Lots 2, 34 & 35 Lynrowan Estate, Acton
I refer to your correspondence of 2nd September, 2004.
I note that pursuant to the Contracts for Sale, settlement of the above transactions is to occur on or about the 1st October 2004.
I am instructed that whilst my client still wishes to proceed with the purchases, settlement is to be delayed pending completion of the roadworks and services to the lots. Until such time as the requisite roadworks and services are effected, my client is not in a position to access the property for building purposes and accordingly, clause 4.1(a) of the Contract for Sale cannot be satisfied.
On this basis, please advise the time frame anticipated for completion of the abovementioned works.
Yours faithfully"
"14 September, 2004
Dear Madam,
Bob Lynch Insurance Agencies Pty Ltd to P & J Mieluk Pty Ltd
I refer to your facsimile of 10 September 2004.
I note that non-completion of the abovementioned works prior to settlement may give rise to the following:
1Breach of workplace safety legislation with respect to entry onto the property;
2Breach of fair trading legislation with respect to representations made in marketing the properties for sale;
3Non-compliance with conditions of Subdivision Permit SD-2003/107, for example condition 4 has not yet been satisfied.
On this basis, I reiterate that whilst my client wishes to proceed with this transaction, settlement will be delayed until such time as the road works and services to the lots is completed.
Please provide details of the likely time frame for completion of the works.
Yours faithfully,"
"12 October 2004
Dear Madam,
Bob Lynch Insurance Agencies Pty Ltd to Mieluk Property Group Ltd
Properties at Lots 2, 34 & 35 Lynrowan Estate, Acton
Subject to the terms of the Contract, receipt of a satisfactory Section 337 Certificate, satisfactory answers to the enclosed requisitions prior to settlement, satisfactory search of title and identification of plan, I *enclose a (sic) Memorandums of Transfer for your approval and signature by the Vendor if in order.
Yours faithfully"
"19 October, 2004
Dear Madam,
Bob Lynch Insurance Agencies Sale to P & J Mieluk Pty Ltd
Lots 2, 34 & 35 Lynrowan Estate, Acton
I refer to my correspondence of the 12th October 2004. Please disregard the Transfers enclosed with that correspondence.
Please find enclosed amended Transfer for signature by the Vendor in readiness for settlement.
Yours faithfully"
"26 October, 2004
Dear Madam,
Bob Lynch Insurance Agencies Sale to P & J Mieluk Pty Ltd
Lots 2, 34 & 35 Lynrowan Estate, Acton
I refer to recent communications in relation to this matter.
I maintain that whilst my client still wishes to proceed with the purchases, settlement is to be delayed pending completion of the roadworks and services to the lots.
With respect to your Notice to Complete requiring settlement on the 25th October, 2004. I deny the fact that your client is ready willing and able to complete the sale based on the fact that clause 4.1(a) of the Contract for Sale is not yet satisfied.
Please advise the time frame anticipated for completion of the abovementioned works in order to obtain a likely date for settlement.
Yours faithfully"
"29 October, 2004
Dear Madam,
Bob Lynch Insurance Agencies Sale to P & J Mieluk Pty Ltd
Lots 2, 34 & 35 Lynrowan Estate, Acton
I refer you to clause 17 of the Agreements for Sale.
I note that clause 21 of the Clarence City Council's Subdivision Permit provides that all lots must be fenced. The Fencing Provision however, contained in the Schedule of Easements registered SP142075, provides that the Vendor shall not be required to fence.
Accordingly, as matters not required by the Clarence City Council are contained in the Schedule of Easements, as expressly stated in clause 17 of the Agreements for Sale, my client has instructed me to bring the Contracts for Sale to an end.
Yours faithfully"
On 26 October 2004, Mieluk, through its solicitors, signed a caveat "claiming estate or interest in fee simple as purchaser". A copy of the caveat is annexed to one of the applicant's affidavits and the copy contains a Land Titles Office stamp saying "- 3 Nov 2004", presumably recording the date of receipt or the date of registration. There is no evidence that the caveat has since been withdrawn. On its face it seems odd that Mieluk's solicitors would sign a caveat on 26 October 2004, write to the applicant's solicitors on 29 October 2004 purporting to bring the contract to an end and then cause or allow the caveat to be processed in the Land Titles Office after 29 October 2004. However, counsel for Mieluk says that the post 6 September 2004 correspondence and conduct is consistent with Mieluk reserving its position under the contract cl 17 rather than electing one way or the other.
In Sargent v ASL Developments Ltd (supra), Stephen J said at 646:
"The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other; thus for a lessor to continue to receive rent under a lease will be consistent only with his rights as lessor and inconsistent with the exercise of a right to determine the lease (Viscount Dilhorne in the Kammins Ballrooms Case (1971) AC, at p873; Herring CJ in the Coastal Estates Case (1965) VR, at p436; Kitto J in Tropical Traders Ltd. v Goonan (1964) 111 CLR 41, at p56). However, less unequivocal conduct, only providing some evidence of an election, may suffice if coupled with actual knowledge of the right of election (Elder's Trustee Case (1941) 65 CLR, at p618). There need be no expressed intention to elect, nor will an express disclaimer of such an intention be of any avail in preserving one right if in fact there be an exercise of another inconsistent right (Croft v Lumley (1858) 6 HL Cas 672 (10 ER 1459); Matthews v Smallwood (1910) 1 Ch, at p786). For an election there need be no actual, subjective intention to elect (Scarf v Jardine (1882) 7 AC, at p361), an election is the effect which the law attributes to conduct justifiable only if such an election had been made (per Kitto J in Tropical Traders Ltd v Goonan (supra), at p55); cf S Kaprow & Co Ltd v Mclelland & Co Ltd per Wrottesley LJ (1948) 1 KB 618, at pp629-630."
An election does not need to be made immediately, some leeway is given provided that delay does not cause prejudice. In Sargent v ASL Developments Ltd (supra), Mason J (as he then was) said at 656:
"A person confronted with a choice between the exercise of alternative and inconsistent rights is not bound to elect at once. He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side. An election takes place when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other (Tropical Traders Ltd v Goonan (1964) 111 CLR 41). So, words or conduct which do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract may not amount to an election to affirm the contract."
Counsel for Mieluk submitted that the correspondence from Mieluk's solicitors regarding completion being deferred until the roads and services were in, properly construed, is simply saying that provided more time is given, there will be completion. Mieluk is presumed to know what its solicitors knew about the variances between the Council permit and the schedule of easements. It is deemed to know that under the contract it had an entitlement to bring the agreement to an end. In my view, the correspondence from Mieluk's solicitors to the applicant's solicitors set out earlier and dated 9 and 14 September 2004 and 12, 19 and 26 October 2004, whether considered individually or collectively, imports an intention of Mieluk to insist upon performance of the contracts, and constitutes an election to proceed. None of the letters said or indicated that Mieluk was reserving its position under cl 17 or that if a right to an extension of time to complete was not acknowledged, Mieluk would or might bring the contracts to an end. The letters were asserting a claimed right, namely a right to delay completion until road access and services were available. The right asserted was consistent only with the contracts continuing and was inconsistent with exercising a right under cl 17 to bring the contracts to an end. An election to proceed having been made well before 29 October 2004 and the election being irrevocable, it was too late to change things and the letter of 29 October 2004 purporting to put an end to the contract under cl 17 was of no effect.
Determinations
The questions in the applications are answered as follows.
In the matter of Bob Lynch Insurance Agencies Pty Ltd v Lance Andrew Facer:
1(a) & (b)Clause 17 of the agreement permits Mr Facer to cancel the agreement on the bases of the registration of either or both of the following:
(i)the covenant "Not to use on such lot plan (sic) unpainted galvanised roofing iron on any dwelling or other building but only roofing tiles or colourbond roofing iron".
(ii)the covenant "Not to use any dwelling or other building on such lot for any purpose apart from usual residential purposes. The keeping of family pets such as horses or dogs in a separate building shall not be in breach of this stipulation".
In the matter of Bob Lynch Insurance Agencies Pty Ltd v P & J Mieluk Pty Ltd:
1Clause 17 of the agreements has ceased to have effect to permit Mieluk to bring the contracts to an end.
2 & 3Mieluk has exercised an election not to being the contracts to an end.
0
4
1