Bronzewing Investments Pty Ltd v Moltoni Corporation Pty Ltd (Receivers & Managers Appointed)

[2014] WASC 362

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BRONZEWING INVESTMENTS PTY LTD -v- MOLTONI CORPORATION PTY LTD (Receivers & Managers Appointed) [2014] WASC 362

CORAM:   MASTER SANDERSON

HEARD:   15 SEPTEMBER 2014

DELIVERED          :   2 OCTOBER 2014

FILE NO/S:   CIV 2790 of 2013

BETWEEN:   BRONZEWING INVESTMENTS PTY LTD as Trustee for the P & F GANGEMI FAMILY TRUST No 3

Plaintiff

AND

MOLTONI CORPORATION PTY LTD (Receivers & Managers Appointed) as Trustee for the MOLTONI FAMILY TRUST
First Defendant

EXTREME ASSET PTY LTD
Second Defendant

Catchwords:

Practice and procedure - Application to vary orders based on 'liberty to apply' order - Turns on own facts

Legislation:

Contaminated Sites Act 2003 (WA)

Result:

Variation refused

Category:    B

Representation:

Counsel:

Plaintiff:     Mr T J Palmer

First Defendant              :     Mr A W Buchan

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     M S Barrett-Lennard & Co

First Defendant              :     Hotchkin Hanly

Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

Prop West Pty Ltd atf Prop West Trust v OOD Investments Ptd Ltd atf MTM Trust [2010] WASC 154

1. MASTER SANDERSON:  This dispute relates to land situated at 355 Midland Road, Hazelmere.  The property was purchased by the plaintiff and the first defendant as tenants in common in equal shares on 27 May 2004.  On or about May 2012 the land was classified by the Contaminated Sites Committee under the Contaminated Sites Act 2003 (WA) as 'possibly contaminated - investigation required'.

2. On 12 January 2012 the plaintiff commenced Supreme Court proceedings against the first defendant and a related entity claiming damages for alleged breaches relating the remediation of the land. On 28 November 2013 the plaintiff commenced these proceedings seeking, among other things, an order the land be sold by public auction. That application was brought pursuant to s 126 of the Property Law Act 1969 (WA). By correspondence between the respective solicitors for the plaintiff and the first defendant the parties agreed to settle these proceeding and the earlier proceedings on terms which included orders of the court dated 20 February 2014. These were consent orders. They were signed off by the solicitors for each of the parties and lodged pursuant to O 43 r 16 of the Rules of the Supreme Court 1971 (WA). They were not in any way sanctioned or approved by the court.

3. The orders provided for the sale of the land by public auction. Order 2 set a reserved price and specified the land was to be sold on or before 31 May 2014. Ron Farris Real Estate was appointed to conduct the auction: see order 5. Order 6 was then in the following terms:

   The agent appointed pursuant to order 5 above is to sell the Land on condition that responsibility for any future remediation of the land under the Contaminated Sites Act 2003 (WA) be transferred in writing to the purchaser.

4. Pursuant to order 15 liberty to apply was reserved to the parties.  This application now comes before the court pursuant to that liberty to apply.

5. The plaintiff seeks two orders.  First an extension of time for the holding of the auction to a date seven weeks following the determination of this application.  That order presents no difficulty.  The parties are in agreement.  It is the second proposed order which divides the parties.  The plaintiff seeks an order that a series of special conditions be attached to the auction conditions.  A minute of the proposed special auction conditions is attached to the chamber summons.  It is quite detailed.  What the conditions seek to do is impose a condition which requires the buyer of the land to give a first ranking mortgage and charge over the land to the present owners as security for any costs remediating the land for which the owners may be liable in the future.  The plaintiff says these conditions are necessary to protect their position.  The first defendant says the proposed special conditions go well beyond what is anticipated by order 6 of the agreed orders and cannot be made under the liberty to apply.

6. Extensive evidence was filed by the parties in support of and in opposition to the application.  The parties took the view it was necessary to file this evidence to show what liability they may incur in the future if they are responsible for remediating the land.  It is not necessary for me to consider this evidence.  Two things are clear.  First, insufficient investigation of the site has been undertaken to allow precise quantification of what the cost of remediation might be.  It might or might not be significant.  Further investigation will be required.

7. Second, the parties are agreed potentially they could be liable for the cost of remediation.  Order 6 of the consent orders anticipates the liability for remediation passing to the purchaser upon the sale of the land.  But in certain circumstances, despite the sale and divestment, the parties might be responsible for the cost of remediation.  It is unnecessary for me to go into the mechanics of the Contaminated Sites Act.  Nor is it necessarily the case the parties will be left with the cost of remediation.  But there is a possibility that might occur and there is no way that possibility can be excluded by the terms of any sale agreement.  In the circumstances the plaintiff says the only way to secure the parties' position is to encumber the land so if the purchaser does not perform the remediation pursuant to the contract of purchase the parties can cover their position by a charge over the property.

8. There was no dispute between the parties as to the scope of the court's power pursuant to 'liberty to apply'.  The meaning of that expression was considered by Le Miere J in Prop West Pty Ltd atf Prop West Trust v OOD Investments Ptd Ltd atf MTM Trust [2010] WASC 154. His Honour said [12] ‑ [13]:

   Paragraph 9 of the Consent Orders reserved liberty to the parties to apply.  An order granting liberty to apply enables further orders to be made which are necessary for the purpose of implementing and giving effect to the relief already ordered or as it is sometimes called 'working out the order':  Cristel v Cristel [1951] 2 KB 725, 729 - 730; Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201, [50]. Orders made to work out an order arise, for example, upon a decree for specific performance where the unsuccessful defendant declines to sign all documents and do whatever is necessary to ensure that the contract is performed. The reservation of liberty to apply ensures that the court may then make orders to secure that the relevant contract is enforced by the defendant by, for example, appointing the appropriate officer of the court to execute the necessary documents of conveyance so as to give title to the successful plaintiff: Abigroup Ltd v Abignano (1992) 39 FCR 74, 88.

   Prima facie, liberty to apply does not entitle a party to come and ask that the order itself shall be varied.  On the other hand, there are many orders as to which the process of carrying the primary order into effect may require supervision, with the consequence that further or supplementary orders or directions may be needed to enable it to achieve its purpose:  Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593, 598 (McPherson SPJ).

9. The difficulty with this application is that it does seek to vary the orders agreed between the parties.  The granting of a mortgage by a prospective purchaser is an altogether different thing from a contractual undertaking to be responsible for the cost of remediation.  The difference is as fundamental as the difference between rights in personam and rights in rem.  The agreement between the parties did not anticipate any covenants running with the land.  The requirement to give a mortgage would almost certainly have a profound effect upon the price that could be obtained for the property.  The parties reached a bargain and settled their differences based upon a purchaser providing a contractual indemnity.  They cannot now agree there should be something more to secure their position.  So be it.  But in my view it is not open to the court on an application such as this relying on liberty to apply to make the orders sought by the plaintiff.  The result of making such orders would be to impose an altogether different settlement on the parties to the one that they had reached.

10. In my view this application must be dismissed.  Subject to hearing from the parties the plaintiff ought pay the costs of this application including the reserved costs.