Carlin v Hamersley Iron Pty Ltd
[2002] WASC 310
CARLIN -v- HAMERSLEY IRON PTY LTD [2002] WASC 310
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 310 | |
| Case No: | CIV:2448/2001 | 13 AUGUST 2002 | |
| Coram: | WHEELER J | 16/12/02 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Questions answered | ||
| B | |||
| PDF Version |
| Parties: | ANTHONY JAMES CARLIN HAMERSLEY IRON PTY LTD (ACN 004 558 276) |
Catchwords: | Contracts Construction and interpretation of contracts Hamersley Home Ownership Plan Contract of Sale Turns on own facts |
Legislation: | Iron Ore (Hamersley Range) Agreement Act 1963 |
Case References: | Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 Whitlock v Brew (1968) 118 CLR 445 Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27 Doe d Spencer v Godwin [1815] 4 M&S 265; 105 ER 833 Farleigh Investments Pty Ltd & Anor v Reef King Pty Ltd [2002] WASC 115 Fowler v Fowler (1859) 4 DeG&J 250; 45 ER 97 Hamersley Iron Pty Ltd v Roberts & Anor, unreported; SCt of WA; Library No 950619; 15 November 1995 Humphries & Anor v The Proprietors "Surfers Palms North" Group Titles Plan 1955 (1992-1994) 179 CLR 597 John Lee & Son (Grantham) Ltd v Railway Executive [1949] 2 All ER 581 Mabarrak v King (1971) 1 SASR 313 Royal Botanical Gardens and Domain Trust v South Sydney City Council [2002] HCA 5 South Australia v Commonwealth (1961-1962) 108 CLR 130 South Seas Oils v Look Enterprises [1988] 1 Qd R 680 Spotless v Commonwealth of Australia, unreported; SCt of WA (Owen J); Library No 980102; 6 March 1998 Sun Alliance & Royal Insurance Australia Ltd v Brandrill Pty Ltd (1997) 19 ANZ Ins Cas 61-370 Trazray Pty Ltd v Russell Foundries, unreported; SCt of NSW (Waddell CJ); Library No BC8801922; 19 May 1988 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
HAMERSLEY IRON PTY LTD (ACN 004 558 276)
Defendant
Catchwords:
Contracts - Construction and interpretation of contracts - Hamersley Home Ownership Plan Contract of Sale - Turns on own facts
Legislation:
Iron Ore (Hamersley Range) Agreement Act 1963
Result:
Questions answered
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M G Clay & Mr C T H Tham
Defendant : Mr C G Colvin SC & Mr J C Vaughan
Solicitors:
Plaintiff : Martin de Haas
Defendant : Freehills
Case(s) referred to in judgment(s):
Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Whitlock v Brew (1968) 118 CLR 445
Case(s) also cited:
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27
Doe d Spencer v Godwin [1815] 4 M&S 265; 105 ER 833
Farleigh Investments Pty Ltd & Anor v Reef King Pty Ltd [2002] WASC 115
Fowler v Fowler (1859) 4 DeG&J 250; 45 ER 97
Hamersley Iron Pty Ltd v Roberts & Anor, unreported; SCt of WA; Library No 950619; 15 November 1995
Humphries & Anor v The Proprietors "Surfers Palms North" Group Titles Plan 1955 (1992-1994) 179 CLR 597
John Lee & Son (Grantham) Ltd v Railway Executive [1949] 2 All ER 581
Mabarrak v King (1971) 1 SASR 313
Royal Botanical Gardens and Domain Trust v South Sydney City Council [2002] HCA 5
South Australia v Commonwealth (1961-1962) 108 CLR 130
(Page 3)
South Seas Oils v Look Enterprises [1988] 1 Qd R 680
Spotless v Commonwealth of Australia, unreported; SCt of WA (Owen J); Library No 980102; 6 March 1998
Sun Alliance & Royal Insurance Australia Ltd v Brandrill Pty Ltd (1997) 19 ANZ Ins Cas 61-370
Trazray Pty Ltd v Russell Foundries, unreported; SCt of NSW (Waddell CJ); Library No BC8801922; 19 May 1988
(Page 4)
1 WHEELER J: The plaintiff seeks the determination of eight questions of construction of a contract entitled "The Hamersley Home Ownership Plan Contract of Sale" ("the Contract"). The Contract provides for the purchase of a property by the plaintiff from the defendant and contains provisions governing the rights of the parties in the event that the plaintiff ceases to be employed by the defendant. The questions of construction have arisen because of a dispute between the parties about the nature of the termination of the plaintiff's employment as Staff Maintainer at the Dampier Operation of the defendant in 2000, and about the consequences which flow from that termination.
2 The Contract is apparently a standard form contract used by the defendant in relation to a number of properties owned by it. There is some dispute about the extent to which it is appropriate for me to have regard to any material extraneous to the Contract in ascertaining its meaning. While the defendant submits that the procedure pursuant to O 58 r 10 employed here is appropriate only where the instrument is capable of construction by reference to its own terms alone, the defendant does refer to certain background matters which are not in dispute in attempting to find support for its view of the correct construction of the Contract.
3 It is not appropriate, pursuant to O 58 r 10, to determine disputed facts, but certain background circumstances may be of relevance, and I set out therefore my understanding of the context of this Contract. Pursuant to the Iron Ore (Hamersley Range) Agreement Act 1963 as amended, a number of agreements and variations of agreements between the defendant, companies associated with it, and the State of Western Australia, are variously ratified and approved. The agreements take broadly the form of those to be found in other Agreement Acts dealing with the development of large natural resources of the State. In agreements of that kind, a corporation or consortium of corporations is granted certain exclusive rights, principally in relation to minerals, but also in relation to lands, and incurs very extensive obligations to develop the mineral resource and to carry out works and activities associated with that development.
4 Relevantly to the present case, the agreements in question here oblige the State to grant to the company in fee simple or for terms and conditions to be determined, land, including townsite lots which are to be provided for nominal consideration. The company is to construct railways, make roads, construct a wharf, and to lay out and develop a townsite and provide housing and other appropriate facilities and services.
(Page 5)
- The first of the ratified agreements requires the company to allow inhabitants for the time being of the port townsite who are employees, licensees or agents of the company or persons providing a legitimate and normal service to it or to its employees, licensees or agents, to make use of water, power, recreational, health and other services and facilities provided or controlled by the company. The agreement provides that any State legislation for the time being in force relating to the fixation of rentals does not apply to houses belonging to the company, and that in relation to each house the company shall have the right to include as a condition of its letting that the company may take proceedings for eviction if the occupant ceases to be employed by the company. Provision is made for sale of houses to employees engaged in the company's operations and exempting such sale from certain provisions of the Sale of Land Act.
5 As is apparent from the tenor of the agreements, and as is in any event a matter of such notoriety in this State that I think judicial notice may be taken of it, towns developed pursuant to agreements of this kind are essentially "company towns" although at some stage they may develop into towns which serve a broader community. By "company towns", I mean that the purpose of the town is to house those who work for or provide services to the company, which housing is developed by the company in circumstances where it is likely that no, or very limited, other accommodation would be available. Because of the nature of the towns and the remoteness of the locations, it is not easy for those unconnected with the company to obtain accommodation. Unlike areas elsewhere in the State, housing is not developed on a speculative basis by developers hoping to attract people to make their homes there.
6 In the present case, Mr Carlin's Contract of Employment with the defendant provided that if he required accommodation he would receive an offer to purchase under the provisions of the Home Ownership Plan, and the Contract was presented to him as being in like terms and effect to contracts offered to other staff.
7 The Contract takes a most unusual form, for a contract for the sale of land. Although cl 2 provides that the vendor as beneficial owner agrees to sell and the purchaser to purchase the land described, and there is provision for vacant possession, other provisions contemplate a relationship quite different from the usual "once and for all" sale of a suburban house. The purchase price is to be paid in the manner set out in the Second Schedule. The Second Schedule provides for payment by 180 instalments over a period of 15 years. The purchaser agrees by cl 15(c) to sign a Payroll Deduction Authority authorising the vendor, or relevant
(Page 6)
- associated company as the case may be, to deduct purchase instalments and other charges from the salary due to the purchaser. Upon payment of the balance of the purchase price and interest, and other moneys which are not presently relevant, the vendor is then to execute and deliver to the purchaser a registrable transfer.
8 There are a number of provisions which are expressed to survive settlement and transfer of the property. Certain of them are for the benefit of the purchaser - for example, cl 16 obliges the vendor to pay the cost of certain electricity used for airconditioning purposes - and other provisions permit the purchaser in certain circumstances to require the vendor to repurchase the property for a sum ascertained in accordance with the Contract. Other provisions are for the benefit of the vendor; in particular, there are a number which restrict the purchaser's rights to dispose of or part with possession of the property, and which permit the vendor to repurchase, in circumstances defined by the Contract, during the "restricted period" (15 years from the date of the Contract).
9 I turn now to the questions posed by the originating summons as amended by order of Master Bredmeyer made 7 February 2002.
1. Was the plaintiff’s payment to the defendant of the balance of the purchase price of $29,116.69 on or about 10 April 2001 an early settlement for the purposes of cl 9(b)?
10 This issue is no longer live and at the hearing before me the parties agreed that the question should be answered in the negative.
2. If the plaintiff ceased to be employed by the defendant under cl 20(e), then on payment of the balance of the purchase price, interest and other moneys, is the plaintiff entitled to receive a transfer of the title free of the defendant’s rights under cl 18?
11 The relevant clauses here appear to be cls 18, 20 and 28. Those clauses are:
"18. RESTRICTION ON DISPOSITION
(a) (i) The Vendor shall have the option, exercisable by notice in writing to the Purchaser given at any time during the Restricted Period, to repurchase the Property for the then current Surrender Value PROVIDED HOWEVER that if the Purchaser is an employee of the Vendor such option shall not be exercisable unless the Purchaser shall first have advised the Vendor by notice
(Page 7)
- in writing that he or she wishes to sell the Property. The Vendor's option shall continue throughout the Restricted Period notwithstanding final settlement of the purchase of the Property during the Restricted Period.
- (ii) The Purchaser shall not sell or otherwise dispose of the Property without first giving to the Vendor the notice referred to in paragraph (i) of this sub-clause 18(a).
(iii) If the Vendor exercises its option to purchase, the Purchaser shall give vacant possession of the Property to the Vendor within a period of TWENTY EIGHT (28) days after the option is exercised whereupon the Vendor will pay the Purchaser, or as he or she shall otherwise direct, the then current Surrender Value subject to any adjustments required by the terms of this Contract of Sale.
(b) The Purchaser shall not during the Guarantee Period sell lease or otherwise part with the possession of the Property or any part thereof to any third person without first giving by written notice to the Vendor the right of first refusal to purchase lease or acquire possession of the Property or that part of the Property at the same price and on the same terms which are offered to the third person within a period of TWENTY EIGHT (28) days from the date of receipt by the Vendor of such notice.
In the event of the Vendor electing not to purchase lease or acquire possession of the Property or that part at the price and on the terms specified in the notice the Purchaser will not sell lease or otherwise part with possession of the Property or part thereof to any third person at a lesser price or on more advantageous terms and conditions than those specified in that notice without first giving the Vendor a further notice in terms of this sub-clause. The rights and obligations set out in this sub-clause shall survive settlement of the purchase of the Property by the Purchaser under this Contract of Sale.
...
(Page 8)
- 20. CESSATION OF EMPLOYMENT, DEATH ETC
(a) Resignation, Dismissal
If at any time during the Restricted Period the Purchaser ceases to be an employee of the Vendor due to his or her resignation (other than by reason of retirement under paragraph (b) of this clause 20) or dismissal (the date of resignation or dismissal in this paragraph (a) being called the 'Relevant Date') the Purchaser may elect to terminate this Contract of Sale by giving notice in writing to the Vendor prior to the date of his or her resignation, within SEVEN (7) days of the date of his or her dismissal or within such further period as the Vendor permits. The Purchaser will vacate the Property within TWENTY EIGHT (28) days of the Relevant Date and as soon as reasonably practicable after receipt of vacant possession of the Property the Vendor will pay to the Purchaser the Surrender Value calculated to the Relevant Date less any Outgoings and other amounts due and payable under this Contract of Sale.
(b) Retirement
If the Purchaser ceases to be an employee of the Vendor during the Restricted Period due to his or her retirement then he or she shall notify the Vendor prior to his or her retirement date whether he or she wishes to remain in occupation of the Property after his or her retirement. Upon retirement either of the following shall apply:
(i) If the Purchaser wishes to remain in occupation of the Property he or she shall pay to the Vendor the balance of the Purchase Price and any interest due or other moneys payable under this Contract of Sale within TWENTY EIGHT (28) days of the retirement date and the Vendor shall as soon as practicable thereafter transfer the title of the Property to the Purchaser. Settlement shall not affect the continued operation of the restrictions on assignment and sale herein contained or other obligations expressed to survive settlement; or
(ii) if the Purchaser does not wish to remain in occupation of the Property this Contract of Sale shall terminate on
(Page 9)
- his or her retirement date and the Purchaser shall vacate the Property within TWENTY EIGHT (28) days of the retirement date. On the Purchaser vacating the Property, the Vendor shall pay to the Purchaser the appropriate Surrender Value calculated as at the retirement date. If the Purchaser fails to notify the Vendor of his or her intentions prior to the retirement date he or she shall be deemed to have elected not to continue in occupation and this clause 20(b)(ii) shall apply.
- For the purposes of sub-clause 20(b) "retirement" has the same meaning that it has under the rules of a Relevant Fund.
- (c) Disability
If the Purchaser being an employee of the Vendor becomes permanently and totally disabled during the Restricted Period then:
EITHER
- (i) the Purchaser shall within TWENTY EIGHT (28) days of the date of ceasing to be an employee of the Vendor pay to the Vendor the balance of the Purchase Price and any interest due or other moneys payable under this Contract of Sale and the Vendor shall as soon as practicable thereafter transfer the title of the Property to the Purchaser. Settlement shall not affect the continued operation of the restrictions on assignment and sale herein contained or any other obligations expressed to survive settlement;
- (ii) if the Purchaser does not give notice in accordance with paragraph (i) of this sub-clause this Contract of Sale except to the extent of the continuing rights and obligations referred to in this sub-clause shall terminate. The Purchaser may give notice within TWENTY EIGHT (28) days of the date of ceasing to be an employee of the Vendor that he or she desires to continue in occupation of the Property whereupon he or she will do so rent free PROVIDED THAT he or
(Page 10)
- she complies for the duration of his or her occupancy with the Purchaser's obligations relating to maintenance and where appropriate payment of Outgoings contained in this Contract of Sale.
- If the Purchaser does not wish to remain in occupation of the Property and this Contract of Sale terminates under this paragraph (ii) of this sub-clause, the Surrender Value payable to the Purchaser shall be calculated as at the date the Purchaser gives the Vendor vacant possession of the Property and shall be paid to the Purchaser at that time.
For the purposes of clause 20(c) 'permanent and total disability' means a condition or injury which is or would be accepted as being a permanent and total disability by a Relevant Fund.
If a disabled Purchaser elects to take the course of action referred to in paragraph (ii) of this sub-clause and subsequently dies whilst still in occupation of the Property the Spouse of the deceased Purchaser may remain in occupation of the Property PROVIDED THAT the Spouse agrees to comply for the duration of his or her occupancy with the continuing obligations which were imposed upon the Purchaser in this Contract of Sale relating to maintenance and where appropriate to payment of Outgoings.
(d) Death
If the Purchaser dies (the 'deceased') whilst in the employment of the Vendor and the Purchaser has not at the date of his or her death paid the balance of the Purchase Price to the Vendor this Contract of Sale except to the extent otherwise stated in this sub-clause shall be terminated as at the date of death. The amount due to the estate of the deceased shall be the Surrender Value as at the date vacant possession is given to the Vendor and such sum will be paid to the deceased's estate on the date the Vendor receives vacant possession of the Property. The Spouse of the deceased shall be entitled to remain in occupation of the Property rent free indefinitely PROVIDED THAT he or she agrees to comply for the duration of his or her occupancy with the continuing obligations which were imposed upon the Purchaser in this Contract of Sale relating to
(Page 11)
- maintenance and where appropriate to payment of Outgoings.
- (e) Other
If the Purchaser ceases to be employed by the Vendor in any circumstances not covered by paragraphs (b) to (d) inclusive of this clause 20, then the Purchaser shall within TWENTY EIGHT (28) days of the cessation of employment pay to the Vendor the balance of the Purchase Price and any interest due or other moneys payable under this Contract of Sale and the Vendor shall as soon as practicable thereafter transfer the title of the Property to the Purchaser. If the Purchaser does not pay the balance of the Purchase Price and any interest due or other moneys payable within TWENTY EIGHT (28) days of cessation of employment this Contract of Sale will be terminated on the twenty-eighth day after the cessation of employment and the Purchaser will immediately vacate the Property. Upon receipt of vacant possession of the Property the Vendor will pay to the Purchaser the Surrender Value calculated as at the date of termination of this contract of Sale.
(f) Death after Settlement
In the event that the Purchaser dies (the 'deceased') during the Restricted Period and has at the date of the death paid the balance of the Purchase Price of the Property under this Contract of Sale then the Spouse of the deceased may continue to live in the Property on the same conditions as set out in this sub-clause 20(d) PROVIDED however in the event that the Spouse of the deceased does not wish to live in the Property or vacates the Property prior to the expiration of the Restricted Period the Vendor shall have the option to lease the Property from the personal representatives of the deceased or any person to whom the title of the Property may have passed or been transferred on the same terms and conditions as are referred to in sub-clause 20(e).
The Vendor at its sole discretion may require the Purchaser to cause the personal representatives of the deceased and/or the beneficiary of any will or under any intestacy of the
(Page 12)
- deceased or any other transferee (together the 'Covenantor') to enter into a deed of covenant to be prepared at the Vendor's expense and by the Vendor's solicitors whereby the covenantor covenants to observe and perform and be bound by all the obligations of the Purchaser which survive settlement upon the terms and conditions contained in this Contract of Sale.
- (g) Substituted Property
If at any time during the Restricted Period the Purchaser remains in the employment of the Vendor and wishes to terminate this Contract of Sale and purchase another property under the Hamersley Iron Pty Limited – Home Ownership Plan the Purchaser may elect to terminate this Contract of Sale on the date specified (the 'specified date') by notice in writing to the Vendor whereupon:
(i) the Purchaser will give the Vendor vacant possession of the Property on the specified date;
(ii) the Purchaser will pay the Vendor any amounts due and payable under this Contract of Sale including any adjusted Outgoings calculated in accordance with clause 22;
(iii) the Purchaser will pay the Vendor the balance of any Loan outstanding under this Contract of Sale;
(iv) the Vendor will pay the Purchaser the amount notified to the Purchaser under clause 17; and
(v) the Vendor will credit the Principal Payments made up to the specified date to the purchase price payable by the Purchaser under any new contract of sale.
If at any time during the Restricted Period the Purchaser has acquired or is entitled to acquire legal title to the Property and wishes to lease or otherwise part with possession of the Property or ceases to be an employee of the Vendor due to his or her resignation (other than by reason of retirement under clause 20(b)) or dismissal the Vendor shall have the
(Page 13)
- option to lease the Property from the Purchaser and such lease shall include the terms and conditions set out in the Fourth Schedule.
- If the Vendor exercises its option to lease, the Purchaser shall deliver vacant possession of the Property to the Vendor within a period of TWENTY EIGHT (28) days after the option is exercised.
For the purposes of this clause 20 'Purchaser', except where the context otherwise requires, includes his or her personal representatives, successors in title and permitted assigns."
- and
"28. CONTRACT TO CONTINUE TO HAVE EFFECT AFTER SETTLEMENT
Unless expressly provided to the contrary herein and save and except to the extent that they have been performed the provisions of this Contract of Sale shall continue in full force and effect notwithstanding the settlement of the sale and the purchase and the transfer of the Property to the Purchaser."
13 I do not accept that argument. As the defendant submitted, clauses such as 20(b) and (c) contain alternatives. For example, in cl 20(c)(ii) if the purchaser does not give the required notice, then except as expressly provided, the entire contract of sale will "terminate". In that situation, the restrictions on disposition would be one of the provisions of the Contract which would "terminate", subject to any potential effect of cl 28. It may be that where a subclause expressly provides in some circumstances for an occupation which appears to be inconsistent with obligations expressed to survive settlement, and within that subclause, it is intended that the rights should continue, express provision to that effect is made.
(Page 14)
14 I note in passing, that cl 20(c) demonstrates that unfortunate disregard of internal consistency and attention to detail which characterises the agreement as a whole. When, for example, one reads the opening words of subcl 20(c)(ii), which refers to a notice in accordance with par (i), it is with some surprise that one then peruses cl 20(c)(i) and finds that there is no reference to any notice contained therein. More significant discrepancies arise in relation to some of the questions which I have to answer, which I mention later.
15 However, although it is not easy to see any real pattern behind the express references in parts of cl 20 to settlement not affecting the continued operation of restrictions on assignment and sale, it is I think unnecessary to explore that issue in too much detail. Whatever inference might arise from the omission of such express provision in relation to cl 20(e), cannot in my view survive the express words of cl 18. So far as the "option" to repurchase is concerned, cl 18(a)(i) expressly provides that the vendor's option continues throughout the restricted period notwithstanding final settlement of the purchase of the property during that period. Similarly, the final words of cl 18(b) are to the effect that the rights and obligations set out in that subclause survives settlement of the purchase of the property. It is difficult to see what clearer terms could be employed. It appears to me that cl 18 by its own terms makes it plain that notwithstanding that the plaintiff has received a transfer of title, the rights of the defendant under cl 18 continue.
16 I am fortified in that conclusion by an examination of the consequences of an alternative construction. The construction for which the plaintiff contends would mean that an employee who retired or who ceased work due to permanent and total disability (that is, due to causes wholly or largely beyond his control) would be subject to the continuing rights, but that an employee who resigned or was dismissed (that is, who had voluntarily chosen to leave his employment or perhaps has been dismissed for some breach of his contract of employment) would be in the better position of taking his interest free of those continuing rights. That appears to be an unlikely result.
17 I would therefore answer Question 2 "No".
3. If the plaintiff ceased to be employed by the defendant under cl 20(c), then on payment of the balance of the purchase price, interest and other moneys, is the plaintiff entitled to receive a transfer of title free of the defendant’s rights under cl 18?
(Page 15)
18 As I understand it, this question is asked only in relation to cl 20(c)(i). The reason for that, as I understand it, is that the plaintiff had not as at the date of ceasing to be an employee paid the balance of the purchase price and had not at that date taken a transfer of the title. I have already noted that cl 18 appears to answer this question. However, apparently from an abundance of caution, cl 20(c)(i) itself provides, as I have already noted, that settlement does not affect the continued operation of the restrictions on assignment and sale or other obligations expressed to survive settlement. The provisions of cl 18 are in part restrictions on assignment and sale. The "vendor's option" is perhaps not such a restriction, but where that option is exercised, there is an obligation on the purchaser to give vacant possession within a specified time, and it is my view that that "obligation" is encompassed within the proviso to cl 20(c)(i). I would therefore answer this question "No".
4. If the plaintiff ceased to be employed by the defendant under cl 20(e) or 20(c), then on payment of the balance of the purchase price, and upon registration of the transfer of title:
4.1 does the defendant have rights under either cl 20(f)?;
4.2 does the defendant have rights under cl 20(h)?
5. Is the defendant’s option to lease under cl 20(f) void or unenforceable for uncertainty?
6. Is the defendant’s option to lease under cl 20(h) void or unenforceable for uncertainty?
19 As to 4.1 and 4.2, I am not in a position to give a concluded answer to these questions, which are at this stage hypothetical. I say that for a number of reasons. First, and most obviously, cl 20(f) is expressed to be applicable in the event that the purchaser dies, and the plaintiff is at present alive. I accept that he has a serious illness, that his prognosis is poor, and that he very much wishes to have an answer to this question in the interests of his spouse. I hope that the observations I propose to make will be of some assistance.
20 As I understand the questions, it is sought to have me deal not only with the construction of cl 20(f), but also with its enforceability as against the personal representatives of the purchaser and/or the beneficiaries under any Will of the purchaser. There are a number of difficulties in its construction.
21 Turning to the second paragraph first, it is plain that once the purchaser has become the "deceased", the purchaser is not going to be in a
(Page 16)
- position to cause his personal representatives or beneficiaries to do anything. The reference to the "deceased" there is plainly intended to be a reference to the "prospective deceased", that is the purchaser. It is further plain that although the vendor may perhaps be able to require the purchaser to use best endeavours to cause his or personal representatives or beneficiaries to enter into deeds, there is no way in which the purchaser can require that those persons do in fact enter into the relevant deeds, and it is not clear what, if any, contractual consequences would follow if those persons refused to do so. Nor is it clear what consequences would flow if personal representatives and beneficiaries under an existing Will entered into covenants and the purchaser thereafter changed his testamentary arrangements so that there were different personal representatives and/or beneficiaries.
22 At the heart of the difficulties with this subclause, is the concept of privity of contract. When asked by me how, once a transfer had been registered, any of the contractual obligations could survive the death of the deceased and bind the beneficiaries under the Will, the defendant's counsel said that:
"They do so, if at all, by either an equitable burden arising from taking with notice of the Contract, contractual rights, or they do so pursuant to the covenant which is sought to be imposed upon those who are the representatives. Those are the only ways in which the burden could arise ... ". (emphasis supplied)
23 In my view this submission was correct. I do not at present see any other way in which subcl 20(f) could create obligations which survive not only settlement but the death of the purchaser. As I understand it, in this case no relevant deed has been entered into, and I have already pointed to the difficulties surrounding that portion of the subclause which appears to impose an obligation on the purchaser to procure the entry into of the relevant deed. It may be that Mr Carlin's spouse has some notice of the terms of the contract; it appears from the argument before me that the question of what would occur in the event of his death is of some concern to him and it would not be surprising if he had discussed that question in general terms with her. However, it seems to me that it is impossible, assuming that there may be circumstances in which some equitable burden may arise from notice of a provision such as this, to determine in what circumstances that burden would arise, in the absence of any evidence of facts which could arguably constitute relevant notice.
(Page 17)
24 The plaintiff further suggests that so far as the proviso to the first paragraph of 20(f) is concerned, it is void for uncertainty since it refers to an option to lease on the same terms and conditions as are referred to in subcl 20(e). The plaintiff points out that there are no lease terms referred to anywhere in 20(e), and submits that a condition requiring a "lease", which gives no indication of what the terms of the lease may be, must be void for uncertainty.
25 In my view, the issue here is not one of uncertainty but of manifest typographical error. It is open to a court to correct such an error if the intended meaning is plain; see, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 600 - 601. In my view, there is only one subclause which could be intended to be referred to here, and that is cl 20(h). It was contended by the plaintiff that a lease with the terms referred to in cl 18(b) could have been contemplated; that is a lease on the terms upon which it was intended by the purchaser (or in this case the spouse or personal representative) to lease the property to a third party. However, the proviso in cl 20(f) does not arise merely where the spouse wishes to lease the property to another, but wherever the spouse does not wish to live in the property, for whatever reason. Clause 20(h), by comparison, is able to be given effect to whether or not there is a third party with whom the spouse or the personal representative have had any negotiations about a potential lease.
26 The question then arises whether the option to lease under cl 20(h) is itself void for uncertainty. The only relevant uncertainty it appears is as to the term of the lease contemplated by cl 20(h). The Fourth Schedule specifies the usual conditions as to keeping the property in good repair, permitting sub-letting, and the like. It also specifies the annual rental. The commencing date is specified by cl 20(h); that is, within 28 days from the exercise of the "option".
27 However, it is submitted by the plaintiff that the duration of a lease is an essential term, and must be able to be ascertained either from the express words of the lease contract or by necessary implication, and if that cannot be done then the lease is void for uncertainty. I accept the submission as a correct statement of the law. The plaintiff submits there is nothing in the Contract which enables one to determine whether the period of the lease would be any period during which the purchaser wished to lease or part with possession of the property; the balance of the restricted period; the balance of the guarantee period; the period for which the vendor wishes to lease the property; or some other period.
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28 The defendant submits, and I accept, that where there is no doubt the parties meant to enter into a binding agreement, the court will lean heavily against finding uncertainty. It refers to a number of cases involving leases, in which the courts have drawn from surrounding circumstances or from the terms of the agreement, a conclusion as to the intended term. The two possibilities advanced by the defendant were either a lease "for the balance of the term of the Contract" (which could in itself either be for the balance of the restricted period or the balance of the guarantee period, the latter being a period of 20 years during which certain of the obligations of the Contract would survive) or for a term to be specified at the option of the defendant. In oral submissions, the defendant contended that since the right was one to be exercised by the vendor at any time during the restricted period, the better view was that the lease which resulted would have a term of the balance of the restricted period.
29 A distinction must be drawn between contracts a term of which is uncertain, and contracts a term of which may have more than one possible meaning. An example of the former, is that of Whitlock v Brew (1968) 118 CLR 445, upon which the plaintiff relies. In that case, a lease was to be granted "upon such reasonable terms as commonly govern such a lease". It was impossible to ascertain from those words any potential term, and there was no evidence before the court as to any terms commonly found in leases of that kind. By contrast, in Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396, there were a number of terms, such as an agreement to pay "outgoings", which were capable of a variety of meanings. The court in that case applied the well-known observations of Barwick CJ in Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 436 - 437, to the effect that a contract of which there can be more than one possible meaning or which when construed can produce more than one result is not therefore void for uncertainty. Barwick CJ observed that: "As long as it is capable of a meaning, it will ultimately bear that meaning which the courts ... decide is its proper construction". It is perhaps a better way of expressing the matter to say that a contract or contractual provision which is void for uncertainty is generally void for absence of meaning, although no doubt there may be cases in which it is genuinely impossible to prefer, however slightly, one of two or more possible meanings.
30 In this case, it is my view that it is possible to select one of the four possible meanings specified by the plaintiff. Since the option is to be exercised during the restricted period, it would be odd if it resulted in a lease which extended beyond that period, so that it seems to me that the
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- balance of the guarantee period can be ruled out. There is nothing to suggest that the period is one to be specified at the option of the vendor, and the application of the contra proferentem rule would incline one against such a conclusion. The real choice appears to be between the period for which the purchaser wishes to lease the property or part with possession of it, and the balance of the restricted period. If the exercise of the vendor's rights were triggered only by the wish of the purchaser to part with possession of the property, there would be much force in the suggestion that the relevant period was the period for which the purchaser did wish to lease the property. However, it is triggered not only by that decision, but also by the purchaser ceasing to be an employee of the vendor due to certain circumstances.
31 The object of the contract as a whole, read in the light of the factual context which I earlier described, appears to be to make provision for the purchaser as an employee of Hamersley, so that Hamersley employees are able to live at a reasonable cost in an area of Hamersley's choosing. Once a person ceases to be an employee, that object is no longer served by the Contract. It is for that reason, that cl 20 provides in some detail for repurchase by Hamersley where employment is terminated in specified circumstances. Having regard to the Contract as a whole, it appears to me that cl 20(h) is intended to permit Hamersley, where the occupation of the property by the purchaser is not serving the objective to which I have referred, to make use of the property for its own purposes, but in circumstances which fall short of an outright repurchase and which therefore would allow for the resumption of occupation by the purchaser at some future time. My own tentative view would be that, in the context of the Contract as a whole, it is most likely that it would be construed as permitting a lease under cl 20(h) for the balance of the restricted period. However, the matter not having been fully argued, it is sufficient for present purposes that I simply reach the conclusion that there are really only two possible lease periods and that the choice of one of them would be a question of construction which a court would be able to resolve.
32 As a result of the views I have expressed above, I would answer questions 4 - 6 in the following way:
4.1 there is no evidence before me of any circumstances giving rise to such rights;
4.2 assuming that the purchaser wishes to lease or part with possession of the property or has ceased to be an employee due to resignation (other than by reason of retirement under cl 20(b)) or dismissal, yes.
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- 5. No.
6. No.
- 7. If rights conferred by cl 18(a)(i) survive settlement, then on the true construction of the instrument, do the words “if the Purchaser is an employee of the Vendor” in cl 18(a)(i) cover the plaintiff who was an employee at the time of entering the instrument?
33 As I understand the facts of this case, the plaintiff is no longer an employee of the defendant, and has not given notice that he wishes to sell the property. The question then arises whether the defendant is able to repurchase pursuant to cl 18(a)(i). The competing contentions are: on behalf of the plaintiff, that the words in that subclause "if the purchaser is an employee of the vendor" look to the status of the purchaser at the time of entry into the contract, and on the other hand the defendant's contention that the proviso is to be understood as precluding it from exercising its "option" only where the purchaser is an employee at the time at which it seeks to exercise that "option".
34 It is submitted by the plaintiff that the terms of the contract should be construed as at the date of its execution. I accept that submission, but I do not think it advances the position. Provisions such as cl 18 were manifestly intended to continue to have effect according to their terms for the duration of the contract. It is not unusual for contractual provisions to vary in their application as circumstances, which are provided for in the contract, may arise.
35 It is my view that the defendant's contentions must be correct. The contract itself appears to contemplate that purchasers will, as at the date of contract, always be employees of the vendor. Clause 15(c) is a covenant by the purchaser to sign a payroll deduction authority authorising Hamersley Iron or the relevant associated company to deduct purchase instalments. Clause 20, which I have set out, deals in some detail with various rights and liabilities which arise where the purchaser "ceases" to be employed, or where the purchaser "remains in the employment" of the vendor. Nothing in the Contract appears (leaving aside the interpretation of cl 18 for which the plaintiff contends) to contemplate the situation of a person not being an employee of the vendor, but becoming an employee at some stage during the course of the Contract, or the situation of a purchaser never being an employee of the vendor.
36 This proposition is complicated somewhat by the fact that the Contract itself contains two definitions of "the vendor". The Contract
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- commences with the statement that the Contract is between Hamersley Iron Pty Limited (the "Vendor"), and certain clauses of the Contract clearly indicate that this meaning of the Vendor is to be understood; for example cl 15(c) refers to a payroll deduction authority authorising "the Vendor or the relevant Associated Company ... ". However, in the definition section, the definition of "vendor" reads "unless the context otherwise requires, includes an Associated Company of the Vendor". The position appears to me to be that the Vendor is generally to be understood as being Hamersley Iron and its associated companies, unless anything in the context (as for example in the express terms of cl 15(c)) indicates otherwise.
37 As well as the indications in the Contract itself to which I have referred, it seems to me that the background circumstances which I described earlier point to the conclusion that contracts of this type will generally be entered into between Hamersley and its employees, rather than between Hamersley and other persons, although those background circumstances do not lead to a conclusion that this will inevitably be the case. There may well be a need on the part of Hamersley to provide accommodation for those who are not its employees but who provide services to it or to its employees. However, the background circumstances and the terms of the Contract taken together tend to suggest that, at least in the usual case, the person entering into the Contract as purchaser will be at that time an employee of Hamersley.
38 If it is the case that purchasers will always or almost always be employees of the vendor at the time of entering into the Contract, the interpretation contended for by the plaintiff would have the result that the option would in the usual run of circumstances only be able to be exercised where the purchaser had advised the vendor that he or she wished to sell the property. If that were the case, then there would over time be a significant number of ex employees, whether they ceased employment by retirement, disability or whatever cause, who were able to purchase their properties and remain in possession of them until such time as they determined that they wished to sell the property. This appears to me to be inconsistent with the objects of the contract as I understand them.
39 Further, as a matter of ordinary usage of language, it appears to me that the defendant's interpretation is to be preferred. The operation of cl 18 is concerned with an option which may be exercisable "at any time" during the restricted period. It appears to me that a proviso restricting the operation of that option must logically be understood as looking to the
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- time of the exercise or purported exercise of the option, rather than to some past time. Being a true proviso, it takes its temporal reference from the temporal reference of the part of the clause which it conditions.
40 Finally, if I accept the plaintiff's submission that, at least hypothetically, there may be persons who are not employees of Hamersley but who perhaps become employees of Hamersley during the course of the term of the contract, then it seems that in that hypothetical situation the interpretation contended for by the plaintiff has an illogical and unlikely operation. Its construction would mean that if a purchaser were not an employee at the date of the agreement, but became an employee shortly thereafter, then the option to repurchase could be exercised at that later time, while the plaintiff was still an employee, thereby relieving the defendant of the obligation to provide accommodation. On the other hand, as the defendant points out, if the purchaser were an employee for a short period and then resigned with the result that the defendant had to employ a replacement, the option to re-purchase could nevertheless not be exercised by it and it would have to secure additional accommodation for that replacement employee. It seems clear that, consistently with what appears to me to be the purpose of this Contract, its provisions favour employees over non-employees, although distinguishing between non-employees depending upon the way in which they ceased to be employed. It would be inconsistent with that favourable treatment of employees to interpret cl 18(a)(i) in the manner contended for by the plaintiff.
41 Finally, I mention the plaintiff's contention that if the proviso cl 18(a)(i) is understood as applying only in respect of those purchasers who are employees of the vendor at the time of the purported exercise of the option, it would "make nugatory" the provisions in cl 20 conferring rights of settlement on purchasers who cease to be employed, pursuant in particular to cls 20(b)(c) and (e). I accept that those rights are thereby rendered less valuable, in the sense that it would be open to the defendant to defeat them by exercising its "option". However the rights are not thereby rendered nugatory. Those persons are entitled to take a transfer of title in the circumstances prescribed by cl 20, and that title subsists unless and until the defendant does exercise its rights pursuant to cl 18; if the rights of the defendant are not exercised during the restricted period, then those persons obtain title unencumbered by such rights. I would therefore answer Question 7 in the negative.
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- 8. Whether the provisions of the instrument purporting to confer rights or obligations in favour of the vendor following settlement and transfer of the property to the purchaser:
8.1 are void for uncertainty; and
8.2 can be severed from the contract?
Conclusion
43 I would answer the questions in the originating summons, as amended, as follows:
1. No.
2. No.
3. No.
4.1 There is no evidence before me of circumstances which might give rise to such rights.
4.2 Assuming that the purchaser has acquired title or is entitled to acquire title and wishes to lease or otherwise part with possession of the property or has ceased to be an employee of the vendor due to his or her resignation (other than by reason of retirement under cl 20(b)) or dismissal), yes.
5. No.
6. No.
7. Assuming the plaintiff is not an employee at the time at which the vendor purports to exercise the option, no.
8. Unnecessary to answer.
0
8
0